Document of The World Bank Report No: 29838 IMPLEMENTATION COMPLETION REPORT (TF-22473 SCL-40760) ON A LOAN IN THE AMOUNT OF US$85 MILLION TO THE GOVERNMENT OF PERU FOR AN IRRIGATION SUBSECTOR PROJECT December 20, 2004 CURRENCY EQUIVALENTS (Exchange Rate Effective August 19, 2004) Currency Unit = Nuevos Soles US$ 1 = 3.38 FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS ATDRs Technical Administration of Irrigation Districts (Administraciones Técnicas de Distritos de Riego ­ ATDRs) . CAS Country Assistance Strategy COFIDE Peruvian Development Finance Corporation (Corporación Financiera de Desarrollo ­COFIDE) ERR Economic Rate of Return FAO Food and Agriculture Organization of the United Nations FRR Financial Rate of Return GOP Government of Peru GTZ German Agency for Technical Co-operation ICR Implementation Completion Report IMF International Monetary Fund INADE National Institute for Development (Instituto Nacional de Desarrollo) JBIC Japan Bank for International Cooperation (formerly OECF) LA Loan Agreement M&E Monitoring and Evaluation MEF Ministry of Economy and Finance (Ministerio de Economía y Finanzas) MINAG Ministry of Agriculture (Ministerio de Agricultura) NGO Non-Governmental Organizations NPV Net Present Value O&M Operations and Maintenance OECF The Overseas Economic Cooperation Fund (currently JBIC) OED Operations Evaluation Department PCU Project Coordination Unit POA Annual Operational Plan (Plan Operativo Anual) PSI Irrigation Subsector Project (Proyecto Subsectorial de Irrigación) PSR Project Supervision Report SAR Staff Appraisal Report WUOs Water User Organizations Vice President: David de Ferranti Country Director Marcelo Giugale Sector Director/Manager John Redwood/Mark Cackler Task Team Leader/Task Manager: Peter Koenig PERU Irrigation Subsector Project CONTENTS Page No. 1. Project Data 1 2. Principal Performance Ratings 1 3. Assessment of Development Objective and Design, and of Quality at Entry 2 4. Achievement of Objective and Outputs 7 5. Major Factors Affecting Implementation and Outcome 13 6. Sustainability 14 7. Bank and Borrower Performance 15 8. Lessons Learned 18 9. Partner Comments 20 10. Additional Information 25 Annex 1. Key Performance Indicators/Log Frame Matrix 27 Annex 2. Project Costs and Financing 29 Annex 3. Economic Costs and Benefits 31 Annex 4. Bank Inputs 34 Annex 5. Ratings for Achievement of Objectives/Outputs of Components 37 Annex 6. Ratings of Bank and Borrower Performance 38 Annex 7. List of Supporting Documents 39 Annex 8. Borrower's ICR 40 Annex 9. Map 50 Project ID: P008037 Project Name: Irrigation Subsector Project Team Leader: Peter Koenig TL Unit: LCSEN ICR Type: Core ICR Report Date: December 20, 2004 1. Project Data Name: Irrigation Subsector Project L/C/TF Number: TF-22473; SCL-40760 Country/Department: PERU Region: Latin America and the Caribbean Region Sector/subsector: Irrigation and drainage (90%); Agricultural extension and research (8%); Central government administration (2%) Theme: Rural services and infrastructure (P); Rural policies and institutions (P); Participation and civic engagement (S) KEY DATES Original Revised/Actual PCD: 07/14/1993 Effective: 06/26/1997 Appraisal: 03/11/1994 MTR: 04/23/1998 Approval: 07/25/1996 Closing: 06/30/2002 06/30/2004 Borrower/Implementing Agency: GOVERNMENT OF PERU/MINISTRY OF AGRICULTURE Other Partners: STAFF Current At Appraisal Vice President: David de Ferranti Shahid Javed Burki Country Director: Marcelo Giugale Christian Delvoie Sector Manager: Mark E. Cackler Nicolas Krafft Team Leader at ICR: Peter Koeing Carlos Emanuel ICR Primary Author: Samuel Taffesse 2. Principal Performance Ratings (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=Highly Unlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible) Outcome: S Sustainability: L Institutional Development Impact: SU Bank Performance: S Borrower Performance: S QAG (if available) ICR Quality at Entry: S Project at Risk at Any Time: Yes 3. Assessment of Development Objective and Design, and of Quality at Entry 3.1 Original Objective: 3.1.1 According to the Loan Agreement (LA) the objectives of the Project were to develop the capacity for decentralized management of irrigation systems by Water Users Organizations (WUOs), to reduce the role of the public sector in irrigation, and to ensure cost recovery of capital investment and operation and maintenance of irrigation systems. These objectives supported sectoral reforms introduced by the Government of Peru (GOP), addressed the most relevant issues in agricultural production in Peru, and helped resolve a wide range of managerial and efficiency problems in the sector. 3.1.2 Government Reforms and Objectives: The project was designed to contribute to GOP's overall reform efforts. The project's objectives were well aligned to the reform program and reflected the GOP's priorities. Starting in the early 1990s, the GOP embarked on a reform dealing with: (i) improving incentive policies so prices would better reflect opportunity costs; (ii) reducing government subsidies in order to control the budget deficit and inflation; (iii) improving the regulatory environment to promote private investment; and (iv) controlling violence and drug trafficking. Specific to the agricultural sector, the GOP issued several decrees, including Decree No. 653 of July 30, 1991 to promote investment in agriculture and the Supreme Decree of October 30, 1991 which called for improvement and modernization of irrigation systems. In addition, the GOP transferred the responsibility for Operations and Maintenance (O&M) of irrigation infrastructure to WUOs as early as 1989, a focal point of the Irrigation Subsector Project (PSI) Project. 3.1.3 Irrigated agriculture was the dominant source of agricultural production: During the preparation of this project, it was estimated that irrigated agriculture accounted for two-thirds of agricultural output. The Pacific coast of Peru (Costa ) accounted for 21 percent of the cultivable 1 area and for 60 percent of agricultural GDP. Due to shortage and unreliable rainfall, all cultivable lands in the Costa were irrigated. Therefore, modernization in agriculture focused primarily on improving the irrigation subsector. 3.1.4 The irrigation subsector was characterized by inefficiency and infrastructure disrepair: Assessment of the subsector revealed that except for a few modern irrigation schemes, most of the irrigation infrastructure was old, requiring extensive rehabilitation. Less than half of the irrigated land had a reliable year-round water supply. Inefficiency in water usage was observed in most of the irrigated areas (average overall efficiency was about 30 percent at beginning of project). Moreover, many large irrigation schemes introduced in the coastal region of Peru starting early in the 1960s were not economically viable, and too many projects were driven by the availability of fiscal resources. Fluctuations in resource availability meant that some of the projects that began in the 1960s remained incomplete, while those that were completed suffered from inadequate funding for proper maintenance and repair. 3.1.5 There were several additional problems in the management of the irrigation subsector: These deficiencies included: (i) shortage of funding for O&M ­ expenditure for O&M stood at US$20-$30 per ha, far lower than needed for a sound maintenance program. As a result, much of the irrigation infrastructure fell into disrepair and was not functioning at full capacity; (ii) low - 2 - level of skills of WUOs and lack of an effective technology transfer system, as shown by the misuse of agricultural chemicals and resulting in water pollution and environmental problems. During project preparation, it was estimated that 200,000 to 300,000 hectares were adversely affected by salinity and water logging; and (iii) absence of an updated legal system (water law) which could have established water rights and in turn could have supported the allocation and efficient use of water. Modification in Project Design 3.1.6 The Project underwent practical adjustments without a formal restructuring. The following key changes affected project implementation and are to be taken into account when evaluating the achievements of the original objectives: 3.1.7 Reallocation of funds for 1998 El Niño natural disaster. In agreement with the Bank, a total of about US$36 million of project funds (US$30 million of loan funds) were reallocated from agreed project activities to carry out emergency works in an area of 435,000 ha of primary and secondary irrigation infrastructure destroyed or damaged by the 1998 El Niño disaster. This reallocation left a 35 percent shortfall in loan funds for planned activities and affected original targets. 3.1.8 Japanese co-financing (Japan Bank for International Cooperation ­ JBIC)2 of about US$60 million did not materialize. The bilateral protocol agreement did not allow structural changes in the project. Therefore, when it became clear that COFIDE (Corporación Financiera de Desarrollo), a government-owned second-tier credit institution, and first-tier lenders, would not participate in the project (see para. 3.1.9, below), the JBIC loan was put on stand-by. After the project closing in June 2004, the GOP has applied for a new JBIC loan. 3.1.9 The cost recovery percentage of irrigation investments had to be reduced to a more modest but realistic level. The principle of 100 percent cost recovery through COFIDE failed from the onset of project implementation for the following reasons: (i) prior to the project, farmers' payments for O&M costs, if any, were minimal. Therefore, expectation of farmers paying full investment / rehabilitation and O&M costs were unrealistic; and (ii) the innovative approach of COFIDE working with first-tier lending institutions failed, due primarily to high interest rates, low service provision in rural areas, and WUOs' lack of collateral. The revised implementation arrangements introduced a more modest but realistic cost recovery scheme, under which farmers contributed between 15 percent (for rehabilitation) and 30 percent (for gates and measurement structures) at the beginning toward investment / rehabilitation costs and full O&M costs. Contributions for investments were collected by users and put into a joint account with PSI prior to bidding for the works. Recovery of full O&M costs was made through water tariffs. 3.1.10 Limit on foreign indebtedness and on domestic budget deficits. This was the result of an agreement between the GOP and the International Monetary Fund (IMF). It was introduced after the PSI project's approval and resulted in slower than planned implementation due to annual expenditure caps. It also distorted to some extent PSI's implementation plans. It is one of the chief reasons for the two project extensions of a total of 2 years. - 3 - 3.2 Revised Objective: Although the LA was amended according with the reallocation of funds for El Niño emergency works (see para. 3.4.1, below), the original objectives were not revised. Predictably, the original project objectives and targets could not be met, due to the shortfall of funds. Nevertheless, as project implementation progressed, targets were adjusted to the new realities. In retrospect it is clear that formal restructuring of project objectives and targets should have taken place (in addition to the Amendment of the LA). It would have allowed better monitoring and avoided apparent gross cost over- and under-runs. However project implementation as such did not suffer any setbacks. In fact, as implementation progressed, PSI project coordinating unit (PCU) and the Bank team established new Performance Indicators, reflected in Annex 1. 3.3 Original Components: The project's five components were well aligned with its objectives. Component A: Irrigation Rehabilitation (US$102.4 million or 65 percent of base cost) 3.3.1 This component aimed at rehabilitating irrigation infrastructure for approximately 25 public irrigation schemes. Through the 25 public irrigation schemes (or subprojects), the component planned to cover an estimated area of over 200,000 ha and benefit over 50,000 farming families. The rehabilitation works were designed with 100 percent repayment (cost recovery) of the investment costs. The implementation of this component depended on credit to be channeled through COFIDE to WUOs (see para. 3.1.9). Component B: Institutional Development and Strengthening of Users' Organizations (US$6.0 million or 4 percent of base cost) 3.3.2 This component was intended to strengthen the WUOs in the project area (limited to the Costa), to achieve full recovery of the cost of O&M and to ensure long-term project sustainability. The activities to be financed under this component included strengthening WUOs' capacities in the areas of administration (including the calculation and collection of new tariffs which reflect full cost recovery), finance, and most importantly O&M of the irrigation systems. A four-year training program was designed for: (i) organization leaders; (ii) technical managers and their assistants; (iii) extension workers; and (iv) administrative staff. Component C: Incentive Program for Irrigation Technology Improvement (US$38.1 million or 24 percent) 3.3.3 This component sought to promote the adoption of technological innovations among all irrigation farmers. The component had two major subcomponents: (a) training technical specialists (extension agents) and financing their salaries, on a declining basis, over a three-year period to assist with access to new technology; and (b) one-time matching grants from the government for part of the investments made by beneficiary farmers to modernize their irrigation systems. The base cost of this component included a contribution from the beneficiaries equivalent to about US$11 million (or 28.9 percent of the component's estimated cost). Under the matching grant subcomponent, with aim of supporting poverty-stricken farmers, the program envisaged the provision of an 80 percent matching grant to farmers with fewer than 15 hectares and a grant of no more than 50 percent to farmers with more than 15 hectares. - 4 - Component D: Project Administration and Monitoring (US$2.9 million or 2 percent) 3.3.4 This component envisaged the creation of a financially autonomous PCU under the supervision of the Ministry of Agriculture (MINAG). The PCU was expected to be responsible for intersectoral coordination arrangements and the implementation of the institutional development, incentives program, and training subcomponents. The PCU was also expected to evaluate irrigation scheme proposals submitted by the WUOs, on the basis of pre-established technical, financial, economic, and environmental eligibility criteria. In addition, the PCU was entrusted with the monitoring of irrigation subproject implementation and progress assessments, the collection of baseline data, and the establishment of procedures to capture key technical, financial, and operational information. To accomplish most of its tasks, the PCU was expected to design and establish an information and monitoring system prior to loan effectiveness. The unit was also responsible for coordinating the work of executing agencies which included COFIDE and WUOs for the rehabilitation component; NGOs and external consultants for training and extension components; and the National Institute for Development (INADE) for the Dam Safety Emergency Program. Component E: Dam Safety Emergency Program (US$7 million or 5 percent) 3.3.5 This component was aimed at developing an emergency rehabilitation program for critical problems of selected dams within the Pacific basin of Peru. Activities under this component included testing and conducting necessary rehabilitation of control equipment, valves, gates, low-level drains and other outlet works, and generators in four major dams (Poechos, San Lorenzo, Tinajones, and El Fraile), as well as completion of earth stabilization works at El Fraile dam. It was also planned that under arrangements satisfactory to the Bank, INADE would periodically inspect and supervise the development and execution of an emergency rehabilitation program for the selected dams. 3.4 Revised Components: 3.4.1 There were some modifications to the project components. Due to the 1998 El Niño phenomenon, the irrigation program (Component A) was split in two, emergency and rehabilitation works (see para. 3.1.7). The evaluation of the execution of Component A was postponed from 1998 to 1999. These changes were reflected in an amendment to the LA in 1998. 3.4.2 In 2001, it was established that eligible WUOs would finance 15 percent for modernization and rehabilitation works and 30 percent for gates (compuertas) and measurement structures ( aforadores), unlike the original plan of 100 percent of the costs of rehabilitation and improvement of irrigation works, and they would actively participate in selecting contractors and in supervising the execution and takeover of works. As part of the request for the first 18-month extension of the Closing Date, by means of a Ministerial Decree, the WUOs' share was increased gradually to 50 percent of the investment cost. 3.5 Quality at Entry: Satisfactory - 5 - 3.5.1 In general, the GOP's reform agenda in the agricultural sector was relevant in articulating project components and objectives: The objectives were suitably aligned to address the problems observed in the irrigation subsector. Lessons learned from experience in Peru and worldwide were only partially incorporated in the project design (para. 7.1.2, below). It was a continuation of the Bank's involvement in the Peruvian irrigation subsector (a fifth project ) and3 the project was a direct reflection of the prevailing thoughts (both then and at present) on intervention mechanisms to improve the irrigation subsector's performance. A study by the Operations Evaluation Department (OED) confirmed that the Bank's lending in 1995-97 rather closely followed the strategy proposed in the Country Assistance Strategy (CAS), including Irrigation Rehabilitation (FY97)4. This same OED evaluation commented that the "project loans that were approved in 1995-97 were overall well designed and incorporated lessons from experience. Some of them, particularly the rural roads, the water rehabilitation and management, and the irrigation sector projects included significant institutional development components that were correctly identified as essential to project sustainability."5 3.5.2 Risk Assessment: The Staff Appraisal Report (SAR) identified several risks and mechanisms to minimize their impact, with varying degrees of success. In the case of risks related to lack of capacity, the project alleviated them by enhancing the capacity of WUOs. In addition, peer pressure among WUO members was expected to reduce the "free-rider risk" (WUO members benefiting from the WUO infrastructure, but not contributing to it). Financial viability studies were expected to deal with risks associated with investment selection. The new Water Law, under preparation at that time, was expected to deal with low water tariffs and the historical legacy of not collecting the full amount of tariffs. 3.5.3 In other key aspects, risk assessment was weak and mitigation measures poorly understood and / or downplayed. The principle of full recovery of investment costs, adopted by the original project design, was infeasible and did not reflect known global experiences, or the history of Peru's irrigation subsector. Furthermore, farmers were not consulted during project preparation on their willingness to pay 100 percent. The project identified as a risk the possibility of low participation of first-tier lending institutions, but believed that the significance of this risk would be reduced by financial sector reforms and improvement in macroeconomic conditions. But practical perennial issues affected the planned credit activities: (i) COFIDE's inadequate rural branch system, (ii) COFIDE was unable to identify a viable system of collateral for its credits, because farmers, the only land owners, were unwilling to cede their land as collateral for collective responsibility of WUOs. In addition, COFIDE itself expressed insecurity about its role from the beginning and doubted that local banks would lend to WUOs (para. 5.2.1, below). These issues contributed to delayed project Effectiveness and became a major obstacle for project implementation (see para. 3.1.9). 3.5.4 Project design was too optimistic in as much as Peru's irrigation subsector had suffered protracted neglect, but the project planned a revolutionary change, a jump from negligible investment cost recovery to 100 percent recovery within the five-year project, predicated on farmer buy-in and on the involvement of second-tier banks which was never certain / secured (para. 3.1.9 and 3.5.3, above). Furthermore, the estimation of the rates of return was based on the incorrect assumption that the majority of farmers would change to high-value crops, once water - 6 - limitations were resolved. In practice, limited markets hindered the shift to high-value crops. These factors could have been revealed with better up-front analysis. 4. Achievement of Objective and Outputs 4.1 Outcome/achievement of objective: Satisfactory 4.1.1 The project achieved a satisfactory outcome despite natural disasters and other serious issues mentioned above. The project's major achievements include (i) out of 64 WUAs, 50 percent are technically and financially fully autonomous, 25 percent are in the process of developing full-fledged capacity and financial viability, the remaining 25 percent still need strong institutional support and training; (ii) about 135,000 farm families benefitted from the project; (iii) 435,000 ha, some of whose irrigation systems were affected by El Niño, were rehabilitated and reconstructed; (vi) about 5,000 ha were upgraded with modernized and pressurized irrigation; (v) water conveyance efficiency increased on average from about 55 percent to 68 percent; (vi) cost recovery for O&M increased from about US$ 7.8 million per year in 1998 to US$ 20 million in 2004; (vii) about 6,500 new jobs were created; and (viii) yields per hectare of cultivated land were raised on average by 20 percent to 50 percent. In addition, the project had a significant poverty impact, as more than 70 percent of farmers in the project area are considered poor, with land holdings of less than 3 ha. On average, surveyed farmers increased their household incomes by 30 percent. 4.1.2 The project's outcome is measured by the following five indicators developed for this ICR in consultation with the Borrower and summarizing the list of indicators included in the SAR: (i) number of eligible WUOs (see para. 4.1.12, footnote #7 for eligibility criteria); (ii) number of WUOs with considerably improved management; (iii) extent of private participation in irrigation investments; (iv) O&M cost recovery; and (v) improvement of dam safety level. 4.1.3 The project's impact must be assessed from the perspective of the conditions under which it was implemented. The 1998 El Niño phenomena had a devastating impact on the agricultural sector in general, and on the irrigation infrastructure in particular. The impact of El Niño was not limited to loss of irrigation infrastructure but also to roads and other supporting infrastructures which had a direct impact on project beneficiaries. The 2001 earthquake, which resulted in major damages to irrigation infrastructures -- mainly canals and drainage -- was another event the project had to deal with on an emergency basis, although no funds were diverted for earthquake-related rehabilitation works. These two natural disasters affected WUOs' ability to invest, due to lost production and the consequent reduction in farmers' income. In order to cope with these emergencies and dictated by the downturn in the economy, limited fiscal space, less than the originally (and wrongly) foreseen investment cost recovery of 100 percent, and the absence of the JBIC loan, the GOP was forced to revise the budgetary authorization for the use of external and local funds. These factors directly impacted the pace of project implementation. 4.1.4 The project was designed with the expectation that JBIC would provide parallel financing which did not materialize for reasons already noted earlier (see para. 3.1.8). This further exacerbated the impact of resource limitations stemming from the reallocation of funds to El Niño emergency works (see para. 3.1.7). - 7 - 4.1.5 Project achievements are nevertheless impressive. Remarkable progress was made in moving away from a system characterized by crumbling infrastructure, unfinished works, and inadequate O&M towards improved efficiency, both in the management and rehabilitation of the systems, and improved incomes and well-being for beneficiary farm families. The WUOs are now fully responsible for O&M and they determine their priorities, participate in selection of contractors, administer their finances and manage water sharing within their irrigation schemes. An observable cultural shift toward self-sufficiency by WUOs in managing and operating irrigation systems has begun. The transfer of responsibility for O&M to WUOs predates the project, but it is only through this project that consolidation (i.e., strengthening of WUOs as entities capable to manage, administer, and finance their irrigation systems) was made possible. 4.1.6 According to the Bank's database6 in Peru agricultural value added (at constant 1995 dollars) increased by an estimated 31 percent in 2003 compared to its 1997 level during project implementation years. Because irrigated agriculture is the backbone of Peruvian agriculture, these results can be attributed, at least in part, to the project's impact on the agricultural sector. For example, production increased significantly in the project area, e.g., rice increased by 189 percent and 123 percent in the north and central regions of the project areas, respectively. 4.1.7 The project benefited an estimated 134,000 farm families (see Annex 1 for impact and output indicators, and Annex 3 for cost-benefit analysis). Yields per hectare of cultivated land increased by between 20 and 50 percent, for all products. The project created an estimated 6,400 new jobs. 4.1.8 Due to modernization of irrigation infrastructure and WUO training, in the areas directly benefiting from the project, water conveyance efficiency increased from 55 percent to 68 percent (the SAR had predicted an increase from 60 to 78 percent). The SAR also predicted an increase from 60 to 70 percent in water application efficiency. In fact, these efficiency indicators increased (i) from 55 to 85 percent in the areas that participated in "incentive program" (irrigation technification); and (ii) from 55 to 63 percent in areas that benefited from gravity irrigation programs. 4.1.9 Tariff collection increased from US$7 million in 1999 to US$ 20 million in 2004; this was instrumental in the improved O&M activity and the regularity of O&M works. 4.1.10 Out of 64 WUOs in the Costa, 50 percent are now fully autonomous, 25 percent are in the process of developing full-fledged capacity and financial viability, and the remaining 25 percent are in the initial stages of self-sufficiency in the management of their irrigation systems. Farmers were also active in modernizing their irrigation systems. 4.1.11 In essence, the project objective was to develop decentralized management of irrigation systems in which WUOs would assume greater responsibility. As WUOs enhance their management capacity, cost recovery is expected to improve and simultaneously reduce public sector involvement. - 8 - 4.1.12 The legal transfer of O&M responsibility to WUOs predates the project. However, only through this project were WUOs enabled to administer and manage their systems, which is at the center of the project's overall objective and is the GOP's decentralization goal. Tariff collection for O&M more than doubled between 1999 and 2003 (para. 4.1.7, above). The capacity created at WUO level has allowed the number of eligible WUOs7 to increase from 2 in 1999 to 33 in 2003. The share of users' contributions to the recuperation of capital cost reached 15-30 percent (or US$3.6 million) and 40 percent of the cost of irrigation modernization in collective irrigation systems (or US$4.9 million). 4.1.13 The project also financed highly satisfactory reconstruction work in the aftermath of El Niño, rehabilitating irrigation infrastructure servicing some 435,000 ha. In addition, the rehabilitation work included the construction of a better disaster resistance infrastructure. The project created a critical mass of WUO members capable of managing of their irrigation schemes. Moreover, through technical support by agricultural extension workers, the project introduced new technologies and transferred knowledge. Within the WUOs, the project developed transparency in procedures and decisions in water distribution, which reduced remarkably, conflicts among water users over water allocation. 4.2 Outputs by components: Component A: Rehabilitation of Irrigation Infrastructure ­ Highly Satisfactory (US$50.4 million or 49 percent of appraisal estimate). 4.2.1 As designed, the project foresaw that the WUOs would be able to undertake rehabilitation and modernization by borrowing money from private banks. However, this did not materialize. As a result, the component was modified in 1998 through an amendment to the LA. Execution was transferred to the PCU with WUOs covering 15-30 percent of investment cost. 4.2.2 This component financed the reconstruction, rehabilitation, and improvement of civil works which included 165 main intakes, 1,257 structures, 49 wells, and 313 km of canals. Despite having available only about 49 percent of the component's original investment estimate, the component benefited 125,200 families (250 percent of the original target and 41 percent of families in the Costa) and 443,000 ha (222 percent of the appraisal target and 42 percent of the agricultural land of the Costa). These works were the factors behind the observed improvement in the availability and reliability of water supply. In addition, Component A promoted water measurement and new water level control technologies in canals and automatic discharge measurements. The WUOs' active participation in prioritizing works was instrumental in the successful implementation of these activities. Component B: Institutional Strengthening of WUOs ­ Satisfactory (US$13 million or 217 percent of appraisal estimate) 4.2.3 Under this component, the institutional capacity of 64 WUOs to manage the different tasks of their irrigation schemes was enhanced. Financial and technical autonomy increased from 2 WUOs before the project to 33 (50 percent) by 2004 out of a total of 64 WUOs. These WUOs are now fully responsible for their systems, including administering and hiring private contractors and technical staff. The other WUOs are at different stages of advancement (see para. 4.1.1, - 9 - above). A total of 80,103 farmers benefited from efforts to raise awareness about users' institutional rights, and 187 Irrigators' Commissions (Comisiones de Regantes) received training to build their capacity for O&M, tariff collection, and administration. 4.2.4 The component financed the training of members of the WUO in the following three areas: (a) 18,709 farmers in basic concepts for the proper maintenance of infrastructure and equipment, including O&M and preventive maintenance; (b) 4,369 WUO members in cost recovery policies and water charge rate structures and collection and in efficient administration of financial resources; and (c) 5,724 WUO members in construction and contract management. Component C: Incentive Program for Irrigation Technology Improvement -- Satisfactory (US$19.1 million or 50.1 percent of appraisal estimate) 4.2.5 This component financed two major activities: (i) an extension program for the promotion of more efficient irrigation techniques and cultural practices, as well as (ii) matching grants program (economic incentives) to help farmers in adopting new irrigation technologies, with the goal of achieving greater efficiency in the use of water and soil resources, increasing farmers' competitiveness and raising their income. 4.2.6 The extension program was expected to be carried out through the training of extension workers who would be responsible for providing extension services to farmers and who would be partially paid by WUOs. However, due to the WUOs' difficulties in making these payments, an amendment to the LA changed the modality of direct extension services to beneficiaries, paid by the project, which gave rise to a delay in the start-up of such activities. A total of 50,744 farmers participated in the extension program, of whom nearly 7,700 fully apply the knowledge they have acquired, and 4,076 farmers have been trained in business management. Only modest achievement was registered in establishing a market for technical assistance services paid by farmers; in which 5,248 beneficiaries participated. Although the component has several achievements, more time and resources were needed to achieve the expected impact. One activity which was not initially foreseen but which responded to strong farmer demand was the establishment of 102 production chains. 4.2.7 Activities under the incentive program also began late, due to the problems faced by beneficiaries in obtaining financing. The project carried out five competitions for the allocation of incentives for irrigation technology improvement, and implemented 252 projects with an area of 4,933 ha (75 percent of target), benefiting 1,022 farmers. The targets were not met largely because, in the process of reallocating funds for El Niño emergency works (para. 3.1.7, above), financing for the incentive program component was reduced by about 36 percent. Since the average size of land per family in this case was less than 5 ha, a majority of farmers are assumed to be poor. Contributions by beneficiaries have been increasing gradually from an initial 28 percent to 45 percent in the latest bidding event for pressurized irrigation. Total investment in irrigation technology improvement was US$12.4 million, of which beneficiaries contributed US$4.9 million. In addition to beneficiaries' investment in irrigation technology improvement, this subcomponent led to other investments by owners, especially in fruit planting. Although the - 10 - amount of this investment is not known, beneficiaries' total contributions undoubtedly exceeded the amount cited above. 4.2.8 The component is considered satisfactory because the following were achieved: (i) the introduction of innovative technologies to improve irrigation efficiency, both in gravity irrigation, especially through the technique of irrigation by multi-gate pipes, and in pressurized irrigation, in which the project made several design improvements, overcoming previous, frequent deficiencies; (ii) increasing crop yields from 12 percent in the case of mangoes to 80 percent for paprika; and (iii) improving market access, especially through the establishment of 102 production chains. When accomplishments are assessed against cost (50 percent of the original estimate), this component is rated Satisfactory. Component D: Project Administration and Monitoring ­ Satisfactory (US$23.9 ­ 824.1 percent of the appraisal estimate) 4.2.9 This component financed project administration, including coordination of the different executing agencies, implementation of the training and incentive programs, selection of WUOs that had fulfilled established eligibility criteria, and management of project procurement and financial responsibilities. It registered a cost overrun of 824 percent, as compared to appraisal estimates, i.e. US$ 23.9 million, versus US$ 2.9 million. This illustrates a good case for formally restructuring the project in view of the events described under 3.1.6 to 3.1.10, i.e. formally reallocating funds and defining new targets up-front, so as to avoid apparent stark cost over- and under-runs. 4.2.10 The apparent increase in ex-post project costs is to a large extent, though not exclusively, explained by two main reasons: (i) the two additional tasks this component was obliged to implement, i.e., emergency works for El Niño, as well as tasks originally planned for implementation by COFIDE, and (ii) a two-year project extension. Other reasons contributing to the high administrative costs were the contracting of an expensive international consulting firm for Component B and an unforeseen number of short-term consultants. Most activities under this component were carried out successfully. The PSI regularly presented to the Bank all reports as stipulated in the LA and provided the supervision missions with all the requested information. However, establishment and implementation of an effective monitoring and evaluation (M&E) system, including base line data and a detailed logical framework, were only completed about two years before Project Closing (see paras. 5.3.1 and 7.6.2). Nevertheless, the PCU managed to monitor and track progress towards targets adjusted according to changed circumstances (see Annex 1 ­ Key Performance Indicators). Component E: Dam Safety Emergency Program ­ Satisfactory: US$7.8 million (111.4 percent of appraisal estimate). 4.2.11 INADE was responsible for the implementation of this component. The component financed the rehabilitation of 4 dams with critical problems that were selected during project preparation. The component financed improvements in the structural safety of these dams, the installation of modern monitoring and other supporting equipment, as well as several studies. - 11 - During the execution of this component, additional requirements surfaced that required addition studies which were financed by this component. As an outcome of this component, the project created a dam safety committee within INADE, which is responsible for periodic evaluation of the safety of the country's dams. As planned, the project also benefited from a panel of experts who on several occasions reviewed the works performed under the project and provided important input on improving the design of works. The panel was instrumental in identifying weaknesses in the design and implementation of this component, even though feasibility and diagnostic work was carried out by renowned international experts during project preparation. 4.3 Net Present Value/Economic rate of return: 24.1 percent 4.3.1 Based on selected sample works in Components A and C, the economic rate of return (ERR) for the project was calculated to be 24.1 percent and the net present value (NPV) to be $3.16 million. The estimated ERR at the time of the Implementation Completion Report (ICR) is lower than that reported in the SAR which was 38.7 percent. The discrepancies between the SAR and the ICR estimates are mainly due to an optimistic assumption of crop switching to high value crops and an expectation of major expansion in irrigated agricultural areas during project preparation. However, mostly due to reallocation of funds to El Niño emergency works, irrigated land expanded only slightly, by 2.2 percent, and the majority of the project benefits to beneficiaries accrued from higher profitability from the same plot of land. On average, surveyed farmers increased their household incomes by 30 percent, farm profitability by 45 percent, and 1.7 million man days of new employment creation equivalent to over 6,400 jobs. Aside from the increase in agricultural production, the project has contributed to promoting production chains with agribusinesses and input and service providers. 4.4 Financial rate of return: 23 percent Similarly based on selected sample works in Components A and C, the financial rate of return (FRR) for the project was calculated to be 23.0 percent, as opposed to 36.3 percent in the SAR. The difference in the FRR and the ERR is mainly explained by taxation on agricultural inputs leading to high domestic price of inputs. 4.5 Institutional development impact: Substantial 4.5.1 While the legal transfer of responsibility for O&M from the GOP to the WUOs predates the project, actual decision making power was only transferred during the project. Before the project, the main power remained within MINAG and the MINAG-appointed irrigation district administrator, who made important decisions at the level of water management, distribution, and tariffs. Through the project's training and institutional strengthening, WUOs assumed increasingly more responsibility in managing and financing irrigation schemes. Today, the GOP no longer finances any O&M work. WUO-elected officials gained more power and enhanced irrigation system management. The irrigation district administrator now plays the role of technical advisor. 4.5.2 Not only are the WUOs responsible for the O&M of their respective irrigation schemes, they have now become active partners in the selection of contractual arrangements, financial decisions, prioritization of different works, setting of tariffs, and allocation of water quotas. - 12 - 4.5.3 The increase in capacity is also evident in the improved irrigation water supply and distribution, effective participation in the process of rehabilitation and improvement in irrigation infrastructure (including prioritization of works, technical specifications, selection of contractors, and supervision of works), and effective use of their financial resources. Due to the transparent decision making process established, conflicts in water allocation have been reduced significantly, thereby contributing to an improvement in social capital formation. 4.5.4 The project also supported the formulation of a water law (currently being debated in Congress) that will be an essential ingredient in improving the performance of the irrigation subsector. At national level the project supported the creation of a dam safety commission and organized a panel of experts who accomplished several tasks that will serve as a reference for future supervision and inspection of infrastructure works. The project also contributed to the strengthening of MINAG and supported it in formulating the National Irrigation Policy and Strategy (2003). It also strengthened Technical Administrations of Irrigation (Administraciones Técnicas de Distritos de Riego ­ ATDRs). 4.5.5 The consolidation work has created ownership by WUOs that bodes well for the future continuation of the decentralization process. Both the GOP (due to its goal of reducing the fiscal burden) and WUOs have demonstrated interest in the continuation of the new institutional arrangement. 5. Major Factors Affecting Implementation and Outcome 5.1 Factors outside the control of government or implementing agency: 5.1.1 The 1998 El Niño natural disaster and earthquake had significant impacts on irrigation infrastructure. The reallocation of funds for El Niño emergency works, unavailable JBIC loan, as well as fiscal limitations (GOP ­ IMF agreement), were key external factors that significantly influenced project implementation. 5.2 Factors generally subject to government control: 5.2.1 Counterpart funding was not always timely, although the GOP is to be commended for coming up with significant additional funds for the project, i.e. 193 percent of original estimate. The delays in counterpart contributions has resulted in an Unsatisfactory rating in the project supervision report (PSR) on seven occasions. Overall Effectiveness was also delayed nearly a year following Board approval. The reasons for this delay rest mainly on the COFIDE component. Conditions of Effectiveness included the establishment of a Subsidiary Agreement between MEF and COFIDE, as well as the drafting of accounting procedures to make the planned transactions between the PCU and COFIDE operational. From the beginning, COFIDE had misgivings about its role, since it doubted that local banks would lend to WUOs. Once this component was modified (para. 3.1.9 above), the project became effective. 5.3 Factors generally subject to implementing agency control: 5.3.1 The establishment of a functioning M&E system was the responsibility of the PCU. It was delayed considerably, despite repeated reminders from the Bank Team. It was only accomplished in the final phase of the project, when in fact the PCU and Bank Team had gradually developed performance indicators as the project was implemented (see para. 3.2, above). The consultant - 13 - hired for the final evaluation of the project reported insufficient baseline information as a major problem for regular and rigorous evaluation of project implementation. The PCU was also late in contracting several consultancies, i.e., contracts for WUOs' training and extension programs. 5.4 Costs and financing: 5.4.1 As originally appraised the project's estimated total cost was US$172.4 million, out of which the Bank's financing was estimated to be US$85 million (49.3 percent of base cost), JBIC's US$60 million (34.8 percent), beneficiaries' US$11.0 million (6.4 percent), and GOP US$16.4 million (9.5 percent). 5.4.2 The SAR recommended retroactive financing up to US$500,000 for institutional strengthening activities and US$2.5 million for Component E. However, due to the late start-up of activities under Component C and the annual cap in project expenditure due to limited fiscal space to finance investments through external resources, disbursement was characterized by lags which led to two closing date extensions for a cumulative two-year period. 5.4.3 Recent estimates show that the total project cost reached US$124.6 million (or 72.3 percent, the main difference being the lack of JBIC financing). Total disbursements amounted to US$84.7 million or 99.6 percent of the Loan amount. Although there were occasions when the counterpart funds were not forthcoming in a timely manner, the GOP's estimated contribution reached US$31.7 million or 193.3 percent of the original estimate. Beneficiary contributions stood at 75 percent of the original estimate. 5.4.4 The project also benefited from financial assistance from the Japanese PHRD fund (US$577,155.76), FAO and the German Agency for Technical Co-operation (GTZ) for preparation and feasibility studies, respectively. 6. Sustainability 6.1 Rationale for sustainability rating: Likely 6.1.1 The key element of the sustainability of project achievements is the degree of effectiveness reached by WUOs which currently are institutions respected by users and which, overall, have demonstrated administrative capacity in handling technical, financial, and administrative processes, including collection of tariffs, allocation of water, bookkeeping, managing the day-to-day details of administering irrigation schemes. WUO committees are directly elected by the users and are directly accountable to farmers. This has helped to establish transparency in decision making. These factors will contribute jointly to the institutional and managerial sustainability of the project's outcomes. About half of the 64 WUOs are advanced to the point where sustainability during the economic life of the project may be expected. Continuous, timely training to strengthen WUOs would further consolidate their achievements reached, while enhanced, specialized training is needed to varying degrees for the remaining WUOs, to help them attain full technical and financial autonomy. - 14 - 6.1.2. A key factor in the strength of WUOs is revenue from sufficient tariffs. The project has been able to generate a culture of prepayment of tariffs, in increasing amounts, which not only permits the O&M of irrigation systems but also small modernization works fully financed by users. The payment of increasing tariffs is favored by project activities that have increased farmers' ability to pay, due to greater availability of water and to technical improvements in irrigation and crop practices. The project carried out a detailed irrigation profitability study (see PSR Seq. #16) to identify agricultural activities that may increase profitability and return. This effort was meant to ensure that farmers receive an increasing return on their investment, since farmers have clearly demonstrated their willingness to continue modernizing and improving their irrigation systems, provided that the investment they make entails a higher return. Therefore, the project's effort to raise productivity and ensure the profitability of farming activities bodes well for its financial sustainability. 6.1.3 In 2003 the GOP, with project support, formulated the document entitled "National Irrigation Policy and Strategy in Peru," which establishes several guidelines to ensure the continuity of actions carried out by the PSI, particularly those related to the strengthening of WUOs, improvement of large- and small-scale irrigation infrastructure, improvement of on-farm irrigation, and irrigation research and training. 6.1.4 A special case is the sustainability of the Dam Safety Committee which was established with the project's support. This committee, which is in charge of overseeing security in all of the country's dams, is currently set up in INADE, an agency that, as a consequence of the current decentralization process, is being decentralized to different regional governments. This may negatively affect the continuity of the committee. 6.2 Transition arrangement to regular operations: 6.2.1 As foreseen in the SAR, the PCU submitted to the Bank a satisfactory plan for the future operation of the project. The plan outlines and describes specific actions and operational activities to ensure the sustainability of the project's impacts. 6.2.2 While the project was fully satisfactory in its reduced scope (see paras. 3.1.6 - 3.1.10), many of the original objectives remain incomplete and could be substantially improved with additional financing. The GOP has asked the Bank for an additional funding of US$10.3 million (total project cost: US$18 million). This small follow-on operation, to be carried out over a two-year period, would primarily help strengthen existing achievements and train additional WUOs to guarantee a higher level of sustainability of those which have already achieved autonomy (para. 6.1.1 above), and at least half of the remaining WUOs could also become technically and financially autonomous. Beyond the original project objectives, the additional financing would also help formalize water rights which is a crucial first step for the application of the new Water Law, currently under discussion in Congress, and which received considerable Bank and FAO/CP support in the past. 7. Bank and Borrower Performance Bank 7.1 Lending: Satisfactory - 15 - 7.1.1 Notwithstanding original design flaws (i.e. COFIDE component) and protracted delays after Board approval, the Bank conducted pre-feasibility studies, identified areas of immediate interventions, and developed a list of monitoring and impact indicators, at the time of the SAR, when the logical framework was not yet a Bank requirement for the SAR. The project team foresaw the need to coordinate project activities with other Bank projects (especially with agricultural extension to realize the full synergy and, thus, the impact of the project), and partnered with other financiers. It also identified beneficiaries and potential risks and analyzed environmental and poverty impacts. 7.1.2 However, the project design did not adequately reflect lessons learned from the previous four irrigation projects in Peru and from recognized worldwide experience in the irrigation subsector. The main issues of preparation / design were: (i) unrealistic 100 percent cost recovery objective (not heeding local and international lessons); (ii) not fully understanding the risks of using credit to achieve major innovations in rural areas (affecting the project's largest component ­ 65 percent of base cost); (iii) too many Effectiveness Conditions, suggesting rushed preparation/ reluctance to hold up Board presentation to get fundamentals right; and (iv) insifficient analysis of economic projections and of predictions regarding farmers behavior, i.e., converting to high-value crops and major expansion of newly irrigated areas. 7.2 Supervision: Satisfactory 7.2.1 The Bank supervision missions, on balance, correctly rated project implementation advances and prepared quality PSRs, extensively used FAO's irrigation experts, demonstrated flexibility in including additional activities imposed by the two natural disasters, and worked closely with the project unit in improving project implementation and in seeking solutions to problems encountered in implementation. The Bank teams worked closely with the PCU in improving the project's "at risk" status. They also managed to adjust the Bank's procurement and other procedures in order to accommodate and quickly respond to emergency situations and works. 7.2.2 Bank missions were instrumental in identifying and resolving problems, such as the unrealistic target of full cost recovery and the lack of baseline data for an operational O&M system. Bank missions also were consistent in their effort to ensure that project objectives were not compromised in the face of natural disasters and frequent changes in project coordinators (see para. 7.5.2 below). In addition, Bank missions were innovative in adjusting to changing circumstances, as well as in providing technical solutions to canal management and pressure irrigation. The Bank ensured that WUOs spent only a small and limited percentage of the water tariff on administrative costs. 7.2.3 The supervision team did not formally restructure the project, when the events described under paras. 3.1.6 through 3.1.10, occurred. Instead, adjustments were made in practice over time, during project implementation, eventually leading to a logframe of indicators, adapted to the new realities, as reflected in paras. 3.1.6 - 3.1.10 (Annex 1 ­ Performance Indicators - of this report). 7.3 Overall Bank performance: Satisfactory - 16 - 7.3.1 The original project design was unrealistic in as much as the COFIDE component and the 100 percent cost recovery was concerned (para. 3.1.9). However, corrective measures were taken early on, and major negative impacts were averted, largely thanks to increased GOP contributions (almost double of original estimates). 7.3.2 Bank supervision missions ensured that project implementation did not involve significant deviations from Bank policies and procedures on safeguards, financial management, and procurement. The Bank demonstrated flexibility in advising the PCU on adapting to the changed circumstances during project implementation. The qualitative guidance and support provided by Bank and associated FAO staff during project implementation was of high quality. Thus, the overall rating of Bank performance is Satisfactory. 7.3.3 The Bank's performance fell short in not properly restructuring the project to reflect shifts in amounts needed under each component. This resulted in misrepresentations as far as over- or under-expenditures are concerned, when comparing original cost allocations of each component with actual expenditures. Borrower 7.4 Preparation: Satisfactory 7.4.1 During project preparation, the GOP passed important pieces of legislation, transferred the responsibility for O&M to WUOs, sought to reduce the role of the public sector in irrigation management, eliminated restrictions on use of agricultural lands as collateral for commercial bank loans, and liquidated the agricultural marketing agency, among others. Thus, the GOP was committed to its stated aim of reform as applied to the agricultural sector. 7.5 Government implementation performance: Satisfactory 7.5.1 The GOP's formulating the new Water Law and processing it all the way to Congress during implementation of the project, as well as the elaboration of a document on national irrigation policy and strategy (published in May 2003), shows the GOP's unwavering support to modernizing the irrigation subsector. Although at project closing counterpart contribution estimates show that the GOP's contributions were almost double those projected at appraisl, the timing of the contributions often lagged behind the established project implementation schedule. The discrepancy was mainly due to (i) the two natural disasters the country experienced and the associated recovery works these emergencies entailed; and (ii) the fiscal restraints the government faced (para. 3.1.10). 7.5.2 The GOP could have ensured better stability in the project coordinator position ­ there were a total of six project coordinators. Nevertheless, the project's technical staff remained reasonably stable, without being significantly affected by the frequent changes in directors. 7.6 Implementing Agency: Satisfactory 7.6.1 The PCU was instrumental in adjusting the project and easily adapted to changing circumstances (such as emergency works), managed project implementation according to the - 17 - Bank's fiduciary guidelines, coordinated important studies, successfully dialogued with the GOP to ensure that the GOP fulfilled its counterpart contribution commitment, and in general was responsible for the coordination of project implementation. It was also able to adjust and take additional tasks as circumstances changed (e.g., emergency works). 7.6.2 The project suffered from lack of baseline data for a functioning M&E system. The initiation of the incentive program, Component C, was considerably delayed (para. 4.2.7, above). In addition, contracting of some consulting services was slow (para. 5.3.1, above). 7.7 Overall Borrower performance: Satisfactory 7.7.1 The Borrower showed unwavering commitment to the project objective during preparation and, on balance, successfully followed its commitment during project implementation. Although in the face of natural disasters and fiscal constraints the focus and priorities temporarily shifted, overall the Borrower's performance was Satisfactory. 8. Lessons Learned 8.1 The project introduced several innovations; and it was beset by unforeseen events, all of which influenced overall performance to various degrees. Here are the key lessons to be drawn: l Long lists of complex Effectiveness Conditions tend to create implementation delays and imply that project preparation was not complete. A realistic, sound project design should require only standard Effectiveness Conditions. l Formal project restructuring and target adjustments are a must, when significant changes in project funding and / or design take place (paras. 3.1.7 and 3.1.10). l Cost Recovery: a) An investment program for irrigation improvement based on credit with 100 percent cost recovery has a high probability of failure, if: (i) no prior willingness to pay and participate surveys are carried out; (ii) loan conditions, interest rates, and repayment time are inadequate for farmers' socio-economic conditions; and (iii) WUOs can not provide collateral to satisfy commercial banks. b) In an environment with virtually no previous culture of cost recovery, government support for a certain portion of the investment ­ on a declining scale over at least a three to five year period, as willingness to participate takes hold ­ is crucial for success. l Participation of users in the process of selecting, designing, executing and financing irrigation works, provides them with a sense of ownership, thus, assuring greater effectiveness and sustainability in the use and maintenance of works. l Transferring irrigation schemes from the Government to WUOs is a process that requires institutional, administrative, and technical support of associations. l Improvement in infrastructure must be accompanied by training and coaching of WUOs. For example, Government contributions used for irrigation works under Component A, helped achieve some of the goals of component B, i.e., making "eligible" WUOs. l Continuous, rigorous training of all members of WUOs is key for the success of the project. Such support may be necessary for several years after WUOs have achieved autonomy, depending on their internal structure and dynamics. - 18 - l The understanding by farmers of a market for technical assistance, for which they eventually are willing to pay, requires long training and awareness programs, as well as significant economic resources. l Irrigation may be a good vehicle for broader agricultural development, as demonstrated by the demand of farmers for the creation of `productive chains' (the project created 102 production chains ­ not foreseen at time of appraisal). - 19 - 9. Partner Comments (a) Borrower/implementing agency: PCU/PSI (see Annex 8 , Borrower's Completion Report) "AÑO DEL ESTADO DE DERECHO Y DE LA GOBERNABILIDAD DEMOCRÁTICA" MINISTERIO DE ECONOMÍA Y FINANZAS DIRECCION GENERAL DE PROGRAMACION MULTIANUAL DEL SECTOR PUBLICO INFORME N° 158-2004-EF/68.01 COMENTARIOS AL INFORME DE CIERRE DEL PROYECTO SUBSECTORIAL DE IRRIGACIÓN PREPARADO POR EL BANCO MUNDIAL I. ANTECEDENTES · El 20 de agosto de 1996 se aprueba mediante el Decreto Supremo N° 084-96-EF, la operación de endeudamiento externo entre el Perú y el Banco Mundial (BM) para financiar la ejecución del Programa Subsectorial de Irrigación (PSI), por un monto de US$ 85 millones. · El diseño original del PSI comprendía la ejecución de los siguientes componentes: i) componente A: mejoramiento y rehabilitación de los sistemas de riego, ii) componente B: fortalecimiento de las organizaciones de usuarios de agua de riego, iii) componente C: programa de incentivos para la tecnificación del riego, iv) componente D: administración del programa, y v) componente E: programa de emergencias en seguridad de presas. · En junio de 1998 se suscribió la primera addenda con el BM, en la cual se acordó la modificación del componente A del Programa, debido a: i) la situación de emergencia por los efectos del Fenómeno del Niño 1997 ­ 1998 y ii) la falta de acceso de las Juntas de Usuarios a la banca comercial. A partir de esta modificación, el Estado asume el financiamiento total de las obras de infraestructura que ejecuta el PSI. · Superada esta situación de emergencia, se suscribe la segunda addenda con el BM, en la cual se incorpora la participación de las JU en el proceso de selección, financiamiento y ejecución de las obras de riego. Además, se modificaron los componentes B y C; se incrementaron los recursos para el componente de administración (D) y se consideró la ampliación del Proyecto hasta diciembre de 2003. · Se aprobó una segunda ampliación del PSI hasta el 30 de junio de 2004, con un saldo de ejecución al 31 de diciembre de 2003 de US$ 6.9 millones. · Actualmente, el PSI ha culminado la ejecución del financiamiento del BM. Sin embargo, se ha solicitado una ampliación del préstamo por un monto adicional de US$ 10.3 millones, - 20 - la cual se encuentra en fase de preparación. · El BM ha presentado a esta Dirección General el informe de cierre de la primera etapa del PSI. En ese sentido, se adjuntan algunos comentarios sobre la ejecución de dicha etapa, y además se incluyen algunas recomendaciones que deberán ser tomadas en cuenta para la formulación de los estudios que sustentan la solicitud de ampliación del préstamo. II. OPINIÓN · La evaluación del PSI señala que existen aspectos institucionales y técnicos a mejorar y que deberán tomarse en cuenta para la ejecución de nuevas intervenciones del Ministerio de Agricultura (MINAG) orientadas al subsector irrigación. · Sin embargo, esta Dirección General reconoce los avances logrados por el PSI en el subsector riego, especialmente en el fortalecimiento de las organizaciones de usuarios (JU). III. ANÁLISIS 1. Esta Dirección General coincide con la segunda recomendación hecha por el BM al mencionar la importancia de realizar un diagnóstico exhaustivo sobre las características técnicas, económicas, educacionales, culturales y sociales de los beneficiarios. Algunos de los problemas que enfrentó el proyecto al inicio de su ejecución se debieron principalmente a problemas de diseño (componente A por ejemplo), los cuales pudieron ser corregidos con la elaboración de un correcto diagnóstico. Además, es necesario que se realice un análisis de la capacidad de pago de cada Junta de Usuarios para el cofinanciamiento de las obras. 2. Con relación al componente A, esta Dirección General considera que es necesario incrementar gradualmente la participación de los beneficiarios en el cofinanciamiento de las obras de infraestructura de riego que se ejecutan con recursos del Estado. De otro lado, será importante incorporar las metodologías de evaluación ex ante del Sistema Nacional de Inversión Publica (SNIP), a fin de ejecutar las obras en su optima magnitud y dimensión. Los parámetros de costos de inversión publica por hectárea, análisis costo beneficio y análisis de riesgos, deben ser desarrollados con mayor profundidad. 3. Con relación al componente B, fortalecimiento de las organizaciones de usuarios, esta Dirección General reconoce el avance que ha logrado el PSI. Actualmente se cuenta con 33 de 64 JU elegibles en la costa, es decir más del 50%. Sin embargo, es necesario que se implemente un mecanismo de cofinanciamiento por parte de los beneficiarios a la asistencia técnica que se brinda al personal de las JU, con el fin de asegurar la capacitación permanente de los directivos de dichas organizaciones. Además, es necesaria una participación activa y directa en el diseño, aprobación e implementación de los planes de capacitación por parte de los Administradores Técnicos del distrito de Riego (ATDR) y de la Intendencia de Recursos Hídricos del INRENA. Esta Dirección General considera que el PSI debe actuar con mucho mayor sinergia con los organismos reguladores y normativos en materia de riego, especialmente en los aspectos referidos a los planes de distribución y aplicación, entre otros. De otro lado, deben revisarse algunas de las actividades de la capacitación, especialmente en lo referido a los gastos de los talleres, personal, movilidad y - 21 - materiales. El impacto de los resultados obtenidos pueden obtenerse a un costo público menor. 4. Con relación al componente C, es importante precisar que a pesar de los esfuerzos que ha realizado el Estado peruano en subsidiar programas con incentivos directos a la tecnificación de riego, muchos de los sistemas de riego presurizado instalados por el PSI no se encuentran operativos, tal como lo menciona CEPES en la evaluación realizada en diciembre de 2003. En ese sentido, será necesario realizar una evaluación con la finalidad de determinar las principales causas que originan este problema. Además, es importante precisar que con recursos públicos se debería financiar obras comunes, y no a nivel de parcela. Por otro lado, se debería incentivar con mayor incidencia el uso de sistemas de riego tecnificado por gravedad, debido a que el costo de inversión es significativamente menor al de los sistemas de riego presurizado, generando beneficios similares. De esta manera, se podría generar un mayor impacto en el área de influencia del proyecto. 5. Con relación al PERAT, esta Dirección General considera que las estrategias de intervención públicas en este tipo de asistencia técnica, han evolucionado hacia la provisión por parte del sector privado, y cofinanciamiento público. Los avances de los proyectos INCAGRO, MARENASS, Corredor Puno Cusco son ilustrativos. De otro lado, si bien los avances del PERAT son reconocidos, es cierto también que su intervención va más allá de los objetivos directos del PSI, como es la eficiencia del uso de riego. El PERAT ha abordado la problemática de la tecnificación en el marco de la rentabilidad de este tipo de prácticas, y no directamente en la mejora de la eficiencia de riego. A nuestro juicio, el PSI debe evaluar su intervención a su especialidad en riego, y mejorar la coordinación de su intervención con otros proyectos y líneas de inversión del Sector Agricultura como el INCAGRO o la Direccion General de Promocion Agraria. El PERAT debería focalizar su ámbito de acción en función a los valles donde se efectúan los concursos de tecnificación de riego, y limitar su intervención a temas de incremento de la eficiencia en el uso de agua con sistemas de riego tecnificado, así como en su operación y mantenimiento. La asistencia técnica debería ser provista por privados, con un financiamiento parcial e incremental por parte de los beneficiarios, tal como lo establece el MINAG en sus políticas y estrategias de intervención sectoriales. 6. Esta Dirección General no encontró diferencias significativas en la ejecución del componente de seguridad de presas, las metas físicas y financieras se ejecutaron de manera satisfactoria. 7. Con relación a los costos del proyecto, es importante precisar los siguientes aspectos: · Los costos administrativos del proyecto (componente D) se incrementaron de manera significativa (824% sobre lo estimado exante). A pesar que la modalidad de ejecución del proyecto fue modificada en el transcurso de su ejecución, esta Dirección General considera que 19% de costos administrativos sobre el costo total del proyecto es excesivamente elevado. En ese sentido, es necesario que el MINAG adecùe su estructura orgánica y en el caso del PSI, mejore sustancialmente su eficiencia de gestion en la ejecución de la segunda etapa. Cabe resaltar que parte importante de los sobre costos administrativos se agravaron debido a que parte del personal directivo del Proyecto no contaba con las calificaciones técnicas ni la experiencia necesaria para manejar este tipo de - 22 - proyectos. Del mismo modo, el proyecto al asumir directamente la ejecución de varios componentes que el diseño original asignaba a terceros, terminó sobredimensionando su personal. · Otro componente que incrementó de manera significativa su costo de ejecución fue el de fortalecimiento de JU. Los costos de inversión se incrementaron en 217% con respecto a lo previsto exante. Costos del PSI: Exante vs. Expost (millones de US$) exante expost variación (%) Componente BM GOP USU total BM GOP USU total BM GOP USU total A: obras 42.4 0 0 42.4 50.2 7.4 3.2 60.8 118% 143% B: PES 6 0 0 6 10.5 2.5 0 13 175% 217% C: tecnificación - PERAT 25.58 1.52 11 38.1 10.6 3.6 4.9 19.1 41% 237% 45% 50% D: administración 1.02 1.88 0 2.9 8.3 15.6 0 23.9 814% 830% 824% E: presas 7 0 0 7 5.1 2.6 0.12 7.82 73% 112% contingencias 3 13 0 16 0 0 0 0 0% 0% 0% Total 85 16.4 11 112.4 84.7 31.7 8.22 124.6 100% 193% 75% 111% 8. Dada la necesidad de una segunda etapa para consolidar los logros alcanzados por el proyecto, esta Dirección General considera que existen elementos que hacen suponer que la sostenibilidad economica del PSI no estaría asegurada. Por tal motivo, se considera indispensable incrementar la participación de los usuarios en el cofinanciamiento de las obras de infraestructura de riego y en las actividades de asistencia técnica y fortalecimiento de organizaciones, así como una participación más activa con los ATDR's. 9. El PSI ha trabajado con un excesivo nivel de autonomía institucional, en forma casi aislada, con un débil nivel de coordinación con entidades involucradas en el manejo del agua: la Intendencia de Recursos Hídricos del INRENA, el PERPEC del MINAG y el INADE del Ministerio de Vivienda Construcción y Saneamiento. Asimismo, el PSI no ha sido propositivo en la institucionalización del proyecto en el MINAG. La formulación de un nuevo proyecto debe empezar planteando la organicidad institucional de las entidades que intervienen en el manejo integrado del recurso hídrico. 10. Esta Dirección reconoce la necesidad de diseñar una metodología de seguimiento más estricta, que incluya la elaboración de una línea de base, la definición de indicadores de resultados medibles y la metodología de evaluación final antes del inicio de ejecución del proyecto, con la finalidad de determinar los verdaderos beneficios e impactos de la intervención, tal como lo indica el BM en la recomendación N° 8 del informe de cierre del PSI. Dicha metodología debería enmarcarse en los esfuerzos del Sistema Nacional de Inversión Pública - 23 - 11. Por otro lado, dado que el Perú se encuentra enmarcado en un proceso de descentralización, es necesario que se incremente la participación de los Gobiernos Regionales durante la ejecución del proyecto, tanto al momento de priorizar las obras, como al momento de ejecución y seguimiento de las mismas. Se sugiere que los Gobiernos Regionales participen además en el proceso de calificación, selección y supervisión de las empresas que estén encargadas de la ejecución de las obras de infraestructura. Asimismo, se sugiere la participación de los Gobiernos Regionales en los concursos de incentivos a la tecnificación de riego. IV. CONCLUSIONES Y RECOMENDACIONES La evaluación del PSI señala que existen aspectos institucionales y técnicos a mejorar y que deberán tomarse en cuenta para la ejecución de nuevas intervenciones del MINAG orientadas al subsector irrigación. Sin embargo, esta Dirección General reconoce los avances logrados por el PSI en el subsector riego, especialmente en el fortalecimiento de las organizaciones de usuarios. A continuación se presentan algunas recomendaciones que deberán ser tomadas en cuenta por el MINAG al momento de formular proyectos de inversión pública orientados al subsector irrigación. · Los costos administrativos de un proyecto de inversión pública deberían encontrarse en el rango del 8 al 10% del costo total de inversión del mismo. · Es necesario que el MINAG defina claramente el esquema institucional del Sector, en especial con relación a sus intervenciones en el subsector irrigación. · Es necesario que el MINAG incorpore a de manera activa la participación de los ATDR en la ejecución de sus programas y proyectos orientados al subsector irrigación. · Es necesario incrementar el nivel de cofinanciamiento de las organizaciones de usuarios en la ejecución de obras de infraestructura de riego a través de mecanismos competitivos de asignación de prioridades. · Es necesario que se cumplan con los lineamientos sectoriales del MINAG en la modalidad de ejecución de sus programas y proyectos orientados a brindar asistencia técnica. Es decir, la asistencia técnica debería ser provista por privados y cofinanciada por los beneficiarios. · Es necesario establecer un sistema de seguimiento y monitoreo más estricto. Para lo cual es necesaria la construcción de una línea de base, la definición de indicadores cuantificables y la metodología de la evaluación final, para una correcta evaluación del proyecto. · Es necesario incrementar la participación de los Gobiernos Regionales en la supervisión, priorización y ejecución de proyectos de inversión pública orientados al subsector riego. Lima, 6 de diciembre de 2004 Dirección General de Programación Multianual del Sector Público - 24 - (b) Cofinanciers: mie-suzuki@jbic.go.jp To: Pkoenig@worldbank.org 11/30/2004 09:14 AM cc: gcharlier@worldbank.org, ytanimichi@worldbank.org, m-sakamoto@jbic.go.jp, h-takeuchi@jbic.go.jp, c-osaki@jbic.go.jp Subject: RE: Peru - Proyecto Subsectorial de Irrigacion (PSI) - Implementa tion Completion Report (ICR) Dear Mr. Koenig I am sending you our comments on your Implementation Completion Report for the PSI Project as follows. 1. Page 2 (OECF) and Page 6 (footnote 2): Full name of OECF is ·The Overseas Economic Cooperation Fund·. 2. Page 6 (3.18): (·Japanese Bank for International Cooperation· ) should be (·Japan Bank for International Cooperation·). 3. Page 6 (3.1.8): The place where ·JBIC·s procedures did not allow........· says, should be changed to ·The bilateral protocol agreement did not allow......·. since the structural changes in the project proposed by the Government of Peru was not allowed not because of our procedures but because of the protocol agreement between both countries. 4. Page 16 (5.1.1) and Page 22 (9.b): Please say ·JBIC loan· instead of ·JBIC funds· or ·JBIC funding· Taking this opportunity, I would like to inform you that our head office is planning one-week appraisal mission for this PSI project at the beginning of January. We hope to be able to continue coordinating with you. Best regards Mie Suzuki JBIC Lima Office (c) Other partners (NGOs/private sector): None 10. Additional Information Footnotes for Main Text 1. The project area was limited to the coastal region, "Costa". 2. Formerly OECF (Overseas Economic Cooperation Fund) of Japan. 3. The previous projects were: Loan 114-PE Irrigation Project; and 418-PE San Lorenzo Irrigation which financed works and land settlement in the San Lorenzo area; Loan 1403-PE Irrigation Rehabilitation I Project which helped the rehabilitation and reclamation of 40,000 ha in four coastal valleys; and the fourth Loan 1771-PE Irrigation Rehabilitation II which supported irrigation rehabilitation works in 34,000 ha in 1987 (credit suspended in 1987 for non-payment of arrears). 4. OED. 2002. Peru: Country Assistance Evaluation. Report No. 24898-PE. 5. Ibid. p. 10. 6. WDI (World Development Indicators) 7. Eligibility criteria are: (i) having a Technical Manager; (ii) preparation of realistic budgets that allow - 25 - efficient operation and maintenance of irrigation works and installations and reflect such budgets in irrigation tariffs; (iii) implementation and application of the modality of prepayment of irrigation tariffs; and (iv) having a fee collection percentage higher than 75%. - 26 - Annex 1. Key Performance Indicators/Log Frame Matrix IMPACT INDICATORS (OUTCOME) Impact Indicators No. At Project SAR Target Current Value Start-up (June 2004) 1. N° of Users' Organizations, out of the 64 in the 2 -- 33 Costa, that comply with eligibility conditions [1] 2. N° of Users' Organization whose management 2 -- 54 quality has considerably improved [2] 3. % of private participation in irrigation 0 100 [3] * 15% improvement of investments networks * 30% gates, meters, and community works * 40% improved irrigation technology systems 4. % of realistic costs of operation and 72 100 80.5 maintenance (O&M) covered by water tariffs 5. N° of dams, out of the 4 selected, whose safety 0 4 4 levels have significantly improved [1] (i) to have a Technical Manager; (ii) to prepare realistic budgets that allow efficient operation and maintenance of irrigation works and installations, and to reflect such budgets in irrigation tariffs; (iii) to implement and apply the modality of prepayment of irrigation tariffs; and (iv) to have a percentage of tariff collection higher than 75%. [2]Based on categorization A (14 WUOs), B (18 WUOs), C (22 WUOs) y D (10 WUOs). Only category D is limited in its development. [3]Indicator established when Component A considered that WUOs should pay 100% of investments in irrigation works. Components Results Indicators SAR Current Value Target (June 2004) COMPONENT A N° of feasibility studies carried out 40 32 N° of irrigation systems rehabilitated 32 49 [1] Rehabilitation of irrigation Water conveyance efficiency in percentage, 78 68 infrastructure departing from 56% PSI estimate at appraisal (SAR est. at appraisal 60%) Area affected by "El Niño 1998" and -- 435,000 reconstructed by the project (ha) Length (km) of improved and/or rehabilitated -- 313 canals N° of improved and/or rehabilitated intakes and -- 1,422 canal structures N° of improved and/or rehabilitated control and -- 283 measurement works N° of wells rehabilitated -- 49 - 27 - Components Results Indicators SAR Current Value Target (June 2004) COMPONENT B N° of users, out of the 350,000 in the Costa, who -- 80,103 Institutional strengthening have become aware of their duties and institutional of users organizations rights N° of Users' Organizations, out of the 64 in the 64 64 Costa, that have received training in operation and maintenance, charges and tariffs, and institutional management N° of Irrigation Commissions, of the 614 in the -- 188 Costa, that have received training in operation and maintenance, charges and tariffs, and institutional management COMPONENT C N° of farmers who benefited from incentive 450 [2] 1,022 program for irrigation technology improvement Incentives for irrigation Area (ha) covered by incentive program for 6,600 4,933 technology improvement irrigation technology improvement Water application efficiency in percentage, in 70 85 areas covered by incentive program, departing from 55% PSI estimate at appraisal (SAR estimate 60%) N° of farmers who participated in extension -- 50,744 programs N° of farmers with paid technical assistance -- 5,248 N° of production chains promoted by the project -- 102 COMPONENT D UCPSI has a designed monitoring and evaluation -- Yes system; a logical framework and impact and (with delay) Strengthening of Project results indicators Coordination Unit for UCPSI has a monitoring and evaluation system -- Yes project coordination and implemented and in operation monitoring UCPSI complies reasonably well with the -- Yes activities and results established in the POAs and with the submission of reports required by institutions involved in the project COMPONENT E N° of dam safety programs executed 4 4 Dam Safety Committee established and in -- 1 Emergency dam safety operation program [1]Refers to valleys assisted by the project with irrigation reconstruction and/or rehabilitation works. [2]Considering that 1 system of technically improved irrigation belongs to 1 beneficiary farmer. - 28 - Annex 2. Project Costs and Financing Project Cost by Component (in US$ million equivalent) Appraisal Actual/Latest Percentage of Estimate Estimate Appraisal Component US$ million US$ million Rehabilitation of irrigation and drainage infrastructure 102.40 60.80 59.4 Institutional development and strengthening WUOs 6.00 13.00 216.7 Incentive funds for technological improvement 38.10 19.10 50.1 Project administration and monitoring 2.90 23.90 824.1 Emergency dam safety programs 7.00 7.80 111.4 Total Baseline Cost 156.40 124.60 Physical Contingencies 6.80 Price Contingencies 9.20 Total Project Costs 172.40 124.60 Total Financing Required 172.40 124.60 Project Costs by Procurement Arrangements (Appraisal Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N.B.F. Total Cost Other 1. Works 12.50 3.40 41.10 60.10 117.10 (12.50) (3.40) (38.50) (0.00) (54.40) 2. Goods 3.20 1.40 16.00 11.50 32.10 (3.20) (1.40) (10.10) (0.00) (14.70) 3. Services 0.00 0.00 13.80 0.00 13.80 (0.00) (0.00) (13.80) (0.00) (13.80) 4. Miscellaneous 0.00 0.00 9.40 0.00 9.40 (0.00) (0.00) (2.10) (0.00) (2.10) Total 15.70 4.80 80.30 71.60 172.40 (15.70) (4.80) (64.50) (0.00) (85.00) - 29 - Project Costs by Procurement Arrangements (Actual/Latest Estimate) (US$ million equivalent) 1 Procurement Method Expenditure Category ICB NCB 2 N.B.F. Total Cost Other 1. Works 0.00 48.40 5.00 3.30 56.70 (0.00) (42.30) (3.90) (0.00) (46.20) 2. Goods 0.00 7.60 1.90 4.90 14.40 (0.00) (5.30) (1.50) (0.00) (6.80) 3. Services 8.80 8.40 12.40 0.00 29.60 (7.50) (7.20) (11.40) (0.00) (26.10) 4. Miscellaneous 0.00 0.00 23.90 0.00 23.90 (0.00) (0.00) (5.60) (0.00) (5.60) Total 8.80 64.40 43.20 8.20 124.60 (7.50) (54.80) (22.40) (0.00) (84.70) 1/Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies. 2/Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff of the project management office, training, technical assistance services, and incremental operating costs related to (i) managing the project, and (ii) re-lending project funds to local government units. Project Financing by Component (in US$ million equivalent) Percentage of Appraisal Component Appraisal Estimate Actual/Latest Estimate Bank Govt. CoF. Bank Govt. CoF. Bank Govt. CoF. Rehabilitation of Irrigation 42.40 60.00 50.20 7.40 118.4 0.0 & Drainage Infrastructure Institutional Development 6.00 10.50 2.50 175.0 & Strengthening WUOs Incentive Funds for 25.58 1.52 10.60 3.60 41.4 236.8 Technological Improvement Project Administration & 1.02 1.88 8.30 15.60 813.7 829.8 Monitoring Emergency Dam Safety 7.00 5.10 2.60 72.9 Programs Physical Contingencies 1.20 5.60 0.0 0.0 Price Contingencies 1.80 7.40 0.0 0.0 Note: In addition the Appraisal Estimate includes Beneficiaries contribution of US$11.0 million for the "Incentive Funds for Technological Improvement" component. The actual Beneficiary contribution was US$3.20 million for the "Rehabilitation of Irrigation and Drainage Infrastructure" component, US$4.90 million for the "Institutional Development and Strengthening WUOs" component and US$0.12 million for the "Incentive Funds for Technological Improvement" component, totalling an amount of US$8.22 million. Thus, the Percentage of Appraisal for Beneficiaries for the "Incentive Funds for Technological Improvement" component was 44.5 % and for the whole project was 74.7 %. - 30 - Annex 3. Economic Costs and Benefits Introduction The SAR estimated an overall financial rate of return (FRR) of 36.3 percent and an economic rate of return (ERR) of 38.7 percent. The estimate was based on 64 farm models in 10 subproject areas1 under Component A (Rehabilitation of Irrigation and Drainage Infrastructure). In most cases, estimates of increased production values in the analysis resulted from expected expansion of irrigated areas as opposed to crop conversion into high-value crops such as horticultural crops. The prices used were those prevailing in December 1992 and adjusted to 1994 levels and the time span used was 20 years. In contrast, estimates prepared for this report showed an overall FRR of 23.0 percent and an ERR of 24.1 percent. Unlike the analysis in the SAR which only accounted for a sample of Component A investments, the post-project analysis also included investments in Components A and C (Incentive Programs for Technology Improvement). The estimates were based on household-level surveys of beneficiary farms conducted in February 2004, prices used were those of December 2003, and the time span used was 15 years2. Expansion of land which was expected to explain most of the benefits occurred only minimally (only 2.2 percent of newly irrigated land was created). Thus, most project benefits resulted from improved yields and from switching to high-value crops. Component A: Rehabilitation of Irrigation and Drainage Infrastructure Under this Component, 42 irrigation and drainage systems were rehabilitated and improved, benefiting 35,838 families, more than 139,000 ha over 20 water user groups in 7 departments3 and 18 provinces along the coast. In addition, in the department of Tacna, 46 wells were improved, benefiting 690 families or users in 2,655 ha. For this analysis, rehabilitation works under Component A were broken down into three types of works: intakes, canals, and wells. For each type of work, three samples were chosen based on the amount of investment in works, extent of land receiving benefits from works, and number of beneficiary families4. For each selected sample work, field interviews were conducted with beneficiary families to gauge the benefits received from the project. 130 farmers were selected for Component A. A method was used to ensure that the chosen samples reflected the actual land size distribution of each area. The results show that wells had the highest FRR (33.4 percent), followed by canals (27.9 percent) and intakes (8.7 percent). Aside from increases in farm income due to higher availability of water, interviewed farmers reported increased regularity in the provision of water and a reduction in damaging effects from floods. In the region of Galpón-Pativilca, Cabeza de Toro, and Sarmiento, a significant expansion of a secondary crop took place due to the installation of the infrastructure. Additionally, in the case of Sarmiento, a primarily rice growing area, the introduction of a secondary crop, legumes, aided in reversing the serious salinization problem. - 31 - Component C: Incentive Programs for Technology Improvement In total, 4,933 ha and 1,022 farmers with an average farm size of 5 ha benefited from systems installed under this Component. Evaluation for this component was categorized by a representative sample of permanent crops (lemon, olives, and grapes) and an annual crop (paprika). Furthermore, systems were broken down into farm-specific (individual) and group-owned systems. 17 representative farmers cultivating these sample crops were interviewed during the field survey in February 2004. Systems installed for lemon production showed the highest rates of return, whereas those for grapes showed the lowest. Furthermore, in general, systems installed for individual farmers as opposed to groups of farmers showed higher rates of returns. Internal Rate of Return Summary Table for Selected Samples FRR ERR Investment Area Farmers Inv./ha Inv./farmer Component A 1000 US$ 1000 person $/ha $/person Ha Intakes Chuschuco 4.7 5.6 1,087 1.6 520 697.3 2,090.4 Galpón-Pativilca 22.3 23.4 163 0.4 473 403.8 343.8 Cabeza Toro 10.5 12.8 182 5.6 587 32.7 310.1 Sub-total: Intakes 8.7 10.3 1,432 7.5 1,580 190.0 906.1 Canals Santa Rita Sihuas 23.1 23.8 737 1.7 132 431.8 5,583.4 Sarmiento 2.7 18.7 198 0.2 74 804.6 2,669.9 Huaranguillo 34.1 34.3 1,249 1.9 803 661.6 1,554.9 Sub-total: Canals 27.9 29.3 2,183 3.8 1,009 568.6 2,163.7 Wells Well IRH22 7.2 7.9 4.2 0.03 5 165.8 839.4 Well IRH34 50.0 49.8 3.2 0.03 4 122.5 796.4 Well IRH60 41.0 43.9 2.7 0.01 2 387.6 1,356.5 Sub-total: Wells 33.4 34.3 10.1 0.06 11 173.1 917.8 Sub-total: Component A 21.88 22.9 3,624 11.4 2,600 317.1 1,394.2 Component C Lemon: group 36.3 36.3 558 0.3 101 2,075.1 5,526.7 Lemon: individual 43.6 43.7 319 0.2 19 1,784.2 16,808.8 Olives: mixed group 21.1 21.6 313 0.2 31 1,991.3 10,084.9 Olives: group 18.3 18.5 2,410 0.2 146 2,482.0 16,506.8 Olives: mixed individual 27.2 27.6 384 1.0 80 2,387.1 4,804.1 Paprika: group 22.4 26.9 1,957 0.7 164 2,648.0 11,932.3 Grape: individual 16.8 17.0 773 0.3 39 3,043.4 19,821.0 Sub-total: Component C 24.1 25.4 6,714 2.7 580 2,459.5 11,576.6 Total for Components A & C 23.0 24.1 10,339 14.2 3,180 730 3,251.3 - 32 - Summary Overall the works under the project yielded benefits in increased productivity, switching to high-value crops, introduction of secondary crops, and the full use of established irrigation perimeters. However, no expansion of irrigated agricultural land took place, as initially foreseen in the SAR. Lack of a formal system of land titles and markets is believed to have hindered the expansion. Aside from the increase in agricultural production, the project has contributed to promoting production chains with agribusinesses and input and service providers. Compared to projections in the SAR, both the FRR and ERR are lower (FRR: SAR = 36.3%, ICR = 23.0%, ERR: SAR = 38.7%, ICR = 24.1%). Reasons for this are believed to be unfavorable climatic conditions (severe drought) at the time of the ICR field survey (February 2004), difference in selected samples as well as differences in assumption used in the rate of return calculations, e.g., the SAR assumes falling yields, production values and incomes of between 1-3 percent for the no-project scenario. Footnotes 1. San Lorenzo, Chancay Lambayeque, Huaral la Esperanza, S. Rita de Siguas, Yurumayo, La Joya Antigua, Huara S. Rosa, Chili Regulado, S. Lacramarca, Sama. 2. Full results are reported in "Análisis Económico Financiero del Proyecto y Evaluación de la Rentabilidad de las Obras de Infraestructura de Riego: II Etapa de los Servicios de Consultoría - Informe Final", June 2004, Centro Peruano de Estudios Sociales (CEPES). 3. Arequipa, Lambayeque, La Libertad, Lima, Ica, Tacna, Piura. Tumbes, Ancash, and Moquegua benefited from El Niño rehabilitation work. 4. Selected samples for Component A: Intakes (Pachia, Pativilca, Pisco), Canals (S. Rita Siguas, Chancay-Lambay, Chili Regulado), Wells (#34, #22, #60 - all in La Yarada) - 33 - Annex 4. Bank Inputs (a) Missions: Stage of Project Cycle No. of Persons and Specialty Performance Rating (e.g. 2 Economists, 1 FMS, etc.) Implementation Development Month/Year Count Specialty Progress Objective Identification/Preparation 02/27/1992 3 FAO CONSULTANTS (3). 04/10/1992 2 SR. IRRIG. ENG (1), FAO CONSULTANTS (1). 08/25/1992 5 SR. IRRG. ENG.(1) LAND SPEC.(1) FAO CONSULTANTS(2), ECONOMIST(1) 11/21/1992 3 SR. IRRG. ENG.(1), FAO CONSULTANTS (1), PRINCIP. IRRG. ENG.(1) 12/22/1992 2 FAO CONSULTANTS (2). 01/16/1993 2 SR. IRRG. ENG (2) 05/24/1993 4 SR. IRRG. ENG (1), SR. ECONOMIST (1), FAO CONSULTANTS (2) 08/10/1993 4 SR. IRRG. ENG (1), LAND SPEC. (1), FAO CONSULTANTS (2) 10/28/1993 4 SR. IRRG. ENG (1), SR. ECONOMIST (1) FAO CONSULTANTS (2) 03/31/1994 9 SR. IRRIG. ENG (3), FIN. ANALYST(1), PROJECT ANALYST (1) FAO CONSULTANTS- LEGAL, ECONOMIC, IRRI.ENG. EXPERTS (4). 06/19/1994 6 SR. IRRIG. ENG (2), FIN. ANALYST(1), LAND SPEC.(1) FAO CONSULTANTS (2). Appraisal/Negotiation 11/18/1994 1 SR. IRRIG. ENG 12/1/1994 6 SR. IRRIG. ENG (2), FIN. ANALYST(1), LAND SPEC.(1) FAO CONSULTANTS (2). 12/20/1995 1 FIN. CONSULTANT Supervision 02/23/1997 2 TASK MANAGER (1); FAO - S S CONSULTANT (1) 08/28/1997 2 CREDIT (1); TASK MANAGER U U (1) - 34 - 04/23/1998 2 TASK MANAGER (1); U S ECONOMIST (1) 09/25/1998 2 TASK MANAGER (1); S S PROCUREMENT OFFICER (1) 04/17/1999 3 IRRIGATION SPECIALIST (1); U S RURAL DEVELOPMENT (1); AGRICULTURAL ECONOMIST (1) 09/17/1999 4 IRRIGATION SPECIALIST (1); S S RURAL DEVELOPMENT (1); SR.AGRICULT. ECONOMIST (1); DAM SPECIALIST (1) 09/17/1999 6 AGRICULTURAL S S ECONOMIST (1); RURAL DEVELOPMENT SPEC (1); IRRIGATION ENGINEER (1); PROCUREMENT SPECIALIST (1); DISBURSEMENT SPECIALIS (1); DAM SPECIALIST (1) 09/17/1999 2 IRRIGATION ENGINEER (1); S S AGRICULTURAL ECONOMIST (1) 05/05/2000 2 SR.IRRIGATION ENGINEER S S (1); SR.AGRICULTURAL ECON. (1) 10/12/2000 4 SR. AGR. ECONOMIST (1); SR. U U IRRIG. ENGINEER (1); FINANCIAL MANAGEMENT (1); DISBURSEMENT ANALIST (1) 01/29/2001 3 AGRICULTURAL U U ECONOMIST (1); IRRIGATION ENGINEER (1); ECONOMIST (1) 06/01/2001 2 IRRIGATION ENGINEER (1); S S AGRICULTURAL ECONOMIST (1) 09/29/2001 4 AGR. ECONOMIST (1); S S IRRIGATION ENG. (1); ECONOMIST (1); MONITOR AND EVALUATION (1) 02/16/2002 3 SR. AGRICULTURAL ECON. S S (1); SR. IRRIGATION ING. (1); SR. ECONOMIST (1) 07/26/2002 3 SR. IRRIGATION ENG. (1); S S FINANCIAL MANAGEMENT (1); MONITORING EVALUATION (1) 01/24/2003 4 LD. AGRICULTURAL S S ECON.(1), SR. IRRIGATION ENG. (1), MONITORING - 35 - SPECIALIST(1), PROCUREMENT SPECIALIST(1) 02/25/2004 4 SR. WATER RESOUCE MGMT S S SPCECILIST.(1), SR. OPERATIONS OFFICER. (1),ECONOMIST(1), SR. IRRIGATION ENG.(1) ICR 07/23/2004 4 SR. WATER RESOURCE S S SPECIALIST (1) SR. OPERATIONS OFFICER (1), ECONOMIST (1), FAO IRRIGATION ENG.(1) (b) Staff: Stage of Project Cycle Actual/Latest Estimate No. Staff weeks US$ ('000) Identification/Preparation 198.9 260.7 Appraisal/Negotiation 49.8 122.8 Supervision 212.18 997.2 ICR 15* 42.7 Total 475.88 1423.4** * Estimate based on work plan agreement. ** Includes FAO cost and Trust Fund. - 36 - Annex 5. Ratings for Achievement of Objectives/Outputs of Components (H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable) Rating Macro policies H SU M N NA Sector Policies H SU M N NA Physical H SU M N NA Financial H SU M N NA Institutional Development H SU M N NA Environmental H SU M N NA Social Poverty Reduction H SU M N NA Gender H SU M N NA Other (Please specify) H SU M N NA Private sector development H SU M N NA Public sector management H SU M N NA Other (Please specify) H SU M N NA - 37 - Annex 6. Ratings of Bank and Borrower Performance (HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory) 6.1 Bank performance Rating Lending HS S U HU Supervision HS S U HU Overall HS S U HU 6.2 Borrower performance Rating Preparation HS S U HU Government implementation performance HS S U HU Implementation agency performance HS S U HU Overall HS S U HU - 38 - Annex 7. List of Supporting Documents Centro Peruano de Estudios Sociales (CEPES), FAO, Banco Mundial. 2002. "Estudio de la Rentabilidad de la Agricultura de la Costa Peruana y las Inversiones para Mejoramiento del Riego." CEPES. 2004. "Análisis Económico Financiero del Proyecto y Evaluación de la Rentabilidad de las Obras de Infraestructura de Riego: II Etapa de los Servicios de Consultoría ­ Informe Final." FAO. Support Services for Irrigation Systems and Irrigated Agriculture. http://www/fao.org/ag/aglw/waterinstitutions/archive5.stm#Int76 Mission Aide Mémoires and PSRs Nott, G. and M. Svendsen (2000). "Irrigation Management Transfer in Turkey: Process and Outcomes," in Groenfeldt, D. & M. Svendsen (eds.) 2000. Case Studies in Participatory Irrigation Management. World Bank Institute. WBI Learning Resource Series, No. 20247. OED. 2002. Peru: Country Assistance Evaluation Report No. 24898-PE. Proyecto Sub-Sectorial de Irrigación (PSI). Informe de Cierre del Proyecto. Julio del 2004. Several Project documents. World Bank. 1996. Staff Appraisal Report. Peru: Irrigation Subsector Project. Report No. 13542-PE. World Bank. World Development Indicators. - 39 - Additional Annex 8. Borrower's ICR RESUMEN EJECUTIVO A. FUNDAMENTO DEL DISEÑO, DE LOS OBJETIVOS DE DESARROLLO Y DE LA CALIDAD INICIAL 1.1 Objetivos Originales El objetivo central actual del Estado Peruano sobre la política de riego en el país es "contribuir a mejorar la rentabilidad y competitividad de la agricultura de riego mediante el aprovechamiento intensivo y sostenible de las tierras y el incremento de la eficiencia en el uso del agua"; en ese contexto, los objetivos originales del PSI, aquellos que se identificaron en el año 1997 y los actuales, son plenamente concordantes con esta política de Estado. Durante la ejecución del proyecto se propuso una definición del "Marco Lógico" que permita una visión más articulable de los componentes del proyecto y a la vez un plan de indicadores de desempeño y cumplimiento de objetivos, resultados, productos y actividades 1.2 Objetivos Revisados Los objetivos originales no fueron modificados y continuaron vigentes hasta el cierre del proyecto. 1.3 Componentes Originales El componente A. Rehabilitación de la Infraestructura de Riego, fue orientado a mejorar las condiciones físicas de los sistemas de riego existentes en la Costa, mediante la rehabilitación y el mejoramiento de aquella infraestructura de riego en mal estado, considerando que los costos de las obras deberían ser pagados totalmente por los usuarios a través de sus respectivas OUAs (JUs y/o CRs). El diseño consideró que las OUAs concertaran compromisos de préstamos con la banca privada la cual actuaría de intermediaria de una línea de crédito administrada por COFIDE como banca de segundo piso. El componente B. Fortalecimiento Institucional de las Organizaciones de Usuarios, se basó en la ejecución de un Programa de Entrenamiento en Servicios (PES) para desarrollar las capacidades técnicas, administrativas y de gestión institucional, del personal directivo, técnico y administrativo, de las OUAs (JUs y CRs), orientado a mejorar las condiciones operativas en los sistemas públicos de riego, obtener la recuperación de los costos totales de O&M y asegurar la sostenibilidad del proyecto en el largo plazo. El componente C. Programa de Incentivos para la Tecnificación del Riego, estuvo orientado a promover la adopción de tecnologías innovativas de riego parcelario para conseguir mayor eficiencia en el uso de los recursos agua y suelo. Consideró 2 sub-componentes: (i) un programa de entrenamiento a cargo de extensionistas; y, (ii) un programa de incentivos para implementar sistemas de riego tecnificado a nivel parcelario. En el caso de los incentivos, los mismos serían asignados a los beneficiarios mediante concursos públicos. El componente D. Administración y Monitoreo del Proyecto, que a través de la UCPSI se encargó de realizar las coordinaciones intersectoriales y la implementación del proyecto, así como el monitoreo y evaluación del desarrollo técnico, administrativo e institucional de sus componentes. El componente E. Programa de Emergencia de Seguridad de Presas, orientado al desarrollo de un programa de rehabilitación de emergencia de 4 presas (embalses) de la Costa (Poechos, San Lorenzo, Tinajones y El Frayle) que se encontraban afectadas por problemas críticos de tipo hidráulico, estructural y/o equipamiento especializado. - 40 - 1.4 Componentes Revisados El componente A tuvo las siguientes modificaciones: (i) en 1998, por una situación de emergencia a causa de los daños ocasionados por el fenómeno "El Niño", se acordó que el Estado asuma las inversiones totales y la ejecución de las obras de reconstrucción; las OUAs sólo cubrirían los costos de O&M y la rehabilitación de sus sistemas de riego de tercer y cuarto orden; y, (ii) en el 2001 se acordó una co-participación de las OUAs y el Estado en el financiamiento y ejecución de las obras de rehabilitación y mejoramiento de riego; las OUAs calificadas como elegibles deberían financiar el 15% del costo de las obras y participar activamente en los procesos de selección del contratista, supervisión de la ejecución y recepción de las obras. Se incorpora además la modalidad de obras comunitarias a cargo de las OUAs donde la contribución del proyecto no deberá exceder el 70% del costo total. El componente B no tuvo cambios. Se ejecutó en 3 etapas con 2 modalidades de ejecución, una primera etapa por una empresa consultora y la segunda y tercera etapa por administración directa de la UCPSI. El componente C tuvo los siguientes cambios: (i) en Octubre del 2002 se establece la implementación de un programa de extensión y asistencia técnica para promover el uso de técnicas más eficientes y métodos de riego y prácticas de cultivos, en reemplazo del entrenamiento de extensionistas y financiamiento de sus salarios (durante 3 años con reducción progresiva de los mismos); y, (ii) en Octubre del 2002 se establece en el programa de incentivos la contribución del proyecto en el financiamiento de hasta el 70% de los costos de los instrumentos y equipos (tales como medidores de agua) para mejorar el manejo de agua por las OUAs. El componente D tuvo que ser modificado como consecuencia del cambio producido en la ejecución del componente A, estableciéndose en Junio de 1998 que la UCPSI se encargue de la ejecución de los componentes A, B, C y D, y el E a través del INADE. El componente E no sufrió cambios. 1.5 Calidad al Inicio Se considera moderadamente satisfactoria porque consideró casi todos los aspectos técnicos e institucionales que tienen relación estrecha con una eficiente gestión del agua de riego. Todos los componentes tienen como común denominador mejorar la eficiencia de los sistemas de riego. El proyecto es inédito en su diseño y estrategia de ejecución porque plantea, por primera vez, la participación financiera de los usuarios de riego y sus OUAs en los costos de rehabilitación, mejoramiento, operación y mantenimiento de sus sistemas de riego. Asimismo, fue consistente con la estrategia del BIRF de apoyar los esfuerzos que realiza el Gobierno en desarrollar y dar sostenibilidad a su agricultura, así como, con las prioridades que tiene el país respecto del rol del Sector en el desarrollo de la economía. Esta calidad de inicio se vio afectada por la inadecuada estrategia de ejecución original del componente A, que nunca pudo ponerse en práctica y tuvo que ser cambiada durante su ejecución tal como se indica en el numeral 1.4, debido principalmente a que no consideró un diagnóstico detallado previo del nivel de ingresos y la capacidad de pago de los usuarios de riego y de las OUAs y se fundamentó en 2 supuestos que hasta la fecha no se han dado: (i) la participación activa del sistema financiero nacional en la parte operativa del proyecto; y, (ii) la dación de una nueva Ley de Aguas incluyendo el establecimiento de los derechos reales de su aprovechamiento. B. CUMPLIMIENTO DE OBJETIVOS Y RESULTADOS 2.1 Impactos/Cumplimiento de Objetivos - 41 - El proyecto ha cumplido en forma satisfactoria con su finalidad, propósito y objetivos específicos, y con las metas establecidas en sus diferentes componentes. La población objetivo confirma que hay un incremento en el uso extensivo e intensivo de sus tierras y un mayor fortalecimiento de la institucionalidad rural en donde el PSI realizó sus acciones. El proyecto también contribuyó a aumentar la producción y productividad agrícola y por ende en los ingresos de los agricultores. Existe un alto grado de satisfacción entre los usuarios respecto a la confiabilidad de sus sistemas de riego debido a: (i) la calidad de las obras rehabilitadas o mejoradas; (ii) los avances logrados en la capacidad de gestión de dichos sistemas de riego por sus respectivas OUAs; y, (iii) la mayor transparencia de los procedimientos y decisiones en torno a la distribución del agua reduciéndose al mínimo la arbitrariedad en su reparto. Los objetivos del proyecto se concentraron básicamente en 2 categorías: objetivos físicos y desarrollo institucional, ambos con un grado de cumplimiento satisfactorio. Cumplimiento del objetivo 1 El desarrollo de la capacidad de las JUs para la gestión descentralizada y eficiente de los sistemas de riego ha sido cumplido de manera altamente satisfactoria, porque se han mejorado todas las condiciones necesarias para posibilitar la sostenibilidad económica y operativa de los sistemas de riego, tal como se evidencian con los siguientes logros obtenidos: (i) 50% de las 64 JUs existentes han alcanzado un proceso sostenido y ascendente de sus capacidades de gestión y el otro 50% se encuentra en una etapa de franco proceso de desarrollo; (ii) el abastecimiento de agua a los usuarios se ha mejorado en suficiencia y oportunidad, con un incremento promedio de la disponibilidad hídrica del 14%; (iii) incremento sostenido de la cobranza anual de las tarifas de agua (de casi US$ 7 millones en 1999 a US$ 15.6 millones en el 2003, con tendencia ascendente); (iv) incremento del gasto en O&M en relación con el presupuesto total ejecutado anualmente por las JUs (US$ 8.5 millones en el año 1999 a US$ 13.2 millones en el año 2003); (v) aumento sostenido del número de JUs elegibles para acceder al financiamiento de sus obras de mejoramiento de riego en el marco del proyecto; de 2 JUs elegibles (3.1% del total de JUs) al inicio a 33 JUs elegibles (52% del total de JUs) al término del proyecto; y, (vi) significativa mejora de la calidad de la gestión técnica, administrativa e institucional, en 54 JUs de las 64 existentes (14 JUs se encuentran en la categoría A, 18 en la categoría B y 22 en la categoría C. Las 10 JUs de la categoría D tienen fuertes limitaciones para su desarrollo). Cumplimiento del objetivo 2 La reducción del papel del sector público en las irrigaciones ha sido un objetivo que se cumplió en forma satisfactoria que se constata principalmente con los siguientes logros: (i) participación significativa de 20 OUAs en el financiamiento de las obras de mejoramiento de riego, obras comunitarias y compuertas y medidores (US$ 3.6 millones) y el incremento del aporte de los agricultores en los costos de inversión de los sistemas de riego tecnificado (US$ 4.9 millones); (ii) evolución anual creciente de los costos en O&M asumidos por las OUAs (US$ 8.5 millones en 1999 a US$ 13.2 millones en el 2003); (iii) transformación del rol intervensionista y ejecutor del Estado a otro de promotor, normativo y supervisor; y, (iv) mayor participación de las OUAs en la ejecución de estudios, obras y actividades productivas agropecuarias (financiamiento de las obras de mejoramiento de riego y en la priorización, preparación de expedientes técnicos, vigilancia y supervisión de la ejecución de sus obras). C. Cumplimiento del objetivo 3 Este objetivo, asegurar la recuperación de los costos de inversión y de operación y mantenimiento de los sistemas de riego, tuvo un desempeño satisfactorio, sustentada por los siguientes logros: (i) contribución de las OUAs con US$ 3.6 millones de una inversión total de US$ 24 millones (obras de mejoramiento de - 42 - riego, obras comunitarias y rehabilitación de pozos) cuando anteriormente no había ninguna contribución de las OUAs a este tipo de obras; (ii) contribución de los agricultores con US$ 4.9 millones de un costo total de US$ 12.4 millones en sistemas de riego tecnificado; y, (iii) costos de O&M bajo responsabilidad completa de las OUAs. Los recursos financieros que las OUAs destinan a O&M han evolucionado anualmente en forma significativa alcanzando en la actualidad (a cifras del 2003) un monto de US$ 13.2 millones. D. Otros objetivos alcanzados El proyecto ha contribuido de manera satisfactoria con el objetivo de mejorar la eficiencia de riego a nivel de sistema y en el ámbito parcelario en aquellas zonas donde tuvo intervención directa; así: (i) mejoró sensiblemente la eficiencia de conducción de riego en la mayoría de los sistemas públicos de riego administrados por las OUAs, de 80% en la situación ex ante a 81% actualmente; (ii) mejoró significativamente la eficiencia distribución de riego en la mayoría de los sistemas públicos de riego administrados por las OUAs, de 70% en la situación ex ante a 79% actualmente; y, (iii) aunque en áreas pequeñas, en parcelas integrales demostrativas, mejoró la eficiencia de riego parcelario alcanzando en promedio 63% de eficiencia cuando la eficiencia ex ante se estima entre el 50 y el 60% en riego convencional por gravedad. El proyecto también ha contribuido satisfactoriamente en el aspecto de la gestión empresarial de los agricultores, logrando los siguientes resultados: (i) crear una masa crítica de 18,000 productores aptos para organizarse en grupos y formar empresas, cadenas productivas u otras actividades productivas agropecuarias; (ii) capacitar y entrenar a 600 promotores aptos para participar en la generación, implementación y gestión de cadenas productivas y a 190 profesionales como operadores de riego parcelario y de gestión de agro-negocios; y, (iii) promover 53 cadenas productivas actualmente formadas y 49 cadenas en proceso de formación involucrando una superficie de unos 5,030 ha y la participación de alrededor de 1,582 productores. 2.2 Resultados por Componentes A. Rehabilitación de infraestructura de riego Desempeño satisfactorio porque la mayoría de las metas alcanzadas superan las programadas como el aumento de disponibilidad de agua (entre 14 y 35% versus 30% programado) y la participación de las OUAs en el financiamiento de las obras de mejoramiento de riego (20 JUs de 12 JUs programadas y S/. 10.8 millones de 11.5 millones programados) y algunas se encuentran ligeramente por debajo como el caso de las OUAs elegibles (33 JUs elegibles de 35 programadas). Se ha ejecutado la reconstrucción, rehabilitación y mejoramiento de un total de 165 bocatomas, 313 km de canales, 1,257 obras de arte (obras complementarias de los sistemas de riego), 283 compuertas y 49 pozos multi-fincas con una inversión total de US$ 52 millones, beneficiando a unas 443,500 ha (51% del área total de riego de la Costa) y alrededor de 125,200 familias rurales (41% del total de la región). Las OUAs han participado en las decisiones e inversiones de las obras (priorización de las obras, preparación de los expedientes técnicos, vigilancia y supervisión de la ejecución de las obras). La calidad de las obras y los logros obtenidos son percibidos y reconocidos por los usuarios por el aumento de la disponibilidad de agua y la seguridad de su abastecimiento. B. Fortalecimiento institucional de las organizaciones de usuarios Desempeño altamente satisfactorio porque con una estrategia y modalidad inédita de ejecución ha logrado un cambio positivo y significativo en el fortalecimiento institucional de las OUAs. Se consiguió una fuerte y estrecha - 43 - empatía y sinergia entre los entrenadores del PES y sus entrenados (personal directivo, técnico y administrativo de las OUAs) para el logro de los resultados. Se implementó con instrumentos de gestión de O&M, C&T y GI, en las 64 JUs, a 186 CRs de 666 CRs existentes y se capacitó al personal directivo, técnico y administrativo de las OUAs en el uso de dichos instrumentos. Se entrenó a 9,419 personas y se capacitó a 28,802 entre directivos, personal técnico y administrativo y usuarios de las 186 CRs, mediante 7,294 eventos de capacitación ejecutados. En general, todos los indicadores cuantitativos muestran evolución positiva. Se mejoró significativamente la eficiencia de distribución y de operación en los sistemas públicos de riego donde el PES intervino directamente, incrementándose la eficiencia de distribución de riego en 9%. Se incrementó la recaudación global de las tarifas (vigentes y atrasadas) en casi el doble (de US$ 10.7 millones a US$ 20.5 millones), las tarifas vigentes en más del doble (de US$ 6.9 millones a US$ 15.6 millones) y las tarifas atrasadas que alcanzaron un monto total acumulado de US$ 23.2 millones; y, se logró aumentar las eficiencias de cobranza de tarifas vigente (relación entre las tarifas vigentes y el monto puesto en cobranza) de 41.5% a 75.5% así como la ejecución presupuestal que muestra gastos significativos para O&M incrementándose de US$ 8.5 millones en 1999 a US$ 13.2 millones en el 2003. C. Programa de incentivos para el mejoramiento tecnológico Desempeño satisfactorio porque en conjunto, los programas de incentivos para la tecnificación del riego y de extensión en riego parcelario y asistencia técnica en prácticas culturales, han fomentado en los agricultores un mayor interés sobre la necesidad de tecnificar el riego de sus parcelas cubriendo el ámbito correspondiente a 30 valles. El PIRT realizó 5 concursos de incentivos implementando 252 sistemas de riego tecnificado parcelario, con una inversión total de US$ 12.4 millones beneficiando a 4,933 ha y 1,022 familias. El aporte de los beneficiarios alcanzó el 39.6% de dicha inversión (US$ 4.9 millones). El PERAT logró que 16,355 agricultores adquieran capacidades para realizar un manejo eficiente del riego parcelario y prácticas culturales de cultivos, del cual casi 7,700 aplican plenamente los conocimientos adquiridos y 3,680 cuentan con capacidades en gestión empresarial. Ha beneficiado con asistencia técnica a 1,941 agricultores (65% de la meta programada) y capacitó a 190 profesionales en aspectos de asistencia técnica (actualmente aptos para brindar este servicio). Ha alcanzado eficiencias de aplicación de agua de 63% en riego tradicional por gravedad cuando anteriormente no se sobrepasaba el 60% de eficiencia de riego parcelario en las PIDs. D. Administración y monitoreo del proyecto Desempeño satisfactorio lográndose implementar, poner en marcha y ejecutar las actividades de los otros componentes. En los 2 últimos años de ejecución del proyecto, se implementó y operó un adecuado sistema de monitoreo y evaluación con marco lógico e indicadores de impacto, efectos y cumplimiento de metas, así como, instrumentos de medición, definidos y bastante detallados. La UCPSI cumplió razonablemente con las actividades establecidas en los planes operativos anuales, así como con la presentación de los informes requeridos por las instituciones involucradas con el proyecto (auditorias externas, informes de gestión trimestrales, semestrales y anuales, informes de evaluación y otros). E. Programa de emergencia de seguridad de presas Desempeño altamente satisfactorio. Se cumplió con todas sus metas físicas establecidas y adicionalmente se formó y estableció el Panel de Expertos en Seguridad de Presas, cuyas propuestas, conclusiones y recomendaciones, han - 44 - servido y sirven actualmente para la sostenibilidad de la rehabilitación, operación y mantenimiento de las 4 presas que fueron consideradas en el proyecto. Se promovió la creación y puesta en marcha del Comité de Seguridad de Presas en el INADE que se encarga de la evaluación periódica del estado hidráulico estructural de las presas existentes en el país. Se ejecutaron actividades adicionales a las establecidas en el proyecto con el aporte técnico y financiero de las OUAs e INADE. 2.3 Evaluación Financiera La TIRF del proyecto al cierre fue de 23% que significa 13 puntos menos respecto de la TIRF ex-ante (36.3%). 2.4 Evaluación Económica La TIRE al cierre del proyecto fue de 24.1%, casi 15 puntos menor a la estimada durante su formulación (38.7%). La rentabilidad económica del proyecto resulta superior a la financiera debido a que la transferencia neta promedio del proyecto y sus beneficiarios al resto de la sociedad en el sector agrícola nacional es negativa. 2.5 Impactos de Desarrollo Institucional El desempeño del proyecto en este aspecto es calificado como Alto debido a que: Las OUAs han logrado avances importantes en su organización y gestión institucional adquiriendo legitimidad ante sus usuarios y frente a las instituciones del sector rural donde actúan, con base a: (i) la implementación y uso de los instrumentos necesarios de gestión institucional; (ii) la mejora de la eficiencia en sus servicios sobre la oferta y distribución de agua; (iii) su participación efectiva en los procesos de rehabilitación y mejoramiento de su infraestructura de riego; y, (iv) actitud más responsable respecto de la O&M de sus sistemas de riego y al uso más efectivo de los recursos financieros provenientes de la cobranza de la tarifa de agua. El sector privado relacionado directamente con el proyecto (las empresas constructoras y supervisoras en el componente A, los proveedores de equipo de riego tecnificado en el PIRT, los proveedores de insumos y de asistencia técnica en el PERAT) ha mostrado visible desarrollo consolidando y potenciando las existentes y promoviendo la creación de nuevas empresas. La IRH y de sus ATDRs se han fortalecido durante sus participaciones en la coordinación y ejecución del PES, en la identificación y supervisión de la ejecución de las obras de reconstrucción y mejoramiento de infraestructura de riego y en los eventos de capacitación y entrenamiento realizados. C. PRINCIPALES FACTORES QUE AFECTARON LA IMPLEMENTACIÓN DEL PROYECTO Y SUS IMPACTOS 3.1 Factores fuera del Control del Gobierno o de la Agencia Ejecutora Los factores que afectaron al proyecto fueron: (i) la ocurrencia en 1997 y 1998 del fenómeno climático denominado "El Niño" que destruyó gran parte de la infraestructura de riego obligando al Gobierno a tomar acciones de emergencia para reconstruir la infraestructura dañada. En acuerdo con el BIRF, se destinó parte de los recursos financieros del componente A a la reconstrucción de los sistemas de riego de la Costa Norte y Central; (ii) la ocurrencia en el 2001 de un fuerte sismo que afectó la Zona Sur del país comprometiendo la capacidad de las OUAs localizadas en dicho ámbito y por ende la ejecución del componente A, debido a que en dicho año se estaba - 45 - iniciando la ejecución de las obras de rehabilitación y mejoramiento de las redes de riego con el aporte financiero de dichas OUAs; (iii) la escasa participación de la banca privada en la parte operativa del proyecto debido al alto riesgo del sector y al bajo nivel de rentabilidad de los agricultores. En los casos donde la banca incursionó en las actividades agrícolas, lo hizo con altas tasas de interés y plazos de amortización cortos, desalentando a los agricultores a acceder a los préstamos; y, (iv) la sucesiva postergación del Convenio de Préstamo suscrito entre la OECF (hoy JBIC) y la República del Perú, por un monto cercano a los US$ 60 millones para el componente A y que hasta la fecha no se concreta. 3.2 Factores generalmente sujetos al Control del Gobierno La falta de aprobación de la nueva Ley de Aguas, que contemplaba el establecimiento de los derechos reales de aprovechamiento hídrico y la promoción de un mercado de aguas, fue un factor que afectó la ejecución del proyecto, toda vez que su aplicación hubiera permitido la actualización de las tarifas de agua; el uso de los agricultores de este patrimonio como garantía para sus préstamos de inversión y de capital de trabajo; y el ordenamiento de la distribución del agua en los sistemas de riego, entre otros. En menor grado, las restricciones presupuestarias anuales ocasionaron su extensión para poder aprovechar la totalidad del préstamo. Las ampliaciones acordadas fueron; la primera hasta el 31 de Diciembre del 2003; y la segunda con fecha de cierre 30 de Junio del 2004. 3.3 Factores generalmente sujetos a la Agencia Ejecutora La débil coordinación que existió con la IRH y las ATDRs al inicio del proyecto, así como las dificultades con los aportes acordados con las OUAs para co-financiar el costo de las obras de infraestructura de riego y la contrapartida de los agricultores beneficiarios de los programas de incentivos para la tecnificación del riego, fueron otros aspectos que merecieron una gran atención por parte del proyecto. 3.4 Costos y Financiamiento El costo total del proyecto fue de US$ 124.6 millones, sin considerar el financiamiento que debía aportar JBIC por US$ 60 millones. Los costos por componentes muestran algunas diferencias: el componente C muestra un gasto total de US$ 19.1 millones que representa la mitad de lo programado (US$ 38.1 millones); el componente B programado con un costo de US$ 6.0 millones en la práctica ejecutó un gasto de US$ 13 millones (un poco más del doble de lo programado) y el componente A gastó US$ 60.8 millones, es decir, US$ 18.4 millones más que lo programado sin considerar los recursos del JBIC que estaban programados para co-financiar dicho componente. En el componentes E; lo ejecutado versus lo programado no muestra diferencia significativa. D. SOSTENIBILIDAD 4.1 Racionalidad de la Calificación de la Sostenibilidad La sostenibilidad del proyecto se califica como probable porque se han logrado cambios positivos importantes en el fortalecimiento institucional de las OUAs. La mayoría de estas OUAs han sido implementadas con instrumentos de gestión técnica, administrativa e institucional y el personal directivo, técnico y administrativo de aquellas ha sido entrenado en el uso de dichos instrumentos. Como resultado de este proceso se ha logrado que todas ellas utilicen los instrumentos, automaticen en gran medida los procesos rutinarios de O&M, C&T y GI, incrementen en forma - 46 - sostenida la recaudación de las tarifas de agua y mejoren las condiciones necesarias para la sostenibilidad económica y operativa de dichas OUAs y de sus sistemas de riego. Los logros alcanzados todavía se encuentran en una situación que requiere continuidad en la intervención del Estado para su sostenibilidad. El MINAG esta interesado en continuar con la ejecución del proyecto y esta realizando las siguientes gestiones concretas: (i) la ampliación del préstamo 4076-PE con el BIRF por US$ 10 millones para continuar con el proyecto por 2 años adicionales; (ii) la aprobación del préstamo del JBIC por US$ 60 millones para ejecutar el proyecto hasta el año 2009; y, (iii) la aprobación del MEF por US$ 1.2 millones para financiar la ejecución del proyecto en el período Julio-Diciembre del 2004. La estructura organizativa de la UCPSI no sería modificada pero si trabajaría en forma más estrecha con las ATDRs y la IRH del INRENA. También habría mayor coordinación con el INIA e INCAGRO en relación a los aspectos de asistencia técnica y transferencia tecnológica en riego y prácticas culturales. La UCPSI tiene una experiencia operativa de 7 años, cuenta con personal calificado que conoce las actividades del proyecto y ha desarrollado un Marco Lógico, indicadores e instrumentos de medición bastante detallados que permiten y aseguran un adecuado monitoreo y evaluación de sus impactos, efectos y cumplimiento de metas y resultados. El desarrollo que se pudiera alcanzar en la agricultura de riego en la Costa y su sostenibilidad con base al cumplimiento de los objetivos general y específicos del PSI, además de las condiciones técnicas e institucionales que se encuentran en franco proceso de mejora, permitirá que las condiciones económicas y ambientales también experimenten avances, incidiendo significativamente en los ingresos de los agricultores y en la generación de oportunidades de empleo en sus fincas, así como, paralelamente una reducción de los problemas de drenaje, salinidad y empantanamiento de las tierras agrícolas mejorando las condiciones de vida y de medio ambiente en dichas áreas. 4.2 Arreglos de Transición hacia la Operación Regular Las OUAs que han mostrado mayor desarrollo en su fortalecimiento institucional se han preparado para afrontar la culminación del proyecto y están tomando las acciones necesarias para que los logros y avances obtenidos no se pierdan y más bien se potencien, consolidando los aspectos de C&T y O&M e implementando sus unidades de comunicación y capacitación para mantener permanentemente informados a sus usuarios y desarrollar las capacidades de sus asociados. 53 de las 64 JUs existentes en la Costa han evidenciado avances notables en la calidad de su gestión y al menos 32 de ellas se encuentran en un nivel de desarrollo suficiente para que con un acompañamiento y supervisión técnica de las ATDRs respectivas podrían sostenerse por si solas. El desarrollo del Subsector Riego en la Costa depende todavía de los recursos económicos del Estado y de la cooperación técnica y financiera internacional para que en el mediano plazo se alcance su plena sostenibilidad. Aún en el caso de reducirse el apoyo técnico y financiero requerido, es todavía posible que la sostenibilidad del Subsector se logre aunque en el largo plazo, teniendo en consideración las siguientes realidades: (i) el notable desarrollo de las OUAs en sus gestiones técnicas, administrativas e institucionales con base a la distribución más eficiente y equitativa en cantidad y oportunidad del agua de riego, el aumento creciente y sostenido de la cobranza de la tarifa de agua y la participación más activa de los usuarios de riego en las actividades institucionales de sus OUAs; (ii) la participación creciente de las OUAs en las inversiones de obras de riego, en los costos de operación y mantenimiento de los sistemas de riego y en los procesos de identificación, formulación y supervisión de sus proyectos de riego; (iii) el mayor interés mostrado por los agricultores en invertir en sistemas de riego tecnificado parcelarios; y, (iv) el desarrollo de los servicios de apoyo a la producción agrícola bajo riego, como los contratistas y supervisores de obras de riego, los proveedores de equipos de riego tecnificado y de asistencia técnica y extensión en riego, los operadores financieros y de cadenas productivas y el fortalecimiento de las ATDRs. - 47 - E. DESEMPEÑO DEL BANCO Y DEL PRESTATARIO 5.1 Desempeño del Banco En términos generales el desempeño del Banco fue satisfactorio. El proceso de identificación fue ágil y consistente con los objetivos de la estrategia del BIRF para el Perú y con el plan de desarrollo del Gobierno, en relación con la agricultura bajo riego de la Costa. La identificación y el diseño del proyecto reflejan en su contenido la problemática de la baja eficiencia en los sistemas públicos de riego, asociada al mal estado de la infraestructura de riego y a la deficiente gestión técnica, administrativa e institucional de las OUAs. Sin embargo, la ejecución del componente A según el diseño original establecido en el SAR no fue la adecuada y no fue posible ponerla en práctica. El diseño del proyecto fue complejo principalmente en cuanto a la participación de varias instituciones con características diferentes; la UCPSI sujeta a la administración del MINAG, la co-participación de COFIDE del MEF e INADE del MIPRE. Además, su financiamiento incluyó a la OECF (JBIC) y el BIRF, con normas y características institucionales particulares. El proceso de supervisión del Banco fue amplio, oportuno y efectivo. Hubo un total de 22 misiones de supervisión, de Agosto 1997 a Octubre 2004, casi el doble de lo programado pero con una extensión del plazo de ejecución del proyecto en 2 años. Sus orientaciones y apoyo técnico dieron buenos resultados y se tomaron medidas rápidas como la implementación del programa de emergencia del fenómeno de "El Niño", el cambio de la estrategia del componente A, el desarrollo del "Marco Lógico", indicadores e instrumentos de medición de impactos, efectos y cumplimiento de metas y resultados del proyecto y la extensión del plazo de ejecución que fueron debidamente sustentadas con los documentos técnico económicos correspondientes. 5.4 Desempeño del Prestatario El MINAG contrató consultores nacionales e internacionales para desarrollar los diferentes aspectos técnicos, económicos, administrativos, legales, institucionales y ambientales del proyecto y recibió orientación y asesoramiento periódico de misiones del Programa Cooperativo FAO/BIRF. Las principales definiciones respecto de sus objetivos, estrategias de ejecución y financiamiento, fueron acordadas por el BIRF, el Gabinete de Asesores del MINAG y la Oficina de Inversiones del MEF, respectivamente. La formulación se financió con una donación del Gobierno de Japón bajo administración del BIRF, haciendo participar al PNUD Representación en el Perú como administradora de los recursos de dicha donación. Se prepararon 32 documentos que sirvieron de base para la elaboración del SAR. La calidad de dichos estudios fue satisfactoria por el enfoque, detalle y abundante información que fueron de mucha utilidad para la preparación del SAR. La implementación del proyecto por el Gobierno se realizó en un plazo menor a lo estipulado (6 meses) cumpliéndose con todas las condiciones previas establecidas en el respectivo contrato de préstamo. Asimismo, la UCPSI actuó durante la puesta en marcha y ejecución del proyecto de una manera efectiva, adecuándose rápidamente a los cambios producidos y a las decisiones acordadas entre el Gobierno y el Banco respecto del proyecto sin perder de vista el objetivo principal del mismo, a pesar de los factores naturales, técnicos, económicos, institucionales e inclusive políticos, que se presentaron y alteraron el normal desarrollo del proyecto. Todos los componentes cumplieron sus objetivos, metas y resultados, a cabalidad. Tomando en consideración la actuación del Gobierno en el proceso de preparación e implementación del proyecto y de la UCPSI en la puesta en marcha y ejecución del proyecto indicada anteriormente, en términos generales se considera el desempeño del prestatario como satisfactorio. - 48 - F. LECCIONES APRENDIDAS 1. La necesidad de incorporar como parte de la ejecución del proyecto a los propios beneficiarios sea como co-ejecutores y/o co-financiadores ya que está demostrado que los sistemas y procesos sólo pueden ser sostenibles si los actores se apropian o empoderan de ellos. Esta afirmación se desprende del hecho que el diseño del PSI consideró el aporte financiero de las OUAs en los costos de las obras de rehabilitación y mejoramiento de riego y la participación de los directivos, personal técnico y administrativo y usuarios en la ejecución del fortalecimiento técnico-institucional de sus OUAs, inédito respecto de otros proyectos similares ejecutados en el Perú que no han sido sostenibles en el tiempo. Existe alta probabilidad que los logros y resultados obtenidos se mantengan e inclusive se potencien porque existe una clara percepción de los beneficiarios respecto de la confiabilidad de las obras ejecutadas, del fortalecimiento institucional de sus OUAs y de la tecnificación del riego parcelario promovida, debido a que han tenido un conocimiento directo sobre la forma como se han ejecutado las actividades del proyecto. 2. El diseño de este tipo de proyectos debe basarse en un diagnóstico exhaustivo de la problemática incidiendo principalmente en la caracterización técnica, económica, educacional, cultural y social de los actores o beneficiarios (Grupo Meta). Esta condición resulta importante para poder diseñar la estrategia y la metodología más adecuada. 3. La definición clara y precisa de la interdependencia que debe haber entre sus componentes y con el ámbito de actuación del proyecto, de modo que converjan sobre dicho ámbito y obedezcan a un mismo objetivo común. Esto es una condición necesaria porque de esta manera se logran establecer sinergias entre los componentes y se evita que cada uno de ellos actúe en forma independiente y se perciban como proyectos separados del resto. 4. El logro de una fuerte identificación y sinergia entre el personal del proyecto con la población objetivo es una condición muy favorable para conseguir sus objetivos, resultados y metas, que puede ser obtenida mediante el trabajo conjunto entre ejecutores y beneficiarios. 5. La supervisión periódica de un equipo especializado externo (en este caso las misiones del BIRF) es necesaria para que se encargue de evaluar y orientar el avance del mismo. Si bien, un proyecto puede ser eficiente en su ejecución, existen aspectos (estrategias, modalidad de ejecución y otros) y situaciones (presencia de fenómenos naturales adversos, restricciones presupuestales, falta de participación de algunos actores y otros) que pueden limitar su marcha normal y que desde dentro de la organización no pueden ser solucionados. En estos casos resulta trascendental la participación de dichas misiones que permiten dar soluciones rápidas y expeditivas a los problemas presentados. 6. La necesidad que los proyectos incorporen, durante su formulación y ejecución, sea con mecanismos de coordinación y/o de participación, a aquellas instituciones públicas y privadas que directamente tienen relación con los fines y sus beneficiarios. 7. La recomendación para que futuros proyectos de estas características trabajen con mayor incidencia a nivel de usuarios es pertinente dado que la cultura tradicional dominante de estos actores constituye una debilidad para la sostenibilidad de sus logros y resultados. Es necesario reforzar el cambio de actitud de los beneficiarios no sólo con procesos de sensibilización sino también con otros mecanismos de comunicación y difusión masivas. 8. El Marco Lógico, su respectiva Línea de Base y sus indicadores de medición para el propósito, finalidad, objetivos específicos y cumplimiento de metas y resultados, son referencias imprescindibles para la evaluación del desempeño del proyecto. Esta clara definición debe partir desde su diseño y la implementación de los instrumentos de monitoreo y evaluación debe hacerse efectiva desde el inicio del mismo. - 49 - Additional Annex 9. Map - 50 -