The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) REPORT NO.: RES29816 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF IN WEST BENGAL ACCELERATED DEVELOPMENT OF MINOR IRRIGATION APPROVED ON OCTOBER 4, 2011 TO STATE OF WEST BENGAL WATER SOUTH ASIA Regional Vice President: Annette Dixon Country Director: Junaid Kamal Ahmad Senior Global Practice Director: Guang Zhe Chen Practice Manager/Manager: Meike van Ginneken Task Team Leader: Anju Gaur, Raj Ganguly The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) ABBREVIATIONS AND ACRONYMS CSO Civil society organization IBRD International Bank for Reconstruction and Development IDA International Development Association DPMU District project management unit EIRR Economic Internal rate of return FY Financial year GIS Geographical information system GoWB Government of West Bengal m Million NPV Net present value PWD Public Works Department SPMU State project management unit USD United States dollar WUA Water Users Association The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. BASIC DATA Product Information Project ID Financing Instrument P105311 Investment Project Financing Original EA Category Current EA Category Full Assessment (A) Full Assessment (A) Approval Date Current Closing Date 04-Oct-2011 31-Dec-2017 Organizations Borrower Responsible Agency DWRID, Government of West Bengal,Public Works State of West Bengal Department, Government of West Bengal Project Development Objective (PDO) Original PDO The project development objective is to enhance agricultural production of small and marginal farmers in the project area. OPS_TABLE_PDO_CURRENTPDO Summary Status of Financing Net Ln/Cr/Tf Approval Signing Effectiveness Closing Commitment Disbursed Undisbursed IBRD-80900 04-Oct-2011 21-Dec-2011 19-Mar-2012 31-Dec-2017 30.00 1.22 28.78 IDA-50140 04-Oct-2011 21-Dec-2011 19-Mar-2012 31-Dec-2017 125.00 72.04 38.73 The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) Policy Waiver(s) Does this restructuring trigger the need for any policy waiver(s)? No Note to Task Teams: End of system generated content, document is editable from here. I. PROJECT STATUS AND RATIONALE FOR RESTRUCTURING 1. The proposed restructuring seeks an extension of the project closing date from December 31, 2017 to December 20, 2019, along with associated changes to the results framework, disbursement estimates, implementation schedule, change in implementing agency, and economic and financial analysis. It is the project’s third restructuring and the first to include a closing date extension. 2. The project development objective (PDO) is to enhance agricultural production of small and marginal farmers. The PDO will be achieved through accelerated development of irrigation services; strengthened community-based irrigation management, operation and maintenance; and agricultural development through agricultural services, crop diversification, use of improved technologies, and income generating opportunities. 3. The project originally intended to provide 4,660 minor irrigation schemes covering an area of 139,000 hectares (ha) to benefit 166,000 farmers. The project was designed for long-term engagement with the state’s Irrigation Department for building institutional capacity to adapt to “farmer–driven” and “farmer-centered” participatory planning and implementation processes. It also sought to develop the capacity of farmer associations to manage, operate, and maintain irrigation infrastructure. 4. The pace of implementation was slow during the initial phase of implementation. This was attributable in large part to delays in staffing District Project Management Units (DPMU) with dedicated engineers and specialist contract staff. Developing an appropriate targeting methodology to select beneficiary areas for suitable schemes as well as the need to train project nodal staff at the state and district levels further added to delays. Project implementation was done in batches of irrigation schemes. From Batch 2 onwards, a revised approach was introduced, using a transparent irrigation scheme selection process based on land use. The new approach also included enhanced focus in five predominantly rainfed districts largely inhabited by tribal communities. 5. A first restructuring in February 2016 entailed a partial cancellation of USD 95 million of the IBRD loan (or 38 percent of total Bank financing). The second restructuring of June 2017 brought the results framework in line with the project’s reduced scope and revised the target to 1,400 schemes with gross irrigation potential for 45,000 ha serving 63,000 farmers. 6. The project is currently rated Moderately Satisfactory for both Project Development Objective and Implementation Progress. At present, 1,511 water user’s associations (WUAs) have been formed, 867 schemes have been completed and handed over to WUAs, and 388 schemes are under construction. The project is on track to reach the revised target of a gross irrigation potential of 45,000 ha. Farmers in these areas have witnessed multiplier benefits in agriculture, horticulture and pisciculture. The annual gross income potential in vegetables has increased from about USD 2,813/ ha to USD 7,813/ ha in project command areas, and income from fisheries has almost increased fivefold from 1,100 USD to 5,500 USD per ha. As of October 31, 2017, USD 73.26 million (65.03% of the Credit and 4.08% of the Loan) has been disbursed. Recently IUFR of USD 33 million has been cleared by the Bank which will increase the overall disbursement rate to 75%. 7. The Government of West Bengal has put in place resources in terms of manpower, systems and community support organizations deployed at the site. On September 29, 2017, the Bank received the action plan from GoWB. The Bank team has evaluated the action plan and finds it satisfactory. At the current implementation rate, the proposed two years extension will allow for project activities to be completed and revised targets to be reached. The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) II. DESCRIPTION OF PROPOSED CHANGES Change in Implementing agency GoWB has proposed Public Work department (PWD), West Bengal as one of the Implementing Agency for carrying out construction of the Administrative Building for the project. It has been confirmed that PWD will carry out the procurement process following World Bank Guidelines. PWD has a vast experience of building construction and is adequately staffed to carry out the construction of Administrative Building. The procurement process will be subjected to prior or post review depending on the estimated cost of the building. The department has a grievance redressal system. Based on this assessment, PWD of Govt of West Bengal can be considered as one of the Implementing Agencies. Changes to Results Framework The only proposed changes in the result framework is the revision of target values to account for the proposed closing date extension, which will allow for a full utilization of project funds. In the June 2017 restructuring, the target values that were deliverable up to December 2017, in line with the reduced project scope and December 2017 closing date. Change in Loan Closing Date(s) The proposed change in closing date to December 20, 2019 will enable the project to achieve its development objective and for the remaining funds to be fully utilized. Change in Disbursement Estimates The proposed change aligns actual and projected disbursement with the extended project timeframe. Change in Implementation Schedule The project was originally designed to complete schemes by June 2017 and have at least one crop cycle to handover to WUAs. The proposed extension will allow the project to complete schemes by June 2019 and to complete the handover process by December 2019. Changes in Economic and Financial analysis Following the partial cancellation of the loan amount and a change in the implementation strategy for the project, the number and type of schemes changed. The original project design aimed to construct and handover 4,660 schemes to irrigate 139,000 ha predominantly with groundwater. In the restructuring of June 2017, the targets were reduced to 1,400 schemes serving 45,000 ha and 63,000 farmers. This revised target values after the project extension are the development of approximately 2,500 schemes serving 75,000 ha and 100,000 farmers. An economic analysis was conducted to reflect the change in project scope. With this proposed restructuring, the net present value (NPV) of the project is INR 0.95 billion (USD 13.8 million). The economic internal rate of return (EIRR) is 12 percent. At project appraisal, the NPV was INR 5.4 billion (USD 117.4 million) and the EIRR was 25 percent. An updated economic analysis at the time of the second restructuring resulted in a NPV of INR 2.0 billion (USD 30.8 million) and an EIRR of 18 percent. A 10 percent discount rate was used in all three analyses. The difference in the results of the economic analysis is attributed to the fact that the revised project includes more schemes in drought prone areas where the crop water demand is higher and access to electricity is poor. This shift requires a shift from groundwater schemes using grid power to solar-operated groundwater schemes and surface water schemes which have a higher unit costs. Also, the crop water requirement in drought prone areas are higher. The economic and financial analysis did not account for long-term ecological and social benefits as restructuring has allowed for social inclusiveness through development of irrigation resources in tribal dominant drought prone areas. and potential for change in landscape and carbon credits with increased water holding capacity of region. The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) Note to Task Teams: The following sections are system generated and can only be edited online in the Portal. I. SUMMARY OF CHANGES Changed Not Changed Change in Implementing Agency ✔ Change in Results Framework ✔ Change in Loan Closing Date(s) ✔ Change in Disbursement Estimates ✔ Change in Implementation Schedule ✔ Change in Economic and Financial Analysis ✔ Change in DDO Status ✔ Change in Project's Development Objectives ✔ Change in Components and Cost ✔ Cancellations Proposed ✔ Reallocation between Disbursement Categories ✔ Change in Disbursements Arrangements ✔ Change in Overall Risk Rating ✔ Change in Safeguard Policies Triggered ✔ Change of EA category ✔ Change in Legal Covenants ✔ Change in Institutional Arrangements ✔ Change in Financial Management ✔ Change in Procurement ✔ Other Change(s) ✔ Change in Technical Analysis ✔ Change in Social Analysis ✔ Change in Environmental Analysis ✔ The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) IV. DETAILED CHANGE(S) OPS_DETAILEDCHANGES_IA_TABLE IMPLEMENTING AGENCY Implementing Agency Name Type Action DWRID, Government of West Bengal Implementing No Change Agency Public Works Department, Government of Implementing New West Bengal Agency OPS_DETAILEDCHANGES_RESULTS_TABLE RESULTS FRAMEWORK Project Development Objective Indicators PDO_IND_TABLE Relative change in value of outputs measured as ratio between post to pre-project values Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 120.00 140.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Increase in production of major outputs: Rice Unit of Measure: Metric tons/year Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 25000.00 95000.00 Revised Increase in production of major outputs: Oilseed Unit of Measure: Metric tons/year Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 7000.00 8800.00 Revised Increase in production of major outputs: pulses Unit of Measure: Metric tons/year The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 2200.00 3500.00 Revised Operational water user associations created and/or strengthened (number) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 1400.00 2000.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Water users provided with new/improved irrigation and drainage services (number) Unit of Measure: Number Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 62061.00 100000.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Water users provided with irrigation and drainage services - female (number) Unit of Measure: Number Indicator Type: Custom Breakdown Baseline Actual (Current) End Target Action Value 0.00 8286.00 12000.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Water users provided with new/improved irrigation and drainage services: Small and Marginal Farmers Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 79.00 80.00 Revised Water users provided with new/improved irrigation and drainage services: Tribal farmers The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 0.00 12.00 13.00 No Change Water user association that are generating at least 80% of resources required to manage, operate and maintain the developed schemes Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 0.00 62.00 70.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Intermediate Indicators IO_IND_TABLE Area provided with new/improved irrigation or drainage services Unit of Measure: Hectare(Ha) Indicator Type: Corporate Baseline Actual (Current) End Target Action Value 0.00 41000.00 75000.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Area provided with improved irrigation or drainage services Unit of Measure: Hectare(Ha) Indicator Type: Corporate Breakdown Baseline Actual (Current) End Target Action Value 0.00 41000.00 75000.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 Increase in water harnessed with new/improved irrigation services Unit of Measure: Cubic Meter(m3) Indicator Type: Custom Supplement The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) Baseline Actual (Current) End Target Action Value 0.00 66000000.00 250000000.00 Revised Area diversified to less water intensive cash crops Unit of Measure: Percentage Indicator Type: Custom Supplement Baseline Actual (Current) End Target Action Value 5.00 20.00 20.00 No Change Change in cropping intensity in areas provided with new/improved irrigation services Unit of Measure: Percentage Indicator Type: Custom Baseline Actual (Current) End Target Action Value 122.00 160.00 170.00 Revised Date 31-Mar-2012 31-Aug-2017 20-Dec-2019 OPS_DETAILEDCHANGES_LOANCLOSING_TABLE LOAN CLOSING DATE(S) Original Revised Proposed Proposed Deadline Ln/Cr/Tf Status Closing Closing(s) Closing for Withdrawal Applications IBRD-80900 Effective 31-Dec-2017 20-Dec-2019 20-Apr-2020 IDA-50140 Effective 31-Dec-2017 20-Dec-2019 20-Apr-2020 OPS_DETAILEDCHANGES_DISBURSEMENT_TABLE DISBURSEMENT ESTIMATES Change in Disbursement Estimates Yes Year Current Proposed 2012 600,000.00 600,000.00 2013 6,000,000.00 6,000,000.00 The World Bank IN West Bengal Accelerated Development of Minor Irrigation (P105311) 2014 8,500,000.00 8,500,000.00 2015 0.00 0.00 2016 57,900,000.00 37,000,000.00 2017 47,000,000.00 20,000,000.00 2018 35,000,000.00 35,000,000.00 2019 0.00 25,000,000.00 Note to Task Teams: End of system generated content, document is editable from here.