Document of The World Bank FOR OFFICIAL USE ONLY Report No. 2047 FILE COPY PROJECT PERFORMANCE AUDIT REPORT INDONESIA (FIRST) IRRIGATION REHABILITATION PROJECT (Credit 127-IND) May 4, 1978 Operations Evaluation Department 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. ABBREVIATIONS AND ACRONYMS AV - Audio-Visual BIMAS - Bimbingan Massal Swa Sembada Bahan Makanan - "Mass Guidance for Self-Sufficiency in Foodstuffs" a farm input-credit package program BRI - Bank Rakyat Indonesia - People's Bank of Indonesia BULOG/DOLOG - Badan Urusan Logistik - "National Logistics Body" - rice procurement agency/Depo Logistik - provincial branch of BULOG BUUD - Badan Usaha Unit Desa - Forerunner of KUD as Village Unit Cooperative DGWRD - Director(ate)-General of Water Resources Development GOI - Government of Indonesia HYV - High-Yielding Variety INMAS - Intensifikasi Massal - "Massive Intensification" - a farm input program INPRES - Instruksi Presiden - "Presidential Instruction" - a rural public works program IPEDA - luran Penbangunan Dearah - Land Tax KUD - Koperasi Unit Desa - Village Unit Cooperative MOA - Ministry of Agriculture O&M - Operation and maintenance PELITA - Government of Indonesia Five-Year Plan PPL - Agricultural extension worker PPM - Senior agricultural extension worker PPS - Agricultural subject matter specialist PROSIDA - Proyek Irigasi IDA - Agency of DGWRD created to execute IDA-assisted projects REC - Rural Extension Center DOMESTIC INFLATION INDEX (Indonesian fiscal year April 1 - March 31) 1976/77 = 1.000 1968/69 3.420 1972/73 2.375 1969/70 3.100 1973/74 1.613 1970/71 2.894 1974/75 1.343 1971/72 2.870 1975/76 1.122 OFFICIAL EXCHANGE RATES (US$1.00 = Rp) 1968/69 375 1969/70 375 1970/71 375 1971/72 400 /a 1972/73-76/77 415 /a The official rate was changed from US$1.00 = 375 to 415 in August 1972. FOR OFFICIAL USE ONLY Project Performance Audit Report INDONESIA (FIRST) IRRIGATION REHABILITATION PROJECT (Credit 127-IND) TABLE OF CONTENTS Page Preface Basic Data Sheet Highlights PROJECT PERFORMANCE AUDIT MEMORANDUM I. Project Summary 1 Project Development and Implementation 3 Agricultural and Economic Impact 6 The Tertiary Issue 12 Conclusions 17 Attachment Government's Comments PROJECT COMPLETION REPORT 1. Introduction A.1 2. The Project A.2 3. Problems in Project Implementation A.7 4. Project Impact A.10 5. Present Status of the Project A.15 6. Performance of the Borrower A.19 7. Bank/IDA Performance A.20 8. Conclusions A.22 Tables Maps This document has a restricted distribution and may be used by recipients only ir he performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Project Performance Audit Report INDONESIA (FIRST) IRRIGATION REHABILITATION PROJECT (Credit 127-IND) PREFACE This report presents the results of an audit of the first of the Indonesian irrigation projects, partly financed by Credit 127-IND for US$5.0 m. The credit was signed in September 1968 and closed, with minor cancellations, in March 1977. The audit was based on interviews with Bank and Government staff, and on a reading of the Project Completion Report (issued by the East Asia and Pacific Region in June 1977), of the appraisal report, supervision reports and other material in Bank files, and of independent studies available in Jakarta and Washington dealing with irrigation systems on Java. The audit was conducted as part of a larger assignment for 1977 in which the Operations Evaluation Department reviewed the accomplishments of the Bank's entire agricultural sector portfolio in Indonesia, including the series of nine active irrigation projects. OED missions were made to Indonesia in January and June/July 1977, with visits to each of the four irrigation schemes financed by the project. The irrigation program was a major focal point of OED's sector study, and OED was assisted in the field work by two irrigation consultants. The Audit Report consists of a Memorandum prepared by OED, including a summary originally drafted by the authors of the PCR, followed by the PCR itself. Much of the material in the PCR was drawn from an earlier PCR pre- pared in 1976 by PROSIDA, the executing irrigation authority (PROSIDA's PCR is available in Regional and OED files). The two PCRs present an excellent review of physical progress of the irrigation works on primary and secondary canals and structures, and of the problems of implementation that were gradually overcome. The second section of the Memorandum elaborates on the discussion of implementation in the Region's PCR, drawing upon additional material in PROSIDA's version. The audit mission differs with both PCRs in respect to the analysis of on-farm use and impact of the irrigation waters, and the last two sections of the Memorandum are devoted to a discussion of water use and the tertiary system. The mission's field work concentrated on two of the schemes financed under the first project. But schemes from other projects were visited as well and the discussion of water use and tertiaries applies to the rehabilitation program as a whole. The reader will find that the audit does not fully share the confidence, evident in many passages of the Bank's PCR, that the main constraints to efficient water use have received priority and are in the process of being removed. Nevertheless, the audit does share with the PCR a sense of general satisfaction with the first project's results. OED wishes to express its gratitude to the headquarters and field staff of PROSIDA who facilitated the sector review and the on-site visits, especially to the members of PROSIDA's small agricultural staff. Apprecia- tion is also extended to the research staffs of the Agro-Economic Survey, Bogor, and the Research Institute in Social Sciences, Salatiga, who worked with OED's consultants on the field studies.  lroprt Pnrformance Audit Report INDONESIA (FIRST) IRRIGATION REHABILITATION PROJECT (Credit 127-IND) BASIC DATA SHEET AMOUNT (in US$ mt) As of Aug. 31, 1977) Exchange Original Disbursed Cancelled Adjustment Outstanding Credit 127-IND 5.0 5.0 0.012 .9 5.9 PROJECT DATA Original Plan Revisions Actual First attention - Bank Files Jan. 19, 1968 Board Approval Sept. 3, 1968 Sept. 3, 1968 Credit Agreement Sept. 6, 1968 Dec. 22, 1970 (real- Sept. 6, 1968 location of proceeds) July 27, 1973 (real- location of proceeds) Credit Effectiveness Jan. 1, 1969 Feb. 4, Feb. 28, 1969 March 25, 1969 Last Disbursement March 9, 1977 Credit Closing June 30, 1974 Dec. 31, 1975; Dec. 31, March 25, 1977 1976 (delayed to enable procurement of parts) Total cost (US$ million) 8.8 Dec. 1969-US$20-25 million US$54.0 including June 1970-US$31 million US$4.3 million of Nov. 1975-US$47 million additional works Dec. 1975-US$56.8 million to be executed with local funds. Economic Rate of Return (%) (by subproject) 37 Glapan Sedadi Glapan Sedadi 56 Rentang Rentang 71 Cisedane Cisedane 47 Way Seputih Way Seputih (overall, weighted by costs)52 30 MISSION DATA Month/Year No. Persons Man-weeks* Date of Report Appraisal March 1968 4 12 Aug. 14, 1968 Supervision I July 1969 4 4 Sept. 8, 1969 II January, 1970 2 2 Jan. 16, 1970 III March/April 1970 2 4 May 28, 1970 IV September 1970 2 4 Oct. 12, 1970 V May/June 1971 2 3 July 9, 1971 VI February 1972 2 3 April 19, 1972 VII Oct./Nov. 1972* 2 3 Jan. 3, 1973 VIII April/May 1973 2 2 June 20, 1974 IX Jan./Feb. 1975 4 2 April 4, 1975 X November 1975 4 3 Jan. 27, 1976 XI Aug./Sept. 1976 5 3 Oct. 18, 1976 Project Review Mission March 1974 8 4 April 15, 1975 Completion March 1977 3 3 June 24,1977 Total 52 * From 1971 onwards supervision missions also supervised other rehabilitation projects in Indonesia. Project Review Mission reviewed all ongoing irrigation rehabilitation projects in Indonesia. Supervision from Nov. 1972 to April 1974 was assisted by Irri- gation Engineer assigned to Resident Mission, Jakarta. FOLLOW-ON PROJECTS, prepared by consultants engaged under Credit 127-IND. Credit 220-IND of US$14.5 million for the third Rehabilitation Project covering 202,000 ha and Credit 289-IND of US$12.5 million for the Fourth Rehabilitation Project covering 229,000 ha.  Project Performance Audit Report INDONESIA (FIRST) IRRIGATION REHABILITATION PROJECT (Credit 127-IND) HIGHLIGHTS The first rehabilitation project, partially financed by the Bank's US$5.0 m credit, accomplished its immediate objective of restoring to pre- war standards the Dutch-built primary and secondary irrigation canals and structures in three of the most degenerated schemes on Java. A fourth scheme, providing new canal services to a transmigrant community in Sumatra, has also been successful, though falling substantially short of its area target. Bank participation was organized in a hurry in 1968 to initiate the Bank's lending program with Indonesia and to get on with the urgent job of rehabilitation, and underestimates of physical requirements in these circumstances explain most of the cost overrun of 500%. Appraisal forecasts of the impact of rehabilitation on cropping intensities and yields also proved to be too modest, so that actual benefits tend to offset the cost increases and give an average rate of return of 30%, less than expected yet substantial nevertheless. The project was the first of a series of rehabilitation and, more recently, new irrigation works which brought Bank staff together with the staff of the Directorate General of Water Resources Development and its large consultant staff. The series is one of the Bank's most acclaimed lines of credit and successful physical operations. A separate executing agency, PROSIDA (Proyek Irigasi IDA), was established within the DG to manage Bank supported projects, and the growth and effective management of PROSIDA constitutes a notable achievement in institution building. The implementation problems, which were to become common with all Bank projects in Indonesia, were gradually overcome, and PROSIDA almost caught up with the original appraisal schedule. The project reveals the difficulty of ensuring effective water use at the farm level despite the achievement of physical construction targets. Social and administrative constraints in the villages, and in public serviees to the villages, explain continuing shortfalls in operations and maintenance, agricultural inputs, and water rotation and management. Until these constraints are properly understood and removed, the optimal effects of the improved water supplies will not be achieved. The following points may be of particular interest: -consequences of rushed appraisal (PPAM paras. 11, 17, 18 and PCR paras. 3.01, 7.02) -insufficient 0 & M (PPAM paras. 15, 33, 41 and PCR paras. 1.03, 2.13, 3.07, 5.01-5.03) -creation and successful development of an executing agency (PPAM para. 19 and PCR paras. 4.02, 4.03, 5.19, 8.01) -correlation between yield effects and increased water supply (PPAM paras. 22-31 and PCR paras. 4.04-4.14) -social factors in tertiary rehabilitation (PPAM paras. 39-47); -use of successor projects to correct deficiencies in the first (PCR paras. 2.11, 2.13, 2.16, 3.07, 5.04, 5.13, 5.21, 7.05, 7.06) -problem of implementing water charges; switch to land tax in 1976 (PCR paras. 2.13, 3.07) -introduction of competitive bidding leads to lower unit costs (PCR para. 3.04) -avoiding engineering errors in successor projects (PCR paras. 4.01, 5.03) Project Performance Audit Memorandum INDONESIA (FIRST) IRRIGATION REHABILITATION PROJECT (Credit 127-IND) 1/ I. PROJECT SUMMARY-- 1. The first Bank-assisted development project in Indonesia for irrigation rehabilitation was Credit 127-IND for US$5.0 million. It was also the first Bank Group project of any nature in Indonesia. The project was designed to rehabilitate deteriorated systems on Java and to assist in completing the construction of a fourth system for a resettlement area in South Sumatra. The Java projects were given the highest priority of the many irrigation systems in Indonesia which had received practically no main- tenance since the advent of World War II. The project was appraised in March 1968 and included the purchase of machinery, equipment and vehicles for the rehabilitation and construction of irrigation facilities commanding almost 200,000 ha of paddy land. It also provided for the employment of consultants who designed, planned and supervised construction and rehabili- tation of works under the project and who carried out feasibility studies for two subsequent irrigation rehabilitation projects. 2. Because of the urgent need for assistance in the irrigation sector, the project was appraised without the benefit of the usual preparatory engi- neering or feasibility studies. Also, the objective was to restore canals and structures to their pre-war status: deficiencies in structures, alignment and concepts of canal design were not always corrected. Total project costs at appraisal were estimated at US$8.8 million; a detailed cost estimate com- pleted by consultants in 1970 revised the estimated total cost to US$31 million, and at completion costs had increased to US$54 million. Of the increase from US$8.8 million to US$54 million, 70% was due to expansion in the scope of work; of the increase from US$31 million, only 30%. In each case the rest was due to inflation. On the economic side, cost overruns were partly offset by paddy yields considerably greater than those estimated at appraisal and by a boom in world market rice prices. 3. The project provided the critical momentum for establishing an effective program for rehabilitation of the numerous large-scale irrigation systems in Indonesia which suffered from nearly 40 years of neglect. It further demonstrated that an efficient, properly operated and maintained irri- gation system would be essential to achieve maximum benefit from the related inputs necessary for higher agricultural productivity such as fertilizer, pesticides and high-yielding varieties (HYVs). Optimal levels of operation and maintenance, input services, and farm yields have yet to be achieved, but the situation continues to improve. Without the project, irrigation sys- tems would have deteriorated further and the contribution of the other inputs partly negated. The project helped to reverse the trend of declining yields and stagnation in the agricultural sector, and contributed to the initiation of rice import substitution and related foreign exchange savings. 1/ Adapted from the Summary and Conclusions of the PCR dated June 24, 1977. -2- 4. Prior to this project, there had been no established relationship between the Bank and Government for evaluating, appraising and assisting Government in its economic development. Thus all of the learning problems on both sides normally encountered in the initiation of a relationship were present. These problems included reporting, procurement, disbursement, consultants, supervision, and related administrative difficulties. Effective leadership by the Directorate General of Water Resources Development was instrumental in overcoming these problems, despite rapidly accelerating demands on its staff. The creation in 1969 of a special organization within the DG - PROSIDA - to be responsible for the implementation of the Bank- financed irrigation projects has proven to be a sound decision. PROSIDA now ranks among the most effective of the Bank's collaborating agencies. 5. The assumption at appraisal that the investment would provide large benefits and returns to the economy has proven correct, though the most important impact on production has come from unanticipated increases in cropping intensities. Yield increases on already irrigated lands during the wet season, which could be attributed to rehabilitation, have thus far played a secondary role; the full yield effects having yet to be realized. Increased production from land brought under irrigation accounts for 75% of project benefits versus 25% attributable to yield improvements. The spread of the brown plant hopper on paddy land of the north coast of Java has reduced harvests of the last two years, but the main constraints to reaching and sustaining high yields appear to be institutional - difficulties in the organization of 0&M, farm services and tertiary rehabilitation. 6. The project has had an important impact as a laboratory for adapting engineering design to local conditions, for the training of design, construction supervision and operation and maintenance staffs and for insti- tution building. Subsequent irrigation projects in Indonesia are benefiting from lessons learned in the execution of this project. The following paragraphs elaborate on particular aspects of this project experience. The audit team was told the intention of the Bank and the DG when they agreed to implement the project as quickly as possible, although the appraisal report does not make that point. Modifications in subsequent project design indicates that that intention was carried out. - 3 - Project Development and Implementation 7. Bank lending to Indonesia began with this small credit for rehabilitating three of the deteriorated, run-of-the-river irrigation systems on the alluvial plains of the north coast of Java (Cisedane, Rentang, Glapan Sedadi), and for completing the construction of a fourth system for a trans- migration area in Lampung Province, Sumatra (Way Seputih). The three Java schemes were considered those needing most urgent repair. Government had initially proposed new irrigation works in other parts of the country, but later agreed with the Bank that the quick pay-off promised by rehabilitation was of more importance to the objectives of the first five-year plan. 8. The project (Rehab I) provided for survey and design or rehabili- tation works on two other groups of run-of-the-river schemes, mostly on Java. These were subsequently financed by the Rehab III (1970) and IV (1972) irri- gation credits. The tenth and eleven projects in the Indonesian irrigation series are currently in appraisal status. The focus of the projects has shifted now from rehabilitation to development of new irrigation works and increased storage capacity. The first nine projects will have covered 1,140,000 ha of the 1,500,000 ha within command of the Dutch-built works designated as "technical" irrigation schemes. The Asian Development Bank, USAID and the Japanese Government have helped rehabilitate most of the rest of that category. Thus, including the on-going works, the task of rehabili- tation of the major systems is now considered to be complete. 9. Total Bank commitments to Indonesian irrigation to date amount to US$277 million. Credit 127 was the first tranche in what has developed into one of the Bank's most acclaimed lending lines. Lessons learned from this pilot operation were reflected in design of repeater projects. 10. Part of the US$5.0 m credit was allocated to consultant services (US$1.7 m actually disbursed). Harza Engineering International (USA) was the primary contractor for feasibility and design of the works financed by the first, third and fourth projects. The Harza staff resident in Indonesia reached a total of ten in late 1970. Those situated at the Jakarta head- quarters of PROSIDA worked alongside members of foreign teams contracted for other Bank irrigation projects. 11. The phenomenal cost overrun of 500%1/is explained partly by appraisal underestimates of (1) requirements for repair of the main structures, (2) the extent of the silt accumulation that had to be removed, and (3) the difficulty of turnaround for equipment working along the narrow canal right of ways. The overrun is explained also by increased scope of works, particularly the addition of drainage facilities and inspection roads. Because of the Bank's haste to get the first Indonesian credit signed - as a Bank commitment to support the new Government's stabilization and development programs - the importance of these additional works had not been fully appreciated and 1/ See also Government's comments attached (para. 3 (a)). had not been costed at appraisal. Harza's initial estimates in 1970 inclu- ded the extra works and indicated total costs of US$31 m. Subsequent addi- tions, and the impact of several strong inflationary forces (a shortage in supply of domestic civil contractors in the face of the extraordinarily rapid increase in demand for their services, the cost inflation of internationally traded goods in 1973/74), were to nearly double that figure during the rest of the project life. 12. When Harza's estimates became available in 1970, Government requested17 supplementary credit of US$4.0 m. The request was ultimately rejected,- though the third irrigation credit was signed that year for US$14.5 m for the expanding PROSIDA program. The Bank's financial contri- bution to the first project therefore amounted to 12% of total costs (in constant dollars, instead of 57% as forecast at appraisal) and 35% of foreign exchange costs (instead of 100%). If one considers just imported equipment (54% of actual Bank disbursements), the list of items originally proposed at appraisal turned out to be reasonably accurate: the dredges, draglines, bulldozers, trucks and mobile workshops were purchased early in the project life, were almost adequate for the job, were used as prescribed, and were subsequently shifted to other PROSIDA sites. The escalation of costs due to project scope and inflation mainly affected not the imported equipment bill but the local cost items and consultant charges. The Bank continued to exert strong influence through supervision of the project despite its diminished overall financial share. That influence was enhanced by the pros- pects of a long series of repeater credits. 13. During the first three years of the project PROSIDA and the con- sultants were faced with major problems of implementation.2! These were due to (a) their unfamiliarity with Bank procurement and contract procedures, (b) delays in clearance of imported goods at customs, (c) the rapid expan- sion of PROSIDA's program, fully stretching its staff resources, (d) late releases of Government funds, and (e) the layers of clearances within Govern- ment required for proposals for changes or increases in scope, the last two reasons aggravated by the cost increases. The set of implementation problems was to become a familiar feature of Bank-financed projects in Indonesia. Rehab I was on the Bank's problem projects list in 1970 and 1971, as a result of the new cost estimates and their implications. 1/ The supplementary request, which would also have been grossly inade- quate in light of actual cost increases, reflected general Bank policy to limit supplementary financing to shortfalls caused by unexpected exchange rate changes. 2/ The initial delay in effectiveness, due to late agreement on consultant services, seems to be the result of overoptimism at appraisal on the time required for the Directorate General to select and negotiate contracts for foreign services, with which it had had no experience for decades. - 5 - 14. With the exception of operations and maintenance (O&M) costs, PROSIDA was eventually able to accommodate the cost overruns and make up much of the lag behind the appraisal schedule. The main irrigation works on the four schemes were mostly finished by the original completion date - April 1974. Completion was extended for several years, however, in order to provide for additional drainage works. Ninety-five percent of the IDA funds were disbursed, on schedule, by June 1973, though the closing date was also pushed back, by a series of extensions, to March 1977, to allow for the late disbursement of Bank funds against spare parts. Supervision was performed through 1976 though the later missions concentrated on the newer irrigation projects. 15. Shortfalls in Government finance for and attention to O&M services were noted with increasing anxiety in the supervision reports, starting as early as 1970. The silt load carried by the volcanic island's rivers is enormous. A high rate of deposition on the flat northern plains requires that canals and structures be constantly serviced. The O&M shortfall thus threatened to undermine the objectives of the main works. Government assigned the rupiahs that it had agreed to, but these allocations proved to be inade- quate to keep up with inflation and the physical load. 0&M deficiencies in all the PROSIDA irrigation projects continued, putting Rehab I back on the problem projects list in 1975 (along with III and IV). The developing crisis led to concerted and successful Bank presentation in 1976, and substantial increases in the O&M budget were made a condition of approval of the seventh loan. The PCR and PROSIDA describe budget assignments for FY1978 as adequate, though the Bank and Government must clearly be concerned that actual releases match the commitments, and continue to do so in future years. The Bank is frank in acknowledging that it was not sufficiently aware at appraisal of the complexity of the O&M operation, and that valuable time was lost during implementation in preparing for the 0&M tasks. 16. The O&M shortfall is partly a function of the exceptional geographic conditions. Provincial governments are supporting reforestation programs in the upper watersheds. Nevertheless, Javanese population pressures force families up the slopes, and the rate of reforestation is thought to be still lagging behind the rate of watershed destruction. OED's sector study con- sultants concluded that the siltation problem will get worse, and that predictions of endless cycles of rehabilitation projects are not without foundation unless action is taken to minimize by proper design the sediment amounts entering the canal systems; to provide the resources for proper 0&M; and to reduce excessive watershed soil erosion. 0&M responsibilities for the four schemes were transferred in 1977 by PROSIDA to the provincial govern- ments as required under the project, and the effect of the shift of O&M services has yet to be tested. These issues may be the most important of the ex post review in terms of their bearing on the future.!/ 1/ "The Region feels that excessive silt loads are only part of the O&M problem. An overall lack of funds has been a much more crucial issue in recent years, as have been the Government's cumbersome procedures for the release of bud- geted funds. Inadequate staffing has also been a contributing factor. Considerable progress has been made on these issues in the last two years, partly as a result of a Bank policy of making new lending for irrigation conditional on the provision of adequate funding for O&M of ongoing proj- ects." See also the audit mission's comments on these issues in para. 15 above. - 6 - 17. A 1969 supervision report and PROSIDA's PCR_i/ itself have noted another feature of the series of rehabilitation projects, the fact that, partly in the interests of speed and economy, the job had been limited to restoration of the old Dutch system and its pre-war standards. Deficiencies in structures (particularly the use of stop logs at the gates), in alignment (whether flawed in the original design or upset by subsequent earth movement) and in concepts of canal design were not always corrected. The first super- vision report warned in September 1969 of the need to investigate the reason for the excessive deterioration of the system in previous decades, at a rate that suggested that design defects in the old system as well as poor mainte- nance were to blame. The warning went largely unheeded. The weakest part of the project appears, however, to have been in the topographic surveys. Survey work that was done barely sufficed as a basis for the main scheme reticulation, and has been described as inadequate for tertiary design. The audit mission was told of tertiary headworks higher than the normal secondary flow, and that PROSIDA has had to redo some project works; but that many of these problems were eliminated in subsequent projects. 18. Given the absence of field data available to Government and the Bank in 1968, given Government's unfamiliarity with the rules of spending foreign aid funds, and given staff shortages in the Directorate General and its provincial irrigation services, the overruns and problems of implementa- tion and consequent reduction in benefits were predictable. PROSIDA's subse- quent growth, and its present reputation of efficiency, however, places it among the best of the institutional success stories in the Bank's Indonesian portfolio. Agricultural and Economic Impact 19. The PCR describes the project as exceptionally successful, the cost overruns having been offset by yield improvements exceeding appraisal expecta- tions and by a boom in world rice prices (PCR para. 4.15). Updated individual economic rate of return estimates given in the PCR for the four schemes are on average only slightly below the high rates forecast at appraisal (51% vs. 52%, using weighted averages). The evidence available to the audit mission does not fully support the PCR assessment, though it is clear that the eco- nomic returns to Rehab I will be relatively high. 20. The PCR concludes that "the fundamental assumption at appraisal... has proven irrefutably sound: the relatively small investment necessary to rehabilitate irrigation systems produced large incremental benefits and returns to the economy" (PCR para. 4.08) and that further yield increases are possible. The audit accepts this overall conclusion but wishes to stress, in accordance with the PCR, the uncertainty about whether the most effective use of project waters is yet being made and therefore whether the full benefits 1/ The report was prepared by an expatriate adviser and has not yet been officially released by PROSIDA though the audit mission was authorized to make use of it. - 7 - are yet being realized. This uncertainty has also been registered by outside observers..L/ 21. The agricultural impact of rehabilitation can be separated into three components: the expansion of area served by the canals in the wet (October-April) and dry (May-September) seasons, the increase in yields attributed to irrigation waters that are both more plentiful and better controlled, and shifts to higher value cropping patterns permitted by the improvements in water supply.Z/ 22. The three Java canal systems in Rehab I did not aim at any signifi- cant increases in dry season area because the project did not add any storage capacity.(The works at Way Seputih in Sumatra were for area expansion. The following remarks refer only to the Java schemes.) Shifts in cropping patterns to higher value crops were also not anticipated, because of the Javanese smallholders' preference to grow paddy.-3/ 23. It should be noted that the distinction between increased benefits deriving either from higher yields or expanded area is not easy to define in bunded paddy lands, especially in the dry season. Many of the farmers tend to speculate on planted crops finding adequate water from canal seepages, residual moisture and occasional rain. Consequently crops are planted in most fields in both seasons although yields are likely to be poor. The benefits of extending water supplies through rehabilitated canals can there- fore be considered as being derived from yield increases, or from the expan- sion of irrigated land. 24. In Java rehabilitation began a few years after new high yielding rice varieties were introduced, together with other inputs in the Government's country-wide campaign for self sufficiency in foodstuffs (the BIMAS program). Due to the combination of improved water supplies and input packages it is impossible to define accurately the benefits of rehabilitation and BIMAS. The appraisal report and the PCR recognize the difficulty, but nevertheless make the attempt to forecast yield effects due to water and without BIMAS.A/ 1/ Anne Booth "Irrigation in Indonesia, Part I" Bulletin of Indonesian Economic Studies Vol. XIII, No. 1, March 1977, pp. 55, 56. 2/ There is also an important welfare benefit due to the improved supply of dry season water to the canals in the villages for domestic use. 3/ Subsequent remarks in the Memorandum do not deal with the cropping pattern, although it was obvious in the field that the increased dry season canal supplies were being directed in part to crops normally grown under rainfed conditions. 4/ The quantitative analysis has been further confused by the sudden spread of the brown plant hopper in the last two years. This pest is causing major damage on Java's north coast and is the object of intense concern at the rice research stations. - 8 - 25. The Bank appraisal missions starting in 1968 have assumed that yields, and the associated use of the BIMAS package and other improvements in on-farm practices, were the key target of the rehabilitation projects. In Java, however, the impression one gets from irrigation officials, extension agents, and smallholders is that the area impact is of dominant importance, especially the tripling of dry season hectarage that can be planted with a guarantee of surface water supplies. 26. All observers report significant yield increases in the irrigated areas of the north coast in the last 10 years, roughly from 2 tons (unhusked rice) to 4 tons per hectare. That advance is substantially larger than the 20% increase reported for all of Java. The importance of that change on the north coast must be emphasized. But PROSIDA, in its own rate of return calculations in 1976, attributed all the increase to rehabilitation. The PCR narrative also implies that most of the increase can be given to rehabil- itation, since the proper application of the BIMAS package depends upon assured water supplies. In fact eligibility for BIMAS credit in the dry season is conditioned upon the availability of a guarantee of irrigated water and that guarantee now extends to almost half the total area. In the wet season BIMAS operates in all areas except those subject to frequent flooding. Thus about 90% is covered of BIMAS in the wet season, compared with about 35% in the dry.1/ The PCR tables are based on the assumption that about 60% of the increase to maximum yields in 1985 are due to rehabilitation, or approximately 1.2 tons of the total 2.1 tons projected improvement for the wet season crop (and a slightly lower share of the dry season crop; see especially PCR Table 9, second column). OED's Indonesian sector evaluation team came to the conclusion that the yield improvement in the wet season was realized on fields that would have had enough water anyway in the last 1/ In good years the dry season figure can be higher, as shown below and in para. 27. AREA WITH ADEQUATE WATER SUPPLIES TO ESTABLISH ELIGIBILITY FOR BIMAS (% of total area under command) Dry Season Wet Season 1968 a/ 1977 Present, Normal 1977 Cisedane 15 80 50 95 Rentang 10 55 40 85 Glapan Sedadi 8 20 15 90 a! The average of these figures is not consistent with the 17% figure given in para. 27. The two sets are from expert sources and the inconsistency has not been explained. - 9 - few years to produce a good response, that significantly less than half of the higher yields could be attributed to rehabilitation, and that the assump- tions of PROSIDA and the Bank were not supported by the comments of farmers, officials and other observers.!/ (Of course, on fields which have been brought by rehabilitation within the command of dry season wate, supply, there is agreement that almost all production would have to be attributed to the project.) Due to the lack of specific information on pre-project levels of production the PCR's claim that yield increases were the result of improved water supplies is difficult to support. However, this state- ment does not underrate the benefits of drainage and the feeder roads, which were also improved under the project and to a certain extent the improved reliability of water supplies. 27. The audit team recalculated the PCR rates of return based on more conservative assumptions about the yield effects to date of rehabilitation on Java, reducing the attributable yield effect by about half (or 0.6 tons, about 30% of the reported increase). At the same time it confirmed and reused the PCR figures showing substantial (and unanticipated) increases in the dry season harvested area (and, of course, in rice prices). The latter rose in 1977 to 56% of total paddy area within the Java schemes (up from 17% in 1968), implying a major advance in cropping intensities. 28. The audit estimate of the overall economic rate of return, including Way Seputih, is 30%. It is clearly very good, though less than the PCR weighted estimate of 51%. Even without the audit adjustments, analysis of PCR Table 9 shows that more than 50% of the net annual returns from Rehab I come from the area increase, including yield improvements that would have occurred anyway. With the audit adjustments, area can claim 75% of the net annual return to rehabilitation; attributable yield improvements can claim 25%. The fact that despite the cost overrun, the substantial economic impact predicted at appraisal has been largely achieved is because both crop prices and production have also been higher than expected. The appraisal produc- tion estimates, based on almost no area increase (on Java), and an extremely conservative forecast of yield increases - only 0.15 tons per ha (also, just with reference to Java) - are easily exceeded even by the audit ex post estimate of 0.6 tons. 29. Thus, in the audit mission's view it would be wrong to say that the substantial wet season yield improvements reported from 1968 to 1977 are mainly associated with rehabilitation, or that the main impact of rehabilitation to date has been on yields. This judgement, it must be made clear, although it coincides with and is partly based on the informed opinion of most independent 1/ "The Region believes that this statement gives undue weight to the years 1975/76 and 1976/77 when rainfall was plentiful and well-timed and thus there was little need for wet-season irrigation. PCR estimates are based on long-term average conditions. In average and below average rainfall years, provision of irrigation water through the rehabilitated system must clearly have an effect on harvested area and yields." (See also para. 30) - 10 - researchers during the last several years, is not supported by extensive statistical evidence (of which there is a great shortage in Indonesia) and is not accepted by the Regional Office. The latter draws attention to the difference between estimates of yield increases in the irrigated areas of the north coast (100%), and on Java as a whole (20%).1/ This audit cannot explain that difference, but since research results from the north coast strongly suggest that the difference is not due mainly to rehabilitation, it is apparent that an important piece of analysis still has to be performed. Indeed, if rice production policy in Indonesia were to give priority to wet season yields, attention should be turned to identify the factors that were boosting yields - on paddy fields watered by both rainfall and field to field flooding from sources of pre-1968 canal supply - even in the absence of rehabilitation. 30. This audit accepts the project's long term yield objectives for rehabilitation. For one thing there are limits to the amount of land which can be brought under the command of dry season irrigation supplies in the rehabilitated areas as long as they lack storage capacity. / A strategy emphasizing area is bounded by those limits. Also, recent reports of improved yields in part reflect the relatively favorable climatic conditions of the last two years, the brown plant hopper notwithstanding (see footnote 3, page 7). Poorer rainfall would reduce wet season rainwater supplies, which the farmer relies on in the absence of rehabilitation. In years of poor rainfall, then, the value of the insurance provided by rehabilitation will be clearer, and ought to be reflected in positive statements given in farmer interviews made at that time. These judgements will always be highly conjectural, of course, since everyone is predicting a steady upward thrust of yields due to continuing improvements in the BIMAS package, and that factor will help offset the depressing impact of less water, but leave the farmer and his observer uncertain as to what is due to what. 31. More importantly, the anticipated jump in yields due to the inter- action of water control, on the one hand, and better varieties, fertilizer and husbandry practices, on the other hand, a productive combination which is the focal point of the Bank's run-of-the river rehabilitation strategy, is available to Government now that the schemes are complete. A further increase in yields of 1 ton, to 5 tons total, might be achieved by that combination. Rates of return would of course increase. This last calcula- tion has not been made because it implies increases in costs of government services and subsidies to train and induce the farmers to reach the new production plateau. These extra costs would also have to enter the rate of return calculations, but estimates are not available. 1/ The technically irrigated areas on the north coast comprise about 15% of the area devoted to rice on Java. 2/ See Government's comments attached (para. 3 (d)). - 11 - 32. The reason why the full yield potential of rehabilitation has not yet been realized is precisely because of the deficiency in technical know- how.11 One of the continuing observations found in the series of supervision reports is about the poor quality of complementary agricultural services and supplies. PROSIDA emphasizes this point too. Rehabilitation advanced ahead of improvements in complementary agricultural activities, a problem that was reported by supervision missions before the end of the first proj- ect year. PROSIDA's agricultural office, with an able group of young agriculturalists, has always been understaffed, especially in economic analysis and was unable to provide the services required. The study of farm conditions to show what is happening in the villages and on the farms with the canal waters, a point elaborated in the next section2/ has yet to be made. 33. However, a 1974 review of the irrigation program in Indonesia by a seven-man Bank mission analyzed the agricultural issues raised by the lower than expected agricultural impact of rehabilitation. By sending the mission the Bank showed its concern that the project may fall considerably short of its on-farm potential. During the same time shortfalls in O&M services were of equal concern. While an O&M advisor was added to the consultant team and a second, independent O&M executive consultant was appointed to PROSIDA in 1972,3/ to emphasize the importance of improved maintenance, the agricultural shortfall brought less immediate response. 34. Reported wet season yields have doubled in the project areas and the BIMAS package is clearly responsible for most of that increase - with rehabilitation playing a complementary role. The Ministry of Agriculture succeeded in establishing the input supply system that put the fertilizer seed package in the hands of paddy farmers who wanted to use it. However, it was less successful in bringing farmers to husbandry standards which would have enabled them to reach optimal yields. 1/ See Government's comments attached (para. 3 (b) and (c)). 2/ PROSIDA, to its substantial credit, began in the mid-1970s to contract with university research institutes to study some of the agricultural and organizational constraints, and to measure the on-farm impact of its programs. But the implications of these studies, several of which were performed by research staffs which OED was also to employ in the sector study, do not seem to be reflected in corrective action by PROSIDA. The research results themselves have not entered the main- stream of progress and supervision reporting. 3/ This last O&M consultant was one of three executive consultants added to PROSIDA's staff in 1972. He left PROSIDA in 1976, after drafting much of PROSIDA's PCR. - 12 - 35. The Bank has moved vigorously in the last two years to close the remaining gap, the 1974 report helping to point the way. In addition to the irrigation projects appraised and supervised, a new agricultural extension project was signed in 1976, and a food grain support study was initiated in 1977, both for the purpose of ensuring the associated advance of all compo- nents of the farm system. While the Bank may have neglected these subjects in the early 1970s because of the urgency to get rehabilitation started, the seriousness with which it is now addressing them must be recognized. The Tertiary Issue 36. Rehab I financed works on primary and secondary canals and their associated structures, and the first 50 meters of the tertiaries leading from the turnoffs. Rehabilitation of the tertiary system (the phrase is used here to denote tertiaries, quarternaries, and drainage ditches) was included among the project's objectives, but, at Government's insistence, that work was left to the farmers. The Bank was pessimistic about the farmers' capabilities to restore or construct tertiaries to standards appro- priate to the main system, but acquiesced in Government's argument that such work had traditionally been the farmers' responsibility (more precisely, the responsibility of the village irrigation authority and volunteer farmer groups) and public intervention would erode that volunteer spirit. More importantly, the Government's planning agency (Bappenas) and other officials felt (and still feel) that if PROSIDA assumed the job it would give unfair advantage to farmers in the area of the rehabilitation scheme. Almost from the start supervision reports noted the lag in tertiary reconstruction. The implications were treated as seriously as the shortfalls detected early in the O&M and agricultural services. The 1974 review report discussed the tertiary issue at length, recommending that Government assume respon- sibility for their reconstruction and that subsequent Bank loans provide finance for tertiary rehabilitation on the earlier schemes as well as those to come. All projects signed since 1974 have included tertiary finance: 15% of the total costs of the fifth through ninth projects were assigned to tertiaries and the seventh project was designed with tertiaries as its principal target. 37. PROSIDA has proceeded, independently of the Bank, to finance Pilot Tertiary Projects (PTPs) in all its schemes. The PCR states that 35 were functioning in the Rehab I areas by 1977, covering about 3% of the total hectarage. Nevertheless that figure is dwarfed by the job that remains. A November 1975 supervision found little evidence that more than 10% of all tertiary units had been improved to technical standards by any agency or farmers group. 38. OED gave special emphasis in the Indonesian sector review to a study of tertiary rehabilitation, to determine whether the use of Bank and Government funds, and the shift of organizational responsibility away from - 13 - the farmers, were justified. The data gap at the village and farm level prevents a thorough assessment of the value of public action directed at ter- tiaries, and the following discussion must be taken as tentative. This audit's impression is that public action on tertiary rehabilitation is probably justified, but that the argument put forward is not the best one. The shift towards tertiaries in Indonesia follows a pattern in other parts of the world for Bank projects to get involved in the terminal end of irrigation systems, including farmers' water organizations, and it is instructive to see if the case in Indonesia is similar and as strong as it appears to be elsewhere. Roughly half of the Government officers and foreign observers the audit mission spoke with thought that PROSIDA and the Bank were making a mis- take. The PCR states the Bank's conventional position without developing the issue. 39. Some of the other Bank-supported irrigation projects outside of Indonesia finance new tertiary works, not tertiary rehabilitation. That distinction is important, because it is clear that the essential question is not whether tertiaries are important but whether the systems already in place on Java are working well enough to take advantage of the improved primary and secondary canal supplies. Most of the north coast under command of the secondaries was served by tertiaries of one standard or another. The tertiaries in the areas without access to dry season irrigation were of low density and temporary and crude construction, reflecting the absence of any strong communal urging to improve wet season water control. Tertiaries in areas with access to dry season irrigation were better. But all of these local canals had deteriorated, since the war, along with the major canals. The latter were rehabilitated by Government, and it is the farmer's apparent disinclination to restore the smaller canals that forced PROSIDA and the Bank to intervene. 40. The fundamental question is why did the farmers not do what they were expected to do. The PCR gives two main reasons: "the farmers' inability to set out canals and structures to the correct lines and grades and their inability to finance these works" (PCR para. 2.11). Persons familiar with the literature on the Javanese country side would be surprised by that explanation, because the Javanese paddy farmers have established a reputation, that stretches back hundreds of years, for excellence as small scale irri- gation engineers. Technical and financial problems have not prevented the construction of some of the most admired village schemes in the world, and the idea of the Javanese giving up, in the face of these constraints, from restoring irrigation systems that would bring them the water they want does not fit the image. That image is less appropriate to the northern plains than to the hillsides and river basins of Central and East Java where this "hydraulic civilization" developed,!/ and that difference explains some but by no means all of the change in behavior. 1/ On near horizontal plains at sea level the problem for farmers in setting out canal alignments and in getting proper drainage are much greater. They will experiment until they've got it if they perceive the rewards to be worth it and if they can agree with each other. - 14 - 41. PROSIDA's intervention simply means that rehabilitation and new construction will proceed further and faster. Whether it is appropriate to use public funds to accelerate a process the farmers had already begun depends upon the economics of the program, about which little is yet known (para. 47). The preferred course may have been to identify and then dislodge the obstacles that were preventing farmer action. Nevertheless, the main reason why the north coast farmer's behavior has to be better explained is because the factors that stopped him from rehabilitating or building may also undermine operations and maintenance services on the improved tertiary schemes. The O&M problems and solutions discussed in paras. 15 and 16 refer to primary and secondary canals; neither the Bank nor Government has ever suggested that Government take over responsibility for O&M on the tertiaries as well. Unless the villagers' interest in O&M on the tertiaries can be aroused, their accelerated improvement to technical standards appears premature. 42. The explanation may be as follows. The farmers have in fact been rehabilitating their tertiaries in those blocks where it was clearly in their collective interest to do so and where the farmers of the block were able to agree on that point. But a combination of factors, many of socio- logical origin, though with equal emphasis on the technical reason!V and less emphasis on the financial reason_/ referred to in the PCR, have persuaded enough of the farmers to withhold support to undermine most of the village rehabilitation programs. Tertiary groups lower on the second- aries, and farmers lower on the tertiaries, have been discriminated against by upstream farmers, and by district and village officials who are often paid extra to protect them. Right of ways for tertiary rehabilitation, particularly near the secondary outlets, have been difficult to secure: the farmers already enjoying good access see no advantage in rehabilitation of the rest of their tertiary block, and the possibility of some losses in any shift from the status quo.3/ 43. The rate of progress will in most cases have been strongly influ- enced by the prospects of dry season supply. But the results were not always predictable. The crucial decisions for local irrigation officials involve 1/ See preceding footnote. 2/ The voluntary contribution of family labor to group activity is disappearing all over Java. 3/ The April 1972 supervision report anticipated some areas would suffer a negative yield impact from rehabilitation, since privileged groups who had enjoyed a guaranteed second crop would be forced to return to a rota- tion every year with downstream groups. - 15 - rotations of water among competing consumers in the dry season, and the farmers' organizations are simply not strong enough to ensure equitah e treatment without Government intervention (and maybe not even then).- 44. The wet season does not advance such strong arguments for rehabil- itation by any agency or farmer group. Especially with the good rainfall of the last few years (excessive in some areas), field to field flooding from the existing systems (which, as said above, have been upgraded to some extent) is good enough to supplement rainfall caught within the bunds. Drainage is a more critical need, hence the inevitable build-up of the drainage component in Rehab I. 45. One of the interesting social and administrative problems limiting farmer self-help on tertiaries stems from the mismatch of tertiary block boundaries and official village boundaries. In some schemes decisions about tertiaries involve parts of two or more villages and although in some cases these do not work well together there are other villages where agreement could be reached. This seems to be another case where social factors deter- mine the outcome. 46. The Bank recognizes these social problems. The PCR gives them only brief attention (PCR para. 5.15) and seems to conclude they are quickly disappearing (PCR paras. 5.15 and 5.21). But the 1974 report describes the difficulties with rights of way and local organization and the Bank's irrigation staff is aware that other obstacles exist. Nevertheless the thrust of the post-1974 appraisal reports indicates that those problems continue to attract less attention than the technical and financial con- straints which the Bank is in a better position to remove, and are given less weight than they deserve. The roots of the problem are complex; the solutions, if they are to be equitable, require better information than the Bank or PROSIDA now have. 47. Equity is a critical element in this discussion, because the dry season water shortage means some farmers must do without. The upstream farmers are likely to see to whatever repairs to tertiaries are necessary, and to demand adequate O&M, in order to continue to make use of the limited dry season supplies they now monopolize. Thus the improvements in water supply and control due to primary and secondary rehabilitation are not going to be wasted in the dry season. The downstream farmers will remain disadvantaged, however. Moreover, as long as the upstream farmers hold their monopoly, pressure will not be exerted on them to rationalize water use and adopt the yield improving water management methods which are the project's ultimate objectives. 1/ Optimal rotation also depends upon all farmers using the same variety, a difficult task. - 16 - 48. The audit mission's irrigation consultants, who looked closely at Rentang, Glapan Sedadi and one of the larger north coast schemes covered by the third project, came to the conclusion that the yield and area impact of most of the PTPs constructed and financed by PROSIDA to date have been very small. The exceptions, and they are striking, occur where a determined effort has been made to augment agricultural services and supplies along with the pilot tertiary works. The research institutes contracted by both PROSIDA and OED seem to have come to the same conclusion. The consultants feel that the expected benefits of tertiary rehabilitation will not materia- lize until the organizational problems are resolved, and the agricultural services can be guaranteed. 49. In spite of the foregoing comment, the rates of return to tertiary investments may nevertheless be acceptable. The amount of money involved is small compared with the costs of rehabilitation of the primary and secondary systems. OED did not compute these rates - it was not part of the Rehab I audit and was too difficult to pursue in the sector study. The PCR makes an attempt to measure the impact of tertiary investments, and other proposed improvements, on the rates of return to the rehabilitation program financed under Rehab I (PCR paras. 4.10-4.18 and tables 10-13). But the analysis does not reach its objective, and the implication that the tertiaries are thereby shown to be justified does not follow.l/ Neverthe- less, this audit concludes from its economic analysis that tertiary invest- ments will prove to be justified in economic terms if the organization factors are addressed as well. Government and the Bank have already learned that lesson, though not enough attention has been given to corrective action, especially to introduce water legislation which would guarantee a more equal distribution of irrigation water during the dry season. 1/ The PCR's proposed additional investments, to start in 1977, including ter- tiary rehabilitation and construction, are added in the PCR to investments already made and evaluated as of 1968. At that point they have practically no impact on the PCR's estimates of ex post rates of return to the four schemes of Rehab I because those rates are so high (averaging 51%). If the incremental benefit and cost streams (in tables 10-13) due to the additional investments are discounted to 1977 and evaluated as of that year (the only acceptable procedure for judging whether to proceed now with the additions), the returns are much lower. - 17 - Conclusions 50. The project illustrates the world-wide problem of ensuring that waters provided by successful irrigation construction schemes are put to effective use on the farms. Cultural and organizational constraints limit these uses, and the Bank may become subject to criticism for overemphasis on physical works and underemphasis on the human factors of paddy develop- ment. The Bank is aware of the problem and has shown increasing concern, in supervision reports and by the special reviews it has commissioned, with the gap between the physical investments, agricultural aspects, and the human factors of irrigation. The emergence of a strong agricultural com- ponent in the irrigation project proposals since 1974 is evidence of this broader view. 51. But the action inspired by that concern may still be less than what is required. There is still a worrisome optimism in Bank reports that the factors blocking village and farm progress will disappear sooner than later and that the Bank's principal job is to help the Government bring to effectiveness new irrigation projects. This audit mission feels the problems are more resistant, that many of the benefits of the irrigation works have yet to be achieved, and that the Government and the Bank have much to learn about why farmers do what they do with improved water supplies and sometimes don't do what they were expected to do. 52. Better understanding would appear to imply increased contact with the researchers on Java who have been studying the irrigation impact. A contract is being prepared to provide for continuing monitoring and evaluation of some of the rehabilitation schemes. At the same time much material is already available on Java, even from PROSIDA's own contract research program, which needs to be more reflected in Bank work. 53. While some observers of the Indonesian scene have questioned invest- ments in irrigation rehabilitation, the audit mission feels that their arguments tend to overlook the substantial benefits from increased dry season production. Further, it is clear that the project has been a successful development effort, measured by its achievements, and the pilot for an important series of Bank loans, and that substantial wet season yield benefits can still be achieved.  Attachment Jakarta, January 12, 1978 Mr. Shiv S. Kapur Director Operations Evaluation Department The World Bank 1818 H Street N. W. Washington, D. C. 20433 U. S. A. Dear Mr. Kapur: 1) Thank you for your letter of December 5, 1977 concerning your request for views and comments on the draft Project Performance Audit Report - Indonesia (First) Irrigation Rehabilitation Project, Cr. 127-IND. 2) The report as a whole was well written covering wide scope of aspects on the implementation of the project with high degree of frankness of its problems identification. Despite there were and still are some weaknesses in the procedural and administrative set up in the project implementation, the positive impact of the project to the agricultural production in the area is noted. 3) However, the following points I would like to draw your attention on from the report, are: (a) The escalation of project cost from the original appraisal estimate of US$8.8 million up to US$54 million at the comple- tion of the project, certainly needs careful examination; (b) The technical know-how of the project seems lack of harmony with the development of agricultural know-how and the social development within the project area; (c) More weight should be put on farm issues including aspects of changing in cropping pattern and husbandry, and changing of farmers' attitude toward adoption of new technology; (d) Design of water storage is important in order to guarantee the farmers with irrigation during dry season. 4) The noble efforts of the World Bank to improve our agricultural system is highly appreciated, and hopefully this First Irrigation Project could pioneer the following projects for improvement and better implementation. Ministry of Agriculture Prof. Toyib Hadiwijaya  Document of The World Bank FOR OFFICIAL USE ONLY Report No. 127-IND INDONESIA CREDIT 127-IND PROJECT COMPLETION REPORT June 24, 1977 This document has a restricted distribution and may be used by recipients only in the performanc2 of their official duties. Its contents may not otherwise be disclosed w-ithout World Bank authorization.  INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND COMPLETION REPORT TABLE OF CONTENTS Page No. 1. INTRODUCTION........... .... . . . . . . . . . . A.1 2. THE PROJECT . . . . . . . . . . . . . . . . . . . . . . . . . . A.2 1. Project Formulation . . . . . . . . . . . . . . . . . . . A.2 2. Project Description . . . . . . . . . . . . . . . . . . A.3 3. Project Definition . . . . . . . . . . . . . . . . . . . A.3 4. Project Execution . . . . . . . . . . . . . . . . . . . . A.4 5. Follow-on Development in the Project Area . . . . . . . . A.6 3. PROBLEMS IN PROJECT IMPLEMENTATION. ......... . . . . . A.7 1. Cost Overruns . . . . . . . ............... A.7 2. Delays Due to Contracting Procedures and Procurement. . A.8 3. Lack of Trained Personnel . . . . ............ A.9 4. O&M Funding . . . . * * . . . .............. A.9 4. PROJECT IMPACT . . . . .................... A.10 1. Engineering Accomplishments........ . . . . . . . . A.10 2. Institution Building . . . . . . . . . . . . . . . . . . A.10 3. Agricultural Development . . . ............. A.10 4. Economic Evaluation . . . . . . . . . . . . . . . . . . . A.11 5. PRESENT STATUS OF THE PROJECT . . . .............. A.15 1. Engineering Aspects . . . . * * . * * * * * ...... A.15 2. Agriculture in the Project Area . . . . . * * ...... A.16 3. Organization and Management . . . . . . . . . * * * * . . A.18 6. PERFORMANCE OF THE BORROWER . . . . . . . . . . . . . ..... A.19 7. BANK/IDA PERFORMANCE . . . . . * . . * * ........... A.20 8. CONCLUSIONS... . . . . . . . . ............... A.22 TABLES  INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT 1. INTRODUCTION 1.01 The first irrigation rehabilitation project (Credit 127-IND) was appraised in March 1968, the Credit was approved in September 1968 and dis- bursements were completed on March 9, 1977. This Project Completion Report (PCR) evaluates the extent to which the appraisal expectations and objectives w3re achieved. It further reports on the effect this project has had on further efforts to improve irrigated agriculture in Indonesia. The following is based on a completion report submitted to the Bank by the implementing agency PROSIDA, and on the findings of a Mission to Indonesia from March 6 to April 1, 1977 comprised of Messrs. J.J. O'Brien and E.B. Boerema, and Miss J.K. Stockard. 1.02 All four subprojects are situated in the wet, humid insular tropics south of the equator with a distinct wet season from November/December to April/May and a dry season for the remainder of the year. The three sub- projects in Java are situated along the northern coast on fertile, flat river estuaries in the Central and West Provinces. Soils are capable of producing excellent paddy yields with adequate fertilizers. The Way Seputih subproject in Sumatera is situated on a gentle undulating plain of red-yellow podzolic soils which are moderately permeable and of low inherent soil fertility. Rainfall is generally sufficient for growing a wet-season paddy crop but without supplementary irrigation in the early or late stages of the growing season, crop yields are generally low. Irrigation water must be available for successful dry-season paddy crops. 1.03 At the time of appraisal many canals had silted up and, in some areas, there was evidence of flooding over stream embankments, and inadequate internal drainage. Many headworks and canal structures were completely inoperative and much of the originally irrigated land had reverted to rainfed agriculture. Poor maintenance of existing tertiary irrigation systems had forced the maintenance of high water levels in primary and secondary canals causing low velocities and excessive silt deposition. Because of a lack of excavating and earthmoving equipment, hand labor was the only means for removing accumulated silt. However, this could not be carried out on a system-wide basis because of limited O&M funds and a need to keep canals operating full-time. Irrigation structures on the primary and secondary systems had been neglected for many years and a great number were inoperative. 1.04 Despite the care and patience with which Indonesian paddy farmers prepare the land and tend the crop on their small landholdings, the traditional lodging paddy varieties grown up to 1968 were estimated to yield no more than 2 ton/ha in the wet season and about 1.5 ton/ha in the dry season. The BIMAS/ INMAS credit and input program was only being moved from a conceptual to an - A.2 - actual program at the time of appraisal and did not become fully operational until late 1969. Other contributing factors included poor organization of agricultural supporting services, inadequate supply of fertilizers and agro-chemicals because of a shortage of foreign exchange, and inefficient distribution channels. Lack of adequately trained staff, transport, pest control and training facilities further reduced the effectiveness of available extension services. 2. THE PROJECT 2.01 Project Formulation. To meet the growing demand for rice, the staple food of the country, GOI imported large quantities of rice in the 1960s. A high priority was therefore placed under Pelita I (1969-1974) on increased paddy production in order to boost the domestic supply. Because irrigation is required for reliable and efficient paddy production, the Government requested Bank Group assistance for rehabilitation and further development of its irrigation systems. First priority in this program was placed on restoration of the capability of large existing systems in Java to deliver water to farmers. Rehabilitation works were to be kept to essential repairs, with the emphasis placed on covering the maximum amount of land at low cost. Because of the urgency of getting rehabilitation works underway, and the Bank's desire to proceed with a lending program in Indonesia without undue delay, the first irrigation rehabilitation package was identified and appraised by a single mission in March 1968. 2.02 The appraisal mission recommended proceeding with the project to ensure that immediate attention would be given to high priority rehabilita- tion, to demonstrate goodwill at a time when no other finance was available, and to provide the initiative for an accelerated development program in the agricultural sector. At appraisal, GOI had not yet determined whether the project would be executed by contract or by force account. Eventually, most of the work was, in fact, accomplished by contract following the establishment of PROSIDA. The Credit was consequently limited primarily to the purchase of equipment to carry out the works which had not yet been identified in detail. The mission completed its report in August 1968 but due to delays in the appointment of consultants, the Credit Agreement for US$5.0 million did not become effective until March 1969. 2.03 The decision to proceed with a relatively simple project without benefit of detailed studies was based on the following considerations: (a) the projected increase in rice production of 39,000 ton/year would save foreign currency expenditure valued at about US$6.6 million/year; (b) the dispersed effort in the project would offset risks associated with concentration on only one area or system; (c) the capability of Government agencies at the time did not allow the execution of a more complex project; - A.3 - (d) the use of modern heavy equipment would speed up rehabilita- tion of canals; (e) distribution of project works over three provinces would provide provincial government administrators with a greater opportunity for involvement and experience; (f) provision of considerable technical assistance would ensure effi- cient execution of the proposed project and preparation of future projects; (g) the project would benefit almost 200,000 ha of paddy land affecting some 400,000 to 500,000 farm families in 3 provinces; and (h) the project was viewed by the Bank as a lead-in to programs in many fields to assist in the economic development of the country. 2.04 Project Description. The project included the rehabilitation of the Glapan-Sedadi, Rentang and Cisedane irrigation systems in Java and the completion of the Way Seputih irrigation system in Sumatera within a five-year period, using manual labor and earth-moving machinery and materials financed out of the proceeds of the Credit. It also included the following: (a) Technical Assistance: an engineering study by consultants of the rehabilitation problem in the areas concerned, the drawing up of a detailed plan for the execution of the project as well as rules for the future operation and maintenance of the systems, including the financing thereof, and the preparation of a further project for irrigation rehabilitation in other areas. (b) Training and Procurement: the training of operators and mechanics and the procurement of earth-moving machinery and equipment, spare parts, repair shops and materials. (c) Pilot Area for Improved Irrigation Management: the establishment of the Way Seputih irrigation system as a pilot area for unified irrigation management. 2.05 Project Definition. Definitive studies to prepare detailed engineer- ing for the four subprojects were initiated by consultants (Harza International) following signing of the credit agreement and immediately prior to credit effectiveness. The consultants responsibility also included the preparation of feasibility studies for future projects that could receive Bank assistance and advisory assistance to personnel in the Directorate of Water Resource Development charged with project implementation. - A.4 - 2.06 The scope of work contemplated at appraisal included rehabilitation or construction of the following: (a) 324 km of primary canals; (b) 821 km of secondary canals; (c) 1,250 km of tertiary canals; and (d) 800 structures. The need for drainage and access and inspection roads in the project areas was recognized by the appraisal mission. However, they were considered to be secondary to the more important irrigation system rehabilitation, and the de- finition of needs was left to studies under the technical assistance included in the project, with implementation financed under subsequent investments. Except for about 1.3 million cu m of excavation for silt removal from an old inland water way proposed to be used as a drain in the Glapan Sedadi area, no drainage was provided, nor were access and inspection roads included. 2.07 Following the more detailed studies by consultants, the scope of project works were increased to the following: (a) 340 km of primary canals; (b) 920 km of secondary canals; (c) 1,450 km of tertiary canals; (d) 1,100 structures; and the addition of; (e) 900 km of drains; and (f) US$500,000 of access roads. 2.08 The work schedule proposed in the consultants report formed the basis for the first reliable cost estimate of US$31 million, made in 1970. At that time all canals had not been dewatered to assess accurately the full extent of siltation and structural damage. Heavy reliability had to be placed on physical data and information available from the colonial period, and the cost estimate was made without the benefit of meaningfully current data from comparable type work. 2.09 Project Execution. Except for tertiary canals, all works contem- plated at appraisal (para. 2.06) had been completed by March 1976, about two years after the originally scheduled completion. At credit closing, the following project works had been completed:/l /1 Figures in parenthesis are the increase or decrease from the appraisal estimate. - A.5 - (a) 570 km (245) of primary canals; (b) 1,100 km (280) of secondary canals; (c) 550 km (-700) of tertiary canals; (d) 1,530 (730) structures; (e) 360 km (330) drains; (f) 300 km (300) of inspection and access roads; (g) 300 km (300) of telephone lines; and (h) 1,200 (1,200) step landings and buffalo wallows along the canal systems. 2.10 All of the project works in excess of those estimated to be required at appraisal were determined by GOI and its executing agency (PROSIDA) to be essential to the effective operation of the systems. More importantly, the additional costs required were all borne by GO. All of the works mentioned in para. 2.09 had been completed by March 31, 1977 and the systems turned over to provincial authorities for operation and maintenance. 2.11 Tertiary reconstruction was considered necessary in all subprojects as evidenced by the extent of tertiary canals envisaged in the original project concept, but it did not occur as expected. Development of tertiary units beyond the first 50 m was traditionally left to the farmers, who execute works on a community effort basis (gotong royong). Mainly because of the farmers' inability to set out canals and structures to the correct lines and grades and their inability to finance these works, very little tertiary develop- ment was accomplished. Within the project area, GOI has now constructed entirely from its own funds some 35 pilot tertiary units of about 150 ha each. Under subsequent projects (Credit 514, Loans 1100 and 1268), GOI will complete tertiary development on about 330,000 ha, of which 105,000 ha are in the Credit 127 area (Cisedane, Rentang and Glapan Sedadi subprojects). 2.12 A large quantity of earthmoving equipment, trucks and ancillary equipment such as concrete mixers, compressors, pumps, mobile repair workshops, inspection vehicles, tools and materials were procured. It was agreed at appraisal that earthmoving equipment would be used at least 2,000 hours per year and that substantial excavation and construction works would continue to be done by hand, particularly in tertiary areas. Appraisal estimates of requirements, actual purchases and the average running hours per year are presented in Table 3. Suppliers of field and workshop equipment provided training for operators and mechanics following delivery. In the monsoonal climate of Indonesia the expected equipment usage could not be reached and, particularly for rehabilitated areas, additional equipment had to be purchased. Dredges, draglines and scrapers were init ally used for about 2,000 hours per year, but in later years this usage lessened. Several reallocations of the - A.6 - proceeds of the credit were necessary to procure the equipment actually re- quired (Table 2). Following project completion, the equipment was transferred either to ongoing PROSIDA irrigation rehabilitation projects, or to provincial irrigation authorities for use in their O&M programs. 2.13 Recovery of costs for O&M of the irrigation systems was to be insti- tuted on a pilot basis in the resettlement area of Way Seputih and water charges were to be levied for this purpose. Development at Way Seputih, however, was slower and more complicated than expected and although all primary and secondary canals were completed in 1975, less than half (11,500 ha) of the anticipated 25,000 ha was cleared for paddy fields. Only when the Agrarian Department had commenced issuing title deeds in 1974/75 were settlers able to borrow sufficient funds to clear and level their land and to construct contour dikes and farm drains. Water charges were never levied as orginally intended under the project. In 1970 the covenant was amended to provide that GOI would collect 0&M charges one year after completion of the system, and if insufficient funds for 0&M were available, GOI would cover the necessary residual O&M expenditures. Under Irrigation VII (Loan 1268-IND) it was agreed in 1976 that GOI charges at levels consistent with the beneficiaries' ability to pay would be established and collected through IPEDA for all irri- gated land served by systems rehabilitated and constructed under the project. This would include the full O&M costs of the systems. 2.14 Follow-on Development in the Project Area. At appraisal, water requirements in Way Seputih were underestimated, and the supply overestimated. In the dry season only 4,500 ha (18% of the potential area) can be irrigated and only 2,800 ha were actually irrigated in the severe dry season of 1976. An ongoing study by GOI with consultant assistance has identified a scheme for increasing the system's water supply. Financial assistance for its construction has been programmed for inclusion in the Banks forthcoming Irrigation X project, along with rehabilitation and upgrading of the adjacent Way Sekampung irrigation system. 2.15 Consultants engaged under Credit 127-IND completed feasibility studies for two subsequent irrigation rehabilitation projects, Credit 220-IND for US$14.5 million (systems serving 202,000 ha), and Credit 289-IND for US$12.5 million (systems serving 229,000 ha). 2.16 Low-lying land on -about 40,000 ha within the project area along the coast of Java is subject to flooding and is almost inaccessible during the wet season due to the extremely low standard of access roads and paths. As additional project works, GOI constructed drainage canals and structures at the cost of US$3.9 million. Further works will be executed for 30,000 ha of land in Rentang under Loan 1100-IND and studies will be undertaken for about 10,000 ha in Cisedane under Loan 1268-IND, with the works to be executed under a future project. Further drainage works are required on 5,000 ha in Glapan Sedadi which will be executed under Irrigation IX as part of a 30,000 ha drainage scheme for the SEDEKU project in East Semarang. Subsequent Bank- assisted projects have provided for the construction or rehabilitation of tertiary irrigation systems serving about 500,000 ha. - A.7 - 3. PROBLEMS IN PROJECT IMPLEMENTATION 3.01 Cost Overruns. Estimated project costs increased from US$8.8 million at appraisal to US$31.1 million at the time of the consultant's detailed cost estimate in April 1970. The 250% increase in estimated costs was largely due to quantity increases for additional work which became apparent after structures were dewatered, and to an increase in the scope of work. By the closing date of the credit (March 25, 1977), total project cost had increased to US$54 million, including US$4.3 million of additional work (not contem- plated at appraisal) remaining to be accomplished by local currency. A summary of costs for the total project and for each subproject is contained in Tables 3 and 4. 3.02 Cost overruns between the 1970 estimate and the current estimate are due almost entirely to inflation, as seen by the summary table below expressed in constant end-March 1977 prices: Credit 127-IND: Capital Costs (US$ millions)/a Subproject Harza's Estimate PCR Estimate Cost Overrun (1970) (1977) (%) Glapan-Sedadi 5.5 /b 30.6 /c 460 Rentang 8.4 /b 34.2 /c 310 Cisedane 5.4 /b 21.1 /c 290 Way Seputih 7.8 /b 19.9 /c 150 Total 27.1 /b 105.8 /c 290 1970 Cost Estimate 81.3 /d 30 /a At the official exchange rate, US$1 = Rp 415. /b April 1970 estimate converted to August 1968 prices. /c End-March 1977 prices. /d April 1970 estimate converted to end-March 1977 prices When expressed in constant prices, the Credit financed only 12% of project costs as compared to the original estimate of 57% contemplated at appraisal. All cost overruns were borne by GOI. 3.03 Comparison between the cost of development per hectare projected at appraisal and actually expended reflects the considerable increase in the scope of works. This is shown in the following table expressed in constant end-March 1977 prices: - A.8 - Credit 127-IND: Costs of Development per Hectare /a Subproject Appraisal Estimate PCR Estimate (1968) (1977) (ha) (US$/ha) (ha) (US$/ha) Glapan-Sedadi 42,000 131 46,010 665 Rentang 91,000 92 90,216 379 lb Cisedane 40,000 135 40,663 519 Way Seputih 25,000 312 11,500 1,730 Total 198,000 188,389 /a At the official exchange rate, US$1 = Rp 415. /b With the cost of the new barrage being constructed under Loan 1100-IND, the cost per ha is $1,227. 3.04 Delays Due to Contracting Procedures and Procurement. The stipula- tion in the supplementary letter to the Credit Agreement (September 6, 1968) that contracts involving US$10,000 equivalent or more needed IDA approval before contract award led to the review of numerous relatively small contracts. This resulted in excessive paper work for both PROSIDA and IDA causing delays in the delivery of goods. Local procedures for civil works contracts initially did not ensure fair and competitive bidding. Many contracts were let to the Army, Government enterprises and some private contractors. On the insistence of IDA, contracts for tender became competitive from mid-1970 onwards, and this resulted in lower unit cost. Adoption of a procedure for the prequalifi- cation of contractors expedited the initiation of construction by shortcutting the advertising, evaluation and award process without any increase in cost or decrease in quality. 3.05 Procurement procedures for equipment were also extremely time- consuming and tedious, resulting in the late arrival of vital machinery and equipment. An analysis of procurement procedures by the consultant under the project revealed that 9 to 12 months were consumed in administrative proce- dures before tenders could be called, and delivery of equipment took up to two years after preparation of the first tender documents. The Resident Mission in Jakarta and supervision missions repeatedly pointed out areas for improvement in procedures, particularly those in selecting the lowest responsive bids. A special Bank mission in early 1974 reviewed procurement procedures in detail for all irrigation projects. Specific recommendations for improve- ment that required no changes in law and regulations, and which were within the authority of executing agencies were made and accepted. Major oppor- tunities for time saving were accomplished within the internal operations of the administrative agencies. - A.9 - 3.06 Lack of Trained Personnel. The quality of construction in all systems was initially deficient because of inexperienced and inadequate inspec- tion. Compaction of earthworks, in particular, needed constant attention. With the incr-ase in the number of qualified inspectors, however, there was marked improvement both in quality of materials used and in workmanship. The initial shortage of qualified surveyors was later recitified through the establishment of a training school for surveyors in Jakarta with field work training in Pemali-Comal. Training costs were not provided under the Project but were met from local budgets. Local training programs were developed for irrigation section heads, area supervisors, subarea supervisors, surveyors, and for hundreds of key farmers, committee members of Farmers' Associations and extension personnel. PROSIDA initiated a limited staff training program in 1970/71; all hydrological staff attended a training course in 1974/75. Subsequent credits and loans have provided funds for staff training in the field of water management, engineering and agriculture. 3.07 Insufficient O&M. O&M funds for the subprojects were inadequate until 1976. Through a continuing dialogue and pressures from the Bank, the Government agreed under Loan 1100-IND that up to 50% of IPEDA (land tax) would be allotted by the Provincial Governments for O&M of irrigation systems, and additional necessary funds would be supplied by the Central Government. It is estimated that Rp 3,500 per ha is required for satisfactory O&M in 1977. 0&M budget allocations for FY76/77 and FY77/78 are shown below: Credit 127-IND: O&M Funds (Rp/ha) Subproject FY1976/77 FY1977/78 ----------- Rp/ha ---------- Way Seputih 2,195 2,700 Cisedane 3,202 3,500 Rentang 2,168 3,300 Glapan Sedadi 3,195 3,500 Funds for Rentang and Way Seputih were inadequate in the past, particularly in Rentang, where there is evidence of rather serious deterioration in maintenance of canal banks. GOI is now, however, fully committed to a satisfactory standard of O&M for rehabilitated irrigated systems and adequate funds should be avail- able in the future. - A.10 - 4. PROJECT IMPACT 4.01 Engineering Accomplishments. PROSIDA has been effectively modifying its designs to avoid previous errors and malfunctions and to standardize structures as much as possible. Improvements are being incorporated into new construction to provide field test data under actual operating conditions. Results will be available for incorporation into the extensive tertiary systems to be constructed in the near future under subsequent credits and loans. Standardization of small to medium size irrigation structures is being sought to achieve cost effectiveness, serviceability, simplicity and endurance. 4.02 Institution Building. The Project was executed by the Directorate General of Water Resources Development (DGWRD) within the Ministry of Public Works and Electric Power. In April 1969, GOI established within DGWRD, at equal ranking with the Directorates of Irrigation, Swamps and Rivers, Survey and Planning, and Logistic Affairs an organization called PROSIDA (Projek Irigasi IDA) which was given the sole duty of executing the present and future IDA-financed irrigation rehabilitation projects. To ensure integration with the Provincial Irrigation Services, the local chiefs of these services in the project areas were appointed ex-officio field managers of PROSIDA works. 4.03 Foresight in the establishment of PROSIDA, although not foreseen at appraisal, contributed greatly to management efficiencies for Credit 127-IND and for all subsequent Bank-assisted projects. The scope of PROSIDA's responsi- bilities is reflected in its current program which includes execution of four additional Bank-assisted projects (Irrigation III, IV, VI and a major portion of VII). It will also be responsible for a large portion of Irrigation VIII and IX. 4.04 Agricultural Development. Increases in paddy area, yields and production exceeded appraisal estimates. The appraisal mission was cautious in those estimates, recognizing that the entire GOI agricultural support services program was only then in the design phase. At appraisal it was projected that after rehabilitation and with the use of inputs, credit and extension packages, the production of paddy from the project area would reach 635,200 tons. It actually averaged more than 1 million for the two most recent years of record, a 160% increase over preproject (1969) production and 58% above the full development production estimated at appraisal. An increase in wet-season irrigated area was not considered at appraisal and dry-season irrigated area was projected to increase by only 10,000 ha to 40,000 ha. The actual dry-season irrigated area has increased by 60,000 ha. Data on area, yield, and production are given in Table 5 and demonstrate the significant benefits derived from the project, considerably exceeding appraisal estimates for full development. 4.05 Pre-project yields reflect the usage of traditional seed varieties with few inputs, and a shortage of water in the dry season as well as at the start of the wet season. Following rehabilitation the cropping intensity has increased to about 150% over all subproject areas in recent years. While it is anticipated that farmers will continue to plant about half of the area in - A.11 - the dry season with the expectation of receiving an irrigation water supply on a full crop from timely rainfall, the dry-season water supply from project facilities is estimated to be adequate for only about 15% of the area in the worst year. Thus, in many years the dry-season yield from about 35% of the area will be adversely affected to some extent by insufficient water. 4.06 The BIMAS program provides eligible farmers (those with an assured water supply and a good credit rating, as determined by the village head) with production credit for the purchase of seed, fertilizers, agrochemicals and hiring charges for pest control equipment, a cost of living allowance, and extension advice. A predecessor of the current BIMAS program was used on some 50,000 ha or about 27% of project areas in 1969. Input usage was, however, not efficient due to the late arrival of fertilizers and chemicals and their untimely application to crops because of insufficient extension advice. There was only one PPL (field extension worker) and one BRI credit unit and two kiosks for input supply for all areas (Table 6). By 1976 the area covered by BIMAS/INMAS programs had increased to 143,000 ha, or 52% of the project area. GOI had established 170 village units (600-800 ha paddy land each) in which the services of a PPL, a BRI credit officer and a coopera- tive are usually available. More village units are to be established in the next three years under the National Food Crops Extension Project (Loan 1267-IND). A further significant increase in BIMAS/INMAS usage is doubtful under present constraints because farmers have either not repaid credits in a timely manner, or they are unwilling to adopt new technology. The potential does exist for still higher yields on about 60% of the farms, should the farmers perceive the benefits of using modern cultivation techniques and high rates of inputs. 4.07 At appraisal, very few farmers grew HYVs. After overcoming initial problems of lack of resistance to the blast disease (Piricularia oryzae) and a not readily acceptable taste, the HYVs gained ready acceptance from the 1971-72 wet season onwards. The improved water availability, control and distribution that resulted from the project minimized the risk of crop loss and provided incentive for the farmers to make investments in fertilizer, pesticide and improved seed. Recognizing this opportunity for substantial production in- creases, GOI made expanded credit and extension services available to the project areas. The Government's ability to lend and the supporting programs had been underestimated at appraisal. As the result of the improved credit control in interaction with the improved supporting services, yields and production turned out to be much higher than projected for full development. 4.08 Economic Evaluation. The economic justification portion of the appraisal report was abbreviated and the economic data available to the mission was mostly subjective. It highlighted the pump-priming character of the investment in providing a catalyst for rehabilitation works, thus eliminating the major constraint to increased rice production, the initiation of rice import substitution and related foreign exchange savings. The analysis was based on limited data for quantifiable assumptions, and on costs estimated without feasibility studies or engineering information. It is largely coincidental that the projected subproject rates of return are within the range of estimates at completion, given the divergence of appraisal assumptions and actual realization of costs, yields, commodity prices and - A.12 - implementation schedules. The fundamental assumption at appraisal, however, has proven irrefutably sound: the relatively small investment necessary to rehabilitate irrigation systems produced large incremental benefits and returns to the economy. 4.09 The economic analysis of irrigation projects at completion raises the question of whether, in projecting the future, to confine the analysis to incremental effects of the completed project or to include effects of subsequent loan activity in the project area as well. The most meaningful analysis could be for an irrigation system and its beneficiaries, yet loans are approved on decidedly different project configurations. System designs funded under one loan, for example, are considered sunk investment costs for analytical purposes when appraising the construction under a subsequent loan. 4.10 The following analysis has considered first the effects of works financed under Credit 127-IND only, and secondly, the effects of all works and services constructed subsequently in each subproject area. In Rentang, for instance, canals were rehabilitated under Credit 127-IND, but construction of a new barrage for the system will soon begin under Irrigation VI (Loan 1100). Tertiary development is scheduled under Irrigation VII (Loan 1268) for Cisedane and Glapan Sedadi areas, and the latter will be affected by drainage improve- ments under Irrigation IX. Training and miscellaneous costs associated with PROSIDA headquarters and field offices have been prorated to each subproject as well. 4.11 Data for the analysis were compiled from the borrower's completion report, supplemented with information contained in supervision reports and cross-checked in the field during the project completion mission. Because of the difficulty in estimating past and present production costs and labor inputs for secondary crops, only rice production was considered. 4.12 Actual project costs were converted annually at the historic offi- cial exchange rate and adjusted by a domestic inflation index to end-March 1977 price levels (Table 7). The index was calculated to correspond with the Indonesian fiscal year (April 1 - March 31) which includes a dry and a wet season crop. 4.13 The official exchange rate since August 1972 has been US$1 = Rp 415. In irrigation project appraisal for Indonesia, foreign exchange has not been shadow priced to approximate its economic value to the economy until 1977 when an estimated standard conversion factor of 0.8 was applied, resulting in a shadow rate of US$1 = Rp 520. Because the determination of a shadow exchange rate on past investments is time consuming and will have little impact on the analysis (with approximately 40% of annual expenditures in foreign exchange, the use of a shadow exchange rate would result in roughly a 10% increase in project costs which would be more than offset by the corres- ponding increase in project benefits), it was disregarded in the present evaluation. The shadow rate was used, however, for costs and benefits associated with future loans in the subproject areas. - A.13 - 4.14 Historic and projected world market commodity prices expressed in end-March 1977 constant values, were used for rice and fertilizers and al- justed for transportation, handling and processing; details are shown in Table 8. In developing the incremental benefit associated with each subproject in Java, it was assumed that the physical system would have continued to deteriorate without the project, and accordingly, access to BIMAS inputs would be restricted. In Way Seputih it was assumed that in the absence of GOI assistance, development of the system over 30 years would reach about one-fourth of current development. Yields in the future without the project were assumed to increase somewhat reflecting relatively greater access to fertilizer and improved seed. Yearly estimates for the 'without project' condition were made up to FY1976/77 to arrive at incremental bene- fits for each subproject, and a gradual build-up was projected for the future. Summary information for all subproject areas is contained in Table 9. 4.15 Improved yields considerably greater than those estimated at ap- praisal and a boom in world market rice prices combined to more than offset cost overruns in the project. The average net foreign exchange savings from incremental rice production in the combined project area is approximately US$165 million annually (Credit 127-IND only). 4.16 Tables 10-13 show estimated economic costs and benefits, expressed in end-March 1977 prices, for each subproject. Using a 30-year evaluation period, the economic rates of return are as follows: Economic Rates of Return for the Subproject Areas Appraisal PCR Estimate Subproject Estimate Credit 127 All Loans 1968 Only Glapan Sedadi 37% 39% 38% Rentang 56% 68% 64% Cisedane 71% 58% 58% Way Seputih 47% 31% 30% 4.17 In Rentang, the cost of the new barrage reduces the economic rate of return by 4%. The ERRs for the other areas are basically unaffected by the subsequent costs of tertiary development and drainage works, because of additional benefits from the improvements. 4.18 Sensitivity analysis was performed to accommodate known discrep- ancies in the method of yield sampling and reporting in Indonesia. Even when benefits were reduced by 50%, in all cases, for both Credit 127-IND only and considering all loans, the economic rates or return remained between 15-45%. Cost overruns of 200% in subsequent loans affecting the subproject areas had the effect of reducing the rates of return by 1-11% (Rentang). - A.14 - 4.19 Income distribution and employment generation were not explicit objectives of the project and except for rough estimates of production costs at appraisal, little information was sought on the direct project beneficiaries. Currently available information is still limited and unreliable, but two con- clusions can be safely inferred. As suggested by rapidly rising wage rates over the period, incremental farm labor opportunities with development have increased significantly, due to the substantial increase in production. Secondly, it is clear that benefits accrued primarily to farm families with small holdings as shown in the following table: Credit 127-IND: Estimated Farm Size Distribution, 1976 Glapan-Sedadi Cisedane Rentang Farm Families (No.) 74,960 186,610 143,440 Farm Size (ha) (% of farms)------------ 0 - 0.5 60 67 45 0.6 - 1.0 25 27 27 1.1 - 1.5 9 4 13 1.6 - 2.0 3 2 5 2.1 - 3.0 1 - 5 3.1 - 4.0 1 - 2 4.1 - 5.0 0.2 - I > 5.0 0.8 - 2 100 100 100 Way Seputih, with approximately 23,000 farm families, is a resettlement (local and transmigrant) area where land parcels are 2.0 ha/per farm family, of which 0.25 ha is home yard, 0.75 ha is dryland, and 1 ha is dryland suitable for conversion to irrigated paddy. Source: PROSIDA Agricultural Unit. - A.15 - 5. PRESENT STATUS OF THE PROJECT 5.01 Engineering Aspects. During the project completion mission in March 1977, a number of civil works in each subproject area were inspected by the mission members. It was found that principal structures such as weirs, headworks and primary canal structures were generally well constructed or rehabilitated in accordance with good engineering practices, skills and materials. Many of the secondary and tertiary canal structures (masonry and concrete) are more massive than is required. Construction, rehabilitation and shaping of irrigation canals, structures and embankments were generally well done; however, there are numerous instances of sliding and slumping of rehabiltated canal embankments in the Cisedane, Rentang and Glapan-Sedadi subproject areas. Causal factors include inadequate compaction of embankment during construction, use of inferior embankment material including nonhomo- genous and structurally unsuitable channel-bed silts and soils, inadequate maintenance, and human and animal usage of the embankments for access to canal water for drinking, bathing and sanitary purposes without adequate safeguards to prevent erosion and gullying. This condition is further aggravated by annual flooding of portions of each of those subprojects where surface drainage is inadequate. The current increased level of O&M funds and works to be provided under Irrigation VIII and IX should practically elimi- nate these problems. 5.02 Access and inspection roads along project canals and rights-of-way range from excellent to 'passable with difficulty' in both wet and dry seasons. Upgrading of road conditions on a continuing basis was evident in each of the subproject areas, with some type of surfacing (rock or black top) in increasing use. With the exception of Way Seputih, however, subproject roads would have to be classified as unsatisfactory due to substandard contruction or lack of proper maintenance, although this situation is also improving with the increased level of O&M funds being made available. 5.03 As noted in several supervision reports on this project, funding for operation and maintenance of all irrigation systems and facilities has been less than required to avoid system deterioration. In addition to canal embank- ments and roads, operation and maintenance of control and division structures below the main headworks level needs attention. Considerable improvement will be provided by the tertiary programs under subsequent projects and other GOI programs. In each of the subproject areas, some gates and gauges were noted to be either inoperable, missing or improperly operated. Properly operated and maintained facilities, including measurement and recording of system diversions and deliveries is the exception rather than the rule. In each subproject area, however, examples of good control and measurement practice were found. These were mainly identified as having been installed fairly recently, usually in Pilot Tertiary Project areas. PROSIDA has been upgrading the quality of its design, construction and operating standards, and has taken full advantage of knowledge gained from its past activities. - A.16 - 5.04 Professional, subprofessional, technical and skilled operation and maintenance personnel need further training in both the theoretical and prac- tical aspects of irrigation project operation and maintenance. Local and overseas O&M in-service training for PROSIDA personnel under Loan 1100-IND and 1268-IND and the Audio-Visual (AV) training program for operation and main- tenance personnel under Loan 1100-IND, will help to remedy this situation. Expansion of the AV program to the construction supervision field and provision of additional O&M training under Irrigation VIII are further expected to correct these deficiencies. 5.05 Agriculture in the Project Area. Three problems exist which are common to each subproject area: (i) Credit and inputs. There were ample supplies of fertilizers in the last two seasons, but many farmers were unable to use them because of ineligibility for BIMAS credit (arrears in repayments). In March 1977 some 49% of farmers in the Tangerang District (Cisedane), 10% of those in the Indramayu District (Rentang) and about 88% of those in the Demak and Grobogan (Glapan Sedadi) Districts had not repaid their 1975/76 credit. Farmers become ineligible for BIMAS partici- pation when they are two seasons behind in credit repayments. In its ongoing work in the credit sector, the Bank is addressing the matter of credit policy. Input supply is also being continually reviewed and analyzed as a part of the Bank's agricultural sector work. There is a proliferation of insecticides, which makes it difficult for extension workers to provide advice on correct usage. The most effective pesticide (Furadan) is expensive and in short supply. Seed of brown planthopper resistant rice varieties is being built up as quickly as possible. (ii) BUUD/KUD cooperatives. Marketing of paddy in excess of family needs is done mainly through local traders. The cooperatives are unable to compete effectively with local traders since they have insufficient funds to pay cash, are not always able to buy unpro- cessed wet stalk paddy, and make heavy deductions for impuri- ties and high moisture content of grain. (iii) Crop Rotations. Although farmers know that they may have insuffi- cient water to complete a dry season crop, they harvest the wet-season crop as quickly as possible and plant again within a few weeks with minimal soil preparation. Fields are not drained between crops and seedbeds are laid out within an unfinished crop area, or near the farmhouse. By doing so, farmers take considerable risk. Not only may crops suffer moisture stress once rivers run low, they may also attract insects from the previous crop. Under the circumstances, it would be highly desirable to provide water storage for the subprojects wherever possible. Only with adequate water can proper crop rotations be established and higher dry-season yields achieved. The provision of storage for irrigation is a logical future addition to achieve optimal production on developed lands. - A.17 - 5.06 Way Seputih. The paddy area in the 1976-77 wet season increased to 13,500 ha, a little over half the area projected for development at appraisal. Farmers on about 12,000 ha have received their land titles from the Department of Agraria. BRI originally required land titles before it would grant credit for land clearing and shaping, which presented a considerable obstacle to farmers. Preparing contoured and terraced rice fields in the undulating ter- rain overgrown with alang-alang is difficult and labor intensive; it is esti- mated that a family can prepare only 0.25 ha per year for paddy, and because of topsoil disturbance the land is not fully productive for two to three additional years. BIMAS credit is generally not extended in the first year and accordingly initial yields are low (1,800 kg/ha). The first two crops are uneven in growth but later crops have potential yields of 4-4.5 ton/ha. 5.07 There are now some 50 Tertiary Units with Water Users Associations (P3A) which operate about 770 blocks or quarternary units of 10-25 ha. Following examples set in two tertiary pilot projects and an agricultural pilot scheme of 450 ha, the farmers with the cooperation of watermasters and subwatermasters are able to regulate flows to their fields satisfactorily. The whole subproject area is subdivided into five water rotation systems (golongans); there is adequate water only for one golongan (about 2,500 ha) in the dry season. The golongan to receive water in the dry season rotates annually, and the order is determined well in advance so that farmers can plan accordingly. 5.08 Agricultural extension services are well developed, but only one cooperative (KUD) has been formed. Additional fertilizer storage is needed in the area to prevent delays in fertilizer applications. 5.09 Cisedane. The 1976-77 wet season crop of around 40,500 ha consists of 27,600 ha with BIMAS inputs, some 5,000 ha receiving somewhat reduced rates of fertilizers and agro-chemicals under the INMAS program and some 8,000 ha, mainly in poorly drained areas, not receiving any or few inputs. A drainage scheme and access and inspection roads for about 7,000 ha of lowlying lands are being investigated under Loan 1268-IND. These improvements would probably be constructed under a future Bank assisted project. 5.10 Some 215 tertiary units have already been identified, but tertiaries, quaternaries and diversion boxes have not been completed. Only 15 Water Users Associations are active. 5.11 The large REC at Sepaten has dormitory facilities and is frequently used for training extension personnel, farmers, housewives and rural youth. There are, however, insufficient O&M funds to maintain the large area of the demonstration seed farm, and the production of valuable disease-resistant seed will be less than half its potential. 5.12 Rentang. From a rehabilitated area of 90,216 ha, some 88,000 ha and 21,600 ha were harvested in the 1975/76 wet season and 1976 dry season res- pectively. Each year more than 30,000 ha is affected by wet season floods. - A.18 - Improvements in drainage works are in progress under Loan 1100-IND. Farmers in the flood prone area are generally ineligible for BIMAS credit and produc- tion costs are high because they frequently transplant two or three times, involving extra transplanting, weeding and seed costs. 5.13 The entire subproject area is covered by the Agricultural Support Program under Loan 1100-IND and all extension personnel have been appointed. The regular system of training PPLs and their fortnightly visits to farmer groups commenced with the 1976/77 crop. A large number of demonstration plots have been arranged, but simple comparison trials on which one or two varieties and a few fertilizer rates are compared remain few. 5.14 Many crops are prone to lodging because nitrogen fertilizer rates are too high, the varieties tall and leafy (IR34 and Pelita) and water management unsatisfactory. Harvesting of undrained fields resulted in a very poor grain quality and yield losses due to immature grain. Low-lying areas suffered seriously from gallmidge damage, and some 6,000 ha may be a total loss in 1976/77. Brown planthoppers have mainly attacked nonresis- tant Pelita varieties causing serious hopperburn to almost 24,000 ha paddy. Further introduction of resistant varieties is urgently required. 5.15 The upstream rotation area apparently always receives priority for dry season irrigation water, thus greatly favoring farmers with land in that golongan. Officially, water was allotted to 30,000 ha in the 1976 dry season, but almost double the area was planted by farmers who gambled on good dry season riverflows. Of the 57,800 ha planted, only 52,000 ha were harvested with a large area producing low yields due to water shortage. Increased dry season water availability through the construction of additional storage and regulating facilities would greatly increase the total productivity of the subproject and it would then be possible to institute a rotational system of water availability with the possibility of more distinct cropping patterns. 5.16 Glapan Sedadi. From a rehabilitated area of 46,000 ha only 21,600 ha were harvested in the 1976 dry season, due to severe drought conditions and a water shortage. BIMAS/INMAS inputs were used on only 33% of the planted area. The average yield of paddy grown with inputs was 3.5 ton/ha and that planted without inputs was 2.7 ton/ha. 5.17 The subproject area was seriously affected by flooding in the 1976/77 wet season. Some 15,000 ha was inundated twice; about 3,000 ha is inundated for various periods each wet season. Drainage improvements are scheduled for the area under Irrigation IX. 5.18 Serious damage was caused by brown planthoppers to the popular Pelita varieties in 1975/76. This has caused a distinct switch to the HYVs IR26, 30 and 34. From preliminary data it appears that seed sales for HYVs through cooperatives increased some 300% for the 1976-77 season. 5.19 Organization and Management. Most public agencies involved in project works in Indonesia suffer from a scarcity of qualified technical - A.19 - personnel at all levels. PROSIDA is no exception, but because of its excel- lent reputation and its salary incentives, it has been able to attract and maintain a core of experienced full-time engineers. However, PROSIDA still loses experienced engineers to consulting firms or to the contracting industry. It has a limited design staff and consequently the bulk of its design work is done by consultants. 5.20 PROSIDA, being purely a project preparation and project execution organization, hands over the O&M of all subprojects to the respective provin- cial governments. As of April 1, 1977 all irrigation systems under the project were officially transferred. Since provincial staff have been involved with project execution and subsequent initial O&M under PROSIDA, the transition is expected to be smooth, and provided adequate O&M funds are available, no organizational or managerial difficulties are anticipated. 5.21 The agricultural section of PROSIDA has spent much time on the development of improved water management at the farm level. Tertiary demon- stration units were mainly used for testing variations in operational, organi- zational and maintenance criteria. After a few years of operation, a model for future development has evolved, and is now being implemented under Loan 1268-IND on some 100,000 ha of rehabilitated irrigation land. Numerous training sessions for farmers, farmer leaders and extension personnel were conducted. Water Users Associations were formed on all tertiary units for operation and maintenance of the units. 5.22 Irrigation Advisory Committees have been established in all sub- project areas for coordinating the provision of water and other inputs. Initially there was no farmer representation on the committees, but at the Bank's suggestion, this was changed in 1975. Determination of suitable times for dewatering systems for maintenance is now made in consultation with all beneficiaries. 6. PERFORMANCE OF THE BORROWER 6.01 The relationship between the Bank and the Borrower continued to improve during the project execution. Initially, quarterly progress reports arrived late, were non-conforming to the agreed outline, and missing some requested exhibits. Supervision missions endeavored to assist PROSIDA in simplifying reporting requirements, and from 1973 onwards, semi-annual reports of satisfactory quality were provided. The project completion report prepared by the Borrower was completely satisfactory and information supplied needed only minimal review and updating. 6.02 PROSIDA has been responsive to queries raised in supervision letters. Letters of concern to the Borrower have dealt mainly with procure- ment matters and requests for additional agricultural support services, O&M of rehabilitated systems, development of tertiary units, and reallocation of funds under the credit. - A.20 - 6.03 Agricultural data was collected by PROSIDA from the provincial and district agricultural services and the BIMAS Secretariat. Yield data is not fully reliable due to the use of varying units of measurement (wet stalk paddy, dry stalk paddy, unhusked paddy, etc.) and the method of establishing yields per unit area. The mission was able to obtain sufficient clarification to utilize reliable data for the economic analysis. 6.04 Covenants. Table 14 shows the degree to which the various covenants relating to project implementation were carried out and the follow-up action taken by the Association. 6.05 Audit: PROSIDA proposed initially that local auditors and account- ants carry out the independent audit. Following discussions with the Associ- ation in October 1970, PROSIDA agreed in November 1970 to use the Director General of Government, Financial Control - Ministry of Finance (Government Auditor) as its independent auditors. Following receipt of the first audits for 1969/70 and 1970/71 in October 1972 the Bank suggested that financial management and control of the project should be sharpened by itemizing expendi- tures to individual subprojects and to headquarters. To assist PROSIDA with establishing sound administrative and accounting procedures, the Bank provided some specialized expertise and agreed to finance the appointment of an admini- strative and finance expert. This was accomplished in 1971 under Credit 220-IND. 6.06 Disbursements. The appraisal report did not include a schedule of disbursement, but at time of signing a schedule was drawn up (Table 15). Initially, disbursement was slow, reflecting the delays in procurement. Credit closure was delayed, to allow for procurement of spare parts, until March 25, 1977. 7. BANK/IDA PERFORMANCE 7.01 In view of the urgent need for rehabilitation of existing major irrigation systems to increase food crop production, the Bank decided to assist GOI without requiring the preparation of a feasibility report prior to appraisal. There were risks involved in appraising a project without the benefit of such a study and it is obvious that project requirements and costs could have been better estimated if at least one year of investigations had taken place. This was however, offset by the importance of initiating an agricultural lending program without delay. 7.02 Under these circumstances, the appraisal mission focused mainly on the rehabilitation and construction of irrigation works without taking suffi- cient account of the poor drainage situation, although the report acknowledged the existence of this in many of the subproject areas. Necessary improvements of access roads into paddy production areas and along channels and drains also could not be assessed. However, additional drainage, roads and canal structures were added to the scope of the project works during project implementation as a result of consultants feasibility investigations financed under the project. - A.21 - 7.03 Because of the large cost increases encountered at the time the first definitive cost estimate was made (April 1970), GOI requested supple- mental financing from the Bank. Bank management declined to provide supple- mental financing and GOI managed to finance all additional costs of the project. 7.04 Supervision missions periodically reviewed the additional needs for improvements in system operations and paddy production. The need for tertiary development became particularly clear. Since the expected tertiary development by farmers was not occurring, the GOI was urged to lay out tertiary demonstration plots in each of the subprojects and a total of 35 tertiary units were constructed. 7.05 Water requirements were underestimated and water availability overestimated for the 25,000 ha Way Seputih subproject, both by GOI and the appraisal mission. At credit closing only 13,500 ha were cleared for cultiva- tion. This is the practical maximum area that can be sustained with avail- able water supplies. Following the issue of land titles, farmers remained reluctant to borrow from BRI for clearing and leveling land, partly for the above reason, and partly because farmers who did so earlier experienced difficulties in repaying loans in five years after a two-year grace period. A Bank-proposed FY78 project (Irrigation X) for construction of additional project works designed to augment the existing water supply is in the pre- appraisal stage. 7.06 The provision of agricultural support services and inputs for efficient paddy production received appropriate attention from most super- vision missions. GOI was frequently reminded of its obligation under the credit. It is to the credit of GOI that input supplies, credit availability and other agricultural support services improved substantially. The Bank has now initiated the financing of improvements to agricultural extension services and applied agricultural research under Loan 1100-IND, while a component of the Agricultural Research and Extension Project (Loan 1179-IND) addresses basic research requirements for paddy and secondary crops, and provides Agri- cultural Information Centers which will translate research information into more suitable form for use by extension workers and farmer leaders. A National Food Crops Extension Project (Loan 1267-IND) became effective in 1976. 7.07 The amount of technical assistance required was underestimated in that demands for project preparation work took a large amount of the consul- tants' time in addition to that required for assistance in project implementation. Considerably more consultants' time was used in project preparation than originally estimated whereas it would have been beneficial if more works supervision, 0&M manual preparation and local personnel training had been accomplished. It would also have been desirable if more consultants' time could have been devoted to agricultural development in the subprojects. Throughout project implementation, Resident Mission representatives were involved, primarily on procurement matters. However, supervision during the period November 1972 to April 1974 was partly pro- vided by the Irrigation Engineer then assigned to the Resident Mission. - A.22 - 8. CONCLUSIONS 8.01 The first irrigation rehabilitation project in Indonesia has been an outstanding example of institution building. PROSIDA developed from a small offshoot of DGWRD dealing with the US$8.8 million project, to an organization presently in charge of planning and executing Bank assisted irrigation rehabilitation and construction works having a total estimated cost of almost US$450 million. Credit 127-IND provided significant engi- neering experience and initiated momentum for government and provincial-level commitment to undertake rehabilitation of irrigation systems. The project contributed to producing a core of trained personnel capable of administering project execution and O&M activities. Subsequent loans should include oppor- tunities to strengthen its capabilities in project preparation. 8.02 Rehabilitation and construction of irrigation projects must incor- porate all phases of development from the supply of irrigation water to the provision of drainage, access, inputs and all agricultural support services if benefits are to accrue in a satisfactory manner to all project benefici- aries. Although not all aspects were foreseen at appraisal, continuous changes and additions during project implementation have generally achieved the required results as is apparent from present yields, total production of food crops and the internal rate of return of the project. Table I INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Machinery and Equipment Purchases and Operational Hours Appraisal Actual Average Type estimate purchased operational (number) (number) (hrs/year) Dredges (8" cutter) 4 6 1,373 Draglines (1/2 cy) - 2 941 (5/8 cy) 1 1 1,194 (3/4 cy) 5 5 1,492 1 cy) 2 2 1,340 Bulldozers (60 hp) - 6 939 (140 hp) 3 3 1,405 (180 hp) 5 5 380 Scrapers 4 4 1,286 Motor graders 3 3 970 Backhoe dozer - 3 570 Mobile crane - 1 298 Transport trailers 2 3 371 Dump trucks 30 30 1,027 Motorized road rollers - 4 Vibratory soil compressors 6 Forklift 1 Inspection cars 9 16 Motorcycles - 129 Boats, trailers, enginers - 6 Concrete mixers 7 7 Compressors 7 7 Pumps 6 6 Electric & gas welders - 6 Stationary workshops 3 3 Mobile workshops 4 4 INDONESIA FIRST IRRIGATION REIABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Allocation and Reallocation of Proceeds and Final Disbursements Actual Percent of Original at Reallocations disbursements appraisal Category Item appraisal Dec. 22, 1970 Nov. 17, 1971 Jan. 12, 1973 July 27, 1973 March 25, 1977 estimate ---------------------------------------- US$ ------------------------------ I Dredges 400,000 550,000 605,000 587,000 619,000 616,713.36 154 2 Dragline 400,000 350,000 395,000 395,000 420,000 419,710.48 105 3 Tractors, scrapers, graders and dump 800,000 700,000 790,000 940,000 975,000 971,819.37 121 trucks 4 Vehicles, equipment transporters, 800,000 750,000 775,000 658,000 702,000 700,483.81 88 concrete Itners, compressors, pumps, workshops, materials and supplies 5 Consultants' services 1,250,000 1,650,000 1,725,000 1,725,000 1,725,000 1,721,364.04 138 6 O&M of mw.htnery and equipment 1,000,000 1,000,000 710,000 695,000 558,000 557,881.22 56 / Unallocated 350,000 - - - - - T'tal _00000 55 o0oo) 000 5000 000 5000,000 4,987,972.28 ~ L J ~ ____C_ Table 3 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Cost Estimates, Actual Expenditures and Balance to Completion Consultant's Expenditures Balance to Total Item cost estimate at close of Credit complete project April 1970 March 25, 1977 (local finance) cost ------------------------- US$ Million ---------------------- Civil Works Excavation Primary canals 3.4 3.3 0.0 3.3 Secondary canals 2.0 2.6 0.1 2.7 Tertiary canals 0.4 1.0 0.1 1.1 Subtotal excavation 5.8 6.9 0.2 7.1 Embankment 1.5 - - Structures 4.9 10.8 0.5 11.3 Main Weirs 2.6 3.1 0.2 3.3 Drainage Canals - 2.4 0.6 3.0 Structures - 1.5 0.1 1.6 Subtotal drainage 3.2 3.9 0.7 4.6 Infrastructures 3.1 4.6 1.2 5.8 Subtotal civil works 21.1 29.3 2.8 32.1 O&M Equipment - 3.0 0.5 3.5 Engineering and Administration Consultant supervision - 2.4 - 2.4 Design (PROSIDA) - 3.4 0.3 3.7 Administration - 3.6 0.2 3.8 Subtotal engineering & admin. 6.3 9.4 0.5 9.9 O&M During Construction - 2.8 0.4 3.2 Contingencies 3.3 - Management General - 1.6 0.1 1.7 Machinery, equipment & vehicles - 3.6 - 3.6 Subtotal management - 5.2 0.1 5.3 Land Acquisition 0.4 - Total 31.1 49.7 4.3 54.0 /a Including embankment. /b Including land acquisitton. Table 4 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Actual Subproject Expenditures Item Way Seputih Cisedane Rentang Glapan Sedadi Total (US$ million)--------------------- Civil Works Excavation of irrigation canals 1.9 1.6 1.6 2.0 Structure (irrigation and drainage) 2.7 0.9 4.3 3.4 Main weirs - 0.8 0.9 1.6 Drainage - 1.8 1.9 0.9 Access roads, housing, etc. 1.0 1.2 1.9 1.6 Subtotal 5.6 6.3 10.6 9.5 32.1 Equipment Construction and supervision 0.8 0.8 1.1 1.0 O&M 0.5 0.8 1.1 1.1 Subtotal 1.3 1.6 2.2 2.1 7.2 Engineering and Administration Consultants 0.5 0.5 0.7 0.6 PROSIDA (design) 0.6 0.9 1.2 1.1 PROSIDA (administration) 0.7 0.9 1.1 1.1 Subtotal 1.8 2.3 3.0 2.8 9.9 O&M Construction 0.7 0.8 0.9 0.8 3.2 Management 0.3 0.3 0.5 0.5 1.6 Total 9.7 11.4 17.2 15.7 54.0 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Area, Yield and Production of Paddy in Subproject Areas Estimate at Appraisal in 1968 Actual 1969 1975-76 Average /a Before project implementation Average Average Harvested Average Subproject Season Area yield /b Production /c Area yield Production Area yield Production (ha) (ton/ha) (tons) (ha) (ton/ha) (tons) (ha) (ton/ha) (tons) Way Seputih Wet 25,000 1.6 40,500 500 1.6 800 10,800 3.5 37,600 Dry 400 1.5 600 2,300 3.3 7,600 Cisedane Wet 40,000 2.1 84,900 37,000 2.0 74,000 38,300 4.1 158,100 Dry 11,000 1.5 16,500 25,400 3.9 99,500 Rentang Wet 91,000 2.1 195,200 78,000 2.2 171,600 84,000 4.4 369,100 Dry 15,000 2.0 30,000 45,000 3.3 149,400 Glapan Sedadi Wet 42,000 2.1 90,500 38,000 2.0 76,000 41,600 3.1 130,700 Dry ___3,500 1.5 i5p.q 1,800 3.1 51,900 Total _98,_000 2.1 411,100 183,400 2.0 374,700 264,200 3.8 1,003,900 Wet season 198,000 153,500 2.1 322,400 174,700 4.0 695,500 Dry season 40,000 29,900 1.7 52,300 89,500 3.4 308,400 Cropping intensity 120% 151% /a This is higher than the probable long-term average, and considerably higher than could be expected M during the driest of years. /b Dry UnbnUiked rice = paddy gabah. /c Rounding of yields caused slight differences in production data. INDONE51A FIRST IRRIGATION RERABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Agricultural Support Services Before (1969) After (1976) Way Glapan Way Glapan Seputil Cisedane Rentang Sedadi Total Seputih Cisedane Rentang Sedadi Total or or average average Agricultural Extension Village units (no.) - - - - 22 48 69 31 170 PPS (no.) - - - - 1 1 2 2 6 PPL (no.) 1 - - - 1 8 48 114 31 201 PPM (no.) - - - - - - 2 20 16 38 Mantri pertanian (no.) 4 10 24 25 63 4 10 24 25 63 Farm families (no.) 12,800 100,000 483,000 216,000 811,800 12,800 186,700 514,600 297,600 1,011,700 Farm families per PPL (no.) 12,800 - - - - 1,600 3,890 4,510 9,600 5,030 REC (no.) - 3 17 20 40 - 2 6 17 Input Supply BUUD (no.) - - - - - 7 17 26 32 82 KJD (no.) - - - - - 1 6 76 9 92 Kiosk (no.) - 2 - - 2 - 10 52 - 62 Credit BRI Unit Desa (no.) - 1 - - 1 7 17 66 14 104 Rice Processing Rice mills (no.) unknown 1 43 186 73 303 Rice Iuller (no.) 95 125 194 156 570 Research and Extension Plots Research-experimental stations - I - I - - 2 - 2 Seed farms - 3 - 4 7 - 3 6 4 13 Basic Data Farm size (ha) Sawah unknown 2.0 0.5 0.7 0.5 - Upland unknown 1.0 Land value ('000 Rp/ha) - 1,000 300 15 - - 4,000 750 45 - BIMAS/INMAS area (ha) - 11,300 37,000 5,100 53,400 3,000 38,600 69,200 32,500 143,300 BIMAS/INMAS coverage (%) 0 28 41 12 27 24 64 52 53 52 a, Table 7 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Annual Expenditures for Capital Investment /a (Rp billion) Indonesian Total fiscal year Glapan Sedadi Rentang Cisedane Way Seputih project 1969/70 1,410 1,810 1,240 1,330 5,790 1970/71 2,225 2,408 1,369 1,314 7,316 1971/72 2,201 2,623 1,518 1,366 7,708 1972/73 2,337 2,482 1,273 1,817 7,909 1973/74 1,419 1,707 968 861 4,955 1974/75 913 1,252 693 535 3,393 1975/76 926 1,216 680 248 3,070 1976/77 766 544 373 326 2,009 1977/78 /b 510 145 370 271 1,296 1978/79 /b 0 0 257 181 438 1979/80 0 0 0 0 0 Total 12,707 14,187 8,741 8,249 43,884 US$ million equivalent /c 30.6 34.2 21.1 19.9 105.8 /a Financial costs, expressed in end-March 1977 values. /b Planned expenditures. /c At the official exchange rate, US$1.00 = Rp 415. TNDONES TA FIRST IRRIGATION RIALABALITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Comodity Price Structure ih the Project Ar-a. lstoric 1969-76 and Pr.oected 1985 /a 1969 1970 1971 1972 L973 1974 1975 1976 1905 Rp/ton US/t.n lp/on US$/ton ip/con USS/ton Rp/ton USS/ton Rp/to US$/ton lp/ton USS/o, lp/ton US$/ton Rp/ton US/ton Rp/ton USS/ton Rice /b Export price That 5% - 42% brokenn .1. fb Bangkok 51.900 L51 35,300 94 68,500 176 35,200 85 72.900 176 186.80o 4>0 Ii6.d00o 450 118,300 285 150.600 290 Ocean fretght and insurance Port handling, storage and transport) 6.100 16 6,100 16 6,200 16 6,200 15 7,000 17 7.30U 18 11,200 27 11.200 27 14.100 27 to wh,olesaloe Transport mill to wholesalers -1,000 -3 -1,000 -3 -1,500 -4 -1,500 -4 -2,000 -5 -2,000 -5 -2,500 -6 -2.500 -6 -2,000 -4 Rice price ex-sill, project area 64,000 171 40,400 108 73,200 188 39,900 gn 77,900 Idö 192,300 463 195,500 471 127,000 306 162,900 313 Paddy equivalent price (632 rice recovery) 40,300 107 25,500 6 46,100 118 25,100 60 49,100 111 121,100 292 123,200 297 du,000 193 102,600 197 Miling Costa lTes valu of by-product. -1,200 -3 -1,000 -3 -1,000 -3 -1.00 -2 -1.000 -2 -2,000 -5 -2,000 > -3.000 -7 -2,200 -4 11andling and tranport coots., farm to mil] -1.600 -4 -1,200 -3 -1.200 -3 -1,200 -3 -1,200 -3 -3,200 -8 -3,200 - -3,300 -8 -1,200 -2 Economic farm-atoe.paddy price ._7.500 100 23,300 62 43,900 112 22 900 55 46.900 113 115900 279 1il8.o00 284 73,700 178 99.200 191 (Financial fara-gate paddy price) (21.000) (56) (21,000) (56) (22,000) (6) (23.000) (55) (23.000) (55) (35,000) (59,000) (68,000) (79.300) (191) Urea /c world export pric. 38,200 102 24,700 66 25.300 65 26.900 65 39,300 95 103,500 249 51,900 142 83,000 200 100,400 193 0ean freigh.t and inaurancn 4,200 l1 4,900 13 5,100 13 5.400 13 5,800 14 6.200 15 7,500 18 8,300 20 4,200 b Unloading and distribution co.sn to BIJUD/kio.k 1,200 3 1,200 3 1,200 3 1,600 4 2,000 5 d,o70 21 9,500 23 14,500 3 19,1o0 37 Transport, BUUD/klok to f.m 1,000 3 1,000 3 1,000 3 1.400 3 2,000 5 2,000 5 3,000 7 3,000 7 1,000 2 ELonomic farm-Rate price 44,600 119 31.800 a5 32.600 ö4 35.300 85 49,100 ils 120,400 290 78.900 L90 l08,800 262 124 700 240 (Financial far.-gate pri-e) (26,600) (71) (26.600) (71) (26,600) (6) (26,600) (64) (40.000) (96) (40.000) (96) (60.000) (145) <50,000) (193> (99,600) (240) TSP L World export price 23.300 62 24,300 65 24,900 64 26,500 64 41.400 100 103,800 250 61.800 149 b6,400 160 19,400 172 Ocean frelght and insurance 4,200 l1 4,900 13 5,100 13 5.400 13 5. Ö00f 14, 6.200 15 7,500 18 8,300 20 11,4o0 22 Unloadlng and distribution costs to BUUDk/ko. 1,200 3 1,200 3 1,200 3 1,600 4 2,000 5 4.000 10 9.500 23 14.00 35 19,100 31 Transport, BIUD/kionk to farm 1,000 1 1.000 3 1,000 3 1,400 3 2,000 5 3,000 / 3.000 7 3,000 7 1,000 2 Economi taro-ate prcke 29.700 79 31.40> 84 32.200 83 34 900 14 51-200 123 117,000 202 b.L-00 197 92,200 222 120.900 23i (Financial farm-gate price) (26.600) (71) (26,600) (71) (26,600) (68) (26.600) (64) (40,000) (96) (40,000) (96) (60,000) (145) (10,000) (193) (96,700) (233) la Economic prces, ligures 1n parenthee.ae fiånancial prices. All conver.tona to US dollars are at lte tistoric tflcial exchange r~ce excpt for 1985 en o hadow foreign nechange rate af SSI.00 - Rp 520 1. used for the economi. farm-gat, pric-. See paragraph 4.13. /b Assmed rice quality: 10 of production. 5 brokens; 600 aedium grade, 25-35% brokens; and 30% loer grade, 421 broken. PrIt-s a-~umd 1,n 190) (ln constant end-narch 1977 price.). 5I brok.ns US$405/o, 25-357 brok.n USS275/ton and 421 brokens US5263/too, 1e .xport price t, Tokyo. 19U5 fob P,le-baug. 1d Export price iob T,,kyo. Soo-ce: Ye-r 1969-74- PROSIDA Credir 1217-IN Completion >Ieport, years 1975, 1976, 1985: Appr,o~l reports of Irrigat 1on VI, VII, T1, IN1DO-NES I A FIRST IRRICATLN RFILABILITATION PROJECT Table 9 CKI:UIT 127-IND PROJECT COMPLETION REPORT Value of Production: At Appraisal, Completion and Future Projections With and Without the Project /a Gross value Net value Net annual Harvested Annual Faragate of Cost of of return Subproject area Yield productionLb price production productionc production from area (ha) (ton/ha) (tons) - ----- - (Rp '000/ha) ------- (Rp million) GLAPAN-SEDAD1 1969/70 Actualt Dry season 3.500 1.5 81,250 37 352,061 Wet season 38,000 2.0 74 23 51 1976/77 Actual:L Dry season 21,580 3.2 196,156 74 237 102 135 7,131 Wet season 41,000 3.1 9 6229 110 119 Projected future without project (1985): Dry season 8,000 2.7 267 80 187 Wet Season 25.000 2.9 90,700 287 95 192 6,296 Projected future with project at full development (1984/85), Credit 127-IND only: Dry season 25,000 3.5 346 120 226 Wet season 45,000 3*8 258,500 99 376 155 221 Projected future with project at full development (1986/87). All loans: Dry season 23,000 4.2 616 130 286 20,020 Wet season 45,000 4.5 307,500 466 160 286 RENTANG 1969/70 Actual: Dry season 15,000 2.0 74 22 52 Wet season 78,000 2.2 201,600 8L 26 55 5,070 1976/77 Actual%4 Dry season 52,100 2.7j 514,470 200 U8 82 Wet season 89,000 4.2 311 127 184 Projected future without project (1984/85): Dry season 10,000 2.8 277 100 144 15,090 Wet season 75,000 3.0 253,DO0 297 115 182 Projected future with project at full development (1984/85), Credit 127-IND only: Dry season 40,000 42 573,000 416 140 276 36.300 Wet season 90,000 4.5 446 165 281 Projected future with project at full development (1984/85), All loans: Dry season 40,000 4.5 603,000 446 150 296 38,390 Wet season 90,000 4.7 465 175 295 CISEDANE 1969/70 Actual: Dry season 11,000 1.5 56 22 34 Wet season 37.000 2.0 90,000 37 74 27 47 2.113 1976/77 Actual:Ld Dry season 22,800 3.7 240,160 74 274 114 160 10.564 Wet season 38,000 4.1 303 121 182 Projected future without project (1984/85): Dry season 15,000 2.8 132,000277 85 192,793 et"season 30,000 3.0 297 100 197 Projected future with project at full evelopment (194/85). Credit 127-IND only: Dry season 28,000 4.2 281,400416 140 261 17,907 Wet season 39,000 4 2 416 155 276 Projected future with project at full development (1986/87), All loans: Dry season 28,000 4.4 30650 436 150 286 19,513 Wet season 39,000 4.7 465 170 295 WAY SEPUTIR 1969/70 Actual: Dry season 450 1.3 1.350 37 48 17 31 33 Wet season 450 1.7 63 20 43 1976/77 Actual:L Dry season 1,000 2.8 48,300 74 207 103 104 1,909 Wet season 13,000 3.5 259 114 145 Projected future without project (1984/85): Dry season 2,500 2.5 247 BO 167 Wet season 3,200 2.8 15,210 277 95 182 1.000 Projected future with project at full development (1984/85):/fi* Dry season 3,500 3.7 636 135 231 4,t30 Wet season 13,500 4.0 64,950 396 150 246 /a Economic prices based on historic (1969/70), present and projected (1985) world mirket prices for rice and fertilizer, from Table 8. /b Indonesian fiscal year, April 1 - March 31. fl Includes hired farm labor. Ld 1976/77 wet seasonl yields estimated dutring harvest. A, An atypical dry eason; the area nufitered fr,,n drought. jt irrigation X, now in th' pr'-.ppraii,al ,ta, woold in I "t, idilt 1utl Wtrks in W4v ip it wich hav- not b".- I,,ld I. i th-. In i lyi. INDONESIA FIRST IRRIWATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT lapan Sedadj (46,010 ha): Economic Costs and Benefits /a (Hp million) Indonesian Project costs Total costs Incremental benefits fiscal Credit 127 /b Irrigation VII /c Irrigation IX Ic Credit 127 All loans Credit 127 All loans year Capital O&M Terti- Studies Misc. Drainage 06W aries /d 1 1969/70 1,410 0 0 0 0 0 0 1,410 1,410 0 0 2 1970/71 2,225 0 0 0 0 0 0 2,225 2,225 0 0 3 1971/72 2,201 0 0 0 0 0 0 2,201 2,201 0 0 4 1972/73 2,337 0 0 0 0 0 0 2,337 2,337 0 0 5 1973/74 1,419 0 0 0 0 0 0 1,419 1,419 0 0 6 1974/75 913 95 0 0 0 0 0 1,008 1,008 14,534 14,534 7 1975/76 926 81 0 0 0 0 0 1,007 1,007 7,762 7,762 8 1976/77 766 147 69 92 160 0 0 913 1,234 4,492 4,492 9 1977/78 510 161 175 819 539 899 0 671 3,103 4,650 4,803 10 1978/79 0 179 208 676 557 2,452 0 179 4,072 5,650 5,490 11 1979/80 0 193 200 0 379 2,733 13 193 3,518 5,114 6,862 12 1980/81 0 207 25 0 0 1,367 26 207 1,625 6,044 8,234 13 1981/82 0 221 25 0 0 0 45 221 291 6,509 9,607 14 1982/83 0 248 25 0 0 0 65 248 338 7,439 10,979 15 1983/84 0 276 25 0 0 0 65 276 366 8,369 11,665 16 1984/85 0 276 25 0 0 0 65 276 366 9,299 12,352 17 1985/86 0 276 25 0 0 0 65 276 366 9,299 13,038 18-29 1986/87-1997/98 0 276 25 0 0 0 65 276 366 9,299 13,724 30 1998/99 0 276 25 0 0 0 65 276 366 10,605 Le 17,704 Le Estimated Economic Rate of Return - Credit 127-IND only: 39% - All Loans: 38% /a Expressed in end-March 1977 values. /b Converted at historic official exchange rates. See paragraph 4.13. ,c Converted at shadow exchange rate of US$1 = Rp 520, based on estimated standard conversion factor for Indonesia of 0.8. /d Includes O&M. /e Includes salvage value at 33% of civil works. 0- INDONES IA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Rentang (90,216 ha): Economic Costs and Benefits j (Rp million) Indonesian Project costs Total costs Incremental benefits fiscal Credit 127 /b Irrigation VII /c Irrigation VI /c Credit 127 All loans Credit 127 All loans year Capital O&M Misc. works New barrage 0&M Misc. 1 1969/70 1,810 0 0 0 0 0 1,810 1,810 0 0 2 1970/71 2,408 0 0 0 0 0 2,408 2,408 0 0 3 1971/72 2,623 0 0 0 0 0 2,623 2,623 0 0 4 1972/73 2,482 0 0 0 0 0 2,482 2,482 0 0 5 1973/74 1,707 0 0 0 0 0 1,707 1,707 0 0 6 1974/75 1,252 172 0 0 0 0 1,424 1,424 30,707 30,707 7 1975/76 1,216 158 0 745 224 112 1,374 2,455 40,062 40,062 8 1976/77 544 196 320 5,146 240 174 740 6,620 14,008 14,008 9 1977/78 145 316 1,077 12,896 280 213 461 14,927 14,433 15,145 10 1978/79 0 352 1,114 8,060 370 68 352 9,964 14,868 16,310 11 1979/80 0 379 757 3,224 460 26 379 4,846 15,930 17,475 12 1980/81 0 406 0 832 580 26 406 1,844 16,992 18,640 13 1981/82 0 433 0 0 580 26 433 1,039 18,054 19,805 14 1982/83 0 487 0 0 580 0 487 1,067 19,116 20,970 15 1983/84 0 541 0 0 580 0 541 1,121 20,178 22,135 16-29 1984/85-1997/98 0 541 0 0 580 0 541 1,121 21,240 23,300 30 1998/99 0 541 0 0 580 0 541 1,121 22,693 /d 34,951 /d Estimated Economic Rate of Return - Credit 127 only: 68% - All loans: 64% /a Expressed in end-March 1977 values. /b Converted at historic official exchange rates. See paragraph 4.13. /c Converted at shadow exchange rate of US$1 = Rp 520, based on the estimated standard conversion factor for Indonesia of 0.8. /d IncludeE salvage value at 33% of civil works. Table 12 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Cisedane (40,663 ha): Economic Costs and Benefits /a (Rp million) Prolect costs Indonesian Credit 127 /b Irrigation VII /c Total costs Incremental benefits fiscal Capital O&4 Terti- Misc. Drainage Credit 127 All loans Credit 127 All loans year aries /d works 1 1969/70 1,240 0 0 0 0 1,240 1,240 0 0 2 1970/71 1,369 0 0 0 0 1,369 1,369 0 0 3 1971/72 1,518 0 0 0 0 1,518 1,518 0 0 4 1972/73 1,273 0 0 0 0 1,273 1,273 0 0 5 1973/74 968 0 0 0 0 968 968 0 0 6 1974/75 693 83 0 0 0 776 776 14,687 14,687 7 1975/76 680 72 0 0 0 752 752 18,462 18,462 8 1976/77 373 130 92 160 18 503 773 5,564 5,564 9 1977/78 370 142 233 539 164 512 1,448 5,807 5,807 10 1978/79 257 159 273 557 14 416 1,260 6,254 6,25- 11 1979/80 0 171 255 379 0 171 805 6,700 6,851 12 1980/81 0 183 33 0 0 183 216 7,147 7,376 13 1981/82 0 195 33 0 0 195 228 7,594 7,901 14 1982/83 0 220 33 0 0 220 253 8,041 8,432 15 1983/84 0 244 33 0 0 244 277 8,487 8,959 16 1984/85 0 244 33 0 0 244 277 8,934 9,486 17 1985/86 0 244 33 0 0 244 277 8,934 10,013 18-29 1986/87-1997/98 0 244 33 0 0 244 277 8,934 10,546 30 1998/99 0 244 33 0 0 244 277 9,795 /e 11,682 /e Estimated Economic Rate of Return - Credit 127-IND only: 56. - All Loans: 584 /a Expressed in end-March 1977 values. /b Converted at historic official exchange rates. See paragraph 4.13. /c Converted at shadow exchange rate of US$I - Rp 520, based on estimated standard conversion factor for Indonesia of 0.8. /d Includes 0&M. /e Includes salvage value at 33% of civil works. Table 13 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Way Seputih (11,500 ha): Economic Costs and Benefits /a (Rp million) Indonesian Project costs Total costs Incremental fiscal Credit 127 /b Irr. VII /c Credit 127 All loans benefits year Capital O&M Misc. works 1 1969/70 1,330 0 0 1,330 1,330 0 2 1970/71 1,314 0 0 1,314 1,314 0 3 1971/72 1,366 0 0 1,366 1,366 706 4 1972/73 1,817 0 0 1,817 1,817 216 5 1973/74 861 0 0 861 861 737 6 1974/75 535 19 0 554 554 5,256 7 1975/76 248 21 0 269 269 5,036 8 1976/77 326 46 92 372 464 1,731 9 1977/78 271 54 308 325 633 1,878 10 1978/79 181 68 318 249 567 2,035 11 1979/80 0 76 216 76 292 2,191 12 1980/81 0 83 0 83 83 2,348 13 1981/82 0 96 0 96 96 2,504 14 1982/83 0 108 0 108 108 2,660 15 1983/84 0 120 0 120 120 2,817 16-29 1984/85-1997/98 0 120 0 120 120 3,130 30 1998/99 0 120 0 120 120 3,898 /d Estimated Economic Rate of Return - Credit 127-IND only: 31% - All Loans: 30% /a Expressed in end-March 1977. /b Converted at historic official exchange rates. See paragraph 4.13. /c Converted at shadow exchange rate of US$1 = Rp 520, based on estimated standard conversion factor for Indonesia of 0.8. /d Includes salvage value at 33% of civil works. Table 14 Page 1 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Covenants Reference Subject Action Taken Section 4.01 (a) Due diligence and The Bank requested DGWRD by letter of supply of funds, September 29, 1969 to provide PROSIDA facilities, ser- with a revolving fund to be replenished vices, etc. every three months, to avoid delays in local funding. Although delays in allocation for construction and operation occurred in 1970, no serious problems occurred at later stages because arrange- ments had been made for quarterly budget allocations to PROSIDA. Section 4.01 (b) Use of consul- Following prolonged contract negotiations tants. for a suitable team, Harza International was employed in March 1969. Due to an increased scope of supervisory services and the provision of a second group of feasibility studies, the contract was renegotiated in January 1971 and concluded in a satisfactory manner. Section 4.01 (c) Furnishing plans, No problems. specifications and work schedules. Section 4.01 (d) Maintaining In response to a Bank letter of April 23, records. 1974, PROSIDA: (a) maintained a cash account for each subproject; and (b) reviewed the recording system for supplies and spare parts. Section 4.01 (e) Annual audit. See para. 6.05. Table 14 Page 2 Reference Subject Action Taken Section 4.02 (a) Machinery See para. 2.12 and equipment. Section 4.02 (b) Users' contribu- tion for 0&M of rehabilitated irrigation Amended by side letter of November 6, system. 1970 to Credit Agreement 220-IND. Section 4.02 (c) Recovery of full These Sections substituted by the costs of O&M on new Section 4.02 (b) and (c) below. experimental basis in Way Seputih. Section 4.02 (b) Collect O&M charges See para. 2.13 (new) one year after con- struction or reha- bilitation. Section 4.02 (c) In case insufficient See para. 2.13 (new) funds for O&M are available to the province, GOI shall take measure to cover O&M expenditures. Section 4.02 (d) Studies on actual Committee set up in 1972 to consider costs of O&M and ways and means of collecting O&M preparation pro- charges. The Bank requested by posals for methods letter of November 21, 1972 to of financing such include members of provincial govern- costs. ment on the committee. GOI decided in 1973 to collect O&M charges through increased IPEDA (land tax) rates. Section 4.03 (a) Coordinating No problems. activities. Section 4.03 (b) Responsibilities for No problems, except the completion of regional authorities tertiary systems, see para. 2.15. in carrying out the project. Section 4.04 (a) Exchange of views Through regular supervision missions with Bank. Section 4.04 (b) Reporting. See para. 6.01. Table 15 INDONESIA FIRST IRRIGATION REHABILITATION PROJECT CREDIT 127-IND PROJECT COMPLETION REPORT Schedule of Disbursements IBRD/IDA fiscal Appraisal Actual year and quarter estimate /a disbursement -------------- US$ million 1968/69 1st 2nd 3rd 0.16 4th 0.31 0.31 1969/70 1st 0.46 1.78 2nd 2.77 1.95 3rd 2.98 2.06 4th 3.18 2.35 1970/71 1st 3.38 2.42 2nd 3.78 2.57 3rd 3.88 2.69 4th 3.93 2.92 1971/72 1sc 4.08 3.17 2nd 4.18 3.40 3rd 4.28 3.64 4th 4.38 4.10 1972/73 1st 4.48 4.29 2nd 4.58 4.53 3rd 4.68 4.74 4th 4.78 4.74 1973/74 1st 4.88 4.79 2nd 4.98 4.80 3rd 5.00 4.81 4th 4.82 1974/75 1st 4.82 2nd 4.86 3rd 4.87 4th 4.90 1975/76 1st 4.92 2nd 4.95 3rd 4.97 4th 4.97 1976/77 1st 4.97 2nd 4.97 3rd 4.99 Closing Date 6/30/74 3/25/77 Undisbursed balance of USS2,027 was cancelled. /a No estimate given in appraisal report. Figures shown were projected at the time of Credit signing. '2> , n11 ||1111111| w Il 1 incl A Ii' , , rn'^" . - - Polembang JATIGEDE DAM PROJECT - Executed under Directorate of Irri 0 GROUNDWATER EXPLORATION PROJECT FUTURE MADIUN IRRIGATION REHABILITATION S U M A T E R A RAILWAYS K A L l t WAY SEPUTIH . NOTE: IrrigatIon project VIl includes tertiary development on 4°*S SUB-PROJECT 100,000 ha of seven sub-projects plus North Sadang and 25,000 ha preliminary works for Kedungombo Dam. Menggala Terusan R. J a v S e a Way Seputih R Bandar aya Guinung~sug ih O T. D.= 6,000 ha Sukadana CIUJUNG SUB-PROJECT T.D.-6,000ha T.D.= 25,000ha Telukbetung 24,300 ha CISEDANE JATILUHUR•PROJECT g R- PPNF. WT /?53,000 ha FEBRUARY670 108-E 42,000 h '2E INDONESIA 116-E 76 RE NTANG . 00 haY Jakarta SUB-PROJECIRRI PROJE 42l hAD- S9,000 ha B-PR EOJECT Maassar ID)nr IMI f23,TM OhI ITATION PROJECT U V- E ..utd-by Jatiffih,r Authority li~bhonIRo GROUNDWAtRcgtUDY AREA eluk Pelabuhan Rotu Bnug ATIGEDE N. NIGOlåÐ.© M A DU S M TE A LW ~ I M N TPROj dltWnso- Suraboya sSD Gs 6.0600 tbPOJC SURPOJEC E N l Bo o Si n8O,cåkaa NO GT N0 h R eHA ] subI usd orth anga T.siPrear SUU-PROJECT~~~~~~~~ dt T It b-.v - IRRIGdTI tet ReelpmHAonBIL17 ~460 o IOSff~ 1o.0Ak for K nombo . S kes shon on this map do not PP R taoung 0 u Y r acceptance by the a Cla 0 akrt - 8 MA f T0E J AM V A Wnbuw 1 oS T..P600ChaSABH P N BPHILIPPINES A c P T.a o25,000ha Dretbe Te betu o MALA- sIh A NE JATILUHUR.PRoJECT pmpif nci P u ea w AA eROJE 253.000Oho E Jakart T GL PAo- SEDADI 92,00 ho . 0 *2O SUB- PRoJECT san -a50 1u0 150 w200 U,ungsCuR N J A. - -,0 MILESIL PPNE 7 g T.D.-25 .000.e b /ndgan Oce N N E L r Teg0l PekO cn k ... Teluk Pelabuh 0 o KE oN oA K2QME TERS 0Su hT.-30OOO E' - ng lI WoriBnd re vvN°E 8°. D- S UARwA PI, ed ocebn BA L I LOMO 'FL RE SNARE A MNA SUM BUBAW1AES 4SULAWESI ° 0 50 190 151 '220 o no SeoIn RON JA, a Sgår0 188000 a 0M-LESE /ndan O ce D N EN E 0 100KLOE TR2 0 K30 TIMOR USRLA12°1° ° JAUDA KIIDo ILOYTES SMB .)~kl,~ w -,,SurabcCya0 SAMPEA BARU10'  叮  IBRD 12633 106"10'E The bourrsd- ow h. n ths map do notPOR ply edoemen accepe by the odBanandiraffiiaeL IMANTAN INDONESIA INDIAN JAVA SEA Project Locatio IRRIGATION PROJECT 0 C/AN 4 CIUJUNG DRAINAGE SUBPROJECT _ _ _ __o_ _ 106'20' -6*00' 0Se d l mOSusukan 4-4--4-TirtaRailwa B o lo e g a r g a rao n C o e n n Rivers andoonig Soletr rinKosemesructed KSMrsmto / II nundatedeArna W 0 02 N /RA Ciruas Sentul Serang -/ 6*10'- RMain Irriga7on Canals Secondary Irrigation Canals Roads I0 Roads to be Rehabilitated / "o' Gravel Surfaced Roads on Flood Embankment Railway Rivers and Main Drains - - -Secondary Drains to be Rehabilitated and Constructed Collector Drains to be Constructed lt Main Rivers to be Rehabilhtated Inundated Areas PEMARAYAN BARRAGE 0 1 2 3 4 5 KILOMETERS 106*10'E 106*20' MARCH 1977