Document of The World Bank FOR OFFICIAL USE ONLY Report No. 18156 IMPLEMENTATION COMPLETION REPORT CHINA TARIM BASIN PROJECT (CREDIT 2294-CN) June 30, 1998 Rural Development and Natural Resources Sector Unit East Asia and Pacific Regional Office This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit = Yuan (Y) 1991 $1 = Y 5.32 1992 $1 = Y 5.42 1993 $1 = Y 5.73 1994 $1=Y8.50 1995 $1=Y8.30 1996 $1=Y8.30 1997 $1=Y8.30 FISCAL YEAR January 1 - December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS AH Animal Husbandry Al Artificial Insemination ICB International Competitive Bidding ICR -Implementation Completion Report NCB National Competitive Bidding O&M Operations and Maintenance PMO Project Management Office SAR -Staff Appraisal Report TBC Tarim Basin Commission TRBMB Tarim River Basin Management Bureau TRBMC Tarim River Basin Management Committee Vice President Jean-Michel Severino, EAPVP Sector Manager Geoffrey Fox, EASRD Country Director Yukon Huang, EACCF Task Manager Daniel Gunaratnam, Principal Water Resource Specialist, EACCF FOR OFFICIAL USE ONLY CONTENTS PREFACE .....................III EVALUATION SUMMARY ...................... .V PART I: PROJECT IMPLEMENTATION ASSESSMENT ...............................................1 A. Project Objectives and Description .........................................................1 B. Achievement of Project Objectives .........................................................2 C. Implementation Record and Major Factors Affecting the Project ......................2 D. Project Sustainability .........................................................8 E. IDA Performance .........................................................9 F. Borrower Performance ........................................................ 10 G. Assessment of Outcome ........................................................ 11 H. Future Operation ........................................................ 11 1. Key Lessons Learned ........................................................ 12 PART II: STATISTICAL TABLES ........................................................ 14 Table 1: Summary of Assessments ........................................................ 14 Table 2: Related Bank Group Loans/Credits ........................................................ 15 Table 3: Project Timetable ........................................................ 16 Table 4: Loan/Credit Disbursement: Cumulative Estimate and Actual ................. 16 Table 5: Key Indicators for Project Implementation ............................................. 17 Table 6: Key Indicators For Project Operations .................................................... 24 Table 7: Studies included in Project ........................................................ 25 Table 8a: Project Costs ........................................................ 26 Table 8b: Project Financing ........................................................ 26 Table 9: Economic Costs and Benefits ........................................................ 27 Table 10: Status of Legal Covenants ........................................................ 28 Table 11: Compliance with Operational Manual Statements ................................ 29 Table 12: Bank Resources: Staff Inputs ........................................................ 30 Table 13: Bank Resources: Missions ........................................................ 30 ANNEX A: ICR MISSION'S AIDE MEMOIRE ....................................................... 31 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization. - 111 - IMPLEMENTATION COMPLETION REPORT CHINA TARIM BASIN PROJECT (CREDIT 2294-CN) PREFACE This is the Implementation Completion Report (ICR) for the Tarim Basin Project, Credit 2294-CN. The IDA Credit for this project in the amount of SDR 93.8 million ($125 million equivalent) was approved on August 29, 1991 and made effective on January 22, 1992. The credit was fully disbursed, with the last disbursement taking place on September 5, 1997 and it closed on December 31, 1997. The ICR was prepared by Daniel Gunaratnam (Principal Water Resource Specialist) in the China Resident Mission (EACCF), East Asia and Pacific Regional Office, and reviewed by Geoffrey Fox, Manager, Rural Development and Natural Resources Sector Unit of the East Asia and Pacific Regional Office (EASRD). The Borrower has not provided its comments to the final ICR. Preparation of this ICR was begun during the Bank's final supervision mission November 18-30, 1997, and an ICR mission visited the region also during the same period. The ICR is based on materials in the project file and information provided during the ICR mission. The Borrower contributed to the preparation of the ICR by contributing views reflected in the mission's aide memoire (Annex A) and by preparing its own evaluation of the project's execution and initial preparation. Since the Borrower's ICR was too long to be included as an annex and a summary was not provided, the Borrower's ICR has been deposited in the project files. v - CHINA TARIM BASIN PROJECT (CREDIT 2294-CN) EVALUATION SUMMARY Project Objectives and Description 1. The main objectives of the project were to support the Government's policy to speed up the development of China's poorer interior provinces through expansion of the irrigated area for crop production, improvement of agricultural services, and promotion of livestock development. 2. The project also incorporated measures to restore the natural ecology and to monitor environmentally sound development of the Tarim Basin. The project was particularly designed to assist ethnic minority herdsmen in raising livestock and to provide productive employment for women. The main features of the project were as follows: (a) irrigation and drainage for 200,000 hectares (ha) in the Yerqiang and Weigan basins; (b) hydropower development in the Yerqiang basin; (c) agricultural support services development for the Weigan and Yerqiang areas; (d) livestock support services development for the Weigan and Yerqiang areas; and (e) restoration of the Tarim River ecosystem. 3. The objectives were generally well designed, appropriately spelled out in the project documentation, and supported by all the stakeholders. Similarly, they appropriately reflected the Government's implementation capacity and were consistent with the Government's development strategy and the Bank's Country Assistance Strategy at the time of preparation. Implementation Experience and Results 4. Essentially all physical targets for irrigation and drainage were achieved, and in many cases exceeded the targets set out during appraisal of the project. Much of the scope was expanded during the midterm review and even these revised targets were fulfilled. 5. The agricultural component also achieved all physical targets and in many cases exceeded the midterm revised upward plan for construction of experiment stations, agricultural extension stations, agricultural schools, agricultural machinery training centers, and seed calibration at county and other levels of governments. Overall investments in agricultural services and production reached 126 percent of the Staff Appraisal Report (SAR) level in Yerqiang and 134 percent in Weigan with some differences between counties and components. In each county of Yerqiang investments - vi - were 100 to 140 percent of the SAR figure. In Weigan investments for each county ranged from 113 to 141 percent of the SAR estimates. 6. One of the most innovative components included under the agriculture component was the hail suppression subcomponent. Hail precipitation causes considerable damages to the Weigan Prefecture farms. All items for this subcomponent, including works and equipment procurement, were completed and commissioned by early 1995. The suppression of hail cloud formation using radar detectors and firing silver iodide crystals into the clouds worked very well to suppress 80 percent of the hail precipitation. 7. Overall investments in animal husbandry services and livestock production reached about 116 percent of the SAR's levels in Yerqiang and 123 percent in Weigan. A relatively large part of the expenditure is for the establishment of County and Township Stations. In the Yerqiang counties, investments ranged between 93 and 149 percent, with investments for County and Township Animal Husbandry Stations in excess of SAR values in two of the counties. In the counties of Weigan, overall investments ranged between 121 and 129 percent, with investments in County and Township Stations exceeding the target by 83 percent. Breeding station investments are above the target. Mixed Crop/Livestock investments also exceed the target by 43 percent. 8. IDA performance in the identification, preparation and appraisal was detailed and has been viewed as satisfactory. Overall, the IDA performance was greatly appreciated by the provincial government during the preparation phase. IDA's performance in project supervision has been satisfactory and helped resolve many of the implementation issues related to designs, financing and management of the project. The performance of the Borrower's implementation agencies, the Xinjiang Regional Project Management Office (PMO), in conjunction with prefecture and county PMOs, was generally satisfactory. The Borrower complied promptly and completely with all the covenants prescribed in the legal agreements except for the water charge covenant, which needs to be fulfilled by December 1999. Half-yearly progress reports, audited project accounts together with the auditors' reports were also regularly produced and received generally on time. Summary of Findings, Future Operations, and Key Lessons Learned 9. Overall Findings. The project's overall outcome is viewed as highly satisfactory, since all the objectives of irrigation and drainage development, and agricultural/animal husbandry were achieved with a relatively high degree of sustainability. The overall economic rate of return of 33 percent is impressive and is almost the same as the SAR's estimate. Overall, the project succeeded in maximizing returns from scarce resources invested in improvement and expansion of irrigation and drainage systems and the expansion of agricultural and livestock production. The large increase in the coverage of extension services, machinery, feed supply and other services has benefited some 350,000 households. Crop yields and livestock production increased substantially from 1991 to 1997 due to the project. Per capita income rose from Y 400-610 in 1991 to Y 1,030-1,5 10 in 1997. - vii - 10. A total of 42,000 ha of newly reclaimed land were given to collectives (11 percent), farmers with proven crop production ability (18 percent) and small peasant farmers (71 percent). Overall, 104,000 households (420,000 people) benefited from additional farmland in the reclaimed area. Over 82 percent of the households were minority Uygurs and landholding increased in peasant households by 7.85 mu (0.523 ha), which is equivalent to 20 percent of their present land area. 11. The animal husbandry component has improved the coverage of animal health and production services for livestock belonging to 330,000 livestock owners. Overall income per head of sheep increased by Y 100. 12. The project was implemented with minimal negative environmental impact in the irrigation areas. In both Weigan and Yerqiang there is no evidence of salt accumulation in the entire agricultural areas because of the drainage schemes. In fact, soils in most irrigated areas are being desalinized and crop yields are increasing. 13. Sustainability. The Regional and Prefecture governments are committed to ensuring sustainability of the project. The Yerqiang and Weigan irrigation schemes have been in existence for many years and have operated successfully. Farmers have already realized substantial benefits from the completed works in terms of increased crop production. Lined canals have assured timely supply of water to farms while the drainage system has prevented salinization of soils. Detailed operations and maintenance (O&M) plans for the irrigation schemes have evolved over a 20-year period of operation. Water charges have increased from 0.2 fen/cubic meter (ni3) to 1.2 fen/m3 between 1993 and 1996 and these charges are sufficient for initial O&M. However, water charges will increase to about 4.8 fen/m3 by December 1999 to recover all the operating, maintenance and capital costs. Drainage schemes will also be managed by the counties under their water resources management offices, and there is already a collection of Y 2/mu from cultivated areas for routine and major maintenance of drainage systems. 14. Agricultural sustainability is assured because extension services have increased dramatically since the project. High-yielding seed production and processing stations have also been established in every county to provide high-quality seed to farmers. Farmers pay for all services and the payments are sufficient to maintain these services. 15. Animal husbandry services are sustainable since farmers have realized the value of these services and there is a huge demand. Costs for these services are all recovered through charges. All costs of veterinary services provided from each Township Station and Substation are recovered by charges that include preventive vaccinations, for which livestock owners pay. 16. Future Operations. The future operations of the project will require: first, the completion of all the unfinished on-farm structures on about 25 percent of the newly reclaimed areas by mid-1999. Second, water charges will have to be raised from 1.2 fen/m3 to 4.8 fen/m3 by December 1999 to ensure O&M is fully funded and there is full cost recovery. - VIII - 17. The Regional Government should complete the evaluation of the seed production and processing enterprises with a view to corporatizing and commercializing these entities so that they are financially autonomous. The Regional Government should also undertake, by the end of 1998, special training for the financial staff at all levels in these seed enterprises given their current weakness in financial management skills. 18. IDA will continue to monitor the operation of project activities in conjunction with the supervision of the Tarim Basin II Project. 19. Lessons Learned. The key lessons learned are summarized below. (a) The project increased crop yields by 20 to 47 percent in the stable areas and 68 to 118 percent in low-yield areas during the project's implementation period of six years. All the project's target yields at full development were matched or exceeded even before the project was completed. The lesson learned is that good irrigation and drainage systems, improved agricultural services and inputs can be immediately utilized by farmers to generate large increases in crop yields and production. (b) The building of drainage systems concurrent with the irrigation systems has brought a great deal of benefit to ensure the desalinization of soils and therefore the stabilization of crop yields. The institutions for the maintenance of these drains through drainage management stations should be expanded to cover drains at main, branch and tertiary levels. Fee collection by drainage districts is an excellent idea and should be expanded to all counties. (c) The project experience has shown that farmers are becoming increasingly market-oriented and are very receptive to extension service demonstrations and advice. This attitude places a heavy responsibility on the extension service to ensure that technical packages given to farmers represent the most cost-effective and least risk-development possibilities. (d) Development of the mixed crop/livestock and fodder base components was successful and served as an example to other livestock-owning families. The benefits of this type of development in terms of family incomes and soil improvement are well understood but with market forces progressively determining land use, technicians and farmers need to be informed about the financial benefits and risks associated with the various production possibilities. (e) Tremendous success was achieved in water savings through the lining of canals. An excellent real-time water monitoring system has been developed for the Weigan Irrigation System. This project's loss monitoring system should be expanded to cover both Yerqiang and - ix - Weigan areas and should be used not only for monitoring losses but also for real-time operation of the irrigation system. (f) This project has an innovative component to suppress hail formation and reduce crop loss. This component has worked successfully in reducing hail cloud formation 80 percent of the time. - But sustainability of this component depends very much on the Government's support for O&M. The Akesu Prefecture should add its resources to the financial support from counties to ensure that all O&M requirements are met. (g) With the movement toward a market-oriented economy the seed multiplication, cleaning, testing, treatment, etc. would be better left to the private sector and separated from the seed quality regulatory service, which should remain a responsibility of the Agricultural Bureau in the counties. (h) Competitive bidding procedures used for works and goods procurement have achieved considerable savings in project costs and in general most of the works achieved good quality. To eliminate unqualified suppliers, more stringent methods of prequalification should be adopted to ensure that all bidders are qualified. - 1 - CHINA TARIM BASIN PROJECT (CREDIT 2294-CN) PART I: PROJECT IMPLEMENTATION ASSESSMENT A. PROJECT OBJECTIVES AND DESCRIPTION 1. The main objectives of the project were to support the Government's policy to speed up the development of China's poorer provinces in the north and west. The project was intended to expand the irrigated area for crop production, improve agricultural services, and promote livestock development in southern Xinjiang Autonomous Region, one of the poorer and less developed areas in China. 2. The project also incorporated measures to restore the natural ecology and to monitor environmentally sound development of the Tarim Basin. The project was particularly designed to assist Uygur herdsmen, an ethnic minority, in raising livestock and provide productive employment for women. The main features of the project were as follows: (a) Irrigation and drainage improvement and expansion for 200,000 ha in the Yerqiang and Weigan basins; (b) Hydropower development in the Yerqiang basin; (c) Agricultural support services development for the Weigan and Yerqiang areas; (d) Livestock support services development for the Weigan and Yerqiang areas; and-- (e) Restoration of the Tarim River ecosystem. The objectives were generally well-designed, spelled out in the project documentation, and supported by all the stakeholders. Similarly, they appropriately reflected the Government's implementation capacity and were consistent with both the Government's development strategy and the Bank's Country Assistance Strategy at the time of preparation. -2 - B. ACHIEVEMENT OF PROJECT OBJECTIVES 3. The project objectives were achieved through implementation of the irrigation, drainage, agriculture and livestock components. Canal lining improved the efficiency of water delivery and saved about a 940 million m3 of water. The water saved gave the counties the capability to expand the irrigated area by 73,000 ha and to provide additional land for cultivation by small farmers and thereby increasing their incomes. Drainage improvements lowered the groundwater table and reduced soil salinity on about 300,000 ha by transporting salt out of the cultivated area and thereby stabilizing crop yields. The strong performance of almost all subcomponents resulted in farm family incomes in Yerqiang increasing by about 64 percent and in Weigan by about 72 percent in constant terms. Over 80 percent of the beneficiaries are Uygur farmers. C. IMPLEMENTATION RECORD AND MAJOR FACTORS AFFECTING THE PROJECT Implementation Results 4. Irrigation and Drainage. Essentially all physical targets for irrigation and drainage were achieved, and in many cases exceeded the targets set out during the appraisal of the project. The scope of the project was expanded during the midterm review (e.g., irrigation canal lining was increased from 736 km to 1,076 km) and even these revised targets were fulfilled. Similarly, overall drainage canal lengths increased by 73 km, 8 percent of total drainage canals specified in the SAR. Improved canal lining has had a tremendous impact on delivering water more quickly and in greater volumes to farmers. TABLE 1: WORKS COMPLETED COMPARED WITH SAR ESTIMATES Revised SAR Estimate/a Actual Completed % Description Yerqiang Weigan Yerqiang Weigan completed Wasteland Reclamation ('000 mu) 630 570 630 570 100 Low-Yield Land Improvement ('000 mu) 931 825 931 825 100 Canal Lining (km) 558 518 563 537 102 (387) (349) Drainage Canals (km) 137 769 143 768 100 (165) (669) Wells (no.) 260 29 199 26 78 /a SAR estimates are shown in parentheses. 5. Agriculture. The agricultural component has achieved all physical targets and in many cases exceeded the midterm plan, which was revised upward. At the prefecture level, all planned construction has been completed for each of the types of stations, such as experiment stations, agricultural extension stations, agricultural schools, agricultural machinery training centers and seed calibration. At the county level, agricultural -3 - extension stations have been constructed or rehabilitated; At the township level, some 89 of the 97 stations have been constructed. Similarly, agricultural machinery service/repair stations have been established at the county and township levels. 6. Overall investments in agricultural services and production reached 126 percent of the SAR level in Yerqiang and 134 percent in Weigan with some differences between counties and components. In each county of Yerqiang, investments were 100 to 140 percent of the SAR figure. In Weigan, investments for each county range from 113 to 141 percent of the SAR estimates. 7. Seed Farms have been established in five counties with seed processing plants and seed stations in all nine counties and one township. Development of the large-scale farms in the Weigan Basin have essentially been completed and about 70 to 80 percent have been brought under production. Cotton seed ginning and delinting plants have been established in all eight counties and one corn drying plant has been established in Yecheng County. Cotton seed ginning capacity has been increased beyond the plan figure in order to meet increased demand. The establishment of seed farms and seed stations is according to plan. Farmers are now using high-quality seed, resulting in uniformity of crop yields over all the counties. 8. Animal Husbandry (AH). Overall investments in animal husbandry services and livestock production have reached about 116 percent of the target level in Yerqiang and 123 percent in Weigan. A relatively large part of the investment is in establishment of county and township stations. In the Yerqiang counties, investments range between 93 and 149 percent of the SAR proposed investments for counties and townships. AH servicing stations investments range between 121 and 129 percent of the SAR values. 9. At the prefecture level, all research facilities for the Bahutai and Tuohai experimental farms and training facilities have been completed. AH extension stations have been established in all eight counties and in all 93 townships, with 19 substations to support the township stations. 10. Construction of artificial insemination(AI)/breeding stations is well below the plan level, with 31 of the planned 44 established. The decision to reduce the number of Al/Breeding Stations from the initial 54 in the SAR to 44 and subsequently to 31 is rational. The need for Al/breeding stations including sires, semen collection and insemination services was reduced because higher-quality semen became available through the prefecture and, consequently, insemination services are provided through township stations and substations. 11. Ecology Restoration Component. All four comprehensive monitoring stations for the Tarim River component have been completed including access roads, water supply, electricity supply and telephone communications. In addition, infrared remote sensing, hydrologic, meteorological, groundwater, and water quality monitoring equipment have been procured. Several control structures have been completed to transfer water from midstream to the downstream section of the Tarim River. Since the - 4 - completion of these structures, 25 million cubic meters (Mm3) and 120 Mm3 of water have been transferred downstream in 1995 and 1996, respectively. In addition, the Xinjiang Government has issued three regulations on the formation of the Tarim River Basin Management Committee (TRBMC) and the Tarim River Basin Management Bureau (TRBMB). These regulations define the scope of work and responsibilities for TRBMC and TRBMB. In the follow-up Tarim Basin II Project, TRBMB is going to be upgraded to a Tarim Basin Commission (TBC), which will have the authority to review and approve all future investments in water resource projects in the Basin and will also be able to invest directly in water resource projects. Benefits Accrued During Implementation 12. Irrigation Component. The canal lining component had an enormous impact on the project. The immediate observations by the farmers was that water delivery was four times faster than previously. The increase in the flow of water at the farm level was about three to four times faster than previously observed, and farmers were able to reduce the length of time required to irrigate their fields by 66 to 75 percent. Lining also reduced groundwater tables by about 1 to 2 meters and this resulted in reduction of soil salinity around the cropped areas. The largest impact of the 980 km of lined canals was the reduction in seepage of water (940 million m3) in the two irrigation areas. These savings in water helped the counties to expand the irrigated area by 73,000 ha and also to supply additional water to about 113,000 ha of low-yield and stable areas. The increased irrigation water had an enormous impact on crop yields (see para. 18). 13. Drainage/Environmental Benefits. With the development of the drainage system, the annual drainage outflow increased from 115 Mm3 in 1992 to 382 Mm3 in 1996. As a result of the increase in drainage outflow, the total waterlogged area decreased from 56 square kilometers (km2) in 1992 to 13 km2 in 1996. The construction of drainage canals also increased the salt outflow from year to year. For example, in 1992 net accumulation of salt in the subproject area was 0.139 million tons. In 1994 the outflow of salt exceeded the inflow by 0.199 million tons, which is indicative that the entire area was desalinizing. In 1995 the net outflow of salt (outflow minus inflow) increased to 0.511 million tons, and in 1996 it increased to 1.015 million tons (see figure 1). The entire cropped area of 133,000 ha was desalinizing and crop yields in all the areas increased. This is one of the first large-scale drainage and irrigation systems in China where desalinization of waterlogged arid areas was proceeding as the project was being completed. 14. Hail Suppression Benefits. The hail suppression component was one of the most innovative components included in the project. It was very successful in reducing the formnation of hail clouds. The cloud detection radar was installed and silver iodide rockets were use to suppress hail cloud formation. Hail damage area was reduced by about 90 percent (from 9,330 ha to 930 ha) in 1996 after this component was implemented in 1994/95. The damage reduction was estimated to be about Y 40-50 million. However, the major problem with the hail suppression station is that it is entirely supported by the county governments who, despite the value of the services of the station, are unable to -5- Figure 1: Salt Movement Out of the Basin support it fully. It is (+ve for accumulation -ve for movement out) important for this station 200 . to be supported by the prefecture government 0 ~ since the hail suppression 1992 53 ~~~19194 1995 1996 1992 94 1995 1996 area covers more than the -200 three counties and there are significant social e6 -400 \benefits outside the county's boundaries. -600 15. Agricultural -800 Benefits. The perform- ance of the agricultural -1000 4 development component has been satisfactory. -1200o_ Since 1990 the total cultivated area increased from 282,700 ha to 359,680 ha (27 percent increase), slightly in excess of the target area for both Yerqiang and Weigan. The cultivated area on stable cropland and low-yield land remained almost constant at 162,700 ha and 117,000 ha, respectively, while reclaimed areas accounted for the entire increase. 16. The cropped area increased from 386,100 ha to 450,290 ha, an increase of 16.6 percent, which is 93 percent of the SAR estimate. Both Yerqiang and Weigan were below the SAR estimate with regard to crop area and cropping intensity because there has been a significant shift in land use toward higher-value crops, with the result that cotton in 1996 occupied 195,810 ha; i.e., 43 percent of the crop area compared to 20 percent before. This change in cropping pattern has made an important contribution to the increase in farm family incomes. 17. Overall crop production increased 19 percent in grains, of which wheat increased by 14 percent. There was a 69 percent increase in cotton, with declines in production of oilseeds, vegetables, fruits/melons and alfalfa. Additional residues and crop by-products available for livestock feed are estimated to be about 250,000 tons. 18. As a result of the project, crop yields have increased to the final development production targets much faster than the rate anticipated in the SAR (see Table 2 for details). The yield increases were 20 to 47 percent in the stable areas and 68 to 118 percent on the low-yield lands. In stable areas, about 50 percent of the yield increase was attributed to additional inputs and another 50 percent was due to irrigation. In the low- yield areas, the yield increase was 40 percent due to additional inputs, 20 percent due to drainage and about 40 percent due to additional water. - 6 - TABLE 2. YIELD INCREASES PRE- AND POST-PROJECT Preproject SAR target at Yield increase, 1989/90 1995 & 1996 full development 1989-95 (tons) (tons) (tons) (%) Stable Area Wheat 4.05 4.8 4.75 20 Com 2 3.9 5.4 4.9 38 Cotton 0.8 1.18 1.05 47 Low-Yield Area Wheat 2.2 3.7 3.7 68 Corn 2 3.1 4.45 4.5 43 Cotton 0.48 1.05 0.9 118 Reclaimed Area Wheat NA 3.30 3.30 NA Com 2 NA 3.45 4.50 NA Cotton NA 0.85 0.90 NA 19. Livestock Benefits. Despite the slow start of animal production development in 1992 and 1993, current output exceeds the SAR estimates. The sheep population and the production of meat increased as shown below in Table 3. However, the goat population declined marginally. TABLE 3: CHANGES IN LIVESTOCK POPULATION, OFFTAKE MEAT & FIBER PRODUCTION Item Unit 1990 1996 Increase % increase Sheep Population '000 Head 2,627.8 3,115.3 487.5 19.0 Sheep Offtake '000 Head 987.6 1,362.3 374.7 38.0 Goat Population '000 Head 878.5 845.0 -33.0 -4.0 Goat Offtake '000 Head 249.0 223.2 -25.8 -10.0 Meat Production '000 Ton 18,157.0 28,714.0 10,557.0 58.0 Wool Production Ton 3,560.0 5,283.0 1,723.0 48.0 Cashmere Wool Ton 86.0 87.0 1.0 0.1 20. In Yerqiang the sheep and goat populations changed by 10 and -60 percent, respectively, while offtake changed by 36 and -17 percent and meat production by 44 percent. The decline in goat population was largely due to the decline in cashmere wool prices in the early 1-590s. Weigan sheep and goat populations changed by 1 1 and 27 - 7 - percent, respectively, offtake by 44 and -3 percent and meat production by 95 percent. Population increases have been partly due to purchases from outside the project area but most are attributed to improved reproduction rates, reduced mortality, increased feed availability and the desire by farmers and herdsmen to increase the size of their flocks and herds. Similarly, offtake, which is a measure of production efficiency, has increased because of improved reproduction and lower mortality and the meat production increase is the result of increased liveweight, carcass yield and carcass weight, which have increased by 2 kilograms (kg) and 3 to 5 kg for sheep and goats, respectively. Offtake of sheep has increased from 37 to 44 percent and goats declined from 28 to 26 percent because of low cashmere prices. 21. Livestock population increases, offtake, carcass meat production and wool production increases are all in excess of SAR target figures but cashmere wool production is only 13 percent of target. The total value of the livestock production increase for the total project is Y 268.12 million, which is considerably in excess of SAR targets. 22. The high level of success in livestock is due to the increased availability of crop residues and by-products, the improved coverage of animal health and production services. The success is also due to the successful implementation of specific project components, namely Mixed Crop and Livestock Farming, Pasture Improvement, Pasture Fencing, Fodder Bases and Fattening Bases. These specific project components involved the formation of collective- groups, allocation of land and financing of collectives and individual households. In addition, there were special demonstrations to all collective groups. Major Factors Affecting the Project 23. Cost Increases. In the first year of the project, 1991/92, the prices of construction materials increased by about 40 percent and, as a result, only 50 percent of the first year's program was completed. The provincial government modified the designs of the large canals and structures, thereby realizing cost savings of about 30 percent on these structures. In addition, the Government decided to procure all civil works and goods on the basis of competitive bidding, which resulted in further savings of about 15 to 20 percent. As a result of these changes, the Government was able to implement the overall program as planned for the next few years. However, at the time of the midterm review in November 1994, it was discovered that there were savings in the IDA Credit. Consequently, the scope of the project was expanded to cover the addition of 330 km of canal lining (30 percent increase), 125 additional groundwater wells (71 percent increase) and the addition of 55 km of 110 kV transmission lines (17 percent increase). 24. Counterpart Funding. In the initial years, counterpart funding was in short supply and when it appeared, it was usually well into the fiscal year. The counterpart funding came from several different central and regional government sources but in 1994 the Bureau of Finance decided to centralize the counterpart funding and to distribute it as - 8 - soon as the funds became available. This resulted in considerable improvements although some of the project components were still short of working capital. Only after the executing agencies obtained access to lines of credit from local banks did construction activities proceed smoothly. 25. Procurement. The use of the Bank Group's Procurement Guidelines had a profound impact on the project costs. The SAR estimated that only 68 percent of civil works and goods could be procured using international or national competitive bidding (ICB and NCB) procedures and another 32 percent would be procured using shopping or force account procedures. However, during project implementation the Project Management Office (PMO) found that competitive bidding procedures reduced cost by 10 to 25 percent and in most cases increased the quality of works and goods. In the Yerqiang Basin the resulting savings are estimated to be about Y 100 million. The PMO increased the ICB procurement of goods and works from the SAR level of 32 percent of all such items to 52 percent. There were, however, some cases where despite using ICB procedures , the lowest bidder produced very poor-quality goods as in the purchase of 15-ton trucks. Most of the poor suppliers could have been avoided by proper prequalification procedures. 26. Disbursements. In the first few years the disbursements were always much higher than the SAR estimates. In subsequent years the disbursements were slightly lower or on target as estimated, but in the last few years they again exceeded the SAR estimates. The last credit disbursement was on December 27, 1997. D. PROJECT SUSTAINABILITY 27. The regional and prefecture government are committed to ensuring sustainability of the project, since the project represents a key element in their effort to increase foodgrain and cotton production, and to reduce the incidence of poverty in southern Xinjiang. 28. Irrigation and Drainage. The Yerqiang and Weigan irrigation schemes have been in existence for many years and have operated successfully. The crop yields in stable areas have increased due to further lowering of groundwater tables and additional water supply. The low-yield lands have already reached the yields of the stable area and the reclaimed areas have also registered substantial yield increases. Farmer interviews also disclosed that farmers have already obtained considerable benefits from the project and that they intend to line the on-farm canals in order to realize further improvements. Lined canals have assured timely supply of water to farms and the drainage system has assured that salinization of soils would be prevented. 29. For both these irrigation schemes , detailed operations and maintenance (O&M) plans have evolved over a 20-year period of operation. In addition, further revisions to the O&M plans have been made since the completion of the project. Yerqiang and Weigan have established O&M water institutions. At the prefecture level, the water management offices (Yerqiang and Weigan Water Management Offices) are first-level corporatized -9 - water companies that allocate water for each county. The county water resource water management offices form the second-level water companies, which have several other branch- and township-level companies that receive and sell water to farmer-managed village organizations. At the village level, the farmers are organized according to production teams. The village water master and production team masters are elected by the farmers. The water allocation for each county, township, and village is fairly well defined, even under water shortage situations. Water charges have been increased from 0.2 fen/m3 to 1.2 fen/m3 between 1993 and 1996. Water charges will be increased by December 1999 to about 4.8 fen/m3 to completely recover the O&M and capital costs. 30. Drainage schemes will also be managed by the counties under their water resource management offices, which have set up several Drainage Management Stations. Each of these stations will be staffed with about four staff who will be responsible for drainage management. There is already a collection of Y 2/mu in some counties for routine and major maintenance of drainage systems. 31. Agricultural sustainability is assured because the quality and coverage of the extension service increased dramatically under the project. Farmers have realized the value of these services. High-yielding seed production and processing stations have also been established in every county to provide high-quality seed to farmers. The Regional Government will corporatize all the various processing plants and seed farms after these have reached full production levels in 1999 and make them financially autonomous. 32. AH services are sustainable since farmers have realized the value of these services and there is a huge demand. Costs for these services are all recovered through charges. All costs of veterinary services provided from each Township Station and Substation are recovered by charges that include preventive vaccinations, for which livestock owners pay Y 6.0 per head of cattle and Y 4.5 for sheep; parasite control cost, Y 3 for cattle, Y 1 for sheep; and veterinary examinations, Y 8 to 14 for cattle and Y 2.5 for sheep. Treatment cost according to the disease is based on actual drug cost plus service cost calculated according to time spent. Similarly, grassland service costs are also recovered and they include advice to livestock owners on the harvest and conservation of forage and assistance with the management of natural and improved pastures. For pasture management, farmers pay Y 1.2 to 1.5 per head for cattle and Y 0.6 for sheep and goats. E. IDA PERFORMANCE 33. IDA performance in the identification, preparation, and appraisal of the project was detailed and has been viewed as satisfactory. Overall, the IDA performance was greatly appreciated by the provincial government during the preparation phase. The preparation work was based on studies and designs performed by the prefecture design institutes over about 10 years prior to IDA's involvement. Many of the designs for the irrigation and drainage systems were already completed and several different hydraulic computer simulations and water balances were already carried out to verify the designs, including water availability. IDA verified the detail designs and water balances and - 10- prepared detailed economic and financial analysis to verify the viability of the various irrigation, agricultural and livestock components. 34. IDA's performance in project supervision has been satisfactory. Seven supervision missions were undertaken over seven years-an average of one mission a year. The supervision missions made significant contributions to (a) financing works in the face of shortages of funds; (b) improving construction methods and achieving economy and efficiency by competitive procurement methods; (b) resolving technical issues; (c) providing counterpart funding and working capital for project activities; and (d) advising on design and scope changes. In most cases, the advice provided by the supervision missions had a positive influence on the project. Many project agencies realized the importance of the supervision recommendations and most of them were carried out. The missions were less successful in assisting the PMO to recruit overseas technical assistance and training using foreign experts. F. BORROWER PERFORMANCE 35. The performance of the project's implementation agencies, the Xinjiang Regional Project Management Office, in conjunction with prefecture and county PMOs, was generally satisfactory. The various prefecture PMOs prepared comprehensive feasibility studies for each component that covered technical, financial, economic and institutional aspects. The technical agencies under the PMOs, such as the Water Conservancy, Agriculture and Livestock Bureaus at various levels of government, also prepared preliminary and detailed designs that were generally satisfactory. Project staff at the prefecture and county levels were generally committed to the project objectives and demonstrated project ownership. The project components were for the most part implemented in line with the agreed implementation arrangements and changes to designs were addressed as they occurred. Implementation in the first year was slow because of the extreme shortage of counterpart funds and lack of familiarity with IDA procedures. However, after the first year the project implementation was much more smoothly implemented. By the time of the midterm review (three years from the start) the project was well ahead of schedule for most components except the AH component, which was then adjusted to meet the actual requirements. Counterpart funding was always an issue and great effort was made by IDA missions to address this issue. Overall, the quality of works was excellent and the prefecture and county implementation agencies' performance was satisfactory. 36. The Borrower complied promptly and completely with all the covenants prescribed in the legal agreements except for the water charge covenant, which needs to be fulfilled in December 1999. A detail monitoring and reporting system was set up that indicated the progress and expenditures on all components. Half-yearly progress reports, audited project accounts together with the auditors reports were also regularly produced and received generally on time. G. ASSESSMENT OF OUTCOME 37. The project's overall outcome is viewed as highly satisfactory, since all the objectives of irrigation and drainage development, agricultural/AH growth were achieved with a relatively high degree of sustainability. The overall economic rate of return of 33 percent is impressive and is almost the same as the SAR estimate. Overall, the project has had a strong development impact through the mobilization of scare resources for the expansion of agricultural and livestock production. The large increase in the coverage of extension services, machinery, feed supply and other services has benefited some 350,000 households. Crop yields and livestock production increased substantially from 1991 to 1997. Per capita incomes have risen from Y 400-610 to Y 1,030-1,5 10 between 1991 and 1997. 38. A total of 42,000 ha of newly reclaimed land were given to collectives (11 percent), farmers with proven crop production ability (18 percent) and small peasant farmers (71 percent). Overall, 104,000 households (420,000 people) were affected. Over 82 percent of the households were minority Uygurs and landholding increased in peasant households by 7.85 mu (20 percent of their present land area). 39. The AH component has improved the coverage of animal health and production services for livestock belonging to 330,000 livestock owners. Other improvements include increased improved livestock feed and better feed utilization. There is also increased pasture production and improved genetic resources. Overall livestock production performance improved. Overall incomes per head of sheep increased by Y 100/head. 40. The project has also had a strong impact on the sustainability of the irrigation areas. In both Weigan and Yerqiang it was clearly demonstrated that there is no salt accumulation in the agriculture areas because of the drainage schemes. The hail suppression component dramatically reduced the number of hail events and crop loss per year by about 80 percent. 41. Lining of canals has considerably reduced the leakage of water. Farmers are able to receive water much more quickly and groundwater tables are considerably reduced and thereby local salinization is reduced. H. FUTURE OPERATION 42. The future operations of the project will require, first, the completion of all the on- farm structures on about 25 percent of the newly reclaimed areas. Second, water charges will have to be raised from 1.2 fen/m3 to 4.8 fen/m3 by December 1999 to ensure O&M is fully funded and there is full cost recovery. 43. Third, the Regional Government should complete its evaluation of the seed production and processing enterprises with a view to corporatizing and commercializing these entities. The Regional Government should also undertake, by the end of 1998, - 12 - special training for the financial staff in these seed enterprises, given their current weakness in financial management skills. 44. IDA will continue to monitor the operation of the project activities in conjunction with the supervision of the Tarim Basin II Project. I. KEY LESSONS LEARNED 45. The key lessons learned from the project are summarized below. (a) The project increased crop yields by 20 to 47 percent in the stable areas and 68 to 118 percent in the low-yield areas during the project's implementation period of six years. All the project's target yields at full development were matched or exceeded even before the project was completed. The lesson learned is that good irrigation and drainage systems, improved agricultural services and inputs can be immediately utilized by farmers to generate large increases in crop yields and production. (b) The building of drainage systems concurrent with the irrigation systems has brought a great deal of benefit to ensure the desalinization of soils and therefore the stabilization of crop yields. The institutions for the maintenance of these drains through drainage management stations should be expanded to cover drains at the main, branch and tertiary levels. Fee collection by drainage districts is an excellent idea and should be expanded to all counties. (c) The project experience has shown that farmers are becoming increasingly market-oriented and are very receptive to extension service demonstrations and advice. This attitude places a heavy responsibility on the extension service to ensure that technical packages given to farmers represent the most cost-effective and least risk-development possibilities. (d) Development of the mixed crop/livestock and fodder base components was successful and served as an example to other livestock-owning families.'''The benefits of this type of development in terms of family incomes and soil improvement are well understood but with market forces progressively determining land use, technicians and farmers need to be informed about the financial benefits and risks associated with the various production possibilities. (e) Tremendous success was achieved in water savings through the lining of canals. An excellent real-time water monitoring system has been developed for the Weigan Irrigation System. This project's real-time loss monitoring system should be expanded to cover both Yerqiang and - 13 - Weigan areas and should be used not only for monitoring losses but also for real-time operation of the irrigation system. (f) This project has an innovative component to suppress hail formation and reduce crop loss. This component has worked successfully in reducing hail cloud formation 80 percent of the time. But sustainability of this component depends very much on the Government's support for O&M. The Akesu Prefecture should add its resources to the financial support from counties to ensure that all O&M requirements are met. (g) With the movement toward a market-oriented economy, the seed multiplication, cleaning, testing, treatment, etc. would be better left to the private sector and separated from the seed quality regulatory service, which should remain a responsibility of the Agricultural Bureau in the counties. (h) Competitive bidding procedures used for works and goods procurement have achieved considerable savings in project costs and in general most of the works achieved good quality. To eliminate unqualified suppliers, more stringent methods of prequalification should be adopted to ensure that all bidders are qualified. - 14- PART II: STATISTICAL TABLES TABLE 1: SUMMARY OF ASSESSMENTS Irrigation Agriculture A. Achievement of Substantial Partial Negligible Not Substantial Partial Negligible Not Objectives Applicable Applicable Macroeconomic Policies X X Sector Policies X x Financial Objectives X X Institutional Development X X Physical Objectives X X Poverty Reduction X X Gender Issues X X Other Social Objectives X X Environmental Objectives X X Public Sector Management X X Private Sector Development X X Other (Specify) B. Project Sustainability Likely Unlikely Uncertain Likely Unlikely Uncertain x x C. Bank Performance Highly Satisfactory Satisfactory Deficient Highly Satisfactory Satisfactory Deficient Identification X X Preparation Assistance X X Appraisal X X Supervision X X D. Borrower Performance Highly Satisfactory Satisfactory Deficient Highly Satisfactory Satisfactory Deficient Preparation X X Implementation X X Covenant Compliance X X E. Assessment Outcome Highly Satisfactory Satisfactory Unsatisfactory Highly Unsatisfactory Irrigation X Agriculture X - 15 - TABLE 2: RELATED BANK GROUP LOANS/CREDITS Year of Loan/credit title Purpose approval Status PRECEDING OPERATIONS: North China Plain Agriculture Irrigation Development & Land FY82 Completed (Cr. 1261-CHA) Improvement Pi-Shi-Hang Chaohu Area Irrigation & Area Development FY85 Completed Development (Cr. 1606/Ln. 2579-CHA) Northern rrigation Irrigation Development and FY88 Completed (Cr. 1885-CHA) Improvement, and Settlement Gansu Provincial Development Irrigation and Agriculture Development FY88 Completed (Cr. 1793/Ln. 2812-CHA) Shaanxi Agriculture Development Irrigation and Agriculture Development FY89 Completed (Cr. 1997-CN) FOLLOWING OPERATIONS: Irrigated Agriculture Intensification Irrigation and Agriculture Development FY91 To be Completed (Ln. 3337/Cr. 2256-CHA) in 12/97 Yangtze Basin Water Resources Irrigation and Area Development FY95 To be Competed (Cr. 271 0/Ln. 2874-CHA) in 12/2001 Gansu Hexi Corridor Irrigation & Land Development, and FY96 To Be Completed (Ln. 4028/Cr. 2870- CHA) Settlement in 12/2006 - 16 - TABLE 3: PROJECT TIMETABLE Steps in project cycle Date planned Date actual Identification 05/89 05/89 Preparation 09/89 09/89 Preappraisal 04/90 04/90 Appraisal 06/90 09/90 Negotiations 05/91 05/91 Board presentation 08/91 08/91 Signing 10/91 10/91 Effectiveness 01/92 01/92 Project completion 12/97 12/97 Loan closing 04/98 04/98 TABLE 4: LOAN/CREDIT DISBURSEMENT: CUMULATIVE ESTIMATE AND ACTUAL (US$ million) FY92 FY93 FY94 FY95 FY96 FY97 FY98 Appraisal estimate 10.00 32.50 69.50 93.50 117.50 125.00 Actual 9.99 30.44 56.88 84.56 112.74 135.01 135.92 Actualas%ofadjustedestimate 99.9 93.7 81.8 90.4 95.9 108.0 108.7 Date of final disbursement December 27,1997 IBRD/IDA At Appraisal Actual Actual Project Fiscal Year Disbursement Project Disbursement Project Cumulative, Semester Semestral Cumulative Cumulative Semestral Cumulative Cumulative Compare (US$ million) (%) (US$ million) (%/.) with SAR (%) 1992 First - - 0.0 8.10 8.10 6.0 100 Second 10.00 10.00 8.0 8.10 16.10 11.9 161 1993 First 9.00 19.00 15.2 10.00 26.10 19.3 137 Second 13.50 32.50 26.0 10.00 36.20 26.7 111 1994 First 18.50 51.00 40.8 12.40 48.50 35.9 95 Second 18.50 69.50 55.6 12.40 60.90 45.0 88 1995 First 12.00 81.50 65.2 16.00 76.90 56.8 94 Second 12.00 93.50 74.8 16.00 92.90 68.6 99 1996 First 12.00 105.50 84.4 17.20 110.10 81.3 104 Second 12.00 117.50 94.0 17.20 127.30 94.0 108 1997 First 7.50 125.00 100.0 4.30 131.60 97.0 105 Second 125.00 100.0 4.30 135.90 100.0 109 Total 106.00 106.00 135.40 135.90 - 17- TABLE 5: KEY INDICATORS FOR PROJECT IMPLEMENTATION SAR % of Project Item Unit Estimated Actual Completed 1. Yerqiang Subproject A. Yuepuhu County Irrigation Component Laokana Canal Reconstruction km 45.0 50.0 111.1 Land Reclamation mu 12,000.0 12,000.0 100.0 Low-yielding land improvement mu 7,600.0 7,600.0 100.0 Agriculture Component County Extension Station m2 2,750.0 2,750.0 100.0 County Seed Station Improvement m2 2,622.0 2,622.0 100.0 Cotton Seed Delinting m2 3,600.0 3,600.0 100.0 Low-yielding land improvement (fertilization) mu 10,000.0 10,000.0 100.0 High-Yield Orchard mu 1,000.0 1,000.0 100.0 Township Agriculture machinery Network no. 1.0 1.0 100.0 Animal Husbandry Component Pasture fencing 5,000 mu mu 5,000.0 5,000.0 100.0 Ordinary Township Stations no. 8.0 8.0 100.0 County Service Center/PMO Office m2 1,633.0 1,633.0 100.0 Mixed Crop and Livestock group 4.0 4.0 100.0 Forage Base mu 1,000.0 1,000.0 100.0 B. Bachu County Irrigation Component Land Reclamation mu 158,000.0 158,000.0 100.0 Low-yielding land improvement mu 99,100.0 99,100.0 100.0 Canal Lining km 65.0 65.0 100.0 Drainage canal construction km 57.0 57.0 100.0 Well Field no. 100.0 49.0 49.0 Agriculture Component County Agriculture Extension Center Improvement no. 1.0 1.0 100.0 Township Agriculture Stations no. 10.0 10.0 100.0 Seed Station Improvement no. 2.0 2.0 100.0 Low-yielding land improvement (fertilization) mu 55,800.0 55,800.0 100.0 Township Agriculture Machinery Stations no. 2.0 2.0 100.0 County Agriculture Machinery Repairing Center no. 1.0 1.0 100.0 County Agriculture Machinery Training Center no. 1.0 1.0 100.0 County Agriculture Machinery Station no. 2.0 2.0 100.0 Animal Husbandry Component Pasture Fencing mu 15,000.0 15,000.0 100.0 Township Stations no. 9.0 9.0 100.0 Xiamali Goat Experimental Station no. 1.0 1.0 100.0 Mixed Crop and Livestock group 14.0 14.0 100.0 County Service Center/equipment no. 1.0 1.0 100.0 Forage Base mu 3,000.0 3,000.0 100.0 PMO Living Facilities m2 400.0 400.0 100.0 - 18- SAR % of Project Item Unit Estimated Actual Completed C. Maigaiti County Irrigation Component Land Reclamation mu 132,000.0 132,000.0 100.0 Low-Yielding Land Improvement mu 76,800.0 76,800.0 100.0 Canal Lining km 87.2 87.2 100.0 Drainage Canal Construction - km 80.0 86.2 107.8 Irrigation Works for Forage Base mu 9,000.0 9,000.0 100.0 Agriculture Component County Seed Station km 2,370.0 2,370.0 100.0 Low-Yielding Land Improvement mu 81,900.0 81,900.0 100.0 Cotton Seed Ginnery Improvement m2 4,350.0 5,889.2 135.4 Ordinary Township Stations no. 9.0 9.0 100.0 County Agriculture Extension Center m2 200.0 200.0 100.0 Agriculture Machinery Component Township Machinery Stations no. 2.0 2.0 100.0 Training Center for Agriculture Machinery m2 1,050.0 1,098.4 104.6 Agriculture machinery repairing center m2 500.0 400.0 80.0 Animal Husbandry Component County Service Center m2 1,233.0 1,334.0 108.2 Stud Farm no. 1.0 1.0 100.0 No. 5 Township Experimental Station no. 1.0 1.0 100.0 Pasture Fencing mu 7,000.0 10,800.0 154.3 Mixed Crop and Livestock group 27.0 27.0 100.0 Township Extension Stations no. 8.0 8.0 100.0 Forage Base mu 9,000.0 9,000.0 100.0 PMO Living Facilities m2 400.0 400.0 100.0 D. Shache County Irrigation Component Low-Yielding Land Improvement mu 193,682.0 193,682.0 100.0 Land Reclamation mu 189,000.0 189,000.0 100.0 Klowati Canal Rehabilitation and Lining km 47.0 47.0 100.0 Well Fields no. 50.0 50.0 100.0 Huangdi Canal Rehabilitation km 40.6 40.6 100.0 Xinliuqu Canal Lining km 27.0 27.0 100.0 Agriculture Component Shache Seed Farm km 4,300.0 4,300.0 100.0 County Agriculture Extension Center km 800.0 800.0 100.0 Township Extension Stations no. 25.0 25.0 100.0 Low-yielding land improvement (fertility lacking) mu 142,800.0 142,800.0 100.0 Township Agriculture Machinery Station no. 3.0 3.0 100.0 Cotton Seed Delinting Workshop no. 1.0 1.0 100.0 Animal Husbandry Component Township Animal Husbandry Stations no. 28.0 28.0 100.0 Mixed Crop and Livestock group 16.0 16.0 100.0 Pasture Fencing mu 3,000.0 - 0.0 Animal Fattening Base no. 1.0 1.0 100.0 PMO Living Facilities km 600.0 600.0 100.0 - 19- SAR % of Project Item Unit Estimated Actual Completed E. Zepu County Irrigation Component Land Reclamation mu 57,000.0 58,000.0 101.8 Low-Yielding Land Improvement mu 65,900.0 65,900.0 100.0 Zepu Well Fields no. 60.0 50.0 83.3 Aktam Canal lining km 7.0 7.0 100.0 Boscam and Boshengan Canal Connecting km 11.0 11.0 100.0 Canal Lining and Rehabilitation km 53.8 53.8 100.0 Agriculture Component County Agriculture Extension Station no 1.0 1.0 100.0 Low-yielding land improvement mu 14,300.0 14,300.0 100.0 County Seed Station no. 1.0 1.0 100.0 Cotton Ginnery no. 1.0 1.0 100.0 \ Zepu Farm Construction no. 1.0 1.0 100.0 New Township Agriculture Extension Station no. 10.0 10.0 100.0 Agriculture Machinery Component Township Agriculture Machinery Network m2 400.0 400.0 100.0 Agriculture Machinery Repairing Center m2 2,812.0 2,812.0 100.0 Animal Husbandry Component Ordinary Township Animal Husbandry Stations no. 9.0 9.0 100.0 County Animal Husbandry Service Building m2 1,334.0 1,334.0 100.0 Mixed Crop and Livestock group 8.0 8.0 100.0 PMO Living Facilities m2 400.0 400.0 100.0 F. Yecheng County Irrigation Component Land Reclamation mu 82,000.0 82,000.0 100.0 Low-yielding land improvement mu 130,600.0 130,600.0 100.0 Canal Lining km 118.3 118.3 100.0 Xiaota Canal Extension km 4.5 4.5 100.0 Well Fields no. 50.0 50.0 100.0 110 kV Switch Yard no. 1.0 1.0 100.0 Agriculture Component County Agriculture Extension Station m2 200.0 200.0 100.0 Ordinary Agriculture Extension Station no 16.0 16.0 100.0 County Seed Station m2 2,000.0 2,000.0 100.0 Cotton Seed Delinting m2 4,600.0 4,600.0 100.0 Corn Drying Plant m2 5,000.0 5,000.0 100.0 Low-yielding land improvement (fertilization) mu 52,200.0 52,200.0 100.0 Agriculture Machinery Repairing network m2 400.0 400.0 100.0 Seed Ginnery m2 2,150.0 2,150.0 100.0 Agriculture Machinery Repairing Center no. 1.0 1.0 100.0 Agriculture Extension Training Center m2 1,200.0 1,200.0 100.0 Animal Husbandry Component Pasture Fencing mu 5,000.0 5,000.0 100.0 Karbasman Semicoarse Experiment Station m2 2,398.0 2,398.0 100.0 Ordinary Animal Husbandry Extension Station m2 18.0 18.0 100.0 Mixed Crop and Livestock group 10.0 10.0 100.0 Animal Fattening Base no. 1.0 1.0 100.0 PMO Living Facilities m2 400.0 400.0 100.0 - 20 - SAR % of Project Item Unit Estimated Actual Completed G. Yerqiang River Management Office Kaqun Hydropower Station Powerhouse and Associated Structures no. 1.0 1.0 100.0 Tailrace km 3.2 3.2 100.0 Diversion Canal km 12.6 12.6 100.0 Mechanical and electrical equipment set 3.0 3.0 100.0 Metal Structure Manufacture and Installation ton 427.0 427.0 100.0 Auxiliary Buildings m2 10,000.0 10,060.0 100.6 Transmission Line Shache Central Switchyard kVA 2x 10000 2x 10000 100.0 Maigaiti Switchyard 110 kV kVA 2x6300 Ix6300 50.0 Maigaiti Switchyard 35 kV kVA 2x5000 2x5000 100.0 Kaqun - Shache transmission line 110 kV km 48.0 48.0 100.0 Shache - Pailou transmission line 110 kV km 66.8 66.8 100.0 Pailou - Maigaiti transmission line 35 kV km 10.2 10.2 100.0 Kaqun - Yechen transmission line 110 kV km 48.0 48.0 100.0 East Bank Main Canal km 28.3 28.3 100.0 Canal Lining km 56.5 56.5 100.0 Observation well no. 68.0 68.0 100.0 Equalizer Experiment Area m2 600.0 600.0 100.0 Training Center m2 6,100.0 7,500.0 123.0 Paise Substation m2 36.0 36.0 100.0 PMO Living Facilities m2 21.9 30.0 136.9 H. Prefecture Agriculture Component Agriculture Extension Center m2 1,000.0 1,000.0 100.0 Seed Inspection/Certification Center m2 1.0 1.0 100.0 Agriculture Machinery Training Center m2 102.4 102.4 100.0 PMO Living Facilities m2 400.0 342.0 85.5 2. Weigan Subproject A. Kuche County Irrigation Component Construction of Irrigation Canals km 164.3 173.5 105.6 Construction of Drainage Canals km 225.0 226.1 100.5 Management Buildings m2 960.0 1,240.0 129.2 Land Reclamation mu 225,000.0 225,000.0 100.0 Low-yielding land improvement mu 228,000.0 228,000.0 100.0 Road Construction km 8.3 8.3 100.0 Pastoral and Irrigation Works km 37.0 37.0 100.0 Agriculture Component Transmission Lines and one Switch yard 10 kV km 48.0 40.0 83.3 Forest Belts mu 5,000.0 2,000.0 40.0 Road Construction km 20.0 20.0 100.0 Wells no. 7.0 7.0 100.0 Civil works m2 3,049.0 3,049.2 100.0 Demonstration base m2 947.0 947.0 100.0 Agriculture Service Stations m2 2,060.0 3,502.0 170.0 Agriculture Extension Stations m2 2,280.0 3,108.5 136.3 -21 - SAR % of Project Item Unit Estimated Actual Completed Agriculture Machinery Service Station m2 1,792.0 1,793.0 100.1 County Seed Station m2 740.0 692.5 93.6 Seed supply points m2 2,000.0 2,000.0 100.0 Animal Husbandry Component Feed mills no. 1.0 1.0 100.0 Pump wells no. 5.0 5.0 100.0 Shelters no. 20.0 6.0 30.0 Breeding stations no. 20.0 7.0 35.0 Dipping vats no. 3.0 3.0 100.0 Township Station no. 3.0 3.0 100.0 Township substations no. 8.0 8.0 100.0 County Center m2 166.0 166.0 100.0 B. Xinhe County Irrigation Component Construction of Irrigation Canals km 159.1 159.7 100.4 Construction of Drainage Canals km 250.7 251.7 100.4 Management Buildings For Canals m2 800.0 800.0 100.0 Xinsha Main Canal Rehabilitation km 64.6 64.6 100.0 Land Reclamation mu 160,000.0 160,000.0 100.0 Low-yielding land improvement mu 247,000.0 247,000.0 100.0 Pastoral Irrigation Works Y 10,000 24.0 24.0 100.0 No. 2 Branch Canal Lining of Sangtam Farm Y 10,000 16.9 15.4 91.1 Sangtam Road km 20.1 16.1 80.1 Agriculture Component Sangtam Transmission Line km 38.3 38.3 100.0 Low-voltage power supply line km 20.0 20.0 100.0 Sangtam Windbreak Forest Belt mu 5,000.0 710.0 14.2 Sangtam Road km 20.0 16.6 83.0 Sangtam Farm Well/Switchyard no. 7.0 7.0 100.0 Buildings m2 4,000.0 3,967.1 99.2 Seed Stations m2 5,443.0 5,443.1 100.0 Agriculture Extension Center and Stations m2 5,460.0 5,358.6 98.1 Agriculture Machinery Center m2 2,423.0 2,423.0 100.0 County Agriculture Machinery School /civil works m2 389.7 389.7 100.0 High Yield Agriculture demonstration Plots mu 200.0 300.0 150.0 Animal Husbandry Component Manalik Pasture Improvement mu 1.0 1.0 100.0 Shelters no. 3.0 3.0 100.0 Pump wells no. 1.0 1.0 100.0 Feed mills no. 1.0 1.0 100.0 Dipping Vats no. 3.0 3.0 100.0 Breeding Station no. 10.0 10.0 100.0 Township Animal Husbandry Service Sta. no. 7.0 7.0 100.0 PMO Living Facilities m2 1,133.0 1,133.0 100.0 -22 - SAR % of Project Item Unit Estimated Actual Completed C. Shaya County Irrigation Component Construction of Canals km 127.1 136.3 107.2 Construction of Drainage Canals km 187.9 196.1 104.3 Forest Belt along Main Canal and Road km 50.0 43.9 87.8 Land Reclamation mu 185,000.0 185,000.0 100.0 Low-yielding land improvement mu 350,000.0 350,000.0 100.0 Xinken Road km 11.2 11.2 100.0 Agriculture Component Buildings m2 5,170.0 5,170.0 100.0 Transmission Line and Well km 13.0 12.0 92.3 Low-voltage power supply line km 12.0 14.0 116.7 Wells no. 5.0 6.0 120.0 Windbreak Forest Belt mu 2,800.0 2,861.0 102.2 Hailou General Service Station m2 500.0 1,334.7 266.9 County Agriculture Extension Demonstration Base m2 1,038.0 1,038.0 100.0 Agriculture Extension Stations m2 3,060.0 3,420.4 111.8 Seed Processing Plant m2 2,155.0 6,150.0 285.4 County Seed Station m2 2,200.0 2,200.0 100.0 Agriculture machinery center m2 1,108.0 1,108.0 100.0 High Yield Demonstration Area mu 2,000.0 25,630.0 1281.5 Animal Husbandry Component Pasture Improvement mu 2.5 2.5 100.0 Shelters no. 24.0 2.0 8.3 Pump Well no. 4.0 - 0.0 Dipping vats no. 7.0 7.0 100.0 Breeding stations no. 9.0 9.0 100.0 County Animal Husbandry Service Center m2 1.0 1.0 100.0 Township Stations no. 1.0 1.0 100.0 Mixed Crop/livestock Expansion no. 3.0 3.0 100.0 D. llaichen County Ahebulong Head Work no. 10.0 9.8 98.0 E. Prefecture Irrigation Component Quality inspection center m2 1,545.0 1,545.0 100.0 Water/saltmonitoring no. 1,100.0 1,100.0 100.0 Construction of Canals km 2.8 2.8 100.0 Agriculture Component One Radar Station, indictor shows the range of radar km 500.0 500.0 100.0 Agriculture School km 1,000.0 1,000.0 100.0 Kuche Experiment Station of Xinjiang AAS no. 2,000.0 2,000.0 100.0 Animal Husbandry Component Cashmere Goat Base m2 2.0 2.0 100.0 Prefecture PMO m2 8,400.0 800.0 9.5 Management Building m2 800.0 800.0 100.0 Prefecture Training Center m2 4,000.0 - 0.0 - 23 - SAR % of Project Item Unit Estimated Actual Completed 3. Ecology Restoration Subproject A. Basin Restoration Preparation Work Training of Main River Course Y 10,000 181.0 181.0 100.0 Diversion Gate of Daxihaiz Reservoir Y 10,000 10.0 10.0 100.0 Patam Diversion Gate Y 10,000 29.0 29.0 100.0 Base Construction Y 10,000 25.0 25.0 100.0 Well Field Construction Y 10,000 80.0 90.0 112.5 Diversion Canal Y 10,000 10.0 10.0 100.0 Irrigation works Y 10,000 22.0 34.0 154.5 Infrared Remote Sensing Y 10,000 140.0 153.0 109.3 Preparation of Monitoring Station Y 10,000 74.0 80.0 108.1 Other Works Y 10,000 20.0 20.0 100.0 B. Buildings Management Buildings m2 8,700.0 8,000.0 92.0 Aksu Management Division m2 1,500.0 600.0 40.0 Alar Station m2 807.0 807.0 100.0 Yinbaza Station m2 1,100.0 1,100.0 100.0 Tieganli Station m2 450.0 450.0 100.0 C. Instrument and Equipment Machinery and Equipment set 605.0 605.0 100.0 Building Material and Fertilizer set 2,000.0 2,000.0 100.0 - 24 - TABLE 6: KEY INDICATORS FOR PROJECT OPERATIONS Key Operation Indicators in SAR/Present Report Unit SAR Estimated ICR Estimated Yerqiang Subproject Wasteland Reclamation '000 ha 42.00 42-07 Low-yield Land Improvement '000 ha 62.05 62.05 Canal Lining and Rehabilitation km 558.39 563.39 Drainage Canal Construction km 137.00 143.20 Well Fields no 260.00 199.00 Power Generation MW 21.00 21.00 Energy Sales 1997 GWh 97.9 65.00 Power Sales at full operation 106 yuan 22.9 29.50 Operating Costs 1997 106 yuan 4.50 8.8.0 Power Tariff fen/kWh 22.5 fen/kWh 45 fen/kWh Total Production at Full Development Rice '000 ton 31.3 37.7 Wheat '000 ton 454.4 382.7 Corn '000 ton 280.9 370.8 Cotton '000 ton 99.2 161.5 Legumes '000 ton 133.0 100.2 Vegetable '000 ton 180.9 56.3 Household Income Reclaimed per household Yuan 7,600 23,470 Low-yield per household Yuan 4,282 4,190 Stable area per household Yuan 5,329 13,900 Weigan Subproject Wasteland Reclamation '000 ha 38.00 38.00 Low-yield Land Improvement '000 ha 55.00 55.00 Canal Lining and Rehabilitation km 517.97 536.96 Drainage Canal Construction km 663.57 673.90 Well Fields No. 29.00 26.00 Total Production at Full Development Rice '000ton 11.5 13.0 Wheat '000 ton 168.2 142.9 Corn '000 ton 141.10 157.8 Cotton '000 ton 35.5 72.2 Legumes '000 ton 136.6 35.5 Household Income at full development Reclaimed Area Yuan 10,107 25,940 Low Yield Land Yuan 3,906 20,800 Stable Area Yuan 10,316 12,850 - 25 - TABLE 7: STUDIES INCLUDED IN PROJECT Study Purpose as defined at Status Impact of Study Appraisal/Redefined Model test/study of the intake To verify the hydraulic Completed The data obtained from the test structure design have been used for the modifica- tion of the structure design Model test for the prevention To find out the measures that Completed The results from the test and of frost damage in forebay have to be taken to protect the study have been applied to guide structures from damage due to the design and to optimize the freezing selection of the pumps Study of roughness under To optimize the measures of Completed The results of the study have different linings canal lining been used for guiding the design and construction of the irrigation canals Analysis of environmental To review the possible nega- Completed The model has be developed and impact due to various envi- tive impacts on the environ- used for the monitoring ronmental factors and estab- ment and establish a model to lishment of a mathematical monitor various environ- model for monitoring envi- mental factors ronmental damage Study for the improvement To modify the existing equip- Completed The results have been used to of delinting equipment ment for energy saving and improve the operation of the reduction of operating cost equipment and savings in energy and operating costs were observed Study on irrigation system To establish a sound inigation Completed The results have been used for optimization system for increasing the guiding the water management efficiency of water use organizations to use the water more efficiently - 26 - TABLE 8A: PROJECT COSTS Estimated at Appraisal Actual/Latest Estimate No. Description Y Million $ Million Y Million $ Million A. Yerqiang Subproject 490.4 93.9 783.6 113.2 Irrigation and Drainage 316.4 60.6 513.1 74.1 Drain/Soil Monitoring 4.7 0.9 11.9 1.7 Hydropower 115.4 22.1 175.4 25.3 Agriculture Support Services 32.3 6.2 53.2 7.7 Animal husbandry Support Services 21.6 4.1 30.0 4.3 B. Weigan Subproject 474.3 90.9 739.5 102.3 Irrigation and Drainage 400.5 76.7 666.4 92.2 Drain/Soil Monitoring 3.5 0.7 2.0 0.3 Agriculture Support Services 41.2 7.9 48.0 6.6 Animal husbandry Support Services 16.8 3.2 7.7 1.0 Mix Crop/Livestock Farning 7.1 1.4 6.6 0.9 Pasture Development 5.2 1.0 8.8 1.2 C. Others 114.5 21.9 42.1 6.0 Technical Assistance, Studies and Training 9.8 1.9 28.4 4.1 Agriculture Support Services 90.6 17.3 10.3 1.4 Animal Husbandry Support Services 14.1 2.7 3.4 0.5 D. Ecorestoration/Environment 28.0 5.4 30.3 4.5 Total Project Cost 1,107.1 212.1 1,595.6 225.9 TABLE 8B: PROJECT FINANCING At Appraisal Actual/Last Estimate Project Description Y million $ million Y million $ million IDA 652.4 125.0 904.4 128.0 Region & Prefecture 197.9 37.9 285.7 40.5 County & Farmer 191.2 36.6 298.9 42.3 Central Government 66.2 12.7 106.6 15.1 Total 1,107.1 212.1 1,595.6 225.9 - 27 - TABLE 9: ECONOMIC COSTS AND BENEFITS Appraisal Estimate Actual Estimate Entity FIRR NPV EIRR FIRR NPV EIRR (%) (Y million)/a (%) (/) (Y million)/a (%) Irrigation Yerqiang - 1,326.0 36 26.1 2,057.0 36.4 Weigan - 858.0 33 17.6 848.0 30.4 Seed Farm 24 6.3 29 17.0 2.2 23.0 Livestock Mixed Crop and Sheep 7.34 23 14.3 30.0 Pasture Based Sheep and Goat 30.08 30 31.0 40.0 Sheep Stud Farm 12 0.45 14 0.22 28.0 Seed Processing Seed Ginneiy (new constructed) 24 6.99 39 21 6.06 30.0 Seed Ginnery (rehabilitated) 13 0.55 - 16 1.0 30.0 Cotton Seed Delinting 12 0.90 16. 14 1.89 18.0 Hydropower 19 173.67 23 12 82.0 18.0 Overall of the Project 34 33.0 /a Discounted at 12 percent. -28 - TABLE 10: STATUS OF LEGAL COVENANTS Cove- Original Revised Agree- nant Present fulfillment fulfillment ment Section type Status date date Description of covenant Comments Project PA Schedule 2, 5 C At all times PMO will be maintained Has been in place since 1989 and Para. I and adequate qualified successfully operated until the end of staffing at all levels the project PA Schedule 2, 1 C Each year Xinjiang will comply All audit report have been submitted Para. 2 with the financial report- since the project started. ing requirement PA Schedule 2, 11 C 12/15 each Xinjiang will ensure that Fertilizer has been made available to Para. 3 year report to adequate supplies of farmers. A total of about 40,000 tons the Bank fertilizer are made has been procured by the Regional available to farmers Government. Reports have been sub- mitted in the yearly supervision Mis- sion which generally occurred in September. PA Schedule 2, 11 C 03/15/92 Wasteland leases will PMO gave us in September 1992 Para. 4 provide give preference to land- county by county allocation of land, report less or poor farm house- which is mainly to the poor and land- holds less within the townships. A more detailed report was provided in 1996 PA Schedule 2, 12 C 3115/92 hold Extension guidelines will Extension guidelines were prepared Para. 5 workshop be prepared satisfactory in September 1991 after a workshop and 03/15/93 to the Bank and utilize in Dec. 1990. Document was submit- develop these for training ted to the IDA for review in March guidelines 1991. Subsequently the Govemment implemented the guidelines. PA Schedule 2, 5 02/15/92 and Appoint an independent The panel was first appointed Para. 6 for yearly technical panel to review 01/15/92 and in June every year there reviews the project annually have been meeting. The last panel meeting was in August 1997. The panel has helped to reduce cost, revise technical components to meet objectives of the project. PA Schedule 2, 12 C 06/15/93 and Provide a report for com- The PMO has provided cotton prices Para. 8 for yearly ment each year showing and their analysis each year. There reports 03/15 price analysis and pro- national price increases have given a duction incentives pro- huge incentive to grow cotton. Grain vided for farmers to grow areas have declined by 20% while cotton. cotton areas have increased by about 75%. There is no necessity to give incentives for producing cotton. The covenant is irrelevant now. PA Schedule 2, 12 C 06/15/93 and Provide a report for com- All incremental grain is sold in the Para. 7 reports 06/15 ment each year showing free market since 1992. In fact there every year analysis of prices for is only about 5% of the grain pro- grain for previous year duced that is sold at negotiated and ensure that incre- prices. Despite the strong mental production is sold competition for grain from cotton in the free market. and there has been a reduction grain area by 20% there has been an increase of grain production 6% every year since 1990 due to increased yield increases due to irri- gation. The covenant seems to be irrelevant now. - 29 - Cove- Original Revised Agree- nant Present fulfillment fulfillment ment Section type Status date date Description of covenant Comments PA Section 2, 2 NYD 12/31/95 Yehe Power Company Yehe Power Company was formed in Para 9 internal cash generation 1994 and it was essentially corpora- will account for 15% tized and is financially autonomous. YHPC capital expendi- The company does have intemally tures starting from generated cash reserves. At this junc- 12/31/95 ture YHPC has no hydropower investments in the basin. PA Section 2, 2 NYD -12/31/99 and Charge water rates to A plan to raise water charges was Para 10. (have plan of recover all O&M and a presented to the Mission 09/15/94. presented O&M by portion of the capital However water charges were raised the plans) 12/31/93 costs; and provide a plan from .2 fen/m3 to .6 fen/m3 in 1992 for O&M and for water even as the project construction was charges by 12/31/93. started and when benefits were not realized. The prefecture government is now planing to corporatize the river basin management office to manage the entire water management so as to ensure accountability and there is full cost recovery. PA Schedule 2, 2 C NA Ensure that charges for All animal husbandry services have Para 10. services for AH stations implemented user charge which recover the costs of the farmers have to pay for services services. Covenant Class: Status: I= Accounts/audits 8 = Indigenous people C = covenant complied with 2= Financial performance/revenue 9 = Monitoring, review, and reporting CD = complied with after delay generation from beneficiaries 10 = Project implementation not CP = complied with partially 3 Flow and utilization of project covered by categories 1-9 NC = not complied with funds 11 = Sectoral or cross-sectoral NYD= not yet due 4 = Counterpart funding budgetary or other resources 5 = Management aspects of the allocation project or executing agency 12 = Sectoral or cross-sectoral policy/ 6 = Environmental covenants regulatory/institutional action 7 = Involuntary resettlement 13 = Other TABLE 1 1: COMPLIANCE WITH OPERATIONAL MANUAL STATEMENTS There was no significant lack of compliance with an applicable Bank Operational Manual Statement (OD or OP/BP) - 30 - TABLE 12: BANK RESOURCES: STAFF INPUTS Stage of Planned Revised Actual project cycle Weeks US$'000 Weeks US$'000 Weeks US$'000 Preparation to appraisal n.a. n.a. n.a. n.a. 90.0 233.1 Appraisal n.a. n.a. n.a. n.a. 50.0 123.8 Negotiations to Board Approval n.a. n.a. n.a. n.a. 12.2 38.3 Supervision/a 31.5 55.2 28.7 59.2 84.7 238.1 Completion 7.0 19.7 7.0 18.0 11.4 51.8 Total n.a. n.a. 50.5 173.990 345.025 794.637 /a Since task budgeting began in FY96. TABLE 13: BANK RESOURCES: MISSIONS Performance rating Specialized staff skills represented Imple- Devel- Stage of project cycle Month/ No. of Days /a mentation opment Type of year persons in field status /b objectives problemsjd Identification 05/89 2 9 FTM, EO Preparation 09/89 2 14 FTM, PE Preappraisal 04/90 11 24 FTM, EO, FA, AG, LS, PE, GS, IE, EN, RS, FS Appraisal 09/90 8 19 FTM, FA, AG, LS, DR, PE, GS, IE Supervision 1 09/91 1 8 FTM N/A I - Supervision 2 05/92 3 8 FTM, PS, DS I I - Supervision 3 09/92 7 8 FTM, PS, EN, LS, WS, IE, GS 2 2 - Supervision 4 10/93 4 9 FTM, AG, IE, GS 1 2 - Midterm Review 10/94 3 10 FTM, IE, GS Supervision 5 11/95 5 7 FTM, PS, IE, GS, EO HS 2 - Supervision 6 12/96 4 8 TM, ID, WR, IE HS S - Supervision 7 06/97 5 10 TM, EO, AN, GS HS S Completion 11/97 7 11 FTM, PS, LS, FA, PS, IE, GS HS S - /a TM: Task Manager; FTM: Former Task Manager; LS: Livestock Specialist; AN: Anthropologist; AG: Agriculture Specialist; IE: Irrigation Engineer; EO: Economist; ID: Institutional Development; PS: Procurement Specialist; FA: Financial Analyst; EN: Environmentalist; GS: Groundwater Specialist; DR: Drainage Specialist; PE: Power Engineer /b 1: Highly satisfactory; 2: Satisfactory. Ic Typical problems included: implementation delays in technical assistance and studies. -31- ANNEX A ANNEX A: ICR MISSION'S AIDE MEMOIRE 1. A Bank Mission composed of Messrs./Mmes. D. Gunaratnam, Zhang Chaohua, Wang Xiaolan (Bank); and P. Jiang, D. Masterton, Hu Shunong and Zhang Weizhen (Consultants) visited Xinjiang Province November 19-30 to discuss implementation completion of the project. The Mission visited the project sites in southern Xinjiang (Weigan and Yerqiang), had discussions with the PMOs at Regional, prefecture and county levels to review the completion of the project. The Mission had a final wrap-up meeting with members of Regional PMO members and Vice Governor on November 29, 1997. The Mission would like to thank the provincial authorities for the courtesy, cooperation and hospitality extended to the Mission during our stay in Xinjiang. The following summarizes the topics discussed and the agreements reached. Project Implementation 2. Irrigation and Drainage. The ICR Mission noted that almost all the physical works for the drainage and irrigation, land reclamation, low yield land improvement are completed. The progress of all works is as follows: Revised SAR Estimate Actual Completed % Description Yerqiang Weigan Yerqiang Weigan completed Wasteland Reclamation ('000 mu) 630 570 630 570 100 Low-Yield Land Improvement ('000 mu) 931 825 931 825 100 Canal Lining (km) 558 518 563 537 102 Drainage Canals (km) 137 769 143 768 100 Wells (no.) 260 29 199 26 78 3. All the physical works have been completed except for some 10 to 15 percent of field structures for the reclaimed areas and a smaller percentage for low-yield land improvement have still to be completed. In addition, there are a total of 61 wells that need to be installed in Yerqiang. The canal lining completed for both Yerqiang and Weigan is more than planned in the project. The lining length does not include many lateral and sublateral canals undertaken by the farmers. In general the works undertaken were of good quality and the impacts were very significant. The only outstanding issue seems to be the completion of the on-farm structures for the reclaimed areas and some of the low-yield areas and additional wells for Yerqiang basin in particular. 4. The impact of irrigation canal lining construction and drainage canal construction are very significant. Based on the information provided a total of 980 km of canal lining was constructed and the estimated amount of water saved is about 940 million m3 per - 32 - ANNEX A year. This is about 1 million m3 of water per km of canal lined. The lining of a small section of canals were affected by frost heave but performed well after the repairs. The lining of canals has dramatically reduced the losses and shortened the time of water delivery by 75 percent. Although the physical works have been completed and operations and maintenance of all the systems have begun it is noted that water charges are still very low and are unable to meet the major repair and depreciation requirements. 5. Weigan Basin Management Office has installed a real-time water flow monitoring system for the Weigan Irrigation Water Management Bureau. The system comprises of 52 canal elevation tele-observation points, covering the Weigan Irrigation Project, with 29 transmitters sending out signals for every 1 m3 change in canal elevation and one monitoring center which collects flow data from transmitters and processes the data before saving in corresponding data bank. Upon successful testing, the system will be put into operation in the next spring irrigation season. Using the system, more flexible and optimal water dispatching water among three counties in Weigan River Basin and more efficient water use are expected. The mission would encourage that Weigan Basin Management Office complete the monitoring system for the whole Weigan and Yerqiang Irrigation Systems and also to use it to monitor the drainage flows. 6. Salt and Water Monitoring. The Mission was extremely impressed with the work undertaken by Tsinghua University for the saltwater monitoring of both basins and the results of the study are very significant in establishing a stable and sustainable oasis. The main areas covered by the study are as follows: (a) Basinwide fundamentals (i) Identification of land utilization by satellite images for remote sensing (ii) Meteorological observation (b) Water and salt balance of Weigan and Yerqiang irrigated areas (c) Groundwater monitoring (d) Soil, water and salt monitoring in the top Im soil (e) Monitoring of the effects of drainage canals (f) Evaporation from bare soils with shallow water tables (g) Water and salt monitoring information systems (h) Estimation of water consumption of different types of lands (i) Groundwater balance (j) Transformation between surface water and groundwater 7. Agricultural Component. At prefecture the level all planned construction has been completed for experimentation, agricultural extension, agricultural school, agricultural machinery training and seed calibration. 8. At the county level, 5 (6 planned) agricultural extension stations have been established and 1 (1 planned) rehabilitated. At the township level 89 (97 planned) stations are in place. - 33 - ANNEX A 9. Agricultural Machinery Service Stations have been established in 6 (6 planned) counties and in 10 (10 planned) townships, with Machinery Repair Stations in 4 (3 planned) counties, Machinery Training Stations in 2 (1 planned) counties, and 6 sets (6 planned) of Agricultural machinery have been provided. 10. Seed farms have been established in 5 (5 planned) counties with Seed Processing Plants and Seed Stations in 9 (8 planned) Counties and 1 (1 planned) township. Development of Kqilik, Sangtamnand Xinken farms in Weigan are 92 percent, 82 percent and 100 percent complete respectively, but 20 to 30 percent of the crop land is yet to be brought into production and establishment of windbreaks in Kqilik and Sangtam is only 40 percent and 14 percent complete respectively because of high seedling mortality due to poor soil conditions. 11. Cotton Seed Ginning and Delinting plants have been established in 8 (8) counties and one Corn Drying Plant established in Yecheng county. Cotton seed ginning capacity has exceeded the planned figure in order to meet increased demand, and the seed farms and seed stations are established as planned. 12. The total investment in agricultural services and production has reached 126 percent of the target level in Yerqiang and 134 percent in Weigan with some differences between counties and components. Investments are 100 percent to 140 percent of the planned for different counties in Yerqiang while in Maigaiti a big cost saving on low yield land improvement reduced total investments to about 78 percent. In Weigan the actual investments for each county range from 113 to 141 percent of the planned. 13. Development of Agricultural Services Agricultural extension services development has been carried out according to the plan. Thanks to the 89 additional Township Agricultural Extension Stations, services have been made more readily available to about 350 ,000 agricultural households. However, due to difficulties in preparation of specifications and tender documents the provision of some equipment is behind schedule. The construction of agricultural extension stations is on schedule, the staffing of those stations at Township level has not been done as recommended in the SAR. The numbers of staff assigned to township stations compared to the SAR targets are 382 to 492 for Yerqiang and 201 to 248 for Weigan. The number of technical staff in township stations has not been increased as proposed and the extension worker-farmer ratios are far below the proposed level, i.e. 1:1050 for Yerqiang and 1:600 for Weigan. The mission noted during the visits to County and Township stations in Yerqiang that some county stations have excessive staff while most township stations are inadequately staffed, and some townships have extension worker-farmer ratios of lower than 1:2,000. 14. Animal Husbandry The animal husbandry component has had a significant impact on the local economy. At the prefecture level all Research Facilities for Bahutai and Tuohai Experimental Farms and Training Facilities have been completed. Such investment items not implemented in the Weigan counties as Livestock Shelters, -34- ANNEX A Watering Wells, Dip Vats and Artificial Insemination/Breeding Stations have been debited to Akesu Prefecture but it is not clear whether these facilities are located in Baichen County. 15. Animal Husbandry Extension Stations have been established in 8 (9 planned) counties and in 93 (93 planned) townships with 19 (19 planned) Substations. 16. The number of Artificial Insemination/Breeding Stations established is 31 in comparison with the planned 44, including 5 in Baichen County. However, the decision to reduce the number of Stations from the initial 54 in the SAR to 44 and subsequently to 31 is rational. The services of Artificial Insemination/Breeding Stations including sires, semen collection and insemination services become less needed because high quality semen is made available through the Prefecture and then insemination service is provided by township stations and substations. 17. Only 2 (2 planned ) livestock feed mills have been established compared with 9 in the initial SAR plan. The decision to reduce the number of small local mills is logical because of the establishment of large livestock feed mill facilities at Prefecture level. The four Roughage Ammoniation Plants initially planned for Yerqiang were all eliminated as the increase in liquid ammonia price made roughage treatment not viable. 18. Other items with variations in target levels include Livestock Shelters: 44 actual against 80 planned , Watering Wells: 8 actual against 12 planned. The reason is that livestock-owning families have been able to build more modest shelters and wells using their own labor and materials at lower cost. Although the number of shelters and wells financed through the project is reduced the total number including those constructed by farmers from their own resources is higher than the planned figure. 19. Establishment and expansion of Livestock Breeding farms for supply of improved genetic material, Kuche, Bahutai and Tuohai at Prefecture Level and Karbasman, Xamaili and Maigaiti at County Level have been conducted. Although work at Kuche is said to be complete, machinery purchase, pasture improvement and forage/fruit tree cultivation are all below the target levels. For the two farms visited, i.e. Maigaiti and Kuche, targets for livestock numbers and output of improved genetic stock have not been met. The cash flow statement for Maigaiti Stud Farm shows a steady increase in net profit although costs do not include investments, financing costs or depreciation. Nevertheless, based on the limited information available during the visit to Maigaiti it is likely that gross income in 1997 including manure value will exceed the stated figure by Y 30,000 to Y 50,000. 20. It is clear that the benefits of the animal husbandry component have been realized. Those benefits include: (a) increased coverage of animal health and production services; (b) increase in livestock feed available and improved feed utilization; (c) increased pasture production; (d) improved pasture utilization; (e) increased livestock population and improved genetic resources; (f) improved production performance; and (g) increased production and farm family incomes from livestock. -35 - ANNEX A 21. Restoration of the Tarim River Ecosystem. The ecosystem restoration component has been finished. Most of the monitoring stations, management buildings, equipment procurement, along with several controlled gates for the Tarim River have been completed. A detailed infrared remote sensing map has been completed for the whole Tarim River Basin. Civil works for the Daxihaize Reservoir, Patam Diversion Gate, etc. have been completed and about 25 million m3 of water was transferred to the lower reach in 1996 and about 120 million m3 in 1997. As for institutional reform the Xinjiang Government has issued three regulations on the formation of the Tarim River Basin Management Committee (TRBMC) and the Tarim River Basin Management Bureau (TRBMB) with letters stating the detailed requirements for the scope of work and responsibilities of the TRBMB. In the follow-up Tarim Basin II Project the TRBMB is going to be upgraded to a Tarim Basin Commission (TBC) which has the rights to invest in projects. 22. Financial Management. The mission is pleased with the Provincial PMO's good recording system of the project's financial accounting information. The mission noted that up to the end of 1996 the shortage of counterpart funding had been a constantly constraint comparing with the smooth physical construction of this project. Although the counterpart funding has been put into place in 1997 and the project has been completed, the mission would still like to emphasize the absolutely importance of the timely counterpart funding. Especially with the Tarim II Project, the Bank expect the firm commitment from the government on this counterpart funding issue. 23. The mission is informed that the average replenishment time from the Bank to the borrower's Special Account is 20 days and the borrower is quite happy with this arrangement. However, due to the borrower's heavy dependence on reimbursement from the Special Account, the borrower suggests the total amount in the Special Account be increased from US$7 million to US$10 million. 24. The mission is pleased to know that the internal audit system from the county, prefecture up to the autonomous region has been operating strictly under the related rules and regulations. Training on auditing issues has been provided to all the auditing staff involved at each level. The autonomous region auditing bureau reviews every underlying document to the SOE such as procurement material, invoices and bills of lading and evidence of payment. The mission feels the accounting system and audit controls are adequate. 25. The mission paid the field visits to the three project counties in Weigan and two counties in Yerqiang area, and met with the finance staff in the enterprises financed the Bank such as the Kaqun Hydropower Station and the Seed Station in Weigan and three seed farms, two cotton ginnery plants in Yerqiang. The mission was informed of the detailed sources and amounts which would be allocated to the repayment fund. The mission would like to congratulate on the accountability of the government to fulfill its debt payment responsibility. -36 - ANNEX A 26. The mission noted that most of the enterprises visited did not have a complete financial management system in place due to various reasons. One of the major reasons is that those enterprises just started operation and the ownership status for most enterprises is not very clear status in terms of the ownership. The mission was assured that after the project is fully completed by December 1997, the Xinjiang Regional Government will conduct detailed evaluation of each component of this project including fixed-asset evaluation, ownership determination. Xinjiang Regional Government confirmed that after the evaluation of the enterprises, they will be corporatized and commercialized with financial autonomy. Xinjiang Government also assured that it will undertake a special training for the financial staff in those enterprises given their current weakness in financial management skills by the end of 1998. 27. Project Covenants The mission noted the following Credit Agreement that is outstanding and need to be fulfilled: Project Agreement Section 2 para. 10 states "Charge water rates to recover all 0 & M and a portion of the capital costs; and provide a plan for 0 & Mandfor water charges by December 31, 1993. " Despite that the water charges increased by about 600 percent from 0.2 fen/m3 in 1991 to 1.2 fen/m3 in 1995 which is far inadequate for full cost recovery. Therefore, the present charges need to be further increased by 400 percent to 4.8 fen/m3 by December 31, 1999. 28. Follow-up Actions: The only follow-up action is the completion of the on- farm structures for the reclaimed areas (25 percent of the area) and some of the low yield areas (10 to 15 percent of the area) for both Yerqiang and Weigan Basins and completion of installation of additional wells for Yerqiang Basin in particular. In addition the mission would recommend the continuation of the Salt and Water monitoring systems as it is important to monitor early warning of salinization in any part of the basin. MAP SECTION CHINA TARIM RIVER BASIN PROJECT YERQIANG RIVER BASIN SCHEME Proe Works Areas Hydroelectric Pwer Plants StobleYield Lend S Proposed Low Yield Land 0 Planned Plonned Reclo- ation S E-sti.g H Well Fields K P_pulo P -renouso Frsts Rivers Projed Ar Boundony :X Resenoins/Lakes Sate Fnm-s Cnals to be Lined and Re Built, Gates - Main -ad Bra-h FtinaC Canls: n Selected Towns /Villages Main e County (Xin) Hedq-t-ers 2 .7' - ets,i U Br-nch H PrefectureHaadqaaneru L~Pr-in- H-edq-itw/ -eIRS25 Dra ns County G-an) Boundaries 4f n Dwis to be Edtded Pefecdure Bo-ndaries -, and Rehabilitatd Branch Drais ta be E-tended - Pronince Bondaries a-d RetrabilitatdP--B d,. EtisSag Main and Branch - International Boundary ARrUX~~~~~~~~~~~~~~~~~~~~~RU 3>0 5 MW e_-.-P; 5rd5' C HE-- TaKae R5 'rl [IBRD 22309R X#NHE ~~~~~~~~~~~~~~~~~CHINA ar ,g g rs -5,t w 41-20 TARIM RIVER BASIN PROJECT orarg WEIGAN RIVER BASIN SCHEME Prai-et W-rbsA-es:- River g Stable Yield Lend Reievrs LAks so ~~~~~~~~~~~~~~~~~~~~~~~~~Low YeId Lend S Hydr- aorr Po.e Piurra 1 g' A rPR Pic ed Relerd -tine - GoStrt.r P r ~ r x l4 # Case.S ta be Lead and Re-Bald:- Rad N ~~~tyvevw ~~~~tv4,~~~'tr~~ - ~ Main end Bre-nh Seine d To-,- Vilinger rt: ~~~~~~~ ~~~~,l-lfrr¼ e ~~~~~~~~~~~~Cas-ty (Xiani H-odys-v- Reistina Cana.ls: Prefectur H-rdq-nrvr aSHAYA A N Main 0 Prv-n I l-edq-arte-s >. 'r_ Bronch Cm -y PrnfvtrXio-Bondaries Main Drains: Prairece. jnd-rins T. Rieir ' , ;. R- Ta ba Eateeded and Rebuilt - intent,onoi Bounday N. K. H .~~~~~~~~~~~~~~~~~~~~~~~~~~r 5,Oaos o:n aro ,rrer -' a as e _z]^5 ~ akae/D \Lrn 4I ,1~~~~~~~(t rW ¾7 - fS ' Arc~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~rl l-JaYIsa - Oav1,~~~~~' ira:oc.t2~~ K ,ro:oc Basaoo.r~~~~~~~~~ torv~~~~~ N s-<~~~~~~ c -rs orj~~~~~~~~(~~ sO J~~~~~~~~~~~~~~~~~~~~~~~~~~g A ~ ~ ~ ~ ~ ~ - L / ssa ~~~~~~~niNc~~~~~~~~ errs os-c ~~~~~~~~~~~~APRIL 1991 IBRD 22550R | | 70' ~~~75' ro- 5-° 90A ' a ~~~~CHINA11- TARIM RIVER BASIN PROJECT 5- ECO-RESTORATION COMPONENT Proposed Offices; i Comnprehensive Monitoring and Irrigated Areas Manaemen Stations Management Office Populus Prenouso/Euphretica Forests 5 Management Bureau Desert Intermittent Lakes / Rivers Proposed Monitoring Sations: - Existing Roads * Existing Meteorological Stations Project Road At 09 Planned Meteorological Stations Existing Hydrological Stations a Selected Towns/Villages * Planned Hydrological Stations 0 County (Xian) Headquarters Area of Map Planned Water Gates 0 Prefecture Headquarters t3 Hydro Power Plants QW Province Headquarters / * Groundwater Sounding Well County (Xian) Boundaries 40- CL Groundwater Balance Stations - Prefecture Boundaries 35 Forest, Shrub, and GrossPrvneBndre f3FMeonitoriropng Proins Province Boundaries q 1 Ir Natural Protection Zone International Boundary of Populus Prenouso Forest :_tt~~~~~~~~~~~~~~~~~~~~~~~~t 'a~ no > X Z 4 4f - - Ms -- ' : W ': ( a: ~~~~~~. -. ---. ... zk .. J * W s f>7- 22, t AKESU : ::: : . ( ; 0 KORLA r XAYAR r , j \ / | '. f-, : 5,. FU0~~~-~ itlQiAN& . r * _ _ _ _ / Q~~~~~~~~~~ ~~IEMO ,,; m0lYUIji. PjQR YUT(AN 0 MINFFNG {) I d''I / HOTN/ i| / . APRIL 1991