Document of The World Bank Report No. 12811-AM STAFF APPRAISAL REPORT REPUBLIC OF ARNENIA IRRIGATION REHABILITATION PROJECT NOVEMBER 2, 1994 Natural Resources Management Division Country Department IV Europe and Central Asia Region CURRENCY EOUIVALENT Currency Unit: Ruble Exchange Rate Rubles per $ March 1993 684 June 1993 1,100 October 1993 2,600 Currency Unit: Drum Exchange Rate Drums per $ November 22, 1993 14.0 (introduction) April 29, 1994 400.0 September 28, 1994 385.0 WEIGHTS AND MEASURES ha hectare knm2 square kilometer kw kilowatt kwh kilowatt hour m meter m3 cubic meter m3/sec cubic meters per second t/ha tons per hectare FISCAL YEAR January 1 - December 31 ABBREVIATIONS AND ACRONYMS asl above sea level Al artificial insemination DWSI Department of Water Supply and Irrigation ERR economic rate of return FAO/CP Food and Agriculture Organization Cooperative Programme FSU Former Soviet Union GDP gross domestic product HSI Hydrological Studies Institute ICB International Competitive Bidding IDA International Development Association IFAD International Fund for Agricultural Development LCB Local Competitive Bidding M&ES Monitoring and Evaluation Section MOA Ministry of Agriculture NMP net material product OME Operation and Maintenance Enterprise of the DWSI O&M operation and maintenance PCR Project Completion Report PPF Project Preparation Facility PIU Project Implementation Unit SOE Statement of Expenditure TOR Terms of Reference USDA United States Department of Agriculture WPI Water Planning Institute WUA water users' association REPUBLIC OF ARMENIA IRRIGATION REHABILITATION PROJECT Table of Contents Page No. LOAN AND PROJECT SUMMARY .......................... i I. BACKGROUND .......................... 1 A. Introduction .......................... 1 B. The Economy ...........................1 II. THE AGRICULTURE SECTOR .5 A. Background .5 B. Agricultural Production. 6 C. Consumption and Self-Sufficiency in Agricultural Products .7 III. WATER RESOURCES AND THE IRRIGATION SUBSECTOR .9 A. Water Resources .9 B. Irrigation .11 C. Objectives and Strategy of Bank Assistance .14 D. Lessons from Previous Bank Involvement .14 IV. THE PROJECT .17 A. Project Objectives .17 B. Rationale for IDA Involvement .17 C. The Proposed Project .17 D. The Rationale for Project Design .18 E. Detailed Project Description .20 F. Project Costs .24 This report is based on the findings of an Appraisal Mission in October 1993. Members of the Appraisal team included Ezriel Brook (Task Manager), Stan Peabody (Sociologist), Camilla Brown (Operations Analyst), and Oscar Honisch (Principal Agriculturalist) from the Bank; and consultants Eli Gazit (Water Resource and Irrigation Engineer) and Richard Van Klaveren (Water Management Engineer). Editorial support was provided by Alan Zuschlag and Rebecca Kary. The project was identified by the FAO/CP in September 1992 and March 1993, and preparation was carried out by IRS/TKB consulting firm, headed by Gabriel Tibor. Data and support for the project identification, preparation, and appraisal was provided by the Armenian Water Planning Institute. Peer reviewers included Ulrich Kuffner, Joma Mohamadi, Willem Van Tuijl, and D. Jeremy W. Berkoff. The Division Chief is Geoffrey Fox (EC4NR), and the Department Director is Basil Kavalsky (EC4DR). G. Financing ...................... 25 H. Procurement ...................... 26 I. Disbursement ....................... 31 V. PROJECT IMPLEMENTATION .............. 33 A. Organization and Management .......................... 33 B. Project Phasing .......................... 36 C. Project Monitoring, Evaluation, and Reporting ........................... 38 D. Accounts and Audit ............................................ 39 E. Bank Supervision ............................................. 39 VI. PROJECT BENEFITS, RISKS, AND ENVIRONMENTAL IMPACTS .... ......... 41 A. Project Benefits .............................................. 41 B. Economic Evaluation ........................................... 43 C. Risks ...................................................... 46 D. Environmental Impact .......................................... 47 VII. AGREEMENTS REACHED IN NEGOTIATIONS .......................... 49 ANNEXES 1 Statistical Annex ...... . ...................................... 51 2 The Agriculture Sector Review ................................... 75 3 The Water Supply and Irrigation Department .......................... 87 4 The Irrigation Rehabilitation Engineering Program ...................... 89 5 Water Management .......................................... 99 6 LCB Procedures, Contracts, and Procurement Packages .................. 115 7 Terms of Reference for the Project Implementation Unit and Consultants ... .... 121 8 Agricultural Development ..................................... 133 9 Project Implementation Plan .................................... 151 10 Proposed Project Supervision Plan ................................ 159 11 Selected Documents Available in Project File ......................... 161 TABLES IN TEXT 1.1 Armenia: Main Economic and Social Idicators .......................... 3 2.1 Development of Agricultural Production, % Shares ....................... 7 2.2 Self-Sufficiency and Per Capita Food Consumption (1985-1992) ............... 7 4.1 Project Cost Summary ......................................... 25 4.2 Financing Plan ............................................. 26 4.3 Summary of Proposed Procurement Arrangements ....................... 30 4.4 Disbursement Categories ....................................... 31 6.1 Summary of Sensitivity Analysis Cases .............................. 43 FIGURES Figure 2.1: Cultivated Land ..................................... 6 Chart 1: Project Inplementation Unit ............................ 34 Chart 2: Armenia Irrigation Rehabilitation Project-Implementation Schedule ... 37 Organogram 1: DWSI Structure .................................. 88 Box 8.1: Yield Reduction Factors ............................. 138 MAPS Project Location IBRD 25388 Irrigation Systems IBRD 25389 Irrigation Systems IBRD 25390 Storage and Pumping Schemes IBRD 25391 i ARMENIA IRRIGATION REHABILITATION PROJECT Loan and Proiect Summarv Borrower: Republic of Armenia Executing Agencv: Ministry of Agriculture (MOA) Beneficiaries: Private farmers and consumers through lowered food prices Amount: US $43.0 mnillion Ternis: Standard IDA terms, with 35 years' maturity and 10 years' grace period Project Obiectives: Assist Armenia in maintaining the level of irrigated agricultural production and improve the country's water resource management. Description: The project is comprised of four main investment components: (a) Rehabilitation of 12 irrigation schemes and the Ararat Valley groundwater network. These cover an area of about 164,700 ha (about 60% of the Armenian irrigated land). There are four types of rehabilitation works under the project: (i) Rehabilitation of the conveyance systems, including canals, aqueducts, siphons, and hydraulic structures in eight major irrigation schemes. The area covered under this category is about 151,400 ha (92% of the project area). (ii) Replacement of pumps and pressure pipelines. This category includes four pumping schemes. (iii) Rehabilitation or replacement of about 650 tubewell pumps. (iv) Rehabilitation of four dam storage schemes (reservoirs). (b) Establishment of pilot projects for improved water distribution and establishment of water users' associations. (c) Financing incremental O&M costs of the irrigation infrastructure until effective water users' associations are in place, and in the meantime to prevent further deterioration of the irrigation infrastructure. (d) Technical assistance, including establishment of a project implementation unit; assistance to update the Water Master Plan; training; preparation of the next irrigation project; and assistance to improve irrigated crop production. ii Benefits: The proposed irrigation rehabilitation investment project would avert a collapse of the irrigation infrastructure in Armenia. A secure water supply would promote agricultural production, increase the food supply, and create employment in the rural areas. Without the project, Armenia would need to substantially increase its food imports, or decrease its food consumption. Under the project, construction work will generate employment opportunities for unemployed skilled and unskilled labor. The project would also establish the foundation for improved and rationalized water management by instituting water users' associations and water charges. Risks: The principal project risk is political. If there is a resumption of hostilities between Armenia and any of its neighbors, a reimposition of a blockade would have an adverse impact on the project implementation because of expected difficulties in importing fuel, spare parts, construction machinery, steel pipes and reinforced steel, without which large diameter pipes cannot be laid and precast concrete sections cannot be manufactured. In addition, resources needed for operation and maintenance of the irrigation infrastructure would be drained and the physical structures would be put in jeopardy as well. The Bank approval of the proposed project is therefore based on the assumption that the current framework for negotiating the international conflict in which Armenia is involved will lead to a peaceful resolution of the conflict, and that the threat of increased hostilities is no longer imminent. A second risk is that Government would not be strong enough to resist pressures to resume policies of water subsidization and/or fail to impose and collect water charges. Without sufficient funds to operate and maintain the new irrigation infrastructure, the system will deteriorate again. To safeguard against such risk the project is contributing to improvements in water management by establishing pilot projects with water users' associations and technical assistance to aid in the establishment and management of the pilot projects. A third risk is that the quality of construction would not meet accepted standards. A properly staffed and trained project implementation unit is planned to reduce that risk. A fourth risk relates to utilization of energy for irrigation. Power is at present generated mainly from hydro-electric sources and is completely subsidized for irrigation purposes. The risk is that utilization of energy for irrigation is associated with deterioration of the environment. Presently most of the generated energy comes from water originated from Lake Sevan. Over-pumping of water from the lake has caused the water level to fall which has had an adverse impact on the micro-climatic environment around the lake. Imposition of water charges that cover the full cost of operations and maintenance and energy costs is imperative to mitigate this risk. iii Estimated Project Costs: Item Local Foreign Total % Foreign % Base . . ~~~~~~~~Exchange Cost Millions of US$ 1. Rehabilitation of 8 Conveyance 5.54 12.93 18.47 70 40.0 Schemes 2. Rehabilitation of 4 Pumping 0.89 8.57 9.46 91 20.0 Schemes 3. Rehabilitation of Tubewells 0.69 6.25 6.94 90 15.0 4. Rehabilitation of Four Dams 0.56 0.75 1.31 57 3.0 Subtotal 7.68 28.50 36.18 79 78.0 5. Pilot Projects to Improve Water 0.14 2.33 2.47 194 | 5.0 Management l l l __ Subtotal 0.14 2.33 2.47 _94 _ J 5.0 6. Incremental O&M Cost [ 2.30 2.70 5.00 54 11.0 Subtotal [2.30 2.70 5.00 54 11.0 7. Technical Assistance | - 1.10 1.10 100 2.0 8. Project Implementation Unit 1.21 1.25 1.46 86 3.0 | Subtotal [ .21 2.35 2.56 192 5.0 Base Cost 10.33 35.88 46.21 78 1100.0 [ 9. Physical Contingencies 1.61 6.45 8.06 80 17.0 10. Price Contingencies 0.66 2.22 2.88 77 6.0 Grand Total 12.60 44.55 57.15 78 1230 Financing Plan: Item Local Foreign Total Million of US$ 1. IDA 4.65 38.35 43.00 2. IFAD 1.80 6.20 8.00 3. The Government 4.15 4.15 4. End Users, Fanners 2.00 2.00 Total Project Cost [12.60 44.55 [ 57.15 iv Estimated Disbursements (US $ million): Bank FY: 96 97 98 99 Annual 4.0 11.0 16.0 12.0 Cumulative 4.0 15.0 31.0 43.0 Closing Date: June 30, 1999 Economic Rate of Return: 53% Povertv Category: N.A. Environment Categorv: "B" Map: IBRD 25388 I. BACKGROUND A. INTRODUCTION 1.1 Armenia, with a population of about 3.7 million, has the smallest territory among the former Soviet republics. About one third of Armenia's population lives in the capital Yerevan, one third in other urban centers, and about one third in the rural sector. 1.2 Before 1988, Armenia experienced relatively robust economic development, unparalleled among other former Soviet republics, which created a diversified industrial infrastructure, a flourishing agriculture, and a modem transport network. The breakup of the Soviet Union, however, has left the country with an economic structure dependent on outside sources for energy, raw materials for industry, and food for its people and livestock. The hostilities with neighboring Azerbaijan have greatly aggravated the situation. However, recently there have been several positive developments in Armenia's relations with its neighbors. Of greatest importance is the progress towards peace in the six year old Karabakh conflict. In July 1994, Azerbaijan, Karabakh, and Armenia signed an agreement formalizing the ceasefire and providing for the immediate commencement of negotiations for a comprehensive peace agreement. This development offers a real prospect of a lifting of the blockade in the near future. In addition, rapidly growing trade with Iran, and increasing stability in Georgia have significantly eased Armenia's isolation. B. THE ECONOMY 1.3 Under the former centralized economic system of the Soviet Union, Armenia was a trade- dependent economy and a producer of industrial intermediate and finished goods. Before the country's independence in 1992, it had a negative trade balance, but this has grown up sharply after 1992: in 1991 the deficit was R 2.4 billion, and in the first half of 1993, it grew to R 116.0 billion (Table 1.1). 1.4 Gross domestic product (GDP) has been declining in the last several years, and in 1992, GDP in constant 1990 prices declined by about 52% and further 15% in 1993. A somewhat more moderate declining trend also occurred with the net material product (NMP). The NMP, in constant 1983 prices, has been declining since 1987, with only one year (1989) showing positive growth. In 1992 the decline was almost 46%, and further 14% in 1993. 1.5 The economy is going through a difficult transition from a centrally planned to a market- based system; from a situation in which energy and water were practically free goods, to one in which these resources have become increasingly expensive; from a system where decision-making was in the hands of only a few top-level officials in Moscow and Yerevan, to an economic environment in which central and local decisions have to be made daily on all levels of economic activity, and in which economic efficiency and cost-effectiveness have become crucial elements. In addition to these difficulties, which are common to all Former Soviet Union (FSU) countries, the Armenian economy still has not recovered from the effects of closed borders since 1991. The traumatic effects of the blockade on its industry and employment, and years of rapid inflation that was first "imported" because the monetary system was linked to the ruble zone until the end of 1993, also contributed to the economic difficulties. When new domestic currency was later introduced, it was associated first with rapid inflation-fueled by 2 Chapter 1 uncontrolled monetary policy', but in the second half of 1994, inflation has tempered down significantly and the currency and the exchange rate have been quite stable. 1.6 Despite this difficult economic environment, significant economic reforms have been implemented in Armenia. Apart from bread, which is rationed, prices for virtually all goods have been liberalized. All agricultural land and a part of the retail sector have been privatized. State enterprises have been given more autonomy and responsibility for self accounting. There is strong commitment on the part of the Government to support the private sector and to continue privatization among most large enterprises, but a general lack of resources, as well as other practical problems, are causing delays. 1.7 Before the start of hostilities with Azerbaijan, agriculture accounted for only 18% of the NMP and for a similar percentage of the employment. With the land reform of 1991, the breakup of the large agricultural production units, distribution of land to individual farmers, and the shortage of food supplies, many people have begun to engage in farming either on a full-time or part-time basis. Increasing unemployment (about 30% in 1992) has accelerated this development. The percentage of the labor force in agriculture, which was only about 18% in 1990, grew to 23% in 1991 and to 30% in 1992. At the same time, the agriculture sector's contribution to NMP, which was 17% in 1990, grew to 32% in 1991 and to about 45% in 1992. 1.8 Agricultural exports accounted for roughly 12 % of total export earnings in 1990 and 23 % in 1992. This included mainly fresh and processed fruits and vegetables, brandies, champagnes, and wines. By contrast, Armenia produced only 20% of its cereal requirements, 30% of its dairy requirements, and 35% of its required meat products. Sugar and vegetable oils are all being imported. Because the blockade limits Armenia's trade with the outside world, both agricultural production and trade configurations have been changing drastically. In 1993 the land area under grain production increased by about 200,000 ha over that of 1990, while vegetable, orchard, and vineyard areas have decreased significantly. All agricultural imports and exports have been falling substantially due to the loss of foreign markets and difficulties in sustaining production caused by material and energy shortages. Because of growing food shortages, a large proportion of the new smallholders have turned to subsistence farmring with emphasis on grain and vegetables. This trend is likely to continue. I Armenia's currency until recently was the Russian ruble, and the country was in fact in the ruble zone. As inflation in Russia accelerted in 1992 and 1993, so was the inflation in Armenia. In the fall of 1993 Russia replaced the old ruble with a new ruble and Armenia issued its own currency, the drum. However, the drum depreciated rapidly, and if the exchange rate is a proxy to domestic inflation, then domestically inflation grew faster than 2,000% between November 1993 and April 1994. However, since May the drum have been relatively stable. Background 3 Table 1.1 Armenia: Main Economic and Social Indicators Social and demographk Indicators (1993) Area 29,800 km2 Population 3.742 million Urban 2.533 million (67.7%) Rural 1.209 million (32.3%) Population Density 125.6 per km2 Life Expectancy at birth 72 years in 1993 Infant mortality rate 17.5 per thousand in 1993 Gross domestic product (GDP) (1993) 779,619 million rubles GDP per capita' 208,343 rubles 1988 1989 1990 1991 192 1993 Annual changes of real output in % Gross Domestic Product -0.7 12.4 -7.4 -10.8 -52.6 -14.8 Net material product (NMP) -2.6 14.2 -8.5 -11.8 -46.0 -9.3 Industry -1.6 2.3 0.5 -8.5 -52.5 -14.0 Agriculture 43.1 -27.7 -13.2 7.7 -8.4 -10.8 Composition of NMP In % Industry 54.6 50.2 45.4 45.9 46.3 30.5 Agriculture 18.5 14.4 17.4 27.9 39.9 56.6 Construction 10.8 21.2 25.4 15.3 5.3 4.5 Transport and Communication 4.1 3.5 4.1 2.7 1.6 0.7 Other sectors 12.0 10.7 7.7 8.2 6.9 7.7 Average prke change (1993) Wholesale price increase 3.2 12.7 4.8 219.7 -- Retail price increase 3.0 4.0 12.0 304 1341.3 Average monthly wage (real change) 3.2 12.7 4.8 47.9 -70.7 -53.3 Consumer Price Index (real change) 10.3 100 824.5 3731.9 Interrepublican and foreign trade (in billions of rubles at domestic prices) Exports 3.8 3.7 3.5 4.9 62.0 190.2 Imports 4.9 4.9 4.7 7.3 75.1 306.2 Trade balance -1.1 -1.2 -1.1 -2.4 -13.1 -116.0 Trade balance in % of GDP -13.7 -12.6 -11.4 -16.0 -22.2 -14.9 Central Government budget Revenue 4.9 4.1 4.3 15.5 183.46 Expenditures 4.7 3.5 5.7 37.6 621.14 Overall balance 0.2 0.7 -1.4 -22.1 -437.68 In percent of GDP 2.1 7.2 0.6 -37.4 -56.1 Money and credit (end of period) Total deposits 4.6 7.3 8.2 15.4 27.0 649.3 Total domestic credit 3.8 3.5 4.7 10.7 39.3 327.4 Net credit to the Government -1.0 -1.0 -0.6 0.1 12.5 251.9 'The official Bank's estimate is US $660 per annum in 1993. Source: Armenia-Country Economic Memorandum, March 24, 1993, together with updated figures of October 1994. II. THE AGRICULTURE SECTOR A. BACKGROUND 2.1 Topography greatly influences agriculture in Armenia. (For details regarding the agriculture sector, see Annex 2) Although mountain peaks soar to 4,090 m above sea level (asl), land is cultivated between the altitudes of 600 m and 2,500 m. Only about 2% of the land, however, is located below 1,500 m elevation. Generally, the landform in the center and north comprises rocky, high mountain ranges separating narrow, fertile valleys. Towards the south, the broad, flat, and fertile Ararat Valley opens out along the left bank of the Araks River to form the border with Turkey. West and north of the centrally located Aragat Mountain, and to the east around Sevan Lake, the landform is generally rolling, but with many rocky outcrops. In the southeast, a few small, irregularly-shaped valleys are fringed by high mountain ranges on both the borders with Azerbaijan. 2.2 Climatic conditions also greatly affect agriculture in Armenia, depending on the altitude. Monthly precipitation is highest from April to June and lowest from July to September. The crop water deficit between May and August ranges from 200 mm to 700 mm. Soil moisture alone is not enough to compensate for this deficit; hence, irrigation is necessary for crop growth. Agriculture in the Economy 2.3 Before the breakup of the Soviet Union, the agriculture sector in Armenia accounted for about 18% of the NMP and a similar proportion of employment. The economy, by and large, was intertwined with the Soviet economy, which made Armenia highly dependent on outside sources for energy and raw materials for its industries, and on grain for its people and livestock. After Armenia's independence in 1992, agriculture's share in NMP increased gradually to about 46% in 1993, and the sector employed about 30% of the labor force also in 1993 because of the adverse effects of the blockade on Armenian industries and services. Two reasons account for the growth of the agriculture sector: (a) it provided critical food supplies for the population at a time when imports had been curtailed because of the blockade; and (b) the country implemented a land reform program in 1991, under which large agricultural production units were quickly broken up, and land distributed to small individual farmers. As a result, there was fresh incentive to engage in agricultural production, despite the difficulties transforming the economy into a market system. Labor Force 2.4 Total employment in agriculture was estimated at 285,000 in 1990. With privatization in 1991, the number of people employed in agriculture rose sharply. Nearly 232,000 people were recorded as living on newly established family farms, while those remaining on the other types of farms apparently fell by only 173,000. Thus, the official statistics suggest an increase in total agricultural employment of nearly 60,000 or 21 %. 6 Wpter 2 B. AGRICULTURAL PRODUCTION 2.5 Of Armenia's overall territory, about 47%, or 1.4 million ha, are cultivable or CULTIVATED LAND are used as pasture for livestock. The rest is 000 HA rocky wasteland, mountains, forest, and heathlands, suitable only for rough grazing during the few summer months. Figure 2.1 shows the distribution of cultivable land at the PerniAul CoPs end of 1992. Home 67 2.6 Historically, agriculture in Armenia has had strong dependence on irrigation; nearly 80% of total crop production is H Grzn produced with irrigation. Approximately 137 286,000 ha are at present irrigable throughout the growing season. Permanent Pastures 666 2.7 The irrigated land is 80% surface irrigated and 20% pipe irrigated. Irrigation F%ure 2.1 intensities range around 100%, but under- irrigation is practiced in most irrigation schemes because the rainfall is concentrated over a short period and because the irrigation system shows serious signs of deterioration (for example, cracks in storage tanks and dams, and collapsed canals) and because of inadequate management (pars. 3.13, 3.17, 3.21, 3.28, and 3.30), which has led to increased salinity in sizable areas. Water resources are plentiful-distribution is the problem-and would allow further expansion of irrigated agriculture. 2.8 Production efficiency and output levels are below those reached in developed countries. Agricultural output in Armenia began to decline in the second half of the 1980s when econonmc difficulties in the Soviet Union were increasing. But compounding the economic difficulties of the Soviet Union due to eruption of the conflict with Azerbaijan agricultural production fell by 28% between 1988 and 1990, more than anywhere else in the FSU. Production started to recover, however, in 1991 with implementation of the Land Reform, and continued to rise through 1993, when production was 13% below that of the 1988 level. In fact, the 1993 crop output surpassed the 1988 levels. 2.9 Crops in Armenia accounted for 45% of total agricultural production in the 1980s. Crop yields are generally low and, even accounting for harsh environmental conditions, the actual yields of most crops are believed to be barely 50 - 60% of their potential. The country's cropping structure has undergone a dramatic shift over the last three years (1991-93). The proportion of annual food crops increased substantially at the expense of forage crops, perennial crops, and industrial crops. Insufficient irrigation water is one of the main reasons for this situation. 2.10 Livestock accounted for 55 % of total agricultural production in the 1980s. This proportion has decreased substantially in recent years due to the significant contraction of the livestock sector caused by the need to import feed for pigs and poultry. In 1993, 73.59% of gross agricultural production originated from the crop sector (Table 2.1). It is likely that this proportion will decrease somewhat The Agricultural Sector 7 further in the coming years. The livestock subsector is in a deep and unprecedented crisis. IEbIe 2.1: Development of Agricultural Production, After peaking in 1987/88, livestock production % Shares started to decline due to the combined impact Livestock Crop share % Ag. of reduced livestock populations and lower share of Ag. of Ag. Output in production intensity. Compared with 1987/88, Output Output total NMP total 1992 output of meat dropped by 38%, 1988 48.2 51.8 18.5 milk by 31%, eggs by 60%, and wool by almost 40%. Particularly hard hit was poultry 1989 55.8 44.2 14.4 meat production, down by almost two-thirds 1990 54.8 45.2 17.2 from 1991. Total 1993 meat production fell by another 30% from 1992, eggs by 40%, and 1991 46.3 53.7 32.2 wool by 10%, while milk production remained 1992 33.2 66.8 45.6 at the 1992 levels according to Ministry of Agriculture estimates. Livestock output 1993 26.5 73.5 NA declined by 45% from 1998 to 1993. Soursc: IBRD Statistical Handbook 1993, State of the FSU, and Annenian Ministry of Agriculture. 2.11 Livestock performance in the late 1980s was only about 35% to 40% of Western standards for milk and meat production. At that time, average fertility rates were 67% of those in the West. The rates have deteriorated further in the past two years. Particularly alarming are decreasing slaughter weights, unacceptably high mortality rates, long fattening periods, and feed conversion ratios two to three times lower than in the West for broiler and pig production. C. CONSUMPTION AND SELF-SUFFICIENCY IN AGRICULTURAL PRODUCTS 2.12 Armenia is far from self-sufficient in TABLE 2.2: Self-Sufficiency and Per Capita Food Consumption food production, since it (1985-1992) produces less than 30% of Self Sufficiency Consumption the flour for bread, and only % (kg per capita) % three quarters of the livestock products consumed Prducts 1985 1992 18 9n in the country. Almost half of food output by volume Bread products 27.1 28.5 134.0 130.0 -3.0 consists of fruits and Potatoes 141.8 115.4 65.0 76.0 16.9 vegetables, in which Armenia is self-sufficient Sugar 13.9 0.0 28.7 9.7 -66.2 and able to export in fresh Vegetable Oil 83.3 75.0 2.4 1.6 -33.3 and processed forms. Since per capita consumption of all Meat and Meat 65.1 76.0 49.0 20.0 -59.2 products except potatoes fell products between 1985 and 1992 Milk and Milk Products 38.0 84.1 433.0 122.0 -71.8 (Table 2.2), food import needsThave dr2fopd asmwell. EWs (pieces) 116.9 103.1 148.0 65.0 -56.1 needs have dropped as well. Armenia now meets a larger Fruits (including 232.6 292.1 47.0 44.0 -6.4 Grapes) Soirce: Ministry of Agnculture. 8 Chapter 2 share of its food consumption through domestic resources because demand for livestock products has dropped by 60% to 70%. Dependence on imported flour has not been substantially reduced. 2.13 Through 1993, cereal production amounted to about 300,000 ton per year, and imports amounted to about 450,000 to 500,000 tons per year. Before the decline in livestock production in the last two years, Armenia required an additional 400,000 to 500,000 tons per year of cereals for animal feed purposes. Because of the blockade over the last two years this requirement has not been met, and is, among other factors, the most important reason for the decline of livestock production. The net shortage of cereals for human consumption in the coming years might decrease slightly. If the price of bread, which presently is the only commodity that is subsidized, is liberalized, then cereals consumption would fall. An increase of 50% in bread prices would cause a reduction of about 10% in the estimated consumption of cereals. Potatoes are another important staple of the Armenian population. Demand and supply are approximately balanced at 250,000 tons per year or 60 kg per person. Until the 1988 earthquake approximately 20,000 tons of sugar per year were being produced domestically, and the balance of about 100,000 tons was imported. After the 1988 earthquake the sole sugar factory was dismantled and sold to Georgia. With the difficulty of import because of the blockade, sugar consumption has fallen by two-thirds. 2.14 Until 1991 local production of milk and dairy products usually met less than half of the country's needs. For meat, domestic production met almost two-thirds of consumption. The reduction of commercial imports since the start of the blockade in 1991 and the large reduction in consumer incomes have pushed up consumer prices and reduced effective demand for livestock products to much lower levels compared to the end of the 1980s. Both meat and egg production have dropped by over 60% and with low imports (or none in the case of eggs), consumption has fallen by more than 50%. Imports of dry milk powder have continued, but at such a low level that consumption of milk products has fallen by over 70%. For all these products, the combination of high income elasticity and halving of real income over the past three years has accounted for over half of the fall in demand. 2.15 In adjusting to higher prices and reduced incomes, the population has shifted its consumption to more potatoes and has maintained bread and fruit consumption close to the levels of the mid-1980s. This has been facilitated by stable or increasing outputs of potatoes and fruits, as well as increased grain production and Government priority given to negotiating and organizing the delivery of food aid, including grain shipments. Thus, the population has been able to maintain a minimum level of nutrition and caloric intake. m. WATER RESOURCES AND THE IRRIGATION SUBSECTOR A. WATER RESOURCES The Main Sources 3.1 Armenia has limited rainfall, surface water, and groundwater. Average rainfall is about 620 mm per year, but varies considerably with altitude. The total estimated volume of annual precipitation is about 18.4 billion m3.' Surface Water 3.2 Surface water is available in 18 principal river basins. Most of the runoff, close to 60%, flows to the four largest rivers (Araks, Debed, Kasakh/Sevdjur, and Akhurian), and an additional 25% to the other three major rivers (Razdan, Arpa, and Vorotan). Water from the Araks River is shared with Turkey. 3.3 The total runoff is about 8.7 billion in3 per year. Of this amount, 1.3 billion m3 per year is useable by neighboring countries. Of the remaining 7.4 billion m3 per year, about 13 percent, or 980 million m3, is stored in 74 irrigation dams (about 1.1 billion m3 live storage). This stored water, together with 1.4 billion m3 diverted by run-of-river and pump schemes, comprises the present 2.4 billion m3 total average volume available for irrigation from surface water resources. Groundwater 3.4 Annual replenishment of groundwater is estimated at about 4.2 billion m3, of which about 1.4 billion m3 reappear in springs within the country. The rest, 2.8 billion m3, comprise three main categories: (a) Groundwater resources pumped by 2,105 irrigation and drainage wells, most of which are in the Ararat Valley. (b) Numerous industrial and municipal wells in various parts of the country. (c) Springs and aquifers reappearing outside Armenia's borders. At least 500 million m3 (18 percent) of the 2.8 billion m3 are still available, and could be used almost without causing reduction of spring or river flows. Annual water resources include the following: rainfall, 18.4 billion m3; runoff through rivers, 7.4 billion m3; groundwater, 0.5 billion m3. Water resources are not entirely mutually exclusive. Both rivers and groundwater resources originate from precipitation and, in years when precipitations are low, the stock of groundwater falls as well. 10 Chapter 3 Water Use 3.5 Annual use of water amounts to about 4.0 billion m3. Irrigation is the largest user with 2.5 billion in3, followed by public water supply (including irrigation of gardens) with about 750 million m3 and industrial water supply with 310 million m3. Substantial amounts of the utilized water is lost along the conveyance and distribution systems; therefore, the total annual consumption is far below 50% of the available water resources. Potentially, with large conservation efforts along the existing systems and the development of new, unutilized water resources, at least 100,000 more land could be irrigated than at present. Dminage 3.6 Serious drainage problems exist in the low lying, light, and medium textured soils of the Ararat Valley. The high groundwater table in these areas, some of it under artesian pressure, is causing varying degrees of soil salinity. The area affected is about 100,000 ha. Approximately half of that area has already been drained by tile and plastic pipes. Open drains have been excavated, natural drainage ways deepened, and vertical pump drainage systems installed.2 However, the operation of some drainage wells is essential to avoid resalinization of some of the reclaimed land. Of the remaining 43,000 ha requiring treatment of some sort, 23,000 ha are classified as slightly saline, 11,000 ha moderately to strongly saline, and some 9,000 ha are considered severely alkaline. Water Quality 3.7 There is a range of water quality in the country. From unpolluted springs and snow melt in the high elevations, to untreated or partially treated sewage in the Razdan River, to saline groundwater in the Ararat Valley. The quality is deteriorating; power shortages and lack of funds make it difficult to operate and maintain existing water and sewage treatment plants near cities, and to operate pumped drainage systems in agricultural areas. 3.8 Water in storage reservoirs is often polluted by untreated sewage and return flows from septic tanks from villages in the watershed. Groundwater quality, except for some parts of the Ararat Valley, is generally good. The Razdan River carries flows from Lake Sevan and serves as recipient for treated and untreated sewage from Yerevan and other cities along its course. Although the river water is used for irrigation in the Ararat Valley, there have been no reports of outbreak of waterborne diseases due to water pollution, and there have been no reports of any ill effects on the quality of crops in the Ararat Valley. 3.9 Two Government ministries test the quality of water in Armenia.3 The Ministry of Environment operates five laboratories that test the quality of drinking water and nine laboratories test the quality of treated sewage. The Ministry also supervises the operation of industrial quality laboratories, 2 Some of the pumped drainage is returned to the canal systems and reused for irrigadon. 3 Water quality is tested according to four categories: (a) taste, color, etc.; (b) chemical content; (c) microbiological constituents; and (d) degree of radioactivity. Water Resources and the Irrigation Subsector 11 which test plant effluent. The Ministry of Agriculture operates several laboratories for testing the quality of irrigation water. B. IRRIGATION The Conveyance System 3.10 Water is supplied to most of the irrigation schemes in Armenia by eight major conveyance irrigation systems. All main canals and most of the secondary canals were originally lined using different types of lining.4 Most of the canal network is in unsatisfactory condition. Due to landslides, erosion, and encroaching vegetation, unlined canals have lost their cross-sections. The condition of lined canals is not much better; in many cases long stretches of lining have deteriorated and, in some places, have completely disappeared. 3.11 In a number of locations, the reinforced concrete in large aqueducts (20-30 m3 per sec) has deteriorated, and water is leaking through the walls and floors of the structures and through cracks and joints. In some locations, the collapse of the aqueduct appears imminent, putting the entire canal system in jeopardy. 3.12 The deterioration of the conveyance system may be attributed to a combination of causes: inadequate design, lack of quality control during construction, bad and insufficient construction material, lack of maintenance, normal aging, adverse climatic conditions, and possibly corrosive water. It is estimated that more than half the water is lost between source and farm gates. Pumping Stations and Pressure Pipes 3.13 About half of the irrigated area (130,000 ha) requires some kind of pump lifts. In sprinkler-irrigated areas, the pumps draw water from gravity conduits and provide the required pressure. Other areas require pump lifts from the water source to the head of a gravity distribution network from where the water is conveyed to the command areas, or to second pumping stations to lift it to another distribution network higher up. 3.14 Altogether some 360 pumping stations, with approximately 900 pumps, provide the energy input for irrigation. The installed capacity of the electric motors is approximately 440 megawatts. Capacities of the pumping stations range from 100 liters per second to 16 m3/sec. The annual power consumption of the irrigation sector is reaching about 500-600 million kwh, a drastic cut from the more than 1.1 billion kwh that was consumed before 1992. 3.15 The condition of most of the major pumping stations is unsatisfactory. Neglect is evident everywhere. Rehabilitation and replacement of pumping equipment is required to save energy and increase the reliability of the equipment. However, despite the dilapidated condition of the stations, they seem to be operating as well as can be expected, and the rehabilitation of the pumping equipment could be 4 Cast-in-site reinforced concrete, precast sections, concrete, and paving with concrete slabs and stones. 12 Chapter 3 postponed to a later stage. 3.16 Some of the pressure pipelines that convey water from the pumping stations to the distribution systems are at the end of their useful life. Others are in critical condition because of corrosion. Approximately 54,000 ha would be affected if the pipelines fail. Design standards used for laying and maintaining steel pipes are unsatisfactory. Black steel pipes are laid on concrete supports above ground without any internal or external protection against corrosion. 3.17 A large portion of the pumping schemes, however, lift the water far above 100-150 m, which is an economic threshold limit that justifies production of typical crops grown in Armenia. Each lift of 1 m3 to 100 m consumes about 0.5 kwh. With an average gross water requirement of 12,000 in3 per ha, a 100 m lift causes power consumption to reach between about 5,000 and 6,000 kwh per ha. Lifting water beyond the threshold of about 100 m is considered an insurmountable economic burden on the farm budget. Consequently, many pumping schemes are uneconomical, and if they cannot be replaced by the gravity system, they should gradually be phased out of the irrigated commnands. Tubewells 3.18 About 1,900 wells supply 700-800 million m3 of groundwater annually for drinking, industrial use, and irrigation in the Ararat Plain.5 About half the wells are irrigation wells. All water from these wells is lifted by submersible pumps. 3.19 An inventory compiled by the Department of Water Supply and Irrigation (DWSI) in 1992 found the condition of the mechanical and electrical equipment in many of the wells unsatisfactory. Approximately, two-thirds of the pump sets were not operating. New statistics for 1993 confirm that their condition has further deteriorated. 3.20 The submersible pumps used in these wells are Russian made. Their life expectancy, under normal working and maintenance conditions, is said to be four years. This is about half the average Western standard. The actual situation observed in the field seems to be even worse. Pump sets are installed without any protective devices against power surges. As a result, motors burn out, sometimes after only a few months' service. Even with a normal supply of electricity, pumps seldom last four years; two to three years seems to be the norm. Electrical installations at the well head are also substandard. Cables from transformers to the electric motors are unprotected, which causes frequent short circuits and damages the motors. 3.21 The accelerated deterioration of pump sets is also caused by cavitation on the impellers and corrosion of metal parts. The space between the casing of the well and the well bore is left open, exposing the gravel pack around the "screen" to the intrusion of dirt and mud. Design specifications for installing wells, drawn up by the Water Planning Institute6, are sound. The problem seems to be in the construction of the well, the equipment and materials used, the shoddy workmanship, and lack of adequate maintenance. Screens are made locally of steel pipe. Holes are drilled into the pipe instead of 5 Approximately 860 wells are artesian; the balance requires pumping. 6 Under the Ministry of Agriculture. Water Resources and the Irrigation Subsector 13 using slotted stainless steel or fiberglass screens. The screens are not made of corrosion-resistant material, and they are installed without protective devices as is normally required in other countries. 3.22 Because of a lack of control and metering equipment at the well head, the operating efficiency of the tubewells cannot be measured, and monitoring the performance of equipment is impossible. Storage Reservoirs and Dams 3.23 Water for irrigation comes from rivers and lakes and in the Ararat Plain, as well as from groundwater. Surface runoff is stored in 24 major reservoirs, which supply water to approximately 92,000 ha. These reservoirs have a storage capacity of 932 million mn3 and a live storage of 840 mnillion ni3. There are five more reservoirs storing 145 million n3 water for municipal and industrial use. An additional 54 smaller reservoirs have a total storage capacity of approximately 300 million mn3. Of the total 83 reservoirs, 74 are under the administration of the Ministry of Agriculture and have a total storage capacity of 977 million m3. The largest existing reservoir has 525 million m3 capacity (Akhurian). It provides water for about 30,000 ha in Armenia, and is shared with Turkey. 3.24 Fifteen of the irrigation dams are considered in need of major repairs, and some even require urgent attention to avoid dam failures if operated at full capacity. The causes of their precarious condition include design errors, construction faults, and lack of maintenance. On-Farm Irrigation Systems and Efficiencies 3.25 The division of collective and state farms under the 1991 land reform (para. 2.3), into some 300,000 small holdings, each with a number of farm plots, has created a serious water distribution problem. Part of the land served by the closed (pressure) systems is farmed communally, in a similar way as before the land reform. However, many of the pressure systems were abandoned because they were not able to serve the thousands of new small plots due to the lack of an effective distribution system. In many of the gravity systems, water distribution is chaotic as well. Up to now, no formal network of authority to implement on-farm infrastructure has been developed, which has resulted in the inefficient, randomly-placed installation of earthen delivery ditches. 3.26 The main difficulty is that the irrigation delivery systems were designed to service large farms which may have irrigated 50 to 400 ha from a single headgate or canal outlet. Presently, the same outlet may service 400 or more farmers, which in many cases, makes it difficult to deliver necessary irrigation water to farmers who are not in close proximity to the canal outlet. In some instances, earth ditches must be installed across one or more adjacent farm plots. Some adjacent farmers will not allow ditch easements through their plots because of seepage and/or the loss of land. The result of these kinds of conflicts is that many farms receive insufficient irrigation water during the irrigation season. Further consequences are that some farmers located even a minimal distance from the existing outlets have no way of directly receiving water; no dependable scheduling technique is used to benefit all farms. In some areas, water distribution is erratic, and many irrigators have broken concrete canals and pipes at points closer than the originally installed outlets in order to have better access to irrigation water. When they are not irrigating, they close the holes in the canal or pipe with soil or sod, which leaks. As the number 14 Chapter 3 of these of-takes in a canal system increases, the delivery efficiency decreases. 3.27 The most problematic areas of the irrigation systems are those that depend on electric pumps to lift water to gravity systems which irrigate 42% of the total fanned land in Armenia. Unpredictable blackouts and low voltage from the shortage of electricity have paralyzed much of the pumping capacity, leaving farmers in limbo or entirely without water. This past irrigation season, the Ministry of Energy, due to lack of resources, was able to supply only 46% of the electricity needed to meet the pumping requirements for crop production. This predicament left many farmers with minimal water, and farmers at the end of most pump systems had no water at all. 3.28 Despite the nominal establishment of water users' associations (WUAs), there is little evidence in the field that such organizations actually function. In reality, water users are organized by villages, with outlet boundaries corresponding to village boundaries. Last year, during the first irrigation season after privatization, the Operation and Maintenance Enterprise (OME) of the Ministry of Agriculture made agreements with each individual farm unit specifying the amount of water the unit would receive and the water fees for the season. The OME was overwhelmed by approximately 260,000 agreements, and the Government was disappointed by a collection rate of a mere 27% of the water charges in 1992. Therefore, the Government instructed OME to make agreements this year with village councils for delivery and charges. Although the Government expected the village councils to execute agreements with individual farmers and collect the water charges, this has only partially been realized. C. OBJECTIVES AND STRATEGY OF BANK ASSISTANCE 3.29 Agriculture has been recognized by the Government as one of the critical sectors in need of assistance for two reasons: (a) the sector employs about a third of the labor force (para 2.3), and (b) the sector provides food which, in the context of the country's trade configuration, is difficult to obtain tirough imports in the short to medium term. Because the agriculture sector is heavily dependent on irrigation, and because the dilapidated condition of the irrigation infrastructure constrains both development of the sector and profitability of existing production, the Bank and the Government have agreed that rehabilitation of the irrigation infrastructure is the first priority in assistance to the sector. Bank assistance would be confined to areas that would have the greatest impact on efficiency in agricultural production. Areas that have been identified are those that are irrigated by gravity or that require minimal pumping, and that under certain cropping patterns can provide for profitable production at the given border prices. D. LESSONS FROM PREVIOUS BANK INVOLVEMENT 3.30 Investments in water resources have played a major role in the Bank's efforts to help countries to reduce poverty and to upgrade living conditions7. Irrigation systems have expanded food production, improved nutrition and increased rural incomes. Bank assistance has evolved from simple project lending toward country focused support for elaborating and implementing subsectoral strategies. These strategies are developed through sector work and subsectoral reviews in which priorities are 7 See Water Resource Management: A Policy Paper, International Bank for Reconstruction and Development,R93- 14/1, may 3, 1993. Water Resources and the Irrigation Subsector 15 articulated and performance is analyzed. The proposed Irrigation Rehabilitation Project incorporates the Bank experience in irrigation projects. Hence, special attention was paid in the project design and concept to restructuring of the operation and maintenance of the irrigation system; quality of construction; cost recovery; adequacy of the water management; the need to complete the country's water master plan that will incorporate intersectoral impact of water development investments; and environmental issues. 3.31 Two projects have been approved so far for Armenia: an institution-building project (Loan 3585-AM), approved in March 1993, and an earthquake reconstruction project (Loan 2562-AM), approved in January 1994. The institution-building project has been slow to take off mainly because the Armenians lack experience in implementing Bank-financed projects. However, recently the pace of implementation has improved due to more intensive supervision and guidance on the part of the Bank. The earthquake reconstruction project just recently became effective, and small amounts have already been disbursed. An implementation unit was established for that loan about six months before Board approval. The experience gained in establishing the implementation unit is important for future Bank projects, especially in regard to administration, accounting, and procedures. The significant success of the implementation unit was demonstrated in the adjustment of local staff to the procedures of IDA financed project requirements and in the confidence they gained in implementing a Bank-financed project. The implementation unit was initially administered and guided by an expatriate, but local staff are now managing all functions of the unit successfully, including procurement and disbursements. Of particular interest is the experience gained by the unit in preparing bids and the enormous interest shown by local state enterprises in bidding for works and supply of goods under the earthquake reconstruction project. IV. THE PROJECT A. PROJECT OBJECTIVES 4.1 The main objectives of this project are to assist Armenia in maintaining its level of irrigated agriculture production and to improve the country's water resource management. B. RATIONALE FOR IDA INVOLVEMIENT 4.2 The Government considers the proposed project to be a priority investment in agriculture (para 3.29). It supports the development objectives of agriculture in Armenia identified in the Bank's Agriculture Sector Report (June 1994). The key elements in this regard are to: (a) expedite completion of the transition to a market-based system, including privatization of food production, processing, and marketing; (b) change the role of Government towards the provision of research, education, extension, and market information; (c) improve the efficiency of production, processing, and distribution of food and agrieulture products; and (d) improve the competitiveness of Armenian agricultural products in international markets. Following the priorities identified in the Bank's Agriculture Sector Report (June 1994), the sector review proposed an assistance strategy that includes (a) provision of critical inputs for agriculture production; (b) support to the Ministry of Agriculture to implement a consistent transition program in food and agriculture; (c) development of institutions and support facilities needed for a market-based privatized agriculture; and (d) capital investments for the development of competitive production, processing and marketing, and related infrastructure (especially the irrigation system). Hence, investments proposed under the project are intended to enable agriculture to maintain and increase production capacity which has been eroded because of severe deterioration of the irrigation infrastructure. The project would also support increasing the role of irrigation beneficiaries in determining their water needs and their financing of the operation and maintenance of the irrigation infrastructure. Under the proposed project, the beneficiaries would gradually take over water distribution and maintenance of the conveyance networks. The Bank strategy also emphasizes the rehabilitation and protection of the environment, which has been severely damaged by the deterioration of the water conveyance systems. The environment is now threatened by a possible collapse of several irrigation dams (psra. 3.28). C. THE PROPOSED PROJECT 4.3 The project consists of four main components: (a) rehabilitation of 12 irrigation schemes and the Ararat Valley groundwater network; (b) establishment of pilot projects for water distribution and new WUAs; (c) financing incremental operations & maintenance (O&M) costs of the irrigation infrastructure; and (d) technical assistance, including the establishment of a project implementation unit, assistance to update the Water Master Plan, training, and assistance to improve irrigated crop production. The investments related to the rehabilitation program make up about 78% of the project's estimated base costs; contribution to O&M about 11 %; the water management, including pilot projects, about 5 %; and technical assistance, including the PIU, about 5%.' I Other and rounding amount to 1%. 18 Chapter 4 D. THE RATIONALE FOR PROJECT DESIGN General 4.4 The project covers an area of about 164,700 ha (about 60% of the Armenian irrigated land), located mainly in the Ararat Valley, in the western part of the country. About 15% of the project areas are also in the northwest part of the country (Map 25388). With the exception of some of the northeast areas, where some of the irrigated lands are at elevation of +1800 m as], the rest of the irrigated land is at elevation ranging from 800 to 1000 m asl. 4.5 The selection of the project areas in the Ararat Valley was an obvious choice. It is the breadbasket of Armenia and the most fertile and productive agricultural area in the country. However, the arid Ararat Valley cannot produce crops without irrigation, and the irrigation system is now in decay. The Ararat Valley is also in close proximity to the capital Yerevan, where about one third of the country's population lives, dependent on the Valley for most of their food supply. Most of the other irrigated agriculture areas of the country are at higher elevations, and do not fit into the selection criteria for the project (para. 4.6). Criteria Used in Selection of Project Components 4.6 The selection of the project's components is based on the following criteria: (a) Energy Savings. Schemes have been chosen on the basis of acceptable cost-benefit utilization of energy for pumping water. Investments that would replace pumping economically by gravity irrigation were given highest priority. (b) Water Savings. Those schemes where rehabilitation would reduce water losses are given high priority, provided the value of the lost water is larger than the investments to repair them. Based on this criterion, substantial cost savings could be realized by rehabilitating leaking canal sections and replacing large diameter pressure pipes that have reached the end of their useful life. At present, water losses in conveyance from the source of water to the farmer's field reduce the areas which can be irrigated. Leaking canal sections can damage fields, houses, and infrastructures adjacent to the structures. The rehabilitation works are located on reaches of canals where the banks and the lining are destroyed, or where there is imminent danger that old and rusted pressure pipes will burst. (c) Irrigation at the Critical Growing Period. Rehabilitation of schemes which provide supplementary irrigation is a priority because water late in the growing season is critical for plants and production. Rehabilitation of schemes that provide supplementary water is economical provided the investment cost is less than the value of reduced yields caused by insufficient irrigated water. Such cases include the supply of supplementary water to three of the Ararat conveyance schemes (Lower Razdan, Octemberian, and Artashat) through pumping from the Sevdjur River (Arevshat and Mkchian), and using return flows through pumping from the drainage collectors, as well as restoring supplementary irrigation from local boreholes. The use of water stored in reservoirs that fully dominate the nearby command areas is also essential for supplementary irrigation. T7he Project 19 (d) Assistance to the Earthguake Reconstruction Zone. Rehabilitation works of the irrigation infrastructure in the earthquake zone around Spitak (Getik scheme) is a priority, given the vast destruction of the irrigation facilities in 1988. (e) Danger to Life and Property Downstream of Storage Dams. Rehabilitation of storage dams is a priority if they are in a significant stage of deterioration and constitute substantial danger to life and property; and if they are being used for economic purposes. Following the above-mentioned criteria, the proposed project would finance rehabilitation of four of the most seriously affected storage dams. Studies would be carried out under the proposed project to identify and appraise additional dams that constitute significant risk to life and property for inclusion in future Bank-financed projects. The recent breakup of the Artic dam illustrate the urgent need to carry out studies and rehabilitate Armenian dams. In May 1994 the embankment of the Artic dam broke across a width of 50 m, flooding two villages, killing several people and sweeping away many animals. Many other dams are in critical condition similar to the Artic dam. Considerations in the Choice of Certain Components 4.7 The following rationale was used to determine the technology and institutional organization for the project: (a) Introduction of Modern Tubewell Technology. Investment in modern tubewell technology is deemed justified if the incremental benefits are greater than the investment costs. Existing wells are badly constructed and do not follow standards established for their construction by the DWSI (for details, see Annex 3) (Annex 4, paras. 18 to 21). Motors have been installed without protection from power surges, and pump impellers wear out because they were installed without adequate filter screens in the wells. A number of these wells cannot be rehabilitated, and new wells will have to be drilled. If new electrical equipment with protective devices against voltage fluctuations is installed, the life of the pumps can be extended by four to five years. (b) Investment in Prefabricated Concrete Lining of Canals and Pump Maintenance. Given that plants and workshops that manufacture concrete lining or maintain pumps already exist in Armenia, some investments in their restructuring are justified if they do not compromise competitive procurement of the manufactured products, or if the manufactured products are cheaper than similar imported concrete linings, or if there is less need to import new pumps. (c) O&M Costs. After the breakup of the collective farming system, under which the Government was responsible for O&M of the irrigation infrastructure and its financing, it is necessary to reorganize both the O&M system and its financing. Presently the Government still manages the O&M system but it provide only a fraction of the O&M needs due to insufficient budgetary allocation. The budgetary allocation is partially dependent on revenues from collection of O&M charges from water users, but such collection is in its infancy and covers only a fraction of the budgetary needs. If financial resources for O&M provisions continue to be unsatisfactory, there is a strong possibility 20 Chapter 4 that the country would need another irrigation rehabilitation project in a short time. Hence, if the project will include a financing component to cover incremental O&M costs until water charges collection is established and able to cover the needed funds, there would likely to be substantial savings in terms of preventing long-lasting damage to the irrigation infrastructure of the country. It has been assessed that with undertaking other measures proposed under the project, there are good prospects that collection of water charges will improve and that in about five years' time, the necessary O&M costs can be recovered. (d) Project Implementation Unit. Presently, the ability of the Government to carry out imnplementation of the IDA-financed project without outside assistance is extremely limited. Assistance under the project for managing competitive bidding, construction work, procurement of equipment, contracting, supervision, and cost accounting is essential for the success of the project. It is believed that this will be more efficient if it is carried out under an autonomous project implementation unit (PIU) contracted under a single contract to an internationally renowned firm. E. DETAILED PROJECT DESCRIPTION The Irrigation Rehabilitation Program 4.8 The project consists of 12 irrigation schemes, including groundwater development (see Annex 4 for details) (US $28 million). 4.9 There are four types of rehabilitation works under the project: (a) Rehabilitation of eight major conveyance systems (US $18.5 million), including canals, aqueducts, siphons and hydraulic structures in eight major irrigation schemes: Shirak, Talin, Abovian (Kotaik), Arzni Shamiram, Lower Razdan, Octemberian, Artashat, and Getik. The area covered under this category is about 151,400 ha (92% of the project area, Map 25389 and Map 25390). (b) Replacement of gumps and pressure pipelines (US $9.5 million). This category includes four pumping schemes, of which one, the Vorotan, is an independent scheme that covers about 1,600 ha (1% of the project area). The other three-Azizbekov, Mkchian, and Arevshat-are within two of the eight major conveyance schemes to be rehabilitated (Map 25390). (c) Rehabilitation or reolacement of about 650 tubewell and pumps (US $6.9 million). These are located in the Ararat Valley, within the command areas of Octemberian, Lower Razdan, and Artashat conveyance schemes. (d) The rehabilitation of four storage schemes (reservoirs) (US $1.3 million). Three of these storage schemes-in Aparan, Mantash, and Sarnakhpiur-have their own command areas totaling about 11,700 ha (7% of the project area). One storage scheme (Karnout) is part 7he Project 21 of the larger Shirak conveyance scheme (Map 25391). 4.10 The Eight Major Conveyance Schemes (for details, see Annex 1, Table 1). The condition of much of the conveyance network is unsatisfactory (paras. 3.12 to 3.14). In the reinforced concrete aqueducts, the concrete has disintegrated and water is leaking through the walls and floor of the aqueducts. In some places enterprising farmers have made use of a free water supply, and in others the collapse of the aqueduct appears imminent. The rehabilitation works under the project include some 141.5 km of main canals, 523.2 kn of secondary canals, 1,411.0 km of tertiary canals and 548.5 km of nonpressure pipes, of which 412.9 km are made of concrete; the balance of 135.6 km is made of steel. 4.11 The Pumoing Schemes (for details, see Annex 1, Table 2). In all the four schemes proposed for rehabilitation, pressure pipelines conveying water from the pumping stations to the distribu- tion systems and some of the pumps are in critical condition. The replacement of pressure pipes and some of the pumps are included in the project. However, radical anti-corrosion steps are required to be introduced promptly, to avoid the same situations in the future, in these and other schemes. Protecting new, as well as existing pipelines that still can be recovered through lining, coating, and other anti- corrosive measures will be financed under the project. 4.12 The works required in the four pumping schemes are as follows: (a) The Vorotan Pumping Scheme. The rehabilitation works within the pumping systems and the pressure pipelines of the scheme include: (i) replacement of 2,015 m of 720 mm steel pressure pipeline, of eight mm wall thickness; and (ii) replacement or rehabilitation of three pumps. (b) The Azizbekov I and II Pumping Stations. The rehabilitation works include replacement of 2,800 m of 630 mm steel pressure pipeline, of 8 mm wall thickness. (c) The Mkchian I & II Pumping Stations. The rehabilitation works within the pumping systems and the pressure pipelines of the scheme include: (i) replacement of 18,000 m of 1,850 mm steel pressure pipeline, of 14 mm wall thickness, and 1,784 m of 1,800 mm steel pressure pipeline, of 14 mm wall thickness; and (ii) replacement or rehabilitation of 15 pumps. (d) The Arevshat I & II Pumping Complex. The rehabilitation works within the Arevshat I & II pumping systems and the pressure pipelines of the scheme include: (i) replacement of 15,800 m of 1,420 mm steel pressure pipeline, of 12 mm wall thickness; and (ii) replacement or rehabilitation of seven pumps. 4.13 The Tubewells Rehabilitation Program (for details, see Annex 1, Table 3). The proposed reconstruction and rehabilitation program would be carried out in three years and would include: (a) drilling of 150 new boreholes, in strict compliance with existing design specifications; (b) rehabilitation of 300 existing boreholes; (c) supply and installation of 250 new pump sets, including the required metering and control equipment; (d) supply of spare parts for the existing Russian pumps, to enable repair and overhaul of approximately 400 pump sets; and, (e) installation of 650 new and rehabilitated pump sets. 22 Chapter 4 4.14 Rehabilitation of Storage Dam Schemes (for details, see Annex 1, Table 4). The project would provide financing for the rehabilitation of four storage dams that are in extremely precarious condition. The rehabilitation program under the project would include repairs as follows: (a) The Aparan Storage Dam: The concrete lining of the spillway tunnel and the chute is completely destroyed in many sections. Also, in various sections along the outlet tunnel the steel lining has disintegrated and water is leaking into the tunnel; the regulation gates and their lifting gear need to be replaced and the cone valve repaired. (b) The Mantash Storage Dam: There are numerous cracks and serious deterioration of the outlet conduit, with muddy water leaking into the conduit. The accumulation of mud at the bottom of the conduit is an indication that an internal process of erosion and piping is taking place. The concrete in the intake tower, the spillway and the spillway channel also require rehabilitation. The irrigation outlet pipe is corroded, and the regulation valves should be repaired. (c) The Sharnakhpiur Storage Dam: Presently the condition of the dam requires that the spillway be reconstructed, and a stilling basin at the end of the chute provided. Strong vibrations endanger the outlet works. The intake should be redesigned and the gates and valves rehabilitated. (d) The Karnout Storafe Dam: The dam embankment is in the process of settling. The elevation of the dam crest is some 80 cm below the original construction level and only 90 cm above the maximum water level. The original wave wall has also settled. The concrete of the outlet conduit is cracked in several places and there is leakage of muddy water into the gallery. This indicates serious internal erosion (piping) in the dam structure, which is unsafe according to international standards, and which poses risk of failure. Pilot Projects to Improve Water Management 4.15 The cost of assistance to improve the water management is estimated at about US $2.47 million (Annex 1, Table 5). Presently there is no effective institution to manage the water distribution to about 300,000 farmers (paras. 3.25 to 3.28, and Annex 5). Over time, WUAs should be formed and given responsibility for O&M and water charge collection. A two-tiered structure should be developed, with outlet-level water user groups of 10-15 farmers, organized into a village-level umbrella association. Present conditions are unsuitable for investment in forming WUAs, as the physical structure does not support user groups, and the village councils are not suitable for the aggregating role. Nonetheless, under the pilot project, programs would be developed in about 400 villages that introduce low-cost methods of dividing command areas into manageable units, and would try different techniques and methods to determine which approach is most appropriate for Armenian farmers. Second, reorienting the Operational Maintenance Enterprise (OME) of the DWSI and village councils will create a better institutional climate for WUAs to develop. Third, as the OME gains institutional experience as a service organization, it will learn which O&M tasks can be delegated to local offices and eventually to WUAs, thus increasing the underlying rationale for such groups. Technical assistance will be structured to facilitate these processes and direct resources and attention appropriately. The Project 23 Incremental O&M 4.16 The allocation for the incremental O&M component under the project is US $5 million (Annex 1, Table 6). The condition of conveyance structures, pumping equipment, and tubewells is very poor because of long-term neglect compounded by poor construction (paras. 4.10 to 4.13). In recent months, staff has not been paid, and maintenance materials, such as paint to protect steel pipes, could not be procured. Clearly, it is only a matter of time before large parts of the system completely fail and irrigation in many parts of the country cease. The most serious consequences of such failures would be in the Ararat valley where no crops can be grown without irrigation. 4.17 Investments in the rehabilitation of the most adversely-affected dams and canals and the procurement and installation of pipes and equipment will not be worthwhile if the rest of the system breaks down because of lack of routine maintenance. The present expenditures on staff, temporary labor, and materials for routine maintenance and small repairs, for the entire irrigation system in the country, is estimated at some US $3 million per year and additional US $2 million to US $3 million would be necessary to cover the actual needs. During project implementation, collection of water charges is expected to be better than at present through assistance to improve water management and distribution systems. Accordingly water charges to be collected would cover 40% of the O&M costs by December 31, 1995 of project implementation2, 60% by December 31, 1996, 70% by December 31, 1997, and 100% by the project's closing date. With this schedule there would be a shortfall in maintenance funds of approximately US $5 million over the four-year project period. This shortfall would be covered from project funds. At negotiations it was agreed that collection of water charges would cover the O&M costs according to the schedule mentioned above (para. 7.1 (a)). Technical Assistance for Training and for Irrigated Crop Production 4.18 A sum of about US $630,000 has been allocated for this purpose (Annex 1, Table 7). Technical assistance would be focused on subjects with which local professionals are unfamiliar and are relevant to the project success and management. All experts will be on relatively short-term assignments to enable the transfer of technology to local staff. In addition some technical assistance is required in areas of irrigated crop production, such as virology, bacteriology, and immunology, to prepare a national program of sanitation of the high-value crop areas. Assistance to Update the Country's Water Master Plan and Preparation of the Next Project 4.19 The cost of updating and modifying the master plan, including preparation of the next followup irrigation project, is about US $500,000 (Annex 1, Table 7). In June 1993 DWSI issued a preliminary draft of the water master plan for the country. The plan deals with overall water resource development in Armenia in the next 40 years. The plan assesses the water balance of both runoff and groundwater resources and compares this with the estimated increasing demand for water from all sectors of the economy. The detailed assessment under the master plan covers all administrative and hydrological levels. However, the present draft master plan is not yet based on sound economic considerations. The plan therefore needs to be scrutinized on the basis of the economic and financial realities in Armenia; 2 Including incremental costs. 24 Chapter 4 substantial modifications are likely to emerge. On the basis of the updated master plan, a followup project would be prepared under the financing of the proposed project. This would include rehabilitation of additional dams that were already identified but not yet appraised, and investments in irrigation components yielding high economic and social benefits, considered of high priority for the country. Project Implementation Unit 4.20 The cost of setting up and operating the PIU during the project implementation period is estimated at about US $1.5 million (Annex 1, Table 8). The Ministry of Agriculture would have overall responsibility for the project. It would delegate responsibilities for project implementation to an independent PIU. The PIU would coordinate planning and design work, the day-to-day supervision on the construction sites, and be directly responsible for procurement and contracting. It would be responsible for the financial management of the project, including the preparation and submission of disbursement claims, and liaison with the Bank, including reporting to the Bank. The unit would also carry out monitoring and evaluation of the project and manage the technical assistance component (see paras. 5.1 to 5.11). F. PROJECT COSTS 4.21 The proposed project is estimated to cost, based on 1993 prices, about US $57 million, including physical and price contingencies. The foreign exchange component is estimated at about US $46 million or about 78% of the total project cost. The cost of imported equipment and materials reflect current market prices of suppliers in the FSU republics. These prices are lower than international market prices, and the suppliers of the FSU are known sources to the Armenian planning authorities. Costs of civil works have been estimated from experiences of the DWSI. Physical contingencies were calculated at 20% of the investment costs because of significant uncertainty regarding the civil works costs and procurement of goods from FSU countries. Price contingencies are based on the Bank's guidelines, starting at virtual no inflation in 1994; 2% for 1995; 2.5% for 1996; 2.7% for 1997; and, 2.5% for 1998. The project cost is denominated solely in U.S. dollar terms because the instability of the ruble during appraisal made it inadvisable to quote prices in that currency. In addition, in November 1993, Armenia decided to issue its own currency, the drum. The underlying assumption is that in the medium term, the rate of inflation would be offset by the rate of devaluation, and the cost of the local component in real terms can be denominated in U.S. dollar terms without significant bias. Physical and price contingencies combined make up about 23% of the project's base cost. Import duties, taxes, and other levies are not included in project costs, since it is assumed that investments under the proposed project are exempt from import duties and taxes. Project costs are summarized in Table 4.1, and details are presented in Annex 1, Tables 10-13. The Project 25 Table 4.1: Project Cost Summary Item Local Foreign Total % Foreign % Base Millions of US$ Exchange Cost 1. Rehabilitation of 8 Conveyance 5.54 12.93 18.47 70 40.0 Schemes 2. Rehabilitation of 4 Pumping 0.89 8.57 9.46 91 20.0 Schemes 3. Rehabilitation of Tubewells 0.69 6.25 6.94 90 15.0 4. Rehabilitation of Four Dams 0.56 0.75 1.31 57 3.0 Subtotal 7.68 28.50 36.18 79 78.0 5. Pilot Projects to Improve Water 0.14 2.33 2.47 94 5.0 Management Subtotal 0.14 2.33 2.47 94 5.0 6. Incremental O&M Cost 2.30 2.70 5.00 54 11.0 Subtotal 2.30 2.70 5.00 54 11.0 7. Technical Assistance - 1.10 1.10 100 2.0 8. Project Implementation Unit .21 1.25 1.46 86 3.0 Subtotal .21 2.35 2.56 92 5.0 Base Cost 10.33 35.88 46.21 78 100.0 9. Physical Contingencies 1.61 6.45 8.06 80 17.0 10. Price Contingencies 0.66 2.22 2.88 77 6.0 Grand Total 12.60 44.55 57.15 78 123.0 G. FINANCING 4.22 The Borrower for all components of the proposed project is the Government of Arnenia. The IDA credit in the amount of US $43.0 Million equivalent would be lent to the Government of the Republic of Armenia at standard IDA terms, with 35 years' maturity and a 10-year grace period. The share of the IDA's loan is equivalent to 75.25 % of total project cost. The Borrower would contribute US $4.15 equivalent, or about 7.25% of total project costs. End users, including farmers in the irrigated areas, would contribute US $2 million equivalent (about 3.5 % of total project costs) in the form of labor and local materials3. 3 Although it is assumed that investment costs are exempt from taxes and duties, nevertheless, they will not be financed under any circumstances by the IDA credit. 26 chapter 4 4.23 The International Fund for Agricultural Development (IFAD) has agreed to consider co-financing the project in the amount of US $8 million to cover the cost of tertiary canals and pipes in the eight conveyance schemes, pilot projects to improve water management, and monitoring and evaluation. 4.24 The financing plan for the project is presented in Table 4.2. Table 4.2: Financing Plan Item Local Foreign Total Million of US$ 1. IDA 4.65 38.35 43.00 2. IFAD 1.80 6.20 8.00 3. The Government 4.15 - 4.15 4. End Users, Farmers 2.00 - 2.00 Total Projet Cost 12.60 44.55 57.15 4.25 In March 1994 the Bank approved a PPF for this project to finance the establishment of the PIU (para. 4.20). 4.26 At negotiations, the Government confirmed to the International Development Association (IDA) of its intentions to provide appropriate contributions that are necessary to fulfill its share in the project financing of the local component and ensure adequate and timely project implementation. It is estimated that in fiscal year 1995 the Government share in the project financing would be about US $1.0 million, and the same amount would be required for fiscal year 1995. H. PROCUREMENT 4.27 Procurement of Goods and Civil Works would follow the "Guidelines: Procurement under the IBRD Loans and IDA Credits, May 1992." Domestic preferences shall be applicable to ICB contracts for goods and civil works in accordance with the Bank Guidelines. All consulting services, including the technical assistance and training would be governed under the "Guidelines: Use of Consultants by World Bank Borrowers and by The World Bank as Executing Agency, August 1981." The borrower will use IDA's recently issued standard bidding documents for Goods and Works. In the case of consulting assignments of time-based and complex nature the borrower shall use Bank/IDA's standard contract for consultants. 4.28 The project is being co-financed by IFAD (US $8 million). The procurement of goods and services for the co-financed amount will be governed under IDA's Procurement Guidelines. The Project 27 4.29 There are several state-owned construction firms or organizations experienced in building large dams, excavating complex tunnels, and constructing large water conveyance systems and hydropower plants. Six of them are active in construction of irrigation systems under the Ministry of Agriculture. All these state-owned firms are technically qualified to undertake the proposed rehabilitation works on the eight irrigation conveyance schemes and the four pumping schemes, the tubewell drilling, the associated repair program, as well as the repair of the dams under the four storage schemes. These firms have financial and managerial autonomy and do not receive subsidies from the Government. They meet the eligibility criteria of OD 11.00 (Paras. 88 to 90). They are intended to be privatized in 1994 or 1995. At present there is only limited contracting capability in the Armenian private sector for the type of volume of the civil works required for the project. 4.30 Manufacturing of prefabricated concrete structures, gravity flow pipes, and canal lining panels for irrigation is done in four plants owned by the Ministry of Agriculture and one plant jointly owned by the private sector and the Ministry of Housing Construction. The latter, called the "Huntsman-Armenia Concrete Corporation," is a modem, efficient facility that manufactures prefabricated prestressed concrete panels for the Ministry of Construction. It is equivalent to any comparable factory in the West. There are also several concrete factories under the Ministries of Construction, Transport and Energy, most of which would qualify to participate in local bidding to supply concrete construction material for the rehabilitation works. These state-owned enterprises also meet the eligibility criteria of OD 11.00 (Parms. 88 to 90). 4.31 Repair and overhaul of submersible and other pumps is at present carried out by a few factories and workshops in Yerevan and in the Ararat Plain. Most of these workshops and factories are also financially and managerially autonomous state enterprises belonging to the Ministry of Agriculture. 4.32 Under the present circumstances in Armenia, the use of competitive bidding relying on the participation of Government-owned companies and the participation of some private sector contracting firms should be considered to provide competition as is the practice in many other FSU republics. 4.33 Procurement arrangements are summarized in Table 4.3. Details of the proposed procurement arrangements are as follows: (a) GOODS: The equipment and construction materials, i.e. steel pipes, valves for Pumping and Conveyance Schemes; concrete pipes; submersible pumps; and syphons, valves, etc., for pilot projects would be procured as follows: (i) ICB will be used for contracts of US$100,000 and above up to an aggregate of US$19.8 million. Bank's standard bidding documents for Goods will be used. (ii) LCB procedures will be used for contracts of smaller value below US $100,000 each. The local competitive bidding will be conducted in accordance with the Bank Guidelines. The total aggregate for LCB contracts is estimated to be US $8.5 million. (iii) Local Shopping procedures will be used for snall items or items that can be obtained off-the shelf, estimated to cost less than US $50,000 per contract, up 28 hapter 4 to an aggregate amount of US $1.7 million, on the basis of at least three quotations from qualified suppliers. (iv) Direct Contracting: Parts for repair of existing pumps will be procured through direct negotiations with the pump manufacturers up to an aggregate amount of US $200,000. (b) CIVIL WORKS: Contracts for civil works would include rehabilitation of dams and canals, installation of pump sets and drilling of existing and construction of new wells, etc., and would be procured in the following manner: (i) ICB will be used for contracts estimated to cost US $300,000 and above and would cover rehabilitation of dams, up to an aggregate amount of US $680,000. The borrower will use Bank/IDA's Standard Bidding Documents for Works through ICB (Smaller Contracts), June 1994. The contractors shall be prequalified. (ii) LCB procedures will be used for most of the smaller contracts which are spread over a large area and may not interest foreign bidders. LCB contracts will typically be those which are estimated to cost less than US $300,000 each and their procurement will be conducted through a locally advertised comnpetitive bidding process which will however, be open to foreign bidders if they wish to participate in bidding. The bidders for the works under Irrigation Rehabilitation program and Pilot projects to improve water management will be prequalified as provided in para. 2.10 of the IDA Procurement Guidelines (May 1992) and IDA's standard Prequalification document will be used for this purpose. The total aggregate for LCB contracts is estimated at US $9.7 million. For procurement of these contracts, the borrower shall use IDA's Standard Bidding Documents - Smaller Works through LCB, June 1994. (iii) Local Shopping: Smaller work contracts, estimated cost less than US $25,000 each may be awarded on the basis of comparison of at least three price quotations obtained from qualified contractors. The aggregate amount for such smaller contract is estimated at about US $100,000. (c) CONSULTANTS (US $1.3 million): The borrower will employ through competitive process an international consulting firm under a single contract to establish the PIU, financed under the PPF (Para. 4.25). The estimated cost for the PIU establishment is about US $1.3 million, including cost of required equipment. The borrower will nominate the Project Manager after obtaining IDA clearance. The Project Manager will be assisted by an expatriate Deputy Manager, experienced in IDA related procurement policies and other financial matters, and four qualified foreign consultants, experienced in PIU operations, to provide necessary training to local staff. The selection of the consulting firm will be on the basis of a select list which will require IDA prior review and approval. (d) TA and PILOT PROJECTS ( US$ 2.3 million): The consulting services for this component will be procured under a single contract on competitive basis to operate the Pilot The Project 29 Projects to Improve Water Management (Para. 4.15); and for TA services (paras. 4.18 and 4.19) that would be administered under the PIU. Technical assistance would be contracted on individual basis for assignments ranging from two weeks to about three months. The selection of these individual consultants would be based on a review of CVs for each selection and the total aggregate for these contracts is not likely to exceed US $200,000 in value. The training, including overseas training, would be provided under TA contracts with local or foreign training institutions and universities in accordance with IDA Guidelines and after prior approval by IDA of short lists, TORs, Letters of Invitation, and final draft contract. The average contract value for consulting firms is likely to exceed US $100,000 each while for individual consultants it may be below US $50,000 each. (e) INCREMENTAL MAINTENANCE COSTS - 0 & M - (US$ 5 million): IDA will finance costs associated with maintenance of existing heavy works and other infrastructure and/or any future remedial activities and repairs, etc., which may be warranted to avoid further damage to these works. These costs will represent reimbursements for supply of materials and installation or repairs (Paras. 4.16 and 4.17). The PIU with Bank approval will establish the procedures for coordinating and supervising the O&M administered by the OME for the purpose of funding under the project. The PIU shall submit to the IDA every year an annual budget, likely unit costs for various categories of repairs, and the procedures for carrying out such repairs and disbursement of funds. Administrative overheads for involved departmental forces of public entities would not be reimbursed under the IDA credit. 4.34 IDA REVIEW: All ICB contracts for goods and works will be subject to IDA's prior review. Prior review would also be required for the first three LCB contracts for works regardless of their value and, subsequently, for all LCB contracts for goods and works, estimated to cost US $200,000 and above each for civil works and US $300,000 for goods. IDA would also pre-review terms of reference and consultant contracts for all consulting assignments costing more than US$100,000 for fums, and US$50,000 for individuals. All other contracts will be subject to ex-post review by IDA. 4.35 Country Procurement Assessment Report: A CPAR has not yet been completed. However, procurement proposed under the project would follow IDA's Procurement Guidelines. 4.36 Procurement Information: Information regarding procurement administration would be collected and recorded and would comprise report of contract, status, and award information by the Borrower, and quarterly reports to IDA by the Borrower. These reports would indicate: (a) revised cost estimates for individual contracts and the total project, including best estimates of allowances for physical and price contingency'; (b) revised timing of procurement actions, including advertising, bidding, contract award, and completion time for individual contracts; and (c) compliance with aggregate limits on specified methods of procurement. 4.37 Agreement was reached during credit negotiations that all procurement processes and actions under the project would follow the procedures outlined in Paras. 4.27 to 4.36 (para 7.1(b)). 30 Chapter 4 Table 4.3: Summary of Proposed Procurement Arrangements (000' US$)4 rrEM [CB LCB OTHER TOTAL 1. Works 1.1 Canals, Syphcns, Pipes and Hydraulics 4,630 130' 5.040 (3.700) (100) (3,800) 1.2 Inallam of Pump ses 1,200 1,200 (970) (970) 1.3 Drilling and Cstruction of New and Exsting Wells 5,480 5,480 (4,380) (4.380) 1.4 Rehubililatn of 850 790 1,640 Dams (680) (630) (1,310) 2. GoodB 2.1 Precut Cocrese Sectisa 8,380 8.380 (6,700) (6,700) 2.2 Steel Pipes, Valves, etc. for Pumping Schemes 6,200 700' 6,900 (5,740) (560) (6,300) 2.3 Coerete Pip 1,900 1,580 3,480 (1,520) (1,260) (2,78W) 2.4 Steel Pipes, Valves, etc. for Conveyance Schemes 10,920 900' 11,820 (9,820) (720) (10,540) 2.5 S ubnmble Pumps 1,200 1,200 (1,200) (1,200) 2.6 Spare Pan for Subnenble Pumps 280 200- 480 (280) (200) (480) 2.7 Equisent for Pilot Projects (Syphm, Valves, etc.) 1,490 500 1,990 (1,490) (300) (1,790) 2.8 Equimem for TeAniscal Assistance snd PIU 420' 420 (420) (420) 3. C _mallmejes 3.1 Cansultanemis to Establish a PIU (uwder a PPF) 1,300 1,300 (1,300) (1,300) 3.2 Teclhncal Assistance and Pilot Projects 2,300- 2,300 (2.300) (2,300) 4. 04er 4.1 leremetl Expn 5,8C0- 5,8C0 (5,000) (5,000) Toal 22,560 22,840 11,750 57,150 (20,450) (18,220) (10,600) (49,270) * Local Shopping = US $1.8 million ** Direct Contracting = US $200,000 * According to IDA Guidelines * According to Procedures approved by IDA 4 Figures in parentheses are the respective amounts financed by the IDA and IFAD loan. The Project 31 I. DISBURSEMENT 4.38 The proposed IDA credit of US $43.0 million equivalent would be disbursed over a period of four years, and the expected project closing. date would be June 30, 1999. There is no experience yet to form a disbursement profile for Armenia, but it is estimated that the country's ability to implement the project over a four-year period is reasonable, especially given that a PIU will be set up in advance of the actual implementation of the project works. A mid-term evaluation would be undertaken by the IDA and the Borrower by April 30, 1997, or when disbursements reach 50% of the total loan amount, whichever is earlier, to examine all aspects of implementation (para. 5.28). Commitments for major contracts would be approved through October 31, 1999. The estimated disbursement during each year of project implementation is as follows: FY 96 US $ 4.0 million FY 97 US $11.0 million FY 98 US $16.0 million FY 99 US $12.0 million 4.39 The proceeds of the credit would be disbursed in U.S. dollars as shown in Table 4.4 below: Table 4.4: Disbursement Categories Disbursement Category Allocation Disbursement Basis (US $ mil.) (1) Goods: Equipment and 23.5 100% of foreign expenditures, Material 100% of local expenditures (ex factory cost) and 85% of local expenditures for other items procured locally (2) Civil Works 9.5 100% of foreign expenditures, 85% of local expenditures (3) Technical Assistance 1.0 100% (4) Operational and 5.0 100% Maintenance Costs (5) Refund Of Project 1.5 Preparation Advance (6) Unallocated 2.5 TOTAL 43.0 4.40 Direct payment procedures from IDA to suppliers will be used. Disbursements against the categories described in Table 4.4 would be made upon receipt by IDA of fully documented applisations, except for contracts valued at less than US $50,000, which would be made against certified statements of expenditures (SOE). Supporting documentation for SOE would be retained by the Borrower and made available to the IDA during supervision. Direct payment applications and applications for 32 Chapter 4 special commitments would be accepted for minimum amounts of US $20,000. To facilitate project implementation, the borrower would establish a Special Account in one of the major foreign commercial banks to cover IDA's share of expenditures. An initial deposit of US $1.5 million would be made, with the amount in the Special Account increased to the ceiling of US $2 million when total disbursements reached US $3 million. Applications for replenishment of the Special Account would be submitted monthly or when one-third of the amnount has been withdrawn, whichever occurs earlier. Documentation requirements for replenishment would follow the same procedure as described above. In addition monthly bank statements of the Special Account which have been reconciled by the borrower would accompany all replenishment requests. At negotiations, agreement would be sought that disbursement arrangements willfollow the procedures described in paras. 4.38 to 4.40 andfor establishing and operating the Special Account as described above (para. 7.1 (c) and (d)). 4.41 Disbursements against withdrawal applications to cover incremental O&M expenditures would be subject to prior agreement with IDA on annual budget requirement by the Government for O&M operations as described in para. 4.33(v). Such agreement will have to be reached prior to every fiscal year and will stipulate the extent of the annual IDA disbursement for that category. Agreement for such arrangement was reached during Credit negotiations (para. 7.1 (e)). V. PROJECT IMPLEMENTATION A. ORGANIZATION AND MANAGEMENT 5.1 The management, administration, and coordination of the project will be the responsibility of the PIU (para. 4.20 and Chart 1), which the Government has decided to establish through PPF financing by the Bank (para. 4.25). The Ministry of Agriculture (MOA), would have overall responsibility for the project. The MOA has already nominated a Project Board of Management, chaired by a Deputy Minister. Other members of the board are the Director of DWSI, Director of the OME, Director of the Economic Department in the MOA, a second Deputy Minister, and a representative from the Ministry of Economy. The Board of Management makes policy decisions and provides general guidance to the project implementation staff. Micro-management of the project has been delegated to the PIU which will report directly to the project's Board of Management. 5.2 The objectives of the PIU are as follows: (a) coordination of project implementation, including planning and design works, direct responsibility for procurement and contracting, and supervision on the construction sites; (b) financial management of the project, including the preparation and submission of withdrawal applications, and liaison with the Bank, including reporting to the Bank; and (c) coordinating preparation of a follow-up project. 5.3 In accordance with project objectives, the PIU would have four sections: Engineering, Services, Monitoring and Evaluation, and Technical Assistance. 5.4 The EnRineering Section would: (a) complete the detailed planning and preparation for the project; (b) approve the designs, specifications and bills of quantities, and prepare contract documents. It would manage tendering procedures and award contracts in accordance with the Loan Agreement and with the Guidelines for Procurement of IDA in order for the contracts to be eligible for financing from the project; (c) schedule and conduct the purchasing process; and (d) provide on-site supervision, approve contractor and supplier payments, and preparation withdrawal applications. 5.5 The Services Section would be responsible for translations, recruitment of personnel, transportation, communication, disbursement (including payments to contractors and suppliers), accounting and auditing. The section would also be responsible for preparing bi-annual reports to the Bank and the Government on the PIU operations and progress in project implementation. Chart 1: Project Implementation Unit W l ProjePt. t P l Auditl"g | D^rJ ~ ~ ~~~~~ai edPrle lstr ls Tsll- . udi X4 ..I wa. Pla *wr X* _e . i a m 2, Contreat~~~~~~~~~~~~~~ Project Implementation 35 5.6 The Technical Assistance Section would principally be responsible for three tasks: (a) to design activities that would enhance the development of the WUAs and repayment of water charges; (b) to provide consultation to the Water Planning Institute in improving and updating the Water Master Plan; and (c) organizing training activities connected with implementation of the project and for specific management systems and irrigated crop production. The training seminars would be conducted by Bank Staff and consultants, with emphasis placed on-the-job training provided by expatriate consultants. 5.7 The Monitoring and Evaluation Section would report directly to the Project Board Management (paras. 5.21-5.25). It would be responsible for collecting and analyzing information on project implementation, and its impact on agricultural production. The monitoring system would alert management to emerging problems and draw up periodic progress reports. 5.8 In view of the Government's lack of familiarity with the establishment and operation of a PIU, the Government has agreed with the Bank to contract with an international consulting firm to establish and manage the PIU. Such a contract was signed with a foreign company in October 1994. Under this arrangement the Armenian Government retained the right to nominate the Project Manager to head the PIU, and this nomination was approved by the Bank. The PIU will initially be staffed by 4 qualified expatriate consultants, in addition to the Project Manager. One of them, the Deputy Manager of the PIU, will train and assist the Project Manager to assume full responsibility for the PIU operations. The other expatriate consultants will have responsibility for establishing the PIU procedures, policies, and accounting, and in collaboration with the Project Manager, for recruiting local counterpart staff who they will train to assume their functions in the project implementation management. The length of stay for the expatriate staff is dependent on the transfer of appropriate technology to the recruited local staff and to the Project Manager. 5.9 In addition to coordinating and administering project implementation, the PIU would also be responsible for coordinating the preparation of a follow-up project. 5.10 The responsibilities of the PIU in terms of procurement are as follows: (a) coordinate detailed plans for procurement, including the packaging of goods into specific contracts; scheduling of purchases and deliveries; designation of responsibilities for conducting the procurement process, and determination of signature authority for each contract; (b) ensure that appropriate arrangements are made for advertising contracting opportunities; preparation and issuance of bidding documents; conducting public bid openings where required; and evaluation and comparisons of offers to select the lowest evaluated bidders; (c) obtain the required approvals from Government and IDA for bidding documents; make recommendations for bidder selection and contract award; and prepare the final contract document; (d) verify that contract conditions for the supply and delivery of goods and services have been met and that contracts are eligible for payments from the Credit; and (e) monitor the progress of procurement and its compliance with the terms of the Credit. 36 Chapter 5 5.11 At negotiations an agreement was reached that the PIU will be organized and operate along the lines of the program described in peas. 5.1-5.10 (para. 7.1 (f)). A condition for effectiveness of the proposed Credit will be the establishment of a PIU with an adequate number of suitably qualified staff as indicated in para. 7.2. B. PROJECT PHASING 5.12 Project implementation is anticipated to take about three and a half years from loan effectiveness, and another six months to loan closing (Chart 2, for details on the project implementation plan see Annex 9). The relatively long project schedule is attributed to the fact that most of the construction infrastructure has been idle for a number of years, and has to be geared up to carry out construction activities over a wide geographical area.' 5.13 Completion of the design and the tender documents is crucial to the prompt initiation of project implementation. Many engineers of the Planning Institute have been temporarily suspended, but the Institute is now gearing up to re-employ them. 5.14 The construction which could be started in the first season is cast-in-situ concrete work such as the construction of parts of the Getik Main Canal, and rehabilitation works on canals where precast sections cannot be used. All these works, however, have first to be designed. 5.15 Procurement of imported items is the most urgent project activity. Specifications would be prepared immediately after the PIU has been set up, and the necessary expertise is available to discuss design and procurement issues with the Planning Institute of the DWSI. Tender documents would be prepared simultaneously with work on specifications. 5.16 Imported goods could be available in Yerevan eight to ten months after tendering. The constraining factor in this timetable is the establishment of the PIU and the recruitment of expatriate experts. Actual implementation of the project can start about six to eight months from establishment of the PIU. 5.17 Replacement of steel pressure pipes requires the importation of pipe sections. These could be available for field work eighteen months after tendering. 5.18 A shorter period would be required for implementation of main, secondary, and tertiary canals which require concrete sections. Most of the concrete manufacturing plants can start operations inmmediately, following LCB procedures to select the lowest evaluated bidder, though provision of some concrete products are contingent on modernization in a plant that is anticipated to be complete before the end of the second year of operations. 5.19 Well drilling will be delayed until the necessary equipment is imported (well screens and other equipment), and the hydrogeological studies are completed. The earliest date well drilling can start will be the second construction season. Each reach of canal which has to be repaired and each pipe section which has to be replaced is a separate building site. I HaWIj;l,3is - - . - .* - - . . ... . . - -*&- - ^+-& - +6+ ................ - -.- .... - --.^+ ... s.- - +s- **+6w+.- ....... ww-6 .. 00- 0 +. - . - - - - - +.- - +. ... .......... .....+ . . i - ~~~~~~~~..... ....... ..... . -.. * . . . . ..... ......... . .... . ... ..... . ...... .. .. .......... - -- :: - s - - .- ::::::::::::::::::::::::::-:::::::::::::::::::-:::.:........... . :::. ..:....:.......................................... .. _ ~~~~~~~~~~~~~~~~~.. ..............._____.._. _.. ................. .-. ............. ... ............... ........... .. .......... _~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~...... ............ . ...... . ... '.'.'.'..'.-;.X . . .. . .. '.'..-.....' . ..... ... .... ... . .......... .. . .. . ...'. -- ............... . . .... ....... . ...... ...........-:::.: - . ..... I.- ..............::::.| :::: .......-:.: : :-::: . .. ... ..... :::- .::::::::::::: :: ...... ...........:: ::-::::: .1 ..... ::::::':' _-~~~~~~~~~~~~~~~~~~~~.. ..........................._ _ _ __. l....._._..._._...._. ....._ .... ........... .. .... .. : ......... . L *......... ........ - I , , , .. , , .. , .. ; ~~~~~~~~. . ._...... ............ . .-- 9 - .. ........ , .. . ........ I..............I........ ..... .... . , i ==~~~~~~ ....... ...... .......c : .- .: - .... ... .... .. ..... ......... . . . ............... ... .........v ................... ..................... .. : r.: ::. . . . . . . . . . . . . . . . . . . . . . . . . . . . . ,,,,, . ~ I mmqmC .. ................ . ...... . ......... ......... .. ............... ............... ............ . ......... U . .. .............. ................................. ... ~ ~ ~ ~ ~ ~ ~ ~ ~ - .. ..... . .......... ...... . ........ . ........................... .- -~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~- ...... ...... .. ......I. . .... .......- .. ........ .. .......... ..~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~. 38 Chapter 5 5.20 The planning and design of dam rehabilitation works, starting from establishment of the PIU, will last at least a year. Construction activity on the four sites will therefore start only towards the middle of the second construction season. C. PROJECT MONITORING, EVALUATION, AND REPORTING 5.21 A monitoring and evaluation section (M&ES), would report directly to the Project Management Board, though administratively it would be serviced and supervised by the PIU (para. 5.7). The M&ES would establish the types of information to be prepared under the project and its evaluation. Broadly this will be divided into three categories: (a) information pertaining to physical implementation and services provided by the project, together with relevant financial records. Key indicators would include progress in implementation of the various irrigation schemes, procurement, establishment of pilot projects for improved water management, and technical assistance; (b) information pertaining to the use of the structures and the services by the targeted population and the initial consequences of that use. Key indicators would include information on the beneficiaries of the various project components, to the extent possible the impact of the project on the beneficiaries income; and (c) information on the social, economic, or environmental reasons for any unexpected reaction by the target population that is revealed by the information about the use of the structures and services. 5.22 The M&ES would provide annual progress reports to the Project Management Board and to IDA in an agreed format. 5.23 The M&ES would collect and analyze data on costs, benefits, and financial viability of main investments on the basis of suitable sampling. The evaluation objectives would be to: (a) critically review, in light of subsequent developments, the project design and rationale stated in the appraisal documents; (b) assess the ongoing economic efficiency of the project. This would require the following: (i) analysis of the project design and determination of its adequacy to overcome the identified constraints in agriculture and thus to promote the desired changes; (ii) comparison of actual attainments with the targets set and identifying the reasons for shortfalls or better than anticipated achievements; and (iii) assessment of the efficiency of project implementation procedures and quality of managerial performance. (c) determine the effects and impact of the project; and Project Implementation 39 (d) present the lessons learned and the recommendations that follow from them. 5.24 The M&ES would also be responsible for preparing information regarding procurement to be collected and recorded as follows: (a) prompt reporting of contract awards information by the Borrower; and (b) comprehensive quarterly reports to the Bank by the Borrower (assisted by consultants) indicating: (i) revised cost estimates for individual contracts and the total project, including best estimates of allowances for physical and price contingencies; (ii) revised timing of procurement actions, including advertising, bidding, contract award, and completion time for individual contracts; and (iii) compliance with aggregate limits on specified method of procurement. 5.25 Annual evaluation reports will be submitted by the M&ES to the Project Board Management and to IDA. The M&ES would also prepare a project completion report not later than six months after closing date. During negotiations agreement was reached that M&ES will: (a) follow the monitoring and evaluation procedures as outlined in paras. 5.22-5.25 above; (b) submit to IDA the periodic reports; (c) prepare a project completion report (para. 7.1 (h)). D. ACCOUNTS AND AUDIT 5.26 The project accounts will be managed by the PIU during project implementation. The project accounts would identify all sources and uses of funds in carrying out the project, including detailed accounting of the use of the proceeds of the Loan and the operation of the Special Account. The project account would be audited by an independent auditor acceptable to IDA, and the audit reports would be submitted to the Project Board Management and to the Bank within four months of the end of the fiscal year. The audit reports would contain a separate opinion on the operation of the Special Account and the statement of expenditure (SOE) procedure, when utilized. Since the auditing profession is not yet well developed in Armenia, it is anticipated that an international auditing firm will carry out the audits. During negotiations agreement was reached regarding the accounting and auditing requirements as outlined above (para. 7.1 (i)). E. BANK SUPERVISION 5.27 The project would require an intensive supervision, with visits by IDA staff at least twice a year (for details concerning proposed supervision plan see Annex 10). With the intention of following 40 Chapter S up this project with wider investment in irrigation, supervision would be combined with project preparation in the last year of the project. It is estimated that project supervision in the first and second year would require about 22 staff weeks each year. In the third year because of the mid-term review, the project would require 25 staff weeks. In the fourth year the project would require about 12 staff weeks, and in the last year together with preparation of a completion report, the project would require about 18 staff weeks. 5.28 At negotiations agreement was reached for a mid-term review of the project by a joint team from IDA and the MOA (para. 4.38). The expectation of the mid-term review is that there would already be significant progress in the implementation of all the project components, and that the master plan of irrigation and water supplyfor the country would already be substantially updated (para. 7.1 (j). VI. PROJECT BENEFITS, RISKS, AND ENVIRONMENTAL IMPACTS A. PROJECT BENEFITS Project Impact 6.1 The proposed investment of about US $57 million over a four year implementation period would finance the rehabilitation of irrigation systems in the major agricultural production areas and would have profound impact on productivity of the agriculture sector; on the well being of the beneficiaries; and on the country's economy. A secure water supply would promote agricultural production, increase the food supply, and create employment and raise incomes in the rural areas. Without the project, Armenia would need to increase its food imports, or decrease its food consumption substantially. Under the project, construction work will generate employment opportunities for about 2,000 unemployed skilled and unskilled workers. The project would also establish the foundation of improved and rationalized water management by creating WUAs and a national system of water charges designed to recover the costs of O&M at a minimum. Basic Assumptions 6.2 The project implementation is predicated on the assumption that there is no economic blockade and the transport constraint has been removed. However, based on the Country Economic Memorandum for Armenia from March 1993, there are two possible scenarios after lifting the blockade. Under the less optimistic one, the country would continue to be hampered by further economic deterioration in the FSU Countries, with a continuing depreciation of its currency. Under this scenario Armenia is anticipated to gradually reorient its trade towards Westem customers. As the economic situation becomes more settled, foreign investments will resume, and a large proportion of idle production capacity will be reactivated. The economic situation should stabilize in about two years after lifting the blockade. In the last years of the decade real growth would reach about 5% per year. 6.3 Under the optimistic scenario, immediately after the blockade is lifted trade and the payments system would stabilize, and the local currency slide halted. This would lead to a rapid growth in production as existing capacity is brought back into use. Following the immediate impact of lifting the blockade, there would be some slowing down in growth while investment capital would continue to flow in. There would be substantial changes in the composition of output and some degree of macroeconomic stabilization should occur. Toward the end of the century growth is anticipated to be 7 % to 8 % per year, leading to a restoration of the 1989 output level by the year 2000. 6.4 Under either scenario, importation of fuel, chemicals, and fertilizers are to be unrestricted, which implies that the project implementation can restore the production capacity of the pre-project level in irrigated areas, and can yield additional benefits from increased demand due to growth in income. 42 Chapter 6 Production and Pricing 6.5 Without project. Rehabilitation of the conveyance systems and the tubewells would most affect the low-lying areas, where rainfall is inadequate for crop production. The assumption was that without the project the system would not completely fail, but only that water losses would gradually increase. As less water reaches the fields, yields would diminish, followed by changes in the cropping patterns. For economic analysis it was assumed that water supply will decrease by about 5 % per annum and reach about 20% of the pre-project supply in the seventeenth year if no rehabilitation measures are taken. 6.6 Farmers' first response to a growing water shortage would be to under-irrigate. First the cereals and forage would get less water, followed by orchards and, finally, potatoes and vegetables. Wheat crops, now irrigated three or four times, would receive two and eventually only one irrigation. This would reduce yields to about 2.5 t/ha with two irrigations, and 1.5 t/ha with one irrigation. Lucerne could no longer be grown: farmers would revert to a single cut of cereal hay, irrigated once, yielding about 2.0 t/ha. 6.7 In the storage dam rehabilitation component, the assumption has been that without rehabilitation the dams would cease to function. Apart from the physical and environmental damage, their command areas would be left without water, or at best with much reduced supplies from run-of-the-river flows. These limited quantities would only be used for the home plots. Since most of the command areas are at medium and high elevations, crops grown would be rainfed cereals for grain and fodder. The cereals grown for grain would yield about 1.5 t/ha, and fodder yields would be about 2.0 t/ha. 6.8 With Project. The repair of the dams and conveyance structures would ensure that agriculture production will not fall. Present yields, now affected by a shortage of water, would increase somewhat, and farmers would be more willing to invest in purchased inputs and land cultivation. This would eventually raise average yields to levels now achieved by the more successful farmers. It is unlikely, however, that the irrigated areas would expand significantly. Water distribution arrangements between new land owners, resulting from the land reform, are not going to be completely resolved during project implementation, though the project would contribute to its improvement. 6.9 Increased agricultural production would be associated with increased demand for food due to expected increase of income and reopening of the trade routes, mainly to Russia and other FSU republics. In recent years trade was severely restricted due the blockade on Armenia. Before the imposition of the blockade, Armenia exported significant quantities of canned fruits and vegetables. However, the blockade caused the agroindustry subsector to be almost completely paralyzed. Lifting of the blockade on Armenia would cause gradual restoration of production of processed fruits and vegetables for export and also import of needed inputs. The increased production resulting from the project is, therefore, not likely to be difficult to be disposed either domestically or through exports. 6.10 Prices. Prices of agriculture products and food in Armenia are liberalized, with the exception of bread. Prices of wheat paid to farmers are lower than the world market price; but despite a price of only 70 to 80% of world prices, wheat is still one of the most profitable crops. However, with normalizing trade after lifting of the blockade, wheat production is likely to fall because fruits and vegetables which were unable to be exported due the restricted trade will stop overhanging the market and would become more profitable to produce. Producer prices that were used to estimate the "with" and Project Benefits, Risks, and Environmental Impacts 43 "withoutw project scenarios were on the conservative side; they were either those paid by Government or the free market prices, where Government prices were not established or not available. All prices of inputs, which have to be imported, are based on, or close to, world market prices. Fertilizer was costed at US $120 per ton, with an average nutrient rate of 30 %; pesticide prices were estimated at US $10 per kg or liter; one hour of tractor work at about US $8.30; and a combine hour at US $10.80. Cost of water was calculated on the basis of US $0.015/kwh, and a consumption of 0.5 kwh/m3 of 100 m lift. 6.11 The returns to forage (Lucerne and Esparcet), of about US $19 per ha in the lowlands and US $4 in the midlands, are calculated up to the point of hay production. Translated into animal production, one ha of forage produces, in the lowlands, yields about 195 kg of dressed weight of beef (at US $0.83 per kg-a return of US $162.5 per ha), or about 3,210 liter of milk (at US $0.165 per I-a return of US $535 per ha). In the midlands 1 ha of forage generates about 2,570 liter of milk (US $429 per ha), or 156 kg of beef (US $130/ha). 6.12 Transport cost estimates are based on ARMPLODORODIE' charges which are: US $1.25 for a tractor or trailer up to 5 km distance, and US $2.5 for the same up to 10 km. Diesel operated truck (Kamaz 8, 10, 12 t) transport is charged at 16 to 21 cents per km . B. ECONOMIC EVALUATION Benefits and Justification 6.13 As indicated above, economic benefits from the project realized by the country and beneficiary farmers would be: (a) avoiding a decrease in production and thus a decrease in farmers' incomes resulting from deterioration of the irrigation infrastructure system; (b) improvement in yields and changes in the cropping pattern that result in optimizing return; (c) reducing the foreign exchange expenditures on imported food as necessitated by decreased production if the project is not implemented; (d) increased employment on construction during project implementation; (e) improvement in the water management and distribution system which would contribute to an increase in production; and, (f) energy savings through more gravity irrigation and less energy dependent pumping resources. The main indirect project benefits would include an increase in employment opportunities for auxiliary The state enterprise in charge of input distribution. 44 Chapter 6 services, such as development of cement lining of steel pipe, and increase in production of concrete pipes (instead of steel pipes). 6.14 From a national point of view, the project would support the rural poor, who comprise a significant portion of the country's population.2 It would contribute to the stabilization of their income by guaranteeing that the water resource infrastructure is maintained and rehabilitated. 6.15 A separate financial analysis is not warranted since as mentioned previously (para. 6.10), prices of agriculture products and food are liberalized in Armenia. By and large there is no difference between economic and financial costs. The price of grains paid to farmers, however, is lower than world market prices (para. 6.10), which makes the net value of production lower by about 4.5 % than if farmers were paid the world market price. The impact of paying the financial price of grains on the economics of the project is treated in the sensitivity analysis (para. 6.17). The cost of pumping water is subsidized. However, about 82% of the project area is irrigated by gravity. Since the cost of water in areas irrigated by power generated sources constitutes about 22.6 % of the operating cost, the impact of water generated by electricity on the total project operating cost is about 4%, which is relatively insignificant (Annex 8).3 Economic Rate of Return 6.16 The economic rate of return for the project is estimated at 53% (Annex 1, Table 14). The economic rate of return calculations are based on the following assumptions: (a) agricultural production based on the development of the irrigated area in four years and a production period of 20 years; (b) without the project, agricultural production in the project area would decline by about 5 % per year up to year 17 and then would remain at 20% of the pre-project level; (c) increases in agricultural production would begin in project year 4.4 In that year about 60% of the fall in the production is restored due to rehabilitation of the irrigation infrastructure under the project. From the fifth year it is assumed that agriculture production would reach the pre-project level; (d) production costs were priced at local October 1993 constant market prices (Annex 8, Table A.3); 2 It is estimated that at least 30% of the farmers do not receive sufficient water, due to failing and mismanaged irrigation infrastructure. As a result the income of these farmers is adversely affected. 3 According to Annex 8, Tables A.8 and A.9 operating costs per hectare in lowlands are Rubles 4,583,980; and operating costs per hectare in the midlands are Rubles 4,432,390. Given that there are 134,600 ha in the lowland and 30,100 ha in the mid lands, total operating costs in million of Rubles are: (134,600 x 4583.98/1000) + (30,100 x 4432.3911000) = 750,418.65. The share of the operating cost of water in the midland is 22.6%, hence: .226 x (30,100 x 4432.39/1000) / 750,418.65 = 0.04 It is likely that the impact can materialize sooner than the fourth year. However, it was preferred to use a conservative assumption. Project Benefits, Risks, and Envronmental Impacts 45 (e) economic prices for wheat were based on Bank projections, but adjusted to the farm gate, prevailing farm gate prices were used for other products (nontradeable, Annex 8, Table A.3); (f) with the project, production would start in command areas of pressure pipeline and tubewell replacement in year three and in year four in areas which will benefit from conveyance system rehabilitation; (g) as a result of rehabilitation of the irrigation infrastructure and increased availability of water there would be a gradual improvement of yields and changes in the cropping pattern. In the Low Lands areas such changes would continue until the twelfth year, and in the Mid Lands areas until the tenth year (Annex 8); (h) depreciation of project elements were based on the following assumptions: for pump sets and mechanical equipment eight years, wells 15 years, and canals and pipelines 25 years. Since some budget allocation has been appropriated for O&M for the existing infrastructure, only 2 % of the investment cost was considered as incremental O&M costs and included in the calculation of the rate of return analysis; and (i) all project works, equipment, technical services, and physical contingencies were included in investment costs. Sensitivity Analysis 6.17 The results of a sensitivity analysis to test the effects of cost overruns and delays or shortfalls in benefits on the rate of return are presented in Annex 1, Table 14 and summarized in Table 6.1. As can be seen, substantial impact on reduction in the rates of return are attributed to delays in Table 6.1: Summary of Sensitivity Analysis Cases CASE RATE OF RETURN 1. Benefit down by 20% 47% 2. Benefit down by 20% and cost up by 20% 43% 3. Benefit down by 50% and cost up by 20% 33% 4. Improved water efficiency from 35 to 50% 61% 5. Paying farrners less than the world price for cereals 52% (current practice, a proxy for FRR) 6. Delay project implementation by one year 48% 7. Delay project implementation by two years 41% 8. Delay project implementation by three years 35% implementation. The reason for such a significant decrease in the rate of return is twofold. First, the opportunity cost of delay equals the net value of production that is lost in the year(s) that the project 46 Chapter 6 originally yielded benefits'; second, the infrastructure is progressively deteriorating and it is assumed that investment requirements rise by about 10% for every year of delay in the rehabilitation works. C. RISKS 6.18 The principal project risk is political. If there is a resumption of hostilities between Armenia and any of its neighbors, a reimposition of a blockade would impact the project adversely because of expected difficulties to import fuel, spare parts, construction machinery, steel pipes and reinforced steel, without which large diameter pipes cannot be laid and precast concrete sections cannot be manufactured. In addition, resources needed for operation and maintenance of the irrigation infrastructure would be drained and the physical structures would be put in jeopardy. 6.19 Some of the benefits associated with the project relate to implementation of reforms leading to a market economy. Such benefits are the imposition and collection of water charges that would recover the full cost of energy. It is also critical for the project that water subsidies would be gradually reduced and that beneficiaries will eventually assume full responsibility for operation and maintenance. The risk is that if the Government will not be strong enough to resist pressure to resume past policies of water subsidies and lax collection of water charges, the irrigation infrastructure in the country would again deteriorate. To safeguard against such risk, any additional assistance by the Bank in the agriculture sector, as well as in other sectors, should consider Government's progress in reducing subsidies for water in agriculture as planned under this project. 6.20 Based on existing modes the quality of construction will not meet internationally accepted standards and the project lifetime would be less than estimated. This has been the case with most of the existing irrigation infrastructure. A properly staffed and trained project implementation unit would mitigate this risk. 6.21 Power is at present generated mainly from hydroelectric sources and is completely subsidized for irrigation purposes. The risk is that utilization of energy for irrigation is associated with deterioration of the environment. Presently most of the generated energy comes from water originated from Lake Sevan. Over-pumping of water from the lake have caused the water level to fall which resulted in adverse impact on the micro climate environment around the lake. Imposition of water charges that cover the full cost of operations and maintenance and energy costs is imperative to mitigate this risk. 6.22 Armenia is in a seismically active zone. Conservative designs for the rehabilitation of dams were adopted to mitigate this risk. For example: without debay project benefits start when there is avoidance of a decline in the net value of production at the completion of the investment works, say, in year 4. If the project is delayed by I year, a decrease in net value of production in year 4 is not avoided. Project Benefits, Risks, and Environmental Impacts 47 D. ENVIRONMENTAL IMPACT 6.23 The project has been placed in category "B" in accordance with Operational Directives. 6.24 The proposed rehabilitation works on the conveyance structures, the tubewells in the Ararat Plain and on storage darns, would have positive environmental consequences. They would reduce waterlogging and erosion near the conveyance structures and protect reclaimed areas in the Ararat Plain, and would eliminate the threat to life and property downstream of the dams. To sustain these improvements in the long term requires adequate maintenance of the rehabilitated structures and careful monitoring of the environmental effects. Within the first six month of the project effectiveness the M&M&ES will define environmental indicators to determine the cost of neglect in infrastructure maintenance. 6.25 Leaking canals and hydraulic structures, if not repaired, would cause environmental damage in the immediate neighborhood of the leaks. Bursting pumping stations and/or their pertinent pressure pipes can destroy infrastructure in the vicinity of the pipeline, and can cause serious soil erosion. 6.26 A delay in the rehabilitation of tubewells in the Ararat Plain will cause an adverse impact on the environment as well. High groundwater levels have been controlled by pumped drainage in the low lying areas of the plain. When drainage wells cease to pump, groundwater will gradually rise and destroy land reclaimed over the last decades. 6.27 The most serious threat to the environment, which the project would protect against, however, is posed by storage dam classified as high risk. According to data collected by the DWSI, a breach in any one of the high risk dams will pose a serious threat to life and property along the probable flood path. 6.28 The approximate number of people living in villages, in the approximate area of the probable flood path of the four storage dams slated for rehabilitation under the project are: Aparan 163,000 Karnout 4,000 Mantash 9,000 Sarnakhipur 8,000 These people are living at significant risk though there are no quantitative estimates as to the likelihood of floods or the loss of life, but such numbers could be astounding. Project would reduce such risk to a reasonable level. 6.29 The DWSI has prepared estimates of material damage which will be caused by dam failures in downstream areas of Armenia. The damage estimates in dollar terms (based on 1991 Ruble) range from about US $3 million for the Aparan Dam to less than US $100,000 for the Karnout Dam. 6.30 Another serious impact of a possible breaching of the Mantash Dam would be the loss of drinking water for a population of about 25,000. The dams also control flooding in the downstream areas. 48 Chapter 6 6.31 The investment program under the proposed project would affect rivers that are international waterways in accordance with OD 7.5, para. 2(a)(i) and (ii), i.e., rivers and tributaries that ultimately flow to and/or are shared with other riparian countries. However, the project is exempt from notification requirements, pursuant to OD 7.5, para. 8, because it finances strictly rehabilitation works. The nature of the planned investments-replacing corrosive pipes, repairing lined canals, replacement of tubewells and repairing leaking dams-should not have negative impacts on either the quantity or the quality of present and future flows. More specifically: (a) all investments under the proposed project satisfy the criteria which require: first, that they will have no adverse effect on the quantity of water flows to any other riparian countries, since they will involve no increase in water extraction. In fact there might even be a slight decrease in the amount of water being extracted due to improved water management and distribution. Second, water quality will not be adversely affected because the replacement of tubewell pumps under the project, may assist in reducing the water table and averting water salinity, which otherwise finds its way to international waterways; (b) for any study to be undertaken in regard to future investments under a separate project that may involve international waterways, the terms of reference for such studies will include examnination of potential riparian issues, in accordance with OD 7.5, para. 8 (b). 6.32 Finally, a review of known international agreements or arrangements that exist between Armenia and other riparians on the sharing of international waters that might be affected by this project has shown that none of these agreements would require notification for the activities contemplated by this project. VII. AGREEMENTS REACHED IN NEGOTIATIONS 7.1 During negotiations the following agreements were reached: (a) collection of water charges to cover operation and maintenance costs will increase according to the schedule proposed in para. 4.17; (b) procurement procedures will be applied in accordance with the Bank and IDA guidelines and in accordance with conditions stipulated in paras. 4.27 to 4.36. (c) disbursement procedures will follow the arrangements described in paras. 4.38 to 4.41; (d) a special account will be established and operated as described in para. 4.40; (e) agreement will be reached prior to every fiscal year, but not later than October 31 of each year, on an O&M Government budget and the extent of IDA disbursements for incremental O&M as described in para. 4.41; (f) the Government will establish a PIU operating along the program described in paras. 5.1-5.10; (g) a monitoring and evaluation unit will be established by December 31, 1995 that will operate along the outlines described in paras. 5.21-5.25; (h) accounts and audits of the project will be carried out as outlined in para. 5.26 and audited project accounts for the project be submitted to IDA for review within four month of the end of each fiscal year; and (i) a mid-term review of the project will be carried out by April 30, 1997 by a joint IDA and MOA review team. The review will be timed toward the end of the second year of the project implementation, as mentioned in para. 5.28; 7.2 A condition for effectiveness of the proposed Credit will be the establishment of a PIU with an adequate number of suitably qualified staff as mentioned in para. 5.11. 7.3 Subject to the above assurances and conditions, the project will be suitable for an IDA credit of US $43.0 million made to the Government of the Republic of Armenia, at the IDA standard terms, including 35 years' maturity and 10 years' grace period for repayments. ANNEX 1: STATISTICAL ANNEX LIST OF TABLES Table 1. Conveyance Systems Table 2. Rehabilitation of Pumping Schemes Table 3. Tubewell Rehabilitation Table 4. Rehabilitation of Storage Dam Schemes Table 5. Water Management Pilots and Field Works Table 6. Contribution to Operation and Maintenance Table 7. Technical Assistance Table 8. Project Implementation Unit Table 9. Project Cost Summary Table 10. Project Components by Year-Investment/Recurrent Costs Table 11. Expenditure Accounts by Years-Base Costs Table 12. Expenditure Accounts by Components-Base Costs Table 13. Expenditure Accounts Breakdown Table 14. Cost/Benefit Analysis - eA IRRITION EIU,UTfATION PRJC r TA 1, Cogmac Sdhs USs ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~e. Paurneteis [in %I * ~~~~~~Phy. Quwntls Uni Base Cost Cond. For. Gross Uni loss lose tso1 11op Total coe 19tr 11s98s 199o 113 Tolal Rate Etch. Tax RPae L knvhuawnd Costs A. Coneance Sdcms la 1. ShIak IV-LC KM 0.9 1.8 2.1 1.2 6.0 6.3 5.7 11.3 13.2 7.6 3705 20.0 70,0 0.0 IV-CC KM 0.1 0.3 03 0.2 0.9 21.5 2.9 5.8 6.e 39 194 20.0 700 0.0 IV-AO KM 0.0 0.1 0.1 P.0 0.2 9.07 0.3 0.6 0.7 0.4 20 20.0 *- 70.0 0.0 Subteol Mia Cana 6.9 17.7 20.7 11.6 59.1 b. Secondary Cana V-LC KM 0.9 1.8 2.1 1.2 5.9 5.24 4.6 9.3 10.8 6.2 309 20.0 70 0 0.0 VI-C KM 0. 1.6 1e 1.0 5.2 2.64 2.2 4.4 5.2 30 14.6 200 700 0.o VI-CC Cl 2.6 5.3 6.2 3.5 17.6 7.23 19.1 36.2 445 254 127.2 20.0 70.0 0.0 Subtoala seesda" CMan 25.9 51.9 80.5 34.6 1729 c. TwdbyCank KM 25.1 50.1 56.5 43.4 167.0 2.3 57.6 115.2 134.4 76.6 364.1 200 700 0.0 g. ofabRplc .1Prsure PII. v-.s.p tr KM 0.1 0.1 0.1 0.1 0.4 107.6 6.5 12.9 15.1 8.6 430 20.0 70.0 0.0 VW-SP-Pp" KM 1.? 3.3 3.9 2.2 11.0 21 34.7 69.3 80.9 46.2 231.0 200 70.0 00 VNACPPip 9 5.P 30.9 36.1 2PA 103.1 6. 102.1 204.1 2362 1361 660.5 20.0 700 0.0 Subtotal Reabfh*Mlace of Pesuwe Pipe 143.2 2066. 334.1 190.9 054.5 SU lli93 2! 412 5497 114 70 1 2.Tdl a. MUS Cana *-LC MA 4.2 6.4 9.8 P 26.0 9.6 41.2 62.3 96.0 649 274.4 20.0 70.0 0.0 b. Secondawy Cana VU KM 3.3 0.5 7.0 A.4 21.8 5.24 17.1 34.3 40.0 22.8 114.2 200 700 00 Vt-LC KM 6.3 126 14.7 p.4 42.0 2.84 17.9 36.6 41.7 23.9 119.3 20.0 700 0.0 V-CC KM 3.6 7.3 6.5 4.9 24.3 11.51 42.0 3.9 97.9 55.9 279.7 20L0 700 0.0 VI-cC KM 10.5 20.9 24.4 13.9 66.7 7.23 75.0 151.2 175.4 100. 5039 20.0 70.0 0.0 SuMtotal SecOndary Canad 152.6 30.1 356.0 203.4 1.017.1 cY aTeay CalS KIU 36.7 7313 65.5 4JO 244.4 2.3 84.3 168.6 195.7 112.4 562.1 20.0 70.0 0.0 d. Rstsabfitsplac Praeas PIpe VI-SP PIp KM 1.7 3.4 4.0 2.3 11.3 21 35.6 71.2 63.1 47.5 237.3 20.0 70.0 . 0.0 a~Ii ma 0L2 fU 12 f 2.uKotalhTg M L L 01 a. Momn Candl IV-LC kln 0.4 0.6 1.0 0.0 2.8 6.3 2.0 5.3 6.2 3.5 17.6 20.0 70.0 00 I-A() km 0.C 0.0 0.0 ° 9p 0.1 6.22 0.1 0.2 0.2 0.1 06 20.0 70.0 0.0 Subloafl Main Cana 2.7 5.5 6.4 3.7 16.3 b. T Canl bn 14.0 27.9 32.6 0.0 93.0 24 33.5 67.0 76.1 44.6 223.2 20.0 70.0 0.0 C. Rehamleplace Pros... PIp V.SP P kmw 0.0 1.7 1.9 1.1 5.5 107.6 66.6 177.5 207.1 118.4 591.6 200 700 00 VN-SP Pw ,km 0.6 1.6 1.8 1.0 5.2 21 16.4 32.6 38.2 21.6 109.2 200 70L0 0.0 A VWACPPip kin 7.4 14.7 17.2 jp 49.0 6.699 49.2 96.5 114.9 65.7 3283 20.0 70.0 0.0 Subtoa Reabfupc 154.4 306.6 360.2 205.9 1.029.3 MAU MU AHi UL 10 z 2- Parmelers on Insl Pity. Ouuleles UnN Base Cost Cont. For. Gross UnIt le5 14 6.. 1997 1993 TOMal Cost 131s 191 Illy 9911 Told- Rate Each. Tax Rage 4. Aunf-Sharnlam : a Main Caal I-LC AKl 1.9 36 4.4 Z5 12.6 11.9 22.5 450 52.5 300 149.9 20.0 70.0 0o0 N-LC KM 1.0 2.1 2.4 1.4 6.9 9.5 9.8 19.7 22.9 13.1 65.8 200 700 00 _ I-AG KM 0.1 0.2 0.2 0.1 0.5 6.22 0.5 0.9 1.1 06 3.1 20.0 70.0 0.0 h. Sulaat Main Cal 32.8 65.6 76.5 43.7 218.6 b. Sconday ConIa I-LC KM1 3.5 7.0 8.2 4.7 23.3 9.79 34.2 68.4 79.8 45.6 228.1 200 700 0.0 II-LC KMl 1.1 2.1 2.5 1.4 7.0 9.79 10.3 20.6 24.0 13.7 68.5 20.0 70.0 00 V-LC KM 1.7 3.5 40 2.3 11.5 5.24 9.0 1801 . 21.1 12.1 60.3 200 700 0.0 VI-CC KM 0.6 1.7 1.9 1.1 5.5 7.2 59 11.9 13 9 7.9 39.6 20.0 700 0.0 Sulotat Seonday C1a 59.5 118.9 136.8 79.3 396.5 C.TutbCans KMA 51.5 102.9 120.1 068 343.0 2.3 118.3 236.7 276.1 157.8 768.9 20.0 70.0 0.0 d. Rd RaMepaa Pmewe Pipe U-SP PI K.A 0.4 0.8 0.9 0.5 2.5 165.3 62.0 124.0 144.0 82.7 413.3 200 70.0 00 VN-SPPip KM 10.5 21.1 24.6 14.0 70.2 21.6 227.4 454.9 530.7 303.3 1,516.3 20.0 70.0 0.0 UIACP Plp KM 24.6 49.1 57.3 32.8 163.8 6.6 162.2 324.3 378.4 216.2 1,081.1 20.0 70.0 0.0 S* doW Rsbal_uRplc Presar PI 451.6 903.2 1,063.7 602.1 3,010.7 Subtotal Anarz i HU22 13244 41545- 1 2 11 6. Low taidan a. Mai Canw Ut-LC KM 0.3 0.6 0.7 0.4 2.0 9.6 2.9 5.9 6.9 3.9 19.6 200 70.0 0.0 V-cc KM 1.5 3.0 3.5 2.0 10.0 21.5 32.3 64.S 75.3 430 215.0 20.0 70.0 0.0 subIoI main Cana 35.2 70.4 82.1 46.9 234.6 b. Secondwy Canl U-CC KlU 2.5 5.0 5.9 3.4 16.8 24.08 60.7 121.4 141.6 80.9 404.5 20.0 700 o0 v-cc KM 11.0 22.1 2S.8 14.7 73.6 11.51 127.1 254.1 296.5 169.4 847.1 20.0 700 0.0 Vt-cc KM 8.1 16.2 16.9 10.8 54.0 7.23 58.6 117.1 1366 78.1 390.4 200 70.0 0.0 SuboMal Secondawy Canad 246.3 492.6 574.7 326.4 1,642.1 c. Ted"r Cnls KMA 6.9 13.6 16.1 9.2 46.0 2.3 15.9 31.7 37.0 21.2 105.8 20.0 70.0 0.0 d. Rddllec riem Pip SSPPk" IAKM 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 00. 200 0.0 0.0 1. Octndoerla IL MaIn Canal intasCuat KM 0.6 1.2 1.4 0.8 4.0 65 39.0 78.0 91.0 52.0 260.0 20.0 70.0 0. N1-LC KM 2.3 4.7 5.5 31 15.6 9.8 22.9 45.9 535 30.6 152.9 20.0 700 0.0 n-cc KM 3.6 7.2 6.4 4.8 24.0 24.1 06.8 173.5 202.4 115.7 576.4 20.0 70.0 0.0 SuMel Mai CnSal 146.7 297.4 346.9 19.3 991.3 bh SwAndsy Canl v-cc KM 3.3 6.6 7.7 4.4 22.0 11.51 38.0 76.0 88.6 506. 253.2 20.0 70.0 0.0 vI-cc K1 6.6 17.1 20.0 11.4 57.0 7.23 61. 123.6 144.2 824 412.1 20.0 70.0 0.0 Suod SseandwayCanal 99.8 199.6 232.0 133.1 665.3 c. Taun Cad K 32.4 64.8 75.6 432 2160 2.3 74.5 149.0 1739 99.4 49.8 20.0 70.0 0.0 4L Fdu6"ph FrNm POP$" vv-sp P" *A 0. 0.0 0.0 00 0.0 0.0 0.0 0.0 0.0 0.0 20.0 0.0 0.0 ..z ||bll Od_|h_ = 0 § l o 4s7 2!1 il4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ f iS 52 t~~u P nwr ders p s QsOtMdNks tinE Bass Cod Cond. For. Glass Uln 11 136.. 137 131M Tdir Cod 1U15 1N0 1117 1191 Total Rate Each. Tan Rate 7. Aitasba a. Main Cand *-LC KM4 0.5 1.0 .1 0.6 3.2 9.8 4.7 9.4 11.o 6.3 31.4 200 700 00 *-CC KM 2.1 4.2 4.9 2.8 14.1 24.1 51.0 101.9 11.9 68.0 339L8 20.0 700 0.0 IV-cc "A 0.2 0.3 0.4 0.2 1.0 21.5 3.2 6.5 75 4.3 21.5 20.0 70 0 0.0 v-cc KM 0.2 0.5 0.5 0.3 1.5 I.S 2.6 5.2 6.0 3.5 17.3 20.0 700 0.0 IV-AO KM 00 0.0 0o 0 0.0 0.1 9.87 0.1 0.3 03 02 1.0 20.0 70.0 0.0 Subtdtal Us Canul 61.6 123.3 143.8 82.2 4109 b. Socndwy Canl n-LC Ko o0 1.2 1.4 0.8 4.0 9.79 5.9 II.? . 13.7 7.8 392 200 700 0O IV-LC KM 08. I.5 1.8 1.0 5.0 6.25 4.7 9.4 10.9 6.3 31.3 200 700 0.0 V-LC KM 0.5 09 .1 p.6 3.1 5.24 2.4 4.9 5.7 3.2 16.2 20.0 700 00 VI-LC KM 3.1 6.2 7.3 4.2 20.8 2.64 8.9 17.7 20.1 11.8 591 20.0 700 0.0 V-CC KMA 1.2 2.4 2.8 .6 8.1 7.23 8.8 178 20.5 11.7 586 20.0 70.0 0.0 Subtotal Secidary Cana 30.6 61.3 71.5 409 204.3 c. Tediary CanI KM 39.6 79.7 93.0 51.1 265.6 2.3 91.6 183.3 213.8 122.2 6109 20.0 70.0 0.0 dL RehbabReplac Pressure PIpe V.SPP1p KM 08. 1.5 1.8 1.0 5.0 107.6 80.7 161.4 1883 1076 53S0 20 0 70.0 0.0 VN-SPPe KwM 1.4 2.7 3.2 1.8 9.0 21.6 29.2 58.3 68.0 38.9 194.4 20.0 700 00 VIIACPIpe KM 10.7 21.3 24.9 14.2 71.0 6.8 70.3 140.0 164.0 93.7 d686 20.0 70.0 00 Sulal RealiNtbeplace Prearme Pip 160.2 360.3 420.4 240.2 1201.0 a. Main Can v-cc KM 1.2 2.4 2. 1.6 8.0 11.5 13.8 27.6 32.2 18.4 92.0 200 70-0 00 b. Seonda"y Can VI-Cc KM 3.6 7.5 8.8 5.0 25.0 7.23 27.1 54.2 63.3 36.2 1808 20.0 70.0 0.0 c.Teuluy Canb KM 5.4 10.8 12.6 7.2 35.0 23 12.4 24.8 29.0 16. 82.6 20.0 700 0.0 dL RebaldReaci Preseve Pipe b-SP KM 1.1 2.2 2.5 1.4 7.2 165.3 178.5 357.0 416.6 238.0 1,190.2 20.0 700 00 v-sPPFip KM 0.3 06 0.7 D4 2.0 107.6 32.3 64. 75.3 43.0 215.2 20.0 70.0 0o Vb SP Pie KM 0.9 1.9 2.2 1.3 6.3 21 19.8 39.7 46.3 26.5 132.3 20.0 70.0 0.0 VACP P"e KMA 3.9 7.6 9.1 5.2 26.0 o.e99 26.1 52.3 61. 34.8 174.2 20.0 700 0.0 Subtotal Rahdalle Presure p 256.0 513.6 599.1 342.4 1,711.8 *. On -lr h kdv s. onbwo kWadnedwe ha 17.3 34 5 40.3 23.0 115.0 2.4 41.4 82.8 96.6 55.2 276. 20.0 70.0 0.0 Eisie ha 8.3 16.5 19.3 11.0 65.0 4.04 33.3 606.7 77. 44.4 222.2 20.0 70.0 0.0 Subtotl 04tum baslrduife 74.7 149.5 174.4 99.6 498.2 SlI>z^llinCI~~~~~~ 3 zz8 m@9 &9a0 S11 mi 2IlA AUKA 2 1 I[KIAZ1 is Al codae humf coed * b I ARM WA IRRIGATION REHABLITATION PROJECT Table 2: RehabilUtllon of Punmina Schers (US$ otoO Pily. Quent ies Unit Base Cost Cont. For. Gioss UnIt 11 1336 l 133 7 1333 Tolat Cost 1996 136 1i397 1393 Total Rale Escim. Tax Rate 1. nvestmenl Costs A. Steel Piessue Pipes Veotan m 906.75 503.75 503.75 100.75 2,015 0.063 57.1 31.7 31.7 6.3 1269 200 900 00 Azlzbekov m 1.260 700 700 140 2.800 0.0560 706 39.2 39.2 768 156. 200 00 0 a 0 Mkchian-SdemlI m 6,100 4,500 4,500 900 18.000 0.285 2,306.5 1,282.5 1,282.5 2565 5,1300 200 S00 00 iacNan-Sch uinell m 789.3 438.5 436.5 87.7 1.754 0.278 219.4 121.9 121.9 24.4 487.6 200 900 00 Aatashal-Schenel im 5,580 3,100 3,100 .620 12,400 0.188 1,049.0 582.0 582.8 116.6 2.331.2 20.0 900 00 An"-Sc_m1 N m 1,530 650 650 t7t 3.400 0.186 267.6 ¶59.8 15986 32.0 639.2 20.0 90.0 0.0 B.Mbtldl Presumepgpo 1 3,992.3 2,217.9 2,217.9 443.6 6.671.8 1. P _mt LUnKs Vo,ad n no 1.35 0.75 0.75 0.15 3 20 27.0 15.0 15.0 30 60.0 20.0 1000 00 M,chm . Schde I no 4.05 2.25 2.25 0.45 9 25 101.3 56.3 56.3 11.3 m2o 200 1000 00 MUdtan-Schenafl no 2.7 1.5 1.5 0.3 6 25 67.5 37.5 37.S 7.5 150.0 200 1000 00 Aml.-.SdwnoI no 1.J I 1 0.2 4 25 45.0 25.0 25.0 5.0 100.0 20.0 1000 00 Ashet.SchulteI no 1.35 0.75 0.75 0.15 3 18 24.3 13.5 13.5 2.7 54.0 20.0 1000 00 tb.m. Putnpg UnIts 265.1 147.3 147.3 29.5 589.0 TOTAL 4,217.3 2,361.2 2,361.2 473.6 93468. _ z ARMENLA NIR AIOIIN REHA- LITATION PROJCT TAbb 3. TubA RehabI l Phy. Quannites tUn Base Cost Cont. For. Gioss UnN 1991 1399 1991 1393 Total Cost 1933 1996 133r 133 Tdal Rate Each. Tax Rat L nvlmes l Costs A. Tubeall RebabUUallon NowBaishes unI 25 50 50 25 150 20 500.0 1,0Doo 1,00o 5000 3.0000 ISO 000 00 Rd.hlled oehakn unl 50 100 100 50 300 5 250.0 S000 5000 2500 1500.0 150 900 00 New Pumpsels ,uI 50 75 75 50 250 4 2000 300.0 3000 200.0 1.000 0 ISO 900 0 0 Sparnpts larRusslnnPs4selaS uni 60 140 140 60 4C0 1 60o 140.0 1400 600 4000 IS.0 D00 00 RehIbUu8on ofRus n PsumnPss unwl 60 140 140 60 400 1 600 140.0 1400 600 4000 150 D00 00 tbnIaanofPumpeds uil 125 200 200 125 650 1 125.0 200.0 200.0 125.0 650.0 150 900 00 z z mW iflU LiEU LULl luLl LU A_ ARMEN IRRIOATION REHABILIATION PROJECT TaMe 4: RhabIllaon of Slorme Dwn Schames -Parunetefs fin %Al Pliy. Quantnies Unitl Base Cost Cont. For. Gross UnU I96 1194 1937 1991 Total Cost 1335 1331 1131 1591 Total Rale Esch. Tax Rat L Inveslnma Costs A. RepakiRshab ol Storape Scheme 1. Apwm Dum a. balgaton FacUkbs Sa"Owe no 0.5 0.5 0.5 05 2.0 115 57.5 57.5 57.5 57.5 2300 200 100.0 00 A4uslmelisoates no 0.5 0.5 0.5 0.5 2.0 10 5.0 50 5.0 5.0 200 200 0 0 o0 Cen cdsan"- hAemdiaid pipe no 0.3 0.3 0.3 0.3 1.0 10 2.5 25 25 25 IO0 20.0 0 0o0 CoeoelcMukA u 4-ameb hg cum 437.5 437.5 437.5 437.5 1.750.0 0.017 7.2 7.2 7.2 7.2 28.9 200 0.0 00 Cencxde cmndu-rb ikcamentsledl Ion 62.5 62.5 62.5 62.5 250.0 0.163 10.2 10.2 102 10.2 406 20.0 1000 00 ILabor Wm 75.0 75.0 75.0 75.0 300.0 0.01 0.6 0.8 0.8 0 8 3 0 200 0 0 00 Tianrsi tm 875.0 675.0 675.0 875.0 3,500.0 0.0 0 0 O0 0.0 0.2 20.0 75.0 00 Subtotal tIdgn Fallbs 63.2 63.2 63.2 63 2 332.7 b. SerIce Spitway Concabt eum 400.0 400.0 400.0 400.0 1,600.0 0.017 66 6.6 6.6 66 264 200 00 00 Rhnmucmntstee Io 40.0 40.0 40.0 40.0 1600 0.163 6.5 6.5 6.S 6.5 26 0 200 100.0 0o Labr NW 5.0 5.0 5.0 5.0 20.0 0.01 0.1 0.1 0.1 0.1 02 200 0.0 00 Teanspea bnlkm 132W0.0 13,200.0 13,200.0 13,200.0 52,600.0 0.7 0.i 0.7 0.7 26 200 75.0 0o Suboala Servic SpOway 13.o 13.8 U38 13.8 55.2 a. Emergeny SpOiway Cancil cuam 2,062.5 2,062.5 2,062.5 2,062.5 6,250.0 0.017 34.0 34.0 340 340 136.1 200 00 00 Rdacanc nseded Ion 206.3 206.3 206.3 206.3 825.0 0.163 33.5 335 335 335 134.1 200 1000 00 FM mdi auam 2031.3 2,,331.3 2,031.3 2,031.3 6,125.0 0.3 03 0.3 0.3 1.2 200 0.0 00 Ptecabyer cum 112.5 112.5 112.5 112.5 450.0 0.017 1.9 t.9 1.9 1.9 74 200 0.0 00 Lao mu 62.5 62.5 62.5 62.5 250.0 0.01 0.6 06 0.6 0 8 2 5 20.0 0 0 0 0 Tanpoet nlkm 106,250.0 106,250.0 106,250.0 106,250.0 425,000.0 5.3 5.3 5.3 5.3 21.3 20.0 75.0 0.0 Sutdal Emgen Sply 75.6 75.6 75.6 75.6 302.6 d. bmulplgatns Pidheeslens I 1.3 1.3 1.3 1.3 5.0 0.0 0.0 0.0 Scab modstirI b 1.3 1.3 1.3 1.3 5.0 0 0 0.0 0.0 Bor_wis ro 3.0 3.0 3.0 3.0 12.0 0.3 0.9 0.9 09 0.9 3.6 0.0. 'o.o 0.0 L,tab W s" ,yths no 3.0 3.0 3.0 3.0 12.0 0.05 0.2 0.2 0.2 0.2 0.6 0.0 0.0 0.0 Sublold Ihvd"ln 3.6 3.o 3.6 3.6 14.2 L. MOnNtodng sunoap _muts no 4.0 4.0 4.0 4.0 16.0 0.9 3.6 3.6 3.6 36 14.4 0.0 0.0 00 Dawoggplcnmdte Po 0.3 0.3 0.3 Q.3 1.0 5 1.3 1.3 1.3 1.3 5.0 0.0 100.0 0.0 Sutol monulng 4.9 4.9 4.9 4.9 19.4 BuMfia Am Onfiu m mi ui1 z> *2 e Parameets oIn % Phi. ulanumlis UnIN lBas Cost Cod. For. Gross UnL 13312 1331 1331 j331 Total cost 15g3 1396 fogy 13oe Total Rafe Each. Tas Rat 2. Kmnoul Dun a. lnlgllo FacIfIlesC Va. v(Si400im Fl no 0.5 0.5 05 0.5 2.0 17.5 86 a.0 880 8.a 35.0 200 1000 0.0 Valn(SO mm) no 0.5 0.5 0.5 0.5 2.0 75. 308 3.8 38 3.8 150 200 1000 00 Lua" mw 10.0 too ' 10.0 10.0 40.0 0,01 0.1 0.C 0.1 0.1 04 200 0o0 00 Teanspeut ton4ran 1.0000 1.000 1,000o.0 ,000.0 4.000.0 0.1 0.1 0.1 01 02 200 660 00 Subtow ti,b'tau, Faalebs 12.7 12.7 12.7 12.7 S06 b. Eatunhnn_ . Dowasli g berm E eu ockl au m 300.0 300.0 300.0 300.0 1.200.0 * 0.0 0.0 0.0 0.0 0 2 200 0.0 o 0 Labo nw 2.5 2.5 2.5 2.5 10.0 0.01 0.0 0.0 0.0 0.0 0 1 200 00 00 Teawtl bnhmgih 5,500.0 55Q0.0 5,500. 5.500.0 225000.0 0.3 0.3 0.3 0.3 1.1 200 75.0 00 Subliot Ennbmk.dv . Downastream t 03 03 03 03 1.4 c. Embnannmf - Dam aest Cancrote aum 50.0 50.0 50.0 50.0 200.0 0.017 0.8 0.8 0.8 08 3.3 200 0 0 0 0 Labo 1m 1.3 1.3 1.3 1.3 50 0.01 0.0 0.0 00 0.0 0.1 200 100.0 00 TetWl nm&. 1.67.5 1617.5 1.687.5 1.687.5 6.75.0 0.1 0.1 0.1 01 0.3 20.0 750 00 Subtoa E*aa*un - Dun crest 09 09 09 0.9 3.1 d. Servce SpliaFy Concrete aum 50.0 50.0 50.0 50.0 200.0 0.017 0.8 0.6 0.8 0 a 3o 3 200 0.0 0.0 R_ocew_dtl lo 5.0 5.0 5.0 5.0 20.0 0.163 0.8 0.8 0 8 08. 3.3 20.0 1000 00 LabWr - 6.0 5.0 5.0 5.0 20.0 0.01 0.1 0.1 0.1 0.1 0.2 20.0 0.0 00 Tianpot Im 1687.5 1,687.5 1,687.5 1.6a7.5 6,750.0 0.1 0.1 0.1 0.1 0.3 20.0 750 00 Sudali svk SpImumy 1.8 1.8 1.8 0 .8 7.1 *. Emrgy 3P.llw0y Concfae cuaim 750.0 750.0 750.0 750.0 3,000.0 0.017 12.4 12.4 12.4 12.4 495 200 00 00 Renlfoceeddeel ton 75.0 75.0 75.0 75.0 300.0 0.163 12.2 12.2 12.2 12.2 480 20.0 1000 00 FMmradhW cam 312.5 312.5 312.5 312.5 1,250.0 00 00 00 00 02 200 00 00 Peol-tclw,ysr cam 27.5 27.5 27.5 27.5 1100 0.017 0.5 0 0.5 o.s 1.0 200 o0 0o0 LAbr am 25.0 25.0 25.0 25.0 100.0 0.01 0.3 0.3 0.3 0.3 10. 200 0o 0 00 TrFaned km*m 31,2S0.0 31,250.0 31,250.0 31,250.0 125,000.0 1.6 1.6 1.6 1.6 6.3 20.0 75.0 0.0 subta Emergey SplUwy 26.9 26.9 26.9 26.9 107.5 L InvesUgd fas P1,0l01 keehS _ I 1.3. 1.3 1.3 1.3 5.0 0.0 0.0 0.0 Sce mmdl 1his 1 3 1.3 1.3 1.3 5.0 00 00 00 Tne e 2.5 25 2.5 2.5 10.0 0.0 1000 00 Ewmen ' no 0.3 0.3 0.3 0.3 1.0 1 0.3 0.3 0.3 0.3 1.0 0.0 100. 0.0 b acdmn Ir no 0.3 0.3 0.3 0.3 1.0 I 0.3 0.3 0.3 0.3 1.0 0.0 100.0 0 0 hdlma no 5.3 5.3 5.3 5.3 21.0 0.3 1.6 1.6 1.6 1.6 6.3 00 0.0 0.0 tab _s uImpkI no 3.5 3.5 3.5 3.5 14.0 0.06 0.2 0.2 0.2 0.2 0.7 0.0 00 0.0 bSlloW hwsUg 7.3 7.3 7.3 7.3 29.0 g. uouhminl s a sImKktS C.O 5 6.0 6. 5. 5.0 20.0 0.9 4.5 4.5 4.5 4.5 10.0 0.0 0.0 0.0 Diahgpls3uWrU tao 0.3 0.3 0.3 0.3 1.0 5 1.3 1.3 1.3 1.3 5.0 0.0 100.0 0.0 |||bidS lo_ m 56.0 56. 5.6 5.0 23.0 ffi-~~~~~~~~~~ H HA MA HA inn lu tu tu tu nu~~~~~~~~~~~~~h. .3. Pmarneters (In %I PillS. q_eill. Unh Base Cod Corl. For. Gross URN 1335 11S 1137 1919 Total Cost 1911 1393 1397 1333 Toal Rate Each. Tax Rat v . hip Fae_ . Con" p am pip no 0.3 0.3 3 0.3 1.0 1.5 0.4 0.4 0.4 0.4 1.S 20.0 0.0 0.0 TM"" su_m Whiv 1s 2.5 2.5 2.5 2.5 100 200 0 0 0.0 *Imgduy m 5.0 5.0 5.0 5.0 20.0 0.175 0.9 0.9 0.9 0.9 35 20.0 0.0 00 ; NowP%m kn 9.0 9.0 9.0 9.0 36.0 0.25 2.3 2.3 2.3 23 90 20.0 100.0 00 Cedhills sq. 9303 93.8 93.3 93.6 375.0 0.03 2.3 2.8 2. 23 11.3 20.0 100.0 00 LAW NW 37.5 37.5 37.5 37.5 150.0 0.01 0.4 0.4 0.4 04 1.5 20.0 0.0 0.0 Trumet bheIu 750.0 750.0 750.0 7.0A 3.000.0 0.0 0.0 0 0 0.0 0.2 20.0 75.0 0.0 Bubo", FaCUss - Con1 9.2 9.2 9.2 9.2 36.9 L kIlpn FasMes .-Valnve Vd(S00m(m no 0.3 0.3 0.3 0.3 1.0 7.5 1.0 10 1.0 1.9 7.5 200 100.0 0.0 Vi.(I0mq , no 0.5 05 0.5 0.5 2.0 12.25 6.1 0.1 6.1 6.1 24.5 20.0 100.0 00 Ldzer. aN 7.5 75 7.5 7.5 30.0 0.01 0.1 0.1 0.1 0.1 0.3 20.0 0.0 0.0 Truieput ho.br 750.0 750.0 750.0 750.0 3,000.0 0.0 0.0 0.0 0 0 0.2 20.0 75.0 0 0 a*lW kIpln Faclikles .Vdveus ..1 0.1 8.1 3.1 32.5 c. Irktm FwaliNks - Tower Cmmdewan cum 350.0 350. 350.0 350.0 1,400.0 0017 65 5.3 5.3 5.3 23.1 200 o0 00 Law a 10.0 10.3 13.3 18.3 75.0 0.01 0.2 0.2 0 2 0.2 0 3 20.0 0.0 00 lualod bi Fa slis - Towr 6.0 6.0 6.0 6.0 239 uL Civt d dhe Chnnl SpIllwal CuKial cum 350.0 350.0 350.0 350.0 1,400.0 0.017 5.0 5.0 5.0 5.0 23.1 20.0 0.0 00 Rdelcm_ui duel bn 35.0 35.0 35.0 35.0 140.0 0.163 5.7 5.7 5.7 5.7 22 0 200 100.0 0 0 Lawd a 12.5 125 12.5 1zS 50.0 0.01 0.1 0.1 0.1 0.1 DS 200 0.0 00 T _M u brh 11.3750 11,675S0 11,075.0 1I.575.0 47.5D0.0 0.6 0.6 0.6 0.6 2.4 200 75.0 0.0 &uabl Cmllv m_d mCh_ *_t 1W22 12.2 12.2 12.2 48.7 Prddpbma Is I_1.3 1.3 1.3 1.3 5.0 0.0 0.0 0.0 -. _I _e.t 1 1.3 1.3 1.3 1.3 50 0.0 0.0 O0 a,hdo no 5.3 5.3 5.3 5.3 21.0 0.3 1.6 1.6 1.6 1.6 6.3 0.0 0.0 0 0 Lduhbsbgaaqim no 3.0 3. 3.0 3.0 12.0 0.05 0.2 0.2 0.2 0.2 0.6 0.0 0.0 0.0 Sdi Nvedlello 4.2 4.2 4.2 4.2 160. L MOaNmIm Uu-p I _mulss or 4.3 4-3 4l3 4.3 17.0 0.9 3.8 3.6 3.0 3.o 15.3 0.0 0.0 0.0 D0igupI m I no 0.3 0.3 0.3 0.3 1.0 5 1.3 1.3 1.3 1.3 5.0 0.0 100.0 0.0 3a||| *leld Sado 5.1 5.1 5.1 5.l 20.3 .~~~~~~~~~~~~~~ i z '4 .4 Paismelers (In %} Phy. Quantil_ UnU Base Cost Cont. For. Gross URN 1115 1521 1117 1333 Total Cosd 111 19916 1317 1531 Total Rate Each. Tas Rat O 4. Sanakbpksn Dam a. Ilnilla FKIIs - Con"uIt Rqpok d eld * b 0.5 0.5 0.5 0.5 2.0 20.0 0.0 0.0 L NW 2.5 2.5 2.5 2.5 10.0 0.006. 00 00 0.0 00 0.1 20.0 0.0 0.0 Sutml.w a p FnI*es - Cori 0.5 0.5 0.5 OS 2.1 b. kailpi Facliies -Valve Van POO mm) to 05 0.5 0.5 0.5 20 7 35 35 35 35 140 200 100.0 00 Vim(SOWmM) no 05 05 0.5 0.5 2.0 7.5 3.8 38 3.8 3.6 ISO 200 1000 0.0 LOWn nm 10.0 10.0 10.0 10.0 40.0 0.01 0.1 0.1 0.1 0.1 04 20.0 00 0.0 Tunnu bnfh 1.000.0 100O.0 1.000.0 1003.0 4.000.0 0.1 0.1 0.1 0.1 02 20.0 75.0 0.0 IMai kul,an FIEl.. - Valvs 7.4 7.4 7.4 7.4 29.6 a. kduih fadINlus - kWhe la wea Ceraads cum 75.0 75.0 75.0 75.0 30.0 0.017 1.2 1.2 1.2 1.2 50 200 0.0 0.0 L1, . m 2.5 2.5 2.5 2.5 10.0 *0.01 0.0 0.0 00 00 0.1 20.0 0.0 0.0 8&6s kdal.m Fmlltl"e- hake o 1.3 1.3 1.3 1.3 5.1 d. E _AkWAmo .D _ winkeis beM Eaeh*d cuirm 137.5 17.5 137.5 137.5 650.0 0.017 2.3 2.3 2.3 2.3 9.1 200 00 00 Laiw - 2.5 2.5 2.5 2.5 10.0 0.01 00 0.0 00 00 0.1 200 00 00 T..rupo b_nm 12,500.0 12.5Q0 12,500.0 12.5W0.0 50000.0 06 06 08t of 2.5 20.0 75.0 00 SubMOS lgho D.gmg beers 2.9 2.9 2.9 2.9 11.7 IL . v .e .I. . Comds =iM 137.5 137.5 137.5 1375 550.0 0.017 2.3 2.3 23 23 9.1 20.0 00 00 Rebhocuemhd dad 13. 1Sa 13.6 13.6 55.0 0.163 2.2 2.2 2.2 2.2 6.9 200 1000 00 E_U cum 3125 312.5 312.5 312.5 1,250.0 O 0.0 0.0 0.0 0.1 20.0 00 0.0 Lalf - 10.0 10.0 10.0 IO 40.0 0.01 0.1 0.1 01 01 0.4 200 0.0 00 Tl_.p.e hfni 10,625. 10,S25.61 10 IO250 10,625. 42,500.0 0.5 0.5 05 0.5 2.1 20,0 75.0 00 |ub 5llsc llpll S.2 5.2 5.2 5.2 20.6 L. Eaanee qStIw 4aV Ccde cumsio oa 625.0 65.O 625.0 62S.0 2,500 0.017 10.3 10.3 10.3 10.3 41.3 20.0 0.0 0.0 Rehlmmuiuluod LDn 62.5 02.5 6S2 62A 250.0 0.163 10.2 10.2 10.2 102 406 20.0 1000 00 Fumdudd uim 275.0 275. 275.0 275.0 1,10J 0.0 00 00 0.0 0.2 200 00 00 PsdhehSotjef aim 37.5 37.5 375 37.5 150.0 0.017 0.6 0.6 0.6 01 2.5 200 00 00 Laker -, 25.0 A5. 25.0 25.0 IOD O0 0.3 0.3 0.3 0.3 10 20.0 0.0 0.0 'Toapd ha 32500 26250.0 2S,250. 26250.0 106,000.0 1.3 1.3 1.3 1.3 5.3 20.0 75.0 0.0 5G4 d I I SUPO 22.7 22.7 22.7 22.7 90. P~ .vodp .. Xs.S"ib 1.3 1.3 1.3 1.3 5.0 0.0 0.0 00 lob Nambh"d b 1.3 1.3 1.3 1.3 5.0 00 0.0 0.0 BbeS"*u r 25 2.5 2.5 2. 10.0 0.3 0.6 0. 0.6 08 : 3.0 0.0 0.0 0.0 L u11 s as_ 2.5 2.5 2.5 2.5 10.0 0.05 0.1 0.1 0.1 0.1 05 0.0 0.0 0.0 S.M bw_. e _m 3.4 3.4 3.4 3.4 135 IL _ _ -ef UaM14 " q lim eA 2.6 is 2. 2.6 11.0 0.9 25 2.5 2.5 2.5 9.9 0.0 0.0 00 0OigWr m I n0.3 0.3 0.3 0.3 1.0 5 1.3 1.3 1.3 1.3 5.0 0.0 100.0 00 Idbidd MNmUb N 3. 3&7 3.7 ar 14.§ OEA NAi dli Ai >U XMTAL MRA fhU MA MA 1-1`,1 EZ -~~~~~~~~~~~~i ARMENIA IRRIGATION REHABILITATION PROJECT Table S. Water Managemnt Pilots and Field Works (US$ 0001 Pararmeters (in %) Phy. Quantitles Uni Base Cost Cont. For. Gross Unit 1996 1996 1997 1993 Total Cost 1996 1936 1997 1993 Total Rate Exch. Tax Rate L hnvesnmnt Codsts A. Fldd Works 1. FkId Outlets HeadgatesfrornMainCauI no 35 75 150 110 370 1.2 42.0 90.0 180.0 132.0 444.0 20.0 100.0 0.0 WatrMeswlxtg DMes no 35 75 150 110 370 0.5 17.5 37.5 75.0 55.0 185.0 200 1000 0.0 Temsometers no 150 300 600 450 1,500 0.04 6.0 12.0 240 18.0 60.0 20.0 100 0.0 Eatthen Diches I 60.0 160.0 320.0 240.0 800.0 200 1000 0.0 Subtotal Fid Outlets 145.5 U0 990 445.0 1,489.0 2. PMl Schmes - GrvIy Headgmtes from Moh C no 6 - 6 0.48 2.9 - - 2.9 20.0 100.0 0.0 Sacanday Ouies Is 0.5 0.7 - - 1.2 20.0 70.0 0.0 W taMeesuriDg mces no 2 4 - - 6 0.5 1.0 2.0 - - 3.0 20.0 100.0 0.0 Ehn 0 Dche Is 0.6 0.9 - 1.5 200 100 0.0 Tensknaeters no 200 340 - - 540 0.04 8.0 13.6 - -21.6 200 100.0 0.0 i-crete Dhdes br Secory Clu nt 6.0 9.0 - 15.0 20.0 20.0 0.0 Subotg l Pgi Sch_nes - Gmvily 19.0 26.2 - - 45.2 3. PIst S8lunes - Exk*q Sp*dnw MAIn VdzM no 1 2 3 0.25 0.3 0.5 0.8 20.0 100.0 0.0 VW"r matemno 1 2 3 0.35 0.4 0.7 - 1.1 20.0 100.0 0.0 Poo PVC ystem 1 2 - - 3 5 5.0 10.0 - - 15.0 20.0 100.0 0.0 Tuulmdws no 20 25 - - 45 0.04 0.8 1.0 - - 1.8 20.0 100.0 0.0 Enm ODkh. h 0.4 0.6 1.0 20.0 10.0 0.0 hiM" Pld Sch_is * Eddh9ingpw 6. 1 - 13.8 S*WA Fisd WAs `1713 336 MA 44A .15U L Tskucd_ Assisane 1. F_d I_bn lmSpcl sm 6. 4 4 3 17 18 108.0 72.0 72.0 54.0 306.0 20.0 100.0 0.0 c,.mAiyngm nt 12 12 3 3 30 18 216.0 2160 54.0 54.0 540.0 20.0 100.0 0.0 S_ddolFsp 324.0 265.0 12.0 106.0 6460 2.Locad On-Funm enu'e_Amh am 12 12 12 12 48 1.5 180 1.0 10 10 720 0.0 0.0 0.0 Stitat T_ebak*a AslAuc_ 342.0 366.6 1U44 1266 12.8 TOTAL IILI 1430 5r 2lA1 t A Tosn we stdch cod m h _wIm dots _ tsr us n OwUm- of 2 2 ARMA MEN&=0 REUMATION PROJECT Tdk1 dbd to CPSIQ °11 MaNdnc' Pau leus (in %I Phy. OaatlUn_e _ Unt Base Codl Cone. For. GCoss thtN 103 196 1407 103 TOdt Ccos 131 1331 1g1 1903 Tali Rate Each. Tain Rale IL Rectwed Codea A. Sdesn b 1.000.0 6000 2000 200.0 2.000.0 0.0 0.0 0.0 U. MalJehsn Supks s 1.500.0 900.0 3O 0 3000 0 3.0000 200 90.0 0.0 - M DU HU L31 II IRROATION REH^JfA PROJECT Taiz7: rTeehrAsdUt, Ca inm fmUmS$i) zp Parmeters (in %) Phy. quanUils Unt Base Cosl Conl. For. Gross unlk 1615 19" 1?7 1933 TOWa Cod 1955 1936 1337 1931 Total Rale Exch. Tax Rate L _ teslms Costs A. Ig. Agon Equip. S TA gf High VaY Crp PreiAion 1. s@d Moure Measwg Equiptm for D kslrles T_wro9eler a no 100 100 0.3 30.0 * - 300 200 1000 00 PollE EC Mw no 60 60 0.1 6.0 6.0 20.0 100.0 0.0 Gypaum no lm* 1000 000 0.01 10.0 - - - 10.0 20.0 100.0 0.0 Augw Sit (1-3m) no 40 - . 40 0.25 10.0 . 10.0 20.0 100.0 0.0 Suotam Moisu Meaui Equip DItribct 56.0 - - 66.0 L Equa_s hr hd;t f We Mgm_L & 1yokchals ThmOlm _h Reldic lu (TDR) no 1 - - 1 10 10.0 * 10.0 20.0 100.0 0.0 Lyrnuct (saffi 2g)u m no 1 - - 1 6060.0 - - 600 200 100.0 00 Tutsulu rSd(050.10 CM) no 16 - - 15 0.3 4.5 , 45 200 1000 0.0 EC 1kip no 2 . . 2 2.5 5.0 5.0 20.0 100.0 0.0 Mhred Thwuomder no 2 - . . 2 2.5 6.0 - * 50 20.0 100.0 0.0 Pod" EC Mist no 2 - 2 0.1 0.2 - 0.2 20.0 100.0 0.0 G lowm Bok no IQO - 100 0.01 1.0 1.0 20.0 100.0 0.0 AuwSea (1-3m) no 4 - - 4 0.25 1.0 - . 1.0 20.0 100.0 0.0 Sutot Equip. bar In o War MpiL A Hydrtdulc 86.7 - - 86.7 3 Tctkdal Asdatance Wiobglt mn 2 1 - 3 18 36.018.0 - 54.0 0.0 100.0 0.0 _b*id mmr 2 1 - * 3 18 36.0 18.0 - - 54.0 0.0 1000 0.0 _wm gid artm 2 1 - - 3 18 36.0 18.0 * 54.0 0.0 100.0 00 NMm"HexdbM. nn I 1 2 18 18.0 18.0 - 36.0 0o0 100.0 0.0 _ub 'a Tecimca Asdstnce 126.0 72.0 - 198.0 Subttalhj 4g Ap. Equip. & TA for HIg Vaa. Crop rdon 268.7 72.0 * 340.7 IL Otw Eapalde Tetdc sdAsace Om bapdh Enghis mo 3 - - . 3 18 54.0 - - 54.0 00 100.0 0.0 m Dei EEr w me W - . 2 18 36.0 - - 36.0 0.0 100.0 0.0 Hdsglal RIo I 1 18 18. - 18.0 0.0 100.0 0.0 te Ppe Casiso _ Speddlid 2 . . . 2 18 36.0 . . - 36.0 0.0 100.0 0.0 Om OCmuclon Egier me 4 - - * 4 18 72.0 - 72.0 0.0 100.0 0.0 medoiE hfs - 2 - 2 18 38.0 . . 36.0 0.0 100.0 0.0 ubi dO Ex_b T al As 252.0 - - - 252.0 C. TA for Mauw Mm. ad PP of Fassilyell" M Upddsg tPh. . me 12 ' ' 12 18 218.0 * * - 218.0 0.0 1000 0.0 PPN d FmzIy S mI 4 4 4 4 16 18 720 72A0 72.0 72.0 288.0 0.0 100.0 0.0 Subtot TA b Mawer Pa md11 do F bllwy tudy 281.0 72.0 7ZO 720 504.0 TOTL:-I rZ 1ujX XA ns tW6". .~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~1 is * %4 p~~~~~~~~~~~~~~~~~~ (US$ in) T 8. PrdS b _ lhll ~~ ~PWNWS(i Phy. Qumatwes. UnM aMW Cost ConL For. Gross Uni 13ff 13#6 1317 1333 Tota Cod 1996 136 1337 1933 Totad Rat Exch. ax Rat L kwestn Coas A. Vddd.. an Eq5omu VW*im no 3 - - - 3 28 78.0 - - - 78.0 20.0 100.0 0.0 C,miiw no 8 - - - 8 2.5 20.0 - - 20.0 20.0 100.0 0.0 prklw rno 5 - - - 5 1 5.0 - - 5.0 20.0 100.0 0.0 mMachs no 1 - - - 1 1.5 1.5 - - - 1.5 20.0 100.0 0.0 T _YPWem no 3 - - - 3 02 0.6 - - - 0.6 20.0 100.0 0.0 FxM0cbtw no I - - - 1 12 1.2 - - - 12 20.0 100.0 0.0 Tdephan no 4 - - - 4 0.1 0.4 - - 0.4 20.0 100.0 0.0 Gema*r no 2 - 2 5 10.0 - - - 10.0 20.0 100.0 0.0 Sub&t Vld.. mid Eq_mst 116.7 - - - 116.7 L. Tchmiel Assisanc 1. Forslg DWy PraioPt M.uW am 12 - - - 12 25 300.0 - - - 300.0 0.0 100.0 0.0 C o Efggw sm 12 - - - 12 25 300.0 - - - 300.0 0.0 100.0 0.0 Pronnmt SpOd 51 6 1 - - 7 25 150.0 25.0 - - 175.0 0.0 100.0 0.0 P Enghes sam 6 - 6 25 150.0 - - - 150.0 0.0 100.0 0.0 T,ars mo 2 2 2 6 25 50.0 50.0 50.0 - 150.0 0.0 100.0 0.0 Subtotd 950.0 75.0 50.0 - 1,075.0 . Local Pfapot MW mo 12 12 12 12 48 0.2 2.4 2.4 24 2.4 9.6 0.0 0.0 0.0 oDpuy* Pm*ct MwUw m 12 12 12 12 48 0.15 1.8 1.8 1.8 1.8 7.2 0.0 0.0 0.0 PbmwgDM Er,ln mao 24 24 24 24 96 0.15 3.6 3.6 3.6 3.6 14.4 0.0 0.0 0.0 Ca _uclo Engkse mD 12 12 12 12 48 0.15 1.8 1.8 1.8 1.8 7.2 0.0 0.0 0.0 OLU Enr_ ffmo 12 12 - - 24 0.15 1.8 1.8 - - 3.6 0.0 0.0 0.0 WiwMwwqwnut Englu' MO 12 12 12 12 48 0.15 1.8 1.8 1.8 1.8 7.2 0.0 0.0 0.0 Prtcmns Sp.dad ma 12 12 12 12 48 0.15 1.8 1.8 1.8 1.8 7.2 0.0 0.0 0.0 Ad _*i or ma 12 12 12 12 48 0.1 1.2 1.2 1.2 1.2 4.8 0.0 0.0 0.0 Accoui ma 6 12 12 12 42 0.125 0.8 1.5 1.5 1.5 5.3 0.0 0.0 0.0 Subttal Locel 17.0 17.7 15.9 15.9 65.5 SuIbaW TeduIc_ AssInce 367.0 397 "3 159 1,141J Tota h _wsbnuw Code jm, a. I" i 1i 4~~~~~WZ ~~~ ~~Parameter fn %) Phy. Ouanties Unit Base Cod ConL For. Gross Unit 1S95 1996 1397 1992 Total Cost 1996 199S 1997 198 Total Rate Exch. ax Rd L Recurren Costs A. Salares Support Staff sm 36 36 36 36 144 0.05 1.8 1.8 1.8 1.8 72 0.0 0.0 0.0 Driyws sm 24 24 24 24 96 0.04 1.0 1.0 1.0 1.0 3.8 0.0 0.0 0.0 Subtotal Saaries 2.8 2J 2.3 2.8 11.0 B. Rent Office/ah Is 7.5 7.5 7.5 7.5 30.0 0.0 0.0 0.0 Houskgib Is 7.2 7.2 7.2 7.2 28.8 0.0 0.0 0.0 SubtolPRent 14.7 14.7 14.7 14.7 63.8 C. UtSiles Teephone Is 12.0 12.0 12.0 12.0 48.0 5.0 70.0 0.0 Electricity is 2.8 2.8 2.8 2.8 11.2 5.0 70.0 0.0 Subtotal UtJllties 14.8 14.8 14.8 14.8 69.2 D. Office Supplis Is 3.0 3.0 3.0 3.0 12.0 10.0 30.0 0.0 E. Adbrinistrative Cost, Travel expens Is 8.0 8.0 8.0 8.0 32.0 10.0 0.0 0.0 Fuel for Vehicles and Power Generator Is 5.0 5.0 5.0 5.0 20.0 10.0 20.0 0.0 M sa q Mintanwce Is 2.0 20 2.0 20 8.0 10.0 20.0 0.0 Subtotal Adn istratve Costs 15.0 15.0 15.0 15.0 60.0 Total Recurrent Costs W.3 j0. 6. C 2 TOTAL 1.133.9 1430 116.29f 1Z 1A912 is Appixoately $W&wmanh. io Three apartments for fasN years. h T1ufrw.~~~ 66 Anne 1 ARMENIA IRRIGATION REHABILITATION PROJECT Prolect Cost Summarv % % Total (Rubel MilNon) (US$S 000) Foreign Bae Local Foreign Total Local Foreign Total Exchane Costs A Irrigation Rebltation Conveynce Schm 14,410.9 33,625.5 48,036.4 5,542.7 12,932.9 18,475.5 70 40 Pnp Shem 2,306.7 22,291.3 24,598.0 887.2 8,573.6 9,460.8 91 20 Tubewe Rehabltafion 1,807.0 16,263.0 18,070.0 695.0 6,255.0 6,950.0 90 15 OwmnidReserv 14,ed.1 1,955.4 3,415.4 561.6 752.1 1,313.6 57 3 Subtotal hrgation RdebUation 19,964.7 74,135.2 94,119.8 7,686.4 28,513.5 36,199.9 79 76 B. Watv Mgnt. Pg Proets & Fed Work 365.6 6,061.0 6,426.6 140.6 2,331.2 2,471.8 94 5 C. Opeation an MntenoMc of Systemw 5,960.0 7,020.0 13,000.0 2,300.0 2,700.0 5,000.0 54 11 D. Toaool Ass_tnce - 2,851.4 2,851.4 - 1,096.7 1,096.7 100 2 E.Project lmplermnton Unit 545.1 3,248.8 3,793.9 209.7 1,249.S 1,459.2 a8 3 27,563.2 93,352.6 120,915.9 10,601.2 35,904.9 46,506.1 77 100 Phyeic_dcotinecies 4,190.6 16,765.2 20,955.8 1,611.8 6,448.2 8,059.9 80 17 Pric ConI c 1,719.1 5,765.1 7,484.2 661.2 2,217.3 2,878.5 77 6 33A4 11L883.0 149365.9 12.874.2 44570.4 67.444.8 zi 124 Staistical Annex 67 ANNEX I Table 10 ARMENIA IRRIGATION REHABILITATION PROJECT Prolect Comoonents by Year - InvestmentVRecurrent Costs (USS '000) Totals Including Contingencies t995 1996 1997 1998 Total A. Irrigation Rehabilitation Conveyance Schenes Investment Costs 3,373.2 6,945.4 8,336.1 4.892.6 23,547.3 Pumping Schemes investntCosts 5,181.9 2,963.8 3.049.1 626.3 11,821.0 Tubewell Rehabiliation Investment Costs 1,393.9 2,738.0 2,816.8 1,516.3 8,465.0 Dam and Resrvoir Investent Costs 3921 403.6 415.2 426.5 1,637.4 Subtota lIrrimgation Rehabilitation 10,341.0 13,050.8 14,617.2 7,461.8 45,470.8 IL Water Mgmt Pilot Projets & Field Wor Investm Costs 621.1 803.9 954.0 752.1 3,131.0 Subtotal Water MgmL Pilot Projecs & Fiel 621.1 803.9 954.0 7521 3,131.0 C. Operaton and Maintenance of System Recurrent Costs 2,840.0 1,754.3 601.6 617.9 5,813.9 Subtotal Operation and Maintenance of S 2,840.0 1,754.3 601.6 617.9 5,813.9 D. Technical Assistance Investmnt Costs 849.2 150.4 77.3 79.4 1,156.4 Subtotal Technical Assistance 84.2 150.4 77.3 79.4 1,156.4 E. Project knbplemntaion Unit Investment Coats 1,122.8 96.8 70.8 17.5 1,308.0 Rcurrent Costs S3.6 55.1 56.7 58.3 223.7 Subtotal Proct mplmntation Unit 1,176.4 151.9 127.5 75.8 1,531.6 Total PROJECT COSTS 16,098.5 16,981.1 16,377.7 "87.0 17,44. Total Invesrmnt Cost 13,205.3 14,171.6 15,719.3 8,310.8 51,407.1 Totmi Recuent Costs 2,893.6 1,809.4 658.3 676.2 6,037.5 68 Annax I ANNEX I Table 11 IlitIOn Rehabiitton Prote expendturs Acu>nts by Years - ease Costs (USS$ 0C) Base Cost Forign Exchange lif 1oss 1337 9 Totrl W rnount L Investmwe Cosdt A. M nknMy and Equipnei 709.0 607.4 866.4 718.4 2,901.2 84.6 2,453.6 EL Technkca Assistnc t. Foregn 1.940.0 507.0 248.0 180.0 2,875.0 100.0 2,875.0 2. Locai 35.0 35.7 33.9 33.9 138.5 Subtoba Technicl Assiadnce 1,975.0 542.7 281.9 213.9 3,013.5 95.4 2,875.0 C. Clv Waft 5,471.5 10,276.1 11,147.8 5,393.2 35,290.4 78.7 27,784.6 D. Tiwipt 11.3 11.3 11.3 11.3 45.0 75.0 33.8 E. Labor 3.1 3.1 3.1 3.1 12.6 0.4 0.1 F. Stuies 10.6 10.6 10.6 10.6 42.4 Total Invstment Costs 11,180.5 11,4532 12,320.9 6,350.5 41,305.1 60.2 33,147.0 L Rocurennt Cods A. Sasec 1C.002 60Z8 202.6 202.8 2,011.0 - - B. tUt"e 14.8 14.8 14.6 14.6 59.2 70.0 41.4 C. Ren 14.7 14.7 14.7 14.7 58.8 - - 0. MateWas and Supplles Offte 3.0 3.0 3.0 3.0 12.0 90.0 10.8 CAM Mltnbi lftsp* guppies 1,900.0 900.0 300.0 300.0 3,000. 90.0 2,700.0 subtota balas ad Supp" 1,503.0 903.0 303.0 303.0 3,0120 90.0 2,710.8 E. Adm_W&w OnCo 1S.0 15.0 15.0 15.0 60.0 9.3 5.6 Totl Recuent Cot 2,550.3 1,550.3 550.3 50.3 5,201.0 53.0 2,75.8 Tol BSEUNE COSTS 13,730.7 13,003.4 tZ871.2 6,900.7 46,506.1 77.2 35,904.9 Physial Contin e 2,141.1 2300.7 2,374.0 1,244.1 8,059.9 80.0 6,448.2 Price C aocie 227.0 677.0 1,132.5 842.1 2,78.5 77.0 2,217.3 Told E reT JOSTS ULI 14.3.7J §0I. S7.444.6 Z 44.S70.4 F_agE IZM* IIa8.6 I.ui .iz9g .4 Forein Woog 12,755.2 12,29.6 12,776.6 6,789.0 44,570.4 RM3ATK)i REHABØLffATION PROJECT ExRp Accowuns kV c_nonns - Banr codRs (US$ 10) -. :t Water Piwt :X rkgtIo RelhabUtaialn Projects £ Project Physical Convey. Punnhlg TubeweN Damn and Fied 0 & M of Techniclk knplenmn. Conlingencles Sche Sduunes Rehab Reservoir Woks Systens Assist. Unh Total % Annunt L nvedmd Cots A. L y Eqans nt - *- 1.105.6 1,478.3 . 142.7 116.7 2.901.2 19.4 552.3 EL Tedmical Assaunce 1. Foreign ' ' 846.0 954.0 1,075.0 2,875.0 59 169.2 2.1nre . * - - 720 - * 66.5 136.5 - - Saabto calThec"bncAsdsLs* - - - 918.0 - 954.0 1,141.5 3,013.5 5.6 169.2 E. Cli VWoas 16,475.6 0,460.6 6,950.0 46.1 77.5 . - 35,290.4 19.0 6,705.7 F. Trnspmt - - - 45.0 - - - 45.0 20.0 9.0 O. LaOW - 12.6 - - - - 12.6 200 25 H.Skuies * - 42.4 - ' ' 42.4 - - Tota hnvesneT Codst 18,475.5 ,460.8 6,950.0 1,313.6 2,471.8 1.096.7 1,258.2 41.305.1 16.0 7.449.8 L Rewuren Cods A. Slute* - - 2,000.0 - 11.0 2,011.0 S. U5NeS 59- - - - 5.2 59.2 5.0 3.0 C. Rent 58.8 - - D. Maleuras and SpplIes omco - - - - . . . 12.0 12-0 100 1.2 O&StbLSnpeir rAFAk - - - - 3 3,00.0 3,000.0 200 600.0 Subtot MldalwWs and Supplies - . 3,000.0 10 3,012.0 20.0 601.2 E. Addn an Codb - - - . 60.0 60.0 10.0 6.0 TotaRecurruCods . . , 5,000.0 , 201.0 5,201.0 11.7 610.2 Total BASElDIE COSTS 18,475.5 9,460.8 6,950.0 1,313.6 2,471.8 5.000.0 1.096.7 1.459.2 46,506.1 173 8.059.9 Phyl Conincies 3.695.1 1,892.2 1,042.5 232.5 480.0 600.0 28.5 33.5 8,0599 Prke Coningenckes 1,376.7 468.1 472.5 91.3 179.2 213.9 31.1 38.9 2,878.5 152 437.4 Total PROJECT COSTS 2I3M473 11.921.1 IIA91. 1t37.4 3.131.0 6LIiU! iAn4 I4I6311 67I444A 14.S 114!Ua Texe- - -- Forein Exchlng 16,483.1 10,712.5 7,618.5 949.0 2,967.2 3,363.7 1,156.4 1,302.8 44,5704 15 2 6.793.4 AZ Er X AMIIENIA IRIGATION REH TIONS -ROJECT Ex£dum Account Bakdow (UJS$ 100) Pk% c - . Pi Ba1_ Cod Pie C u Pm _ . Td bild. Cod a,. Ct pCo g. Lai mm Li LQC7 ~- iaw -- , Puce Cai.rns ¢Eud. DI. & (Ead Iulde a (ECL Oun a (End. DOmAs & Coxd. am Pbyicd Pa. Eusd. Tax.E) Ti Tod PFir. Eulh Tsel Tome Tdl FPa. E-b T .) Tons TOM For.Emcd, Taxes) Taes Tobld Cost Cmi. A.11IhI I 2.43 A 447.7 . 21.2 484.3 73. - 123 173.7 31A 203.7 3.1161 511.7 3.6n.3 3076.6 166.4 L. TdmhW m mIu 3m139 I. Pmsg 2,75.0 . 2A7.6 16.2 - * 16.2 94.. 3.13*0 2.6622 lis @ IL aid 13.i - 131.6 .1 - .1 146C 146 466 I. C Wm 27,746 7T.05S.I 35*290.4 1.244.2 1.412 6,706.7 1,614.1 616.3 2.333.0 34.042. 3.461.2 - 44.330A 37.251.9 7.0173 F.TI.I1 33.1 11.3 45.0 6.6 2.3 .09 2.4 0.t 32 42.6 143 57.2 47.7 95 0. -aa 6.1 12.5 - 121 0. 2.5 2 L5 0.0 0. 0- 0.O 15.9 160 a 13. 2.1 .Skillso 42.4 42.4 - 2.5 2.5 4469 443 446 L 8dmu * 2011 * 2011.0 - - C- - 77.0 77.0 2,066.1 2.066.1 2.06.1 at.um 41.4 17.8 - 2 2.1 0.3 - 30 2.0 1.1 - 3.7 46.1 16.7 - 65.6 62.7 3.1 C. RPA 56.6 5"- - 3.5 3. 62.3 62.3 62.3 od 10. 1.2 - 12.0 1.1 0.1 1.2 0.7 0.1 - 06 12.6 14 140 12.7 13 O&MM4nmwaMac epakSqp5 2 700.0 300.0 - 000 540.0 60.0 ____ 60. 123.7 13.7 ____ 1375S 3.363 1 37317 3__ 7315 3,1.6 22 8a*hId&hbeIeh ..| spos _ 7UTTN--T - lilT 1244 -T3 6 iiiT 3p3163 37S I 3.S7 t 3.753 t S642 E. A*udulreIIv Coal$ 56 54.4 GO60 0.6 5.4 - 6.0 0.4 3.5 - 39 65 63 4 . 6939 63 5 8 4 raii RiammIA Casts ~~T7gff -l-4-f - -iT AT UT___ 1. 0~ i T ~TT T-6031. 5.403 9 .1W rawl RSUlwml - ww - ITWCodeE1F 1 12I74.2 51444'6 48E94.lT -T -IfI G Z *CA MWA fRE TBEWol PROJECT PYI PY2 PY3 PY4 PY5 PYS PY7 PYI PY9 PYIO PYII PY12 PY13 PY14 PYIS PYIS PYI7 PYlS Pyl9 PY20 BEIIEFITS Loww Lanid I w1 hoA prefect #A 17.893 83.498 79,104 74.709 70.314 65.920 61.525 57.130 52UM 48.341 43.948 39.12 35,157 30,762 26.368 21,973 17.579 17.579 17579 17.5793 2 WM proed 1t T7.893 83,496 79.104 62.619 87.893 67.893 87.893 87.863 67,893 87,893 87.893 87.893 87,693 87.893 87.893 67.893 87.693 87.693 67.893 87.893 3 Nd Senei 0 0 0 7.910 17.579 21.973 26.366 30,763 35.157 39,552 43.947 48.341 52.736 57.131 61.525 65,920 70,314 70,314 70.314 70.314 hped of Chwe hI 4 Cueppg Patrn IC 67.193 83.496 79,104 90.881 96882 105,472 114.261 123.050 131.640 140.69 149.418 170.8 170.638 170.6,8 170.638 170.638 170.636 170.630 170.638 170.636 5 (4 -2) 0 0 0 6.262 0.79 17.579 26,368 35.157 43.947 52.736 61.525 82.745 82.745 62.745 82.745 82.745 82.745 82.745 82.745 82.745 6 Subtotal kneE 0 0 0 10,172 26.30, 39.552 52.736 SS6 0 79.104 92.266 105.472 131.066 135.481 130.876 144.270 1411.65 153.059 153.059 153.059 153.059 Idde Land 7 _O4hA pr*d ID 18.566 15.73S 14.909 14.061 13.253 12.425 11.598 10.766 9,940 9.111 8.2B3 7.455 6,626 5.796 4.970 4,142 3.313 3.313 3.313 3.313 6 wlh prjecd / 16.566 15.738 14.909 15.572 16.506 16.566 16.566 16.566 16.566 16,566 16,566 16.566 16.566 16.566 16.566 16.566 16.566 16.566 16.568 18.56 9 Ndt BWf1 0 0 0 1.491 3.313 4.142 4,970 5.796 6.626 7.455 8.283 9.111 9.940 10.768 11.596 12.425 13.253 13.253 13.253 13.253 mpat d Chane hI 10 Ceoppng PattneE 16.566 15,736 14.909 17.129 1.2m 19.679 21.536 23,192 24.U9 25.533 25.533 25.533 25.533 25.533 25.533 25.533 25.533 25.533 25.533 25.533 11 (10.8) 0 0 0 1.557 1.657 3.313 4.970 6.626 8.263 0.967 6.967 8,967 8,907 8.967 *.967 6.967 6.967 8.967 6.967 6.967 12 Subala Bne1iN 0 0 0 3.048 4.970 7.455 9,940 12.425 14.909 16,422 17,250 18,078 18.907 19.735 20.563 21.392 22.220 22.220 22.220 22.220 15 TOTAL BENEFITS 0 0 0 19,220 31.336 47.007 62.76 76.344 94.013 10B.709 122,722 149.165 154.307 159,610 164,833 170.056 175.279 175.279 175.279 175.279 16 Oa MCsuI(2A)IF 0 0 0 0 1,028 1,02. 1.028 1,026 1.026 1.026 1.028 1.028 1.028 1.026 1.028 1,028 1.028 1.028 1.026 1.028 17 Pod Cots 16,099 15.9e1 16.370 8.897 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 IS Tebl Proi Cahd 16.099 15,981 16.378 8.897 1.02 1.028 1.026 1.026 1.020 1.026 1.026 1.028 1.025 1.028 1.026 1.026 1.028 1.028 1,026 1.028 1I NETBENEFITS(W) .16.099 415,961 -16.378 10.323 30.310 45.979 61.847 77.316 92.905 107.681 121.694 148.136 153,359 158.582 163.805 169,028 174.251 174.251 174.251 174.251 20 WL 5X } IA- *Iho.d pro.ct a hom pm Iwm d1.38 ha Is 8901.13 (7aM. AS. Aamex 6). hiome per frm dueck. by 5% per year hough PYI1. *Own 1 reaches 20% of the prprood lnl. Ie *w4ih pred, ndncoe per mimbr ds 3 ymia he o por h W4, 60%D d mrIl oso - h Is reted, and h PYS. preprjed nod komne k complel*y rldred. IC The chang hi cupping paern Is gra, and kwed b ed hI PYi2 (Tb AS. Am 6). ID. - ho_ pWodct. hdcnem pw km d 1.30 ha Is 759.51 (Table hL. Am 6). hiceme p m tldecnas by 5% per ycmred to PYI Uvough PY17. hmn a readm 20% .d th prepoetd lavel. IE The chg to appb m bl _ihd, and biped ahed hi PYIO (TlA A7, Annex 6). /f 2% of hiweabud Cosde.. GE|2p Z RRTATO REwnATIDN PROJEcT ffeNrs DOWN n# Pit Pf PY3 PY4 PYS PYC PY? PYS Pn P110 PYII PY12 PY13 PY14 PYIS PY16 PYI7 PYls PYIS PY20 BENEFIS 0 0 0 15.376 25.070 37,105 0,140 62,615 15.211 EN1 ",I?? 11.332 122.510 121.6 M11 13 .04S 140.223 140.222 140.223 140.o23 COSTS aS,O9 IS,9I 16.376 .16 1.0211 1.026 .020 1.0211 1.021 1.U 1.021 1.021 1.02I 1.021 6.02l 1.020 1.02I ..O 1.026 1,021 NETBNEFITS .18.096 *15.61 -11.315 5479 24.042 30,577 49.112 61.6u 74.142 05.932 t7.14S 111.303 122.452 1211.01 130.&3 135.017 136.135 1S1.13 133.135 131.195 OtOL, ~~~47# 1 86146MS DOWN LeN AND COS TS VP MUN PYI PY2 Pr3 PY4 Pm5 Pr6 PY? PYt Pm PYI0 PYII PY12 PY13 PY14 PYIS PYlt PY1I PYI0 PYIS PYI0 IENEFITS 0 0 0 10337 25,070 37.105 50,140 62.675 2t11 $kM 16.11 113.332 122.510 127,0116 131.867 13.045 140.m 140.m 140.M 140.223 COSTS MM1 19.1 19.S53 10TM 1.24 1,24 1.224 1,234 1.214 1,2 .2U I324 1.23 4 1,4 1,2S4 1234 1,2S4 1.24 1.234 1.234 1.234 NETBENEFITS .19.31* -13.177 -13.653 4.070 23.637 31.372 44.307 *1.442 73.177 15.714 16,.44 1 1.01 122.276 121.45 130.633 134.011 131.390 13.3900 1311.3 13.W0 LIESRFS DOWN 16 e AND COS rS UIP 10% PYI PY2 PY3 PY4 PYS PS6 PI Pn3 P1n PYI0 PYII PY12 PY13 PY14 PYIS PYI6 PYI? PY16 PY11 PO20 BENEFITS 0 0 0 1.410 15.6113 23503 31.330 391.12 47.00 54.3556 11361 74,562 71,134 139l6 82.411 15.021 67.640 81.640 11.640 G1.64 COSTS 19.313 19.177 13.53 10.67 1.234 1.234 1.234 1.234 1.234 1,234 1.234 1.234 1.234 1.234 1.234 1.234 1.234 1.234 1.234 1.234 NET BENEFITS .11.313 -*13177 *I?.15 -1.11 14.435 22.270 30,104 37.36 4773 53121 0%127 73.341 75.960 7Y571 61.113 63.74 61.406 81.406 8.4N 6.406 mm ~~~33N, AWOWD WATER EfFcEWNCFROM 15K - OIL Pll PY2 P3 PY4 PYS Pr6 PY7 PY1 P1Y PYI0 PYII PY12 PY13 PY14 PYIS PY16 PY11 PYIS PY19 PY20 BENEFIS 0 0 0 13.236 37.449 G5.1916 16,331 10116164 130.316 150.710 110.21S 206.091 214.135 221.380 2261.624 235.366 243.112 243.112 243.112 243.112 COSIS 16.099 15.91 16,37I CU111 1.0 20 1.036 1.021 1.026 1.026 1.028 1.026 1,021 1.026 1.026 1.021 1.021 1.021 3.021 1.021 NET BENEFITS .11.009 .15.961 *tt.321 t.V32 31.421 64.110 5.903 1011.35 121.3111 14.53 119.187 2s., 213X107 22o.30 227.516 234.640 242.064 242.064 242.064 242.064 MENEMS DOWN 4|5% PYl Pm2 Pm3 PY4 PY5 PY6 PY7 PY6 P1 P PIO PYII PY12 PYI3 PYIl PYIS PYIS PYIl PIts PY13 PYI0 fl BENEFITS 0 0 0 Ill.56 123.24 44.891 50.165 74.019 6.763 103.J11 117.199 142.452 147.440 152.421 157.416 MAGI404 11.39 167232 161.362 161.39 costs 16.0l 1S.9111 16.378 31.811 1.026 1.023 1,02 1 1.026 1.2 3.026 1,026 1.026 1.026 1.026 1.029 1.023 1,026 6.026 1.0211 6.026 NET BENEFITS .16.039 I.911.1 .11.3171 3.456 211.119 4331163 51.62 131`711 16.75 WIN 116.111 141,424 146.412 ISIA40 156.31 1613116 1616.314 1111.314 16.364 166.3G64 LA"EO ONE YEAR PYI PY2 PY3 PY4 PYS PYS PY PYII PY9 PYIO PYII PY12 PY13 PY14 PYIS PYIG PYI PY1S PYt9 PY2021 BENFITS Low Lwnd 0 0 0 .16172 1,8109 3{7S3 43,947 57.131 70,315 63,496 96,662 10966 135.401 139.876 144.270 146,665 153,059 153.059 153.059 153059 Mdkt Lan 0 0 0 .3.049 3,545 5,699 6,626 9.111 11.596 14,061 16,566 18.0`1 16.907 19.735 20,563 21.392 22.220 22.220 22.220 22,220 Tdo hAfIs 0 0 0 -19,221 22.354 36.461 50.573 66.242 a1.911 97.5S0 113.248 127.945 154,387 159,610 164.33 170,056 175.279 175.279 529 175219 M. COSTS 0ILM Cods 0 0 0 0 0 1,131 1,131 1,131 1.131 1,131 1.131 1,131 1.131 1.131 1.131 1.131 1,131 1.131 1.131 1.131 Pn9d Coue 0o17.709 1757g 1e,015 9.7.7 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 TdiMPP*dCod 0 17,709 17.579 14.015 9,767 1,131 1.131 1.131 1,131 1,131 1,131 1.131 1,131 1.131 1.131 1.131 1,131 1,131 1.131 1.131 NETEIENEFITS 0 17.701 .17,510 37.236 12.566 35.330 49.442 65,111 *0,780 96,449 112,117 126,614 153.257 156.479 163,702 16.925 174.145 174.146 174,14f 174.148 LAa0ED 70 WARS FYI PY2 PY3 PY4 PY5 PYO PY7 PYS PY9 PY10 PYil PY12 PY13 PY14 PY1S PY1S PY17 PylS PY19 PY2022 BENEFITS Low Lnd 0 0 0 -16.172 -26,36 21.446 35,157 48,341 61.525 74,709 87.693 101,077 114,261 139,876 144.270 148,665 153,059 153,059 153.059 153.059 Mia Land 0 0 0 .304 .4.970 4.042 6.626 9.111 11.506 14.081 16,566 16.078 16.907 19.735 20.563 21.392 22.220 22.220 22.220 22,220 Tdcalfloraa 0 0 0 .19.220 431.336 25,486 41.764 57.453 73.121 61.790 104.459 119,155 133.166 159,610 164,S33 170.056 175.279 175.279 175.279 175.279 COSTS OEM Coas 2%) 0 0 0 0 0 0 1.234 1.234 1,234 1,234 1.234 1.234 1.234 1.234 1,234 1.234 1.234 1.234 1,234 1.234 Prejad Cols 0 019.319 19,177 19.653 10,676 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Tdal ojCode 0 0 19.319 19.177 19,653 10,676 1.234 1.234 1.234 1.234 1,234 1.234 1.234 1.234 1.234 1,234 1.234 1.234 1.234 1.234 NET BENEFITS 0 0 .19.319 -6.396 -50.991 14.612 40,550 56,219 71,661 67.556 103,225 117.922 131.934 158.377 163,60 168.623 174.045 174.045 174,045 174,045 lRlt. 4114i LAGGED THREE YEARS PYI PY2 PY3 PY4 PYS PYS PY7 PYS PY9 PYIO PYI PY12 PY13 PY14 PY15 Py`1l PYIl PY18 PY19 PY20 23 BENEFITS LowLand 0 0 0 .16.172 -26.36 -39,552 24,063 39,552 52.736 65.920 79,104 92,286 105.472 11S.656 144.270 14.665 153.059 153,059 153.059 153,059 Mkift Land 0 0 0 J3,048 4,970 Of455 4,539 7,455 9.940 12.425 14,909 17.394 16,907 19,735 20.563 21,392 22,220 2220 22,220 22.220 Tdiedandia 0 0 0 .19,220 .31,338 .47,007 2.622 47,007 62.676 78.344 94,013 109.652 124,376 136,391 164.633 170.056 175,279 175.279 175,279 175,279 COSTS AM Cools (21 0 0 0 0 0 0 0 1,337 1.331 1.337 1,337 1.337 1,337 1.337 1,337 1.337 1337 1.337 1.337 1,337 PnaCools 0 0 0 20,775 21,291 11,586 0 0 0 0 0 0 0 0 0 0 0 0 0 0 NET BENEFITS 0 0 0 .39,995 52,6N9 58,573 26.62 47.007 62.676 76,344 94,013 109,S62 124,373 1365391 164.,33 170,056 175.279 175.279 175,279 175,279 CD aCD PA fl'4I~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~C ANNEX 2: THE AGRICULTURE SECTOR REVIEW A. BACKGROUND 1. Armenia is a landlocked country, located to the extreme south of the Caucasus Mountains between 390 and 410 north and 440 and 46° east. The country borders Azerbaijan to the east and south (Map 1, IBRD 25388). To the north lies Georgia, and to the west and south, across the Araks River from Turkey and Iran. Turkey is connected to Azerbaijan through a 25 km long corridor between Armenia and Iran. 2. Agriculture in Armenia is greatly influenced by topography. Cultivated land lies within an altitude range of 600 to 2,500 m with mountain peaks to 4,090 m above sea level (asl). Only about 2% of the land is located below 1,500 m elevation. Generally, the landform in the center and north comprises rocky high mountain ranges separating narrow fertile valleys. Towards the south the broad, flat, and fertile Ararat Valley opens out along the left bank of the Araks River to form the border with Turkey. West and north of the centrally located Mount Aragat, and to the east around Sevan Lake, the landform is generally rolling, but with many rocky outcrops. In the south-east a few small irregularly- shaped valleys are fringed by high mountain ranges on both borders with Azerbaijan. 3. Irrigation is necessary to ensure food security; however, about 49% of the arable land is equipped with irrigation facilities. The diverse landscape offers particular challenges to the collection, transfer, conveyance, and delivery of irrigation water. The high elevation of Sevan Lake (1,925 m asl, about 1,200 kin2) makes it a strategic source of energy and irrigation water. B. AGRARIAN STRUCTURE 4. Since the land reform of February 1991, most agricultural land has been under private control. The exceptions are pastures allocated for communal grazing, and about 100 state farms which have been retained for seed production, animal breeding, research, or other purposes of national importance. About 20% of the land has been reserved for future village expansion, but is generally available for rent. There are about 300,000 smallholder with holdings averaging about 1 ha to 2 ha; many farmers have less than 1 ha. Most holdings are fragmented; irrigated and rainfed arable land, orchards, and mown grassland within each village were all distributed between the families resident in the village. Families not previously engaged in agriculture have also now become smallholder. About 6,000 groups of farmers (about 20 percent to 25% of the farmer population) have elected to operate collectively, either for cattle or crop production. 5. Sale of land has been officially sanctioned since the beginning of 1994, provided payment to the state has been completed (typically R2,000/ha - R1O,000/ha). However, with the uncertainties of prices, food supplies, and the future of the economy, most families probably regard their smallholding as an indispensable asset, rapid aggregation of holdings is unlikely to occur immediately. Although most land has now been distributed under the two-year program originally planned and initiated in early 1991, the Government has decided to extend the land privatization program for a further 2 years to correct anomalies which have arisen and to privatize parts of the state farms which still remain. 6. As a result of the break-up of the agricultural collective and state farms, village councils 76 Annex 2 have now assumed great importance and authority in rural life. Their responsibilities include: (a) overseeing the land privatization program; (b) administering reserve land area allocated for future village expansion (constituting about 20% of the agricultural land of the country); (c) control of the "self- supporting enterprises" (which include some pooled machinery and equipment); (d) organization of input supply distribution; liaison between farmers and the local branch of the Department of Water Supply and Irrigation (DWSI, Annex 3); and assistance in the collection of water charges. The final form of local government awaits formulation based on new legislation. However, it is understood that 40% of local taxes (principally the land tax) are to be allocated to the village councils, which are also responsible for dealing with economic, social, and cultural matters. C. CLIMATE 7. Armenia enjoys a variety of climatic conditions depending upon altitude. The Ararat Valley is characterized by dry hot summers and cold dry winters, with annual precipitation not exceeding 300 mm. Precipitation increases toward the mountains to 1,000 mm (Mount Aragats). Temperatures decrease with altitude from an annual average of 10°C in Yerevan to 4°C at Sevan Lake. Corresponding growing periods vary between 250 days in the lowest valleys and 170 days around Sevan Lake. 8. Monthly precipitation is highest during the period from April to June and lowest from July to September. Crop water deficit from May to August ranges between 200 to 700 mm, which cannot be supplied from soil moisture alone. Irrigation is thus necessary for crop growth. D. LAND USE 9. About 47%, or 1.4 million ha of Armenia's overall territory are cultivable or are used as pasture for livestock. The rest is rocky wasteland, mountains, forest and heathlands, suitable only for rough grazing during the few summer months. The cultivated land is in: annual crops 465,300 ha perennial plantations 62,700 ha home plots and orchards 57,000 ha permanent pastures 666,000 ha hill grazing and rangelands 137.000 ha Total cultivated land 1,388,000 ha 10. Approximately 286,000 ha are at present irrigable throughout the growing season. In 1992, the distribution of cropping patterns in the main irrigated areas was: kitchen gardens and home orchards 15% vineyards 8% orchards 11% permanent pasture 4% forests 4% arable crops 58%, of which The Agricultural Sector 77 (19% cereals, 29% fodder, 7% vegetables, 2% potatoes 1% others) 11. This crop mix is changing rapidly. The trend, which is expected to continue as long as the present emergency situation is as follows: (a) irrigated cereals, mostly wheat, is increasing: farmers want to be self-sufficient and have spare grain to barter for other commodities; (b) for the same reason, farmers would have liked to expand the potato area, but since Armenia is largely dependent on import of potato seeds, the present area is likely to be maintained; (c) vegetables grown for sale to processing industries is decreasing; (d) the area of orchards and vineyards is decreasing, to accommodate the additional cereals; and (e) the area of forage crops is being maintained, to support livestock, primarily milk producers. At higher elevations, where rainfall is adequate for grazing, increasing amounts of forage are being gathered from un-irrigated lands. There will be increasing pressure on cultivated and natural pasture lands. At low elevations, where there are no pastures and rangelands, people have started supplementing stock feed by collecting weeds, or cutting young reeds. This is a common practice in countries that have no grazing areas. E. CROP PRODUCTION 12. The principal irrigated crops are: - cereals mostly winter wheat and some winter barley; - vegetables tomatoes, cabbages, beans, onions, carrots etc.; - potatoes; - forage mostly luceme (alfalfa) and some sanfoin; spring barley, rye, oats and oats/vetch mixture; - orchards apricots, apples, cherries, peaches and plums; - and, vineyards. 13. Wheat varieties are Mexican high-yielding strains crossed with Russian frost-resistant varieties. At higher altitudes more straw is preferred for additional winter stockfeed. On the whole, high yield potential and good cultural practices are evident. Several fields with estimated yields of 6.0 t/ha were seen at lower altitudes; at higher altitudes, fields with an estimated yield of roughly 5.0 t/ha were common. These impressions were corroborated by farmers, village councilors, and research workers. 14. Winter barley is grown primarily for stockfeed, but also as a grain supplement. It is the high-yielding six-rowed species, much favored in Eastem Europe. Yields are comparable to that of wheat. 78 Annex 2 15. Except at high altitudes, spring wheat and two-rowed spring barley are irrigated when winter crops fail due to frost combined with an inadequate snow cover. Even with irrigation however, the yields of spring wheat rarely exceed 2.5 t/ha. 16. The dominant vegetable at low altitudes is the tomato; at middle elevations tomatoes and cabbages; at high elevations, cabbages. Beans, onions, brinjals, carrots, garlic and others, are grown at all altitudes. Average yields are tomatoes 38.0 t/ha, cabbages 40.0 t/ha, beans for seed 2.5 t/ha, 20.0 t/ha if harvested green. 17. At low elevations potatoes are mostly earlier varieties, and main-crop varieties at high elevations. Yield potentials are 22.0 t/ha for earlier varieties and 35.0 t/ha for the main crop. 18. The principal forage crop is lucerne (alfalfa). It produces five cuts at low altitudes and four elsewhere. Yields are about 2.0 t of hay per hectare/cut. Sanfoin is grown mostly at high altitudes in places not suitable for lucerne, or where honey production is an important local industry. It gives just two cuts per year, yielding about 3.8 t/ha of hay. 19. Other fodder crops listed are rarely irrigated. Some fodder is also obtained from specially set-aside meadows, which are occasionally irrigated from snow-melt. 20. Orchards are mostly apricots at low altitudes and apples in higher areas. Traditionally, they are well maintained. Shortages of plant protection chemicals caused much damage in 1993, which was further aggravated by severe winter and early spring frosts. The frost killed many trees, and destroyed the flowers on others. Other common orchard crops are peaches, plums and cherries. Normal yields are about 15.0 t/ha. 21. Until recently grapes have been the mainstay of Armenian agriculture exports. With exports of wine and brandy impeded by the blockade, the present outlook is uncertain. Normal yields are 13.0 t/ha. F. LIVESTOCK PRODUCTION 22. Livestock production accounted for about one-third of the output value of agricultural primary production in 1992, down from 46% in 1991 and 53% in the late 1980s. It used about 80% of agricultural land, employed an estimated two-thirds of the agricultural labor force, and represented a major source of nutrition and cash income for about 250,000 private livestock producers. Because of the importance Government had attached to increasing per capita consumption of livestock products, the sub- sector was given high development priority in the 1970s and 1980s, receiving between 60% and over 70% of total agricultural investments and operational subsidies, and profiting from large imports of livestock production related inputs. In the late 1980s, for example, yearly imports amounted to about 400,000 tons of energy feed grains, 100,000 tons of protein meals, and substantial quantities of feed additives and veterinary supplies. Altogether these constituted over 50% of the total value of agricultural imports. As a result, the country's livestock populations grew substantially in the past two decades, particularly pig and poultry populations. Despite this growth, Armenia depended heavily on importation of livestock products, namely dairy products (up to one million tons of milk equivalent per year) and meat, accounting for respectively over 40% and 15% of total agricultural imports in the late 1980s. Tfhe Agricultural Sector 79 23. In 1987-88, when livestock numbers peaked, Armenia's livestock population was estimated at 850,000 cattle (including about 310,000 cows), 340,000 pigs (including 35,000 sows), 1.75 million sheep (including 1.14 million ewes), 30,000 goats, 7,500 horses, and 12 million poultry. In 1989, overall livestock numbers began to tumble. It is estimated that between 1987-88 and the beginning of 1993, overall livestock inventories in terms of Animal Units fell by 50%. The worst affected livestock were pigs and poultry, down by about 75% each; followed by cattle, down by over 60%; and sheep, down by over 50%. 24. Due to heavy livestock inventory culling, overall meat production decreased somewhat slower than livestock numbers. From 1987-88 to 1992, total meat production fell by about 38%. Poultry meat production was by far the worst hit, down threefold. During the same period, production of milk fell by 31 %, eggs by 60%, and wool by almost 40 %. G. AGROPROCESSING 25. Armenia's 632 agro-processing enterprises are organized under two ministries. The Ministry of Food has control of the milk, meat, canning, baking, feed milling, flour milling, winery, distillation, food retailing, fertilizer enterprises, and pesticide procurement activities. The Ministry of Food also functions as purchaser and supplier of ingredients used by the enterprises under its jurisdiction. The Ministry of Agriculture controls fewer enterprises, mainly wineries. Some duplication exists with the types of enterprises controlled by the two Ministries. The food processing and distribution industries actually constitute regional and national monopolies controlled by Government because the private sector has not yet actually entered into these areas. 26. All sectors of the agro-processing complexes are operating below engineered capacity. This results in their operating at high unit costs, because the fixed costs are allocated to a smaller than optimum volume of output. There are several practical reasons for the low capacity utilization of facilities: (a) The break-up of the Soviet Union disrupted normal trade flows which were formerly directed from Moscow. Although a centralized administration was not efficient, a pattern and configuration for the distribution and flow of products did exist. The dismantling of the Soviet Union has left many unresolved issues and uncertainties, particularly issues of trade and trade patterns which have been left with uncertainty. (b) Compounding the impact of the Soviet break-up was the rail and road blockade imposed by Azerbaijan on energy fuels, foodstuffs such as wheat and feed grains, manufacturing supplies and ingredients, and other inputs required by Armenia's agro-industrial enterprises. Without these inputs, operations of the food factories have become increasingly inefficient. H. ENVIRONMENT 27. Of the many environmental issues facing Armenia today, several appear to urgently need resolution including: 80 Annex 2 (a) development of programs to control soil erosion, which is proceeding at an alarming pace, especially since the blockade, trees are currently being cut and used as fuel wood to substitute for loss of energy resources; (b) installation and operation of adequate pollution control technologies in Armenian industrial facilities; (c) treatment and disposal of municipal wastes and industrially-derived hazardous wastes; (d) reduction of automotive emissions in urban areas; and (e) protection and restoration of the ecological integrity and the quality of water supply from Lake Sevan. 28. To overcome the pervasiveness of environmental degradation in Armenia there must be a move to market-based costs for energy, fuel, water, and other resources in order to induce conservation. Much of Armenia's infrastructure was developed without regard for these input costs, and even some of the government's current planning documents utilize the argument of inexpensive energy to justify future development plans. Unbridled use of such resources imposes too severe a stress on resource-production sectors and the environmental components upon which they have an impact. Attaining control of these issues will also require some reorientation of Government organization. In certain cases, roles, responsibilities, and authorities must be clarified, some apparent conflicts of interest should be addressed, and in some cases authority must be horizontally interwoven across the existing vertically oriented governmental structures. I. PRODUCTION SERVICES The Input Supply System 29. With few exceptions, Armenia does not have its own pesticide production or formulation ability, and is thus almost entirely dependent on imports. In the past, sources of supply were Russia and Ukraine; further suppliers were Uzbekistan, Azerbaijan, Turkmenistan, and Kazakhstan. However, the Ukrainian production currently covers not more than 20% of its own needs because of difficulties in obtaining energy and raw materials. The situation in Russia and the other republics is not much better, thus forcing Armenia to look for alternative suppliers. 30. Until 1992 two crop protection agents were manufactured in Armenia. One was the herbicide Fenagan, developed in Armenia and produced by the Chimreaktiv factory in Yerevan, and the other was the fungicide copper sulphate produced in a factory in Alaverdi from domestically manufactured copper, and imported sulphur from Turkmenistan. Production of both has been discontinued due to the economic difficulties caused by the blockade. 31. Armenia used to manufacture urea in a fertilizer factory near Spitak (the earthquake zone). However, the factory was badly damaged during the 1988 earthquake and has not resumed The Agricultural Sector 81 production since. All other fertilizers required in the country came from other former republics of the Soviet Union. 32. The supply and procurement of agricultural inputs is almost fully managed by state-owned organizations. The private sector has not begun to operate in these areas, even though there are no legal barriers. The Ministry of Nutrition and Food Reserve is responsible for provision of feed principally grain and forage to the livestock industry, though the Ministry of Agriculture has some feed mills under its control. Armplodorodie is the parastatal organization responsible for supply of agro-chemicals, down to the farm level, including fertilizers and pesticides. It has one main supply depot, five regional supply bases, and one distribution facility (consisting of an Agro-chemical Station, and a Crop Protection Station) in each of the 37 districts of the country. Machinery and Input Supply Services 33. Armenian agriculture presently works with about 12,500 tractors, 1,400 grain combine harvesters, 950 forage harvesters, 2,300 drilling machines, 2,300 grass mowers, 1,700 fertilizer spreaders, 2,200 spraying machines, 9,700 trucks, and a number of smaller agricultural equipment. However, machinery and equipment are not manufactured in Armenia, but have to be imported from other FSU republics. With the collapse of the Soviet Union it has become increasingly difficult to procure new machines and spare parts in all the FSU republics, but in Armenia these problems are much more serious because the country is land-locked and under a blockade. 34. Despite the relatively large fleet of machinery and equipment in the Armenian farms, a number of important machines for land preparation, harvesting, post harvest handling, and animal husbandry are in short supply. However, under the current land privatization and farm restructuring, with an estimated 300,000 private farms, the most limiting factor to mechanization of agriculture is clearly the near total absence of farm machinery suited to the small average farm size of about 1.3 ha, and to the even smaller average land plot of about 0.4 ha. Although the farmers apparently try to compensate for this disadvantage through blocking of cropping patterns and field operations, this will likely prove to be a transitional and unsatisfactory solution. Livestock Support Services 35. The Institute for Livestock Breeding and Fodder Production, which has about 100 professional and support staff, is responsible for livestock research. Since the dismantling of the Soviet Union, work at the Institute has come to a stand-still due to shortages of funds. The current level of funding is hardly sufficient to meet meager payrolls of Institute staff and does not permit financing of other operating expenses, such as electricity, gasoline for transporting staff from and to work, essential chemicals, reagents, and subscriptions to scientific journals. Some limited livestock research is also being done by the Yerevan Zoo-Veterinary College. 36. Veterinary Services are provided by the public sector through the Veterinary Department of the Ministry of Agriculture. This include 41 Rayon-level stations and 321 veterinary posts. There is also a central veterinary diagnostic laboratory in Yerevan, diagnostic laboratories in each Rayon, as well as 12 quarantine stations. Currently, public veterinary services employ about 1,250 veterinarians and 78 veterinary technicians. As of June 1, 1993, former state and collective farms employed an 82 Annex 2 additional 817 veterinarians and 362 veterinary assistants. An estimated 850 veterinarians, mostly former state and collective farm employees, have lost their jobs as a result of the dismantling of state and collective farms through land reform. 37. Livestock Breeding and Artificial Insemination. The Department for Livestock Breeding and Artificial Insemination (Al) under the Ministry of Agriculture is responsible for operation of the national breeding program for all livestock animals, except for poultry, which comes under the Ministry of Agriculture's Poultry Production Division. In the past, the Department has had 41 cattle breeding farms and five pig breeding farms as well as six Al Centers and one Al post in each of the 39 Rayons. The national breeding program includes milk and meat recording, testing, data processing, selection and mating, and Al. Private breeding associations do not exist. 38. Since 1991 breed selection and AI have practically stopped. Only four breeding farms are left. All testing for milk and meat has ceased as the majority of test bull daughters were slaughtered or are no longer traceable. Semen collection has ceased, as the number of breeding bulls dropped from 120 to 16 by mid-1993. Al for cattle fell to almost zero in the first six months of 1993 (compared to almost 200,000 or an AI coverage of over 95% in the late 1980's), and to zero for pigs (most sows of the large pig farms were formerly artificially inseminated) and sheep (about 500,000 sheep were artificially inseminated in the late 1980s). Product Marketing 39. The Government is active in the marketing and distribution of most food products. The Ministry of Food is still the main buyer, but the canneries, dairies, and meat processing facilities are now entitled to sell their products directly to any buyer. The exceptions are flour mills, which are allowed to sell flour only to Government-owned bakeries, because bread is rationed and remains the only subsidized food product; and wineries and liquor manufacturers because their products are exportable and export of wine and liquor remains a government monopoly. Because of the food shortage in the country, the canneries sell their products to the Government at prices lower-than-cost for school lunch programs and to other government and welfare oriented agencies. 40. Milk and meat products are still sold mainly through state-owned retail shops, primarily because state shops have cooling facilities. Prices for dairy products are now relatively high, compared to pre-independence, and products are scarce. Yerevan, which has more than 30% of the national population, receives only 25 % of the milk supply, partly due to increased transportation cost. In regard to meat products, due to shortage of animal feed, price increases far exceed the increase in income and demand has been falling. Financial Services 41. At present, availability of agriculture credit is not a limiting factor to production and investments because agro-industries, due to the blockade and shortage of energy, are operating at very low production capacity. Farmers have low demand for inputs due to the difficult economic situation. With improvement of the economy it is expected that credit would become a limiting factor to agriculture because the financial intermediaries have low processing capacity for loan evaluation, as well as for savings, compared to the substantial growth in potential clientele. The Agricultural Sector 83 42. The total credit granted by the banking system amounted to 37 billion rubles in 1992. Of this amount, about six billion rubles, or 16%, went to agriculture. The specialized agricultural bank, Agrobank, provided at least 80% of this amount and the remaining 20% was provided by other state banks and new private commercial banks. 43. The Armenian State Commercial Joint-Stock Agrobank, or Agrobank for short, is the predominant lender to agriculture. It is a joint stock company and has a wide ownership of 1,549 shareholders, of whom about half are state enterprises under the supervision of the Ministries of Agriculture, Food, and Light Industries, and the other half are non-state enterprises such as cooperatives, private enterprises, associations and private individuals. About one half of loans are being made to shareholders. 44. Lending rates are highly negative considering an inflation rate of over 1000% during the past year. Rates are set mainly on the basis of the Central Bank discount rate. They are, however, lower than in other banks where rates ranges between 3% and 10% per month. For agricultural loans, the annual interest rate is 60 %', for non-agricultural state enterprises, 84%, and for non-agricultural private borrowers and shareholders, 108%. The Agrobank obtains advances from the Central Bank at 30% and is limited to an interest rate spread of 4%, i.e. annual lending rate of 34%. 45. Arrears are surprisingly low, amounting to R 328 million, or 6% of the loan portfolio. Rolling over loans, however, is common. 46. Branch staff practices some form of loan assessment. The purpose of loans, profitability, and repayment capacity are considered. Land titles and other assets are required to guarantee loans. For those who have no collateral to offer, the guarantee of the state enterprise is required. Loan recovery is not yet a problem, but is expected to become more critical in the future. 47. State and Commercial Banks. Since the banking sector is highly segmented, very little financing for agriculture is provided by state banks and the new private commercial banks. The State Industrial and Construction Bank, which is the largest bank, lends no more than 1 % of its loan portfolio to agriculture. While the new private commercial banks may be more inclined to lend to agriculture, the amount of loans these banks may provide will not make any significant impact on the availability of credit to agriculture in the next few years. There are also some cooperative banks but they are undercapitalized and their operations are oriented to urban commercial lending. 48. Government Lending to Agriculture. Because of the crucial need to sustain operations of critical state enterprises and to support the newly privatized farms, the Government has launched a special credit program. Loans are processed through the County Council. Agrobank administers the lending program as a disbursement and collection agent. 49. Informal Rural Credit Market. An informal rural credit market is slowly developing. Suppliers provide farm inputs on credit but at significantly higher prices than government prices. In return, farmers deliver agricultural commodities as payment, thereby guaranteeing the purchase of their products. It is reported that many farmers favor this arrangement primarily because it is an assured market, versus the problem of being unable to collect from state agroprocessing enterprises. As the I It is 34% if the loan is rediscounted by the central bank. 84 Annex 2 distribution of farm inputs becomes privatized, trade related informal finance may be expected to expand. Agriculture Education, Research and Extension 50. Agricultural Research. There are 8 agricultural research institutes in Armenia with 26 experimental stations. The institutes are for: - Agricultural Science - Viticulture, Vine and Horticulture - Plant Protection - Soil and Agro-chemistry - Vegetables - Livestock Breeding and Fodder Production (para 2.35) - Veterinary Medicine - Agricultural Economics 51. All Institutes have drastically reduced their research activities due to budgetary constraints. Traditionally, research has been financed from budgetary allocations, contributions from state and collective farms, and the sale of products by the relatively large farms attached to the research institutes. In the past two years, however, public funding has been significantly reduced and state/collective farm contributions have ceased. Presently, available funding just about covers salaries and wages and, consequently, does not permit any meaningful research work. If the country's agricultural research infrastructure is to respond to the requirements of the emergent new farmers, substantial funding and reorientation/intensification of research activities is required. 52. The most important shortfalls of the institutes are lack of access to research results, technology, and methodology of adaptive research in other parts of the world. Basically the institutes lack funds to provide training of Armenian scientists abroad, or to invite expatriate visiting professors to Armenia; to establish up-to-date agricultural libraries, including subscriptions to essential scientific journals and literature; and for comprehensive variety of field testing and demonstration work on farmers' fields. Forage and pasture improvement research has been neglected in the past, as has research in farm economics, farm management and marketing. Agricultural policy analysis is not pertinent to the contemporary changes in the sector, including privatization. Finally, before the land reform implemented in 1991, organized extension was not needed in the collective and state farms then self sufficient in regard to the required skills they needed. This situation is drastically different now that land is divided between several hundred thousand farmers with no access to efficient agricultural extension. 53. Extension. Armenia does not have any formal organization responsible for transferring technology and information to farmers. There are 10 to 20 Ministry of Agriculture technical staff per rayon, such as agronomists, and livestock, machinery, and plant protection specialists. Although these specialists have mainly administrative and supply-driven functions, they nevertheless can move information to farmers. Many of them reportedly provide excellent technical assistance to the emergent new farmers. 54. Assisted by the U.S. Department of Agriculture (USDA), Armenia made commendable efforts in 1993 to develop a modern, client-driven agricultural extension service relevant and responsive to farmers' needs. Six USDA extension agents with 26 Armenian counterparts had taken up their posts 7The Agricultural Sector 85 at six regional extension centers by mid-1993. Three additional centers became operational by the end of 1993; and Government has made R100 million available to operate the centers in 1993, and to provide them with basic equipment and transport and working facilities. By the end of 1994, the extension service is expected to have a staff of about 150 persons, nine vehicles, a substantial number of bicycles, and video recording capability. The service is already issuing weekly and monthly papers for distribution to farmers, and has a weekly hour of "Rural Weekly" television coverage. 55. There is an ample pool of qualified staff in the country from which extension agents can be recruited. Government is now in the process of finalizing extension concepts and design. The main considerations in establishing the extension service are: cost-effectiveness and lowest possible recurrent cost requirements; how many rayons each extension center should be servicing; distance of the extension centers and the extent of linkage to research and training facilities; and the extent of mass media utilization. 56. Training. Higher-level education in agriculture and livestock production is being offered by the Agricultural University and the Institute for Zootechnology and Veterinary Medicine; and technician-level training is provided by 10 agricultural colleges. A total of 598 higher-level students graduated in 1992, up by about 60% from the three years before, including 135 agronomists, 74 land conservation engineers, 194 mechanical engineers, and 195 veterinarians. However, training has not been reoriented to meet the challenges of privatized agricultural and livestock production. This means that there is not sufficient emphasis on cost-effective, smaller-scale production systems, appropriate natural resource management, farm management economics, and produce marketing. ANNEX 3: THE DEPARTMENT OF WATER SUPPLY AND IRRIGATION 1. The Department of Water Supply and Irrigation (DWSI) has the prime responsibility for water supply, irrigation and drainage. Until 1991, DWSI was an independent Ministry. Since then it has become a Department in the Ministry of Agriculture, headed by a Deputy Minister and a Managing Director. The headquarters are in Yerevan, with some 156 field units covering all irrigated areas in the country. The DWSI supplies and distributes water to some 225,000 smallholder farmers on approximately 286,000 ha of irrigated land. 2. The Department employs some 11,000 permanent and 3,000 temporary staff, the latter during the irrigation season. Due to financial constraints, the management is considering a reduction of the permanent staff by approximately 10%. Most of the staff are skilled in the engineering and technical aspects of water supply and in irrigation and drainage. However, project management, procurement, contracting, economic and financial assessment, and monitoring and evaluation, are activities with which they are unfamiliar. They also lack modern equipment such as computers, software, and basic laboratory equipment. 3. The DWSI is divided into three sections (see Organogram 1). The largest section is the Construction and Water Supply section, which has six divisions: - Construction, with 56 field units; - Operation and Maintenance, with 66 field units;' - Pumping Stations, with 32 field units; - Vorotan-Arpa-Sevan-Operational Management, with two project units; - Rock Excavation; and - Industrial Support, which supervises production of pre-cast concrete canal sections and the repair of pumps. 4. The Water Resources and Reservoir Section has two divisions: - Water Resource Management; and - Special Assignment. 5. The third section deals with the planning of water resource development. The work is carried out by two independent planning and research institutes: - the Water Planning Institute (WPI), which plans and designs all water supply activities, irrigation and drainage schemes; and - the Hydrological Studies Institute (HSI), which is responsible for applied research, hydraulic modelling, water quality control and the introduction of new technologies. HSI has eleven laboratories and two research stations. This division collects water charges from the Village Councils. Organogram I Siructure of the Depoament of Wolor Suppl and Irriatin "bsty 'a Agikdwe I Dhpaatn d Woler &** F c_C~~~W lWO..C. dIIW4{I W" * Wa R=r Proms eNd Pnning S_d5 Sedim SeUt . [ [AAiArLX X rf,~~~~~~~~~~~~~~*id Ww; 11 D anzw 5-l_ _ - A4SWAIND*b I l | | T T _ _ |uero Mu tw , n , * IP ANNEX 4: THE IRRIGATION REHABILITATION ENGINEERING PROGRAM A. GENERAL The Engineering Components 1. The irrigation rehabilitation program covers an area of about 164,700 ha, about 60% of the Armenian irrigated land. It consist of 12 irrigation schemes, including groundwater development. 2. There are four types of rehabilitation works under the project: * rehabilitation of the conveyance systems, including canals, aqueducts, siphons and hydraulic structures in eight major irrigation schems: Shirak, Talin, Abovian (Kotaik), Arzni Shamniram, Lower Razdan, Octemberian, Artashat, and Getik. The area covered under this category is about 151,400 ha (92% of the project area); * replacement of pumps and pressure pipelines. This category include four pumping schemes, of which one, the Vorotan, is an independent scheme, covering about 1,600 ha (1 % of the project area). The other 3 - Azizbekov, Mkchian and Arevshat - are within two of the eight major conveyance schemes to be rehabilitated; * rehabilitation/ replacement of about 650 tubewell pumps. These are located in the Ararat valley, within the command areas of Octemberian, Lower Razdan, and Artashat conveyance schemes; and * the rehabilitation of four dam storage schemes (reservoirs). Three of these dam storage schemes - Aparan, Mantash, and Sarnakhpiur - have their own command areas totaling about 11,700 ha (7 % of the project area), and one dam storage scheme (Karnout) is part of the larger Shirak conveyance scheme. Sources of Water and Area of the Eight Major Conveyance Schemes 3. All the eight schemes are characterized by being river gravitation systems. They are fed by four of the Armenian major rivers: the Razdan, Akhurian, Araks, and Debed (through its Chichkan tributary). 4. The Razdan river provides water to four of the eight schemes; Abovian, Arzni Shamiram, Artashat, and Lower Razdan, which together cover about 79,600 ha (about 52% of the eight schemes). 5. All the irrigation projects in the Ararat valley rely on supply of water from the Razdan River, of which about 300 million m3 per year originate from lake Sevan and 730 million rn3 originate from tributaries of the Razdan River below its departure from the Sevan Lake. Additional water is provided to the schemes irrigated by the Razdan sources, mainly by pumping from the lower Sevdjur River and its diversion canals (through Arevshat, Mkchian, Ranchpar, and other pumping schemes). The Sevdjur/Kasakh Rivers (with annual runoff of over 1,050 million m3 per year), and the Azat/Vedi (with 90 Annex 4 a flow of about 300 million m3 per year), are the main supplementary source, along with a large amount of water pumped from tubewells (estimated at 500 million m3/year) that utilize the huge groundwater aquifer of the valley. 6. The Akhurian River, with average annual flow of 985 million m3, is the main provider of water to two schemes, Shirak and Talin (43,800 ha). It is the only river in Armenia which is equipped with enough storage capacity to accumulate the winter and the snow-melt flows that are required to back up the decreasing rivers' flows of the spring/summer irrigation season. 7. The Araks River, with an annual flow of 1,930 million m3, feeds the Octemberian scheme (21,600 ha). Armenia's share in the Araks flow is 50 percent, according to an agreement with Turkey; the two countries share the diversion facilities. Presently Armenia experiences a shortage of water to provide the Octemberian scheme in the late season. Such shortage cannot be resolved before a joint reservoir being negotiated with Turkey, is constructed. Meanwhile, pumping from lower Sevdjur, drainage collectors, and tubewell pumping cover the water deficit of the Octemberian scheme during the irrigation season. 8. The Chichkan/Pambak rivers, a sub-tributary and a tributary of the Debed River respectively, with average annual flow of 1,090 million m3, provide the water to the Getik conveyance scheme (6,400 ha). The Chichkan River flows decrease during the spring and summer. Only after completion of a storage reservoir (started in 1985 but stopped after the 1988 earthquake) could the scheme be extended by about 50%. However, the winter flows could be used, in the meantime, to produce hydropower to the Spitak area. 9. All the eight schemes are, basically, gravity systems. However, all of them are provided with pumping facilities of one of two types': (a) pumping that brings additional water to the scheme (i.e Sevdjur's Mkchian, Arevshat and Ranchpar, drainage collectors, tubewells); and (b) pumping facilities that lift water from the schemes' gravity main or secondary canals to higher lands within the command, or raise, within the command, the water pressure in closed pipes for sprinkler irrigation. The majority of the sprinklers are now abandoned, as the 1991 land reform resulted in land fragmentation, which made irrigation with the large sprinklers unpractical. B. SCOPE OF WORKS REQUIRED General 10. The rehabilitation works under the project include some 141.5 kmn of main canals, 523.2 km of secondary canals, 1,411.0 km of tertiary canals and 548.5 km of non-pressure pipes, of which 412.9 km are made of concrete and the balance of 135.6 km are made of steel. 11. Most of the conveyance network is in an unsatisfactory condition. The unlined canals have lost their geometrical cross-sections, due to earth slides, erosion, and encroaching vegetation. The condition of lined canals is not much better. In many cases long stretches of lining have deteriorated and in places completely disappeared. In the reinforced concrete aqueducts, the concrete has deteriorated and I The pumping do not exceed a lift of more than 100 m. The Irrigation Rehabilitation Engineering Program 91 water is leaking through the walls and floor of the aqueduct. In some places enterprising farmers have made use of a free water supply. In some locations the collapse of the aqueduct appears imminent. 12. The deterioration of the conveyance system may be attributed to a combination of causes: inappropriate design; lack of quality control during construction; bad and insufficient construction material; indifferent workmanship; lack of maintenance; normal aging; adverse climatic conditions and possibly corrosive water. 13. As experience indicates, the quality of concrete produced in precast factories is better than the concrete cast on the building sites. However, the precast concrete is also deficient. One of the main reasons for the low quality concrete is the use of unwashed aggregates and sand, with high contents of quarry dust. This, however, is relatively easy to correct. There are other deficiencies as well, as it was observed that the joints are not interlocking appropriately. It is therefore necessary to establish norms where standard designs for precast elements of various types,2 including the joints between the sections,3 should be developed by DWSI. 14. In sections of the conveyance system, steel pipes of various diameters are used. These pipes are not under pressure. Sections of such defective pipes will have to be lifted and new pipes in- stalled. In other cases, the concrete supports on which the pipe rests have to be repaired or rebuilt. Wherever possible, part of the steel pipes should be replaced by the much cheaper and much more durable concrete pipes. The Conveyance System 15. The works required in the eight conveyance schemes and brief description of pertinent features are described below: * The Arzni Shamiram Scheme. The scheme commands an area of about 34,000 ha in the Ashtarak and Nairi Districts. The rehabilitation works within the conveyance systems of the scheme include the construction of 20 kn of main canals, 47.3 km of secondaries, 343.0 km of tertiaries and 236.5 km of pipes, of which 163.8 km of concrete and 72.7 km of steel. The estimated cost of these works is US $4,418,000, or about 130.0 US$/ha. * The Talin Scheme. The scheme commands an area of about 30,000 ha in the Talin and Bagramian Districts. The rehabilitation works within the conveyance systems of the scheme include the construction of 280 km of main canals, 157.8 km of secondaries, 244.4 km of tertiaries and 11.3 km of steel pipes, and the estimated cost of these works is US$ 2,100,000, or about 70 US$/ha. * The Octembrian Scheme. The scheme commands an area of about 21,600 ha in the 2 Panels to line earth canals, aqueduct sections, small concrete flumes (canaletti) and control and outlet structures. 3 Precast units should be designed to interlock with each other, and where water-tightness is required the joints should be provided with water stops and sealants. 92 Annex 4 Bagramian and Armavir (Octemberian) Districts. The rehabilitation works of the scheme include two components: (a) the intake and diversion canal on the Araks river. This include: (i) rehabilitation of the intake; (ii) construction of the sand silting basin (0.82 km of the diversion canal); and (iii) increase of the main canal capacity along the first 4 km from 35 m3/sec up to 53.0 m3/sec. The rehabilitation is in compliance with an agreement with Turkey (March 30, 1979) for increasing the intake and the diversion canal capacity for better operation and maintenance of the irrigation system4; and (b) the conveyance system, which include: construction of 39.6 km of main canals, 79.0 km of secondaries, and 216 km of tertiary canals. The estimated cost of these works - including the diversion - is 2,155,000 US$, or about 99.8 US$/ha. * The Artashat Scheme. The scheme commands an area of about 24,000 ha in the Artashat, Masis, Yerevan and Ararat Districts. The rehabilitation works within the conveyance systems of the scheme include the construction of 19.9 km of main canals, 41.0 km of secondaries, 265.6 km of tertiaries and 85 km of pipes, of which 71 km of concrete and 14.0 km of steel. The estimated cost of these works is US $2,429,400, about 101.2 US$/ha. In addition US $6,156,000 (257 US$/ha) would be invested in the two pumping schemes: Azizbekov and Mkchian I & II, that comprise part of the Artashat conveyance scheme. * The Low Razdan Scheme Complex. The complex scheme comprises five sub schemes and commands a total area of about 13,300 ha in the Yerevan, Echmiadzin, and Nairi Districts. The rehabilitation works within the conveyance systems include the construction of 12.0 km of main canals, 144.4 km of secondaries, and 46.0 kn of tertiaries. The estimated cost of these works is US $1,982,400, about 149.1 US$/ha. In addition US $3,121,000 (235 US$/ha) would be invested in the pumping scheme of Arevshat I & II that is also part of the Lower Razdan conveyance scheme. * The Shirak Scheme. The scheme commands an area of about 13,800 ha in the Akhurian District. The rehabilitation works within the conveyance systems of the scheme include the construction of 7.1 km of main canals, 28.7 km of secondaries, 167 km of tertiaries and 114.5 km of pipes, of which 103.1 km of concrete and 11.4 km of steel. The estimated cost of these works is US $1,578,600 or about 114.4 US$/ha. * The Kotaik (Abovian) Scheme. The scheme commands an area of about 8,300 ha in the Kotaik (Abovian) District. The rehabilitation works within the conveyance systems of the scheme include the construction of 2.9 kin of main canals, 93 km of tertiaries and 59.7 km of pipes, of which 49.0 km of concrete and 10.7 km of steel. The estimated 4 The intake was constructed in 1930 on thc Araks river, with a total capacity of 35 m3/sec, equally divided between the riparians. Turkey had already completed the works on their river bank, rehabilitated its intake and increased the diversion capacity to 53.() mt'sec. Thte Armenian completed so far only the design (in 1991). but. because of lack of funds did not start the rehabilitation. Thle Irrigation Rehabilitation Engineering Program 93 costs of these works is US $1,260,300 or about 152 US$/ha. * The Getik Scheme. The works within the conveyance systems include construction of 8.0 km of main canals, 25 km of secondary canals, 36 km of tertiaries, 3.6 km of 2 parallel II-SP steel syphons, and 34.3 km of non pressure pipes, of which 26 km are of concrete. The estimated cost of these works is US $2,565,000 or about 400 US$/ha, including US $496,000 for on farm systems on 6,400 ha, the eventual irrigated area of Getik. The Getik scheme rehabilitation was prepared in detail quite a long time ago. Implementation has started in 1986 but stopped after 1988 earthquake. The scheme was designed and built as a gravity supply system, diverting the water of the Chichkan River, and providing it to about 4,000 ha at the river outlet to the Pambak valley. In the early 1980s, a dam site was selected about 4 km upstream the existing diversion, and work has started on the dam site in 1986. After the 1988 Spitak earthquake, whose epicenter was located some 15 km from the dam site, the diversion canal was severely damaged, and a provisional pumping station was installed at the entrance of the main canal from Chichkan River to the command area at both banks of the Pambak valley, and the works on the dam were discontinued. It is now intended to complete the project as a gravity scheme, with a new, larger canal at a higher elevation. The canal intake shall start downstream the dam site, at elevation + 1,850 m above sea level. The existing command, of 4,040 ha, which at present is only partially irrigated, would be increased by about 2,400 ha of new areas, with complementary water supply to the existing command and, eventually, generation of power at both the dam site (will not be built under this project), and the tail end of the main canal. The Pumping Schemes 16. Four pumping schemes are included under the project. In all the four schemes, pressure pipelines conveying water from the pumping stations to the distribution systems and some of the pumps are in critical condition, and the replacement of the pressure pipes and some of the pumps are included in the project. However, radical anti-corrosion steps are required to be introduced promptly, to avoid the same situations in the future in these and other schemes. Protecting new, as well as existing pipelines that still can be recovered through lining, coating and other anti corrosive devices will be financed under the project. 17. The works required in the four pumping schemes and brief description of pertinent features are described below: * The Vorotan Pumping Scheme. The Vorotan pumping scheme which commands an area of about 1,615 ha at the Goris District, at the far south east of Armenia, is part of a larger command that gets its water from the Regional Vorotan Hydroelectric Complex. The rehabilitation works within the pumping systems and the pressure pipelines of the scheme include: (a) replacement of 2,015 m of 720 mm steel pressure pipeline, with 8 num wall thickness; and (b) replacement/rehabilitation of 3 pumps, at the total estimated cost of US $188,000. * The Azizbekov I and II Pumping Stations. The Azizbekov I and II pumping stations are commanding an area of about 1,622 ha at Masis District, within the upper reach of the 94 Annex 4 Artashat scheme. The rehabilitation works include replacement of 2,800 m of 630 mm steel pressure pipeline, with 8 mm wall thickness, at an estimated cost of US $156,000. * The Mkchian I & II Pumping Stations. The Mkchian I & II pumping stations are providing complementary water to the Artashat scheme which commands an area of about 24,000 ha at the Yerevan, Masis, Artashat and Ararat districts. It comprises two pumping stations, the lower with a discharge totaling 16.6 m3/sec, an average yearly supply of 122 million m3, a lift of 75 m, equipped with 9 parallel pumps with 14.4 mw; and the upper one, at elevation 872 m above sea level with a discharge totaling 9.4 m3/sec, an average yearly supply of 74.8 million m3, a lift of 85 m, equipped with 6 parallel pipes, with 9.6 MW. The rehabilitation works within the pumping systems and the pressure pipelines of the scheme include: (a) replacement of 18,000 m of 1,850 mm steel pressure pipeline, with 14 mm wall thickness and 1,784 m of 1,800 mm steel pressure pipeline, with 14 mm wall thickness; and (b) replacement/ rehabilitation of 15 pumps, at an estimated cost of US $6,000,000. * The Arevshat I & II Pumping Complex. The Arevshat I & II pumping complex is providing supplementary water to the "Lower Razdan complex" which commands an area of about 13,300 ha in Yerevan, Echmiadzin and Nairi Districts. The rehabilitation works within the Arevshat I & II pumping systems and the pressure pipelines of the scheme include: (a) replacement of 15,800 m' of 1,420 mm steel pressure pipeline, with 12 mm wall thickness, and (b) replacement/rehabilitation of 7 pumps, at an estimated cost of US $3,121,000. The Tubewell Rehabilitation Program 18. Groundwater provides water in the Ararat Plain for irrigation and drainage, for drinking water, and for industrial use. In irrigation, the main role of groundwater is to provide complementary supply toward the end of the irrigation season, when other river sources are dwindling at a crucial time for the plants, negatively affecting the yields. Wells for complementary irrigation are used only for 2 to 3 months per year. Another use of wells is to drain, through pumping, the large areas of lowlands, which are negatively affected by high water tables. Of the 650 wells included in the project, more than half (347 units), covering an area of over 11,000 ha, are used for drainage, for up to 5 to 6 months per year. Their water is not lost however, as they are drained into collectors and their water is reused for irrigation at adjacent lands. The wells are of various depths, from 30 to 270 m. The shallower are the drainage wells, with capacities of up to 70 liters per second (250 m3/h), operated with electric submers- ible pumps. The most common are 100 m deep wells, with an average capacity of 120 m3/h (33.3 liter/sec), and with pumping head of about 60 m. 19. The condition of the equipment, both mechanical and electrical, is unsatisfactory and hundreds of pumps are out of service. One hundred and sixty pumps were locally repaired prior to the 1992 irrigation season. The submersible pumps are made in Russia and their life expectancy, under normal working and maintenance conditions, is four years.5 5 The reported life expectancy of the Russian pumps is low by any accepted western standards, where eight years is dte norm. The Irrigation Rehabilitation Engineering Program 95 20. Under the project about 215 pumps would be replaced during each of the first three years of project implementation (650 in total), at an estimated cost of US $6,950,000. The replacement is expected to be within the Octemberian, Lower Razdan, and Artashat conveyance schemes. The replacement would include: (a) 290 pumps in the Octemberian District (along the Octemberian collector and Sovietachen pumping station); (b) 143 pumps in the Echmiadzin District (around Sovietachen and Igerlich pumping stations and Sevdjur, Lower Razdan, Echmiadzin and Nedjirly collectors); (c) 29 pumps in the Masis District (around Nedjirly and Artashat collectors); (d) 65 wells in the Artashat District (along Artashat and Arazdaian collectors); and (e) 123 pumps in the Ararat District (also along the Artashat and Arazdaian collectors). 21. The proposed three-year reconstruction and rehabilitation program would include: * Boreholes: (a) drilling of 150 new boreholes in strict compliance with existing design specifications; and (b) rehabilitation of 300 existing boreholes. * Pumpsets: (a) supply and installation of 250 new pumpsets, including the required metering and control equipment; (b) supply of spare parts for the existing Russian pumps, to enable the repair and overhaul of approximately 400 pumpsets; (c) rehabilitation of 400 Russian pumpsets; and (d) installation of 650 new and rehabilitated pumpsets. Rehabilitation of Storage Dam Schemes 22. The project would provide financing to rehabilitate four storage dams which are in extremely precarious condition. All the four dams are earthfill and have a service spillway and irrigation outlets. The investigation and survey of the storage dams focused on defects and on changes in the design criteria since the dams were constructed. That included: * Revised seismic criteria for dam design. All the dams were constructed prior to the 1988 earthquake. At that time, seismic design criteria was for dams to withstand the effects of earthquakes with an intensity of eight on a Mercalli scale of twelve. After 1988, the criteria was changed, and dams must now withstand an earthquake intensity of nine. * Spillway designs were reviewed to ensure that the embankments will not be overtopped because of inadequate maximum flood flow assumptions, or insufficient freeboard. Present Armenian practice is to select a design flood on the basis of long term stream 96 Annex 4 flow measurements and by statistical projections. Western practice is to design spillway capacities for a flood resulting from a storm producing Probable Maximum Precipitation (PMP). If investigation shows that the dam may be overtopped by flood flows generated by such a storm, corrective actions would have to be taken. In addition, large snow melt flows, which are typical to the Armenian watersheds, need also to be taken into consideration. * In at least one dam - the Karnout - dangerous deformations of the embanlanents, including movement and settlement, were observed. In other dams, seepage through the embankments and piping were observed as well. * In all the four dams erosion and severe deterioration of concrete in tunnel liners and structures were observed. Water leaks through the concrete and at construction joints exceed any reasonable level expected from the normal ageing process of these structures. * Preventive measures are necessary as well, as there is an accelerated deterioration of steel pipes, gates and valves due to a continuous corrosion and cavitation. 23. The storage dam rehabilitation program under the project would include repairing of the following defects: * the Aparan Storage Dam: The dam maximum height is 51 m. The storage capacity is about 91 million m3 at normal water level of 1835 m. Serious leakages appear along the right hand side of the reservoir, with water losses estimated at 1.0 m3/sec. Attempts to seal the bottom and sides of the reservoir through a program of grouting was discontinued, because of lack of funds, and should be completed along a length of approximately 950.0 m. Wet spots were observed on the downstream slope of the dam embankment. The concrete lining of the spillway tunnel and the chute is completely destroyed in many sections. Also, in various sections along the outlet tunnel the steel lin- ing has collapsed and water is leaking into the tunnel; the regulation gates and their lifting gear need to be replaced and the cone valves repaired. The cost estimate for rehabilitation of the Aparan dam is US $724,100. * the Mantash Storage Dam: The dam height is 31 m and it is constructed of zoned layers with a central impervious core. Cutoff and grout curtains are provided. The dam crest is at elevation of 2,000.8 m with a maximum height over the river bed of 31 m. The storage capacity, at normal water level of the reservoir, is 7.9 million ry3 net. There are numerous cracks and serious deterioration of the outlet conduit, with muddy water leaking into the conduit. The accumulation of mud at the bottom of the conduit is an indication that an internal process of erosion and piping is taking place. Repair of the conduit is urgently required. The concrete in the intake tower, the spillway, and the spillway channel also requires rehabilitation. The irrigation outlet pipe is corroded and the regulation valves should be repaired. The estimated cost for the rehabilitation of the dam is US $179,100. * The Sharnakhpiur Storage Dam: The dam height is 29 m with a storage capacity of 4.2 million n3. The dam is built as a zoned embankment with a central impervious core. T7he Irrigation Rehabilitation Engineering Program 97 The dam crest is at an elevation 1,847 m with a maximum height over the river bed of 29 m. A side channel spillway with a crest of 19 m. is located at the left side of the dam and evacuates flood flows through a chute of 170 m. long. Water is released for irrigation through an intake tower with three gate entrances at different water levels and conveyed through a 600 mm steel pipe laid in a gallery through the embankment. Presently the condition of the dam requires that the spillway has to be reconstructed, and a stilling basin at the end of the chute provided. Strong vibrations endanger the outlet works. The intake should be redesigned and the gates and valves rehabilitated. The estimated cost for the rehabilitation of the dam is US $188,200. * The Karnout Storage Dam: The dam height is 35 m with a storage capacity of 21.3 million m3 at normal water level of 1,598.7 m. The dam is constructed of homogenous layers. The crest level of the embankment is at 1,601.0 m. A side channel spillway with a 28.0 m long overflow weir is located at the left side of the dam. Water is released through an intake tower and regulating valves, and is conveyed through a steel pipe laid in a reinforced concrete gallery through the dam structure. Another regulating valve is installed in a valve chamber at the toe of the dam. The dam embankment is in process of settling. The elevation of the dam crest is now 1,600.2 m, some 80 cm below construction level and only 90 cm above maximum water level. The original wave wall has also settled. Interim measures such as reducing the storage level in the reservoir are imperative. The concrete of the outlet conduit is cracked in several places and there is leakage of muddy water into the gallery. This indicates serious internal erosion ('piping') in the dam structure. The estimated cost of the dam rehabilitation is US $222,300. ANNEX 5: WATER MANAGEMENT A. CURRENT STATUS System Functioning 1. The Armenian irrigation systems clearly indicate a state of transition. The land reform program has turned former collective and state farms into a patchwork of small holdings, generally ranging from 0.5 to 1.2 ha, which in many cases are split into several plots in various locations. The people presently irrigating the land are former factory workers, school teachers, shop keepers, bus drivers and farmers, etc; associated with the original collective or state fanns. Many of the present farmers are inexperienced, working their new holdings instead of pursuing their chosen occupations. 2. The irrigation delivery systems were designed to service large farms which may have irrigated 50 to 400 ha from a single headgate or canal outlet. Presently, the same outlet may service 400 or more farmers, which in many cases, makes it difficult to deliver necessary irrigation water to farmers not in close proximity to the canal outlet. Therefore, many farmers have installed earth ditches to transport irrigation water to their fields. In some instances, the earth ditches must be installed across one or more adjacent farm plots. Some adjacent farmers will not allow ditch easements through their plots due to seepage and/or the loss of land. The result of these kinds of conflicts is that many farms do not receive adequate irrigation water during the irrigation season. 3. At this time, no formal network of authority to implement on-farm infrastructure has been developed, and the result is a helter-skelter installation of earthen delivery ditches. Further consequences are that some farmers located even a minimal distance from the existing outlets have no way of directly receiving water and no dependable scheduling technique is used to benefit all farms. In some areas, water distribution is erratic and many irrigators have broken concrete canals and pipes at points closer than the originally installed outlets in order to get irrigation water, and then repairing the broken canal or pipe with soil or sod, which leaks. As the number of repaired points in a canal system increases, the delivery efficiency decreases. Consequently, those near outlets have a virtually unlimited water supply and in many instances those at or near the end of the system remain water short. 4. The primary irrigation delivery infrastructure is designed for surface irrigation and consists of main canals with secondary and tertiary canals, supplemented by lift pumping in various places to raise the water for gravity flow. A small number of former state and collective farms had more modern irrigation infrastructure--center pivot and sprinkler systems--of which underground pipes and risers remain. These systems are rarely used because of their energy demands, but primarily because they were intended to irrigate a large area of a single crop, thus they are not suitable for the current farm structure, with smaller diversified plots growing various crops that require different watering schedules and applications. 5. Stories of system difficulties, poor water service and poor ditch/canal maintenance are numerous. There are also many instances in which things work much better than might be expected, given the poor condition of the infrastructure, an administration that is under funded and unprepared to deal with so many clients, and the disheartening environment in which farmers must work. They cannot afford inputs; they almost cannot afford to transport their produce to market. In some instances, payment by state agribusinesses that purchase the farm produce is delayed for months. Nonetheless, the farmers 100 Annex 5 are now charged for their water, an unprecedented development. 6. The most problematic areas of the irrigation systems are those that depend on electric pumps to lift water to gravity systems which irrigate 42% of the total farmed land in Armenia. Unpredictable black-outs and low voltage due to a shortage of electricity have paralyzed many of the pumps, leaving farmer without water. This past irrigation season the Ministry of Energy, due to lack of resources, was only able to supply 46% of the electricity needed to meet the pumping requirements for crop production. This predicament left many farmers with minimal water, and farmers at the end of most pump systems had no water at all. Water Users, Water Distributors, and Delivery 7. Despite the nominal establishment of water user associations (WUA), there is little evidence in the field that such organizations actually function. In reality, water users are organized by villages, with outlet boundaries corresponding to village boundaries. Last year, during the first irrigation season after privatization, the Operation and Maintenance Enterprise (OME) made agreements with each individual farm unit specifying the amount of water the unit would receive and the water fees for the season. The OME was overwhelmed by approximately 260,000 agreements and the government was disappointed by a collection rate of a mere 27% of the water charges in 1992. Therefore, the government instructed OME to make agreements with Village Councils for delivery and charges this second year. The Government expected the Village Councils to execute agreements with individual farmers and collect the water charges. This expectation has only partially been realized. 8. Under this Village Council arrangement, water is managed by water masters or water distributors who are supposed to manage distribution within an area up to 150 ha, generally supporting 300 to 400 farmers. This means two to four water masters per village. Originally, water masters were paid directly by OME. With the new agreements, the villages are to retain 7 to 10% of the collected water charges to pay the water masters a fair salary. According to official OME descriptions, the water miasters gather information about crops to be grown the next growing season. With the technical assistance and approval of OME and based on crop, area, and provisional delivery schedule, the village councils prepare a precise water demand estimate upon which the water charges are levied. Farmers are expected to pay 50% of the estimated charge by February 20, and are billed for actual deliveries by August 1 and again at the end of the irrigation season. 9. In actuality, most water users sign agreements with Village Councils but few really understand the distribution schedule. Water users are given little information on the availability of water or appropriate times to irrigate. Therefore when water is available, water users irrigate with little or no cooperation among farmers. Without irrigation schedules or lack of compliance with proposed schedules, water is not available to those users farther away from the canal. To eliminate the unpredictability of water delivery to these end users, a responsible water master must establish irrigation schedules among farmers and ensure water is delivered to the appropriate farm when scheduled. 10. Currently, water masters perform their intended functions in some areas, but are virtually invisible in others, except when trying to collect water charges. Not surprisingly, overall payment rates are low; if payments are made at all most occur at harvest time. In most cases, Village Councils have collected very little (11 % by October 1) leaving the water masters essentially unpaid this year, which in turn affects their performance. This year, farmners in many parts of the republic suffered frost damage Water Management 101 for which they are scheduled to receive compensatory payments. The government arranged to have outstanding water charges deducted from the frost payments and paid directly to OME. 11. Existing institutional arrangements do not encourage cooperation among water users, and the design of the existing irrigation system does not encourage the establishment of WUA. Since the privatization of land, irrigation delivery units are too large and ill defined to foster functioning work related groups. Rather, they constitute huge units of 300 - 400 people, too many to be considered WUA. With the installation of headgates, secondary, and tertiary canals, smaller delivery units will be formed and WUA can be established and function as intended. B. ISSUES AND RECOMMENDATIONS System Design 12. Water delivery units are presently too large to be operated efficiently or to support WUA formation. The present design is lacking in farm infrastructure. In many areas, secondary and tertiary canals need to be installed to deliver water to the approximate location of several farms and then install earth ditches strategically to deliver the water directly to individual farm plots. Other areas simply need earth ditches installed from the existing canal to deliver water to individual farms. In any case water measurement and/or metering devices must be installed to ensure proper water management and minimize the effect on overall water quality. The on-farm infrastructure can be simple, and in most cases can consist of precast concrete and earth ditches, simple headgates, and weir control measuring devices. Nonetheless, before a complete redesign of the water distribution is implemented, it would be useful to carry out pilot projects in a few villages to transform the systems by creating major delivery units of perhaps 75 to 100 farm units, further broken into small farmer outlet units, encompassing 10 to 15 farm units. This should be done in consultation with the Village Council and farmers. 13. The pilot projects should vary in design and could include pipe with individual outlets and water meters, concrete ditches where siphon tube irrigation can be demonstrated and ditches with automatic outlets. In addition some areas where sprinkler systems now exist but are not in use should be included in the pilot projects utilizing the sprinkler outlet, installing water control valves, water meters and various methods to distribute water to the field. Technical assistance would be required for location and design of pilot projects along with training of irrigators and water masters in irrigation water management. After pilot projects are initiated, monitoring must be established to identify which one is best suited for particular situations and practices. 14. Additional headgates should be installed at strategic locations to allow more efficient delivery of irrigation water. Water users have damaged canals and pipes at locations closer than installed outlets to get irrigation water because existing headgates are too far away and/or water is too difficult to get to individual fields. OME should be able to determine additional headgate requirements while preparing plans and schedules for standard repair and maintenance of the irrigation system. 102 Annex 5 Reliability of Water Delivery 15. Experience in many countries has shown that the most critical characteristic of irrigation service is reliability. It is more important for farmers to have reliable water deliveries than it is to have adequate supplies, because they can adjust to shortages if they know when to expect water. Reliable supplies enable farmers to work together cooperatively to meet their varying needs, while unreliable supplies encourage misuse, over watering, and competition among farmers. The deterioration of the irrigation infrastructure in Armenia, together with the parcellization of previously large farms, threatens the economic and social status of farmers. Priority should thus be given to rehabilitating the existing systems to assure functioning; designing inner irrigation structure for improved water delivery to make water more accessible to farmers; promoting gravity alternatives in systems that now depend on irregular energy supplies; and improving O&M and establishing procedures to sustain O&M. All of these steps will improve reliability. Water Charges 16. For the immediate future, given the precarious economic status of farmers, and uncertain opportunities for non farmers who currently work their new landholding, a portion of the recurring O&M costs should be covered by project funds rather than depending entirely on water charges. Meanwhile, the process of collecting water charges should be established more systematically and with better information, clearly indicating to farmers that charges will be raised gradually until they meet real costs. At the same time information about costs should be disseminated, and farmers and Village Councils should have an active role in setting local O&M priorities and budgets so they know how their money is being spent. Once the current major constraints on the economy disappear, transporting products becomes more economical, and electricity is more reliable, full cost recovery should be phased in over approximately a five-year period. 17. Presently, energy costs for pumping irrigation water is totally subsidized by the Government of Armenia through the Ministry of Finance. Since energy costs are increasing at a higher rates than farm income, energy subsidies should be continued until the economic status of the farmers is improved. The Government is now considering changing its policy and passing energy cost on to OME. If this happens project funds should cover such energy costs as part of the O&M cost package for which farmers are responsible. The change should be introduced transparently however so that farmers know far in advance how much their water charges will increase as the subsidy is withdrawn over a five year period. 18. Over time, water charges should be set to reflect real O&M costs of the region, including a share of overall institution costs, and electricity charges should be added according to local use. That is, systems without pumps should not subsidize pumping costs of other systems, but the pumping charges should be pro-rated according to all who benefit from the pumping. Similarly, if highland water charges are to be subsidized, the subsidy should come from government revenue, not from the water charges of lowland farmers. In addition, the cost of river and stream bank stabilization and mud flow protection and restoration should not be included in water charges as they presently are. Such activities have national environmental impact, rather than benefiting farmers alone, thus they should be paid from government revenue funds. Drainage improvement costs that are attributable to non local causes, such as high river levels from increased hydroelectric production and neighboring irrigation systems that raise water tables, likewise should not be included in present water charges. Water Management 103 19. Over time, as WUA develop and assume increasing responsibilities for O&M, they should become the collection agents for water charges. Until then, Village Councils are the most reasonable collection mechanisms, through water masters or other agents. At present, however, the Councils have little incentive to assume the responsibility. In order to operate and maintain the irrigation system, it is feasible for the government to advance funds to OME and charge them to Village Councils, which would then be motivated to collect water charges in order to repay the advance. As full cost recovery is phased in, the portion that is to be collected from water users would be advanced to OME, thus getting water users and Village Councils involved gradually and consistently. Discipline 20. Current water laws provide sanctions for destruction of canals and nonpayment of water charges, but existing fines are small and there is no real enforcement. Village Councils are responsible for imposing sanctions for destruction of canals and other infrastructure, as well as non payment of water charges. The Village Councils do not want to assume responsibility for enforcement, for political and other reasons, and they also prevent OME from taking action. OME has no authority to enforce sanctions, however, it is trying to get legislation that will enable it to work through District Councils. OME would like to levy fines for nonpayment, which would be multiplied every year that the farmer is delinquent. Such action is bound to be self defeating, however as the larger the fine becomes, the less likely it will be paid. Consequently, this approach would not achieve the objective of inducing compliance. Ideally enforcement should be direct and immediate, such as cutting off the farmer's water supply. The existing physical structure precludes such action, however, if the command area is broken into smaller units, it would be possible to use group pressure to enforce payment if small outlet units are cut off when farmers in the group are delinquent. 21. Before this can successfully occur, a clear policy must be developed, supported by necessary regulations or legislation and an enforceable mechanism must be established and promulgated. Given the intent of the project to phase in full cost recovery, these provisions should be in place by the third year of project effectiveness, at the latest. Institutional Re-orientation 22. OME is an administrative organization, rather than a service organization. Like most bureaucracies, OME treats farmers as subjects rather than clients. One component of technical assistance should be public relations and management support to transform OME into a focused, pro-active service enterprise. This would consist of several elements: develop clear and effective communication channels from top management to farmers and back up the hierarchy; develop regular information campaigns to inform staff and farmers about opportunities, constraints, and schedules; assist regional and lower-level staff to develop more effective ways to communicate with Village Councils and farmers; develop consultative planning programs that engage Village Councils and farmers in the process of setting O&M priorities and budgets; and prepare staff to be able to respond creatively to a growing role of water user associations both as advising groups and management entities, including such actions as subcontracting maintenance responsibilities to groups. 23. Village Councils currently have mixed roles in water management depending on the interests of the chiefs. Technical assistance should be available to Village Councils to engage them more 104 AnnexS actively in technical water management issues, rather than political. Information and training could be directed to strengthen such a role, and at the same time, financing could be used to structure the interest of the Councils. For example, Village Councils currently agree to collect water charges for OME, and then follow the agreement with greater or lesser interest. If the government advanced funding to OME and billed the Councils, they would have incentive both to collect water charges from farmers and to demand high quality service from OME. Water User Associations 24. Over time, WUA should be formed and given responsibility for O&M and water charge collection. A two-tiered structure should be developed, with outlet-level water user groups of 10-15 farmners, aggregated into a village (system) level umbrella association. Present conditions are unsuitable for investment in forming WUA, as the physical structure does not support user groups and the Village Councils are not suitable for the aggregating role. Nonetheless, the rehabilitation project can play an important role in establishing proper conditions. First, pilot programs to develop simple, low cost methods of dividing command areas into manageable units trying different techniques and methods to determine which approach is most appropriate for Armenian farmers. Second, reorienting the OME and Village Councils will create a better institutional climate for WUA to develop. Third, as OME gains institutional experience as a service organization, it will learn which O&M tasks can be delegated to local offices and eventually to WUA, thus increasing the underlying rational for such groups. Technical assistance will be structured to facilitate these processes and direct resources and attention appropriately, both directly and indirectly, through nongovernmental organizations, if promising ones are found. C. TECHNICAL ASSISTANCE Objectives 25. The field-focused technical assistance team will work in five major areas, each of which has a specific objective to be achieved during the period of assistance: (a) Institutional reorientation Objective: Change the OME from an administrative organization that manages water supplies and water infrastructure to a client-centered service organization that transparently serves the needs of its clients. (b) Decentralized water delivery Objective: With the active participation of Village Councils and farmers, design and construct secondary channels and outlets (major on-farm civil works) to serve no more than 50 farmers each. (c) Water User Associations Pilot Schemes Objective: Water Management 105 Determine the most effective ways to organize farmers into active, effective WUA by executing 3 or 4 pilot schemes designed to test different participatory methods and approaches. Active and effective WUA assume responsibility for developing minor on- farm channels and outlets serving 10-15 farmers, low-level operations and maintenance, water scheduling and the collection of water charges. (d) National Water User Associations Program Objective: Develop and begin implementation of a program to establish active WUA throughout Armenia, based on insights gained from pilot schemes. (e) Cost Recovery Objective: Develop and implement a program to achieve full O&M cost recovery within 5 years of project-effectiveness, in conjunction with WUA organizing efforts. Institutional Reorientation 26. Compared to most irrigation agencies, OME is in an advantageous position. It has a clear mandate, potential financial autonomy and a relatively lean staffing pattern. In order to make the best use of those advantages however, OME needs to change one significant characteristic that it shares with most irrigation agencies: it has an administrative orientation, as opposed to a management orientation. Consequently, OME sees itself as the administrator of infrastructure and water supplies, rather than a client-centered service orientation, in which it acts as a management entity responsive to the needs of its clients. The administrative orientation is manifest in a number of ways: (a) OME gives priority to developing its revenue flow (water charges) rather than assuring water delivery, thus the "success" of a district office is determined by payment rates, rather than the reliability or adequacy of water delivery. (b) It gives priority to farmers' obligations (to pay water charges), rather than their rights (to know about O&M programs and budgets, and to receive reliable, equitable service). (c) OME issues directives, delivery calendars and water charge schedules without following up to see whether or not farmers receive the information and directives, understand them or consent to them. (d) OME collects water charges to fund budgets and work programs that are internally generated; however, farmers are not informed about the use of water charges and have no say in setting O&M priorities or in developing or overseeing the implementation of work plans, thus they are not sympathetic to OME pleas to pay their fees. (e) OME's payment schedule reflects the budgetary needs of the enterprise, rather than the seasonal cash flows of the farmers, thus requirements to pay do not necessarily coincide with ability to pay. (f) OME recognizes that one of the most difficult problems farmers face is to establish field 106 Annex S channels to move water to their individual plots, which involves both technical skills and the cooperation of neighbors, but it has taken no steps to prepare sub-district staff, Village Council members, or water distributors to provide assistance to farmers in this area. 27. Over time, OME must depend on water charges to generate the revenue it needs to operate satisfactorily. To enhance the likelihood that it can generate the needed revenue, OME will need to change the way it does business. In a word, OME must reverse its overall orientation, becoming accountable to its clients, the water users, rather than expecting the water users to be accountable to it. This will require changes in substance and in appearance; it must adopt new objectives and procedures and it must make sure its clients know about the changes. Specifically, technical assistance will help OME acquire at least the following six characteristics: (a) Informative. OME must make concerted efforts to inform other officials and farmers about the enterprise--its objectives and plans, calendars and budgets, strengths and weaknesses, opportunities and constraints, and its needs and deeds. It should adopt simple, direct ways of disseminating information and ensure that the messages reach target groups. It must formulate a coherent communication strategy and mobilize various communications methods to implement the strategy, acquiring the skills needed to package and disseminate its messages effectively. (b) Responsive. OME must develop consistent, dependable ways to identify problems and needs of its clients, and to adapt its programs to resolve problems and meet the needs that are articulated, or else provide adequate feedback to enable clients to understand why there is no response. Equally important, it must demonstrate concretely how it is responsive--specifying which ideas are generated and how they are incorporated into policy or program changes--and inform clients accordingly. (c) Transparent. OME operations and budgets must be made transparent so that clients know what resources are required, how they are used, and what will be the result. Without transparency, water users have no way of knowing whether or not their money is being spent productively, effectively, and efficiently. Unless they are convinced that they get valuable services for their money, OME's clients will not provide resources unless they are coerced. Transparency in planning, budgeting and implementing will enable OME to gain the confidence and support of its clients. (d) Participatory. OME must bring clients into the decision-making process. It should develop mechanisms that enable water users, or water user representatives, to participate in processes that set priorities, develop budgets, oversee implementation, and monitor quality. Participation supports transparency and assures accountability, with little cost and great potential benefits to an enterprise like OME. (e) Proactive. OME must be responsive, transparent, and participatory; however as a professional enterprise, it must also be proactive, anticipating problems and needs before they arise, and preparing itself and its clients to face them. In short, OME cannot be effective if it is passive and responsive; it must assume leadership in ways that demonstrate professionalism as well as responsiveness, that demonstrate a long-term Water Management 107 vision of the enterprise and irrigated agriculture, as well as a precise understanding of the current situation and how to move from the present to the future. This characteristic differentiates OME from its clients, and potentially is the greatest value obtained from water charges. (f) Skldled. To be proactive and credible, OME must have the skills needed to assume current and future responsibilities. In the most concrete sense, this means that all the people engaged in OME operations--full-time staff, part-time workers and water distributors-are fully qualified to undertake their responsibilities. OME has moved quickly from a governmental unit that delivers water to large collective and state farms, to an autonomous enterprise that delivers water to thousands of farmers working on small plots, without changing the orientation or the skills of its staff. The new arrangement requires new public relations skills, as well as field skills, such as the ability to help farmers create and maintain field channels, which staff must acquire in order for OME to be seen by farmers as a credible, professional, and useful organization. At present such credibility is at risk. 28. A technical assistance institutional specialist will help OME acquire these six characteristics by assessing OME communications, operations, and skills, and by working with staff to formulate and implement programs to reorient the enterprise along the lines suggested above. The programs will: (a) develop new communications patterns up and down the OME hierarchy, and between OME and outside entities; (b) modify operational policies, objectives, and procedures to assure participation, transparency, and responsiveness, and to communicate the changes to clients and colleagues; and (c) formulate and help implement a human resources development strategy that gives staff the skills they need now to work effectively, and prepares staff and farmers for future responsibilities. Decentralized Water Delivery 29. Despite the fact that the irrigation systems were designed to deliver water to an outlet that serves a large collective or state farm, and that the command areas have been divided into many small parcels that must each receive water, the systems are operating better than one would expect. Without assistance, and without an established means to adjudicate conflicts or differences of opinion, most farmers have dug field channels to reach their fields in one way or another, either from existing outlets or new outlets that they created by breaking the canals. However, many of these adjustments are wasteful, inefficient, and ineffective; thus water delivery is irregular and inequitable, or at least potentially so. As quickly as possible, secondary, tertiary, and on-farm delivery systems must be regularized and fully articulated to ensure that water deliveries can be equitable and efficient. 108 Annex 5 30. Water delivery should be decentralized in a two-stage process using project financial and technical assistance resources. In the first stage, secondary and tertiary channels and outlets (major on- farm civil works) will be constructed to deliver water to units of 20 ha or less, depending on terrain. In the second stage, implemented while organizing WUA, micro-channels (minor-on-farm civil works) will be constructed to deliver water to groups of 10 to 15 farmers. 31. Major on-farm channels will be constructed under OME supervision, using local participation in design and construction as much as possible. Village boundaries coincide with irrigation system boundaries, thus the Village Council can assist in mobilizing participation and, as appropriate, oversee the process. 32. A technical assistance water management specialist (on-farm irrigation engineer) will help OME develop general specifications for the major on-farm channels and gates and, working with the technical assistance community organizer, train OME field-level staff to carry out the operations. 33. The objective in the design and construction of the major on-farm civil works is to make the work as simple as possible, technically and socially. That is, using acceptable technical criteria, the channels should make the best use of the terrain, be as short as possible and take up as little land as possible. Field execution will have three critical components: consultation, technical design, and participatory execution. At the outset, the OME engineer will meet with the Village Council and farmers to explain the task and obtain the advice of officials and farmers on the location of channels. Technical design will follow, based on field surveys and observation. Once the design is completed, the engineer will meet again with the Village Council and farmers to describe design options considered, explain the rationale for the selection of the final choice, describe O&M implications of the choice and seek consent. Once agreement is reached on the design, the engineer and Village Council will organize the construction process. The engineer will specify labor and material requirements and the Village Council will mobilize farmers to maximize participation in the construction phase and thus to maximize local ownership. 34. Once the approach is fully developed and organized, and staff are trained, this whole process can be executed in a decentralized fashion. Constrained by the number of sites for which each field engineer would be responsible, this program should be fully completed within two years of project effectiveness. First priority would be given to villages that would be the site of WUA pilot schemes. Work in such villages must be completed during the first year. WUA Pilot Schemes 35. The WUA pilot scheme program would be designed to test different methods of organizing farmers and mobilizing their resources for minor on-farm civil works, to determine the most cost-effective way to develop and implement a national water user association program. A technical assistance community organizer would design and advise OME in the implementation of pilot schemes in 3 or 4 villages. The schemes would cover a whole irrigation system (village), using different organizational methods in different parts of the system. Specific pilot schemes would be designed and organized with the active involvement of the Village Council and farmers, based on commitments negotiated at the outset. The program design would specify the experimental framework used, identifying variables to manipulate, indicators to monitor and outcomes to evaluate. At least four different approaches would be used to organize farmers using: regular OME staff; Village Council members; outside organizers; and trained local organizers. To the extent possible, the different approaches will be Water Management 109 used in each site, varying the level of intensity of contact in each. 36. The most important caveat in the design of the pilot schemes is to ensure that the pilots require no more financial, technical, or staff resources to implement than can reasonably be expected to be available for any site through a national program. 37. The technical assistance community organizer will design the program, train staff, advise during implementation (two years), oversee a program evaluation, and draft a final report that presents findings, conclusions, and recommendations for a national program. WUA National Program 38. By the middle of the fourth year of project effectiveness, the technical assistance team will jointly prepare a program to organize water user associations throughout Armenia, drawing on the findings of the pilot schemes and lessons learned while implementing the major on-farm civil works program and various communications efforts. Given the level of accumulated experience at that point, the program should be designed to begin implementation during project year five and continue entirely with OME staffing after the withdrawal of the technical assistance team at the end of year five. 39. The program would be designed to establish a proper legal and institutional framework for WUA, enabling them to have the responsibility and authority to collect water charges, to enforce payment through group sanctions, and to contract with OME to undertake O&M responsibilities as desired. The framework would recognize the rights of WUA to participate in OME decision-making processes, establish OME's accountability to WUA, and specify the relationship between WUA and between WUA and Village Councils. Cost Recovery 40. Perhaps OME's greatest challenge is to make itself financially autonomous, to generate from water charges the revenue it needs to execute routine O&M, replace machinery, and upgrade systems. This is an opportunity afforded to too few irrigation agencies, an opportunity to make the enterprise accountable to farmers, who can express their satisfaction by paying or not, and who can be assured that their payments stay in the irrigation sector, rather than go to a general revenue office. Nonetheless, OME has a few obstacles to overcome to make this opportunity a real opportunity for advancement. 41. Prior to the parcellization of state and collective farms, water charges were invisible to farmers, if they existed at all. Once the land was distributed, however, and OME was made an autonomous entity, Armenian farmers were told that they must pay water charges. In most countries, such new cost recovery policies are effected when systems are newly constructed or rehabilitated, and farmers are due to see immediate benefits. They are imposed with prior warning, so farmers know what to expect and there may or may not be concomitant enforcement mechanisms to assure compliance. In the case of Armenia however, cost recovery policies were adopted without prior warning, unrelated to system improvements. Indeed, water charges were imposed at the point when the systems were required to meet needs for which they were not even designed. Instead of signalling an improved situation, water charges signalled the deterioration of the irrigation systems. Given this situation, collection has been 110 Annex S greater than one might expect. 42. OME has tried two methods of levying and collecting water charges: first, by making contracts with individual farmers; and then by contracting with Village Councils, who were to write individual contracts. Not surprisingly, neither system has worked. OME has not done an effective job of informing farmers about water charges or water schedules and, except for the odd opportunity to deduct water charges from frost subsidies or state enterprise payments, OME has not aggressively sought to collect. Consequently, OME's ability to function has been compromised--it does not have the budget it needs to do the work that would have the impact that would induce farmers to pay the charges. OME is caught between what is required and what is reasonable. That is, it cannot be too aggressive about collecting until it can demonstrate its effectiveness in O&M, because of political repercussions; yet it cannot demonstrate effectiveness until it generates the revenue it needs. It has received subsidies at the end of the year, but they come too late to allow OME to establish the credibility it wants and needs. Moreover, if it indeed is required to pass electricity charges on to farmers in 1994, the situation will worsen, because charges will increase markedly without obvious justification. 43. Given the current situation, OME should revise its water charge schedule to phase in full cost recovery over a five-year period, corresponding to the project period, increasing 20% each year. Project funds will cover the balance, thus enabling OME to do its work, fulfill its responsibilities, and establish credibility. The full technical assistance team will assist in this process by helping to: (a) create effective communication patterns and information flows, thus giving farmers proper information and adequate warning; (b) make systems complete and functional, assuring reliable water delivery; (c) ensure that O&M programs are well conceived, cost-effective, well executed, and well publicized; (d) establish means for farmers to participate in decision-making processes, ensuring transparency and accountability; and (e) create and disseminate a corporate vision, with appropriate action plan, so people inside and outside of OME know where the enterprise is going and how it will get there. These steps, reflecting the achievement of other objectives identified above, will create the environment in which OME can seriously implement a cost recovery program that will be acceptable to farmers. D. TERMS OF REFERENCE Background 44. Concurrent with the privatization of land in Armenia in 1991, the Ministry of Agriculture turned a department responsible for irrigation operation and maintenance into a financially autonomous state enterprise, the Operation and Maintenance Enterprise (OME). The irrigation systems were designed Water Management 111 to deliver water to large state and collective farms, each of which was considered a client. The privatization of land brought three major changes: (a) first, the number of clients rose from 860 state and collective farms to about 300,000 individual fanrs and peasant collectives; (b) second, both farmers and OME had to try to manage water in irrigation systems that were not designed to deliver water to a plethora of small plots; and (c) third, the OME was constrained to generate its operational budget through water charges, thus giving farmers the unprecedented obligation to pay for deteriorating or unreliable service. 45. Not surprisingly, collection rates have been low, which has contributed to OME's inability to carry out maintenance or improvement programs. The Irrigation Rehabilitation Project is designed to fund investments to halt the deterioration of the irrigation infrastructure, improve irrigation systems, and to provide technical assistance and temporary financial support to OME to help it become a viable, functional, and sustainable enterprise. 46. Technical assistance to OME has four major objectives: (a) reorient OME to be a client-centered service enterprise, through improved communications, restructuring and training, so that it works effectively with, and on behalf of its clients--water users; (b) complete major and minor on-farm civil works to ensure equitable water delivery to all farmers; (c) develop active water user associations (WUA) that serve as clients and O&M partners to OME, testing organizational approaches in pilot schemes and than launching a national program; and (d) achieve full cost recovery to enable OME to function efficiently and effectively as a financially autonomous enterprise. Descripdon 47. The OME technical assistance team will be housed in the office of the Managing Director of OME, acting as advisors to the Managing Director and working closely with appropriate departments and field offices to design and execute work programs. The team will consist of three members--an institutional specialist (Team Leader), an on-farm irrigation engineer, and a community organizer. They will work on most tasks as a multi-disciplinary team, but individual team members will have primary responsibility for specific programs and tasks. Team members will work through OME counterparts who are responsible for coordinating each technical assistance program, and who will be expected to assume full responsibility at the end of the technical assistance period. 112 Annex 5 48. The major tasks of team members is as follows: (a) the Institutional Spedalist will have prime responsibility for institutional reorientation. This will consist of helping OME prepare a corporate vision; develop new, effective communications patterns, both internal and external; revise incentives; develop and implement a staff training program; define the roles and rights of WUA, with appropriate legal recognition; and mobilize short-term expertise as needed; (b) the On-Farm Irrigation Engineer will have major responsibility for helping OME prepare appropriate specifications and manuals for major on-farm civil works; train field staff for field application; prepare information manuals describing alternative designs, materials, and standards for minor on-farm civil works executed by WUA; and, in conjunction with other team members, develop training programs for WUA on minor on- farm works; (c) the Community Organizer will be responsible for helping OME design and implement WUA pilot schemes intended to determine the most effective ways to organize farmers in Armenia; oversee monitoring and evaluation of the pilot schemes; work with other team members, evaluate the pilot program to identify lessons learned and their practical implications; and design and begin implementation of a national WUA program. Qualflcations 49. Qualifications for the team members are as follows: Instituonal Specalist (Team Leader) (a) Masters or Ph.D. or equivalent experience in management or sociology, with strong credentials in complex organizations and communications; (b) Minimal 10 years professional experience, at least 5 of which in developing countries; (c) Successful experience in working on multi-disciplinary teams in a field situation; (d) Successful experience in developing capacity building programs, with strong human resource development components, preferably in the irrigation sector; (e) Proven ability to conceptualize and communicate clearly orally and in writing; (f) Proven ability to design and implement corporate communications strategies, using different media; (g) Excellent English skills, oral and written; (h) Russian or Armenian oral skills are highly desirable. Water Management 113 On-Farm Water Management Specialist (a) Masters or Ph.D. or equivalent experience in irrigation engineering or civil engineering with specialization in irrigation; (b) Minimum 10 years professional experience, 3 of which in developing countries; (c) Proven experience in designing and implementing on-farm irrigation infrastructure, using simple technologies; (d) Proven ability to work effectively on multi-disciplinary teams in a field situation; (e) Proven ability to prepare technical manuals demonstrating the use and implementation of simple technologies for a non-technical, village-level audience; (f) Proven ability to work effectively to organize and manage labor-intensive construction of civil works, preferably in irrigation; (g) Excellent English skills, oral and written; (h) Russian or Armenian oral skills are highly desirable. Community Organizer (Community Development Specialist) (a) Masters or Ph.D. in sociology or social work, with emphasis on community organization and community dynamics, or equivalent practical experience; (b) Minimum 10 years professional experience, 3 of which in developing countries; (c) Successful experience in designing, implementing, and evaluating community development programs, with strong empowerment objectives; (d) Successful experience in designing, implementing, and evaluating pilot programs intended to test approaches and methods for organizing self-help groups; (e) Proven ability to work with and train community organizers; (f) Proven ability to work effectively on multi-disciplinary teams in a field situation; (g) Excellent English skills, oral and written; (h) Russian or Armenian oral skills are highly desirable. ANNEX 6: LCB PROCEDURES, CONTRACTS AND PROCUREMENT PACKAGES A. PROCEDURES FOR LCB Procurement of goods (equipment and materials) and related incidental services, as well as civil works (including incidental electro-mechanical works) would be handled in accordance with IDA's Guidelines for Procurement (May 1992 version). Presently there are no local competitive bidding (LCB) regulations in Armenia. Hence, whenever the need for procurement under LCB arises, the IDA guidelines for ICB procedures would be adapted to LCB. Requirements for LCB requirements should include: (a) LCB bid offerings to be based on agreed modifications to sample/standard Bank ICB documents. Key requirements should be: (i) the provisions in the documents must be detailed using Data Sheets; (ii) agreed basic documents should be translated into Armenian (legally certifiable quality) reproduced and distributed as a separate document (similar to Bank standard documents) for inclusion in all Contracts; (iii) the agreed basic documents in english should be similarly reproduced (preferably with accompanying Armenian version) for the ready reference of non-Armnenian speaking entities but must be clearly identified as a reference document; and (iv) Data Sheets and other variables unique to each offering are to be provided for the Bank's prior review and no-objection on the basis of a certifiable quality translation from Armenian to English. These prior reviews would continue until a pre-agreed number of bid offerings have been reviewed and approved without substantive changes. In this manner, any concerns with the application of the LCB process can be addressed and corrective measures identified. (b) Advertisement should be extended beyond the limited number of available newspapers (two exist but only one is now used) to include: (i) increasing local awareness of firm/enterprises by mounting a substantial effort through the available media; (ii) specific notices (SPN's) should: (1) be posted in key locations (possibly bulletin boards) identified by the Government; and (2) placed in key Ministries (e.g., Agriculture, Construction) having a tradition of state ownership of firms. This traditional source of works construction and goods production constitutes an information network that currently exists and which, until the transition to a fully privatized 116 Annex 6 competitive economy is attained, should be utilized to promote competitive bidding procedures giving the Government increased visibility in their privatization efforts. Access to the information should remain an open and free resource available to all enterprises. B. CONTRACTING 2. Contracts for project works will be: (a) manufacturing of precast segments for canal repair work; (b) installation of these segments in the canals and in-situ concrete work; (c) earthwork on the dam sites and in the canals; (d) specialized work, such as grouting, manufacturing, and installation of metal parts in concrete structures; (e) well drilling; and, (f) procurement of reinforcing steel, steel pipes, pumpsets, equipment etc. 3. The rehabilitation of the four dams would be carried out under two groupings of contracts. (a) D/1 series Contract Works, for the rehabilitation of Aparan, Karnout, Sarnakhpiur, Mantash dams; (b) D/2 series Contract Works, for the laying of steel pipes, valves, etc.; and (c) D/I Contracts will be advertised locally, D/2 contracts will be advertised internationally (see series contracts IR/2). 4. The rehabilitation of irrigation systems, canals and pressure pipelines would be advertised in four grouping of contracts: (a) IR/I Series Contracts for goods, the manufacture and delivery of precast concrete sections; (b) IR/2 Series Contracts for goods, the supply of steel pipes, valves, etc.; (c) 1R/3 Series Contracts for works, the rehabilitation of canals; and (d) IR14 Series Contracts for works, the replacement of pressure pipes; 5. IR/l, IR/3 and IR/4 Series Contracts will be advertised locally. LCB Procedures, Contracts, and Procurement Packages 117 6. IR/2 Series Contract Goods, would be advertised internationally. 7. The well drilling and equipment renewal program would be advertised in four series of contracts: (a) Series BH/1 - Goods, for the supply of new submersible pumps; (b) Series BH/2 - Goods, for the supply of spare parts for existing Russian submersible pumps; (c) Series BH/3 - Works, for the drilling and construction of new wells and for the rehabilitation of existing wells; and (d) Series BH/4 - Direct, for the repair and overhaul of existing submersible pumps; 8. BH/1 Series Contracts will be advertised internationally. 9. BH/2 Series Contracts will be by direct contract with the pump manufacturer(s). 10. BH/3 and BH/4 Series Contracts will be advertised locally. 11. Spare parts purchased under BH/2 Series Contracts would be delivered to the selected pump repair workshops for the rehabilitation of old pumps. 12. Construction of the Getik Irrigation Scheme would be advertised as one contract. (a) G/i - for the construction of main canals and distribution system; and (b) the supply of pipes for the irrigation distribution system will be in IR/2 series contracts. 118 Annex 6 DRAFT PROCUREMENT PLAN AND SCHEDULE Page I of 2 (INCLUDING ALL FINANCING SOURCES) i i i Major Activities Schedule , * Total Cost * (Month and Year) Type of * * Estimate , Method of Contract Nature of Package (Thousand USS) Procurement Issue of Submission of Award/Sign Completion _ , ' ' _ Documents Bid/Proposal Contract of Package Goods Pressure Pipes, Pumping Scheme 1 1 4,889 ' ICB December 94 March 96 May 96 98 I Pressure Pipes, Pumping Scheme 2 1,311 ICB April 96 July 96 September 96 98 ' Pressure Pipes, Conveyance Scheme I ' 5,527 ' ICB March 95 July 95 September 95 96 I Pressure Pipes, Conveyance Scheme II | 5,393 | ICB July 95 October 95 December 95 96 Concrete Sections, Conveyance Scheme I ' 4,452 ' LCB November 96 January 97 February 97 98 (4 Contracts) Concrete Sections, Conveyance Scheme II I 3,928 I LCB March 97 May 97 June 97 98 (12 Contracts) g Concrete Pipes, Conveyance Scheme I * 9501 ICB March 97 August 97 October 95 98 (4 Contracts) i Concrete Pipes, Conveyance Scheme II 950 ICB November 97 January 98 February 98 99 * (2 Contracts) l I Concrete Pipe ' 1,580 | LCB March 97 May 97 June 97 98 I Submersible Pumps | 1,200 ICB May 95 August 95 October 95 96 I Spare Parts for Submersible Pumps 280 LCB May 95 July 95 August 95 98 'Equipment for Pibt Projects I 1,490 ICB January 97 Aprl 97 June 97 98 I Equipment for Pilot Projects II 1490 LCB January 97 April 97 June 97 98 * (2 Contracts) e Valves, Siphons, Outfets for Conveyance g 90 0 LS NA. N.A. NA. 98 * Schemes * Valves, Siphons, Outlets for Pumping 700 LS NA. NA. NA. 98 ,Schemes _ ,__ LCB Procedures, Contracts, and Procurement Packages 119 Page 2 of 2 i i I Major Activities Schedule . . . (Month and Year) Type of i i Total Cost i Method of o S Contract Nature of Package Estimate i Procurement Issue of Submission of Award/Sign Completion * , J Documents Bid/Proposal Contract of Package Goods s Equipment for PIU 155 LS December 94 January 95 January 95 95 Equipment for Technical Assistance 265 LS N.A. N.A N.A. 96 nstall Spare Parts, Rehabilitate Submersible 200 DC N.A. N.A. N.A. 96 l Pumps ; Works * Dam Rehabilitation | 850 I ICB ay 95 August 95 October 95 97 ' Dam Rehabilitation (3 Contracts) j 790 ' LCB May 95 July 95 August 95 97 * Conveyance Scheme I (3 contracts) 938 LCB November 95 January 96 February 96 96 Conveyance Scheme 11 (7 Contracts) , 2,190 j LCB March 96 May 96 June 96 97 Pumping Schemes (4 Contracts) | 1,502 LCB July 96 September 96 December 96 97 Small Works in Conveyance and Pumping ' 130 LS N.A. N.A. N.A. 98 . Schemes I Pumpsets Installation * 1,200 LCB October 95 December 95 January 96 97 Construction of Wells (9 Contracts) . 2,990 . LCB June 95 September 95 November 95 97 Construction of Wells (9 Contracts) * 2,490 ' LCB January 96 February 96 April 96 97 Consukant 5PIU Consuftants j1,300 ' -June 94 August 94 November 94 99 1 Serices ,Pilot Projects, Consultants under single j198j -May 95 July 95 August 95 98 l contract.l Consuftants for Pilot Projects ,1,102 i, -May 95 July 95 August 95 99 | | . .(Multph Contracts as Needed) , ANNEX 7: TERMS OF REFERENCE FOR THE PROJECT IMPLEMENTATION UNIT AND CONSULTANTS A. TERMS OF REFERENCE FOR PROJECT IMPLEMENTATION CONSULTANT OF THE PROJECT IMPLEMENTATION UNIT 1. The Project Implementation Consultant is to be an internationally recruited firm (the Firm) retained to establish, staff, and operate the Project Implementation Unit (PIU) for the Irrigation Rehabilitation Project (the Project). The Project is dependent on the future signing of the Loan Agreement for its financing. Financing for the operation of the PIU has, however, been made available in the form of Projects Preparation Facilities (PPF) funds provided by the World Bank. The PIU reports directly to Project Management Board (PMB) which in turn reports directly to the Minister of the Ministry of Agriculture (MOA). 2. The Firm will fulfill a series of evolving responsibilities throughout the estimated four year duration of the Project which is projected to begin approximately six months after the start of the Firm's Contract. During the initial phase (Stage 1) of the assignment the Firm will establish and oversee, as specified in the following paragraphs, the setting-up of a fully-staffed, operational, and autonomous Project Implementation Unit. For the remainder of the Project (Stage 2), the Consultant will supervise the PIU to assure its continued compliance with established procedures, Bank guidelines, and agreed project elements and schedules. 3. During Stage 1 of the Firm's contract, estimated to last for one year, the Firm is to: (a) provide qualified staff for the four expatriate positions of the PIU whose responsibilities are detailed in Section B; (b) establish policies and procedures guiding all activities (e.g., procurement, accounting, inspection, etc.) the PIU is to autonomously perform in fulfilling its responsibilities within the Project; (c) develop annual project schedules for presentation to the Board on the basis of identified undertakings, objective levels of performance and schedules for procurement activities; (d) prepare agendas and presentations for semi-annual Board meetings to update the status of the project and highlight positive and negative variations from standard established in the preceding schedules approved by the Board; (e) liaise with the Ministry of Agriculture and its designated Project Management Board to ensure coordination between respective actions and establish an effective communication system; (f) recruit local personnel to: (i) complete the staffing of the PIU, and (ii) replace key expatriate staff upon completion of the Stage 1; 122 Annex 7 (g) design and conduct all necessary training to ensure appropriate transfer of skills from the expatriate staff to the locally recruited personnel; (h) procure listed items for the Project Implementation Unit in accordance with World Bank guidelines and procedures; (i) establish an internal system designed to facilitate supervision and as-needed technical assistance to the PIU during Stage 2 of the Consultant's contract. This shall be separate and distinct from the Monitoring and Evaluation Unit within the PIU whose function is project oriented; (j) phase the appropriate transfer of responsibility from its expatriate staff to its locally recruited staff in accordance with the schedule and plan originally proposed and subsequently adjusted by the firm; and (k) maintain quality controls on the Project within the planned time of four years as measured from Loan Agreement effectiveness. 4. The Project Director shall be nominated by the Project Management Board and approved by the World Bank but shall be employed by the Firm. The Firm will establish an appropriate level of com>pensation for the Project Manager and will provide orientation and other training as the Firm may deem appropriate for assumption of Stage 2 responsibilities. In the event the nominated candidate should, in the Firm's evaluation, prove inadequate for the task, the Firm may request the Board provide a replacement and its request will be considered. 5. In recognition of the conditions in Armenia, it is proposed that: (a) the Firm will supply a certificate of health for each of its proposed expatriate staff. Particular attention is called to the limited emergency and evacuation services as they may affect conditions of the heart, diabetes, and similar medical concerns; and (b) subsequent to the Firm's selection and signing of the Contract, if an expatriate member of the Firm's staff is determined to be marginally or unqualified as regards their technical skills, health, or cultural incompatibility, the Board should notify the Firm and agree on the schedule for the individual's departure and the arrival of a replacement expatriate more suited to the assignment. 6. Within the Project Implementation Unit are two unique sub-units: (a) Pilot Projects: This sub-unit will be separately financed outside the Firm's Contract and the consultant's will be retained on the basis of invitation documents prepared by the PIU. When established, the Pilot Project's sub-unit will be administered through the PIU. The PIU will not, however, be held liable for the performance of the sub-unit. The Pilot Projects sub-unit will not be established until after the Loan Agreement is signed and effective. (b) Water Master Plan: This sub-unit also has financing from outside the Firm's Contract for financing the updating of the Master Plan. The Water Planning Institute (WPI) has Terms of Reference for the Project Implementation Unit and Consultants 123 been nominated by the Board and approved by the World Bank to provide such services as are needed as an extension of its previous Water Master Planning assignment. The Firm will negotiate a sole source contract with the WPI on an equitable basis. Work or services needed by the Firm or requested by the Board prior to Loan effectiveness may be financed from the available PPF as an advance procurement for compensation upon Loan effectiveness. Additionally, the Water Master Plan will be responsible for preparation of the next project proposed for World Bank financing. Funding for the preparation will be secured separately. The PIU will coordinate the project preparation activities. 7. In recruiting local employees for employment by the Firm, the Firm will be expected to: (a) develop job descriptions for these employees and review them with the Board prior to their recruitment. The Board may identify their concerns with the job description and these concerns will be considered by the Firm. (b) independently establish salaries for their locally recruited staff of employees that consistent with the local economy and availability of the needed skills within that economy while being adequate for employees to rely on the Firm's income as their sole support. 8. The first period of the consultant's contract will be considered ended when the milestone of an effective skills transfer to the long-term PIU staff has been accomplished; this is referred to a the Stage 1 Milestone. For this purposes, MOA and the World Bank (the Bank) will agree on the basis for evaluation and will jointly review the progress of the skills transfer program after 6 and 12 months from mobilization. In the event it is determined the requirements cannot be effectively provided by the locally recruited staff, the duration of the expatriate experts' residence in Armenia may be required to be extended. Following the joint evaluation in which it is determined the locally recruited staff has acquired the required knowledge, skills, and competency to provide quality services, the full-time expatriate staff will be released. In the event the available expatriate staff is suited and agreement regarding their Terms of Reference and compensation can be reached, they may be retained to accomplish specifically identified objectives not within the present Terms of Reference. 9. The second phase of the assignment will involve the continued autonomous operation of the PIU with primary reliance on the firm's locally recruited staff. The firm will continue to be directly responsible for the performance and will remain liable for any failure of the PIU to exercise due care in the performance of their activities. The Firm should be prepared to provide additional technical inputs and guidance as needed by their PIU staff in addition to periodic reviews and monitoring from the firm's home office throughout the life of the Project. 10. The Firm's reporting on the progress and management of the Project through the Project Manager to the Board. Various forms of reports will need to be prepared and presented including, inter alia: (a) A PIU Inception Report will be developed and presented to the Board within two months of Contract effectiveness. The report will outline the planned actions anticipated in the Contract, their current status, problems encountered and recommendations for any changes determined appropriate in the agreed action plan. 124 Annex 7 (b) Monthly status reports will be developed and provided to the Board members no later than the seventh day of the month following. (c) Contract status/deviation reports. (d) Disbursement and accounting reports. 11. The Project will be audited annually to determine its compliance with requirements of the Loan Agreement and World Bank procurement guidelines and procedures. In addition to establishing and maintaining a suitable accounting system covering all activities under its control and providing reports on those activities, the PIU will assist in the preparations for the audits. Final arrangements to obtain auditors is outside of the scope of the PIU. Incentive for Early Completion: 12. The early completion of the project infrastructure rehabilitation (e.g., dam/channel rehabilitation but excluding administrative actions such as the Pilot Projects and Water Master Plan and operation of the PIU through final disbursement and project closing) is deemed desirable and the Board is accordingly offering the following incentives to the Firm: For comnletion Percent of Contract Price Six months or more in advance 15% More than 3 but less than 6 months 10% More than 1 but less than 3 months 5% Less than 1 month None B. TERMS OF REFERENCE FOR DEPUTY MANAGER AND FOREIGN CONSULTANTS OF THE PROJECT IMPLEMENTATION UNIT Deputy Project Mananer 13. The deputy to the Project Manager will be an externally recruited consultant. The deputy project manager (DPM) will be in his office for a period of one year, after which it is assumed that the Project Manager would be able to operate without foreign assistance. The objectives of the DPM work would be as follows: (a) To assist the MOA to set up the PIUThis will entail: (i) overseeing the setting up of policies and procedures under which the PIU office Terms of Reference for the Projea Implementation Unit and Consutants 125 would operate; (ii) preparing terms of reference for the PIU staff, including local and foreign consultants; and (iii) providing assistance to the Project Manager in recruiting the appropriate personnel to the PIU. (b) To provide counseling to the Project Manager in administering and managing the PIU. (c) To oversee the work program preparation and implementation of each of the PIU four sections: engineering, services, technical assistance, and monitoring and evaluation. Tasks 14. The DPM will perform the following tasks in respect to the project: (a) Advise the PIU manager in recruiting and selecting locally hired staff for all the PIU sections and recruiting and selecting foreign consultants for the engineering and the technical assistance sections, including: (i) construction supervision engineer; (ii) water planning and design engineer; (iii) procurement and contract management engineer; (iv) institutional specialist; (v) on-farm irrigation engineer; and (vi) community organizer. (b) Provide guidance and coordinate the work of the PIU sections. (c) Participate in the monthly meeting of the Project Board Management and assist the Project Manager in preparing monthly progress report for the meetings. (e) Assist the Project Manager to prepare semi-annual progress reports to the Bank. Qualifications (a) Water resource and irrigation engineer; (b) Minimum 20 years' professional experience, 10 of which in developing countries; (c) Proven experience in designing and managing implementation of irrigation projects. 126 Annex 7 (d) Proven ability to work effectively on multi-disciplinary teams and ability to coordinate and motivate staff work; (e) Proven ability to conceptualize and communicate clearly orally and in writing; (f) Proven ability to design and implement corporate strategies; (g) Excellent English skills, oral and written; (h) Working experience in Armenia is highly desirable. C rUCdn SuMervison Advisor IS. The construction supervision advisor (CSA) will be externally recruited consultant. The CSA will be recruited for a period of six months, and will prepare a local engineer to assume the respomibility of construction supervision. 16. The objectives of the CSA work will be as follows: (a) to provide advice to the PIU and the MOA on the development of systems and procedures required to ensure that construction activities on this project are adequately supervised; (b) to provide training to locally hired supervisors in the use of the construction supervision procedures and in preparation of bidding documents and bidding procedures; and (c) to oversee the implementation works of the engineering components of the project, including the rehabilitation works concerning the conveyance schemes, the pumping schemes, the tubewells, and the storage dams. Tasks 17. The CSA will perform the following tasks in respect to the project: (a) advise the PIU and MOA in recruiting and selecting locally hired consultants who will perform on-site field supervision ("supervisors"); (b) advise the PIU and MOA on the design of quality and quantity control systems and the development of common project reporting system for all construction contracts, including standards for preparation of monthly certificates; (c) advise the PIU and MOA on procedures for coordinating and monitoring the performance of the local construction supervisors and provide ongoing assistance in carrying out this coordination and monitoring program; (d) with the PIU and MOA, train the local supervisors in construction supervision including Terms of Reference for the Project Implementation Unit and Consultants 127 quantity and cost control, scheduling, and project component reporting; (e) with the PIU and MOA, train and assist local supervisors in appropriate techniques of dispute resolution with contractors and appropriate use of sanctions; (f) on an ongoing basis, monitor the performance of the local supervisors, advise them on how to improve performance, advise the PIU where serious performance problems are perceived, and generally serve as a 'technical resource" for the local supervisors in performing their work over the initial phase of the project; and (g) advise the PIU and MOA on preparing comprehensive reports, including revised cost estimates for individual contracts, revised timing of completion of contracts, and revised estimates of allowances for physical and price contingencies. 18. It is understood that all direct, on-site supervision of construction activities for the project will be performed by Armenian supervisors retained by the PIU and that the CSA will be functioning in an advisory and training capacity in relation to this activity. Authorization of requisitions or change orders for cost schedule increases will be handled by the PIU. Negotiations for the bid documents or contractual agreements will be handled by the PIU staff. Reporting 19. The CSA will prepare monthly progress reports to the PIU management that describe: (a) major activities undertaken and their significance and progress toward achieving the project objectives; (b) major issues and problems; and (c) projected activities for the coming month. These reports should be submitted no later than 15 days after the end of each month. Qualifications (a) Water resource and construction engineer; (b) Minimal 10 years' professional experience, five of which in developing countries; (c) Proven experience in construction supervision of irrigation projects; (d) Proven ability to work effectively and coordinate and motivate staff work; (e) Proven ability and experience in conducting training activities in construction supervision; (f) Excellent English skills, oral and written; 128 Annex 7 (g) Working experience in Armenia is highly desirable. Procurement and Contract Advisor 20. The procurement and contract management advisor (PCMA) will be an externally recruited consultant. The PCMA will be recruited for a period of one year, and will prepare a local engineer to assume the responsibility of procurement management in the PIU office. 21. The objectives of the PCMA will be as follows: (a) to provide assistance and advice in all procurement related matters under the Irrigation Rehabilitation Project; and (b) to train local Armenian staff from the PIU and public and private contractors on all issues of procurement procedures that involve supply and procurement under the IDA financed loan. Tasks 22. The PCMA duty will include the following: (a) assist in the preparation of procurement notices for appropriate publication/circulation and ascertain that advertisements have been carrying out in accordance with agreed procedures; (b) establish a master list of suppliers responding to the advertisements including the distribution of appropriate supplier lists to the procuring agencies. This will form part of the management information system to be established by the PIU; (c) prepare standard bid documents to be utilized by the PIU and ascertain that such documents are in compliance with procedures agreed upon by the Government and the Bank; (d) review the list of goods to be imported to determine that they are eligible for procurement under the proposed project loan and confirm availability of funds for procurement of the proposed goods; (e) assist in the establishment of a schedule/timetable for the procurement of goods; (f) assist in the public opening of bids and preparation of appropriate protocol to be submitted to the PIU management and the Bank; (g) monitor the technical evaluation of the bids received, including provision of assistance as needed in the selection of the lowest evaluated bidder in strict compliance with agreed procedures given in the bid documents; Terms of Reference for the Project Implementation Unit and Consultants 129 (h) oversee the payment arrangement (such as letter of credits or other methods) stipulated in the bidding documents; and (i) provide on the job training to a designated Armenian procurement advisor and prepare training program for interested parties, such as local suppliers and other staff of the PIU. Reporting 23. The PCMA will prepare within 15 days of the end of each month a monthly progress report on all the procurement activities to be submitted to the PIU management and IDA. Qualifications (a) Construction or civil engineer; (b) Minimum 10 years of professional experience, five of which involve procurement; (c) In depth knowledge of procurement procedures used by the World Bank and other United Nations organizations; (d) Proven experience in procurement management that involve international and local competitive bidding; (e) Proven experience in preparations of technical specifications and evaluations of bidding documents; (f) Proven ability and experience in conducting training activities in procurement; (g) Excellent English skills, oral and written; and (h) Working experience in Armenia is highly desirable. Planning and Design Advisor 24. The planning and design advisor (PAD) will be an externally recruited consultant. The PAD will be recruited for a period of one year, and will prepare a local engineer to assume the responsibility of planning and design in the PIU office. 25. The objectives of the PAD would be to provide assistance and advice in all engineering and design activities related to the Irrigation Rehabilitation Project; to assist in planning the next irrigation project; and to update of the Water Master Plan for the country. 26. The planning and design of the project has been carried out by the Water Planning Institute of the DWSI, supported by the Hydrological Studies Institute and for special items of work, by other organizations inside and outside of the MOA. Despite the fact that detailed planning has already 130 Annex 7 been prepared, at the implementation stage it is necessary to scrutinize again the detailed project engineering design. The PAD will approve planning reports, designs, specifications and bills of quantities and in coordination with the CSA and the PCMA he will prepare contract documents. Tasks 27. The PAD duty will include the following: (a) scrutinize all planning and design aspects of the engineering works of the project and coordinate any necessary changes that lead to cost optimization with the Water Planning and Hydrological Studies Institutes; (b) coordinate planning implementation with construction program and procurement activities; (c) provide assistance to the Water Planning Institute in updating a realistic and cost optimal water master plan for the country; and (d) provide assistance to the Water Planning Institute in preparation of the next irrigation project. Reporting 28. The PAD will prepare monthly progress reports to the PIU management that describe: (a) major activities undertaken in regard to the three major tasks of the PAD and their significance and progress toward achieving the project objectives; (b) major issues and problems; and (c) projected activities for the coming month. These reports should be submitted no later than 15 days after the end of each month. Quaffications (a) Water resource and irrigation planning engineer; (b) Minimum 10 years' professional experience, five of which in developing countries; (c) Proven experience in planning and design of irrigation projects; (d) Proven ability to work effectively and coordinate various phases of planning and design work; Terms of Reference for the Project Implementation Unit and Consultants 131 (e) Excellent English skills, oral and written; and (f) Working experience in Armenia is highly desirable. ANNEX 8: AGRICULTURAL DEVELOPMENT 1. The proposed project area will consist of a total of about 164,700 ha, of which some 134,600 ha (82%) will be in the lowlands, and the remaining estimated 30,100 ha in the midlands. A. TYPICAL CROPPING PATTERNS 2. The latest statistics on cropping patterns date from 1992. In 1993 there have been significant changes which are likely to continue. The following Table 1 summarizes the 1992 data from the district statistics and presents the best estimates for 1993. The estimates were made by specialists of the Ministry of Agriculture (MOA) in cooperation with the Bank's Agricultural Sector Mission and the Project Preparation Team. Table 1: Cropping Patterns (in percentage of irrigated area) Lowlands Midlands Highlands 1992 1993 1992 1993 1992 1993 Cereals 27 33 50 53 52 55 Potatoes 3 3 3 2 3 2 Vegetables 10 9 4 4 1 1 Forage 7 6 40 39 44 42 Orchards & 53 49 3 2 - - grapes 3. The greater part of the project area is situated in the lowlands (the Ararat valley), where traditionally more than 80% of Armenia's agricultural output is produced. The underlying assumption is that the cropping pattern evolution in the next five years is as presented in Table 2. 4. The project will secure water supplies to presently irrigated areas, increase the areas which can be irrigated, or firm up supplies to presently under-irrigated areas. It has been assumed that future changes in the cropping patterns would occur mainly in response to market forces. As shown in Table 2, the scenario for the likely development of cropping patterns indicate the following possible changes: (a) cereal area would decrease as affordable grain imports would become available, and land would be liberated for higher value crops; (b) vegetable areas in the lowlands would increase as fresh produce exports and processing would resume; (c) potato area would increase for similar reasons as vegetables; 134 Annex 8 (d) overall forage area would go up in line with anticipated increasing livestock numbers; and (e) orchards and grapes would in general gradually increase as areas occupied by grain crops would become available for higher value crops. 5. As at present, about 13% of the irrigated area would continue to be in "home plots" (kitchen gardens); these small, intensively cultivated fields will continue to produce vegetables and fruits for home consumption. The area under home plot cultivation, however, would not increase because they already take up all suitable land near the villages. 6. Although the project would be predominantly located in the lowlands, to give a national overview, the table below informs also on expected changes in midlands and highlands in percentage of irrigated area: Table 2: Expected Changes in Percentage of Irrigated Areas 1994 1995 1996 1997 1998 Lowlands Cereals 27 23 28 12 10 Potatoes 5 6 6 6 6 Vegetables 14 15 17 17 17 Forage 19 20 22 27 28 Orchards and vineyards 35 36 37 38 39 Midlands Cereals 50 44 40 36 32 Potatoes 3 4 4 4 4 Vegetables 3 3 3 3 3 Forage 20 32 27 30 33 Orchards and vineyards 24 25 26 27 28 Highlands Cereals 50 46 40 37 35 Potatoes 12 12 12 12 12 Vegetables I I I I I Forage 35 33 45 48 50 B. CROP WATER REQUIREMENTS. 7. Crop water requirements at the plant root were calculated for all agro-ecological regions and districts of Armenia by the Department ("laboratory") of Irrigated Crops (Laboratoria Oroshenia Seldkhozkultur) of the Research Institute of Water Affairs and Hydrotechnics (Institut Vodnykh Problem i Gydrotekhniky). Representative figures for amount of water, as well as frequency of irrigations, which were used for the lowlands and midlands calculations of the crop budgets and farm models, are given in the Table 3: Agricultural Development 135 Table 3: Frequency of Irrigation Lowlands Midlands m 3 No. of 3 No. of Irrigations Irrigations Wheat 5,000 3-4x 3,000 3x Potatoes 3,000 5x 3,000 5x Vegetables 8,000 lox 6,000 12x Forage 8,000 6x 4,000 5x Orchards 6,000 7x 5,500 7x Vineyards 7,000 7x 6,000 7x 8. It is estimated that the "with project" yields presented below could be attained if 70% of the above crop water requirements would reach the plant roots at the right time, and thus would prevent shortages of water at critical phases of crop development. 9. The project would assist management to ensure that good principles of irrigation scheduling are being respected. The three imperatives of efficient irrigation water management are that the water supply must be reliable, adequate, and timely. When the first two requirements have been ensured, timing becomes particularly crucial and demands some irrigation agronomy insight and considerable experience. To strengthen the irrigation agronomy capability of the research and extension establishment, the project would finance some soil water measuring equipment, such as one weighing lysimeter, one time dimension reflectometer, and a number of tensiometers and gypsum blocks, as well as soil augers. 10. While overall water use efficiency from the source to the plant without the project is estimated at 35% at best, it is judged that in the "with project" situation the efficiency would increase to a reasonable 50%. C. THE "WITHOUT PROJECT" SITUATION 11. Rehabilitation of the conveyance systems and the tubewells would mostly affect the lowlands, where rainfall is totally inadequate for crop production. These areas include most districts of the fertile Ararat Plain, with a total annual precipitation of about 250 mm, of which usually less than half falls during the main vegetation period. The assumption was made that the system would not completely fail immediately, but that water losses would gradually increase. As less water reaches the fields yields would diminish, followed by changes in the cropping patterns. For the economic analysis it was assumed that water supply would decrease by 5% annually, if no rehabilitation measures were taken and would remain at 20% of the preproject level from year 17 and on. 136 Annex 8 12. Farmers' first response to a growing water shortage would be to under-irrigate. First, the cereals and forage would get less water, followed by orchards and, finally, potatoes and vegetables. Wheat, now irrigated three or four times, would receive two and eventually only one irrigation. This would reduce yields to about 2.5 t/ha with two, and 1.5 t/ha with one irrigation. Lucerne could no longer be grown: farmers would revert to a single cut of cereal hay, irrigated once, yielding about 2.0 t/ha. Eventually, only inadequately irrigated cereals would be grown for grain. The last to be deprived of water would be the home plots. 13. In the dam rehabilitation component the assumption was made that without rehabilitation the dams would cease to function. Apart from the physical and environmental damage, their command areas would be left without water, or at best with much reduced supplies from run-of-the-river flows. These limited quantities would only be used for the home plots. Since most of the command areas are at medium and high elevations, crops grown would be rainfed cereals for grain and fodder. The cereals grown for grain would yield about 1.5 t/ha; fodder yields would be about 2.0 t/ha. No viability calculations were made for the dam rehabilitation component; dam failure would threaten hundreds of lives and that has to be considered as adequate justification. Table 4: Estimnated Gross Yields (t/ha) In the "With" (W) and "Without" (WO) Project Situation Lowlands (1992) WO project W project Cereals 3.5 2.5/1.5 5.0 Potatoes 16.0 nil 20.0 Vegetables * 28.0 nil 38.0 Forage ** 8.0 2.0 10.0 Apricots 10.0 nil 12.0 Vineyards 9.0 nil 11.0 * Tomatoes ** Lucerne Midlands (1992) WO project W project Cereals 3.0 1.5 4.0 Potatoes 18.0 nil 22.0 Vegetables * 28.0 nil 40.0 Forage 6.0 2.0 8.0 Apples 10.0 5.0 12.0 Vineyards 9.0 6.0 13.0 * cabbage Agricultural Development 137 D. THE "WITH-PROJECT" SITUATION 14. The repair of the conveyance structures, pumps and dams would ensure reliable and adequate water supply in the command areas. Yields, now affected by a shortage of water, would increase and farmers would be more willing to invest in purchased inputs and landshaping. This would eventually raise average yields to levels now achieved by the better farmers. It is unlikely, however, that the irrigated areas would expand significantly, unless there are large unirrigated areas (tail-enders), equipped with on-farm systems and not irrigated because of a shortage of water. 15. With adequate and secure water supplies, the primary issue affecting agricultural production would be the availability of inputs, and whether expenditure on them will be justified in view of the market situation. E. TYPICAL CROP BUDGETS AND FARM MODELS 16. The calculations of budgets, models, and incremental production were done under the following assumptions: (a) Calculations are based on the end-October 1993 exchange rate of Rb 2,400 = US $1; (b) Producer prices used were on the conservative side; they were either those paid by Government ("goszakupki"), or the lower estimates of free market prices, where Government prices were not established or not available; (c) All prices of inputs which have to be imported were taken at, or close to, world market prices. Fertilizer was costed at US$ 120/t (Rb290/kg), the average nutrient rate was taken as 30% which about corresponds to the average nutrient content of most used fertilizers; pesticide prices were estimated at US $10 (Rb24,000) per kg or liter; one tractor hour was costed at about US $8.30 (Rb2O,000); one combine hour at US $10.80 (Rb 26,000). Note that the actual prices in October 1993 for most of the inputs, except the mechanized field operations, were substantially lower; (d) Cost of water was calculated on the basis of US $0.015/Kwh, and a consumption of 0.5 Kwh per 1 m3 of 100 m lift, coming to Rbl8/m3 which was rounded up to Rb2O/m3. (For comparison, in Washington, D.C., the residential cost of electric power in November 1993 was US $0.08174/Kwh, and commercial cost wasUS $0.04239/Kwh. (e) The returns to forage (lucerne and esparcet), of about Rb -46,000/ha in the lowlands and Rb38,000 in the midlands, are calculated up to the point of hay production. In the farm models they were recalculated into animal production. One ha of forage thus produces in the lowlands about 195 kg of dressed wight of beef (at Rb2,000/kg a return of Rb390,000/ha), or about 3,210 1 of milk (at Rb400/l a return of Rb 1.284 M/ha). In the midlands 1 ha of forage generates about 2,570 1 of milk (Rbl,030 M/ha), or 156 kg of beef (Rb312,000/ha); 138 Annex 8 (f) The forage unit (FU) coefficients per kg of fodder crop used in Armenia are: 1.15 for barley; 0.26 for straw; 0.5 for hay; and 0.2 for silage. It is considered that 1.4 FU will produce 1 It of milk, and 12 FU 1 kg of beef. Dressing percentage of beef is estimated at 52 percent. In the farm models, it was assumed that half of the forage would be used for milk production and half for beef production; (g) The proportion of annual planting material cost in grapes is based on a spacing of 2.5x 1.25 m, or 3,200 plants/ha, a cost of Rb300/cutting, and an economic plantation life of 40 years. Similarly, the planting material cost for orchards is based on an average 375 trees/ha, Rb 550/seedling, and an economic life of 25 years; (h) The tractor work in orchards and vineyards is for spraying; (i) Transport cost estimates are based on ARMPLODORODIE charges which are: Rb3,000 for tractor/trailer up to 5 km distance, and Rb6,000 for the same up to 10 km. Truck transport is charged at Rb400-500 per tkm with a diesel operated truck (Kamaz 8, 10, 12 t). (Most trucks are ZILs, however, which operate on gasoline at about 25-30 1/100 km; they are all standing (i) The gross yield estimates were adjusted in the crop budgets for losses yed Reduction Facto (field, transport, handling, storage) as Wheat -15 % shown in Box 1. Potatoes -30 % Forage -10 % 17. The analytical background material for Tomatoes -50 % incremental production and benefits calculations Cabbage -40 % consists of the following tables in the attached Fruits -35 % appendix: Grapes -35 % Table A.1 - Estimated development of Box 8.1 cropping patterns on an average irrigated farm of 1.38 ha (in two major agroecological areas -- lowlands and midlands). Table A.2 - Anticipated yield development (net yields kg/ha). Table A.3 - Input and producer prices (October, 1993). Table A.4 - One ha crop budgets at full development - lowlands. Table A.5 - One ha crop budgets at full development - midlands. Table A.6 - Farm model - lowlands, at full development. Table A.7 - Farm model - midlands, at full development. Table A.8 - Farm model in PYl - lowlands. Agricultural Development 139 Table A.9 - Farm model in PYI - midlands. Table A.10 - Estimates of incremental production at full development in lowlands. Table A.11 - Estimates of incremental production at full development in midlands. 18. As indicated earlier, calculations are based on the assumption that with the progressively deteriorating conveyance system, pumping stations, boreholes and dams, yields would progressively decline year after year, until they would reach 20% of pre-project levels by about project year 17. F. INCREMENTAL PRODUCTION 19. Tables A.10 and A.11 show the estimated annual incremental production, based on the differences of expected yields in the last year Table 5: Summary of Increment before system rehabilitation, which is anticipated to be PY3 for about 60% of the project area, and Crops Full Development PY4 for some 40% of the project area. The data show that vegetable production would be almost Grain 44,707 three times higher than in 1993; forage output Potatoes 32,118 would be more than four times higher; potato production would be expected to double; fruits Vegetables 135,309 would almost double; while grape production would increase only by about 5%, indicating the Forage 117,195 importance grapes have in the Armenian economy Fruits 58,759 even under the current circumstances. Table 5 summarizes the total annual incremental Grapes 60,709 production between full development and 1993. G. NET FARM BENEFITS 20. The farm models in Tables A.6 and A.7, shows the net income per farm and per hectare at full project development. Table 6 below summarizes the net income per farm in project year one and at full development. Table 6: Net Farm Income at Full Development in US Dolars Situation Lowlands Midlands Before Project (PY 1) 901 257 With Project' 1,749 1,171 The full development of the Low Lands would be reached in PY12. In the Mid Lands it is expected to be reached faster in PYIO, because in in smaler area the adjusment is expected to be quicker. 140 Annex 8 21. A more detailed analysis of net farm benefits was done for the lowlands and midlands showing income per ha is presented in Tables A.8 and A.9. Under the prevailing cost and price structure, the results are as presented below: (a) highest net returns per ha are being achieved from vegetables, followed by fruits, grapes and potatoes; despite the conversion of forage into milk and meat, forage fares relatively poorly, just somewhat better than wheat, which gives lowest returns; (b) highest retums per laborday come from fruits, followed by vegetables and wheat; and (c) best returns from the cubic meter of water are from potatoes and vegetables, followed by fruits. Agricultural Development 141 Table A.1 Estimated Development of Cropping Patterns on Average Irrigated Farm of 1.38 ha in Two Major Agroecological Areas: Lowlands and Midlands 1994 1996 Full Development Lowlands Midlands Lowlands Midlands Lowlands Midlands % ha % ha % ha % ha % ha % ha Cereals 27 .37 50 .69 18 .25 40 .55 10 .14 32 .44 Potatoes 5 .07 3 .04 6 .08 4 .06 6 .08 4 .06 Tomatoes 14 .19 2 .03 17 .23 2 .03 17 .23 2 .03 Cabbage 0 0 1 .01 0 0 1 .01 0 0 1 .01 Forage 19 .26 20 .28 22 .30 27 .37 28 .39 33 .46 Fruits 14 .19 24 .33 15 .21 26 .16 16 .22 28 .39 Grapes 21 .29 0 0 22 .30 0 0 23 .32 0 0 Total 100 1.38 100 1.38 100 1.38 100 1.38 100 1.38 100 1.38 Table A.2 Lowlands Without Project With Project Crop PYI PY2 PY3 PY9 Total Increment Wheat 2975 2644 2314 661 4250 1936 Potatoes 11200 10869 10539 2488 14000 3461 Tomatoes 14000 13669 13339 3111 19000 5661 Lucerne 7200 6869 6539 1600 9000 2461 Fruits 6500 6169 5839 1444 7800 1961 Grapes 5850 5519 5189 1300 7150 1961 Midlands Without Project With Project Crop PY1 PY2 PY3 PY Total Increment Wheat 2550 2219 1889 566 3400 1511 Potatoes 12600 12269 11939 2800 15400 3461 Tomatoes 12000 11669 11339 2666 17000 5661 Cabbage 16800 16469 16139 3733 24000 7861 Forage 5850 5519 5189 1300 7200 2011 Fruits 6500 6169 5839 1444 7800 1961 142 Annex 8 Table A.3, I: INPUT AND PRODUCER PRICES (OCTOBER 1993) 1. PUTS 1. Seed (Rb/Kg) Wheat 300-350 Barley 250-300 Potatoes 300-450 Maize 230-250 Rapeseed 150-200 Tomatoes 450 Beans 350 Cabbage 7,500 Alfalfa 2,500-3,000 Annual Grasses 300-350 Perennial Grasses 200-250 2. Planting Materials (Rb/I Piece) Apricots 500-600 Apples 600-650 Plums 500-600 Cherries 800-1,000 Peaches 500-600 3. Fertilizer (Rb/ton) N: Urea (46%) 120,000 Amnmonium Nitrate (36%) 120,000 P: Single superphosphate (18% P205) 15,000 Double superphosphate (36% P205) 30,000 K: Potassium chloride (60% K20) 8-10,000 Potassium salt (30% K20) 8-10,000 4. Pesdtddes (Rb/kg or 1) Herbicides (average) 2,000-3,000 Fungicides (average) 5,000-10,000 Insecticides (average) 5,000-10,000 S. Mechanized Work (Rb/ba) Tractor Ploughing 40,000 Cultivating 15,000 Sowing 15,000 Spraying 10,000 Fertilizing 10,000 Combine Harvesting 28,000 Tractor Straw Baling 15,000 Tractor Transport (Rb/ton/Km) 500 6. Energy (Rb/I) Gasoline 2,300 Diesel 1,000 Oil 1,500 7. Cost of Water (for Irription) (Rb/m) I m3 in the plain 18 1 m3 in the midlands 18 S. Cost of Labor (Rb) 1 Worker-Day 300 Agricultural Development 143 Table A.3, H: PRODUCT PRICES (Rb/kg) Market Price Government Price Wheat 250-300 Straw 20 Barley 200-250 Straw 30 Potatoes Early 450-500 350 Potatoes 450-500 350 Tomatoes 700 420 Cabbage 450-500 350 Beans 2500 -- Fruits _ Apricots 1000 800 Apples 900 700 Plums 1,000 700 Cherries Peaches 1,000 700 Grapes 700 500 (Rb/ton) Forage (Green) 15-20,000 -- Forage (Hay) 60,000 . Forage (Silage) 20-25,000 144 Annex 8 Table A.3, HI: SEED AND PLANTING RATES SEED (Rb/kg) SEED RATES (kg/ha) Spring Winter Wheat 220 300 Barley 220 250 Potatoes 3,200 - 4,000 Maize 30 (grain) 50 (silage) Rapeseed 20 Tomatoes 1 Beans 120 - 200 Cabbage 0.5 Alfalfa 12 - 20 Annual Grasses 2,5 - 3 Perennial Grasses 35 - 40 Planting Materials Planting Rates (Nr-trees/ha) Apricots 208 - 286 Apples 208 - 1,000 Plums 333 - 667 Cherries 333 - 500 Peaches 333- 667 Agricultural Development 145 Table A.4: ONE ha CROP BUDGETS AT FULL DEVELOPMENT - LOWLANDS Wheat Potatoes Vegetables Forage Fruits Grapes Quantity Total Quantity Total Quantity Total Quantity Total Quantity Total Quantity Total Rb '000 Rb '000 Rb '000 Rb '000 Rb '000 Rb '000 INCOME Yield (kg) 5000.00 20000.00 38000.00 10000.00 12000.00 11000.00 Loss Coeff (%) 0.85 0.7 0.5 0.9 0.65 0.65 Net Yield (kg) 4250.00 1275.00 14000.00 4900.00 19000.00 7980.00 9000.00 540.00 7800.00 5460.00 7150.00 3575.00 Straw (kg) 7500.00 150.00 Gross Margin 1425.00 4900.00 7980.00 540.00 5460.00 3575.00 EXPENDITURE Seed (kg) 300.00 97.50 3600.00 1350.00 1.00 0.45 5.00 13.75 15.00 8.25 24.00 Fertilizer (kg) 730.00 211.70 800.00 232.00 900.00 261.00 470.00 136.30 770.00 223.30 770.00 233.30 Pesticides (kg, 1) 2.00 48.00 5.00 120.00 5.00 120.00 2.00 48.00 5.00 120.00 5.00 120.00 Tractor (hrs) 11.00 220.00 13.00 260.00 7.00 140.00 3.00 60.00 3.00 60.00 3.00 60.00 Combine (brs) 1.25 32.50 0.00 0.00 0.00 0.00 0.00 Water (mn) 10000.00 180.00 6000.00 108.00 16000.00 288.00 16000.00 288.00 12000.00 288.00 14000.00 252.00 Transport CM1) 2.00 40.00 4.50 90.00 8.00 160.00 2.00 40.00 3.00 60.00 3.00 60.00 Total Cost 829.70 2160.00 969.45 586.05 687.55 739.30 NET INCOME ('000 Rb) 595.30 2740.00 7010.55 -46.05 4772.45 2835.70 Net Income (S) 248.04 1141.67 2921.06 -19.19 1988.52 1181.54 Net Income/MD ('000 Rb) 39.69 16.61 48.35 -0.54 57.50 12.89 Family Labor (MD) 15.00 165.00 145.00 85.00 83.00 220.00 146 Annex 8 Table A.5: ONE ha CROP BUDGETS AT FULL DEVELOPMENT - MIDLANDS Wheat Potatoes Tomatoes Cabbage Forage Fruits Quantity Total Quantity Total Quantity Total Quantity Total Quantity Total Quantity Total Rb '000 Rb '000 Rb '000 Rb '000 Rb '000 Rb '000 INCOME Yield (kg) 4000.00 22000.00 34000.00 4000.00 8000.00 12000.00 Loss Coeff. (%) 0.85 0.7 0.5 0.6 0.9 0.65 Net Yield (kg) 3400.00 1020.00 15400.00 5390.00 17000.00 7140.00 24000.00 8400.00 7200.00 432.00 7800.00 5460.00 Straw (kg) 6000.00 120.00 Gross Margin 1140.00 5390.00 7140.00 8400.00 432.00 5460.00 EXPENDITURE Seed (kg) 300.00 97.50 3600.00 1350.00 1.00 0.45 0.5 3.75 5.00 13.75 15.00 8.25 Fertilizer (kg) 600.00 174.00 940.00 272.60 900.00 261.00 870.00 252.30 470.00 136.30 770.00 221.30 Pesticides (kg, 1) 2.00 48.00 5.00 120.00 5.00 120.00 2.00 48.00 5.00 120.00 Tractor (hrs) 11.00 220.00 13.00 260.00 7.00 140.00 13.00 260.00 3.00 60.00 3.00 60.00 Combine (hrs) 1.25 32.50 0.00 0.00 0.00 0.00 Water (n3) 6000.00 108.00 6000.00 108.00 12000.00 216.00 12000.00 240.00 8000.00 144.00 11000.00 198.00 Transport (TH) 2.00 40.00 5.00 100.00 8.00 160.00 2.00 40.00 3.00 60.00 Total Cost 720.00 2210.00 897.45 756.05 422.05 669.55 NET INCOME ('000 Rb) 420.00 3179.40 6242.55 7643.95 -10.05 4790.45 Net Income ($) 175.00 1324.75 2601.06 3184.98 -4.19 1996.02 Net Income/MD ('000 Rb) 30.00 18.70 44.59 57.91 -0.15 57.72 Family Labor (MD) 14.00 170.00 140.00 132.00 66.00 83.00 Agricultural Development 147 Table A.6: FARM MODEL AT FULL DEVELOPMENT - LOWLANDS Net Income (Rb '000) Labor MD (Rb '000) ha perha per farm per ha per farm Cereals 0.14 595.30 83.34 15.00 2.10 Potatoes 0.08 2740.00 219.20 165.00 13.20 Tomatoes 0.23 7010.55 1612.43 145.00 33.35 Forage 0.39 837.00 326.43 85.00 33.15 Fruits 0.22 4772.45 1049.94 83.00 18.26 Grapes 0.32 2835.70 907.42 220.00 70.40 1.38 4198.76 170.46 Net Income ($) 1749.48 $/MD 10.26 Table A.7: FARM MODEL AT FULL DEVELOPMENT - MIDLANDS Net Income (Rb '000) Labor MD (Rb '000) ha perha per farm per ha per fanm Cereals 0.44 420.00 184.80 15.00 6.60 Potatoes 0.06 3179.40 190.76 165.00 9.90 Tomatoes 0.03 6242.55 187.28 145.00 4.35 Cabbage 0.01 7643.95 76.44 132.00 1.32 Forage 0.45 671.00 301.95 85.00 38.25 Fruits 0.39 4790.45 1868.28 83.00 32.37 1.38 2809.51 92.79 Net Income ($) 1170.63 $IMD 12.62 148 Annex 8 Table A.8: FARM MODEL IN PYI - LOWLANDS Gross Income Crop cost Net Inc. per Net Inc. per Crop Yidd Unit Price Rb '000 PY4 Cost Coeff. Total Cost ha Crop area farm kg/ba Rb '000 Rb '000 Rb '000 Rb '000 ha Rb '000 Wheat 2975.00 0.30 892.50 830.00 0.70 581.00 311.50 0.72 224.28 Potatoes 11200.00 0.35 3920.00 2160.00 0.80 1728.00 2192.00 0.04 87.68 Tomatoes 14000.00 0.42 5880.00 969.00 0.74 717.06 5162.94 0.07 361.41 Forage 7200.00 0.14 1008.00 586.00 0.65 380.90 627.10 0.06 37.63 Fruits 6500.00 0.70 4550.00 688.00 0.83 571.04 3978.96 0.19 756.00 Grapes 5850.00 0.50 2925.00 739.00 0.82 605.98 2319.02 0.30 695.71 19175.50 4583.98 14591.52 1.38 2162.70 Net nc.(S) 901.13 2.40 Table A.9: FARM MODEL IN PY1 - MIDLANDS Gross Income Crop cost Net Inc. per Net Inc. per Crop Yield Unit Price Rb '000 PY4 Cost Coeff. Total Cost ha Crop area farm ykg/ha Rb '000 Rb '000 Rb '000 Rb '000 ha Rb '000 Wheat 2550.00 0.30 765.00 720.00 0.75 540.00 225.00 0.63 141.75 Potatoes 12600.00 0.35 4410.00 2210.00 0.82 1812.00 2597.80 0.03 77.93 Tomatoes 12000.00 0.42 5040.00 897.00 0.71 636.87 4403.13 0.03 132.09 Cabbage 16800.00 0.35 5880.00 756.00 0.70 529.20 5350.80 0.01 53.51 Forage 5850.00 0.11 643.50 442.00 0.81 358.02 285.48 0.35 99.92 Fruits 6500.00 0.70 4550.00 670.00 0.83 556.10 3993.90 0.33 1317.63 21288.50 4432.39 16856.11 1.38 1822.83 Net Inc.(S) 759.51 2.40 Agricultural Development 149 Table A.10: ESTIMATES OF INCREMENTAL PRODUCTION IN LOWLANDS - STARTING IN PY5* Cropping Pattern Increment Crop % ha kg/ha Total (t) Cereals 10 13460 1936 26059 Potatoes 6 8076 3461 27951 Tomatoes 17 22882 5661 129535 Cabbage 0 0 0 0 Forage 28 37688 2461 92750 Fruits 16 21536 1961 42232 Grapes 23 30958 1961 60709 Total 100 134600 * Note: It is anticipated that about 60% of the decrease in production compare to the pre-project level would be restored by the fourth project year, and the remaining 40% by the fifth project year. Table A.11: ESTIMATES OF INCREMENTAL PRODUCTION IN MIDLANDS - STARTING IN PY5* Cropping Pattern Increment Crop percent ha kg/ha Total (t) Cereals 32 9632 1936 18648 Potatoes 4 1204 3461 4167 Tomatoes 27 602 5661 3408 Cabbage 1 301 7861 2366 Forage 33 9933 2461 24445 Fruits 28 8428 1961 16527 Grapes 0 0 0 0 Total 100 30100 * Note: It is anticipated that about 60% of the decrease in production compare to the pre-project level would be restored by the fourth project year, and the remaining 40% by the fifth project year. ANNEX 9: PROJECT IMPLEMENTATION PLAN' ACTIVITY START COMPLETE BY IN CHARGE 'Te Ministry of Agriculture April 27, 94 Ministry of appoint a Project Board to oversee Agriculture project implementation (MOA) Project Board Select a Project Manager April 27, 94 Project Board (PM) Bank no objection May 9, 94 Establishment of PIU (a) Bank propose a list of qualified April 27, 94 firms to establish a PIU. (b) Project Board select a short list. May 13, 94 Project Board (c) Bank no objection. May 27, 94 (d) Bank forward to the Project Board May 27, 94 letter of invitation (LOI) for firms to bid for establishment of PIU, proposed Terms of Reference, and draft contract for hiring the selected firm. (e) The Project Board issue LOI. June 30, 94 Project Board (f) MOA receive Consultants' tender August 15, 94 Project Board proposals. (g) MOA complete evaluation of August 15, 94 September 1, 94 Project Board consultant's proposal and submit to the Bank for clearance. (h) Bank no objection September 15, 94 (i) Negotiations and contract with September 15, 94 October 1, 94 Project Board selected company completed. j0) Consulting firm establish the PIU. November 1, 94 December 1, 94 Consulting firm. Survey and Design of works in 1st December 1, 94 April 1, 95 Planning and group of 8 conveyance schemes. Design Unit of PIU. (a) Preparing tender documents for January 1, 95 March 1, 95 Procurement Unit goods on 1st group of 8 conveyance of PIU. schemes (ICB). (b) Bank no objection March 15, 95 (c) advertisement March 16, 95 July 15, 95 (d) Preparing protocol of responses July 16, 95 Aug 1, 95 (e) Bank no objection June 15, 95 (1) Signing of contract July 1, 95 Implementation of contract of 1st group September 1, 95 September 1, 96 Contractor of 8 conveyance scheme. The Plan is subject to revision, particularly following detailed discussions with the PIU now being established. 152 Anne 9 Survey and Design of works in 2nd April 1, 95 August 1, 95 Plnning and group of 8 conveyance schemes. Design Unit of PIU. (a) Preparing tender documents for May 1. 95 July 1, 95 Procurement Unit goods on 2nd group of 8 conveyance of PIU. schemes ([CB). (b) Bank no objection July 15, 95 (c) advertisement July 16, 95 October 15, 95 (d) Preparing protocol of responses October 16, 95 November 1, 95 (e) Bank no objection November 15. 95 (f) Signing of contnact December 1. 95 Implementation of contract of 2nd December 1, 95 December 1, 96 Conactor group of 8 conveyance scheme. Survey and Design of works in 3rd August 1, 95 December 1, 95 Planning and group of 8 conveyance schemes. Design Unit of P1U. (a) Preparing tender documents for civil September 1, 95 November 1, 95 Procurment Unit works on 3rd group of 8 conveyance of PIU schemes. (b) Bank no objection November 15. 95 (c) advertisement November 16, 95 December 15. 95 (d) Preparing protocol of responses December 16, 95 January 2 96 (e) Bank no objection January 15, 96 (f) Signing of contract ___ February 1, 96 Implementation of civil works of 3rd February 1, 96 February 1, 97 Contractor group of 8 conveyance scheme. Survey and Design of works in 4th December 1, 95 April 1. 96 Phnning and group of 8 conveyance schemes. Design Unit of _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _P IU . (a) Preparing tender documents for civil January 1, 96 March 1, 96 Procurement Unit works on 4th group of 8 conveyance of PIU schemes. (b) Bank no objection March IS1 96 (c) advertisement March 16. 96 April 15. 96 (d) Preparing protocol of responses April 16, 96 May 1, 96 (e) Bank no objection May 15, 96 (f) Signing of contract June 1, 96 Implementation of civil works of 4th June 1., 96 June 1, 97 Contractor group of 8 conveyance scheme. Survey and Design of works in 5th April 1, 96 August 1 96 Plann and group of 8 conveyance schemes. Design Unit of PIU. Project Implementation Plan 153 a) Preparing tender documents for civil May 1, 96 July 1, 96 Procurement Unit works on 5th group of 8 conveyance of PIU schemes. (b) Bank no objection July 15, 96 (c) advertisement July 16, 96 August 15, 96 (d) Preparing protocol of responses September 16, 96 October 1, 96 (e) Bank no objection October 15, 96 (f) Signing of contract November 1. 96 Implementation of civil works of 5th October 1, 96 October 1, 97 Contrawtor group of 8 conveyance scheme. Survey and Design of works in 6th August 1, 96 December 1, 96 Pluming and group of 8 conveyance schemes. Deign Unit of PIM. a) Preparing tender documents for September 1, 96 November 1, 96 Procurement Unit concrete sections in Ist group of 8 of PIU conveyance schemes. (b) Bank no objection November 15, 96 (c) advertisement November 16, 96 December 15, 96 (d) Preparing protocol of responses December 16, 96 January 2, 97 (e) Bank no objection January 15, 97 (f) Signing of contract February 1, 97 Implementation of concrete secdons February 1, 97 February 1, 98 Contactor works of Ist group of 8 conveyane scheme. Survey and Design of works in 7th December 1, 96 April 1, 97 Plannizg Nd group of 8 conveyance schemes. Design Unit of . ________________ PIU a) Preparing tender documents for January 1, 97 March 1, 97 Procurement Unit concrete sections on 2nd group of 8 of PIU conveyance schemes. (b) Bank no objection March 15, 97 (c) advertisement March 16, 97 April 15, 97 (d) Preparing protocol of responses April 16, 97 May 1, 97 (e) Bank no objecdon May 15, 97 (f) Signing of contract June 1, 97 Implementation of concrete sections June 1 97 June 1, 98 contractor works of 7th group of 8 conveyance scheme. Survey and Design of works in 8th April 1, 97 August 1, 97 Planning and group of 8 conveyance schemes. . Des Unit of PIM 154 Ann= 9 a) Preparing tender documents for May 1, 97 July 1, 97 Procurement Unit concrete pipes works on 8th group of 8 of PIU conveyance schemes. (b) Bank no objection July 15, 97 (c) advertisement July 16, 97 August 15, 97 (d) Preparing protocol of responses August 16, 97 September 1, 97 (e) Bank no objection September 15, 97 (f) Signing of contract October 1, 97 Implementation of concrete pipes works October 1, 97 October 1, 98 Contractor of 8th group of 8 conveyance scheme. Survey and Design of works in 9th August 1, 97 December 1, 97 Planning nd group of 8 conveyance schemes. Design Unit of PIU a) Preparing tender documents for September 1, 97 November 1, 97 Procurement Unit concrete pipes on 9th group of 8 of PIU conveyance schemes. (b) Bank no objection November 15, 97 (c) advertisement November 16, 97 December 15, 97 (d) Preparing protocol of responses December 16, 97 January 2, 98 (e) Bank no objection January 15, 98 (f) Signing of contract February 1, 98 Implementation of concrete pipes works February 1, 98 February 1, 99 Contractor of 9th group of 8 conveyance scheme. Survey nd design of dam December 1, 94 April 1. 95 Panning and rehabilitadons. Design Unit of PIU a) Preparing tender documents dams March 1, 95 May 1, 95 Procurement Unit rehabilitation (ICB). of PIU (b) Bank no objecdon May 15, 95 (c) advertisement May 16, 95 August 15, 95 (d) Preparing protocol of responses August 16, 95 September 1, 95 (e) Bank no objecdon September 15, 95 (f) Signing of contract October 1, 95 Implementation of dam rehabilitadons October 1, 95 November 1, 97 Contractor (ICB) a) Preparing tehdfr documents dams March 1, 95 May 1, 95 Procurement Unit rehabilitation (LCB). of PIU (b) Bank no objection May 15, 95 (c) advertisement May 16, 95 June 15, 95 (d) Preparing protocol of responses June 16, 95 July 1, 95 (e) Bank no objection July 15, 95 (f Signing of contract August 1, 95 Implementation of Dam rehabilitation August 1, 95 August 1, 96 Contractor (LCB) l Project Implementation Plan 155 Survey and Design of rehabilitation of 4 December 1, 94 November 1, 95 Planning and pumping schemes Design Unit of I________________ PIU a) Preparing tender documents of Ist August 1, 95 December 1, 95 Procurement Unit group of pumping schemes of PIUl rehabilitation (ICB). (b) Bank no objection December 15, 95 (c) adverdsement December 16, 95 March 15, 96 (d) Preparing protocol of responses March 16, 96 April 1, 96 (e) Bank no objecdion April 16, 96 (f) Signing of contract May 1, 96 Implementation of rehabilitation of 1st May 1, 96 May 1, 98 Contractor group of pumping schemes a) Preparing tender documents of 2nd December 1, 95 April 1, 96 Procurement Unit group of pumping schemes of PIU rehabilitation (ICB). (b) Bank no objection April 15, 96 (c) advertisement April 16, 96 July 15, 96 (d) Preparing protocol of responses July 16, 96 August 1, 96 (e) Bank no objection August 16, 96 (t) Signing of contract September 1, 96 Implementadon of 2nd group of September 1, 96 September 1, 98 Contuactor pumping schemes rehabilitation l a) Preparing tender documents of 3rd August 1, 95 October 1, 95 Procurement Unit group of pumping schemes of PIU rehabilitation (LCB). (b) Bank no objecdon October 15, 95 (c) advertisement October 16. 95 November 15, 95 (d) Preparing protocol of responses December 1, 95 December 15, 95 (e) Bank no objecdon Juaiy 2, 96 (f) Signing of contract JarPy 15, 96 Implementation of 3rd group of January 15, 96 May 15, 97 Contractor pumping schemes rehabilitadon Well drilling and equipment acquisition December 1, 94 March 1, 95 Planning nd Desin Unit of PIU a) Preparing tender documents for well February 1, 95 May 1, 95 Procurement Unit drilling and equipmem of PIU (b) Bank no objection May 15, 95 (c) adverisement June 1, 95 September 1, 95 (d) Preparing protocol of responses September 15, 95 October 1, 95 (e) Bank no objection October 15, 95 (f) Signing of contract November 1, 95 Procurement of submersible pumps November 1, 95 May 1, 96 Supplier 156 Annex 9 a) Preparing tender documents for well October 1, 95 December 1, 95 Procurement Unit drilling and pump installations of PIU (b) Bank no objection December 15, 95 (c) advertisement January 2, 96 February 15, 96 (d) Preparing protocol of responses March 1, 96 March 15, 96 (e) Bank no objection April 1, 96 (f) Signing of contract April 15, 96 Implementing well drilling and pump May 1, 96 May 1, 98 Contractor installadon a) Preparing tender documents for December 1, 94 April 1, 95 Procurement Unit acquisition of spare parts for pumps of PIU (b) Bank no objection April 15, 95 (c) advertisement May 1, 95 June 15, 95 (d) Preparing protocol of responses July 1 July 15, 95 (e) Bank no objection August 1. 95 (t) Signing of contract August 1S, 95 Implementing acquisition of spare parts August 15, 95 November 1, 95 Supplier for pumps Pilot nroiects for establishin2 WUA (a) Procurement unit of PIU prepare a January 2, 95 March 1, 95 Procurement Unit list of consultants to of PIU implement the pilot projects. (b) Project Board select a short list. March 15, 95 Project Board (c) Bank no objecdon. April 15, 95 (d) LOI sent to companies on the short May 1, 95 list Procurement Unit (e) PIU receive consultant's tender July 1, 95 of PIU proposal. (f) PIU complete evaluation of July 15, 95 proposals. Procurement Unit (g) Bank no objection. August 1, 95 of PIU (h) Contract negotiation and signing. August 15, 95 September 1, 95 (i)Consulting firm commences work as October 1, 95 Project Board a Unit for Pilot projects. Selecting first group of four villages to November 1, 95 December 1, 95 Pilot Projects establish WUA Unit of PIU Preparing work program for the first December 1, 95 January 2, 96 Pilot Projects group of WUA Unit of PIU Survey and design of outlets for the January 2, 96 March 1, 96 Planning and frmrs in the first group of WUA design Unit of PIU Shopping and contracting works to March 1, 96 May 1, 96 Procurement Unit install outlets for the first group of of PIU WUA Implementing insllation of outlets to May 1, 96 December 1, 96 Contractor WUA Project Implementation Plan 157 Selecting second group of fifty villages January 2, 96 April 1, 96 Pilot Projects to establish WUA Unit of PIU Preparing work program for the second April 1, 96 August 1, 96 Pilot Projects group of WUA Unit of P1U Survey and design of outlets for the August 1. 96 December 1, 96 Planning and farmers in the second group of WUA design Unit of PIU a) Preparing tender documents for December 1, 96 February 1, 97 Procurement Unit equipment for pilot projects (LCB) in of PIU the second group. (b) Bank no objection February 15, 97 (c) advertisement February 16, 97 March 15. 97 (d) Preparing protocol of responses March 15, 97 April 1, 97 (e) Bank no objecdon April 15, 97 (f) Signing of contract May 1. 97 Implementing installation of outlet for May 1 97 December 1, 98 contramtor the second group of WUA Selecting third group of 350 villages to April 1, 96 August 1, 96 Pilot Projects establish WUA Unit of PIU Preparing work program for the second June 1, 96 November 1, 96 Pilot Projects growp of WUA Unit of PIU Survey and design of outlets for the June 1, 96 May 1. 97 Planning and farmers in the third group of WUA design Unit of PIU a) Preparing tender documents for December 1, 96 June 1 97 Procurement Unit equipment for pilot projects (LCB) in of PIU the third group. (b) Bank no objecdon June 15 97 (c) advertisement July 1, 97 August 15, 97 (d) Preparing protocol of responses August 15, 97 September 1,97 (e) Bank no objection September 15, 97 (f) Signing of contract October 1, 97 Implementing installation of outlet for October 1, 97 October 1, 98 Contractor the third group of WUA a) Preparing tender documents for May 1 96 December 1, 96 Procurement Unit equipment for pilot projects (ICB) in the of PIU third group. (b) Bank no objection December 15, 96 (c) advertisement January 2, 97 April 1, 97 (d) Preparing protocol of responses April 15, 97 May 1, 97 (e) Bank no objection May 15, 97 (f) Signing of contract June 1, 97 Implementing installadon of outlet for June 1 97 June 1, 98 Contractor the second and third group of WUA 158 Annea 9 Technic l Assisnce Staff Training (a) Preparing plan for technical January 2. 95 April 1. 95 Unit of PIU assistance for irrigated crop producdon and for staff training. (b) Preparing TOR for technical April 1, 95 July 1, 95 asistance for irrigated crop production. (c) Preparing TOR for PIU stff April 1, 95 July 1, 95 training. (d) Bank no objection to technical July 15, 95 usistance and sff training program. Conracting technical Assistance and staff August 1 95 Continuous basis Procurement Unit traning of PiU Assistance to Update Water Master Plan Water Masterplan Review te water master plan with the January 2, 1995 December 31 95 Unit of PIU Water Planing Insdtute, discuss assumptions and propose changes. Bank no objection January 15, 96 Prearatdon of New Irriaadon Proiect Water Masterplan (a) Determining objectdves and priorides Januay 2, 1995 April 1, 1995 Unit of PIU of new irrigation project (b) Idendtfying components of the April 1, 1995 July 1, 1995 projct (c) contracdng the WPI to prepare July 1, 1995 January 2, 1996 engineein design of the project (d) prepare cost esmate of the project January 2, 1996 April 1. 1996 componer (e) prepare benefits evaluadon of the April 1, 1996 August 1, 1996 project (M prepare benefit cost analyis of the August 1, 1996 project ANNEX 10: PROPOSED PROJECT SUPERVISION PLAN Approximate Activity Expected Skill Requirement Staff Week Date of Input l December 94 Supervision Mission Task Manager 12 Briefing the PIU on its tasks Irrigation Engineer and project launch Procurement Specialist Disbursement Specialist Water Management Specialist l May 95 Supervision Mission Task Manager 10 Irrigation Engineer l November 95 Supervision Mission Task Manager 12 Irrigation Engineer Dam Specialist Procurement Specialist May 96 Supervision Mission Task Manager 10 Irrigation Engineer November 96 Supervision Mission Task Manger 10 l_______________________ Irrigation Engineer l May 97 Supervision Mission (mid- Task Manager 15 term review) Irrigation Engineer Water Management Specialist Dam specialist Procurement specialist November 97 Supervision Mission Task Manager 10 Irrigation Engineer May 98 Supervision Mission Task Manager 10 Irrigation Engineer November 98 Supervision Mission Task Manager 10 l_______________________ Irrigation Engineer May 99 Supervision Mission Task Manager 12 (and PCR preparation) Irrigation Engineer Water Management Specialist .___ __ __ __ _ . Agriculturalist ANNEX 11: SELECTED DOCUMENTS AVAILABLE IN PROJECT FILE 1. Republic of Armenia, Irrigation Subsector Review and Project Identification Subsector Review and Project Identification Report, Report No: 79/93 CP - ARM 2, May 25, 1993, FAO/Investment Center. 2. Preparation Report for Irrigation Rehabilitation Project, September 1993, IRS-TKB, International Consultants Ltd. Two Volumes. 3. Armenia Irrigation Rehabilitation Project, Safety Check Seven Dams, Two Volumes, HASKONING, Royal Dutch Consulting Engineers and Architects, December 1993. 4. Armenia Irrigation Rehabilitation Project, First Priority Rehabilitation Program, HASKONING, Royal Dutch Consulting Engineers and Architects, February 1994. 5. Armenia Irrigation Rehabilitation Project, Second Priority Rehabilitation Program, HASKONING, Royal Dutch Consulting Engineers and Architects, February 1994. 6. Republic of Armenia, Irrigation Rehabilitation Project, Panel Expert Report, Dam Safety Review, March 94. 7. ARM - Armenia Irrigation Rehabilitation Project. Concrete Linings of Main and Secondary Canals of Major Irrigation Systems in Armenia. Mission Report. Prepared by Piero Sembenelli, Consultant, August, 4, 1994. IBRD 25390 ~~--.~~~GEORGIA / ~~~~~ARMENIA _ GETIK CONVEYANCE SCHEME otrG_ Os G_ t IRRIGATION REHABILITATION PROJECT IRRIGATION SYSTEMS SARALANDJ I SHIRAK EXSTNICOANDARE CONVEYANCE I.AND NO _TAAME FOR IRRIGATIKN SCHEME E RY4L Tt*NERS DIJAN ROADS REGION CANTAIS ® NATIONAl CA~1AL >1 - - - ~~~~~~~~~~~~~~~~~INIERNATIONAL BOLUNDARIES MAPS ARE NOT AT SAME SCALE AND SCALES ARE UNKNOWN. TA ERCNAVEYNESHMENOGa. TALIN CONVEYANCE SCHEME ARZNI SHAMIRAM CONVEYANCE SCHEME GEORG . -. ~SAAAR"MENIA i' AZERBAU JAN ISLAMIC AREP. OF IRAN FBRUAJY I "I IBRD 25391 _ \ < \ _ VARDENIS * APARAN ARMENIA r@\ ASHEN \ ! STORAGE SCHEME IRRIGATION REHABILITATION PROJECT STORAGE AND PUMPING SCHEMES KOUTCFAK CO-AAlD AREAS I - SRCOWARY C--.S PRESSURE PIPE.~ll I \ \ * PUMPING STATMCS R ROADS >, ARITCH- a l SHENAVAN 0 TOGS \A. TAV ' ' ) NORAASHEN -.- INTREGION CAPALS EN ~~~~~~~SNATiONA CAMITA VARDENUT~ MAPS ARE NOT AT SAME SCALE )ERS4JATAP ,_A AI/AND SCALES ARE UNKNOWN MANTASH STORAGE SCHEME TOUFASHEN TOUFASHEEN g SARNAKHPIUR STORAGE SCHEME VOROTAN PUMPING SCHEME GEORGIA i < t \.0 t X > _._, \ ARMENIA Ti, ~~~~~~~~~~~~~~~~~~~~~~~~~~~TEKH KCORNIOZOR /*Ii'~S EAA NEW KARASHEN K K(A N * / ~ ~ ~ ~~~OREVIN AIKASAR ,,)etooeky__ , . =),, (j) OLD KNNDZORESK'E AZERBAIJAN TURKEY Pi P> CDORIS R Oo.S KARAOLI t~~~~~~~~~~~~~~~~~~II AZERWAL'IA.TJ * ISLAMIC ../N **~~~~~~~~~~~ C ~~~REP. OF IRAN TEBRUARY 19W. IBRD 25388 T. Skd-~~~~~~~~~~~~~~~~~~~~~~~~~4.4 GEORGIA T. D,2 .EORGIA T.L BM'. GEORGIi - |A ARMENIA gr ' --+ z -s ~ ~ ~~IRRGAIO PRoEHcABLTBclATION PROJECT E N- i>,~~~~~~~~~~~~~~~~~~~ CONVEYANCE SCHEMES TA 0+ M EVANAN\|> @B PUMPlNG SCHEME IE TO)S* PUPING STATION R_ T~~~~~~~~~~~~~~ ONS'LAE ZERB IRRIGANIO MEAIN BITIES INPRJC SKdi P AZERBAIJAN * NATIONAL CAPITAL - ~~-5qa'_^RsEAT - \ ( ?~~~~~ -PRIMARY ROADS DISTRICT BOUNDARIES E V A - PUMPINTERNATIONAL BOUNDARIES ) ) 8 ° 4 t~~~~~~~~~~~~~~~~~~~O < w TAN< X J~~~~~~~~~~~~~~~~Z GRUDAE DEVELOPMENT>. < \X > ISLAM}C > X < b Z.>}~~~~~~~~~DAM A A REPUBLICTNML S \ ~~~~~~~~~~OF IRAN V GJ . L(00O0 10 20 50 40 50 t0 70 40-4 ERBIJA NAIOA CAPITA 40- - -RIVER- . j,~ P - ~~~~~~~~~~~~~~~~ - ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ALOD EGDISRIC BOUDAIE TURKEY AGRO-ECOLOGICAL REGION BOUNDARIES~~~~~~~~~~~~~~~~~~~~~P80IT1W IERD 25389 OKTEMBERIAN * KOTAIK (ABOVIAN) ARMENIA CONVEYANCE SCHEME - e CONVEYANCE IRRIGATION REHABIUTATION PROJECT ' $ j iA SCHEME § IRRIGATION SYSTEMS COMK--ND AJE SAUNE t.NO MEAIN CARNALS "' 0> DERSONVEYANCE SCHEMS,OANCNELS --- SECONDARY TERTIARY CN --RrVERS - PEESSURE PIPENES e ~~~~~~~~~~~~~~~PIJiNG ST.TONS BRIDGE -'IAAI ROADS R"WRVOADS ~3 REGION CAPITALS NATIONALB CAPITAI -. NTERNATIONAL BOUNDOARIES MAPS ARE NOT AT SAME SCALE AND SCALES ARE UNKNOWN. ARTASHAT ~~~~~~~~~~~LOWER RAZDAN GOGA - CONVEYANCE SCHEME ~~~~CONVEYANCE SCHEME ARMENLA. .... ...... IZEP. OF~~/ ~ I AN EBIA T U R K E Y~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~VJ YEREV 199A 1,~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~