Document of The World Bank FOR OFFICIAL USE ONLY Report No. 5834a-NEP STAFF APPRAISAL REPORT NEPAL RASUIWA-NUWAKOT RURAL DEVELOPMENT PROJECT - PHASE II (RASNUDEV) June 20, 1986 South Asia Projects Department General Agriculture Division II This document has sk restricted distribution gand may be used by recipients only in the performance of their official duties. Its contents mnay not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Nepalese Rupees (NRs) US$ 1.00 = NRs 18.0 NRs 1.00 = USS 0.056 (approx.) NRs 1 M = USS 55,555 WEICHTS AND MEASURES Metric System Fiscal year July 16 - July 15 ABBREVIATIONS AND ACRONYMS AA - Agricultural Assistant AADO - Assistant Agricultural Development Officer ADBN - Agricultural Development Bank, Nepal ADB - Asian Development Bank (Manila) ADO - Agricultural Development Officer AHW - Animal Health L4orker AIC - Agricultural Input Corporation APROSC - Agricultural Projects Services Center ARU - Adaptive Research Unit ASC - Agricultural Service Center ATU - Appropriate Technology Unit CDO - Chief District Officer DADO - District Agricultural Development Office DAP - District Annual Plan DDG - Deputy Director General DFO - District Forest Officer DC - Director General DIHM - Department of Irrigation, Hydrology & Metereology DLAH - Department of Livestock Development & Animal Health DOA - Department of Agriculture DP - District Panchayat DTO - District Technical Office FAO/CP - Food and Agricultural Organization/Cooperaive Program HMG/N - His Majesty's Goverment of Nepal IAAS - Institute of Agricultural & Animal Science ICP - Integrated Cereals Project IDA - International Development Association IPDD - Integrated Panchayat Development Design IRDB - Integrated Rural Development Board IRDP - Integrated Rural Development Project JT - Junior Technican JTA - Junior Technical Assistant FOR OMCIAL USE ONLY LDO - Local Deveopment Officer LHF - Leasehold Forest MOA - Ministry of Agriculture MPLD - Ministry of Panchayat & Local Development NPC - National Planning Commission PC - Project Coordinator PCO - Project Cordinator's Office PDO - Panchayat Development Officer PF - Panchayat Forests P0 - Production Officer PPF - Panchayat Protected Forests RDI - Rural Development Project I RTC - Regional Training Centre, Trishuli SFDP - Small Farmers Development Programme SMS - Subject Matter Specialists SPO - Sub-Project Office (SFDP) TA - Technical Assistance T&V - Training & Visit System (of Extension) UG - Users Group UNDP - United Nations Development Programme VP - Village Panchayat VSO - Voluntary Services Organization IVS - International Voluntary Services WUG - Water User Group I Thi document has a restrkced distribution and may be used by recipients only in the performance of their oficil duties. Its contents may not otherwise be disclosed without World Bank authori2tion. NEPAL RASUWA-NUWAKOT RURAL DEVELOPMENT PROJECT - PHASE II (RASNUDEV II) Credit and Projezt Summary Borrower: His Majesty's Government of Nepal (HMG/N) Executing Agency: Ministry of Panchayat and Local Development (MPLD) Amount: SDR 16.6 Million (US$19.1 M equivalent) Terms: Standard Project The proposed project is the second phase of the IDA Description: financed Rural Development Project (Credit 617-NEP) covering the Rasuwa & Nuwakot districts in the Central Development Region of Nepal, which was completed in June 1984. The proposed project would aim: (a) to consolidate the investments made during the earlier phase of develop- ment by making all physical facilities fully operational, and by improving the qualities and coverage of agricul- tural support services and the services of the institu- tions responsible for rural infrastructure development and maintenance; (b) to further improve the agricultural production base and the socio-economic infrastructure (roads, bridges, drinking water); (c) to expand forestry plantation and soil conservation programs; and (d) to promote development of effective local level planning and implementation of rural development projects. The project would be implemented over an eight year period and at full development would benefit some 20,000 farm families and generate incremental annual production of 22,000 Mt of foodgrains, 0.8 M litres of milk, 0.6 M3 of fuelwood, and some 250 tons of tropical and sub-tropical fruits, apart from additional sustained employment equivalent to about 5000 manyears annually. Unquantified benefits would also accrue from the development of rural infrastructure, forestry and soil conservation works, and human resource and institutional development. The project does not face any unusual technical or engineering risks. It would be implemented under a more stable administrative environment as a result of HEG/N's commitment to the implementation of new administrative arrangements for decentralized rural development planning and implementation. Nevertheless, organizati4)nal, staffing and local funding problems could conceivably affec. timely implementation. These risks, however, would be partly offset by the strong implementation support, technical assistance, and staff development provided under the project, and by the fact that the project is focussed on selected activities for which experience was gained under the first phase development program. Estimated Cost: 1/ (US$ Million) Local Foreign Total Extension, Training and Research, Farms and ATU 2.1 0.6 2.7 I rigatio0 2.4 1.2 3.6 Agricultural Cre-1it 0.6 0.0 0.6 Agricultural Inputs 0.2 1.0 1.2 Livestock Development 0.7 0.2 0.9 Rural Infrastructure 1.5 0.9 2.4 Forestry 1.7 0.1 1.8 SoiL Conservation 0.5 0.2 0.7 ImpLementation Support & Institutional DeveLopment 1.5 0.7 2.2 Technical Assistance, Overseas training and studies 0.2 1.6 1.8 Total Base Costs 11.4 6.5 17.9 Physical Contingencies 0.5 0.4 0.9 Price Contingencies 2.9 1.8 4.7 Total Project Costs 14.8 8.7 23.5 Financing Plan: US$ Milli^n IDA UNDP HMGIN Total Local Costs 11.0 0.5 3.3 14.8 Foreign Costs 8.1 .6 - 8.7 TOTAL 19.1 1.1 3.3 1/ 23.5 Z 81.0 5.0 14.0 100.0 Estimated Disbursements: 21 (US$ Million) FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 Annual 1.0 1.8 2.0 2.5 3.0 3.7 3.5 1.7 Cumulative 1.0 2.8 4.8 7.3 10.3 14.0 17.4 19.1 Z 5.0 15.0 25.0 38.0 54.0 73.0 91.0 100.0 Economic Rate of Return: 21Z 31 1/ Including taxes and duties of US$0.2 h (approximately). 2/ According to IDA Fiscal Year. Credit closing date 12/31/93. 3/ With 85Z of project costs (excluding price contingencies) included as economic costs. -ii-' Table of Contents (continuation) Page No. VII. PRODUCTION. YIELDS. FARM INCOME AND COST RECOVERY............ 45 Sources of Increased Production 45 Farm Budget Analysisn.. .... . ............ * ** 48 Marketing and Prices. .......... 49 VIII. BENEFITS, ECONOMIC RATE OF RETURN AND RISKS.................. 50 Overall Benefitsn e f i ts............ 50 Economic Analysis. 51 Project Risks and Sensitivity Analysis . .52 IX. CONDITIONALITIES AND ASSURANCES. 54 List of Tables in Text 3.01 - Major Cropping Systemsy s t e ms.. ... .... . ...... 14 3.02 - Yield and Production of Major Crops . .14 5.01 - Stmmary of Project Costs ..32 5.02 - Proposed Financing Plan . . .33 5.03 - Procurement Arrangements ..35 7.01 - Present and Projected Yields per ha . .46 7.02 - Overall Incremental Crop Production. 47 7.03 - Per Ha and Total Incremental Production of Forestry Produce. 48 7.04 - Farm Budget for a Typical 0.8 ha Farm . .49 8.01 - Economic Analysis and Sensitivity Tests ..54 List of Table in Annexes Annex 1, Table 1 - Land use in Project Area Table 2 - Land use by Physiographic Region & Land Type Table 3 - Present Cropping Pattern & Land Use in Nuwakot District Table 4 - Present Cropping Pattern & Land Use in Rasuwa District Table 5 - Present Cropped Area. Yield & Production in the Project Area Annex 2. Table 1 - Phasing of Crop Development Program Table 2 - Training Programs for Extension Staff & Farmers Table 3 - On-farm Adaptive Research Table 4 - Appropriate Technology Unit Table 5 - Technical Assistance, Overseas Training & Studies NEPAL RASUWA-NUWAKOT RURAL DEVELOPMENT PROJECT - PHASE II (RASNUDEV II) STAFF APPRAISAL REPORT Table of Contents Page No. I. INTRODUCTION ........... ..................................... 1 II. SECTOR BACKGROUND. 1 The Agricultural Settin. 1 Agricultural and Rural Development Strategy. 5 IDA Sector Lending Strategy. 7 Review of Implentation of IDA Assisted Rural Development Projects. 8 Implication for Future Projects. 9 Rationale for a Second Phase of the RD I Project .10 III. THE PROJECT AREA .11 General .11 Present Land Use and Crop Production .12 IV. THE PROJECT .15 Ceneral .15 Summary of Project Components .16 Detailed Features .17 Agricultural Development .17 Forestry, Soil Conservation and Watershed Management.... 25 Rural Infrastructure Development .28 Institutional Development and Implementation Support.... 30 Technical Assistance, Overseas Training and Studies. 30 V. PROJECT COSTS, FINANCING, PROCURMENT, DISBURSEMENT, FISCAL IMPACT AND COST RECOVERY .31 Project Costs and Financing .31 Procurement .34 Disbursements .37 Fiscal Impact and Cost Recovery .38 VI. PROJECT ORGANIZATION & IMPLEMENTATION .40 Broad Framework .40 The Project Coordinator's Office .40 Reorganization of the DTO .42 Village Panchayats and Users' Groups .42 Trained Manpower and Project Staffing .42 Staff Development .44 Monitoring and Reporting .44 Status of Preparation. 45 -ii i- Annex 3, Table 1 - Summary of Project Costs (by categories of expenditure) Table 2 - Summary of Project Costs (by components) Table 3 - Summary of Project Costs (by year) Table 4 - Project Coordinator's Office Table 5 - Incremental Staff Requirements Table 6 - Estimated Disbursement Schedule Table 7 - Economic Analysis of Total Project Annex 4 Selected List of Documents in Project File Maps World Bank 18881 World Bank 18882 World Bank 18920 NEPAL RASUWA-NUWPKOT RURAL DEVELOPMENT (PHASE II) PROJECT (RASNUDEV) STAFF APPRAISAL REPORT I. INTRODUCTION 1.01 The IDA financed Rural Development Project (RDI), Cr. 617-NEP, covering the two hill districts of Rasuwa and Nuwakot in the Bagmati zone. was the first major rural development project designed to develop agricul- ture, as well as the socio-economic infrastructure outside the better endowed Terai and Kathmandu valley. It was completed in December 1983, two years after the originally scheduled date. The credit was fully disbursed in June 1984, a Project Completion Report has been prepared and a Project Performance Audit Report is under preparation (see paras 2.20-2.23 for details). 1.02 To consolidate the gains made under the first project (RDI), His Majesty's Government of Nepal (HMG/N) requested the Bank to assist with the preparation of a follow-up project. With UNDP funds, project prepara- tion was undertaken by the Agriculture Projects Services Centre (APROSC) and was completed in July 1983. An IDA pre-appraisal mission visited Nepal in May-June 1984, when broad agreements were reached with HMG/N on the scope, components and size of the proposed project. This report is based on the findings of an appraisal mission, consisting of Mr. M.O. Farruk (mission leader), Ms. Chingboon Lee (IDA), Messrs. M. Sugimura, D. Kraatz (FAO/CP), and P. Mould (Consultant), which visited Nepal in January/February 1985. II. SECTORAL BACKGROUND The Agricultural Setting 2.01 With 93% of the labor force engaged in agriculture, the economy of Nepal is almost completely agrarian. Some 8.5 M people out of a national population of 15 M still live in the mountains and hills in the steeply dissected Himalayan Range. The resource base for agricultural production is relatively restrictive due to the rugged terrain. Only about one-sixth of the total land area is suitable for cultivation, of which some 15% is irrigated. The man-land ratio for the whole country is estimated at about five persons per ha of arable land compared to 9 persons per he for the Hills. The distribution of land ownership is still skewed, despite the implementation of the Land Act and Rules of 1964. Tenant sharecroppers are estimated to number about 2 million, a vast majority of whom operate without security of tenancy rights. -2- 2.02 The traditional methods of farming in the HilLs are continuous and exhaustive cropping of limited areas of terraced hilLside. The exces- sively rugged terrain and the sparse road network restrict the supply and use of chemical fertilizer inputs; consequently, productivity is rela- tively low and maintained from a small supply of livestock manure and mineral nutrients of the forests. Agricultural development is also hand- icapped by a relatively low production and processing technology base and extremely weak institutional arrangements for introducing and supporting new and improved production technology. Consequently, agricultural production during the last decade increased only by about 0.7% per annum. while population grew by about 2.7% per annum, thus Leading to a progres- sively deteriorating food balance. It is estimated that 39 out of 75 districts are deficit in food production and by the year 2000, domestic production of cereals would meet only about 65% of Nepal's consumption requirements. The Hills will be deficit by 60% and the Terai (which is now in surplus) by 10%. 2.03 Crops Production. Food crops, mainly paddy, maize, wheat, millet, barley and potatoes, occupy some 2.2 million ha, or about 90% of total cropped area. Cash crops, mainly oilseeds, sugarcane, tobacco and jute, are grown on some 240,000 ha (10% of the total cropped area), primarily in the Terai. About 40% of all cereals grown in the Hills are maize, 28% are paddy and 13X millet. Legumes are virtually not grown. Current yields are very low with maize at 1.7 tons per/ha and decreasing; millet 1 ton/ha and decreasing and wheat 1.3 tons/ha with an upward trend. Cropping intensities vary between 110-130%. Average fertilizer consumption is about 28 kg/ha, equivalent to about 13 kg of nutrients per ha of cropped area, one of the lowest levels in the world. Nearly 70% of the applica- tions are on paddy and wheat and 75% of the total consumption is in the Terai and Kathmandu valley. At the lower edges of the hiLls, where there is occasional road access, use of fertilizers is increasing, but most settlements on the less accessible slopes use compost and animal manure to augment soil fertility. Altijugh horticulture offers scope for agricul- tural diversification and lnt2nsification, production is still sporadic and on a modest scale. 2.04 Livestock. Total livestock population is estimated at over 15 million head with cattle accounting for about 45Z, buffaloes 25% and small ruminants, yaks!chauries comprising some 30Z. Nearly 70% of the animals are in the Hills. Productivity of the animals is very low due to poor nutrition (available fodder supply can meet less than 70% of the nutri- tional needs), high incidence of de ilitating disease and low genetic potential. Nevertheless, farrers continue to maintain a sizeable number of such low yielding animals as sources of milk, meat, manure and draught power. Livestock provides some 25-30% of household incomes. -3- 2.05 Forest Resour%;es. The present forest area of NepaL is about 4.3 M ha (3.9 M ha iri the Mountains & Hills and 0.4 M ha in the Terai). 1/ These figures represent a 33% reduction in forest area between 1064 and 1980. The situation is, however, much worse than statistics suggest, because many areas in the Hills now classified as forest are, in fact, degraded wasteland with few or no standing trees. FueLwood harvesting has increased progressively, greatly exceeding the sustainable yield, while uncontrolled overgrazing has all but destroyed regeneration. Projections show that with present usage and increasing demand from a growing popula- tion, accessible forests in the Hills will disappear within 14 years and those in the Terai within 25 years. 2.06 Agricultural Institutions. Agricultural development and policy are the concern of four mninistries: the Ministry of Agriculture (MOA), the Ministry of Forests and Soil Conservation, the Ministry of Water Resources and the Ministry of Land Reform. MOA includes the Department of Agricul- ture (DOA) and the Department of Livestock Development and Animal Health (DLAH), which are responsible for promoting production through research, training and extension in their respective subsectors. The Directorate of Irrigation, Hydrology and Meterology (DIHM) is responsibLe for development of large and medium size irrigation schemes. Each of these directorates is headed by a Director General. MOA also has overall responsibility for the Agricultural Input Corporation (AIC) and the Agricultural Development Bank, Nepal (ADBN) (paras 2.10-2.11). 2.07 Agricultural Extension. Under the Director General of the DOA, four Deputy Director Gcnerals (DDG) are responsible for Crop Development, Extension and Services, Horticulture and Fisheries, and Planning & Coor- dination. The extension wing is represented at the region by a Regional Director of Agriculture who supervises district level extension programs headed by an Agricultural Development Officer/Assistant Agricultural Development Officer (ADO/AADO). Each ADO/AADO is assisted by a number of Junior Technicians (JT) and Junior Technical Assistants (JTA), each receiving two years and one year training, respectively. DOA extension staff currently includes some 150 graduate staff and over 1,000 JT and JTA. A recent innovation has been the employment of Agricultural Assistants (AA) at the village level, who are selected from among progres- sive farmers and retired servicemen. MAs receive minimal training and serve on a part-time basis in areas adjacent to their homes for a nominal allowance ranging between Rs 50-150 per month. The performance of the MAs varies, depending on the extent of supervision by the JTAs, but on the whole this represents a relatively cost-effective way of providing exten- sion at the farm level. In recent years, agricultural extension services 1/ Based on the 1980 UNDP/FAO satellite mapping with aerial survey sup- port. -4- in the Terai have been reorganized along the principles of the "Training and Visit" (T&V) system through a number of IDA-assisted projects and with promising results. Of the 20 districts in the Terai, 14 are now covered by T&V. Agricultural extension services in the hills, however, would not be amenable to the principles of intensive training and visit system because of logistic constraints. The primary thrust in the Hills there- fore has been the establishment of Agricultural Service Centers (ASCs), which serve as focal points for the provision of advisory services, inputs, demonstration, leader farmer training, mini-kit distribution, etc. 2.08 The effectiveness of agricultural extension activities are generally considered to be lacking. Shortage of competent agricultural extension staff, low productivity and Lack of proper motivation, both resulting from the inadequacies of the pre-service and in-service training programs and unsatisfactory administrative, personnel and operational policies in the civil service system, are important impediments to the effectiveness of the system. However, the situation has been improving during the recent years as a result of technicaL and project assistance provided by IDA and other donor agencies (see para 2.18-2.19). The IDA-financed Agricultural Manpower Development Project (Credit 1534-NEP) will also specifically address the issue of increasing the output as well as the quality of training progr4ms of the existing pre-and in-service training institutes. 2.09 Agricultural Research. Agricultural research is the respon- sibility of DOA and is administered by a Deputy Director General (DDG) working under the Director General of Agriculture. The research s!rvice operates a total of 52 centers located throughout the country: 7 in the Eastern Region, 25 in the Central Region, 10 in the Western Region and 10 in the Far Western Region. These consist of (a) research stations (for cereal crops); (b) research centers (for cash crops); and (c) research farms, the latter being mainly engaged in seed multiplication. Con- siderable progress in the development of appropriate farming recommenda- tions under irrigated and rainfed conditions in the Terai has been made largely as a result of the Integrated Cereals Project (ICP) and the Crop- ping Systems Program (an integral part of ICP), financed by the USAID. However, development and testing of crop production technologies, specific to the different micro-climatic areas of the Hills have not received much emphasis except for the work that is being done at the two hill research centers at Lumle and Pakribas. 2.10 Agricultural Inputs. The Agricultural Inputs Corporation (AIC) is the sole governme.at agency responsible for (a) importation and distribu- tion of chemical fertilizers; (b) maintenance of a buffer stock sufficient for at least one cropping season; (c) collection, processing, storage and distribution of improved seed and assistance to DOA in conducting seed multiplication programs; and (d) distribution of locally manufactured and imported agricultural tools, implements and agrict!'tural machinery. In -5- general, AIC suffers from lack of finance to import fertilizer on time and in adequate quantities. In recent years, about 40X of fertilizer imports, largely urea and complex mixtures, was obtained in the form of external commodity aid. Fertilizer prices are subsidized by over 50%, on the average, and selling prices are uniform throughout the country, reflecting transport subsidies as well. In 1982/1983 budgetary subsidies to AIC amounted to NRs 56 million, equivalent to about 32 of HMC/N regular expen- diture and 2% of current revenue for that year. Most of AIC's fertilizer and other inputs are retailed through the cooperatives (para 2.12) and private sector involvement is minimal and sporadic. In recent times, however, AIC has been considering steps for increasing distribution through licensed private dealers. 2.11 Agricultural Credit. Institutional credit accounts for some 40% of total amount borrowed by farm famiLies. The rest is provided by money-lenders, landlords and traders. The single major source of institu- tional credit is the Agricultural Development Bank, Nepal (ADBN). Nearly 702 of ADBN credit is provided directly to the individual farmers, while some 30% is on-lent through Coo73ratives (Sajha, para 2.12 below,. Lend- ing by ADBN increased four-fold during the five-year period between 1972/73 (NRs 36 million) and 1981/82 (NRs 140 milLion). Further increases were registered during the subsequent years. Asian Development Bank has been providing assistance to ADBN for general agricultural lending as well for implementing the Small Farmer Development Program (SFDP), which is a supervised credit program focussing on the provision of credit to small farmer groups bearing joint and individual repayment obLigation (see para 2.13). 2.12 Cooperatives. The Sajha development program was introduced in early 1976 to provide credit, agricultural inputs and marketing facilities, as well as to sell consumer goods (salt, kerosene, coarse cloth, diesel oil, rice and sugar). At present, one Sajha serves, on an average, three to four panchayats. At che village panchayat level, they also act as the local agent of the AIC. There are 1,170 registered societies, the majority of which suffer from poor management and lack of resources. Agricultural and Rural Development Strategy 2.13 Nepal is on the threshold of implementing its Seventh Five-Year Plan (1985-1990). The Fifth Five-Year Plan (1975-80) marked the beginning of an era of increased resource allocations to the agricultural sector and emphasis on rural development through Integrated Rural Development Projects (IRDP). Consequently, during the last two plan periods, 27Z and 30%, respectively, of cotal plan allocations were made to the agricultural sector and seven IRDPs, two Watershed Development projects, two Integrated Agricultural Development projects and one Rural Development Project -6- designed to meet specifically the credit needs of the small and marginal farmers/landless labors (SFDP, were initiated. 2.14 The quest for appropriate institutional arrangements and policies for effective rural development began in the mid-fifties with the intro- duction of the Village Development Programme under the Village Development Department. Since then a number of attempts have been made for devolution of planning and implementation activities. In 1962, the institution of the Panchayat System introduced a new structure of local government which made the Chief District Officer (CDO) responsible for planning and coordination of development programs in their respective districts. This was abandoned in 1970 and the district line departments again became individually (inde- pendently) responsible for development activities. In 1974, the concept of District Administration Plan was introduced with a view to prepare and implement integrated multi-sectoral development programs under the overall leadership of the CDOs, supported by a newly created position of Panchayat Development Officer (PDO). This arrangement brought rural development within the jurisdiction of the Ministry of Home and Panchayat, a role which the other line departments found difficult to accept. In 1978 another new institutional arrangement for RD programs, the Integrated Panchayat Development Design (IPDD), was introduced whereby the role of vilLage and district Panchayats were enhanced and mechanisms for inter- ministerial coordination at the different leveLs of the government were introduced. In i980 a new Ministry of Panchayat and Local Development (MPLD) was created with interministerial cocrAination of rural development projects and local infrastructure development a. two of its primary func- tions. 2.15 Notwithstanding the above, the basic organizational problems afflicting rural development in Nepal were not resolved and all IRDPs were/are being implemented in an environment characterized by (i) unsatis- factory involvement in and priority given to IRD projects by most of the participating line ministries; (ii) staff shortages and excessive staff turnovers; (iii) delays in fund releases; (iv) lack of support to district level implementation agencies from central level bodies in terms of policy guidelines, design standards, and implementation, monitoring and evalua- tion procedures, and most importantly; (v) by the inability of the MPLD, as the Coordinating Ministry, to influence the programming, budgeting and implementation of projects by the participating line ministries (para 2.20). 2.16 The Decentralization Act of 1982 and The Decentralization Rules of 1984. The Decentralization Act and Rules became effective, intensively in 14 districts and broadly in the others, as of July 1985, and represent the rurrent institutional arrangement for planning and implementation of IRDPs. The Act and the Rules accord the District Panchayats (DP) con- siderable administrative, supervisory and financial control over the -7- various line departments at the district level in matters of plan formula- tion and project implementation. The Local Development Officer, an employee of the MPLD, will act as secretary of the DP and through him the power of the DP will be exercised. The Act also provides for formuLation of annual and five-year district development plans with active invoLvement of the ward, viLlage and town panchayats and technical support from the Regional Office of the National Planning Commission (NPC). 2.17 Implementation of the Act should, in principle, overcome many of the organizational weaknesses impeding effective implementation of rural development programs (para 2.15). However, in light of earlier attempts at devolution which ran into serious procedural and operationaL difficul- ties, the succtss of the new arrangements will need a strong and sustained commitment from the government to improve rural development management. IDA Sector LendinE. Strategy 2.18 The IDA lending strategy for the agriculture/rural deveLopment sectors had the following underlying imperatives: (i) to accelerate the production of essential foodgrains and fuelwood in order to cope with increasing deficits of these basic commodities; (ii) to prevent the progressive deterioration of the environment and agro-ecological condi- tions in the hills; (iii) to improve the socio-economic and physical infrastructure and the availability of basic amenities in the hills/rural areas; (iv) to improve the technological and institutional basis for agricultural/rural development; and (v) to promote development of local and national level institutions for pLanning, programming and implementa- tion of sector development programs. 2.19 In line with the above strategy and objectives, the IDA lending program in the past was designed for (i) intensification and diversifica- tion of crop production in the Terai through fuller exploitation of the surface and groundwater resources, 1/ and strengthening of the institu- tional and manpower bases for agricultural support services 2/; (ii) integrated area development in the hills to improve agricultural productivity, rural infrastructure and basic social services, and to 1/ The Birganj and Narayani Irrigation Projects (Crs. 373-NEP and 856-NEP); the Sunsari-Morang Irrigation Project (Cr. 812-NEP); Bhairawa-Lumbini Groundwater Projects I and II (Crs. 654-NEP and 1316-NEP); and the Mahakali Irrigation Project I (Cr. 1055-NEP). 2/ Agricultural Extension and Research Project (Cr. 1100-NEP); Agricul- tural Extension and Research Project II (Cr. 1570-NEP); Cash Crops Project (Cr. 1399-NEP); Agricultural Manpower Development Project (Cr. 1534-NEP). -8- protect environment and ecology 1/; and (iii) forest replantation, protec- tion and managen.ent through community participation. 2/ Review of Implementation of IDA Assisted Rural Development Projects 2.20 Rural Development Project (Credit 617-NEP) I. 3/ The project was the first large scale attempt at addressing the problems in the mid-Hills of Nepal (in the districts of Rasuwa and Nuwakot) and was also among the earLy RD projects to be assisted by the Bank. The project, which turned out to be complex with a large number of components, was to be implemented through a coordination mechanism, novel to the existing institutions and operational procedures. The project commenced on time and made con- siderable progress in most of its components up to 1979. At that time, HMG/N introduced new administrative arrangements for rural development (most important of which was the creation of the MPLD and a hierarchy of committees for project coordination, para 2.14). This, combined with the then prevailing political uncertainties, severely affected project implementation and the project lost momentum. The Coordinating Ministry, MPLD, failed to carry out effective coordination and the overall perfor- mance of most of the implementing agencies also gradually deteriorated. Frequent staff transfers, staff shortages, shortages of local funds, apathy of most line agencies towards a so-called "MPLD" project, all contributed to implementation delays, and the project had to be extended by two years. 2.21 Despite the implementation constraints, most of which were of an erg- iizational nature, the project achieved most of its broad objectives, particularly in the case of the agricultural sector, rural infrastructure and forestry/soil conservation. The project introduced an extension organization in an area which had no such tradition. Important tech- nological changes affecting cropping patterns and husbandry practices were introduced and use of improved seeds and fertilizers increased sig- nificantly. However, the improvements are believed to have taken place mainly on the more accessible areas and on irrigated areas, and only to a very small extent on the remote and rainfed areas (for which the 1/ The First Rural Development Project (Cr. 617-NEP); Second Rural Development Project, Mahakali Hills (Cr. 939-NEP); Hill Food Produc- tion Project (Cr. 1008-NEP). 2/ Community Forestry Development Project (Cr. 1008-NEP); Second Forestry Project (Cr. 1400-NEP). 3/ The Credit is fully disbursed now and a Project Completion Report has been prepared. -9- availability of sustainable and cost effective technology is much more limited). 2.22 The effects of the other components have been mixed. There is no doubt that the bridges constructed by the project have had a positive impact and have enabled year round communication between villages Located on opposite banks of the rivers. Positive results can also be claimed for the drinking water supply component and for the improved trails and tracks. On the contrary, the impact of other sc,cial components such as those for cottage ;ndustry, health, and education, has been minimal, primarily because the project was unable to influence the major sectoral problems that beset the implementation of these components. 2.23 While the wheel of change has been set in motion, engendering economic and social advancement in the area, development in the project areas is only at a rudimentary stage. To further accelerate economic growth in keeping with local resources, additional investments would be required to intensify agriculture under irrigated and rainfed conditions, to protect the environment from further degradation, to expand and modern- ize the physical infrastructure, and to strengthen agricultural support services. 2.24 Second Rural Development Project (Mahakali Hills). This was prepared and appraised at a time (1978-79) when the implementation of the RDI was proceeding satisfactorily and the organizational and institutional constraints had not yet emerged. The project design, therefore, could not take into account the experiences of RDI, hence this too turned out to be a complex project with a large number of components involving some 18 implementing agencies. Moreover, the project area comprises three very remote districts with poor accessibility, particularly during the rainy season. To make things worse, a severe earthquake during the second year of the project forced HMG/N to give priority to reconstruction and implementation of the project was temporarily kept in 'abeyance'. All these contributed to substantial delays in project implementation and during the fir_. "ive years of the project only about 25% of the credit had been disburseL. Since a large number of civil works (including some 95 buildings and three irrigation schemes) would have remained incomplete by the original credit closing date (February 28, 1985), the credit was extended by a year. Recently, however, project implementation has improved and by current credit closing date, disbursements are likely to reach about 60% of SAR estimates. Follow-up emphasis emphasis on the productive sectors and on consolidating previous activities will be impor- tant in sustaining the improvements. -10- Implication for Future Projects 2.25 Implementation experiences of the RD projects in Nepal, Bank financed as well as those of other donors, have the following implication for the design of future projects: (a) RD projects should be simple and focussed on key sector(s)/subsector(s) such as agriculture, incLuding crops, horticulture, irrigation and livestock development; forestry, soil conservation and natural resource management; and rural infrastructure development in direct support of the above activities; (b) compLex and centralized interministerial coordination requirements should be kept to a minimum; emphasis should instead be given to program coordination at the district level with the provision of effective central support; (c) proper financial and personnel management, including timely flow of funds to impLementing agencies and timely posting and retention of qualified staff are crucial to proper project implementation; (d) project components need to be an integral part of the work program of the Line ministries; (e) local level institutions, e.g., Users' Groups (para 6.06) must par- ticipate not only in the operation and maintenance of infrastructure, but also in their construction; (f) design of civil works should be kept simple and to standards that can be easily maintained with available local skills and materials; and (g) recommended production technologies should be consistent *with the logistic situation of the respective areas and based on already available recommendations. Rationale for a Encond Phase of the RD I Project 2.26 Experien-e in Nepal and elsewhere has shown that the problems of rural development are far too complex and deep rooted to expect iso- lated or relatively short-term intervention to make a fully significant and sustainable impact. This is even more applicable in respect of the Hills of Nepal where intensive and sustained efforts would be required for correcting decades of land misuse and agro-ecological imbalances. While rural development in the country has experienced a number of shortfalls, it is imperative for the government to continue with its rural development program to augment food production, correct regional imbalances, and improve the economic and social conditions in rural areas. Also, resolu- tion of some of the basic ecological and land use issues is not amenable to simple solution and various facets of the issues must be confronted simultaneously. The first RD project met its broad objectives, but more importantly, it has generated some fundamental institutional, technologi- cal and attitudinal conditions which provide the necessary pre-conditions for accelerated gains in agricultural production, forestry development, introduction of more rational land use system, and for institutional and infrastructural development in the two project districts. However, in order to consolidate first phase investments and enhance the benefits from them, further investments would be required for completing/rehabilitating some of the physical infrastructure including irrigation schemes, roads, bridges and buildings and for making all facilities operational through appropriate staffing, operation and maintenance. These considerations provide the primary justification for the proposed follow-up project, which taking into account the development framework established under the first project would focus primarily on the directly productive components and their operation and maintenance, and relatively less on wholely new investments. In designing the project and determining its scope, full cognizance has been taken of the lessons learnt from the first project as will be evident from the following: (a) compared to the previous project, the proposed project will have fewer components; it essentially has only four major components each including activities that were successfully initiated during the first phase; (b) the project has been processed after detailed consultation with and agreement of the participating line minis- tries and agencies; (c) the project would be implemented by three well established ministries and their constituent departments/agencies, all of whom have gained substantial experience through the implementation of the first project; (d) all civil works would be similar to the kind of struc- tures that were built during the first phase and would not require complex design or special construction and supervision skills; and (e) following the Decentralization Act, coordination of project would be at the district level with technical support and implementation assistance provided by a well staffed (local and expatriates) Project Coordination Unit, whose role and functions have been more clearly defined (para 6.03) III. THE PROJECT AREA General 3.01 The proposed project area includes the two hill districts of Rasuwa and Nuwakot in the Bagmati zone of the Central Development Region of Nepal. It includes 80 village panchayats (62 in Nuwakot and 18 in Rasuwa) and has a total population of about 230,000 (200,000 in Nuwakot and 30,000 in Rasuwa). 3.02 The topography of the project area is domirated by the Trishuli River Valley and to a lesser extent by the Tadi and Likhu river valley floors. Smaller river valleys of the Phalanku Kohla, Silanku Khola, the Samari Khola and the Kalphu Khola also add to this area of relatively flat land (locally known as khet) where most of the paddy is grown. Most of the project area is characterized by steep slopes rising from valleys, and small terraces which cover the hills from the valley floor to elevations up to 3000 m. The major river valleys are broken into numerous smaller micro-climatic areas by 'kholas' (small streams) and hills which face in all directions and are exposed to wide variations of sunlight, rain and wind. Average annual rainfall is between 1600-1800 mm (80X between aune and September), but varies a great deal in different valleys. Geologi- cally the project area consists of gneisses, schists, crystalline lime- stones and quartzites. Soils are principally silt-loams (50% of all -12- soils) with loams (15%) and clay loams (152) also being important soil types. Soil reaction is moderately acid with medium levels of nitrogen and organic matter, and available levels of P205 and K2 are medium to high. 3.03 The hydro-electric potential of the Trishuli Ganga and its tributaries is estimated at about 675,000 kw. One hydro-electric plant at Trishuli of 18,000 kw has been in operation since 1966; a second one at Devighat, using the tail waters of the Trishuli turbines and with a capacity of 14,000 kw, was commissioned in 1983-84. There are only two mini-hydro plants, one of which is not in operation for Lack of essential maintenance and spare parts. Trishuli is connected with Kathmandu by a macadamized road of 72 km. A new road (114 km) connecting Trishuli with betrawati, Dhunche, Syafru and Somdang (in Rasuwa district) is under construction. It has already been constructed up to Dhunche- Syafru and the remaining stretch is expected to be completed by 1990. This would open up many of the agricultural areas and settlements in the Rasuwa district for accelerated development. Total length of small feeder roads (all weather non-macadam and jeepable fair weather tracks) in the project area is about 40 km. 3.04 The ethnic and caste composition of the project area population is quite diverse and all the nine major groups are present. Hjowever, nearly 80% of the population consists of four major castes -- Tamangs (44%), Brahman (18Z), Chhetri (12%) and Newars (6%). In both Rasuwa and Nuwakot, Tamangs represent the largest group with 67% and 41% of the population, respectively. Gross annual incomes per household in Rasuwa and Nuwakot are estimated at NRs 4,700 and 5,530, respectively. Some 60% of it is contributed by crops/horticulture and about 25Z by livestock. 3.05 Each village panchayat (VP) typically has 10-20 settlements. The lowest level settlement clusters are of 10 to 15 households. The geographic area of a village panchayat is quite extensive typically vary- ing from 1,000 to 2,500 hectares and stretching from the valley floor at less than 1,000 m up to 2,400 m. The number of families range from 300-400 to 1,000. The upper part of Rasuwa has much smaller panchayats ranging from 100-300 families. Cultural diversity also varies from predominantly homogeneous single ethnic group/caste to multi-ethnic and multi-caste panchayats. Each panchayat is divided into 9 wards statutorily; a ward may be a single settlement or may comprise several villages. Present Land Use and Crop Production 3.06 Present Land Use. Agricultural land occupies about 36% of total project area. The remainder is under forest (38%) and other forms of land, including perpetual snow and rock areas (26%). Total net cultivated area including grazing land is estimated at about 65,300 ha, of which -13- about 29,300 ha are in Rasuwa district and about 36,000 ha in Nuwakot district. Since over 80% of the agricultural lands i:i Rasuwa district is grazing land, the cultivated area for crop production is only about 5,200 ha. I.. iuwakot district, about 31,800 ha are used for crop produc- tion and the grazing land is some 4,300 ha. Annex l, Table 1 sets out the present land use in the project area. I/ 3.07 Cultivated lands, excluding grazing lands, are broadly classified into three types: level terraces, sloping terraces (known as "Pakho" or "Bari" land) and valley floors ("Khet" land), the latter including tars, alluvial fans and foot slopes. Level terraces are the most dominant type occupying some 72% of the total. "Khet" Lands in the Rasuwa and Nuwakot districts are only about 3% (140 ha) and 18Z (5,800 ha), respectiveLy, of the totaL cultivated lands. 3.08 Nearly 60% of all agricultural land is located in the physiographic division known as "mid-mountains" (sub-tropical to warm temperate), 20% in "high mountains" (warm temperate to Alpine) and 20% in High Himals (Alpine to Arctic). Over 90% of agricultural land in the Rasuwa district fall in the last two categories, whereas most lands (93%) in Nuwakot fall into the first category. Available information puts some 8,000 ha under some form of traditional and/or improved irrigation in the two project districts. These are mostly located in the valley floors and, to a lesser extent, on the level terraces (Annex 1, Table 2). 3.09 Present Cropping Patterns Yield and Production 1/. The cropping patterns according to different land types, estimated cropped area and cropping intensities are shown in Annex 1, Tables 3 and 4. About 15 different cropping patterns have been identified in the project area and are grouped into maize based cropping, paddy based cropping and other cropping systems as summarized below: 1/ Source: Preliminary (1985) data from CIDA - Land Resource mapping project. 1/ The yieLd estimates are based on the following: (i) annual crop survey conducted during Phase I pnriod; (ii) Phase I Project Component Analysis Series, Vol. 1,2 and 3; (iii) Official Crop Statistics (see TabLe 6); and (iv) Sample Survey for Central Development Region - Middle Mountain (CIDA - Land Resource Mapping Project). -14- Table 3.01: MAJOR CROPPING SYSTEMS Rasuwa Nuwakot Total -----'000 ha------ '000 ha Z Maize based cropping 6.0 30.8 36.8 57 Paddy based cropping 1.2 23.8 25.0 39 Other 1.1 1.3 2.4 4 Total cropped area 8.3 55.9 64.2 100 3.10 In maize based cropping, maize accompanied by interplanted millet is the dominant sequence and entails often no winter cropping. In paddy based cropping, paddy-wheat and double cropping of paddy predominate, with wheat as a winter crop. On level terraces, both maize-millet and paddy-wheat (irrigated) rotations are found whereas on sloping terraces which are entirely rainfed the cropping pattern is dominated by maize-millet (intercropped). 3.11 Annex 1, Table 5 gives estimated average yield and production, for major crops which are summarized below: Table 3.02: AVERAGE CROP YIELD AND PRODUCTION Crops Yield Production (tons/ha) ('000 tons) Paddy 2.1 37.5 Maize 1.2 25.1 Wheat 1.2 7.3 Millet 0.9 13.5 Barley 0.7 1.1 (Total grain) (1.4) (84.5) Potatoies 7.0 9.7 Others 0.5 0.9 3.12 Other Crops, Vegetables and Fruits. Less than 2% of the cropped area is devoted to sugarcane, soyabean, mustard, barley, black lentil, etc. A wide variety of winter and summer vegetables are grown in both project districts, primarily to meet family subsistence and for some cash sales. Given the climatic variations, subtropical (mango, guava, papaya, -15- oranges) as well as temperate (apple, pear, plum, peach) fruits are grown in the project area. 3.13 Livestock. The total livestock population in the project area is estimated at 152,000 cattle, 83,000 buffaloes, 165,000 goats and sheep and some 2,500 yak and chauries. On average each househoLd in the project area owns 5-6 large and 4-5 small ruminants, but productivity of animals, as elsewhere in Nepal (para 2.04), is very low. Buffaloes are usually stall fed but cattLe are grazed freely in forest areas and barren lands adjacent to households. Nearly 90% of milk production (some 12 M liters in Nuwakot and 2 M liters in Rasuwa) is consumed locally with the remainder being processed as curd and ghee (clarified butter). 3.14 Forestry Resources. Forest areas comprise about 100,000 ha (37% of the total area) in the project districts. However, in Rasuwa where the Langtang National Park is situated, nearly 45% of the total area is under forest. Forests up to 1,500 m generally have mixed stands of Sal (Shorea robusta) and species of Terminalia, jamun, Lagostromia, Mitrangina, Chilaune and Chir pine. At elevations between 1,500-3,500 m, Chir pine, Hemlock, Fir, Oak and Coniferous species are dominant. Daphne (Lokta) and Nigalo are found at elevations over 5,000 m. As elsewhere in the mid-mountains, forestry resources in the project area have been over-exploited and are in a stage of degradation and rapid depletion. On an average, farmers in the project area have to travel between 3-4 hours to collect their fuelwood, fodder and small timber requirements. IV. THE PROJECT General 4.01 Project Objectives and Strategy. The proposed project, in line with the overall objectives of HMG/N for the development of the Hills would: (a) intensify agricultural and forestry development and further the impetus created by RDI in increasing production, employment and rural incomes in the two project districts; (D) ensure that investments made under RDI continue to yield the expected benefits; (c) expand and improve the quality and coverage of support services and improve support provided by institutions responsible for rural infrastructure; and (d) strengthen regional, district, panchayat and village level capabilities for prepara- tion and implementation of rural development programs and for the main- tenance of rural infrastructure. In pursuit of these objectives, the proposed project would focus on activities that are directly production oriented and would promote changes in existing land use and farming svs- tems. The project would strengthen physical infrastructure and institu- tions that would directly support investments in agriculture. Special emphasis would be given to small farmers as primary beneficiaries of the project. Finally, the project would promote farmers' participation, -16- individually or in groups, in the production of inputs (seeds, planting materials, root stocks, etc.), distribution of other farm inputs and in the construction and maintenance of rural infrastructure. In determining the scope and content of the proposed project, full cognizance was taken of the implementation experience of the RD I (paras 2.20-2.23) as welL as of the likely improvements in the administrative and impLementation environment (paras 2.16, 2.17 and 6.01 & 6.02). Finally, components which were relatively better implemented during the earlier phase have been given priority under this project. Summary of Project Components 4.02 The proposed project would be implemented over a eight-year period, beginning with the 1985-86 fiscal year and would consist of the following components: (a) agricultural development: strengthening of agricultural extension, research, credit and other key support services; construction of new irrigation schemes and rehabilitation/maintenance of existing ones; establishment of private fruit orchards; improvement of preventive and curative animal health services and the genetic potentials of large and small ruminants; (b) forestry and soil conservation: affores- tation, protection, enrichment, and management of existing forests through cowmunity participation; establishment of preventive and curative measures for the protection of upper catchments, minor watersheds, and agricultural lands, infrastructure and settlements on the lower catchments; (c) rural infrastructure development: construction of new drinking water schemes, suspension bridges and motorable tracks; rehabilitation and maintenance of old and existing structures; strengthening of district level capabilities for operation and maintenance of physical infrastructure; (d) institu- tional development and imzlementation assistance: establishment and maintenance of a Project Coordinator's Office; strengthening of-the plan- ning, monitoring and implementation capabilities and the account- ing/financial support services of the district offices; strengthening of regional offices of the Agriculture, Livestock and Irrigation Departments; and (e) technical assistance and overseas training: provision of 8 man years of senior and 38 man years of mid-level specialists/consultants, short term overseas training of key management and technical staff and funds for project/sector related studies. -17- Detailed Features 1/ Agricultural Development (Total outlay of US$9.0 M; 50% of base costs) 4.13 During the first phase of this project, emphasis was given on increasing cereal production through improving the quality and overage of agricultural extension services, increasing the supply of agricultural inputs and credit and by increasing the area under irrigation. To a lesser extent, the project also aimed at the develcpment of tropical and sub-tropical fruit orchards and the production of winter vegetables and potatoes. In respect of these objectives, the project established 12 agricultural service centers (ASC) and staff training facilities, improved the physical facilities of the District Agricultural Development Office, increased the area under irrigation by some 1,400 ha, provided NRs 40 M as medium and seasonal credit, and distributed 12,000 tons of fertilizer, 800 tons of improved cereal seeds, 120,000 fruit plants and NRs 2.0 M worth of agrochemicals during the project implementation period. An evaluation study in 1982 estimated that compared to the base year of the project, paddy production in the area had increased by 34Z, wheat by 17%, maize by 15%, millet by 14% and potato by 66%. Under the proposed project, these activities would be further intensified as described below. 4.04 Crop and Horticulture Development. Improvements in production of foodgrains and horticultural crops would be made through (i) irrigation deveLopment (paras 4.05-4.06); (ii) improvement of the quality of crop and horticultural extension services, farmer and agricultural staff training, adaptive research and the production of seeds and planting materials (paras 4.07-4.14): and (iii) improvement of the supply of fertilizer, agrochemicals and agricultural tools and agricultural credit (paras 4.15-4.16). Since the available package of feasible technology for the rainfed areas is limited, except for paddy, wheat acd maize(see para 7.02), primary emphasis would be on the realization of the full potential of the existing and prospective irrigated areas. However, for the rainfed areas in the mid-mountains, the project would bring about modest increases in productivity of paddy, wheat and maize through gene-al improvements in cultural practices, use of better quality seeds (impeoved or local as appropriate), and by improving soil fertility through iiodest increases in the use of chemical fertilizer (where possible), but mo-e importantly, by promoting better composting, appropriate crop rotation and cultivation of legumes (as cash crops undersown in cereals and fodder legumes grown on terrace risers). Details of the crop development program are in Annex 2, Table 1. 1/ Detailed tables in Project File C.1. All costs in this section are base costs. -18- 4.05 Irrigation Development. Irrigation development would include Hill Terrace Irrigation and Medium Irrigation Schemes. l/ In the case of Hill Terrace Irrigation, the proposed project wouLd complete/rehabilitate 18 schemes (net incremental command area of 300 ha) that were undertaken during the RDI project period. The extent and nature of work required would vary from scheme to scheme, generally incLuding reconstruction of canals/headworks/crossings damaged by land slides, improving/protecting canals/headworks and other Structures and, in some instances, extend- ing/deepening the distribution system. Additionally, 28 small new schemes (5 in Rasuwa and 23 in Nuwakot) would be constructed (net incremental command area of 900 ha). Although called 'new', most of these would essentially be development/expansion of existing rudimentary systems built bv farmers. The work would not involve any major des.gns or feasibility studies. A list of such potential schemes proposed by the District Tech- nicaL Offices (DTO), was reviewed during appraisal. Final selection would be made during the first year of the project by the DTO in consultation with the respective panchayats, User Groups and the engineering staff of the Project Coordination Unit (paras 6.03 and 6.06). It was agreed during appraisal that HMG/N would give priority to those schemes that would benefit larger numbers of small farmers, are relatively more cost effec- tive (average cost below NRs 10,000/ha) and are in areas where no assis- tance had been provided earlier. Also, an individual panchayat would be considered for a new scheme only after existing incomplete/deteriorated systems, if any, had been rehabilitated and put into operation. Under the Medium Irrigation Schemes program, the proposed project would construct, through the Directorate of Irrigation, hydrology and meteorology (DIHM), four gravity irrigation systems in the valleys and lower terraces (Boketar-Chawkitar, Simra, Thansingh and Ratomate) and rehabilitate the Labdu-bzikure and Gadhkar schemes, both built under RDI project. The new schemes would give a net incremental command area of 750 ha. The proposed 1/ The four medium size schemes would be located on the small tributaries (streams) of the Trishuli River - the Phalangukhola, Tadi Khola and Likhu Khola. The Trishuli River originates iin Tibet, joins the Gandaki River below the project area which then flows into the Narayani River down into the Indo-Gangetic Plain. The insignificant volume of water that would be withdrawn by the proposed new schemes would not impact in any meaningful way on the quality and quantity of the flows in the Trishuli, the Gandaki or the Narayani Rivers, and therefore the proposed irrigation component of the project will not have any adverse effects on the lower riparian countries, India and Bangladesh. Nepal has the unrestrictive right to use the water of the Narayani River Upstream of the Gandak Power Project pursuant to Section 9 of the Agreement dated December 4, 1959, as amended, entered into between Nepal and India. -19- rehabilitation/remodeling of the two existing schemes would involve extending the main canals, constructing bigger intakes, flood protec- tion/river training works and upgrading of structures, thereby increasing the command area of Labdu-Dhikure by 100 ha and Gadhkar by 40 ha (approximate). 4.06 For the medium size schemes to be implemented by DIHM (para 4.05), preliminary surveys, designs and estimates have aLready been prepared by consultants and were reviewed during appraisal. However, more detaiLed engineering design and technical specifications would be required prior to the start of construction. Therefore, during the first two years DIHM would complete the necessary design works with assistance from PCU staff and construction would effectively start from the third year of the project. All irrigation schemes implemented under the proposed project, new or rehabilitated, would be owned, operated and maintained by the beneficiaries of the command area who would be organized into Water Users' Groups (WUG) (para 6.06). The District Technical Office (DTO) would provide the necessary technical and other support to the WUGs. The WUGs would also be responsible for mobilizing local resources for the O&M of the irrigation systems (para 5.11). An assurance was obtained during negotiations that prior to undertaking construction of project funded irrigation schemes, and other rural infrastructure works, User Group(s) in each respective panchayats would be formed. In order to maximize benefits from the irrigation schemes, an assurance was also obtained that by Decem- ber 31, 1986, HMG/N would establish an "Irrigation Agronomy and Water Management and Utilization Unit," for the project area within the Depart- ment of Agriculture. Finally, in view of the importance of irrigation development as a source of rapid increases in agricultural productivity in the project area in the long run, a sum of NRs 2.0 m would be provided to DIHM for feasibility studies of potential medium and large schemes, which would be identified in zonsultation with IDA. 4.07 Agricultural Extension Services. The proposed project would strengthen and inEensify the existing agricultural extension services, both at the district and panchayat levels, by providing funds for (i) establishing 8 additional agricultural service centers (ASCs), 3 in Rasuwa and 5 in Nuwakot, constructing additional office buildings and staff quarters at the District Agricultural Development Offices (DADO) at Trishuli and Dhunche; (ii) incremental staff salaries (see paras 2.08 and 6.07), essential furniture, equipment, agricultural tools, vehicles and motorcycles for DADOs and services centers; (iii) plant protection and seed dressing equipment at each VP; and (iv) extension activities such as farmer visits, demonstration and exhibition. 4.08 The Agricultural Service Centers (ASCs), of which there would be 21 at the completion of the proposed project, would be the focal point for -20- extension activities in the respective areas. 1/ Production officers, working under the DADO/AuUDO, would be responsible for guidance and overall supervision of the ASC staff. In some of the more important ASCs, the senior most HOA staff in the ASC would be designated as the officer in-charge of the center. Each of the two DADO office would also have three Subject Matter Specialists (SMS's) -- one each for agronomy, pLant protection and extension to provide technical guidance and training to ASC staff. The extension staff, working directly and/or through panchayat level Agricultural Assistants (AAs), would provide farmers available technical recomendations on farming practices relevant to the different micro-climatic and agroecological zones. Production/demonstration/seed multiplication blocks of appropriate size, located at panchayats and/or lands adjacent to the ASCs would be an important means for dissemination of improved practices. Efforts would also be made for introducing the 'Tuki' system in respect of providing exten.ion services (para 4.15) whereby progressive farmers would be selected and trained as modeL farmers for dissemination of improved cropping practices. Additionally, JT/JTAs would organize periodic group discussions with farmers at the ASCs as well as in the panchayats. Extension efforts would be coordinated with live- stock, forestry and soil conservation programs with a view to promoting appropriate changes in land use and farming systems. 4.09 Agricultural Training. The proposed project would upgrade and strengthen the existing Regional Training Center (RTC) and the satellite training centers at Kakani and Dhunche -- all established under RDI Project, and improve the scope and content of the currently offered train- ing courses. Refresher, orientation and seasonal training would be provided to senior officers, JT/JTAs and to farmers and AAs. The facilities at the ASCs would also be used, particularly for the training of AAs. Course materials would be focussed on specific aspects of agricultural production relevant to the project area. The RTC currently has two Assistant Training Officers and a JT, which is totally inadequate. Under the project, a full time Agricultural Training Officer (C II/T) would be appointed to be the officer in-charge of the center. Addition- ally, he would have two more Assistant AgricuLtural Officers (C/HII/T) and JTs and other support staff. They would form the core staff of the RTC, but the SMSs at the headquarters, specialists from research stations, and senior extension staff at the DADO office would be extensively used as trainers, as is presently in practice. Annex 2, Table 2 provides an indicative training program for field staff and farmers. 1/ The following places were identified at appraisal for establishing new service centers: Jibjbe, Kalikasthan, Timure (Rasuwa); Balakumar, Budhasingh, Chaturale, Kumari and Shikre (Nuwakot). Land for these facilities are available. -21- 4.10 In support of the above program, the project would provide funds for (i) constructing additional staff housing and improving the existing training facilities; (ii) salaries and allowances of incremental staff; (iii) purchasing of training equipment, vehicles and furniture; and (iv) direct costs of course/training administration, i.e., production of audio-visual and other training materials, travelling and daily allowances and fees for trainers. 4.11 On-farm Adaptive Research. The proposed project would establish a small on-farm Adaptive Research Unit (ARU) in Kakani, under the supervi- sion and control of the Agronomy Division DOA which is adequately staffed. The objectives of ARU would be to refine existing broad recommendations on the foLlowing lines to suit specific conditions of the different agro-climatic zones: (i) an improved maize variety with short duration and an improved potato variety suitabLe for the high mountain region under rainfed conditions; (ii) a profit maximizing fertiLizer recommendation for improved varieties of paddy, wheat and maize under rainfed/irrigated conditions for different soil types; (iii) the use of chemical fertilizers for traditional varieties of major crops grown under rainfed conditions; and (iv) improved millet, barley, buckwheat, pulses and oil seeds. 4.12 The ARU would function in close collaboration with other similar programs including the Integrated Cereals Project (ICP) and the activities of the hill research centers at Lumle and Pakribas (para 2.09). Actual field trials would be carried out by the JT/JTAs stationed at relevant ASCs under guidance and supervision of the technical staff of ARU. The proposed project would provide funds for: (i) staff salaries for an agronomist, a horticulturist, a farm management specialist, an assistant soil scientist and other supporting staff; (ii) construction of office building, staff quarters; and (iii) for the purchase of one 4 WD vehicle, and materials for field trials. Details are given Annex 2, Table 3. 4.13 Improvements of Kakani, Dhunche (for Temperate/Subtemperate Zones) and Trishuli (for Tropical/Subtiopical Zones) Agriculture/Horticulture Farms. Production of -egetable potato seeds and fruit plants (for tem- perate and tropical regions) have been the primary focus of the activities of these farms. Limited programs for trial and verification of new varieties are undertaken and the farms also provide facilities (built under RDI) for farmer training. The full potential of these farms as centers for diffusion of innovation in their respective agroecological zones is, however, not being realized. Under the project, these would function as the field units of the proposed Adaptive Research Unit (para 4.11) and better linkages with the national/regional research centers would be established. The quality of seed/seedlings produced on the farms would be improved and the quantity and varieties propagated rationalized. In support of the above program, the proposed project would provide funds for (i) additional professional and non-professional support staff; (ii) improving physical facilities including land development, protective -22- fencing, provision of irrigation systems, construction of staff quarters; (iii) the purchase of vehicles, equipment and furniture; and (iv) annuaL operating and maintenance costs. 4.14 Orchard Development. Under the RD I, assistance had been provided to the Kakani, Dhunche and Trishuli horticulture farms (para 4.13) for improving the production and distribution of fruit plants (para 4.03). However, the distribution of planting materials was not followed up with sufficien: extension and other support (i.e. credit, marketing, etc.), hence farmer adoption was somewhat sporadic. Under the proposed project, the extension staff of the DADO and the relevant horticulture staff in three farms would work in close collaboration to improve the quality, scope and intensity of technical and advisory services in respect of orchard development. Furthermore, credit would be provided through ADBN (see para 4.16) for establishing ten temperate fruit orchards in the high mountain region, 60 tropical/subtropical fruit orchards in the mid-hills and valley, and 24 small fruit preservation/processing units (for which there is a strong demand among the growers). Individual orchards would be about 0.5 ha in size but larger community/group owned orchards would also be eligible for assistance. The main thrust of the program would be to assess the technical and economic viability of commercial production and marketing of temperate and tropical fruits in the project area. 4.15 Agricultural Inputs Supplies. The proposed project would provide NRs 18.4 M to AIC as working capital for the importation and distribution of incremental fertilizer (approximately 3,100 tons) and agro-chemical requirements of the project area; NRs 1.7 H for the construction of addi- tional godowns (one 500 mt at Bidur and one 100 mt at Dhunche) and expan- sion/improvement of existing offices; NRs 0.8 M for vehicles and equipment and NRs 1.16 M for incremental salaries and wages, and operating costs. In the project area AIC would intensify its current policy of encouraging privatization of agricultural inputs retailing (see para 2.10). Measures to be taken would include simplification of the procedures for granting of retailing licenses, using AAs as commission agents (the so-called 'Tuki' system as already successfully practice in some areas) and giving volume discounts to User Groups for input retailing. 4.16 AgriculturaL Credit. Under the RD I, agricultural credit opera- tions in the project area increased substantially. A total of NRs 38 M was provided by ADBN directly to individual farmers and cooperatives. Of this amount, NRs 14 H was provided as short-term production credit, and the remainder consisted of medium- and long-term credit mainly for live- stock purchase, horticulture, farm equipment and machinery, etc. Overall recovery rate has been estimated at about 60%, which is better than the national average. Under the proposed project, incremental seasonal credit requirements for farm inputs (fertilizer, agrochemicals) would be provided by ADBN out of its own resources (see para 2.11); however, the project would provide NRS 4.3 H covering ADBN medium-term credit for (i) orchard -23- establishment and maintenance (NRs 1.6 M); (ii) establishment of fruit preservation units (NRs 0.4); (iii) purchase of miLch animals and small ruminants (NRs 1.5 M), (para 4.17); (iv) purchase of agricultural/dairy equipments (NRs 0.4 M); and (v) support to the Animal Health Workers Programme (NRs 0.4 M). Additionally, NRs 7.3 M would be provided for establishing and operating ten new small far-ners development sub-projects (8 in Nuwakot, 2 in Rasuwa) under its ongoing SFDP program. Interest rates for lending institutions are fixed by the Nepal Rastra Bank which provides refinancing to ADBN at rates ranging from 6-8%, depending on the purpose of the loan. Interest rates charged by ADBN to individuals for short and medium term loans ranges from 1OZ to 15%, depending on the purpose of the loan. Longer term loans (tree crop development) normally carry interest rates of 10%, medium term loans (livestock and irrigation development are lent at 12% and for short term lending an interest rate of 15% is charged. Interest rates for loans from ADBN to Sajha Cooperatives are 4% less than those made direct to individuals. Interest on loans from cooperatives to individuals bear the same interest rates and those made direct by ADBN to individuals. 4.17 Livestock Development. Under RD I, preventive and curative veteri- nary services were improved through establishing 11 livestock service centers, providing additional staff, medicines, drugs and drenches and improving the physicaL facilities at the two district veterinary hospi- tals. Additionally, improved sires (77 Murrah buffaloes, 64 Jersey bulls and 74 improved billies) were distributed for upgrading of the local stock. The proposed project would further intensify and expand these activit;es while concentrating on improving the quality, coverage and effectiveness of these programs (para 4.18-4.21). In view of agro-ecological and socio-economic variations within the project area, some locations have relatively greater potentials for rapid productivity improvements in the short- and medium-term. Twenty such panchayats/areas would be identified where special programs covering animal health, nutri- tion, feed and fodder development and breed upgrading would be implemented through intensive technical and advisory provision of services and special livestock credit (para 4.16). 4.18 The district veterinary hospitals at Trishuli and Dhunche and the existing livestock sub-centers would be strengthened not only for provid- ing veterinary services but also for animal production extension, par- ticularly for feed and fodder development. Each livestock sub-center would be staffed with at least 1 JT, 2 JTA (one of whom would deal with feed and fodder) and 4 stockmen. Project funds would cover (i) expansion of the physical facilities at the two hospitals, construction of four new livestock centers, and 6 dipping tanks; (ii) salaries and allowances for incremental technical and support personnel; and (iii) purchase of vehicles, surgical and other equipment, and medicines, drenches and vac- cines. It is estimated that during the eight-year project implementation -24- period, approximately 25X of the total livestock population would benefit from the improved curative and preventive health care services. 4.19 Animal Health Workers (AHW). Recently the livestock department introduced a program for training selected livestock owners/farmers in elementary health care, disease identification, first aid, and treatment for common and simple ailments. Last year about 15 such people were trained under the scheme but in the absence of adequate financial support and technical follow-up, the trained AHWs have remained largely ineffec- tive. The proposed project would, on a pilot scale, strengthen and expand the program. About 100 leading livestock owners/farmers would be trained at the district veterinary hospitals in Dhunche and Trishuli (in batches of ten) for about 4 weeks covering the subjects/topics that are normally dealt with in the training of the livestock assistants. Upon completion of the training, they would be given small 'creatment kits' containing instruments for minor surgery, syringe, first aid and other medicines for treating common illness, and for vaccination. They would be allowed to charge farmers appropriate fees for their services and alsc be entitled to get their supplies of drugs, etc., from the district hospitals/livestock service centers at nominal costs. Finally, ADBN would, upon recommenda- tion from the relevant district veterinary officer, provide short-term credit to selected AHWs for starting formal practice in preventive and curative veterinary health care through opening of small outpatient clinics/dispensaries. The objective of the program, which would be closely monitored and supervised by the livestock department, would be to create a cadre of self-sustai ing Village Animal Health Workers (AHW). Funds provided under the project would cover the costs of training of the selected individuals, supplying the treatment kit and its subsequent replenishment and for the ADBN credit. 4.20 Feed and Fodder Development. The pasture development farm at Rasuwa, established under RB I, would be improved and expanded to increase its production of grass seeds, napier grass cuttings and other herbacious fodder. It would also promote cultivation of legumes and forage crops (in cooperation with the Department of Agriculture) and planting of fodder trees (in cooperation with the Forestry Department) on private and public lands. Four additional range units (each having a JT, one JTA and one Stockman) would be established and the operation of the Chandanbari and Langtang fodder development sub-centers, established under RD I, would be strengthened. Some 500 ha of range lands in various locations in the upper and lower mid-hills would be sown with grass seeds such as perennial rye, oats and white clover, alongside a program for training and educating livestock farmers in the techniques of seeding, protection, regeneration and management of seeded rangelands. Additionally, experimentation with urea treatment of straw would be initiated, and chaffing machines and mineral blocks would be distributed in order to improve the nutrient value of roughages and other on-farm feed. -25- 4.21 Breed Improvement. The proposed project would provide funds for (i) the purchase and distribution nf 75 murrah buffaLo bulls, 150 improved rams/bucks/goats, 5 yaks, and (ii) developing breeding herds of promising local breeds of cows and other ruminants. Sire distribution and its follow-up would be better organized and supervised and emphasis would be on the development of breeder farmers in strategic locations. As in RD I, the animals would be given to panchayats free of cost, which would be responsible for their upkeep and maintenance, but veterinary services would be provided by the nearest livestock sub-center. Most murrah bulLs would be procured from Janakpur livestock farm and/or from India. Funds would also be provided for the purchase of 50 animals of exotic breeds of ewe/ram and 95 local sheep for the Pansykhda sheep and goat farm in Nuwakot in order to replace the old stock. 4.22 Appropriate Technology Unit (ATU). The ADBN has been successfully operating three Appropriate Technology Units (ATU) in three different areas in Nepal with the purpose of field testing and disseminating tech- nologies that would make the most use of available natural resources in the rural areas. Its current activities cover such diverse fields as development of small water turbines for grain milling and power generation (2-4 kw units), bio-gas plants for fuel and light, wood-saving stoves, beehives, solar dryers, pedal pumps for irrigation, etc. The proposed project wouLd provide funds to ADBN for establishing and operating an Appropriate Technology Unit at Trishuli (or at any other suitable place in the project area). The work program of the Unit would be developed in consultation with the Project Coordination Unit (para 6.03). Details are given in Annex 2, Table 4. 4.23 Strengthening of Regional Offices. In order to ensure effective technical support to and supervision of the district offices, the project would provide funds for strengthening the Central Regional Offices of the Departments of Agriculture (DOA), Livestock Development and Animal Health (DLAH) and Irrigation (DIHM). Funds provided would cover incremental staff salaries and allowances, essential vehicles, equipment and furni- ture. Forestry, Soil Conservation and Watershed Management. .Total outlay of US$2.4 M; 14Z of base costs) 4.24 Forestry Plantation and Management. To promote afforestation, the project would Ci) establish and maintain 3,000 ha Panchayat Forests (PF), 250 ha of Leasehold Forests (LHF), private/homestead plantings on 500 ha and public pLantings on 1,000 ha; (ii) protect and maintain 3,000 ha of degraded forests as Panchayat Protected Forests (PPF); (iii) promote the usage fuel saving stoves; (iv) carry out enrichment planting on and protection of 1,200 ha of public forests; (v) construct demarcation on 375 km; and (vi) maintain some 750 ha of RD I project plantings. Funds provided wouLd cover the following: (i) direct costs of plantation -26- development, i.e., cost of raising seedlings, labor for planting, initial maintenance, guarding; (ii) construction of new office buildings, expan- sion/remodelling/completion of existing ones; (iii) purchase of vehicles, motorcycles, survey equipment and planting tools; and (iv) incremental staff salaries and allowances. 4.25 Seedlings (approximately 16 M) would be raised on the existing central nurseries (5 in operation) and on smaller nurseries to be estab- lished on suitable locations based on plantation sites. Development of private/panchayat nurseries would be promoted through supply of polybags, seeds, root stocks and technical advice. At least 30Z of the seedlings raised would be of fodder species. Training on forest development, protection, and utilization would be organized for school students, teachers, panchayat leaders and others. Such training would be practi- cally oriented, simple and would emphasize dissemination of knowledge on forest maintenance, protection, suitability of various plant species under the respective ecological conditions. 4.26 Trees planted in PF would be mainly species suitable for fuelwood production and preference would be given to faster growing species. Fod- der grasses and legumes would be produced in PF, usually from indigenous species naturally regenerating, but high yielding species would also be undersown, depending on the availability of seeds. All seed would be provided through the DFO, who would either arrange for its collection from trees locally or would obtain it from seed stores maintained by the Com- munity Forestry and Afforestation Division (CFAD) of the Ministry of Forests. Development of LHF would be on a pilot basis. Each participat- ing panchayat would be leased about 20 hk of public land for planting, primarily with fodder tree and herbacious fodder plants and grasses. Planting on private lands would be implemented through provision of seed- lings and technical advice. Species planted would primarily be fruit and fodder trees. Project objective would be to cover some 50% of all households in the proiect area. Finally, some 1,000 ha of public lands would be reforested by DFO through hired labor and would include areas which, due to topography and location reasons, would not be suitable for development through community participation. 4.27 Forest Management and Protection. Activities under this component would include rehabilitation of degraded forests (protection, regeneration and enrichment planting) through establishment of PPF (covering areas that are close to villages and which could be restored by simple protection and enrichment planting), demarcation, and enrichment planting by the DFOs. Most remnant forests vary in location, species content and condition and, therefore, management practices would vary. On an average, however, a 10% new planting would be required in these areas although in some, such as Sal forests at lower attitudes, a substantial coppice crop could be obtained only through protection measures. -27- 4.28 Implementation. In implementing the aforementioned programs, the following procedures, which are being followed at present in respect of other community forestry programs, including the IDA-financed Community Forestry Development Project (Cr. 1008-NEP), would be adopted. Vi]lage panchayats would prepare proposals for participation in PF, PPF, and LHF, which would be approved by the respective district panchayats and the DFOs. Once land had been declared legally unencumbered, areas to be planted/protected would then be identified and demarcated by agreement among village panchayats, Forest Department and the Land Survey Depart- ment, or according to land ownership records. In accordance with the forest rules, a Forest Management Plan providing guidelines for plantation management, protection and distribution of produce, would then be prepared and formal agreements between the participating panchayats and the DFO negotiated and executed. Assurances were obtained during negotiations that HMG/N would (a) provide the participating panchayats legally unencum- bered lands for the development of Panchayat Forests, Panchayat Protected Forests and Leasehold Forests, by December 31 of each calendar year of the project implementation period commencing on December 31, 1986; and (b) prepare and furnish to the IDA by July 31, 1987, for its approval, draft Forest Management Plans providing guidelines to District Panchayats in the project area for the protection and maintenance of forest plantations and distribution of produce. 4.29 Soil Conservation and Watershed Management. The proposed project would implement a program for (i) protecting 500 ha of upper catchments and minor watersheds of the Tadi, Likhu and Samarikhola through conserva- tion of natural vegetation and construction of structures at strategic places; (ii) intensive watershed conservation on some 470 ha covering highly degraded minor watersheds, drinking water and irrigation sources; (iii) rehabilitation of 500 ha of erosion prone areas designed to protect agricultural lands, settlements, major roads/hydro schemes/canals and other infrastructure; and (v) strengthening of conservation education, extension and training. Demonstration aspects of all departmentally implemented conservation works, greater dependence on curative measures and biological control and coordinated program development with the forestry, roads, irrigation, MPLD and other relevant departments would be the basic strategy for implementing this component. Funds provided under the project would cover the costs of civil works (for soil conservation, offices, staff quarters etc.), salaries and allowances for incremental staff, costs of raising seedlings, purchase of vehicles and equipment and maintenance and operating costs. 4.30 HMG/N with assistance from the FAO made an assessment of the watershed condition of the project area, including general indications for -28- priority action, in 1983. 1/ During the first year of the project, a semi-detailed watershed management plan would be prepared by the planning wing of the Department of Soil Conservation based on the above study and other pertinent information. The plan would identify, on the basis of bio-physical status, priority areas for soil conservation and provide preliminary estimates. Schemes for implementation under the project would then be selected based on factors such as cost effectiveness of individual schemes, the urgency of intervention, number and type of beneficiaries, the extent of locaL contribution and land availability. An assurance was obtained during negotiations that a semi-detailed watershed management plan for implementing the soil conservation works in the project area would be prepared and submitted to IDA for its approval by September 30. 1987. Rural Infrastructure Development (Total outlay of US$2.4 M; 14Z of base costs) 4.31 Village Drinking Water Supply. Under RD I, 133 drinking water schemes were started of which 105 were completed. In order to ensure maximum benefit from previous investments, priority would, therefore, be given to the completion of schemes that were unfinished or are in need of rehabilitation. A total of 56 such systems (Rasuwa 24, Nuwakot 32), including one in the Dhunche district HQ, would be included for comple- tion/rehabilitation. On average, such work would cost about NRs 60,000 per scheme. In addition, the project would construct and maintain 45 new systems (Rasuwa 15, Nuwakot 30). A typical village water supply system would be normally gravity fed and cost about NRs 190,000 and would serve about 125 households. New drinking water schemes would be constructed only in those panchayats where previous schemes have been completed and are adequately maintained by the panchayats/users. Selection and ranking of schemes for implementation would be determined by the district panchayat based on proposals made by village panchayats and based on further investigation by DTOs. Selected schemes would be finally designed and costed by DTOs who wouLd also supervise construction and provide the skilled labor input. In properly designed and constructed systems the maintenance requirements would be limited to periodic cleaning of reser- voir and break-pressure tanks and intakes. The necessary labor input for such maintenance, including regular inspection, would be the respon- sibilities of the Panchayats/User groups. More complicated repairs and those requiring new parts would usually be beyond the local capabilities and would be done through assistance by DTO, with likely financial support from the DP. The project would strengthen the maintenance capabilities of 1/ A Watershed Management Plan for the Trishuli Watershed; FAO/HMCN, 1983. -29- the respective DTOs (para 6.05) and also provide training to villagers on routine maintenance and repair of these installations. 4.32 Suspension Bridges. Under RD I, 8 suspension bridges and 39 small wooden bridges were constructed. The program generated substantial socio-economic benefits and the proposed project would further expand and consolidate this program. Funds would be provided for the rehabilitation of some 20 bridges, which have been damaged primarily because of natural causes (land slides, scouring of foundations) and to some extent by inade- quate preventive maintenance; construction of 18 new ones (9 in each of the two districts) and; maintenance of the new ones constructed during project implementation. During appraisal, a tentative list of existing bridges for rehabilitation and sites for the new ones prepared on the recommendations from the various village panchayats was agreed upon. These would be finalized in consultation with the panchayats during project implementation. The Suspension Bridge Division (SBD) of MPLD and the PCU would provide technical guidance and supervision to the respective DTOs in respect of finalization of sites, designs, specifications and estimates. Standard designs and specifications have been developed in the course of implementation of RD I and only simple modifications and surveys would be required to suit specific site needs. 4.33 Motorable Track Development. The project would rehabilitate the Sera-Chahare (10 km), Chaughada-Apraha (6 km), Trishuli-Samari (4 km) motorable tracks and finance the completion/rehabilitation of the Betrawati-Pairabesi (4 km), and Labdhu-Kharenitar (8 km) tracks. Rehabilitation would include the repair of flood or traffic-damaged struc- tures, provision of culverts for irrigation canal crossings, landslide protection, drainage works, surface grading and widening where necessary. Additionally, the project would construct the following new tracks: i) Dhaibung-Jibjibe in Rasuwa (3 km); (ii) Trishuli-Deorali in Nuwakot (10 km); and (iii) Dhunche Service road in Rasuwa (1 km). The first two of these would connect important agricultural production areas to the existing district road network, thereby serving as outlet for substantial quantities of agricultural produce as well as transport of inputs and building materials and other goods and services. Dhunche service road would connect important project-related offices and a dispensary to the new district road. All tracks would be constructed to truckable standards and would have at least 4 m width and a gradient not exceeding 10%. Appropriate slope stabilizations, retaining walls and other protection structures would also be provided. Survey, design, suaervision, construc- tion and provision of special equipment such as rock drills, compaction rollers, as well as blasting material, gabion wire, hume pipe and other materials would be the responsibility of DTOs. -30- Institutional Development and Implementation Support (Total outlay of US$2.2 M; 12% of base costs) 4.34 In addition to strengthening of the participating line departments (Agriculture, Livestock, Irrigation, Forestry and Soil Conservation), the proposed project would provide funding for incrementaL technical, managerial, financial and other staff, as required, for the LocaL Develop- ment Offices and the District Technical Offices of the two project dis- tricts. Appropriate technical assistance (para 4.35) and training would be provided to improve staff capabilities and also to streamline operational methods and procedures. The assistance would support HMG/N in its currenc program for decentralization of administration at the district level (para 2.16). In addition to these, the project would provide furnds for continuing the operation of the Project Coordination Unit (PCU; para 6.03), which was established during the RD I project and which would be responsible for assisting the district level entities in the implemen- tation of the proposed project. Funds provided would cover (i) salaries of the incremental professional, technical and support staff; (ii) pur- chase of essential equipment, vehicles, furniture; (iii) construction of offices, residences; and (iv) operating and maintenance costs. Technical Assistance, Overseas Training and Studies (Total outLay of US$1.8 M; 1OX of base costs) 4.35 The project would provide funds for 8 manyears of senior speciaList staff/consultants (both resident and visiting) and 38 manyears of mid-level professionals (international volunteers) to assist in project implementation where expertise would not be locally available and/or trained manpower is in short supply. Volunteers from a number of agencies such as the Peace Corps, the VSO, IVS and the UN are already involved in a number of externally funded HMG/N projects in Nepal, and with satisfactory results. Preferably, TA staff would be made available during the first four years of project implementation and would be attached to the PCO. HMG/N would ensure that adequately qualified Nepali staff wouLd be posted to counterpart positions, and who would take over from the T.A. staff at the end of their respective tenures. International volunteers would be given specific assignments, most of which would involve working closely with field level officials in line agencies or District Panchayat offices. Details are in Annex 2, Table 5. 4.36 The following TA staff requirements were identified at appraisal and agreed with HMG/N during negotiations: (a) Senior Specialists: Plan- ning Monitoring and Evaluation Advisor--39 mm; Civil/Irrigation Engineer--39 mm; (b) Short-term ConsuLtants: training, adaptive research, water management, vocational training--6 mm; financial management and accounting--14 mm; (c) International Volunteers: Planning aides--75 mm; Agronommist/Adaptive Research--72 mm; Vocational Trainer--72 mm; Silvi-pasture/Fodder Specialist--72 mm; Sub-engineers/Overseers--160 mm. -31- Terms of reference for the above TA personnel have been prepared and were agreed with HMG/N during negotiations. 4.37 Funds would be provided for short-term overseas training of key management and technical staff, including 4 Local Development Officers (LDOs), 4 Planning Officers and 2 Engineering staff. Trainees would be sent to attend structured and formal courses/programs at appropriate overseas institutions, although up to 10% of total funds for overseas training would be available for short-term familiarization visits. Assurances were obtained during negotiations that (i) trainees for over- seas training would be individuals with experience and qualifications satisfactory to IDA; (ii) trainees would be trained in institutions and programs accentable to IDA; and (iii) upon completion of the training, the returnees would be provided with adequate jobs to serve for at least five years in rural development projects in Nepal. 4.38 Funds would be provided for undertaking studies designed to iden- tify key project/sector related issues (socio-economic, organizational, technical, financial), as well as to generate -information on the impact of the project in reLation to its objectives. Except for the mid-term review, most of the studies would be micro-level investigations covering topics such as (i) farmers' response to agricuLtural support services. (ii) changing cropping patterns, yields, farm income in the irrigated and non-irrigated areas; (iii) field level implementation constraints; (iv) nature of employment generation by project works; (v) constraints to adoption of new technology. In addition to these, a review of HMCN's cost recovery and input pricing and distribution policies would also be made (para 5.12). V. PROJECT COSTS, FINANCING, PROCUREMENT AND DISBURSEMENT Project Costs and Financing 5.01 Total project costs based on February 1985 prices and updated to reflect November 1985 prices and an eight year implementation period are estimated at NRs 423 M (US$23.5 M), including price and physical contin- gencies (US$5.7 M) and a negligible amount of taxes and duties (US$0.2 M). The foreign expenditure component is estimated at US$8.6 M, equivalent to about 37% of total project costs. Details, summarized below, are in Annex 3, Tables 1 & 2 and in Project File C.1. -32- Table 5.01: SUMMARY OF PROJECT COST (BY COMPONENTS) (lb 1011 U e000 2 Totl Low, Foels Tyotl- toal Tta Toa W_m Costs A. NMMEOIL KISLWIW 1. SI XIUUI I SON= 16It.10,5 4,206.3 20116.7 Mo.o 2.7 ,13.7 21 6* Z. 1?311 11,1.3 1,613.4 12u?M.6 n2. '1.1 72e3 13 4 3. TU 43,126.0 21o,=. 64361.0 2WPM iti. 34513.6 33 t 4. LIULE I N IOL1IE FA4 6U.6564 3,113.6 960s.0 369.3 175.2 5m50 32 3 L LhUfuPE!uUP.T 12,375.3 3,614.8 15,990 7.5 206.3 3.3 23 5 6. E13jaJIIT t11,66.5 - 1U11 647.9 - 6.9 - 4 7. AM!0 1 lo 3.60.4 13,68.1 2229.2 203.4 1234.4 1.2.7 84 7 L l I-VWWM ROOM 1MIA0 11971 2177 7.3 Ua.! 14s3 43 1 9. 91EPI1 IMU tEUT 1,630.0 245.0 I95.0 93.3 16 106.9 13 1 S*uf-YT IMRZOL lTuS wIUi 10 .3 3,924.5 Ms. 6,0.0 25.1 *.3 31 5S 1. ML EWElIE DIM00 WM EMT m 1 3 2503.5 15,34.0 43U51. 1.132.5 4 7 5.436.2 35 14 C. FIUWI , SOL C9TOI 1 MM .InM 1. PUS LTEI m CUNI1T P0W6M CUWINU 2U9,1.. 2,451 31P5a.7 I.U7.7 123.3 1,13. 11 1O 2. SO1L -IMI 9.60.6 3,473.9 1 5 503.0 193.0 6.0 2 4 Su*-Toal F PUllET SOL CE3 ng VA 301 IVAD 33173 S59n.0 44,092.3 L-0.7 7 . 2449.6 13 14 L ZIW IrTI SW9 NS 1311114 VlEtEIF 1 . 5 nt _ CFII Wm 8I:5.1 4,311.3 15m.9 457.7 239.5 7.3 34 4 2. SIS1TN I OF LU 543. 336.2 3970.7 330 13543 493.4 . 37 3 3. OUSl S MM 6,701.3 2,6l91 9139.4 372.3 149. 5.2 : 3 4. sh wTImm O mu 41.0 1O75 6,49.5 27.6 93.1 30.7 26 2 5. S !_ I EN M W 314.5 302. 1,37.0 453 2.9 73.2 33 6. TEOIIRC. A STM , P 08 NA I AS SUM 4440.0 292.0 313.0 2467 1,551.1 179.1 36 10 Sah-Tia URg _ qT WM Me DBMS TI WflM 304.4 0,445.1 7190934 1,7.5 2,246.9 3.94.5 37 22 Total N CIE PIT! 205.431,4115,616321, s120.0 1UP415.7 642443 17,t*00 36 10 ial SAi= mm 9,50.2 6661.7 1201.9 530.0 370.1 9001. 41 S Pitt, Caita eja 53,V27.3 3243. 1.175.3 2,961.01,02A.6 4,73.! 31 7 Total F COST 268t31.t0 1s17L2 42372 14906.7 3,20.9 23,m.76 37 132 StuSt_b 23. 1 14:0 -33- 5.02 Physical contingencies (US$0.90 M) were estimated at 7% for civil works and 5% for other expenditures (excluding salaries, wages and allowances). Prices Contingencies (US$4.8 M) are about 27% of base costs and reflect expected inflation rates which currently are estimated to be as follows: 1986-87:7.0%; 1987-88: 7.3%; 1988-89 to 1989-90: 7.6%; 1990-91: 6.0%; 1991-92 to 1992-93: 4.5% 1/ 5.03 The proposed IDA credit of US$19.1 M would be tn HMG/N on standard terms and conditions and would cover 81% of total project costs (74% of local and 93% of foreign costs). UNDP is expected to finance part of the costs of recruiting senior specialist staff, consuLtants and international volunteers, overseas training and project related studies, amounting to US$1.1 M, equivalent to about 5% of total project costs, (7% of foreign and 3% of Local costs). IDA credit and UNDP grant together would thus finance 86Z of total project costs, including 100% of foreign exchange costs (US$8.6 M) and 78% of local costs. HMG/N contribution would be US$3.3 M (Rs 59 M), equivalent to 14% of total project costs (including applicable taxes and duties). The signing of the UNDP TA agreement and appointment of an executing agency acceptable to the borrower, UNDP and the Association would be conditions of IDA credit effectiveness. Table 5.02 summarizes the financing plan. Since most of the project beneficiaries would be small farmers producing for subsistence, no cash contribution from them other than the amounts they would be borrowing from ADB/N for crop input, purchase of improved animals for milk, meat, wool and drought power, and for agricultural tool/equipment purchase, would be expected. However, they would make substantial contribution in kind (in the form of family labor) for on-farm development works and 0 & M of irrigation and physical infrastructure. Table 5.02: PROPOSED FINANCING PLAN Local Foreign Total --US$ M-------------- HMC/N 3.3 - 3.3 (14%) IDA 11.0 8.1 19.1 (81%) UNDP 0.5 0.6 1.1 (5Z) Total 14.8 8.7 23.5 1/ Calendar year enuivalents: 1986 & 1987: 7%; 1988: 7.5Z; 1989: 7.7%; 1990: 7.6%; 1991 to 1993: 4.5%. -34- 5.04 Except for ADBN and the AIC, IDA and UNDP funds would be chan- nelled to the participating line ministries through the Ministry of Finance of the HMCN through the normal budgetary procedures. However, HMGN would enter into a subsidiary Loan Agreement with ADBN and a Finan- cial Agreement with AIC, with terms and conditions satisfactory to IDA, for providing project funds to these two entities. Execution of the above agreements and its ratification by HMGN, the ADB and the AIC (as the case may be) would be a condition of disbursement against expenditures incurred by these two agencies in respect of implementation of their respective activities under the project. Assurances were also obtained during nego- tiations that (a) annual HMG/N budgets would include adequate allocations covering project expenditure in the two districts, and (b) budgetted funds for each trimester would be released by no later than the first fortnight of each trimester. During negotiations it was also agreed that a Spe- cial Account in the Nepal Rastra Bank would be opened and maintained by HMG/N on terms and conditions satisfactory to IDA and with in an authorized allocation of an amount equivalent to US$350,000. Procurement 5.05 Procurement arrangements are summarized in the table below: -35- Table 5.03: PROCUREMENT ARRANGEMENTS -------------US$ M----------------- ICB LCB Other NA Total Cost Civil Works (including 10.0 10.0 building, irrigation, (9.0) (9.0) roads, bridges, drinking water schemes and soil conservation works) VehicLes, Equipment and 1.1 0.6 1.7 Furniture (1.0) (0.6) (1.6) Forestry Development Costs 2.4 2.4 (plantation establish- (2.2) (2.2) ment and maintenance) Breeding Stock 0.15 0.15 (0.13) (0.13) Fertilizer and Agrochemicals 1.7 1.7 (1.6) (1.6) Feed/Fodder Development, 1.4 1.4 Technology Testing & (1.3) (1.3) Materials for Extension & in Service/Farmer Training Agric. Credit 0.9 0.9 (0.8) (0.8) Salaries and O&M Costs 3.0 3.0 (1.4) (1.4) T.A./Studies/Overseas 2.2 2.2 Training * (1.1) (1.1) TOTAL 2.0 10.6 2.5 7.5 23.5 (2.6 ( 9.6) (2.3) (4.6) (19.1) * US$ 1.1 M to be financed by UNDP. (Figures in parentheses show the amount to be financed by IDA): 5.06 All civil works (US$10.0 M) would be simple structures of stand- ardized designs, widely dispersed geographically and over time, thus rendering them unsuitable for International Competitive Bidding (ICB). -36- Contruction of buildings, roads, bridges, drinking water supplies, soil conservation structures and irrigation works would, therefore, be awarded to local contractors following Local Competitive Bidding (LCB) procedures, which were found at appraisal to be satisfactory to IDA. Provided, however, that civiL works contracts estimated in the aggregate to cost US$2.4 M or less may be procured through force account or user groups. However, in order to ensure quality in construction, assurances were obtained during negotiations that all civil works under the project would be undertaken by qualified and experienced contractors registered by the Ministry of Works & Transport of HMCN, or by bonifide and properLy con- stituted User or Beneficiary Groups. Vehicles, Equipment and Furniture (US$1.7 M) would be grouped in appropriate bidding packages to facilitate competitive bidding. Procurement would be by ICB in accordance with Bank guidelines, except where individual items are valued at less than US$30,000 and the total order does not exceed US$150,000, in which case procurement would be by LCB procedures. Following standard practices, breeding stock (US$.15 M) would be purchased from local and Indian markets at prevailing market rates and would not be suitable for usual bidding procedures. AIC currently imports fertilizers and agro-chemicals through ICB. Project requirements (US$1.7 M) would be too small to justify inde- pendent importation and therefore as far as practicable these would be bulked with the normal AIC procurement of these commodities. Nearly 50Z of the total expenditures for plantation works for forestry and 3oil conservation (US$2.4 M) would be for hired labor, 35% for planting materials, and 15Z for transportation costs. None of these would be suitable for competitive bidding, and hence these would be procured through contract labor and/or under force account as per schedule of rates annually published by HMG/N and in accordance with procurement procedures satisfactory to the Association. The balance of project costs (US$7.6 M) would be for staff salaries, vehicle operating and maintenance costs, adaptive research costs, in-country training, agricultural credit, and technical assistance, and overseas training which would not be suitable for any form of competitive bidding. 5.07 Contract Review. Bidding documents, including text of the Invita- tion To Bid, specifications, procedures for advertisement, draft contract documents and aLl such other pertinent information would be submitted to IDA for review and comments for civil works contracts costing US$100,000 or more, and for vehicles, equipment and other goods costing US$50,000 or more. Prior to award of contract, bid evaluations for such contracts would also be submitted to IDA for its review and concurrence. It is estimated that the total value of procurement under the above would be about US$2 M and 0.5 M respectively. Contracts below these amounts wouLd be subject to post-award review by IDA. -37- Disbursements 5.08 Disbursements under the proposed IDA credit would be completed by December 31, 1993, and the proceeds would finance the various categories of expenditure as follows: (a) 90X for civil works (US$9.0 M); (b) 100% of foreign expenditure for directly imported vehicles, equipment, furni- ture and construction materials, or laoZ of local expenditures (ex-factory costs) and 70% of local expenditures for other items procured locally (US$1.6 M); (c) incremental staff salaries and aLlowances, and operating and maintenance costs disbursed at a declining scale of 80X of total expenditures in FY86, FY87, and FY88, 70% in FY89, and FY90, 50% in FY91. 40% in FY92 and 20% in FY93, (US$1.5 M); td) 100% of foreign expenditures, 100% of local expenditures (ex-factory costs and Local breeding centres, as the case may be) for fertilizer, agrochemicals, agricultural equipment, and breeding stocks and 70% of local expenditures for other items procured locally (US$1.5 M); (e) 90Z of the medium term credit disbursed by ADBN for the livestock and horticulture components, anu for operating the project's SFDP programme and the ATU (US$1.0 X); (f) 90% of total costs for forestry plantation, soil conservation activities, and improved stove programme (US$1.8 M ); (g) 90% of the costs for extension activities, i.e. minikit, demonstration and materials for adaptive research and the costs of in-country training of farmers, extension workers and other project staff (US$1.2 M); and (h) 10OZ of total costs for studies, and technical assistance (US$1.1). The remaining US$0.4 million would be under the unallocated category of the credit. Disbursements against expenditures for the categories (c), (e), (f), (g) and (h) would be made against cer- tified statements of expenditures, the documentation for which would not be submitted to IDA for review, but would be retained by HMG/N and made available to IDA supervision missions for their review. Disbursement against all other categories would be fully documented. Retroactive financing of up to US$300,000 would be provided to cover the following expenditures incurred after July 16, 1985: (i) salaries, allowances of incremental staff and other operational costs; (ii) purchase of vehicles, equipment and furniture; (iii) feasibility study and design of irrigation schemes and other civil works; and (iv) staff training. 5.09 Accounts and Audit. Under HMG/N rules, it is the responsibility of the Ministry of Finance to maintain, through the officers of the Finan- cial Comptroller General, all government accounts, while the Auditor General is responsible for auditing of all such accounts. HMG/N seeks to ensure that all accounts are maintained according to sound accounting principles and the scope of the audit is sufficient to evaluate the regularity, propriety, economy, efficiency and effectiveness of public expenditure. However, the performance of HMG/N in respect of the IDA audit and accounting requirements has been weak and in case of most of the projects, the audited accounts have frequently been substantially in arrears. This is partly because expenditures related to IDA-financed projects are audited by the Auditor General as part of the implementing -38- government department's overall financial records and the Auditor General does not release the full audit report until it is cleared through several steps, including presentation of the main report to the National Panchayat. In order to ensure that covenants related to audit in IDA assisted projects are complied with on time, IDA has been assisting project accounting staff in preparing separate project accounts in such detail as required for audit, soon after the end of each fiscal year, and presenting these to the Auditor General. IDA has also proposed the format and content of the auditors report on such accounts which can be completed and forwarded to IDA without waiting for the full audit report of the concerned department's overall annual financial accounts. Similar proce- dures are being instituted for a separate annual audit of all withdrawal applications based on Statement of Expenditures (SOEs). Assurances were obtained during negotiations that HMG/N would cause the participating line departments, the AIC and ADB/N. (i} to maintain separate records and accounts for all project expenditures in accordance with sound accounting principles, (ii) to have such accounts audited by an independent auditor acceptable to IDA, in accordance with sound auditing principles, (iii) forward to IDA, such accounts together with certified copies of the Auditor's reports om such detail as shall be requested by IDA, within nine months after the end of each fiscal year; (iv) to include in the annual audit reports, submitted to IDA, a separate opinion from the Auditor as to whether the disbursements made on the basis of SOEs were in respect of goods and services receized and incurred for the purposes of :he project. The project would provide additional staff and in-service training to existing accounting staff in the two project districts to improve finan- cial management. Fiscal Impact and Cost Recovery 5.10 Fiscal impact. Since the beginning of the 80's, Nepal has been experiencing an unfavorable budgetary situation with deficits running between llX-12Z of GDP. Nepal is consequently faced with the problem of maintaining a reasonable level of development expenditures while reducing the growth of regular expenditures, and at the same time, increasing mobilization of public resources. During project implementation, HMG/N would be required to provide, on an average, about URS 8.0 M annually as incremental local funds, equivalent to less than one tenth of one percent of current levels of regular pubLic expenditures and revenues, respec- tively. During the post-project phase, after eight years of project implementation, the average annual recurrent cost for maintaining project related services and OEM costs for the physical infrastructure would amount to about NRS 7 M. This level of incremental public expenditure would be justified in view of the project's expected contribution to improving agricultural productivity, employment and -ural income of the poor and in preventing further deterioration of the environment in the project areas. However, it is expected that during implementation efforts would be made by the government to keep overall incremental salary and -39- wage costs at a minimum by giving priority to redeployment/reallocation of existing personnel in meeting the project's incremental staff require- ments. Secondly, steps for mobilization of resources at the panchayat/village levels would also be intensified in order to reduce the O&M burdens of the public sector. Furthermore, dialogue with HMG/N on the broader issues relevant to national policies cost recovery policies, input and price subsidies would be initiated during the implementation of the project (paras 5.11-5.12). 5.L1 Cost Recovery. The stated objective of HMG/N is to generate increased amounts of financial resources at the local levels with a view to ploughing those back into the local economies, either for new invest- ments or for operation and maintenance of physical infrastructure. Conse- quently, there is provision for levying irrigation water charges (cur- rently fixed at about NRs 62 per ha per crop for the hill and small irrigation schemes, and NRs 100 per ha per crop in the larger command areas). The District Panchayats are also empowered, under the decentralization by-laws, to collect tolls on roads, bridges, irrigation canaLs etc. Notwithstanding the above, cost recovery measures are not diligently enforced; the underlying principles, policies and guidelines for the levy and collection of relevant charges are ambiguous and often confLicting. The current levels of irrigation water charges were estab- lished in 1975 and the rates do not recover the operation and maintenance costs. Moreover, only small amounts are collected, and the system is not flexible enough to take into account unforeseen circumstances suc' as land slides, drought, power failure, etc. 5.12 Broad issues such as collection of water charges, beneficiary and user taxes, and input subsidies need to be addressed and resolved at the national policy level. Nevertheless, the proposed project, while promoting development of cost recovery in the first instance relevant to the project area and designed to generate sufficient local resources and beneficiary participation for the operation and maintenance of the irriga- tion systems, drinking water supply, roads, bridges and other physical infrastructure, would also initiate dialogue with HMG/N on the broader policy issues. During negotiations IDA and the HMGN delegation reached agreement on the need for formulating and implementing more broadly appropriate national policies and methods for cost recovery and reduction of input subsidies. Assurances were obtained that {i) by September 30, 1987, HMGN would, in accordance with terms of reference acceptable to IDA, complete a review of its cost recovery policies (i.e. water charges on small and medium irrigation schemes, benefit taxes on rural infrastruc- ture) and input subsidies, and furnish the findings and recommendations of the review to IDA for its comments; and (ii) by December 31, 1987, prepare and furnish to IDA, on the basis of the above study and taking into account IDA's comments, detailed proposals and an action plan, including guidelines, principles, policies and implementation schedules, for estab- lishing irrigation water charges, benefit taxes and for phased elimination -40- of farm input subsidies as well as for the development of broader channels of input supplies. VI. PROJECT ORGANIZATION AND IMPLEMENTATION Broad Framework 6.01 The Decentralization Act of 1982 and the Decentralization Rules and Regulations of 1984, which became effective from July 1985, provide an institutional framework and working procedures for peoples' participation (through viLlage, town and district panchayats) in the planning and implementation of development activities, and for coordination of these activities at the district level. Implementation of the Act should, in principle, overcome many of the organizational weaknesses impeding effec- tive rural development. Therefore, the organizational framework and implementation arrangements recommended for the proposed project are essentially in line with the provisions of the Decentralization Act and Rules. 6.02 The proposed project would be implemented by the relevant line departments and agencies operating at District and Sub-District levels under the overall guidance and supervision of the District Panchayat (DP). The central and regional head offices of the respective line ministries would provide technical supervision (in regard to programming, budgeting and implementation) and exercise control over fund release. Within the two project Districts, the LDO, as DP Secretary, would have overall responsibility for coordinating both planning and implementation, with support and policy guidance provided by a Project Coordinator's Office (PCO), acting as the field arm of the MPLD and the Integrated Rural Development Board (IRDB). The Project Coordinator's Office (PCO) 6.03 PCO established under the RD I project would be strengthened for providing overall coordination, supervision, monitoring/evaluation and implementation support to the district line agencies. PCU would be headed by a Project Coordinator (PC) of confirmed Class I status and be located at Betrawati, in Rasuwa District. 1/ The project coordinator would have no direct administrative control over the LDOs or any of the other line department officials at the project districts; nevertheless, he would have considerable influence on them through his participation in the District Plan Formulation and the District Supervision Committees established under 1/ A Project Coordinator of the required qualifications has already been appointed. -41- the Decentralization Act (para 6.04). PCU would have the following func- tions: (a) Planning: to assist in developing district-level planning capabilities and to ensure that all project activities are incorporated in the District Annual Plan (DAP) for each district; (b) Monitoring: to help establish a system foe physical and financiaL monitoring within each district and its effective use for management purposes and to prepare annual progress reports; (c) Evaluation: to help DP conduct routine crow and household surveys and ad hoc surveys of project components and areas according to sound evaluation principles (para 4.38); (d) Training: to help provide in-service, job-related training, :esigned in accordance t-ith principles of skills-gap analysis, model training programs and materiaLs, and to assist project agencies in organizing appropriate training; (e) Supervision: to ensure quality control of rural works under the project, including certification of major works (para 5.06), and field visits by multi-disciplinary, District Supervision Committees and other teams to review progress and problems. (f) Liaison? to establish effec- tive working relationships with all project agencies, their respective central and regional offices and with IDA (for preparation and submission of reimbursement claims and progress reports) and to effect inter-district coordination, as required. 6.04 PCO would be organized into seven sections, namely: (a) Coor- dinator's Office, (b) Financial Management, (c) Planning, Monitoring and Evaluation, (d) Training and Communications, (e) Engineering Services, (f) Administration, (g) Kathmandu Liaison Office. All except (e) and (g) would be headed by a Gazetted class IIIINT official. The Engineering Services Section would be headed by a Divisional Engineer (G/IIIT officer) and the Liaison Office by an NG/I/NT officer (details are presented in Annex 3, Table 4). A condition of IDA credit effectiveness would be that the Project Coordinator's Office established during RDI would be reor- ganized in a manner satisfactory to the IDA and would be assigned with adequate powers functions, funds and staffing as would be necessary to ensure its effectiveness. Assurances were also obtained during nego- tiations that Ci) the head of the PCO (Project Coordinator) would at all times be an Officer of HMG/N with qualifications and experience satisfac- tory to IDA, and that the PC shall, at all times, be assigned with such powers, functions, responsibilities, funds and staffing as shall be required for achieving its purposes; and (ii) the Project Coordinator would actively participate in the meetings and deliberations of the Dis- trict Plan Formulation and District Supervision Committees of the District Panchayats in the project area. Reorganization of the DTO 6.05 The DTOs of the two districts would be reorganized into three functionally separate sections: Ci) civil works (bridges, tracks, build- ings); (ii) minor irrigation and drinking water supply; and (iii) opera- tion and maintenance. These technical sections would be supported by an -42- administration section and an accounts section and a drawing/record keep- ing office. Each technical section of the DTO wouLd be headed by an engineer, except for the maintenance section in Rasuwa which would be headed by senior overseer for the time being. The most senior of the engineers in the DTO would be designated as the officer-in-charge. However, overall technical supervision of the DTOs would be provided by the Divisional engineer in the PCU, who would also be assisted by the engineering adviser provided under the TA program. The operation and maintenance program would be implemented in collaboration with the main- tenance teams (brigades) to be formed at the various panchayats (para 6.07). These were agreed with MPLD during appraisal. Village Panchayats and Users' Groups 6.06 In line with provisions of the Decentralization Act and Rules, greater use of these entities would be made for planning, supervision and implementation of project activities at the local level, as well as for operation and maintenance of physical infrastructure. The VPs would be responsibLe for identifying and prioritizing development schemes in their respective areas, estimating total resource requirements and mobilizing local resource contributions. Wherever possible, User Groups would be formed and they would assist the VPs in the above activities. The respec- tive District Panchayats, with the help of the two districts' planning, engineering, financial and other relevant staff would provide the required assistance to the VPs/user groups in these matters. Trained Manpower and Project Staffing 6.07 The availability of trained agricultural staff, both for officers and JT/JTA level staff, has increased substantialLy during the last two decades. Currently available trained agriculturaL staff is estimated at some 1,650 officers and over 5,000 JT/JTAs, compared to 770 officers and 2,450 JT/JATs in 1980 and 56 officers and 214 JTs in the year 1962. Institutional capacity for formal, in-service and non-formal training in different areas of agricultural expertise has also increased, and at present the total output of diploma and certificate level graduates are estimated at 150 and 800 (450 JTAs and 350 JTs) per annum, respectively. Notwithstanding these impressive gains, implementation of agricul- tural/rural development projects in Nepal has suffered due to delays in the deployment of incremental project staff and, more importantly, because of the low productivity and motivation among a good many of the available staff (arising from unsatisfactory quality and content of pre- and in-service training, low levels of salaries, allowances, benefits and performance incentives, and inadequacies in the administrative and opera- tional environment). HMG/N, however, is fully aware of these problems and recently has taken a number of steps to meet the short-term requirements of the externally funded projects as well as to bring about long-term improvements. These include {i) creation of a special pool of staff at -43- the central level to be made available to projects; (ii) implementation of a number of programs, including an IDA financed Agricultural Manpower Development project, for increasing the quality and relevance of training in the existing institutes; and (iii) intensification of overseas training program for higher level technical and management staff with bilateraL assistance (currently about 50 overseas trained staff return to Nepal annually). Furthermore, recently IDA has completed a comprehensive review of the public administration improvement and training needs based on which HMG/N is expected to embark on a major programme for enhancing the qtality and number of trained manpower in the coming years. 6.08 Project incremental staff requirements are shown in Annex 3, Table 5. During appraisal HMG/N agreed to provide project requirement of staff on a priority basis, starting with filling up of the existing vacan- cies in the established posts in the two project districts. It was also agreed that in meeting the project's incrementaL staff requirements, priority would be given to reallocation of existing staff within the respective ministries, particularly those that are found to be non-optimally utilized in their current assignments. The balance of the requirements would be met through new recruitment. The staff training facilities and programs initiated in the first phase of the project would be further improved and strengthened to improve the productivity and performance of lower and mid-level staff (para 6.09). The provision of technical assistance staff including international volunteers would also contribute in these respects. Assurances were obtained during nego- tiations that (i) key project staff in the two districts and in the PCO would be appointed, deployed and maintained in a manner that shall con- tribute to timely implementation of the project and achievement of the objectives; 1/ (ii) the LDOs in the two project districts would be at least confirmed Class II Gazetted Officers with other qualifications and experience satisfactory to IDA; and (iii) incremental posts created under the proposed project and determined during the mid-term review (para 6.12) to be essential for post-project development in the two project districts would be absorbed in the regular budget of the HMG/N beginning its 1990-91 fiscal year. Staff Development 6.09 Under the proposed project, the following training would be provided at the following levels: 1/ HMG/N staff are normally required to serve in one particular assign- ment for at least 466 working days. During negotiations it was under- stood that stricter adherence to this provision in respect of project staff would be expected. -44- (a) Agency Level: Routine, mainly technical, job-related training, particularly to enable junior staff (e.g., JTA, AA and overseers) to deliver effective services to farmers and villagers; (b) District Level: (i) Short-term courses, seminars and workshops for officials involved in project activities (e.g., monitoring, evaluation, accounting, organization and effective use of train- ing). These would be organized either by the LDO's office (Train- ing Section) or by PCU. Use would be made both of their own manpower or of consultants as resource persons to give the train- ing; (ii) Seminars and workshops for peoples' representatives and officials together about the project and various aspects of the main processes, such as planning, supervision, organizing rural works using voluntary labor and organizing operation and main- tenance of rural facilities. Some of these deliberations would be conducted at village level and the VP Secretaries would be expected to play an organizing and training role. (c) Central Level: Short-term courses, seminars and workshops for officials and panchayat leaders on more technically advanced aspects of project pLanning and implementation. (d) Overseas: Medium duration courses for senior officials to upgrade basic skills where suitable courses are not available in the country. Such training could be in collaboration with Nepali institutions. Monitoring and Reporting 6.10 Project monitoring would be based on trimesterly reports prepared by project agencies in accordance with a system, including formats, approved b;, IRDB/PCU and acceptable to IDA. The system to be used would closely follow the proposals of the MPLD's IRDP Monitoring Task Force, but modified in the light of the Decentralization Rules and in order:to gener- ate more meaningful information for project management. The LDO office with the help of PCU, would organize training courses for the planning and monitoring staff of project agencies to facilitate the introduction of the system. Each LDO's office would have a team of two supervisors and 13 emnunerators within its planning section, (8 in Nuwakot and 5 in Rasuwa) who would be responsible for conducting monitoring surveys. The LDOs would have responsibility for consolidating reports at the District level. PCU would provide help to agencies, as necessary, to ensure accurate completion and timely submission of reports. PCU would also check and consolidate agency reports from both Districts and submit them to MPLD, NPC, IDA and other project agencies. -45- 6.11 PCU staff to be engaged, part time, on evaluation would be the Planning Officer, 2 Research Assistants (for field visits) and the Plan- ning, Monitoring and Evaluation Advisor. PCU would also: (i) provide operational guidance to LDO staff; (ii) provide supervisor and enumerator training; (iii) prepare terms of reference for evaluation studies/surveys (para 4.38); and (iv) undertake technical reviews of draft reports and organize seminars/workshops to discuss the findings of evaluation surveys. 6.12 Assurances were obtained during negotiations that (i) HMG/N shall carry out a mid-term review of project implementation, the terms of reference of which would be submitted to IDA for its approval by January 31, 1989; and (ii) the review wouLd be completed and its findings furnished to IDA by December 31, 1989. Status of Preparation 6.13 All implementing agencies are established reguLar departments of HMCIN and the only ad-hoc body, the Project Coordination Unit, has been in existence since the implementation of RD I. While there are some vacan- cies in the mid-level positions, all project entities have the required staff to implement the first year's program and prepare for the subsequent years. Adequate financial provisions have also been made in the 1986-87 budget of the government. For the larger irrigation schemes, preliminary design, surveys and cost estimates have been prepared. For other civil works, i.e., bridges, minor irrigation schemes, drinking water supply, etc., the standard design and estimates based on the implementation of such works during the Phase I project are available. UNDP project docu- ment covering the Technical Assistance, overseas training and studies componcnt has been drafted. TORs for Technical Assistance staff have also been drafted and were reviewed with HMG/N during negotiations. Institu- tions for overseas training of Nepalese staff have also been tentatively identified. VII. PRODUCTION, YIELDS, FARM INCOME AND COST RECOVERY Sources of Increased Production 7.01 The proposed project would bring an additional 2,000 ha of cur- rently rainfed (or partially irrigated) crop lands under irrigation, improve productivity on some 8,000 ha of existing irrigated areas through better water utilization and higher cropping intensity, and improve crop- ping practices on some 15,000 he of rainfed areas (para 7.02). In the newly irrigated areas, rainfed maize and millet would be gradually replaced by more profitable paddy anc wheat grown under irrigated condi- tions. Some increases in the net cropped area in the existing irrigated areas are also expected. -46- 7.02 Current and projected per ha yield increases under the project are summarized in Table 7.01 below. Incremental yields on newly irrigated lands are expected to be substantial but only modest increases would be possible on currentLy irrigated areas because yields on those areas are already quite high. It has been assumed that on irrigated lands, roughly 10 kg output increase per 1 kg of additional nutrient would be achieved. Although the poLential for increasing crop production in the rainfed areas in the two project districts is relatively limited compared to the irrigated areas, the current levels of production of rainfed paddy, wheat and maize would be increased with the use of available improved varieties, moderate increases in the use of chemical fertilizer, better composted farm manure and improved husbandry practices. Table 7.01: PRESENT AND PROJECTED CROPS YIELDS PER HA With Project at Present Full Development * Crop Irrigated Rainfed Irrigated Rainfed Early Paddy 2.9 _ 3.5 (21%) Monsoon Paddy 2.2 1.7 3.0 (36%) 2.0 (18%) Maize 1.5 1.2 2.0 (33%) 1.6 (33Z) Wheat 1.5 1.0 2.0 (33%) 1.5 (50%) Pulses/oilseeds 0.7 0.5 0.8 (14%) 0.5 (0) Millet - 0.9 g 0.9 (0) Potato 7.0 - 7.5 (7%) - Z increase in parenthesis. Full development yields would occur in the 3rd year of a farmer's participation. 7.03 Overall Incremental Production. Based on the yield assumption in Table 7.01 above, the incremental production of various crops is estimated as follows: -47- Table 7.02: OVERALL INCREMENTAL CROP PRODUCTION Irrigated Crops Rehab. & New Intensification Rainfed Crop Crop Schemes Existing Areas Development Total ------------------------(tons)---------------------------- Paddy 6,030 6,920 1,050 14,000 Wheat 1,700 1,250 675 3.625 Maize (670) 280 4,800 4,410 Millet (720) - - (720) Pulses/Oil Seeds 110 - - 110 Net Incremental 6,450 8,450 6,525 21,425 7.04 Orchard Development. Expected production benefits from the development of temperate fruit orchards have not been quantified because the program would be experimental and on a pilot scale. Fruit production from the proposed development of tropical/sub-tropical fruit orchards has been estimated by using a 0.5 ha mango orchard model, some 60 of which would be established under the proposed project. 1/ Overall incremental production is expected to reach full development in the project year 18, producing about 250 tons of fresh fruit (mango) (also see para 7.08). There would be, however, about 65 tons of annual reduction of maize and millet production, as the orchards would be established by converting about 35 ha of crop land. 7.05 Forest Products. The main forestry produce that would result from project's new plantation (4,750 ha), enrichment planting (1,200 ha), and maintenance and protection of degraded forests (3,000 ha) and Phase I plantings (750 ha) would be fuelwood, small timber/poles, twigs and leaf and grass fodder. Based on a mortality rate of 50% and an average plant rotation of 16 years, the following incremental production has been estimated. 1/ Although the estimation of fruit production was made by assuming that all fruit would be mango for the purpose of project analysis, planting of other fruits like litchi, banana, pineapple, guava, etc., which are becoming popular in the area, would also be promoted under the program. -48- Table 7.03: PER HA AND TOTAL INCREMENTAL PRODUCXION OF FORESTRY PRODUCE per Ha Total J 000' m3 New Plantings a/ Yr 16: 90 m 3 430 Protection/Regeneration 3 and Enrichment Planting b/ Yr 16-30: 6 m3 77 Phase I Planting c/ Yr 8: 90 in 90 Total Fuelvood 599 Leaf Fodder. etc. Yr 3-30 4 tons/ha 450,000 tons a/ Includes Panchayat forests, leasehold forests, and private and public plantings b/ Includes PPF, and enrichment planting, demarcation by Forestry department. c/ Output from only 1/3 of Phase I plantings have been included as project induced production. 7.06 Livestock Production. Improvements in curative and preventative veterinary services would benefit some 25% of the large and small ruminants in the project area. This would result in some 5% increase in the production of milk (as a result of increase in the number of female animals in lactation, improved calving ratio, and freedom from debilitat- ing disease), and 10 increase in the value of the livestock (due to reduction in mortality, increased body weight, improved offtake). Likewise the breed and feed improvement program in the 20 panchayats (pockets) would improve the productivity of local buffaloes in the long run. It is estimated that average annual incremental milk production between years 4-20 would be around 0.8 M liters. Additionally, an increase in the marketed value of small ruminants to the extent of about NRa 4 M per year would also accrue. Farm Budget Analysis 7.07 Nearly 75% of the households in the project area have farm sizes below 1 ha and since the primary focus of the project would be the small farmers, farm budget analysis was done on the basis of 0.8 ha farm models. Based on the predominant cropping practices, the following approximately representative farm models were analyzed: (1) valley floors; (ii) mid-hills (paddy based); and (iii) mid-hills (maize based). The results, which are summarized below, show that net farm income at full development of project participation would increase by about 25% in the case of a typical rainfed mid-hills farm and by over 80% for a representative irrigated valley farm. -49- TABLE 7.04: FARM BUDGET ANALYSIS FOR A TYPICAL 0.8 HA FARM Without Project With Project c/ Net Returns (NRs) Net Returns (NRs) per p/ha p/ha per p/ha p/ha farm area cropped farm area cropped I. Valley floors Financial 3394 4243 2425 6379 7974 (872) 3189 (31Z) Economic 4322 5402 3087 7949 9936 (84X) 3975 (292) II. Mid-Hills a/ Paddy-based Financial 2574 3218 2340 3331 4164 3028 (29%) Economic 3309 4136 3008 4232 5290 3847 (28%) Maize-based Financial 1646 2058 1496 1956 2445 1778 (19Z) Economic 1964 2455 1785 2383 2979 2166 (21%) III. Mid Hills b/ Paddy-based Financial 2553 3191 2321 3260 4075 2964 (28Z) Economic 3209 4011 2917 4033 5041 3666 (26%) Maize-based Financial 1688 2110 1535 1976 2470 1798 (17%) Economic 1994 2492 1813 2397 2996 2125 (17%) a/ Nuwakot b/ Rasuwa c/ Percentage increase in parenthesis. Marketing and Prices 7.08 Marketing of agricultural produce in the hills is generally con- strained by a lack of organized markets and by poor accessibility due to rugged terrain. HW'IN, through the Nepal Food Corporation, administers a price support policy for major foodgrains, but normally market prices are higher than support prices. There are, however, no restrictions on -50- private trade, prices and interregional movements of produce, which has helped in the development of a fairly active private sector involved in the marketing, transportation and storage of agricultural produce. The project area has a number of established produce markets, and is welL connected with Kathmandu, the major urban center. The main tourist route to the border of China (Langtang) also passes through the project dis- tricts. These provide a ready market for the disposal of surplus agricul- tural and horticultual produce in the project area. During the first phase project (RD I), a number of market sheds were constructed to promote organized markets, and roads/tracks/bridges were built to connect impor- tant centers of production to the district roads, a program which would be continued under the proposed project as well (para 4.32 and 4.33). All these would help improve further the marketing infrastructure in the project area and facilitate disposal of incremental marketable surplus. Given the possibility of widening foodgrains and fuelwood deficits in the country during the next decade, the projected increase in the interna- tional prices of paddy and coarse grains in real terms (according to IBRD projections), and HMG/N's commitment for maintaining renumerative prices for agricultural produce, prices of the project induced commodities are expected to be relatively stable in real terms in the longer term (1985-95). VIII. BENEFITS, ECONOMIC RATE OF RETURN AND RISKS Overall Benefits 8.01 The project area includes some 45,000 farm families in the two project districts. Since agriculture is the main occupation of the people, and as the project assistance would give priority to the needs of the small and marginal farmers, they would be the major beneficiaries of the proposed project. It is estimated that approximately 50% of the farm families would directly benefit from farm production, livestock and forestry activities. The following summarizes some of the major quantifi- able and non-quantifiable benefits. 8.02 Production Benefit. At full development in year 10, (except for fruits when full development will be reached in year 18) annual incremen- tal production of foodgrains (21,400 m.t.), milk (0.8 m liters), fuelwood (.6 M m ), fruits (250 tons - in year 18) and leaf/fodder grasses would increase the availability of these commodities in the two hill districts. Incremental foodgrain production would reduce imports and at border prices provide gross foreign exchange savings (earnings) of nearly US$3.5 M per year from year 10 of the project. The value of the incremental fuelwood and leaf fodder is estimated at about NRs 42 M per annum at 1985 market prices. At fuLl development in year 10, the combined net incremental income from agriculture and forestry sources are likely to be on the order of NRs 150 M per year. -51- 8.03 Employment Benefits. The more intensive land and input use associated with the introduction of irrigated agricuLture and improvements in husbandry practices would lead to the creation of some 5,000 man/years of additional farm labor annually from year 6. All construction and forestry plantation work would be labor intensive and it is estimated that project works would generate some 15,000 manyears of additional employment during the project implementation period. 8.04 Enviornmental Benefits. Implementation of the project w'uld have a number of beneficial effects on the environmental and agro-ecoiogical conditions in the project area. Forest plantation, protection, and management of existing forests, and soil conservation measures would protect the hillsides as well as the agricultural lands, physical infrastructure and settlements by reducing the rates of surface run-off, soil erosion and sedimentation. Benefits from these, though not quan- tified, would be quite substantial. More importantly, implementation of these components would lay the foundations for long-term changes in the environmental conditions through fostering appropriate land use and farm- ing systems. Economic Analysis 8.05 Economic Rate of Return. Based on the assumnptions detailed below (para 8.06) the best estimate of the ERR for the whole project is about 21%; those for the more narrowly defined agricultural development, live- stock development and forestry components are 30Z, 30% and 31% respec- tively. 8.06 Assumptions and Derivation of Values for ERR Estimates. (a) Project Life: 30 years with no residual value (b) Opportunity Cost of Capital (OCC): 13.5% (c) Standard Conversion factor (SCF): 0.9 (d) Construction Conversion factor (CCF): 0.86 (e) Cost Stream: (i) all identifiable taxes, duties and subsidies on goods and services were excluded; (ii) price contingencies were excluded but physical contingencies included; (iii) all investment and recurrent costs during the project implementation period were included; however, for research, training, technical assistance, rural infrastructure and soil conservation components, for which no direct benefits were quantified, it was assumed that the benefits from these would not be limited to this project alone and that the overall contribution of these activities to the -52- project's incremental benefits would be sufficient to account for only 50% of the respective investment costs 1/; (iv) the replace- ment costs for vehicles and equipment during post project phase were included; (v) all project costs were adjusted by the SCF and construction costs by the CCF; (v) economic farm labor wages were estimated as the average of peak and slack period wages, adjusted by the SCF; and (vi) O&M costs, (salaries, wages, allowances, and vehicle, equipment and other operating costs) from year 9-30 were estimated at 50% of such costs in project year 8. (f) Benefit Stream: (i) includes the economic vaLues of the net incremental production of foodgrains, fruits, livestock products and forestey produce; non-quantifiable benefits accruing from forestry and soil conservation works, technical assistance, train- ing, infrastructure development and research were not included; (ii) economic prices for internationally traded commodities were derived from IBRD projected 1992 prices, expressed in 1985 con- stant dollars; all locEl costs for handling, in-country transpor- tation, storage, etc., were adjusted by the SCF; and (iii) economic prices for locally traded commodities were derived by adjusting project. ".e -age market prices by the SCF. Project Risks ani Sensitivity Analysis 8.07 The proposed project would be implemented in an area and by institutions which have had conbiderable experience of implementing a similar but a more complex project in the immediate past (para 2.20). Moreover, the project is in line with the sectoral/subsectoral objectives of the government, and the population of the project area, through par- ticipation in the previous project, have become more aware of the challen- ges and opportunities facing them. Therefore, the project would have full political commitment of the government, as well as the cooperation of the project area population. 8.08 Engineering risks would be minimal because all civil works relat- ing to the various components would be built to simple standards, using mostly local labor, equipment and materials. Production technologies to be promoted for agriculture, livestock and forestry development are rela- tively simple and well known to the participating farmers, hence no major problems in their adoption are anticipated. However, projected yields in the irrigated areas (which would depend on proper utilization of water and timely availability of improved seeds, fertilizer and agrochemicals) and 1/ If 100% of investment costs for research, training, rural infrastruc- ture, soil conservation and technical assistance are included, the ERR decreases to 17%. -53- in the rainfed areas (depending on timely and adequate precipitation) could conceivably be affected by climatic conditions and inadequacies of the support services. However, strengthened agricuLtural extension serv- ices and improvements in the credit and input supply arrangements under the project would help to minimize such problems. Moreover, in estimating incremental production, lower than optimum yields have been assumed to account for such conditions. Yields from the community forestry planta- tions could be affected by lack of proper maintenance and protection by participating panchayats. However, based on past experiences in the community forestry programs in Nepal, it appears that the hill population are showing a growing concern with their ever deteriorating environment, and this has been reflected in their increasing willingness to make a contribution to its restoration. Project implementation procedures (para 4.27) are geared to help ensure that participating panchayats would effectively protect and maintain the plantations and in return share the benefits accruing from them. 8.09 Apart from the above technological and engineering risks, organizational, staffing and flow of funds problems could, as in the past, affect timely implementation of the project and realization of its benefits. Although the administrative environment for project implementa- tion is expected to be much more stable and certain as a result of the commitment of HMG/N to the implementation of the Decentralization Act and Rules (paras 2.16-2.17 and 6.01), it is by no means certain that the new arrangements would be effective in overcoming the usual impediments to project impLementation. But these risks would be partly offset by (i) providing strong implementation support through a restructured and adequately staffed PCU (paras 6.03-6.04), and appropriate technical assis- tance and staff development (paras 4.34-4.36 and 6.08); (ii) strengthening the district level planning and implementation capabilities as well as central level supervision and guidance (para 4.34); and (iii) better ensuring adequate project staffing, reducing staff turnover and appointing senior and appropriately qualified staff to the key management positions (paras 6.04-6.06). Project assistance for improving financial administra- tion of the district level entities are expected to help alleviate the problems of delays in fund reLease by HMG/N and reimbursement by IDA. Finally, the proposed mid-term review (para 6.12) would provide an oppor- tunity to introduce measures to deal with any serious project impediments and thereby ensure proper execution of the project. 8.10 Sensitivity Analysis. In order to assess the effect of the above project risks on the project's economic viability, sensitivity tests on the ERR was done. The results are summarized in Table 8.01 below. -54- TABLE 8.01: ECONOMIC ANALYSIS AND SENSITIVITY TESTS (a) Tests on ERR Components Overall Agriculture Forestry Livestock …_______________________z…___________-- - - - - - - - - (i) Base Case 21 29 31 30 (ii) Benefits - 15% 17 23 28 25 (iii) Costs + 15% 17 24 23 25 (iv) (ii) + (iii) 13 19 26 20 (v) Benefits -2 yr lag 14 18 34 19 (vi) Cost + 15% & benefits 12 15 22 17 2 year lag (b) Switching Values 1/ Benefits Costs (i) Whole Project -25 +34 (ii) Agric. Component -39 +63 (iii) Forestry Component -70 +237.9 (iv) Livestock Component -44 +77 _J Percentage change in benefits/costs that would reduce NPV to zero at the estimated OCC (i.e., IRR becomes zero). IX. CONDITIONALITIES AND ASSURANCES 9.01. The following assurances were obtained during negotiations: (a) (i) prior to undertaking construction of project funded irrigation schemes and other rural infrastructure works, Users' Group(s) would be established; and (ii) by December 31, 1986, HMGN would establish and, thereafter maintain within its Department of Agriculture an irrigation Agronomy and Water Management and Utilization Unit; (para 4.06) (b) HKGN would (i) make available to Panchayats unencumbered lands for forestry plantations under the project by December 31 of each calendar year of project implementation, and (ii) prepare and furnish to IDA by July 31, 1987, for its approval, draft Forest Management Plans for the project area plantations; (para 4.28) -55- (c) a semi-detailed Watershed Management Plan for implementation of the soil conservation works in the project area would be prepared and furnished to IDA for its approval by September 30, 1987 (para 4.30); (d) (i) trainees for overseas training programs would be persons with qualifications and experience satisfactory to IDA and would be trained in institutions/programs acceptable to IDA; (ii) returnees would be provided with adequate jobs to serve in ruraL developmenc projects in Nepal for at least five years (para 4.37); (e) (i) annual HMG/N budgets would include adequate alLocations cover- ing project expenditure in the two pruject districts; and (ii) budgetted funds for each trimester would be released to implementing agencies by no later than the first fortnight of each trimester (para 5.04); (f) all civil works under the project would be undertaken by qualified and experienced contractors registered with HMGN's Ministry of Works and Transport, or by a properly constituted User Group; (para 5.06); (g) participating line departments, AIC and ADB/N would: (i) maintain separate records and accounts for all project expenditures in accordance with sound accounting principles; (ii) such accounts would be audited by an independent auditor acceptable to IDA, in accordance with sound auditing principles; (iii) forward to IDA, such accounts together with the auditor's reports within nine months after the end of each fiscal year; and (iv) include in the annual audit reports submitted to IDA, a separate opinion from the auditor as to whether the disbursements made on the basis of SOEs were in respect of goods and services received and incurred for the purposes of the project (para 5.09); (h) (i) by September 30, 1987, HMGN would, in accordance with terms of reference acceptable to IDA, review its cost recovery policies including collection of irrigation water charges (for medium and small irrigation schemes), benefit taxes on rural infrastructure, and farm input subsidies, and furnish the findings of the review to IDA for its comments; (ii) by December 31, 1987, HMGN would prepare and furnish to IDA, on the basis of the findings of the aforementioned study and taking into account IDA comments thereon, detailed proposals and an action plan for implementing more broadly appropriate national policies and methods for cost recovery, reduction of input subsidies and development of broader channels of input supply to farmers (para 5.12). -56- (i) the head of the PCO shalL at all times be an officer with qualification and experience satisfactory to IDA, and would par- ticipate i: the meetings of the District Plan Formulation and the District Supervision Committees of the project area District Panchayats (para 6.04); (j) (i) Project staff would be appointed, deployed and maintained in a manner that shall contribute to timely implementation of the project and achievement of its objectives; (ii) incremental Project staff which would be required for carrying out post-investment project activities shall, commencing on the Bor- rower's Fiscal Year 1990-91, be included in the Borrower's regular staff budget; and (iii) the Local Development Officers required for carrying out the Project shall be qualified experienced officers of at least confirmed Class II Gazetted rank (para 6.08); (k) terms of reference for carrying out a mid-term review of project implementation would be furnished to IDA by January 31, 1989, for its approval and the said mid-term review would be completed and the results furnished to IDA by December 31, 1989 (para 6.12). 9.02 The following are the conditions of effectiveness of the IDA credit: (a) the UNDP Project Agreement would have been duly signed by the parties thereto; (para 5.03) (b) an executing agency acceptable to the Borrower, UNDP and the Association shall have been duly appointed as executing agency for the Project components financed out of the proceeds of the UNDP Grant; (para 5.03) and (c) that the PCO has been reorganized in a manner satisfactory to IDA and has been assigned with adequate powers, funding and staff (para 6.04). 9.03 A condition of disbursement wouLtd be that no disbursements against expenditures for the provision of agricultural credit by ADBN and the importation and distribution of agricultural inputs by the AIC shall be made until the subsidiary Loan Agreement and the Financial Agreement have been signed by HMGN and ADBN and AIC, respectively, and have been duly ratified by the parties concerned (para 5.04). 9.04 With the above conditions and assurances, the proposed project would be suitable for an IDA credit of US$19.1 M (SDR equivalent of 16.6 M). NEPAI. 1111,1uMwr iMA" rin er iRf (PISE I1)1 Sunmry of Dlstrictwise Lad Use (wriculturu/Forastry) 1/ 1AWA Olsttct Nbaust District Total Wood eaGms Area 2/ Net Areea2aroe Area I/ N e It p AreaGross Area Net Arme . - - - - - - - - - - - - - - - - - - - - - - - - - P^A - - - - - - - - - - - - - - - - - - - - - - - - - - 1. Aricultural Lad Use 4 Oiltivted laid.s LeAl Terraces 7,320 4,620 3,7111 45,840 28,510 22,930 53,160 33,300 26,710 Slirq2I Terrces 2,110 1.550 I.2'0 6,550 3,803 3,050 9,430 5,350 4.340 Valley Floors 280 160 140 7,760 6,610 5,800 7,940 6,770 5,940 Grasi. Lands 24.070 24.070 24.070 4,250 4.250 4,250 28.32D0 28320 28.320 (sib-total) (34,450) (30,400) (29,280) (64,400) (43,240) (36,030) (96,850) (73,640) (65,310) 2. Forestry Lord Use Omittfrs f0e,0 1,90 - - 22,060 - I4Ard1dod 7,390 - - I9,900 - - 27,290 - - Othen 25,150 - - 5,870 - - 31,020 - - amb 9,670 - - 21,220 - - 30,890 - - . J1 (Ob-total) (52,290) - - (48,910) - - (101,260) - - 3. Other Lad Use Sad, Crawl, Bouldeirs - - - 1,440 - - 1,440 - - PRdi 23,630 - - 3,290 - - 26,92D - - Peretual Snw AMd Ice 40,3Q - - - - - 40,80D - - Others tO - - 1,110 - - 1,120 - - (sib-total) (64,440) - 5840) - - 70,28) - - Total (2) + (2) + (3) 151,180 - - 119,210 - - 270,390 - - I/ Colsp led frau preliminary district's land yWe data prepared by CIM A and WResurces It2ap, Project, Kath,uu (1965) 2/ 'tpped Area " nultiplied by land use intensity factor 3/ 'ross Area" multipI led by Internal area loss factor 4/ See Tables 4 ard 5 for doWails '-I- NEPAL xEmAN4IMr~ lUUAL DE l PRWECI (PIiSE 1) Agricultural Lard Use by Rbysotraphic Region and by Land Type in uisua/M&akot Districts I Laind Tpe Physiographic Regions 2/ Hid Notatains Hih Mwmtains Hih Hi Hl Total Rusua District - - -- - - --, -------- (gross area) 3/ Level Terraces 1,600 3,020 4,620 Sloping Terraces - 1,550 1,550 Valley Floors 60 100 - 160 Grazing Land 890 9,740 13,440 24,070 Total (Rusuwa) 2,550 14,410 13,440 30,400 Nuwakot District Level Terraces 27,540 1,040 - 28,5&1 Sloping Terraces 3,800 - 3,80M Valley Floors 6,610 - 6,610 X Grazing Land 2,320 1,820 110 4,250 * Total (Nwiakot) 40,270 2,860 110 43,240 Total (Rusuwa + Nwakot) Level Terraces 29,140 r 4,060 - 33,2ao Sloping Terraces 3,8C0 1,550 5,350 Valley Floors 6,670 100 - 6,770 Grazing Land 3,210 11,560 13,550 28.320 Total 42,820 17,270 13,550 73,640 (%) (58) (23) (19) (100) 1/ Ccqpiled fron preliminary districts land use data prepared by CWl - lad Resouces Mapping Project, Katjm du (1985) V Physiographic regions are classified aninly by geooogical and geomorphological basis. They are however rotighly associated with the following range of clizatic conditions. Hid Mountains = Sub Tropical to Wazm Temperate High oMuntains= Wamn Temperate to Alpine High Hirmal: Alpine to Artic 3/ 'Mapped area" nultiplied by land use intensity factor (see Table 2) WU.'AL -3aMwn Rt.;AL. UlEl DVr IiOJECT I'UA1SK 1 1 Present Crcoppir Patterns nd Estimated land Use' In l&akot District 1/ Net Oltivated AreA Cropped A r e a Lvel Sl§cpiu Valley Total Intensity Terraces Terraces Floors 2/ Paddy Huize Millet let Potatoes Others 3/ Total % - _______------- - - --- ------------------------------- 1. Paddy based crnppi iaddy-allow 470 40 370 80 880 - - - - - 8D Paddy-Paddy SW - 1,810 2,340 4,61O - - - - - 4,68D P&ddy-o'ISed 40 - 70 llO 110 - - - - 80 190 P 'Paddy-OlIeed 20 - - 20 40 - - - - t0 30 Padd4&ewo 7,380 60 1,130 8,570 8,570 - 7 4.820 - - 13,390 Pa*4d-Pd lsat 50 - 260 310 620 - - 260 - - no F.My-Ilieat-ize 20 - 490 510 10 250 - 490 - 1,250 PaddyFallva-lsize 1,230 - 330 1I560 1,560 950 - - - - 2,510 (sb-total) (9,710) (IOD) (4,490) (14,300) (16.970) (1,0) ( - ) (5,570) ( - ) (90) (23.130) 165 2. Huats based crppirig Hise 4/- Hillet 5/ 11,510 2,950 7c0 15,230 - 15,230 13,7 - - - 28,930 igs-Cerel 210 - - 210 - 210 - - - 200 310 lsze-1ulses 120 - 110 230 - 230 - - - 170 400 IVtslz otatoes 560 - - 560 - 560 - _ 560 - 13120 (sbtotal) (T2,470) T2,930) -(a I0) T16,230) Tt ) (6.230) (13,700) (- ) MO) (270) (3D,760) *190 3. Othrs Careal-Fallow 570 - - 570 - - - - - 570 570 HlKcellauuous 18O - 50 6130 -_ 680_ (sub-total) (750) (-) (50) (1,250) (-) (-) (-) C-) (-) (1,250) (1,250) I00 4. Total (1) * (2) 4 (3) 22,930 3,050 5,800 31,780 16,970 17,430 13. %D 3.570 560 1,610 55,8d0 175 5. Crazirg Lands - - - 4,250 6. Total Aricultural Lands - - - 36,030 (4) + (5) 1/ Estirates based on preliminary district land use data prepared by CID-Land Resoures 4apping Proje;t. KaEh-.L-du (1985) 2/ Valley floors Includes tars, alluvial fans and footslopes 3/ Includes barley, huk&hac, pulses etc. 4/ Includes swe mlllets 5/ Includes src maiz2u KPAL SIA4~ `NE W I mv r F8 T 1Z'IIA 11) Present Croppirs Patterns znd Eatinatd land Uso.tn RASLs District 1/ Net tbltivated Ame DI2Ulfl~~~~~~~~t dTI Cropped A reaa Cr~xojpiwu C=owou Patterns Level Slcptm Vaeiy 2/ Total C intrp er* Terraces Terras Floors Padft l tse HlUlet Wheat Potatoes Odin 3/ Toal (2) - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -H - - - - - - - - - - - - - - - - - - - - - - - - - 1. Paddy based croppiT Peddy - Fallow 10 - - so eo - - - - Pa&y-Fe6dy - - 10 to 20 - - - - - 20 Pady - Uet 4W0 - 20 460 460 - - 240 - - PO -dy- Falle - Haize 250 - 30 210 240 160 - - - - 440 (V*-total) (770) (-) (60) (6a0) (640) (160) (-) (240) (-) C-) (1,240) 150 2. Malz based croppirg Hlzez / Fallow 60 290 30 380 - 270 110 - - - 360 Haltu 4 Hillet S/ 1,250 120 - 1,370 - 1,370 1,20 - - - 2,570 Haize - Oereal 370 10 50 930 - 930 - - - 840 1,770 MHize - Potatoes 640 - - 640 - 640 - - 640 - 1,280 (,b-totul) (2,320) (920) (60) (3,320) ( - ) (3,210) (1,310) ( -) (040) (840) (6,000) 10 3. OCthrs Potatoes - Fallo 60 120 - 190 - - - - 18D0 - ID Hlscellavms 630 250 - 380 - - - - - 8ao ODD (sVb-total) (690) (370) (-) (1,060) W) 1) C-) (-) (180) (MO) (1,060) IO0 4. Total (1) . (2) # (3) (3,780) 1,290 140 5.210 840 3,370 1,310 240 820 1,720 8,300 160 5 Crang 1s - - - 24.070 6. Total Agricultural tands - _ _ 29.280 (4) (5) I/ EstImted basd on preominary district lmd use data pripared by ClA - Land Resources Happirg Project, Kathnan (1985) 2/ Valley floors Inclubs cars, alluvial fans ai footslopes 3/ Includes barley, ItxiLktheat, pluses, oil seds, sarcane etc. 4/ InCludes S. ml let 5/ Includes soiw miize ANNEX 1 Table 5 11.UU UfL DDf_ll tlIUIY l11 NA I) EPaclted Promt Crd2e Are, Yield ad peodutimn in Ptjcut Ar Cropped Am I/ Yield V Production RDaw Nw.kot Total - - - - - - - - h( - - - - - - - (t ) (ton) Early padd, Irrigated 10 2,670 2,68D 2.9 7,770 Manso paddy. " 250 7,850 8,120 2.2 17,8W0 Mosoon pay. min£ed 570 6,440 7,010 1.7 11,917 taI Pady (8B0) (16,970) (17,810) (LI) (37,547) "bin. inipted 30 570 GM0 1.5 900 Maize, ainaed 3,3Y0 16,810 20D20D 1.2 26,210 Total =en (3,370) (17,4J0) (20,1D1) (1.2) (25,140) Lnlt. prted 12D 2,770 2,89 1.5 4.340 1,1ot, rinfed 1D 2J100 2,920 1.0 2.920 Total ut Q2W0J C5,570) (5,810) (1.2) (7,250) HIIkIt. ainfed 1.310 13,7D 15,010 0.9 11,510 IhrIev, rainfed 8s0 670 1.510 0.7 1.0Ib) Total grain 6.600 54.340 60,960 (1.4) W,5I7 Potatoes 82D 560 1,38D 7.0 9,0 Others 3/ 850 940 1,82D 0.5 910 Total cropd amea 8,30D 55,820 6.,120 Net cultivated area 4 5,210 31,780 36.990 .kt irrigated arm 2o 7,850 8,s2l V Es:i aed boend an Tobls 2. 3 e: 4 7/ Roued figrs; Mission (asimte bed on Ci) Amal crup awwy cmabaced 6wig Pme I perio (ii) KuI Project Cwon Amlyuls Saerin. VoL. 1. 2 and 3. (iil) Official Crp Stacistics (Sc Table 5) (iv) Spla Survey foe GmD=l Div. RegionMiddle k5mcain (CIDA - Land Resources Mappirg Project) 3/ Oilseed. pulses. crc. I/ Exclude grazing lands -62- AM=Z 2 NEPAL Table I Ratuva-Nuvakot Rural Dewelonmut Proi et Pbase II (RUNUDZV 1I1 Phosins of Crop Dev loummut Prorra XLYI XT ILa ILYr mu DA mu Y6 Yr 10 ha - cumulative -- - - 1. Rainfed Crop Develoment Monsoon Paddy 250 500 800 1200 1800 2600 3500 Noize 250 750 1500 2500 4000 6500 8000 12000 Wheat 200 350 450 650 1100 1300 1350 Subtotal (Rlinfed) 250 1200 2350 3750 5850 9400 11900 16850 IL Irrigated Cron Developnent A. Expansion of existing and construction of now schemes 1. DIEM Schemes Rebab. Labdu-Dhikure 50 100 Rehab. Gadbkar 20 40 Boketar-Chovkita 60 100 120 Siur. 15 90 240 Thansingh 75 120 140 Ratomato 75 150 250 Subtotal (Incremental Irrigated Area by DEM) 70 140 140 140 200 330 545 790 890 2. ill Terrace/Minor Scheme. by MTO Rebab Phase I Schemes 50 100 150 200 250 300 300 300 Rev Schemes - - 60 120 270 460 720 900 Subtotal (Incremental Irrigated Area by DTO) 50 100 210 320 520 760 1020 1200 1200 Total incremental Irrigated Area by DIRM & DTO 120 260 350 460 720 1090 1565 1990 2090 B. Crop intensification on existine areas Early Paddy 500 750 1000 1500 2200 2200 2200 2200 Monsoon Paddy 750 1200 2200 4000 5500 S000 7000 7000 Maize 60 100 250 400 500 550 560 560 560 Wheat 100 300 500 900 1500 2200 2500 2500 2500 Subtotal (intensification on existing Area) 160 1650 2700 4500 7500 10450 11260 12260 12260 -63- ANNEX 2 Table 2 NEPAL Rasua-Nuvakot Rural Developmejt ProJect Phase II (RASNUDEV II) TRAINIXG PROGRAM FOR EXTENSION STAFF AND FARMERS Type of Training Frequency Location Participants Duration Trainers I/ Quarterly Preparation-f 4 x year RTC JT/JTA 2 days DADO/Trainir. Trisull Officers/ Experts/ Research Sta- tion Staff Pre Seascu 2 x year Sub Center Agriculture 2 days JT/JTA Assistants Monthly 10 x year Sub Center Agriculture 1 day JT Assistants/JTA 2/ Farmers Training- 4 x year RTC Trisuli Farmers 5 days Training FTC Kakani (25-30 per batch) Center Staff FTC Dhunche Special ad hoc 3 x year RTC Trisuli JT/JTA 5 days DADO/Training courses 3/ officer/ Experts Special ad hoc 2 x year RTC Trisuli AA 5 days Training Courses 3/ FIC Kakani Officers/ FTC Dhunche Selected JT / The first -and third sessions should be treated as pre season training to finalize technical detai. s of prograus for the ensuing cropping season. The second and fourth sessions should be utilized to reviev activities.. 2 Should cover specific crops/plant protection/horticulture development/vegetable and new set of farmers should be invited for each batch. 3/ Special courses for plant protection/water management/horticulture development/ vegetable cultivation/special crops. 64- EPL _10 - _U 31NN R iK nIE!T mECT - P0IW 1C I 1 11 it I IANEK 2 Tile 25. 01- FullN fIrTM Table 3 btiled Cat Tile Pavmter, hantit. kwe s Pw. Cot. For. or, Sumerm BrAi 1 2 3 4 5 6 7 1 lTtalbiht Cot 1 2 3 4 S 6 7 I Total Ratbe . Tu bW aka _ _ _ - _ _ ._ _ *_ _a _-- _ __ .__*s * __ _w_ - _u flu 1. 940IA 1c A. civil beli Di"t fu W 5seb . - - -1 --O 1.5 -750 75.0 13.0 0.070 .35 o UnLO Otaftmwrtars m ue -31 1W --- -3 0 1.5 - 7 250.0 1!0.0 - - - - Uo 00.0 0.35 0e W3 S.*-T.tal ivil be - M. 300.0 150.0 - - - - 6.0 4 UPidk no - I - - - - I - 2 2e0.05 -200.0 - - - -2e0.0 - 0 0.05 0.95 0 VWl Si-Total ICelan - 20e.0 - - - - 20.0 - 40.0 C. haterhial for Field Trials ueriels IS - 21 30 36 45 60 60 40 311 1.0 - 36.0 54.0 64.0 0.0 1".0 10.0 13.0 59. 0.05 0.n5 0 IN Si-Totd P rlads ftr Field Trials -36.0 54.0 64.0 01.0 1n 1.0 113.0 1130 5I Tstal II IIEIT 94313 - 30U.0 354.0 214.3 01.0 13.0 30.0 113.0 1,S.0 IL M33ym cogs- - - - A. SW srn Imt .bgMiSt no - I I I 1 1 1 1 7 25.05 - 25.0 25.0 25.0 25.0 25.0 25.0 25.0 175.0 0 0 0 L Ant.Nm tlultost no - I 1 1 1 1 1 I 7 25.05 - 2.0 25.0 25.0 25.015.0 25.0 25.0 175.0 0 0 0 S. MM.S1IIIE iMST d - I I I 1 1 1 1 7 25.05 - 25.0 25.0 25.0 25.0 25.0 25.0 25.0 175.0 0 0 0 SOL Fmlan aarr no - I I I I I I 1 7 25.05 - 25.0 25.025.0 25.0 .0Z.0 .0 115.0 0 0 0 oSA Clk no - I I I I 1 1 7 12.05 - 12.0 2.0 12.0 12.0 12 12.0 12.0 0.0 0 0 0 SOL wwr w -nI I I I I 1 1 7 15.05 - 15.0 15.01.0 0 15.0 15.15.0 15.0 105.0 0 0 0 SO Pas no -2 2 22222 14 0.05 - 16.0 16.0 16.0 16.0 16.0 16.0 16.0 112.0 0 0 0 SL li-Total Stff Salaies aod Alie es - 143.0 143.0 143.0 143.0 143.0 143.0 143.0 1001.0 D. 1 rLl. ad flinthmoe OIN odies lump - - - - - - - - - - 30.0 30.0 30.0 30.0 30.0 30.0 30.0 210.0 0.05 0.35 0 MM -Total peration ad KiAntmce - 30.0 30.0 30.0 30.0 30.0 30.0 30.0 210.0 C. am u; im cesuman Ofe Eems ad Cmmil o - - - - - - - - - - 2.0 5.0 - - - 7.0 0.0 0.35 0 aC 1*-Total MmE S0 An CWIML B - 2.0 5.0 -7.0 Total E93T OUS1 -175.0 170.0 173.0 173.0 173.0 173.0 173. 1,210.0 Tow - 561.0 532. 317.0 254.0 211.0 401.0 201.0 2mM.8 latabor 23 15 13:52 -65- £PI* ~~~~~~~~~~ANUN 2 O - _NT ML EWN ICT - 111 £ 11 I Tb Tale 26. MtUUTT IEOIEII MiT htalud cut table in, *mie Parmwtav bAilt. hu. cuts ft.. -At -- - t. For. sris S_umr b it 1 2 3 4 3 6 7 U TOtalb t 1 2 3 4 3 6 7 * Total Rb Ech. Tm bhb kma I. E Um A. 115905 ACT7hIBM baItUI Turt mi ustiatUtm - 100.0 16s0. 100.0 1 0.0 -0.0 100.01 70.0 0.05 0 0 am Traitdrni toar- - - 15.0 15.0 15.0 15- 15.6 15.0 15.6 105.0 0.0 e 0 0 ECT Dburw.Umn- t-i Tour - - - --0.0 5.0 50.0 50.0 50.6 0.0 56.0 315.0 0.05 0 0 UeET pMtd u bicia - - - - - - - - - - 10.0 10.0 10.0 10.0 10.6 10.6 10 70.0 0.05 0 0 EXCT Sab-Total E IN ICTIW ES - 175.0 175.0 175.5 175.0 175.0 175.6 175.0 1,225.0 16 OFFS E I UIES 11 UNUlS- - - - -10.0 160.0 100.0 100.0 160.0 10.0 110.0 700. 0.05 0.35 0 On Totl IEMNE USTI - 275.6 275.0 275.0 25.0 275.0 275.0 275.6 1,25.0 _- _ _ __m 70tl - 275.0 2Th.0 275.0 215. 275.0 27.0 275.0 1m2.0 - - _- 2 - I - _ _ Uwtab. 23.19 12:5 34flJ - IAT lURURA IMEIT N iT - FME 11 I IE 11 I1AR 2 T 0. 3 IWWllML 3IfT A TT,NI - 3 SIU TWbi 5 hOoled CL Table hiut BM ts Uni t 1 2 3 4 * A 7 5 TU u cost 1 2 3 4 3 a 7 5 Total I. _OuNEN COM__ 1-IMMUEAL WSBTS 1. TECHI3 ICILLIsiUr 1. SNIIR VMLlm PLIIIAa I ODT1 MD EWIUMTHW 301S3 3 3 12 12 12 - - - - 39 200.05 600.0 2410. 24J0. 2400.0 - - - - 7,000.0 UuIE NM 3 12 12 12 - - - - 3 200.e5 600.0 2400.0 2400.0 2.400.0 - - - - 700.0 silTotal S1JU WEIILISTS I.200.0 4.93.0 4800.0 4.3o0.0 - - - - 15600. 2. hr 113 MNSILTOM I30N11. APTM -1 5. 1T TN . VI. M6. MN - 2 2 2 - - - 6 300.05 - 00.0 600.0 o00.0 - - - - 1,3e0.0 JtTIIIi PP9T M1 2 3 3 3 3 - - 14 20.5 40.0 60.0 60.0 60.0 60.0 - - - 230.0 m1 LCL CLTU LS - - - - - - - - - 50.0 50.0 0.0 50.0 50.0 50.0 50.0 50.0 400.0 Sfi-Total l S31 Tom CULTTS 0. 710.0 710.0 710.0 110.0 50.0 50.0 50.0 2w40o.0 3. InTEv . uuJUIEEIS RMIN ES A 3 24 24 24 - - - - 75 20.05 60.0 43.0 460.0 400.0 - - - - 1.000 DIST - 24 24 24 - - - - 72 20.e5 - 40.0 0.0 490.0 - - - - 1,440.0 TCLDu. 14I33 NM - 24 24 24 - - - - 72 20.es - 410-0 41*-. 450-0 - - - - 1,440.0 SILWPASrE SPCISI M - 24 24 24 - - - - 72 2-0.5 - 460.0 460.0 480.0 - - - - 1,440.0 n3-EmD INM 4 36 43 46 24 - - - 160 20.0 3.0 70.0 0.0 90.0 400.0 - - - 31200.0 Sub-Total Dm3TIUI. VuITES 140.0 2640.0 2,3I0.0 2.00.0 410.0 - - - 920.0 Sob-Totl TEUK ASSISTANU 1,430.0 3.150. 5 390.0 ee3s0.0 590.0 50.0 s0.0 SD.0 27.100.0 3. 1R3T mm sE TNE - - - - - - - - E1000- 700.0 700.0 700.0 700.0 - - - 2.e0.0 C. MECT ELATD STIS 91E11 NIO-TERI l M - - - - - - - - - - 3.0 300.0 300.0 300.0 300.0 - - 1,500.0 Total D rIIEIG aosr 1#330.0 95110.0 9,390.0 9.30.0 1.59.0 350.0 50.0 50.0 31500.0 1-. _ COM A. 596*USIAn ILNMU AMI. OFFEIt MY 15I 1 1 1 1 1 1 22 15.05 2m.0 15.0 15.0 15.0 15.0 15.0 15.0 15.0 330.0 TYPIST am HY 0.5 I I 1 1 1 1 1 7.5 10.05 5.0 10.0 10.0 10.0 10.0 10.0 10.0 10.0 75.0 LOCAL TLUEL LS - ------- -20.0 30.0 30.0 10.0 50.0 50.0 50.0 1D0J 330.0 tib-To1tal 93.95 No ALL.USi 250.0 15.0 15.0 75.0 75.0 75.0 75.0 75.0 M3.0 3. OfflIX SUPLIES II OIa IBNa LS …----5.0 10.0 15.0 15.0 20.0 20.0 20.0 20.0 I25. TOtW EIKFAI EDITS 25.0 65.0 70.0 90.0 95.0 95.0 95.0 95.0 310.0 ----- ~ -- -- Tatal 10M.0 9.215.0 9,460.0 9.400.0 1.685.0 445.0 14L.0 145.0 324,60.0 lSwtoioMr 23. 15 IL.57 -67- NEPAL ~~~~~~~~~ANNEX 3 RAGIJIA - NWNDY EAL IELOPENT PROI PH II (I1491 3 Table 1 suER flu DW r WART (Mg '000) CUS '0001 Z Total -Z Foiviln aw Local ForeiSn Total Local Fruin Totl Echa Costs 1. DIIESTNENT COSTS A. CIVJIL MIKS 1. BUILDINGS 10610.9 5,630.9 16,241.7 599.5 312.8 S02.3 35 5 2. IRRISATIDN 40,165.0 21,235.0 61400.0 29231.4 1,179.7 3,411.1 35 19 3. ROADS AND JD6IES 19,072.0 10,269.5 29i341.5 1b059.6 570.5 1.630.1 35 9 4. IMRINECA AEtR RiPPLY 9431.! 5079.5 149510.0 524.0 292.1 806.1 35 5 S. SOIL CONSwAnON 3304.6 177M.4 504.0 183.6 98.9 292.4 35 2 SijrTotul CIVIL VERS S2.5S3.9 43.993.3 126,577.2 4v518.0 29444.1 7P,32.1 35 39 B. VENIMlES 652.3 12,393.7 13,046.0 36.2 689.5 724.9 95 4 C. 0E1IPIO 433.6 7,547.9 7,991.4 24.1 419.3 43.4 95 2 D. FINlITtE 1,392.0 343.0 1,740.0 77.3 19.3 96.7 20 1 E. FEASIBILITY AND OER STUDIES 4,485.0 - 48495.0 249.2 - 249.2 - 1 F. CREDIT FUNDS 11,661.5 - 11U661.5 647.9 - 647.9 - 4 B. FEED AID FOUR DEELIfPIENT 1i101.0 - 10101.0 61.2 - 61.2 - 0 H. BREEDING STOCK 1,092.0 72B.0 1,820.0 60.7 40.4 101.1 40 1 I. mRICtL TU0 UTS 1,510.7 16999.6 19B410.2 93.9 939.9 1,022.9 92 6 J. FORET PROTECTI AND PLNOTATIN HAIIAENEN 23,931.9 - 23,931.9 19329.6 - 19329.6 - 7 K. EXTENIOON ACTIVIES 4i943.0 - 4,943.0 274.6 - 274.6 - 2 L. TRAIfNE 7,392.6 2,900.0 10,2.6 410.7 161.1 571.8 2B 3 n. TEhIMCAL SSISTANCE 2,080.0 25,020.0 279100.0 115.6 1,390.0 1,505.6 92 8 Total INUETNT CLSTS 143,259.5 109,830.4 2530S99. 7,95B.9 6,101.7 149060.5 43 79 II. - CCOTS A. SAIARES AM ALLEICE 47M712.9 - 470712.9 2,650.7 - 2,650.7 - 15 3. EIIU111 KHNICLES M EUIPIENT OPERATI AND AIINTEIWE /a 5,950.2 3,262.8 99213.0 330.6 181.3 511.8 35 3 C. IRGATION SOS OPERATIN M MNTE IC 1.161.0 - 1,161.0 64.5 - 64.5 - 0 D. STYES IEROVENEII PROGRAM 714.3 - 714.3 39.7 - 39.7 - 0 E. OFFICE tPPES AND CNUAES 4790.6 2,543.4 79334.0 266.1 141.3 407.4 35 2 F. OTHER EXPNWDINE 1,895.0 - 1I895.0 105.3 - 105.3 - I Total RECENII COSTS 629224.0 5,906.2 68030.2 3,456.9 322.6 3,779.5 9 21 Totl DASELINE COSTS 205493.4 115,636.6 321,120.0 11.415.7 6,424.3 17,840.0 36 1o0 Physical Contingtwcius 9,540.2 6,661.7 16,201.9 530.0 370.1 900.1 41 5 Price Cantinsncies 539297.3 32,978.0 86,175.3 2M9U.0 1.826.6 4,797.5 39 27 Total PRLIECT COSTS 2689321.0 155,176.2 423,497.2 149906.7 9P620.9 23,527.6 37 132 ==== /a ESTINATED AT ABOUT 301 OF INIIESNENT COSTS IN EDILDING 8WHICLES AND EINJ1PHENT. Swt.tsr 23. 1995 14:07 ANN"1123 Table2 - - TMa am wIACT - N 11 MM 11 I FM CIIJ now Mes m00 (El l1o) I Toatl Z Fhrelg DM tcad Fueign TYotl LaI FeIoi Total Ebaus Csts _ _~ ~~ ._ ..__ 3 * 3_33 .... A. EISOT 1. A^nm ucc SIEDI EIES 0 0INC 131 10.1l.4 2p4*4.9 12,02.3 W5.2 136.9 700.1 20 4 TIWNIE 6,760.2 1546.3 10,36.4 4F6.7 15.9 572.6 15 3 BnT 346.4 0.3NAM 56361.0 249.1 1.041.1 39131.2 33 to 011.ILTOE N IHITIQLIIK FMNS 4,456.2 H13O4 654.5 247.6 113.8 366.4 32 2 LINh NEWLEEN 6434.1 2041.0 3945.0 361.3 135.6 4%.9 2 7 3 3Ia0LTl3 CA3311 7.711.0 - 0731.0 4U7. - 4U7.0 - I URI1IIZA11 L 131W5 2v963.7 17,211.0 20425.7 164.9 9I 1423.0 E5 6 S-Total HIOTIAL lEmNt 9103.5 44M73.4 123640.9 4,94.6 2M45.4 6110.0 36 P 2. RUN. INF3SMICTURE p ,M10C 313TEPLY * NINESSV 30 10.23255.3 9,2.3 2,031O.0 2,014.2 546.1 2It50.3 35 9 3. PtuiT * SOIL CS fnot A OT1 NLMIElI FDEST tUMATI0 M1 CW TY FOIEST EW ENT 1304438 14339.6 19,334.4 2,42.5 74.4 1,076., 7 6 SOIL CUSEIETIU 4,959.2 I.S9.1 6.I51.0 2o.0 110.7 310.6 29 2 9*S-Totl FUEIl . SDIL a n1310 AN 3*11t 331A300 22#904.0 3.33.4 26,235.4 3,272.4 115.1 1,457.5 13 9 4. IIENwoaTh MO E * INSTTM . mwtwmn STUSSIIEIS OF 111 4.364.7 2.323.7 79193.4 270.3 129.4 39. 32 2 STIUSIEII OF LU 3,127.4 1923.5 5.ss.9 173.7 107.1 230.9 3 ' Sub-Total ZEWENATINSUPF03 AM IDSTITWTK TIEK WET 7,992.1 4.257.2 12t24S.3 444.0 236.5 am0.5 35 4 Su-Total macn 126,254.3 62.15.7 190430.6 7,125.3 3.453.1 10,578.4 33 59 1. WA *. TMMUWF DEIJFNN 3- STREN91 E X3 0Ns n 11CES 5,973.1 I.7.4 7,714.5 331.9 6.7 420.6 23 ' 1*2m 2431.1 107.1 2.as.2 141.7 6.0 147.7 4 1 IRSTIDN 5630.0 2,370.0 1,0e.0 312.8 131.7 444.4 30 2 uuILiNE NM HRUnLTI FmS 2.200.3 1,015.3 32135.5 122.2 56.4 17.6 32 1 UWSOi UEWLOPIH 5,671.2 3,173.3 7,045.0 326.2 65.2 391.4 I7 ' upjpTjpL ssr 2.5.5 - 2,5O.5 160.0 - 160.0 - I URILIIM. D1n3 69.7 1,336.3 2,02.5 35.4 74.3 112.7 66 1 Sub-Total 310L13 KELWL3EI 25,797.3 7,744.4 33,542.2 l.433.2 430.2 1.03.5 23 ID 2. Oft I;WBtfl31 i klEI CUR SUPPLY * 3I03ES * ROM 10.241.2 5411.3 15,76.5 569.3 306.6 7.9 35 5 3. FONESntr * 1313. CESDTIS arVTE N Ir FSSES rPTATIEN ND CP11R117 FT QDKUWT 11,073.9 1.1m5.5 12,379.4 615.2 61.4 676.6 9 4 SOIL 033M0*1 4,195.5 142.1 5,677.5 233.1 02.3 115.4 26 2 St-Total FtRhRT , SIL TNSERVIN Me MR HIW_EIT 15.20.3 2.5M7.6 17U,5.9 348.3 143.9 992.0 14; 4. IW IBENT*T3U SRE a- DiSTfIlOIt. EIQWIeT SITTliIN CF 210 3,374.4 199I3.1 5,357.5 187.5 110.2 297.6 37 2 STIEEIN OF UO 2,507.1 1407.7 3,914.3 239.3 71.2 217.5 36 1 Sb-Totl IrLWOTATI Mmr a INDTIT0TISW EWLUPNT 5,081.5 3390.9 ,272.3 326.3 M.4 515.1 37 3 Sub-ToW tAl UN 57D,196.1 39Y241.0 76437.3 3,177.6 1.061.9 4,246.5 25 24 C. UNUl4L SUPE LVI 1. LWam - 1 - FnA 1ATIVE esHal 1.510.0 I197.B 2p777.8 B7. 66.5 154.3 43 1 APPREP*A TECNIIS 33311 1.0.0 245.0 1,925.0 93.3 13.6 106.9 13 1 St-Total AOMt TOL IEIEI T 3,260.0 1.442.e 4.702.8 111.1 0.2 261.3 31 1 2. IPLITANn S911 AM DSTITUTIWL KEWNT P531JE CElMNI SF111E 6,701.3 2466.1 9,.4 372.3 149.9 522.2 29 3 STUI0NIC OF MM 4.336.0 1,67.5 6.492.5 267.6 93.1 360.7 26 2 STR5EIIR OF 10N 014.5 502.5 1,317.0 45.3 27.9 n.2 3a 0 1EIWbL SISTEU . OE31AS Ti1 lU STUDIB 4-440.0 27921A.0 32.360.0 246.7 1.551.1 1,797.8 86 10 S9-Tol ILWENAT*TI 6 aD I nTIUT DIl EWIPIENT 16.771.7 32m.1 49,58.9 931.0 I 22.7 2753.8 66 15 S*e-Ttal W0mT S9P03 UlIT 20,031.9 34.23f.9 54,27.7 1,112.9 1,902.2 3.015.1 63 17 ToW 3SEU1E CUMS51 25,433.4 II5v63.6 321,120.0 11,415.7 6,424.3 17,840.0 36 100 Phiad Coinaota s 9.540.2 6*6UI.7 16.201.9 530.0 370.1 900.1 41 5 Price CsUaurlas 53.297.3 327.0 06,75.3 2,961.0 1,26.6 47087.5 39 27 Tota 990.C1 COSTS 2U.321.0 155,176.2 423,497.2 14,906.7 1t620.9 23,527.6 37 132 Srwtbur 23. 1M5 16:40 -69- ANNEX 3 Table 3 110100 -mistM 1m1mW mmWuiP rncT - rn 11 ui nI PVUoeKt CmtoRA ho Your Toels Inlnudil Cutteauimn (Uh 000) I 2 3 4 5 6 7 U I.6. U*- ---- **C.afl. ----- - ---- ---- .. a. mUmO 1. A1ICaLTURIAL R E- TN STREIINOTIINU [IEIIS IN SERVICES 52.6 1,410.2 197M.4 23A2.3 2M3O3. 2131.9 2i406.0 2,334.2 Is5i34.5 tUilRIE 5.3 62.9 142471 IP631.7 2132.? 2UM.0 2,42.0 2w313.e 13P26.8 IEISATIS 924.1 5.411.6 3.00-s 12,010.5 lI0.1 119M.2 14,107.0 0.715.4 79.575.7 *AlLTDE Nip NU?IOTLTUE F5 44.5 1130.6 1,379.1 1,651.9 2463.0 1,460.4 1i325.2 811.9 Be216.7 LIVESTOC JD0310 30.0 1,064.2 1,279.4 1211.3 2,53.0 ,299.5 2,592. 1,20.1 10,757.5 *UIC3LTUL l:D11 I1.4 471.6 941.0 19556.1 3,175.1 2,41F.3 2,13.7 2,41.6 12,601.4 AIRIILT DIMITS 1,655.7 2186.8 2,Z944.9 315P.6 4,09.5 4,431.6 4,397.1 4,.9 27,916.0 Sub-Toal AGRIhO.II.aL OE'JELOP3It 2,95.5 12317.9 17,54.7 22,99.4 32,01.3 26,362.9 3,044.0 23P359. 16,4998.6 2. I3.L INFRASTRUCT I W 3119119t SifV , 1IRE f IES, t0IBM 369.6 3,091.5 5.406.1 5,375.? 1,279.9 7,M.6 &665.U 4,671.6 39,5B0.4 3. F9tESTIY , SOIL CUIU TIU MD OTER lIWKIENT RIE5T PLIThTIIN NOl [NNUNT F17EST EWlIET 511.6 1,544.5 2,567.7 3.016.3 S,e10.4 53u3.5 4,9M. 2,75.7 26,915.4 SOIL CINCMTIO 96.7 m.0 914.7 165.9 1,293.4 1409.6 3931.0 1,601.5 9,126.6 Sub,-Total FORESTY . SOIL CIONMTW MI TER IAWEJNT 606.2 2,313.2 3,482.4 4,942.2 6,303.1 7273.1 ,7e60. 4,353.2 36042.0 4. INWLeIIII _ S09931 MD INSTITnnTI3I. KWLE'1E3T 5T1 131ENI OF PTO 107.2 1004.0 9.S 1s036.2 1,073.0 1,11.4 2,031.1 Ie105.4 8,5".0 STRIEMINOE OF LU 16.0 1222.6 600.1 459.0 524.2 90.5 00.0 1.556. 6.201.7 Sib-Toul I1W TIT1 SWI0 MD INSflUTIN KlJPDI 123.2 2306.1 1,597. 1575.2 1,597.2 21.70.0 2,137.1 2.642.3 14,79.7 6-lotal _r63 3,99.6 20O504.5 0,e029.7 3433n.5 46,M.1 44,031.4 46,307.0 35,026.1 7s50920.7 ;. RAuaM 1. fmiaTW KVEWUI'IEs STOEIIEINI EXIENSIE SUMICS 4.5 1,030.4 199.4 1.339.0 1,314.9 1.3.5 1,926.9 1,217.0 9,522.5 1I9Nl1B - 183.2 315.3 42..4 613.7 66.4 697.9 726.5 3,632.3 IlI1hAllE 130.7 2.111.1 23113.3 1.&4C. i 979.7 453.6 616.4 6u.0 10410.3 RICILaTU S MD NORTIC3LTtIUE F4NS 114.0 004.5 611.7 530 3 3B2.9 441.3 692.5 271.0 3456.3 LIVESTOCK EUIIIT 37.3 9f3.5 106.0 1,069.6 1,151.4 1.168.0 1,405.0 1l074.5 7,99.0 AGRIDLtU.L RDIT - 100.0 364.1 617.6 653.0 876.1 1,005.0 220.2 4,058.6 aaSCtiCliEA Ies 76.8 105.3 531.1 364.0 402.2 390.4 315.9 447.2 2,723.6 Svb-T1tal IRICULTUUL IEOJIR 341.4 5,410.0 e,681.6 6g062.1 6,560.6 542i.2 6,40.3 4621.4 42,10.7 2. 100*1L IDnmI * TU RE UC t 3RIM1 01TER SUPPLY . RI S RMSs 369 ln10.3 2,169.4 2,650.4 31333.2 3,631.5 3,024.5 3I996.6 229396.5 3. na3E11 , SOIL CUEVTDIU IBTER MRIBT ;utS7 PUATATIONI MS aUIIUITI MMST lVELOPNENT 303.9 1.210.5 1,9.7 2,03.0 39193.3 2,68.7 2,405.9 942.3 25,602.0 SOIL CISISRSTIE 49.7 721.6 79.4 952.0 19115.2 11".90 1,502.6 1,119.5 7,459.7 St,6-Toal FWar . SOIL IC_1ION AN ElmER TI*EIO 353.5 2.002.1 29693.1 3840.0 4,313.5 3e0f0.6 3.901.5 2.061.8 23,061.7 4. DrU MffATION 1W3 AM INSTIDUIII. KVELOFiEll STREUEI OF BM 05.3 970.0 724.9 734.2 681.2 662.1 1,562.6 96.1 6,323.5 SIREIlENINGS OF LBO - 097.6 504.6 421.5 456.7 039.3 640.5 1064. 4,813.5 Sub-taol INUMfJTATION SIWR AM6 INITITUTIIIL DEVELOPMNT 55.3 le57.6 ,229.5 IIS55.1 1,144.9 1.501.9 2h203.1 1,960.9 l11139.0 Sib-Total ROM 1,149.9 11,026.0 13,473.5 13,709.O 15.360.2 14,651.1 169776.4 12640.7 9,136.9 C. CENTRAL S99l0T EIIT 1. MMIiLTEM DEVELW1NE M - FAIR AIMWTIE IE(AC - 615.0 617.4 462.0 297.2 347.7 670.7 360.1 3,379.0 OWUPIMTE TEDOLOST IOIIT - 309.4 330.5 355.1 302.1 401.0 429.3 440.6 2,662.1 Stb-Total *ACLT IEK MT - 93.4 947.9 817.9 679.4 755.7 3,100.0 016.0 6,041.0 2. nET4Tn SUPPO1T AS DISTlIIIIIL lElUEiENT 3T01 CIOlhlMT11 OFFIMCE 377.7 2,221.4 1441.3 1I210.5 19131.3 1,170.6 2,436.4 1,266.7 11,263.0 STENTNENING F OD1 69.3 914.3 19110.0 1,397.0 19515.5 181.1 1096.5 592.1 7,7Y94. sIIIENI OF 0a0 - 31.4 141.1 145.6 150.5 155.2 471.3 162.6 1P507.6 TED1UL A4551TM4E , tffA TRAIN110 M SThES 12t07.5 10,32B.2 11357.7 12,220.3 2.312.1 623.9 184.3 109.2 39,103.2 Sub-Total IIT4AT10 SIRT 3 II6ITUHOI. EELOIENT 2,334.6 13,894.3 14,129.1 14,91.4 5177.4 2.030.0 49100.4 29210.5 59,740.6 s-Total CETl 99 MIT 2,334.6 141817.7 15,076.9 15,799.4 5,110.1 3PS6.5 5,2J.4 3,C27.3 65,7J9.6 TOtal Uci CTrs 7,411.1 46,340.2 56,500.l 64,341.9 6,410.0 62,269.1 60,372.6 50,694.1 423,497.2 5Stder 23, 195 16140 70- _-__ w _v*_~~~~~~~~~~ ~ ~ rJ 1111I11 I Y*W * m- a khdam I" e- left -11111ID Mile.~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ .-f r- muss si _ _ - J .3- 3- - - -I.30.553 - - - - . k-,111 MID - .se.; -; - - a a e*Ans. - 3 a s - - - - -ma -mIds k-lid _s R. - I ---a - - - - -a --- Steen ..e a - -s s -s - - ma C. _dm ist..l - -, - UuS - U. - - - - r. - - - M6. - I-3- - I ma - - --ma -m MA t if d I_ l - - - - - - "- . 3. - - - - ma 3. FwSt.. Milan le-_ - - - - - - - m -a m.s - 3 . . - kwlt NMI, Maa ma - 11-s 33. tm 4. It.? 13w1.s ad 413 CWPdM.Aff I 33313I I 3.63- NA 3.$ u20 Auau. n.mualI. M F.iI_. _ - 31-3 1 - -323 -i 1- -1331. 3-11 r3.4 2. FiMa 1a1.W -- SWUl D. -buSnm . I33I3I II3 3 34.639554 .4 33.4 PA "At1lVA "A.419.4 193 Eats - Il222221 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~32 U1. 33.2 U*3 Si SisZIA MA ltJ lsi.I 2-J lI_en hiWs- I-la- srI I a a a n bi.*asL - -2~~~~~~~~~~~~~~~~~~~~2 22222s4 3. -3.1 U.S 242."a U.62 41U31 4. tan OIS am h.. t1msm - __ I I I I I I3 I M I. *9 .IJ AJIJ INA 3 .4IIJ4 IU A 11 .4 1163 fts. AM 1" 'I 1' 21 1z '1 I' '1 | .l. An nA ua 1Z .A 1.a 141 AIL . I 3 2 a I 2 331 Ism 11.33 UJ 11.4 f. U a 2J 4 11.2J 153 ta-tat lng-s ad C.Wans- tes-. 34 aL9Si i 33.2 3.2. 9.2a aas31 _mite - 5L I 1 1 :7J 134.3 N6 NJ1 3.2 3.3 na NJ1I.2 mA.t. - @3la31II3 1m 7.3 am s 6.4. ns uaizau.s nzans ~s.s 53ft8d. - L 2 2 2 3 2 2 1 3.9 11. 11 .1 2. 99 39 3. S. 3J 234 13 I I I I I I333 5 1 11 1 .3O U.3 1131 3 3 3 3313 D 1i . mm.l - 333 3113S 9.9.4 9.3 9. 919.19WA.V 9.19A 72. 545.1m316..w 5131I137I 9.335 4.4 9.IJ11.9.3 194949.1 IIJ39. 16s4 Me I-t *n- - -lI l D 7 11.9 -13 3 131.6235 3 3612A . 3J 336.7 h_____ -. 3414 42 .5 i. . a u.esaa 5.3-2a .4 k_- Id ss Iras-w .r D t. 15D.6 1 . 92n9 I. 9.m 1ma a.9 13.1"a _ L * : *a1 21 23 2 4 2II 271 UKR 7. IIL2 N.1 A3 [MI r2 14U IWl 3UJA IU.I ens-a - 31313331 5 I1.53311 tI - 14 VA VJ UJ11 39 3 1 t .4 1.__1" - 3131I13K I IN 1 . I I r21J3 JJ 7 AJ 21 33 maJ CIwStItd 1 31 1 9.3394 93 9. W11.9.3949.3 94.3 Wm- _L _ _ v5 1. 1 1 1 .1 .1 It r. ":m Ja J5J iJ. Ja u1 Sj aJa a.4 a - I 3333131 3 I 2 I 3 I3 5 la 33.72-73 6rJ "~~~~~~~~~~~~~~~~~~~~~~~~~1 1, 1. 1 I I7 S. 'I rtusu JSi S X.7 1 UJ2.7 Ur 43II 13 I I I I 73 9.54 L. 9.1 9.1 j 9.1 9.1 .1 13 k-Mi" wan Lus-m 1B"iS OA.6 46. 4 64141 46.5 46 43 4L3 Wa k-lid- IE IiS. a lIla. I1 4I9.9 1 7 - IIJ U a IIJ. "e1.97UI 5--_ b *. a mas. s . . ..a a J. 31 MA n o sw - aa ma as ma 51 .J23*J.8 13.11.5 7933. ktat 555 5S 61111 SIn - ana ma. mab mJa mab maJ im-s r. wi eus s S-Td _111I1111 ION M MO IIO M 111111 MA MA MA MA5U 11 JIJU U" UJ UJ1.m mis-I-s- -l ma ma maJ ma isa m a ma us.5 n-M ur _em an -1 ma m: ma-. ma me ma7 ma am C. mm fE 1__1 _i1_ m-is -s -a ma ma ma m a m2 a n sa k-Md flU__ euK Wa is_s ma ma m Da maJ mA a ma aNA skilt_ - wm asma ma U, ase ma -*a sa 1 1111,ALW 3 - - - - - - - - - NJMAM 9Mam A t N _ . _ 4 1_ 1A A1 _ _ _ _ _ _ AN 3 -71- Table 5 NEPAL IWAS-UIOT RUR DZYR.fh PR,O3CT - PASEI-I (RAIUDYV UI) PROFE3SIL TICUMCAL * KAWAGZL Established In Post Proiect Incrmetal Pocu Requirement Staff A. Cametted Staff mlorn Crnade Job Cil/T Senior Agriculture. 4 4 13 9 Engineezring nd Forestry Staff at District Level. G/hIIIT SM, Forest Officer, 27 15 47 32 Assistaut Agronomist, Horticulturiet, Production Officer, Assist. Engineers, etc. c/thIT Local Development Officer 2 2 2 GIII/lT Planning Officer 2 2 11 9 Administrative Officers TOTAL Gaetted Staff 35 23 73 50 3. Non-smaztted Staff RNIlT JTf, Overseers, Draftmen, 98 69 140 70 Rsearch Assistants, Forest Rangers, etc. lC/i/IT JTA, Assistant Ranger, 95 47 150 103 Sub-Overseer, Field Assistant, etc. lCIfhIIT Accountants 8 8 20 12 NGiI/IT Senior Clerks, 15 10 30 20 A*. Officer NG/It/NT Typist, Clerks. 39 29 117 88 Stoackn, etc. TOTAL Not-Gazetted Staff 255 163 457 294 * Only district level offices and excluding Project Coordinators Office. -72- ANNEX 3 Table 6 NEPAL RASUWA-NUWAKOT RURAL DEVELOPMENT II PROJECT Estimated Disbursement Schedule IDA Fiscal Year by Semester Semester Cumulative z -US$ M FY87 1st Semester .4 .4 2nd Semester .6 1.0 5.0 FY88 1st Semester 0.8 1.8 2nd Semester 1.0 2.8 15.0 FY89 1st Semester 0.9 3.7 2nd Semester 1.1 4.8 25.0 FY9 lst Semester 1.2 6.0 2nd Semester 1.3 7.3 38.0 lst Semester 1.4 8.7 2nd Semester 1.6 10.3 54.0 FY92 1st Semester 1.6 11.9 2nd Semester 2.1 14.0 73.0 FY93 1st Semester 1.5 15.4 2nd Semester 2.0 17.4 91.0 FY94 lst Semester 1.7 19.1 100.0 2nd Semester NEPAt RASUHA-NUHAKOT RURAL DEVELOPMENT II PROJECt ECONOMIC ANALYSIS TOTAl. PROJECT ./ NRS 000 I 2 3 4 5 5 - .7 .a 9 to ii1 i2 13 - -14 is IS 1? is is i. casts TOTAL PROJECT COST 5515 22225 35914 38904 40747 35225 36929 26975 - - -- - - --- VEHICLE AND EQUIPMENr REPLACEMENT - - - - - e 221 2134 13367 4161 ST$ 121 2134 13261 4167 Ill POST PROJECT RECURRENT COSTS - - - - 5659 5559 5659 5659 5651 1619 5619 5519 51659 1619 5619 LABODU OII IKURE IRRIGATION SCHEME ON FARM COST as8 331 392 392 392 392 392 392 392 392 392 392 392 392 392 392 292 392 CROP INTENSIFICATION ON FARM COST 2 190 695 2034 3122 4541 4110 5246 5246 5246 1246 5245 1246 1265 246 524 5 24 5246 5246 5246 tOTAL PROJECT COST 1617 32103 35940 41420 44611 4015£ 44091 32513 1226£ 12024 13431 24154 16064 12268 12024 13431 "14566 16064 12268 II. BENEFITS FORESTAY BENEFITS - 923 110 125 175 240 9775 9621 9625 9625 9621 9821 9525 9625 14550 16125 34500 52875 LIVESTOCK BENEFIT - I 140 688 1455 3180 4933 5658 5488 5838 7042 9039 9645 841 6261 £102 809 099 8099aos LABDU DHIITURE IRRIGATION SCUHEM- 451 1129 119£ 1198 ls 1596 159£ 1596 1196 119£ 1596 11 98 1596 159£ 159£ 11 98 155£ 118 ISIS CROP INTENSIFICATION 936 062 303£ 9293 17661 22359 23519 25839 25839 2183 25639 25639 25632 25839 25639 25639 25639 25839 21633 RASUHA MIDHILLS MAIZE BASED NET BENEFIT 88 174 483 403 402 403 402 403 403 403 403 402 403 403 403 403 402 403 403 RASUWA MIDHIILS PADDY BASED NET BENEFIT 85 379 556 823 823 823 823 623 823 523 823 823 823 523 823 623 623 323 823 NUNANOT MIDHILLS MAIZE BASED NET BENEFIT 43 184 501 421 421 421 421 429 429 421 42! 421 421 421 421 421 421 421 421 NUHAKOT MIDHILLS PADDY BASED NET BENEFIT 94 411 946 923 923 923 923 923 923 923 923 923 923 923 922 923 923 923 923 NET BENEFIT VALLEY FLOOR -181 9302 2839 3299 3527 3627 352? 362? 352? 3627 3527 3527 3527 3527 3521 3622 3527 3527 3627 NET BENEFIT SINRA - 05 104 13 14? 434 434 si 1142 2253 2212 2251 2211 2259 2251 2251 2259 2259 2259 NET BENEFII THANSINO 161 290 290 210 290 210 1023 1450 9806 1606 1812 1812 1612 1812 1612 1612 1612 1612 NET BENEFIT RATOMATO - 311 463 592 1310 2191 2453 3453 3221 2954 2552 26559 2549 2649 2649 .2649 2549 2649 2541 NET BENEFIT GADHKAR SCHEME - 224 472 42 472 472 472 472 472 472 412 472 4 12 472 42 472 412 412 412 NET BENEFIT BOKETAR CHOWKETAR SCHEME - - - - 355 71? 955 1064 1054 1664 1064 5084 1064 1054 1014 1064 1084 1184 HORTICULTURE BENEFIT -37 -60 -l06 -945 -Ill -185 -963 -tOG -21 60 II, 252 314 356 39I 414 425 425 425 TOTAL PROJECT BENEFITS 229 442? 90994 18519 29000 35995 41510 55429 55289 57956 56941 61012 61686 60502 60262 64968 565511 64926 103301 INCREMENTAL NET BENEFITS INCREMENTAL NET 5ENEFITS -5265 -26016 -26026 -22809 -15581 -3952 -2469 23806 44029 45932 45514 36348 45522 46234 48359 51532 4168?1 63862 39032 . II *3. *':*.*. 3 ftu **;;A1 fln!fit :tt2a,:,tt. I:.: nt: ::t:..:t 3itZ a a/ EXCLUDING 501 OF ACTRAINING. ADAPTIVE qESEARCH. SOL CONSERN.RRLIRS.1 N / RIIGAD90 FA lbl NEPAL RASUIIA-NUHAKOT RURAL OEVELOPMENT 11 PROJECT .......................................... ECONOMIC ANALYSIS TOtAL PROJECT of .................................. NRS OOC 20 21 27 23 24 25 26 27 25 29 30 1. COSTS 1OTAL PROJECT COST VEHICLE AND EQUIPMENT REPLACEMENI 727 2134 13367 4767 971 727 2134 13357 4765 971 727 POST PROJECI RECURRENT COSTS 5659 5559 5659 5659 5659 5659 5659 5659 5659 5659 5659 LABOU OHIKURE IRRIGATION SCHEME ON FARM COSI 292 392 392 392 392 392 392 392 392 392 392 CROP INTENSIFICATION ON FARM COSt 5246 5246 5246 5246 5245 5246 5246 5246 5246 5745 5245 TOTAL PROJECT COST 12024 12431 24564 15064 12255 12024 13431 27464 15064 12265 12024 11 BENEFITS ............ FORESTRY BENEFITS 55125 47100 22425 6675 4050 4050 4050 4050 4050 4050 4050 LIVESIOCK BENEFIT 8009 S099 8099 8099 8099 8099 8099 8099 8099 6099 1099 LABOU ONIXURE JRRIOATION SCHEME 1598 I598 1598 1598 1598 1598 1595 1598 1598 1595 1593 CROP. INIENSIFICATION 25519 25189 252 2589 25839 25819 25839 258939 25982 25839 25839 RASUNA MIDHILLS MAIZE BASED NEI BENEFIT 403 403 403 403 403 403 403 403 403 403 403 RASUNA MIHILtS PADOY BASED NET BENEFiT 823 813 523 823 823 823 823 823 523 823 823 NU11AKOT MIDHILLS MAIZE BASED NET BENEFIT 421 421 421 421 421 421 421 421 421 421 421 NUNAXOT NMIHILS PADDY BASED NET BENEFIT 923 023 923 923 973 923 923 923 923 9223 923 NET BENEFIT VALLEY FLOOR 3627 3627 3627 3627 3627 3627 3627 3627 3627 3627 3627 NET BENEFIT SIMRA 2251 2251 2251 2251 2251 2251 2251 2251 2251 2251 2251 NET BENEFIT THANSING 1812 1512 1812 1812 1812 1812 1512 1512 1812 1812 1812 NET BENEFIT RAI1ATO 2649 2649 2649 2649 2649 2649 2649 2549 2649 2649 2649 N7 NET BENEFIT GADbiAR SCHEME 472 472 472 472 472 412 472 472 412 422 472 NET BENEFIT BOKE1AN CHONMETAR SCHEME 1084 1084 1084 1084 1084 1084 1084 1084 1084 1084 1084 HORIICULTURE BENEFIT 425 425 425 425 475 425 425 425 425 425 425 ....... ......... .......... .. .... . ....... ......... . ..... . . .... ... .... .... .. .. ... .. .... .. . .. IOTAL PROJECI BENEFITS 108551 97526 72851 57101 54476 54476 54416 54475 54415 64476 54475 ....... ........ ....... ......... .. .. .... .. ....... ....... ... .... .... .... . ... ... ....... INCREMENTAL NEI BENEFIlS ........................ INCREMENIAL NEt BENEFITS 95527 84095 48187 41037 42208 42452 41045 29512 38412 42208 42452 .s****- -.:i:i: Tetsts :2::::: ::::::: u:2:: 2.::::: : :::::: -2 : i November IS. 1985 18:57 Internal Rates ot Return of Hel Streams ,---s- ....... -.--st .......-s .,:.t N. 101A 29. 451 SWITCHING VALUES Al 13.51 APPRAISAL SWIICHING PERCENIAGE STREAM VALUE VALUE CHANGE . 1011 214.093.70 131,080.48 38 772 C.OTA 131 080. 48 214.093.70 63.331 1p Net Present Value at OCC 13.5l * 83,013.2 Internal Rate of Return * 29.41 % a Coatxn Equivalenl Rate of Return 2 22.51 SENSIIIVIlT ANALISIS ..:. ...28..... ....... ANNEX 4 NEPAL RASUWA-NUWAKOT RURAL DEVELOPMENT PROJECT - PHASE II (RASNUDEV II) Selected List of Documents in Prolect File Al The Overlooked Link in Agricultural Planning - Mimeographed Report by Mr. Bharat B. Pradhan; September 1981. A2 Rural Development and Decentralization in Nepal - Paper presented to Nepal Aid Group meeting by HMG/N; April 1985. BI Rasuwa-Nuwakot RuraL Development Project, Second Phase Project Pr-paration Report, APROSC; July 1983 (in four volumes). Cl Project File - Detailed Project Costs. C2 Project File - Working Papers on Organization. Item 1 - Project Organization & Implementation Item 2 - Technical Assistance & Overseas Training Item 3 - Summary of Decentralization Act & Rules Item 4 - Job Descriptions (LDO, Planning Officer & Village Secretary) C3 Project File - Working Papers on Agriculture, Irrigation & Rural Infrastructure Development NEPAL NEPAL RASUWA-NUWAKOT RURAL DEV A-NUWAKOT RURAL DEVELOPMENT PROJECT PHASE It PHASE 11 mAll HHAIit >Nuwakot Projel h Nuwokot Prlied Areo X~~~~~~~~~~~~~~~~~ fAI -L rVflES D ~ FApps!,oe E DrFACILItEs, E 6G._T,,k Ro 5 014-ANu -I-.d1I ,,- JRASUWA DISTRICT RASUWA OJSTRICT , X A A _ s d . / * A 7 M.-M.ilEr *-k vArl ANA R DISTRIL0 S)SNDHU oil~ ~ ~~~~S > , ,tj; j, nej Xo Z X >x~~~~~~~~AL L &tACHOKf > - / * 9,'. olig,,i li!;s:lr,:,ti > HAItRAtt "t,:. : 54. . _RI_ ....... \ DtSTRlCTDISTRIC r \ n @ n * u eA*. U SA * *.; ], E >KATHMANDu DiSTRICT \, | F,Lff.100 - rIPIOOTE,ST_ . , . . S _ O _ . . = =,__. ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~IBRD 1BB / _- t __ ,.A GIINA N - 4 x CHINA / N \ ¶ > \ t V - \~~~~~ ~~~.. -S ,,:'''- /DIA\ .. THYANOCHET THUMAN HM \TH YAN BOCHET - / ow 1 - TIMURE - TIMURE DHADINGA\ > t ,//\ l kSYAFRU U A :RUtoo\ NErAL < / ~~~~HAKIU ( /fd\ _ <)< S RASUWA-NUWAKOT RURAL DEVELOPMENT PROJECT } ADAGAON t~{ > A aDHUN FACILITiE oi S:goI o Soer-; A- 9 1 A t \ .. D n 1 Schemr S-p-nion Bridge- *A A T-kdnble Tro.k HULOGA A YARSA SJ qg e:S R~~~ 2ehobi itotionlCoepleon oF -. A ~~~~~~YAFISA T-ukobln T-1,k ~\;< DHAIBUNG| S > t * Dninking WotIr Scheine NUWAKOT AL S ising New irove Top Rood t AB. - Distridt Cor IS ~ ~ ~ ~ ~ ~ ~ ~~~ -Panchiara Boundaries us,,s , =District boundonri ; betraoon -- Inrereotfiinol Boundory SPEBR18 *1 ~~~CHINA NEPAL RASUWA-NUWAKOT RURAL DEVELOPMENT PROJECT H I G H H I A L A A f - /PHASE 11 H I G H Hs I LAYA 2 TYPE OF CULTIVATED LANDS Sloping Terraces Valley Floors, Tars, R A'tS U W A Alluvial Fans and Footslog Longtono - Level Terraces .1 I 4 ~~~~~~~~~-Rivers PA_ 3:,a, bo g H I G H H i M A L A -Physiographic Boundaries D H A D I N G District Boundaries International Boundaries c~~~~~~~hunche 0 ~~~~~~~~~~~~District Headquarter KILOMETERS 0 5 10 L~~~ -T A~~~~~~~~ I N D *Oe~Kho/ -C ft - &W ft bw g - f - K2 MIDD~JE~W TAN1CHINA NEPAL ~Area of Map et 3 ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~2BS W~~~~~~~~~~~~~~~~~~~~~~~ K AT HMA ND U INDI 11-~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~4 I 12