Document of The World Bank FILE Cop FOR OFFICIAL USE ONLY Rlport No. P-2926-NEP REPORT AND RECOMENDATION OF THE PRESIDENTOF THE INTERNATIONAL DEVELOPMENTASSOCIATION TO THE EXECUTIVEDIRECTORS ON A PROPOSED CREDIT TO THE KINGDOM OF NEPAL FOR THE BABAI IRRIGATION ENGINEERING PROJECT December 11, 1980 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its eotents may not otberwise be disctsed without World Bank athoriation. Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank FILE CopFOR OFFICIAL USE ONLY
Rlport No. P-2926-NEP
REPORT AND RECOMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED CREDIT
TO THE
KINGDOM OF NEPAL
FOR THE
BABAI IRRIGATION ENGINEERING PROJECT
December 11, 1980
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its eotents may not otberwise be disctsed without World Bank athoriation.
ADBN - Agricultural Development Bank of NepalAIC - Agricultural Inputs CorporationDCA - Development Credit AgreementDIHM - Department of Irrigation, Hydrology and MeteorologyHHGN - His Majesty's Government of NepalMFA - Ministry of Food and AgricultureSDR - Special Drawing RightsUNDP - United Nations Development Programme
FOR OFFICIAL USE ONLY
NEPAL
BABAI IRRIGATION ENGINEERING PROJECT
Credit and Project Summary
Borrower: Kingdom of Nepal
Amount: SDR 2.8 million (US$3.5 million equivalent).
Terms: Standard
ProjectDescription: The proposed project would assist the Government in the
preparation of final designs, tender documents and evalua-tion of tenders for a proposed Babai Irrigation Project.The engineering credit would finance:
(a) preparation of detailed engineering designs,cost estimates and tender documents for adiversion weir across the Babai River, irri-gation, drainage and road systems within theproject area, and a 30 km stretch of the East-West Highway passing through the project area;
(b) aerial photography and topographical mapping;
(c) a semi-detailed soil survey and a socio-economicbenchmark survey, geological and hydrologicalsurveys and hydraulic model tests;
(d) procurement of engineering equipment;
(e) camps and quarters required for the field work,local counterpart staff and related operationalcost; and
(f) assistance to DIHM in prequalifying interestedcivil works contractors and evaluation oftenders.
The project faces no special risk.
This document has a restricted distribution and may be used by recipients only in the performance ofthcir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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Estimated Cost: US$ Million EquivalentLocal Foreign Total
Financing Plan: US$ Million EquivalentLocal Foreign Total
IDA 0.92 2.58 3.50Government 0.05 - 0.05
0.97 2.58 3.55
Estimated US$ Million EquivalentDisbursements: IDA FY 1981 1982 1983
Annual 0.6 2.3 0.6Cumulative 0.6 2.9 3.5
Rate of Return: Not applicable.
Maps: IBRD No. 15208 and IBRD No. 15209.
INTERNATIONAL DEVELOPMENT ASSOCIATION
REPORT AND RECOMMENDATION OF THE PRESIDENTTO THE EXECUTIVE DIRECTORS
ON A PROPOSED CREDITTO THE KINGDOM OF NEPAL
FOR THE BABAI IRRIGATION ENGINEERING PROJECT
1. I submit the following report and recommendation on a proposeddevelopment credit to the Kingdom of Nepal for Special Drawing Rights (SDR)2.8 million (US$3.5 million equivalent) on standard IDA terms to help financethe Babai Irrigation Engineering Project.
PART I - THE ECONOMY
2. The most recent economic report entitled "Nepal-Development Perform-ance and Prospects" (Report No. 2692-NEP) was distributed to the ExecutiveDirectors on December 14, 1979. The principal findings of the Report andrecent developments are described below. Country data are shown in Annex I.
3. Nepal is one of the least developed countries in the world. Percapita income is estimated at $120 (1978), and health and education standardsare well below the average of South Asia: life expectancy at birth is about45 years, infant mortality 150 per thousand, and adult literacy 19%. Thepopulation, growing at the rate of 2.6% a year, is estimated to be 13.3million (1978). Over 90% of the population live in rural areas.
4. The economy of Nepal centers around agriculture. It accounts formore than 60% of GDP and 75% of merchandise exports, and provides a livelihoodto over 90% of the population. In addition, most of the industrial sector,which comprises about 9% of GDP, processes agricultural raw materials. About25% of total rural incomes are estimated to arise from non-agriculturalactivities. Cottage industries are one of the most important of these,engaging over 1 million people and comprising about 6% of GDP. They providebasic consumer goods in the many small isolated markets where such goods wouldotherwise not be available.
5. As a small open economy, Nepal is highly susceptible to develop-ments in India. The Terai, which lies along the Indian border, has closeand virtually free trading links with India, and accounts for about 60% ofthe country's GDP, and about 40% of the population. The Kathmandu Valley,the administrative and commercial center, is closely linked with the Terai,but at significant transportation costs. The rest of the country, the Hillsand Mountains, is isolated by the nature of the terrain and consists of alarge number of fragmented markets.
6. When Nepal adopted economic and social development as major gov-ernment objectives in the early 1950s, there was virtually no economic oradministrative infrastructure. Initial development efforts were necessarilyconcentrated on establishing a foundation for future development. Duringthese early stages, it was inevitable that growth would remain slow and that
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there would be little if any increase in per capita income. However, theFifth Development Plan (1975/76-1979/80) was to be a turning point; it wasbelieved that the country was poised for more rapid growth on the order of 4-5% annually. The level of investment was to increase substantially and itsfocus to shift towards the more directly productive sectors and the socialservices.
7. Public investment performance has been excellent; developmentexpenditures have grown at over 15% annually in real terms and the Governmenthas been relatively successful in reorienting investment away from the trans-port sector towards agriculture and the social services. However, few of theother Fifth Plan objectives have been achieved. The GDP growth rate is likelyto average only 2.4% per year, mainly because of poor agricultural performance.Little progress has been made in increasing agricultural productivity andagricultural production increased at an annual rate of only 0.7% during thefirst four years of the Fifth Plan. Growth in other sectors has been mixed,with the poor agricultural performance limiting the growth of agro-relatedindustries. Production in several large industries including jute goods,sugar, leather goods, and cement has increased but most Fifth Plan targetswill go unmet. In the services sector, tourism has been dynamic, but itstill only contributes about 1% of GDP.
8. Economic developments during 1979/80 were characterized by decliningoutput, accelerating inflation, and a weakening in the trade and paymentsposition. Foodgrain production declined by 13% due to the poor monsoon in1979, and to deal with this shortfall, the Government appealed for 110,000tons of foodgrains assistance. Donors have made available about 60,000 tonsand together with local procurement from less seriously affected parts ofNepal, this may be sufficient to maintain minimum food requirements. The1980 monsoon is reported to have been satisfactory. Inflation acceleratedto about 12% in 1979/80, because of the deterioration in the domestic foodsituation, higher import prices and the expansionary effects of the budgetdeficit. Government activity slowed in 1979/80; real growth in total expen-ditures was only 5% compared with 10% in 1978/79, while revenues declined by3.5% in current terms. However, the economic prospects for 1980/81 are some-what brighter in view of the improved weather as well as the planned accelera-tion in government expenditures given in the 1980/81 Budget; GDP growth shouldbe positive in contrast to its 1% decline in 1979/80.
9. The disappointing overall performance of the domestic economy duringthe Fifth Plan period has been accompanied by a widening trade deficit.Imports have grown under the impetus of the Government's development programwhile the trend in export earnings has been sluggish due to declining riceexports. The deterioration on the trade account has been partly covered byincreased tourism receipts and remittances from Gurkhas (soldiers from Nepalserving in the British or Indian armies). Foreign assistance in the form ofgrants and concessionary financing have generally ensured that the overallbalance remained in surplus. However, the shortfall in foodgrain productioncoming at a time when Nepal's oil bill was rising has resulted in paymentsdeficit of US$8 million for the 12 months ending July 1980 and Nepal drewSDR 10.5 million (US$13.8 million equivalent) from the IMF under the Compen-satory Financing Facility in September 1980. As of May 1980, foreign exchangereserves were equivalent to six months of imports.
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10. On March 31, 1978, the authorities replaced a complex system of mul-tiple exchange rates and exchange and trade restrictions with a dual exchangesystem. Transactions with India, which were virtually free from restrictions,were unaffected by these changes. New treaties on trade and transit withIndia were also concluded in March 1978. Under the dual exchange rate system,Nepal maintains a basic rate of NRs 12.00 per dollar, with a second, premiumrate applying for all merchandise trade with third countries except for importsof certain development goods. On February 21, 1980, the premium rate waschanged from NRs 16.00 per dollar to NRs 14.00 per dollar, but the exemptionwas restricted to only imports of petrol and petroleum products, cement andchemical fertilizers. These exchange rate adjustments involved an apprecia-tion of about 14% for exports to third countries and an overall appreciationof about 2% for imports from them. But this was partly offset by (i) with-drawing the 12% duty on exports of raw jute; and (ii) raising import dutieson a wide range of imports from third countries. However, with the exceptionof raw jute exports, earnings in domestic currency from exports to thirdcountries will decline, leading to a possible shift of some exports to India.The overall trade balance is likely to be adversely affected by the recentmeasures.
11. The poor long-run performance of the economy is chiefly due to thefailure of agricultural production to keep pace with population growth. Overthe period 1967-77, foodgrain production grew at an average annual rate ofonly 1.5%. Increases in the area under cultivation account for almost all ofthis, since average yields rose by only 0.1% annually. Contribution of irri-gation development has so far been limited. Only about 23% of the irrigablearea is provided with irrigation, and existing facilities are still poorlyutilized. In the past, insufficient attention has been paid to bringing waterdown to the farm level and this has been compounded by inadequate supportservices such as extension and research, timely supplies of improved seed andfertilizer and other inputs, credit and farm-to-market roads. However, recentmajor irrigation projects financed by IDA and the Asian Development Bank areaddressing these problems by taking more comprehensive and integrated approaches.
12. In the Hills and Mountains, which contain only one-third of thecountry's agricultural land and yet have nearly two-thirds of the population,population pressures have pushed cultivation up steep hillsides and ontomarginal land; average yields have actually declined. Population density onagricultural land in these areas is higher than in Bangladesh. Malnutritionis acute; food production meets only two-thirds of minimum subsistence needs.Because they have little to trade except their labor, one-third of the inhab-itants of these Hill areas migrate seasonally to the Terai plains and northernIndia for food and work. Since the early sixties, an estimated 400,000 havemigrated permanently, and there are signs that this exodus is accelerating.
13. Economic policy making has been delayed by the political developmentsof the past two years. These events culminated in the May 1980 referendumwhich reaffirmed the existing political system, while allowing for suitablereforms. A Constitutional Commission is expected to announce proposed reformsshortly, possibly including direct election of members of parliament. Thesepolitical activities slowed down preparation of the Sixth Plan (1980/81-1984/85)and the Plan is only now undergoing final review. However, the thrust of the
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Plan, outlined in an earlier document, was endorsed by members of the Nepal
Aid Group at its January 31, 1980 meeting. It places highest priority on
developing agriculture, including revitalization of Hill food production to
meet local requirements. At the same time, since land holdings in the Hills
are too small to generate much more than subsistence needs, programs will be
started to encourage diversification into other activities such as small-scale
and cottage industries to supplement Hill incomes. For the Terai, the strat-
egy is to continue efforts to realize the Terai's considerable potential for
increasing production of foodgrains and cash crops. The irrigation infra-
structure is to be more fully utilized and improvements to extension services
and associated inputs concentrated on those areas with irrigation facilities.
Reafforestation programs are given priority in order to provide fuelwood and
fodder as well as to reduce soil erosion.
14. While these efforts in the directly productive sectors merit urgent
attention, Nepal faces similar challenges in developing its human resources.
Although curbing population growth requires major actions, selective programs
in education and health can greatly assist population planning as well as
alleviate human suffering and lay the basis for future increases in productiv-
ity. The Government's strategy recognises that the approach must be selective
since programs for meeting basic needs generally have only a long-term impact
on manpower development but divert resources away from activities more directly
and immediately related to production. Increasing foodgrains production will
meet the major need of improved nutrition. Better and more readily available
supplies of drinking water and fuelwood will meet other needs, while also
freeing labor currently spent in their collection. Basic health facilities
are to be expanded through integrated community health posts, while in educa-
tion, stress is placed on improving the quality of primary and adult vocational
education. Family planning programs are to be stepped up. The other basic
need to be met in rural areas is improved transport, and the Sixth Plan will
include programs to improve trails, tracks, and suspension bridges.
15. For Nepal to establish a basis for more rapid and sustained growth,
the structure of its economy will need to change since its present dependence
on agriculture limits the economy's overall growth potential to about 4% per
year. Tourism offers perhaps the best near-term potential for increased
foreign exchange earnings; however, efforts are needed to reduce its capital
intensity, strengthen linkages with other local industries and extend its
benefits beyond the Kathmandu Valley. Hydropower also offers some possibil-
ities, but neither it nor tourism will ever be substantial generators of
employment. In the long run, Nepal must diversify and develop its industrial
sector. Obviously, efforts in this sector must be on a highly selective basis.
The multiplicity and complexity of the constraints to industrial development,
including the lack of natural resources and a skilled labor force, as well as
Nepal's small domestic market and landlocked position will nullify any general-
ized approach. Public enterprises need to operate more efficiently, village
and cottage industries should be promoted. Beyond this, joint ventures with
India, for example, as in cement production, may be attractive. The precon-
ditions for industrialization must be established in the near future or there
is a danger that Nepal will always be struggling to move its economy beyond
subsistence. These include providing financial incentives, research and
extension services on the technical, financial and marketing aspects of
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enterprise, and the upgrading of manpower skills in the areas where Nepalmay have a comparative advantage.
16. Nepal has made significant progress in mobilizing domestic resourcesto support its development efforts, considering the extreme poverty, low degreeof monetization, and fragmented nature of the economy. Revenue grew at 16% ayear in current terms between 1969/70 and 1978/79, increasing from 5% of GDPto about 9% during this period. Over the same period, the Government was ableto maintain savings on current account in excess of 2% of GDP, a good achieve-ment for a country in Nepal's economic position. However, this excellentrecord is now in jeopardy. Political developments led to difficulties in
* collecting income and land taxes in 1978/79, but this was more than offsetby increased collections from other sources. However, custom duties, whichgenerate about one-third of total revenues, were lowered in the 1979/80 budgetcontributing to the 3.5% decline in overall revenues in that year. To reversethe deterioration, the 1980/81 budget raised various taxes including importduties, sales tax, income tax on private businesses, tourist taxes (hotel andairport taxes, and visa fees), and fees for extraction of forest products.These measures are expected to generate revenues equal to about 13% of total1979/80 revenues which, together with better implementation of existing taxes,should be sufficient for overall revenues to exceed 9% of GDP in 1980/81.
17. Foreign assistance has been a decisive factor in Nepal's development.During the Fifth Plan, foreign financing equalled about 45% of developmentexpenditures. In view of the limited prospects for increased domestic resourcemobilization, foreign financing requirements may be about 60% of planned SixthPlan development expenditures, which amount to about NRs 10 billion or over $800million at 1979/80 prices. Aid commitments need to average about $225 millionannually during 1980-82 compared with $160 million during 1977-79. However,even this level of foreign assistance would not provide the Government withsufficient resources to meet increasing consumption demands. Additional aid,either through financing a higher proportion of total project costs or in theform of commodity assistance, could provide budgetary support to meet pressingrecurrent expenditure requirements, particularly in the social sectors. TheNepal Aid Group was formed in 1976 to assist in the overall coordination offinancial and technical assistance efforts. The Group has met three times atplenary meetings under the Chairmanship of the Bank to discuss overall externalassistance needs as well as at the local level in Kathmandu to discuss andcoordinate strategy. At the latest plenary meeting, which was held in Parison January 31, 1980, and was attended by representatives from eight countriesand six international organizations, Nepal received aid indications exceedingUS$200 million equivalent.
18. Although foreign aid commitments and disbursements grew by over25% annually during the Fifth Plan period, only 40% of disbursements includedin the Government's budget were from foreign borrowing, the remainder beinggrants. As of December 31, 1979, official foreign debt outstanding was only$125 million, of which $106 million was due to multilateral agencies. Theseloans were obtained on a highly concessional basis and the grant element oftotal aid remains in excess of 90%. As a result, debt service payments wereonly US$3.1 million during 1978/79, equivalent to less than 2% of exports of
goods and services.
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PART II - BANK GROUP OPERATIONS IN NEPAL
19. Bank Group operations in Nepal began in FY70 with an IDA creditof US$1.7 million equivalent for a telecommunications project. Since then,22 additional credits have been approved, bringing total IDA assistance toNepal to US$267.6 million equivalent, net of cancellations. In view of Nepal'smany development needs, this assistance has been for projects in a wide varietyof sectors. Six of these sectors account for 83% of IDA credits by amount:irrigation ($75.0 million for 5 projects); water supply and sewerage ($46.8million for 3 projects), power ($40.8 million for 1 project); telecommunica-tions ($21.7 million for 3 projects); highways ($19.2 million for 2 projects);and rural development ($19.0 million for 2 projects). The remaining $45.1million of IDA assistance has been for one project in each of the areas ofsettlement, technical education, tourism, technical assistance, forestry,grain storage and industrial development financing. The proposed credit wouldbe the third in FY81, bringing the total amount of IDA assistance to Nepal toUS$271.1 million equivalent, net of cancellations. No Bank loans have beenmade to Nepal. IFC made its first investment in Nepal ($3.1 million) in ahotel project in Kathmandu in FY75. Annex II contains a summary statement ofBank Group operations as of October 31, 1980, and notes on the execution ofongoing IDA projects. It shows certain delays in the implementation of theseprojects, particularly during the initial periods. These delays have beenlargely due to Nepal's limited technical and managerial capabilities. Inorder to assist Nepal in coping with this constraint, considerable technicalassistance is being given by Bank Group staff, including our Resident Missionin Kathmandu. As a result, improvement in the rate of disbursements is beingrealized. During FY80, US$22.6 million equivalent were disbursed compared toUS$42.8 million equivalent disbursed during the entire previous nine years.
20. Bank Group lending to Nepal has so far been at a modest levelcompared to the country's need for external assistance. The internationalcommunity has shown considerable interest in Nepal's economic development and,to date, shortage of funds has not been a bottleneck. The main constraint onthe utilization of increased aid has been Nepal's limited absorptive capacity,affecting the pace of project preparation and implementation. The Bank isassisting the Government in project preparation through the Technical Assis-tance Credit (Credit No. 659-NEP) and by acting as Executing Agency for anumber of technical assistance projects financed by UNDP. The Bank Grouphas also addressed the problem of absorptive capacity through its role inorganizing the Aid Group for Nepal (para 17).
21. The Bank Group's current strategy places major emphasis upon thedirectly-productive sectors (particularly agriculture) and the developmentof complementary infrastructure, including feeder roads (particularly con-necting the Hills to the Terai), communications and hydroelectric power.Preparation of projects in irrigation, Hill food production, agriculturalextension, cottage industry, technical education and power is under way.
PART III - THE AGRICULTURAL SECTOR
22. Agriculture is the key sector for Nepal's economic development:farm production and related activities contribute more than 60% of GDP, pro-vide almost 90% of employment and about 75% of merchandise exports, mostlyfoodgrains2 jute and oilseed. Only about one sixth of Nepal's gross area of141,000 km is cultivable. Foodgrains account for about 90% of cropped area,rice being the most important (50%), followed by maize, wheat, other cerealsand pulses. The rest of the cropped area is under oilseeds, jute, potato,tobacco, sugarcane and horticultural crops. Growth of agricultural production(average 1.1% per year 1970-77), which is largely determined by foodgrainperformance, has not kept up with population growth. Growth has primarilycome from area expansion since yields have largely stagnated (para 11).
23. The Government has had to moderate its earlier approach to regionalspecialization according to comparative advantage (foodgrains in Terai vs.horticulture, tea and livestock in Hills) in view of the need for a properfoodbase in the Hills. The role of the Terai will continue to be the genera-tion of domestic and exportable foodgrain surpluses as a resource for furtherdevelopment. Since area expansion is limited in the Terai, emphasis will begiven to increasing yields, mainly by an expansion and upgrading of existingirrigation infrastructure and inputs. Initial results from the IDA-assistedBirganj Irrigation Project (Narayani Zone) indicate that substantial yieldimprovements can be expected from improved irrigation water supply combinedwith increased agricultural inputs and effective extension services.
24. Agricultural Institutions. Apart from the Ministry of Forest, theGovernment has three major Ministries dealing with agriculture: the Ministryof Food and Agriculture (MFA); the Ministry of Land Reform; and the Ministryof Water Resources. Irrigation projects are the responsibility of the Ministryof Water Resources which includes the Department of Irrigation, Hydrology andMeteorology (DIHM). MFA includes the Department of Agriculture (DA), and theDepartment of Food and Agriculture Marketing Services. MFA also has overallresponsibility for a number of public sector corporations which include theAgricultural Inputs Corporation (AIC), Agricultural Development Bank of Nepal(ADBN) and Nepal Food Corporation. In general, like many other governmentagencies, agricultural institutions suffer from lack of trained staff.
25. Agricultural Extension, Research and Training. The DA's Divisionof Agricultural Extension and Training is responsible for operation of agri-cultural extension services through offices located at the regional anddistrict levels. Effectiveness of extension services is hampered by inadequatestaff training and lack of communication, transportation, and housing facili-ties at the village level. Research is carried out in a research complex nearKathmandu and in 12 smaller stations dispersed throughout Nepal. However, thelinkage between research and extension activities is poor and the products ofresearch are not always directly well disseminated to farmers. Training alsosuffers from shortage of experienced instructors and training facilities.IDA's financing of intensified and reorganized extension services in sevenTerai districts under ongoing irrigation projects (para 32) promises to yield
favorable results, as already noticeable in the Parsa district where the
Training and Visit system is being implemented. A project for agricultural
extension and research for eight more districts in the Terai is being prepared.
26. Agricultural Inputs Supply. AIC is mainly responsible for the
marketing of fertilizers, seed, pesticides, and agricultural equipment.
AIC distributes these inputs to cooperative societies (Sajhas), villagecommittees, other public organizations, and private traders, fixes retail
prices for all inputs, and is responsible for input storage. Provision
of inputs is coordinated with District Agricultural Officers, ADBN and
cooperatives. The activities of AIC have been rapidly expanding and are
fairly satisfactory.
27. Agricultural Credit. ADBN is the main source of institutional credit
in agriculture; two commercial banks play only a minor role in this sector.
ADBN extends short, medium and long-term loans to individual farmers, groups
of farmers, cooperative societies and village committees. Overall lending has
increased considerably over recent years, and now covers about 25% of total
agricultural credit needs. ADBN's financial position is reasonably sound,
although overdues run at about 24% of loans outstanding. Repayment performance
of cooperative societies has even been poorer. The Asian Development Bank has
been assisting ADBN in improving its procedures. The technical assistance
needs of ADBN would be further studied and partly provided under a component
in a proposed agricultural extension and research project (para 21).
28. Cooperative Movement. Since 1976, the cooperative movement has
been reorganized under the name Sajha. In order to reach more farmers and
mobilize local savings, the Government converted existing "guided" societies
(under ADBN management) and village committees into village cooperative
societies, under the direction of village panchayats. They are to provide
credit, inputs, marketing services and some basic consumer goods. They
function as collective borrowers towards ADBN and as agents of national
trading organizations.
29. Marketing and Transportation. Domestic marketing services in Nepal
are not well developed, due to the lack of roads, telecommunications systems,
and warehouses. Since the late 1960s, several public sector organizationshave been established for marketing major farm products. These include the
Nepal Food Corporation (NFC), Rice Export Companies (RECs), National Trading
Ltd., and Jute Development and Trade Corporation. Officially, export of rice
was exclusively the responsibility of RECs, which are joint ventures with the
private sector traditionally involved in rice trading. In practice, however,
since the Indian border is open, extensive free trading occurs, for which no
reliable data are available. The Government has recently liberalized export
trading for foodgrains, and plans to place control of public sector domestic
and export trading in NFC and strengthen it so that it may be better able to
promote government foodgrain policies. The Grain Storage Project (Credit
No. 1062-NEP) is assisting the Government in this effort.
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The Irrigation Sub-Sector
30. Water Resources Utilization. Nepal has abundant water resources,including3major rivers with annual average discharges totaling about 150billion m and capable of irrigating 6 to 8 million ha. However, there areonly about 1.3 million ha of land suitable for surface irrigation in thecountry. Exploitable groundwater resources, largely concentrated in the Terai,could provide tubewell irrigation for about 0.4 to 0.6 million ha. Totalirrigation potential is, therefore, less than 2 million ha. Utilization ofwater resources for irrigation is limited by several factors: (i) there arefew reliable sources of perennial surface water for year-round irrigationexcept for the eight major rivers 1/; (ii) these large rivers are costly todevelop, particularly for relatively small command areas typical in theNepalese Terai; (iii) heavy sedimentation in riverbeds creates considerableproblems in construction, operation and maintenance of irrigation systems;and (iv) power supplies to energize tubewells are severely restricted inextent and amount. At present, only about 300,000 ha (about 23% of thepotential surface irrigable area) are provided with some form of irrigation,of which about 150,000 ha are under public schemes.
31. Irrigation Development. Before the launching of Nepal's firstDevelopment Plan in 1957, few substantial irrigation works had been undertakenby the Government. The main reasons were limited financial resources andshortage of trained manpower. Nevertheless, with schemes such as the 11,000ha Chandra Project (1922), farmers' stream diversions, bucket-lift, and othertraditional methods, irrigation had been provided to an area of some 154,000ha, mainly in the Hills. During the First and Second Development Plans (1957-62 and 1962-65 respectively), the Government's irrigation programs were con-centrated on building medium sized systems (15-16,000 ha) in the Terai. Inthe Third Plan (1965-70), however, a program was launched for construction ofminor irrigation projects, mostly in the Terai, to encourage greater farmerparticipation and to expand irrigated areas rapidly. Due to poor investi-gations and construction, many of these projects fell short of expectations,which resuited in discouraging response from farmers. The Government switchedback in the Fourth Plan (1970-75) to a policy of constructing medium-sizedirrigation projects. In keeping with the priority given to quick yieldinginvestments, the emphasis shifted in the Fifth Plan (1975-80) towards thecompletion of ongoing schemes and new investment in projects with shortgestation periods and high returns, including groundwater development forirrigation by tubewells. The target was to bring 146,000 ha under irrigationin addition to the present 300,000 ha. However, it is estimated that by theend of the Fifth Plan, only about 100,000 ha will have been completed. Themain reasons for the shortfall are (i) the shortage of technical personnelfor design, construction, supervision and project management; (ii) chronicshortages in cement and steel; (iii) weak local civil works contractors; and
1/ The Mahakali (Sarda), Karnali, Babai, Rapti, Narayani (Gandak), Bagmati,Kosi and Kankai Rivers.
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(iv) slow procurement due to the country being landlocked and to administra-tive bottlenecks. Bank Group strategy is to assist the Government in resolv-ing these constraints through financial and technical assistance, includingsubstantial training components. Preliminary targets set for the Sixth Plan(1980-85) call for the irrigation of 40% of agricultural land in the Teraiand 12% in the Hills by 1990 (presently 12% in the Terai and much less inthe Hills). The irrigation infrastructure is to be more fully utilized andextension services and associated inputs to irrigated areas to be enhanced(para 13).
32. Bank Group's Participation in Irrigation Development. The BankGroup is presently involved in five ongoing irrigation projects and two ruraldevelopment projects with irrigation components. The Bank has also acted asExecuting Agency for UNDP in the preparation of feasibility studies under theMajor Irrigation (Far West Region) Project. The Birganj Irrigation Project(Narayani Zone) (Cr. 373-NEP, US$6.0 M, 1973), under construction since 1974,was originally designed to improve and upgrade 28,700 ha of its command area.In November 1977, the Government and the Association agreed to reduce thescope of the project and limit the works to 16,000 ha of the command area soas to accommodate a 50% cost overrun during 1974-77. After a slow start dueto procurement and staffing difficulties, project implementation has steadilyimproved. All civil works and equipment contracts have been awarded, andconstruction is about 95% complete. The executing agency, the Narayani ZoneIrrigation Development Board, is operating effectively. Crop yields achievedunder irrigated conditions are promising. Water charges are being levied inareas reached by irrigation, and farmers' acceptance is satisfactory. Theproject is expected to be completed by mid-1981. The Narayani Zone IrrigationDevelopment (Stage II) Project (Cr. 856-NEP, US$14.0 M, 1978) is also proceed-ing satisfactorily. Construction works are ongoing in five of the six irri-gation blocks. The Bhairawa-Lumbini Groundwater Project (Cr. 654-NEP, US$9.0M, 1976), the first full scale tubewell project in Nepal provides for construc-tion of 63 deep wells, detailed development of the 7,500 ha command area andagricultural supporting services. Actual work on the project started in July1977. More than 40 tubewells have been constructed, and drilling is to becompleted by March 1981. All 63 wells are to be provided with pumps andmotors by March 1982. Progress in irrigation works has been slow due toshortage and poor performance of local contractors. However, all civil workscontracts have been awarded and the project is scheduled for completion byJune 1982. The Sunsari-Morang Irrigation and Development Project (Cr. 812-NEP,US$30.0 M, 1978) is designed to restore and improve the existing canal systemthroughout 66,000 ha, involving, inter alia, river training and sediment controlworks. Minor distribution canals to 10 ha groups of farms would be plannedfor 18,000 ha and implemented for 6,400 ha. A contract for the first 850 haof command area development has been awarded and rehabilitation work on themain canal is on-going. An EEC Special Action Credit of about US$4.0 millionequivalent was approved in June 1979 to help finance part of the Government'sshare of the local cost. Investigations for the design of river trainingworks to improve the water supply to the main canal intake have reached acrucial stage. Unfortunately, no technical solution is also economicallyviable. The only available option is regular maintenance to keep the supplychannel open. This would not affect the overall viability of the project.The Mahakali Irrigation Project (Stage 1) (Cr. 1055-NEP, US$16.0 M, 1980)
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provides for the rehabilitation and upgrading of the existing irrigation
system (3,400 ha) on the left bank of the Mahakali River in the Far Western
Region and extending it to 6,600 ha net. The project is also designed to
improve drainage conditions, provide a complete public access road network,
all weather service roads, intensify agricultural extension and research, and
train students in engineering and agriculture through fellowships abroad. A
component in the First Rural Development Project (Cr. 617-NEP, US$8.0 M, 1976)
provides for improvement of small scale Hill irrigation schemes and development
of a high lift scheme on the Batar plateau in Nuwakot District for a total of
approximately 1,900 ha. Construction of the major works for the Batar plateau
(approximately 200 ha) has been completed, and satisfactory progress has been
achieved for the development of the small scale schemes. The Second Rural
Development Project (Cr. 939-NEP, US$11.0 M, 1979) also includes a component
for the improvement of small scale Hill irrigation schemes in the Mahakali
Zone. Implementation of this project is in an early stage.
The Need for Technical Assistance
33. Shortage of technical manpower is a severe constraint on Nepal's
development. This constrains the Government's ability to prepare, implement
and operate projects, and substantial technical assistance is required to
resolve this constraint. In view of the high priority given to irrigation
and the large number of projects being prepared and being implemented the
absorptive capacity constraint is increasingly felt in this sector. Available
staff is very thinly spread over the various regions, divisions, and projects,
and is hardly sufficient to meet present needs. The shortage of engineers
will be a major constraint in implementing the irrigation projects under the
Sixth Five Year Plan. For the Sunsari-Morang Irrigation and Drainage Develop-
ment Project, DIHM was unable to provide the necessary design staff and local
consulting firms were recruited to work together with project staff and
project consultants in order to meet manpower requirements. The use of local
consultants has been successful and is expected to strengthen the development
of local consulting firms. In addition, any completed project would require
about as much staff for operation and maintenance as is now available for
construction. Hence, the number of irrigation engineers in the country has
to be increased drastically if irrigation development is to be accelerated.IDA and other donors include training components in most projects in Nepal.
Under the Mahakali Irrigation Project (Cr. 1055-NEP), about 80 Nepalese
students are to be trained abroad in civil and mechanical engineering andagriculture. In the meantime, local capabilities have to be supplemented by
technical assistance.
PART IV - THE PROJECT
34. In 1976, an IDA mission identified the Babai Irrigation project
to irrigate some 13,500 ha (net) of land on the east bank of the Babai River.A feasibility study, financed by UNDP with the Bank as Executing Agency,
was completed by Tahal Consulting Engineers (Israel) in November 1978. Subse-quently, the Government redefined the project area and additional technical
studies were needed and financed from the Technical Assistance Credit (Cr. No.
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659-NEP). A supplementary report was completed by Tahal in June 1980. Thestudies included the preparation of preliminary engineering designs. A Bankmission visited Nepal in January 1980 to prepare the proposed engineeringproject which would advance project preparation to tendering stage. Negotia-tions were held in Washington, D.C., in December 1980. The Nepalese delegationwas led by Dr. T.N. Pant, Joint Secretary, Ministry of Food and Agriculture.A supplementary data sheet is attached as Annex III.
The Babai Project Area
35. The Babai project area, covering some 20,000 ha gross, is locatedin the Far West Region of Nepal, in the Bardia District of the Bheri zone(Map IBRD 15208). Gularia, the District's headquarters, is located west ofthe Babai River. Since there is no bridge over the Babai river, movementof goods and people to and from the project area is more oriented towardsNepalganj, the Region's headquarters (Map IBRD 15209), from which access tothe project area is only possible in the dry season, as there is also no bridgeover the Man River. Completion of the East-West Highway will improve accessto the project area and link it to the Central Region of Nepal. The Highwaynow ends east of the Man River, while, within the project area, there is onlya network of badly rutted cart tracks.
36. Climatic conditions in the project area are sub-tropical, meanmonthly temperatures range from 14.7 C in January to 30.6 0C in May. Themonsoonal rainfall pattern varies distinctly between the wet season (June-October) and the dry season (November-May). Of the average annual rainfallof 1,335 mm about 90% falls in the wet season. Assured water control isessential for year round crop production to meet shortages in the dry seasonand to drain excess run-off in the wet season.
37. Most of the area is flat and forms a gently inclined plain witha gradient of about 1%. A reconnaissance soil survey and land classifica-tion was undertaken as part of the feasibility study.
38. The source of water supply for the project area is the Babii riverwhich has mean monthly flows ranging from an absolute minimum of 3 m /secin May to a maximum of over 100 m /sec in August. The Babai River flows intoIndia where it discharges into the Karnali River. The Karnali River is oneof the region's major rivers with a substantial dry season flow, compared towhich the dry season flow of the Babai is minimal. Additionally, water flowsin the Babai downstream of the proposed diversion originate mostly fromgroundwater regeneration. India is diverting water from the Karnali at abarrage upstream of its confluence with the Babai. The project would haveno significant effect on the flow of water downstream.
39. Farmers' built intakes and canals irrigate at present about 7,000ha in the project area. In addition, some 2,000 ha are irrigated from smallstreams crossing the area from the foothills. About 4,000 ha of the easternpart of the project area is still under rainfed cultivation. Present crop-ping intensity is 129% (135% in the irrigated areas and 116% in the rainfedareas). Crops grown during the wet season are paddy (70%), maize (19%) and
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vegetables (1%); during the dry season, wheat (14%), pulses (13%), oilseed(11%) and vegetables (1%). The most common cropping sequences are (i) paddy-wheat; (ii) paddy-pulses; and (iii) maize-oilseed. Present yields are low:paddy, 1.9 mt/ha; maize, 1.4 mt/ha; wheat, 1.1 mt/ha; and mustard, 0.6 mt/ha.Improved irrigation and drainage would greatly enhance agricultural production.
The Babai Irrigation Project
40. The Babai irrigation project would provide the necessary irrigation,drainage and road infrastructure for 13,500 ha (net) of land in order to increaseagricultural production and farmers' incomes in the area, and accelerate ruraldevelopment. It is estimated that project works would take approximately fiveyears. Upon completion, annual production of various foodgrains would increaseby some 19,000 tons (from the present 14,000 tons). Of this increase, rice andwheat would contribute over 80%. New cash crops such as cotton and groundnutswould be introduced on a small scale.
41. The major civil works for the Babai project would be (i) a diversionweir on the Babai River upstream of Bargadaha, approximately 240 m long and 4 mhigh; (ii) main canals with a total length of 38 km; (iii) irrigation laterals(150 km) and sub-laterals conveying irrigation water to tertiary units, approx-imately 40-50 ha in size; (iv) tertiary channels within the tertiary unitsproviding irrigation water to farm groups of 7-10 ha; (v) major and tertiarydrains; and (vi) the construction of an interconnected network of all weatherpublic roads and canal service roads.
42. Future access to the project area would be provided by the East-West Highway. A pre-feasibility study for this road between Kohalpur (northof Nepalganj) and Mahend,ranagar in the Far Western Region was completed byNorconsult A. S. in November 1978. The study considered two alternative align-ments for the road section passing through the Babai project area. HMGN hasrecently selected the northern alignment which crosses the Babai river at theproposed diversion weir site, so that a combined weir and bridge would beconstructed. This alignment also follows for some distance the alignmentof the main canal. UNDP is financing a feasibility study, detailed designsand tender documents for the section of the road from the Babai River toMahendranagar. Consultants for this study started field work in November1980. Since close coordination would be required between the design of theroad and the Babai irrigation project, the consulting firm to be recruited forthe Babai project would prepare the detailed designs and tender documents forthe 30 km stretch of the East-West Highway between the Babai and Man Rivers.
43. The project area overlaps the 5,700 ha UNDP-supported Khumber CottonProject. Most of this area is still covered by low value unproductive forestwhich would have to be cleared. HMGN is considering the development of 2,400ha of this area for cotton cultivation on rolling uplands and under rainfedconditions, and settle farm families in the area. These farmers would alsoreceive 2,400 ha of lowlands for paddy cultivation which would receive irriga-tion facilities under the Babai project. Since 1977, UNDP has assisted HMGNwith a pilot scheme in the Khumber area for cotton cultivation and the tech-nical viability of cotton cultivation under rainfed conditions has been
- 14 -
established. However, no progress has yet been made with the establishment ofthe necessary institutions, nor have settlement plans been finalized. In addi-tion, HMGN has not yet decided whether to proceed with the implementation ofthe Khumber project. As the layout for the irrigation and road systems forthe 2,400 ha of lowlands would have to be coordinated with the settlement androad plans for the overall Khumber area, the Government would, not later thanJune 30, 1981 decide on the future of the 2,400 ha of lowlands and whetherthis area should be developed as part of a settlement scheme for the cottonproject, or as part of a settlement scheme for paddy cultivators and wouldnotify the Association of any institutional arrangements made or to be madefor forest clearing and settlement of the Khumber area (Section 4.02(a) ofthe draft Development Credit Agreement (DCA)).
The Proposed Engineering Project
44. The purpose of the project would be to prepare detailed designs andtender documents for the Babai Irrigation Project and for the 30 km stretch ofthe East West Highway. A consulting firm would assist DIHM to undertake thiswork which would involve (i) aerial photography, ground control and topograph-ical maps; (ii) topographical surveys along alignments of irrigation and drain-age channels and roads (including the East West Highway section), and sitesurveys for major structures; (iii) additional geological investigations(particularly at the weir site), surveys for the location of constructionmaterials, infiltration tests, hydrological surveys, laboratory tests and ifnecessary a hydraulic model test for the headworks and the desilting facili-ties; (iv) a semi-detailed soil survey and classification of the soils forirrigation; (v) final design and tender documents for the irrigation projectand the East West Highway section (including bridge over the Man River); and(vi) the prequalification of contractors, the issue of tender documents andevaluation of bids. A detailed socio-economic benchmark survey would also beundertaken to establish a data base for appraisal of the irrigation project,for its design and for assessment of its future benefits. DIHM is short ofengineering equipment and vehicles; the necessary equipment would thereforebe provided under the project. There are no accommodation facilities in theproject area for use by the consultants and DIHM staff during field work.Camps and quarters would therefore be constructed under the project. Theproposed engineering project would be completed over two to three years.
45. The executing agency would be the DIHM. DIHM would appoint a ProjectManager, with qualifications and experience satisfactory to the Association,to be responsible for the implementation of the project (Section 3.02 of thedraft DCA). A roads engineer would be deputed from the Roads Department toDIHM to be responsible for the design of the 30 km section of the East-WestHighway (Section 3.01(b) of the draft DCA). DIHM would recruit a consultingfirm satisfactory to the Association to assist in conducting the surveys andpreparing the detailed designs and tender documents (Section 3.03(a) of thedraft DCA). DIHM has already received proposals from a short list of consul-tants acceptable to the Association. DIHM has the capability to supervise theengineering contract. DIHM would provide suitably qualified and experiencedstaff to work with the consultants (Section 3.01(b) of the draft DCA). Inview of the inadequacy of local facilities and qualified staff, most of thedesign work would be undertaken in the consultants home office and two Nepalese
-15 -
engineers would work with and be trained by the consultants during the designphase. This would speed up preparation and reduce costs. Related costs would
be financed from the credit. Copies of documents prepared by the consultantsfor the project including reports, drafts, plans, designs, specifications,
work schedules and estimates of costs would be furnished to HMGN with a copyto the Association (Section 3.03(c) of the draft DCA). Upon completion of theengineering services DIHM would consult the Association on the recommendationsand conclusions relating to the project (Section 3.03(d) of the draft DCA).
Project Costs, Financing and Disbursements
46. The estimated total cost of the engineering project is US$3.55 mil-lion equivalent, including contingencies and approximately US$50,000 equivalentof taxes and duties. The foreign exchange component would amount to US$2.58
million equivalent or about 75% of total costs. Details of project costs areincluded in the Credit and Project Summary. The main cost item (US$1.3 M) isfor the services of engineering consultants, comprised of approximately 95man-months of professional services in the consultants Head Office and 55 man-months in the field at man-month costs of respectively US$7,500 and US$10,500(including salaries, overheads, overseas allowances and international travel,but excluding reimbursable items required for the assignment). In addition,the following items would be included in the consultancy contract: aerialphotography, geotechnical investigation of the weir site, mapping and modeltesting (US$550,000) and the procurement of field equipment (US$500,000). Asrequired field equipment should be procured as soon as possible in order toavoid delays with the field work, the consultants would, as part of theircontractual obligations, procure the equipment through international shoppingprocedures satisfactory to the Association. Construction of camps and quarters(US$250,000) for the consultants and Nepalese staff and labor would be carriedout through local competitive bidding procedures satisfactory to the Associa-tion, or by force account.
47. UNDP has indicated that it has no funds in its program to financethe proposed engineering project before the beginning of 1982. In order notto delay implementation of the irrigation project, to which the Governmentattaches high priority, the Government has requested IDA financing. In viewof the Government's limited capacity to raise resources (para 17 above), theproposed credit would finance the total project cost net of taxes and duties.Disbursements would be made against: (a) 100% of expenditures for civil works
* carried out by force account and 95% of expenditures for civil works carriedout by contract; (b) 100% of foreign expenditures for imported equipment, 100%of local expenditures (ex-factory) for locally manufactured equipment and 75%of local expenditures for other equipment procured locally; (c) 100% ofsalaries and operating expenses; and (d) 100% of expenditures for consultantsservices. Disbursements for construction of camps and quarters, salaries andwages for Nepalese staff and labor and other local operational cost would bemade against statements of expenditure certified by the Project Manager.Retroactive financing, up to US$300,000, would be undertaken for the construc-tion of camps and quarters, since these facilities have to be completed beforethe consultants can start their field work.
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Reporting and Accounting
48. DIHM would maintain records adequate to record the progress of theengineering credit and to reflect project expenditures (Section 4.01(a) of thedraft DCA). DIHM would set up a special project account for the project andhave this account audited each fiscal year by independent auditors acceptableto the Association. Within nine months of the end of each fiscal year it wouldfurnish its audited financial statements to the Association (Section 4.01(c)of the draft DCA).
Justification and Risks
49. The major benefit of the proposed project would be to enable theGovernment to prepare the Babai Irrigation Project for tendering. Whencompleted the irrigation project would provide farmers with a more reliablesupply of water, reduce dependence on erratic monsoon rainfalls and increasethe incentives for higher input application and adoption of advanced farmingpractices. As a result, cropping intensity and yields would improve consider-ably, and additional employment opportunities would be created for familyworkers on the farm and for landless families. Foodgrain production would beincreased to provide, apart from better nutrition, a surplus for export and/ordistribution to food deficit areas in Nepal. Introduction of new cash cropswould diversify the agricultural spectrum and provide for additional foreignexchange earnings or savings. At full development production of foodgrains isexpected to increase by some 19,000 tons, equivalent to an overall increase of140%. Cash crops, which are of little importance at present would increasefrom a gross value of about NRs 35 million to about NRs 60 million, mostlythrough introduction of new crops (cotton and groundnut). The engineeringproject faces no special risk.
PART V - LEGAL INSTRUMENTS AND AUTHORITY
50. The draft Development Credit Agreement between the Kingdom of Nepaland the Association and the Recommendation of the Committee provided for inArticle V, Section 1(d) of the Articles of Agreement, are being distributedto the Executive Directors separately.
51. Special conditions of the project are listed in Section III ofAnnex III.
52. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association.
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PART VI - RECOMMENDATION
53. I recommend that the Executive Directors approve the proposed credit.
Robert S. McNamaraPresident
AttachmentsDecember 11, 1980
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ANNEX ITABLE 3A
NEPAL - SOCIAL INDICATORS DATA SHEET Page 1 of 5 pages
NEPAL REFERENCE GROUPS (WEIGHTED AVERAGESLAND AREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)/-
TOTAL 140.8 MOST RECENT LOW INCOME MIDDLE INCOMEAQ ICULTURAL 40. 1 1960 A 1910 A ESTIMATE A ASLA & PACIFIC ASIA & PACIFIC
GNP PER CAPITA (US$) 40.0 60.0 120.0 197.9 894.8
ENERGY CONSUMPTION PER CAPITA(UILOGRAMS OF COAL EQUIVALENT) 5.0 15.0 11.0 166.0 842.4
POPULATION AND VITAL .TATISTICSPOPULATION, MID-YEAR (MILLIONS) 9.3 11.4 13.6URBAN POPULATION (PERCENT OF TOTAL) 3.1 3.9 4.8 20.8 39.1
POPULATION PROJECTIONSPOPULATION IF5 YEAR 2000 (MILLIONS) 21.0STATIONARY POPULATION (MIILLIONS) 46.0YEAR STATIONARY POPULATION IS REACHED 2160
POPULATION DENSITYPER SQ. FM. 66.0 81.0 97.0 193.2 376.1PER SQ. EM. AGRICULTURAL LAND 243.0 286.0 339.0 409.6 2350.4
POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 40.3 42.0 42.4 42.0 40.4
ESTIMATED RELATIVE POVERTY INCGCELEVEL (USS PER CAPITA)
URBAN .. ..RURAL .. .. 41.0 .. 182.5
ESTIMATED POPULATION BELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)
URBAN .. .. 55.0 46.2RURAL .. .. 61.0 51.7 33.2
Not availableNot applicable.
NOTES
The group averages for each indicator are population-weighted arithmetic means. Coverage of countriesamong the indicators depends on availability of data and is not uniform.
lb Unless otherwise noted, data for 1960 refer to any year between 1959 and 1961; for 1970. between 1969and 1971; and for Most Recent Estimate, between 1974 and 1978.
Ic Government programs only; Id 1971-73; /c Pcr.onnel in gQver,uwext services onlly; /f Upper s-.ondary(grade 6-10) only; 8 1962.
April. 1980
-20- ANNEX I
Dt?IRTIOMOF SCLALINDIAMRSPage 3 of 5 pagesNoe:Athecnh the at 4- rcofo cecsgtrIly jodged the meet uthorltati-e to rlae,It shud alo he acted that they mY cot beicer
M_all11oocp-bale sa5 ofdthe lI.. of ettodardl rd deftaittocs sod -coPti ose- ty dltt'feret rootrlo to ootleottoe tOe data. The dat re ccoteesoetd t de-orib orders or magnitude, Wto-et trecds, an cha-t-tei. ceticmjor dirfer--e :stees ooria
The,o5setO'o toece for etchtaiarae pcsclattoe-ceet.td Jeoectoi a-ae es-Iodirc hOe exrem oT-es of the toiatotr acd the -oet Ppocated
ocuctoy eeaoarr--o;. SAtO is- of dsta, groo,p ... rs-e or el. ttoto orCptldcpo litpreeai of adloatoe of Access. to water aod Eorta
itdtcao _cahfc a.o thectoo to gov re-oots.
IAJr. AlGA (thoossd l~.k. ) c-c.. to Eoireha sioo-c (es-net of roobto)-too rc c rur.ltrc1-Tatc.lofcete otpistg lad are, sd maccd caters, floatr ofpol7 tnl no o - oa. se- d yecrt dsosle
Aerboitoon - ROt rectt eti-tat of -gtotr.ae sd temperaily peocae f their reepeotle ool- os torret Cipos.. ec icob-deor p -rsetly for -rops, patoces, es-ct coo Aittoho a-des or to the -colleti- sod .oosi tch Or coti-t treatooct. or bor cerete
lIe fsIloo. and cas~~~~~~~~~~~W::te.-oter bry cae-o ptem or to Ceo pot pototec tad -aIi.c
tWO PflCAPfITA 9i~' - lop per capita est-t.mtc acort sahe prce *k Poscaltor7ytio-Ppalodrdo ycrieo roltgpplicEiEiieby rce oenr metod as World MUc Atlas (1976-78 albqaiidfo oidcl aetod at otes I -ylee.2910 197, aid 17fldata. Pcpslattos-o - for R-og feooc-tpl.to dortidd by cotro peacticiog tale
,%:'. r Ct.y ?ttFtcrt- Pro o2A - Anou - oesw-ptlos of oceoot1 eteog acd fesale godoat. oto eota.cre,ai sbtc ost
therml deletroolty) It kiticoyt of coa eqlsetPer capital i96o, sc"id rios I,) di-cide by tort erponr,oar f hoaptoat teds m laIneity ~~~~~~~~~~~~~~~~ptolio acd peioate geea cd scialtod ho-tptal sod -heboilitatin oc-ters.
1I70 se 1976 dot.Koapitaleas estt,ias,ct -racetly ataffed by at LeLAst use phystsc.
PtPUttA'TTGN bin V!fA. zfAT:Z7lCS Utitblish-tts p-oidls peitripally -ootota -on oe tot t-ltodet cora7Tta o aio >-er ilcs As of Joly to 1960, 1970, acd hsapIttao eo icolods -eths tod -eot-a -ct-o tOt pe-onetly staffed
1977 Oats. ~~~~~~~~~~~~~~~~~~~~~by a pftssyctca (boa by a ediva.. asistant, cors, idoife, etc. i offetirtsi Psolaton 'ecet oftota) - ttc of orhbc to total flccsiaticco lA-patteot -oowdatla cod protide alImited oseig of medIcalfailitIe..
differet deficttoo o oroco eeto siy tIect ocaptabblity of data Odtsoocoh totl BeId - totl water of to ot. too ditobhogea froms~i otcitirs 190,1977, sd 1975 dota. topiat ddolddby tIe somi- or beds,
Pcowlti- tot to rear 002 - Correct ppcoistios projeotiocs ar basedcc iXSfl1975 total PopoItato by age med -e cod toclr oortodity swd fertility Aer-ge Site of Htooehold (p--oi co hooc-bold) - tota. ohao sd -orl este.'foeto parastee forsytlt rates cosprioc of thre- oooe.iol ... coisto of a group of toiloi h. shar tiots qoate o,e_I. astoming life -pe-t-no at birthic-tcoisg cihoxott the.ir mo .Iea.. A boade orloger cay oca cot be icoloord to tOe
pee cptta1.00c bevl, ad feesle life topeot-cy stahilicLo a5soscoid for sltalttotoa pcpoes77.5 years. Thr,osete for fertility rate abs har.. eelvl.Aeae oos of icrsecpe ro -~ toa. ora,sdrrl -Aeae o, e
ssssing drolite Ic feetility -voodoo to -om leve coo past of peeso... poe 0000 ic e.ll a-t-, so roa- copt t itel- doellitro,,faiyecoioprform-. 0oihoc-ty is. then assiged ccc of these ' reprti-cty. f.eriittg esolIde -o =-penot tt'vtrs c -- rpied ros
sine oc nteato- of -Maslity cod fertility treede for proJecti-e AIlea, t lcrct preto oio tosci. orb,o cod 0-cot - Coo-picoposes. renticoal ~~~~~~~~~d-ciiIo sol , itth ot in ivis 5ateaa p-rcetago of
Sttai-ocary cocotios - Ia a stationary ppalati.tsheen is cc gro.tt total, ceha, sod rura dacligs respevtiveIly.ative the birth rat is equal to toe death rate, and also the ageat-oto- -ecis coctact. This is cotieced otly aft., fertIlity rates tEOlATIlt
deollce to tie repIav-et l-o1 of oit cot reprodottic rate, cost Adootod -icoltet Ratiossorb gteraluc of cce eobs It.-Itef neatly. 7he statitocary pop.- Prioncoooy total ntesc etl Goose totl, ole cod fosle enrol-
-at "ottis ae titdc hebcso t.trprojected hcaratrrioti-t ctofalus icvpoty Iro -a i quose of re.pootte- procavyof the popolstit istb ya 2000, and the oste of doltose of fertility tocaeppslatloss; cortaly iooIodes -hild-e eded 6-1l fea- boo
rte to , epcrrsee.sdjoated for differec egh f rrs Ocsts -rtrorr t.ea statioct yroo-= oI ic rco.nbd y Te oa hee stattoas posait--lero cdo..tioce.....t. o eoIeI10 pLooet i_oPsc 'oils
.Pu.statto frss t.eoy cot -ttlesi o fesoale - Computed to ---o; roootoF., so. Xt.. - 0.1-yea Pociatioc per aqicre kilomter (100 beotares) of edocoaiioceioee t iet foor fer of approvd pro-sttra!itt-othir;
totasae p-oidee g-cera occaional, or tesottertraiste iteivrtioso. f- orlPer so.ICm.sre:otutlla d -Cmoeaseon foe agrltoato.. land osoald of 1.2 to 17 year of age; -oerespod -c-v -ocr ro e gI.-rIly
Poccolaioc Grr-i sh reeb"t - total - cU_i estb racca Cf total sAd- Plcpll-t rrto-piso, acd -- rodcoy - Cotal stodc-t -soo.od is
Peilto rtchPsr-eor - rin - 1Oic grostt rates ef orhs sycdigIospoooit "o l',5-ooj lod-72 acd 1970-75. Odolt littr--y rate (p-ort) - Lite..atn adolit (atln to ma-d sod oite)a
foods Pieth Rote ocr-or-o so) _- tool Ice births per thousad of aid- ap-rrtag of 'totl adult pop~Iiotto se ityear sooeryea ppoott ,o17, 1970, -i 1977 octa.
Crude Death Rctr (rei ocadl - Ao-ncc death per thooocd of mi-ea COffSftPrTfON
Go-c, flprodcotic Rae-hyr~e ottr of .daoht-r a csI sil hear tetn esta ih 5b sldeabol-cc hearse acd .ilitovyishro rea epo t-_ peiod If sIc W cprtMcoe presec.t age- ehicle..
specific fertil ity rates; oooab flo-yea a--rges -ndig Ia 1960, Rtdto Reci-er (err thoctod ppmcitirt( All types rf re-ivers for rodlo190 Lai bt h7dcca ogeec foohii pee toot-cdof p-ottto o odsoniressdpacily iseiog- Ovrotre ceoal. (thoonsods) - A-..oI c-ahe of re-rieso in cootries and te year-hs abeore tlotraio of rad1io sets -o Ic
aoetoeaof irot-oooooidevices -on doe ,,-ice of cat.ioa fsily effect; dsta for- s year say sot be -opara1l slso- s-t -c-nriesploocio ps-ogrs-s aol`eIrhd ileoi-ng.
coe f hl-icarfg s 1 (5-o44ya the ote itrth-oostr devtce oieprtrcodppcoa coloe oni-ossd TV r-oeIer it _tosi-sto al otried -cr Wis am ag grap and so pear shoe egiotr_ti;.o of Tv sect o it effr-..
FOOD AND _________ of daldoeaoteat 5-pr*rfed cc a perorcol pilicotoocMIRde '--ifo 0 rooooir "otto (110071.120) - lodec of per att deosted peiatily so ocodAr ce-aItot It is coacilered to be 'doily"
anosP prdoroo al od -o'oitfrs. Prodoction. ecIode sI daid i t eersa eatfotttrssefeed and ts onai_dol year has Os C-enditll te rve priemy goods Clr- Ao.c.aI Atts-d-oo or C-rto fa - caned O thecor-be or t toast
(e.g sagroco teseod f soga) ostoib ar edible act Ioct .ta . ..tteit sold dsroc h ea,icasa oaioo. to oic-is sisema cd mebtle(e.g.evffe sodtea "y co i.e). docrrg.tt produvtibo of eahtooo nis
is hase on ostroi treceProd-00r yrtceceIghta.
essegy qoiolco -foct t'dtoplcos o-rt blai it .otey P-e caPita Toto1 Labor Po- (thuosessm) - ttrisysttee P-ros., ta-lding cree- per dcci. Aoaiiable sopplira cveprtse do~~-tecti p-dsrt i, imports tees fo-Ir sod soceplocd hut -ULdiog h-...sl-.. esodests, et - eiii
eaports, and rbh-gee il to-1,h Net-opplit coclde ~ -tal fed, secds, is various -ctries ar so -op-bsi..q_stltlet oeed Ic fcod poo-ssnt, sd losses ir distelbotica. Reqipre- Fe-al (porc-i - PF--le iab- -. brre as pretgof scial labor fosetscee- t-ttr by )A casd oc plyoologicol o-ds fr. tor.al 4crori-tor- oe t 6.-lbo Oire Is formon, orestry, hostig sd
aciiyc0 trao co-toe-isc -ci' oserta1 teiertce td e~tgtt, fiohosg soperetag of talabrorr.-ag ad o torboti-s of-crttot cd tO1cacoc 10 p-rro ro rotyoron)- ao oa.i ilg cnt octoos e-ottr. iag ordcast at _hoocood lecr e'Itriroty, cae do gao at er.rato of "totl Io fMo.-
Per rid St. -or-y of re 'n,o -s e da) - Petalo contest of pee Pstrptt. ce(cecs to-oe,sdrsle-ieiiptosocpt.'tee -tos';Y of tIb" Poe on. ri s,pply of food Ita otie-d ss cot-cy estee ar -op-tds oa,sle o -l oo os spr
aloe -fooirrete ce ll "oo tries rotabIsod hy SIN p-ccde for a -ortage of tota, asi tod lk-tal popoI.l-o of alt coc reaperti-eLyoatnmomalicovr o tOgram o .1tctstcot per day cod . gras af 1900 t0,ad 19175 data. 'Tese ar 11.0' yartkiptoao ratesrfetscstsalsco foee proete, o aitob I gras shudhInitroeo g-e t -utr of the poPLdhtit, cd long tier stro. A fo Letsc
5grm ofaeitl p_t.iet soIn avrge for tne acold, proposed by FAO Fcirt-ni Secetod-- Rlatir -Act rf populaltion tdrO 15 sd 65 cd ove toIa the Third he,ld Frod ory.heL-o force. to age goostoco 15-64 years
No, -crits er tio 0-orrc tr- arite -Ji rut - PootrIl sopply af food NCNSRma
Chlld (ages 1--,1>rc tOy Ostoro hoco - ci deaths e thoassed Pvts fiits eoe1th. is rash and hicnd) - R .. eteed by richestta age,-ot-o I- paro, t otolece Icthis av trop: formastproo- fratrret2 rvd,poet 20) p-rot, sod poorest cO perect
oplag. o_s,tr-e data tooLe~d ter tIre stica.- of houehldst.
Iiy,"Tfl FORGtr TAsR,-F crtM1Ldic Ep,cottcy at birth_ t Ae) -Aer mache of years sf tIre tici-ot. obo11.tlot oes c,eLcl e c-tit[L - orhotr and rural-
rcaaieic at bieto tOot.11.3 ad 1917.dat. Abootote p-orety I.co.- loti httcreIcl oosoiameealafat Otefofty Ofe -ro i. oor.A)-dr,o.I deaths of i.rtfai nder M one ctetlosaiIly adequate diet,pic rase-tat -coe-sc reqotoemea ta cot
yea rofcop-o tt--. lc b,rthe.afroco
saeatrct--s:ioaestetdsrbo aeso unttroctest, E : ioa esci coa f i o" .r ut" - Oris lec s tr 0- terra ee
acid sctisr seth so prLrosther ofP--re.prls o1-atoa.I Esete f-tusior '01 - hooo -- r t y .- er rootJ (' th i -. odo L-dac-otctsena lt f-ontai t~'t etrofet lov-td so rsie tKs rra -t Q. Ferret cf ptpoino ,ot tuoba slo~L rod;a ae -obtetoe
ooes of toss ti-ode- I rura ar... ..... otl a Is,od actchat ste Io,oiO o.r -esce or c,4l tucet-id do ct. _sos toaeo a Pioo tr an -A oist Coaftot
dsrprniepart t f the day ccfin og 0 famiiy' a ester. seeds -ocml analysts n PrQec Coiefparcoct
-21-ANNEX IPa-g-e 4 of 5 pages
ECONOMIC INDTCATORS
CNP PER CAPITA IN 1978: Us$120 a/
GROSS NATIONAL PRODUCT IN 1978 ANNUAL RATE OF GROWTH. 1965-78(X, constant prices)
Money and Quasi Money 2,524 3,223 3,772 4,512 5,249Bank Credit to Public Sector 480 750 966 1,129 1,336Bank Credit to Public Enterprise 567 511 869 1,080 1,156
Bank Credit to Private Sector 716 864 1,072 1,332 1,849
Money and Quasi Money as x of GDP 14.5 18.7 19.3 21.1 ...General Price Index (1973/74 = 100) 115.9 119.0 132.3 136.8 153.0Annual Percentage Changes in:
General Price Index -0.7 2.7 11.2 3.5 12.0 c/Bank Credit to Government 67.8 66.3 28.9 16.9 30.7 d/Bank Credit to Public Enterprises -0.4 -9.9 70.1 24.3 16.9 d/Bank Credit to Private Sector -8.6 20.7 24.1 24.3 35.3 d/
Note: All conversions to US dollars in this table are at the average exchange rate prevailingduring the period cov'nred.
a/ World Development Report 1980.b/ Total labor force; unemployed are allocated to sector of their normal occupation.c/ Estimate.d/ April 1980 vs. April 1979.
.. not available
-22-
ANXFX I
Pvge 5 of 5 pases
TLUPF PAYMENTS AND CAPITAL FLOWS
BAlXNCE OF PATMENTS MERCHAN; St EXPOR-S 197S/79 8/
Fuel and Related MaterialsImports of which: Petroleum 17.6 17.5 16.7 Outstanding 6 Disbursed 55.7Exports of which: Petroleum -- - - Undisbursed 149.1
Outstanding, incl. undisbursed 218.4
RATE OF EXChANGE
From October 1975Through October 1975 through March 20, 1978 Since March 20. 1978US$1.00 - NRs 10.56 US$1.00 - NRs 12.5 US$1.00 - NRs 12.00NR 1.00 - US$ 0.095 NR 1.00 - USS 0.08 NR 1.00 - USS 0.083
a/ Customs basis.h/ Payments basis.c/ Ratio of Debt Service to Exports of Goods and Non-Factor Services.
not applicable
South Asia Programs DepartmentNovember 1980
- 23 - ANNEX II
STATUS OF BANK GROUP OPERATIONS IN NEPAL
A. STATEMENT OF IDA CREDITS (as of October 31, 1980) /a
US$ MillionsAmount (lesscancellations)
Credit Undis-No. Year Borrower Purpose IDA bursed
Three credits fully disbursed 7.1373 1973 Kingdom of Nepal Irrigation 6.0 0.4397 1973 Kingdom of Nepal Telecommunications II 5.5 1.5470 1974 Kingdom of Nepal Water Supply and
Sewerage 11.8 2.8
505 1974 Kingdom of Nepal Settlement 6.0 4.6600 1976 Kingdom of Nepal Kulekhani
Hydroelectric 40.8 16.3617 1976 Kingdom of Nepal Rural Development 8.0 5.6654 1976 Kingdom of Nepal Groundwater 9.0 2.3659 1976 Kingdom of Nepal Technical Assistance 3.0 1.2704 1977 Kingdom of Nepal Second Water Supply
and Sewerage 8.0 6.6705 1977 Kingdom of Nepal Industrial Development
Corporation 4.0 3.4730 1977 Kingdom of Nepal Second Highway 17.0 10.6772 1978 Kingdom of Nepal Technical Education 5.7 5.6799 1978 Kingdom of Nepal Telecommunications III 14.5 14.5812 1978 Kingdom of Nepal Irrigation 30.0 28.0856 1978 Kingdom of Nepal Irrigation 14.0 13.6939 1979 Kingdom of Nepal Second Rural
Development 11.0 11.01008 1980 Kingdom of Nepal Forestry 17.0 17.01055 1980 Kingdom of Nepal Mahakali Irrigation /b 16.0 16.01059 1980 Kingdom of Nepal Third Water Supply /b 27.0 27.01062 1980 Kingdom of Nepal Grain Storage Ic 6.2 6.2
Total Outstanding /d 267.6
Total Undisbursed 194.2
B. STATEMENT OF IFC INVESTMENT (as of October 31, 1980)
Amount of US$ MillionsYear Obligor Type of Business Loan Equity Total
1975 Soaltee Hotel Hotel 2.70 0.43 3.13(Pvt) Ltd.Total commitments now held by IFC 2.27 0.43 2.70
/a No Bank loans have been made to Nepal./b Not yet effective./c Approved on August 26, 1980; not yet signed./d Prior to exchange adjustments, net of cancellations.
ANNEX II-24- Page 2
C. Projects in Execution I/
Credit No. 373 - Birganj Irrigation Project US$6.0 million Credit ofApril 18, 1973; Effective Date: July 9, 1973; ClosingDate: June 30, 1981
The project has nearly been completed. The main remaining item isthe restoration of eight tubewells. Crop yields achieved in irrigated areasare promising. Water charges are now being levied in a limited area, andfarmers' acceptance is satisfactory.
Credit No. 397 - Telecommunications Project II US$5.5 million Credit ofJune 20, 1973; Effective Date: September 11, 1973; ClosingDate: June 30, 1982
Due to organizational problems, lack of continuity in senior manage-ment, and delay in obtaining expert assistance, there have been delays inprocurement and the project is about two years behind schedule. Good progressis now being made with the assistance of experts and consultants provided bythe United Kingdom and a new General Manager has been appointed. The projectis now proceeding satisfactorily and present estimates are for completion bythe end of 1981.
Credit No. 470 - Water Supply and Sewerage Project US$11.8 million Credit ofMay 8, 1974; Effective Date: June 26, 1974; Closing Date:June 30, 1978; Revised Closing Date: July 31, 1981
All major contracts have been let. Project implementation is overtwo years behind the original schedule, primarily due to delays in letting thecontracts. A management team provided by the United Kingdom is assisting theWater Supply and Sewerage Board. Work is now progressing satisfactorily. AnEEC Special Action Credit was approved in July 1979, to cover some of theGovernments share of the local costs of the project. During the negotiationsfor the EEC Special Action Credit, the implementation schedule and datedcovenants were revised, and the closing date amended to July 31, 1981. Allmajor contracts are expected to be completed by December, 1980.
Credit No. 505 - Settlement Project US$6.0 million Credit of August 14, 1974;Effective Date: February 20, 1975; Closing Date: July 15,1982
Project implementation, though still about two years behind schedule,has improved slightly over the last months and 1,550 families have been settled.
1/ These notes are designed to inform the Executive Directors regardingthe projects in execution and, in particular, to report any problemswhich are being encountered and the action being taken. They shouldbe used in this sense on the understanding that they do not purportto present a balanced evaluation of strengths and weaknesses inproject execution.
-25- ANNEX IIPage 3
Forestry clearing remains a bottleneck and technical assistance is beingprovided to speed up the operation. Stress has also been laid on the needfor employment of adequate and experienced staff and better management andplanning of operations. Because of doubts about land use policy, we arediscussing with the Government reduction of project area to be newly settledfrom 17,600 ha to 11,100 ha.
Credit No. 600 - Kulekhani Hydroelectric Project US$40.8 million Credit ofJanuary 9, 1976; Effective Date: May 18, 1976; ClosingDate: December 31, 1982
All civil works contracts have been awarded and construction workstarted in December 1977. The revised estimate of project costs, excludingtaxes and duties, is now US$109 million which is some 60% higher than theestimate of US$68 million at the time of appraisal. The increases in costsare due to a number of factors, principally design changes as a result offurther geological investigations and the risk factors inherent in a majorproject which is remotely located. These are reflected in higher prices andimplementation delays which are adding to costs. In addition, the apprecia-tion of the Japanese yen, in which substantial part of the costs of equipmentand engineering services are being paid, has increased the US dollar cost ofthe project. Cofinanciers are providing additional funds to cover the foreignexchange cost overrun. An IDA supplemental credit of US$14.8 million and anEEC Special Action Credit of US$3.0 million equivalent were approved by theExecutive Directors on May 10, 1979. Progress is satisfactory.
Credit No. 617 - Rural Development Project US$8.0 million Credit ofApril 30, 1976; Effective Date: July 16, 1976;Closing Date: December 31, 1981
Progress continues to be satisfactory, with almost all plannedproject actions being implemented ahead of schedule. Disbursements had beenlagging due to delay of project authority in submitting disbursement applica-tions. Interministerial cooperation is good, and at the district level, soundand practical development plans have been produced which are fully supportedand understood by project farmers. Adequate financing to carry out projectproposals has been made available in the budget by the Government and sitesand plans for most district construction projects have been completed and
r construction started. Training of weavers and issuance of improved loomsunder a credit scheme is proceeding well. Shortage of middle-level staff inthe project area for construction supervision and agricultural extension mayhinder project implementation. However, arrangements have been made for moreefficient deployment of existing staff and for special training of farmersas part-time agricultural assistants. Under the associated Bank-executedUNDP technical assistance project, the assistant to the Project Coordinatorand the Irrigation Advisor have completed their assignments.
ANNEX IIPage 4
Credit No. 654 - Bhairawa - Lumbini Groundwater Project US$9.0 millionCredit of July 9, 1976; Effective Date: November 16, 1976;Closing Date: June 30, 1981
Drilling of tubewells is in progress. Forty-one production wellshave been constructed. Progress of civil works is very slow due to the weak-ness of local contractors. Project implementation is over two years behindschedule. Completion of the 11 kV transmission lines is far behind schedule.Consequently, pumps and motors cannot be installed in the completed tubewells.
Credit No. 659 - Technical Assistance Project US$3.0 million Credit ofSeptember 16, 1976; Effective Date: November 16, 1976;Closing Date: December 31, 1980; Revised Closing Date:June 30, 1982
Studies for a national agricultural extension project, a silica-limebrick factory, an airborne magnetometer survey, cottage industries and thegrain storage project have been completed, while studies are in progress forriver control for the Sunsari-Morang Irrigation Project, an agricultural man-power survey and the upgrading of mechanical workshops for irrigation projects.
Credit No. 704 - Second Water Supply and Sewerage Project US$8.0 millionCredit of May 27, 1977; Effective Date:February 28, 1978; Closing Date: June 30, 1982
Engineering consultants have begun work, and feasibility studies,master plan updating, and final designs have been completed. A tariff spe-cialist has been recruited, and the first contract for water meters has beenawarded. Evaluation of the bids for major contracts is underway. An EECSpecial Action Credit was approved in July 1979 to assist in financing a por-tion of the Government's share of the local cost of the project.
Credit No. 705 - Nepal Industrial Development Corporation Project US$4.0million Credit of May 27, 1977; Effective Date: February 17,1978; Closing Date: December 31, 1981
The UNDP-financed policy advisor completed his assignment and theaccounting and information systems advisor took up his post in February 1980.To date, subprojects for about $1.7 M have been approved by IDA. Progress inimplementation of the credit has deteriorated due to shortages of complementarylocal currency resources. Accordingly disbursement have continued to lag.
Credit No. 730 - Second Highway Project US$17.0 million Credit ofOctober 19, 1977; Effective Date: December 23, 1977;Closing Date: December 31, 1982
Although the project remains about two years behind schedule(disbursements are at about 35% of the appraisal estimate), recent majorimprovements in the Borrower's management give rise to the expectation thatproject performance will improve and that substantial completion may possibly
- 27 -
ANNEX IIPage 5
be achieved by the Closing Date of December 31, 1982. Good progress is beingmade in the construction of the Talsipur feeder road and significant improve-
ment has been achieved in the organization of work on the Thankot-Naubise Road.
Credit No. 772 - Technical Education Project US$5.7 million Credit ofApril 14, 1978; Effective Date: July 11, 1978;Closing Date: September 30, 1983
Good progress towards implementation has been made. Contracts have
been signed for all civil works packages, except external works, for which thebids are being evaluated; however, equipment tendering is behind schedule.
The first batch of fellowship students have completed their programs and asecond batch have started their programs. A team of educational experts,financed by ODA, have begun work in the field and a program of cooperation
with Paisley College of Technology, Scotland, is progressing satisfactorily.
Credit No. 799 - Third Telecommunications Project US$14.5 million Creditof August 22, 1978; Effective Date: February 27, 1979Closing Date: June 30, 1984.
ODA is financing the telex equipment and the satellite earthstation. Project consultants have been appointed. Procurement actions havebeen initiated.
Credit No. 812 - Sunsari-Morang Irrigation and Drainage Development ProjectUS$30.0 million Credit of July 7, 1978; Effective Date:November 30, 1978; Closing Date: June 30, 1984
In July 1980, a landslide in the catchment area caused a major floodin the Kosi river, causing considerable erosion and endangering the Chatra
Main Canal. Emergency flood protection works were carried out. As a resultof this event it was agreed that river training works are not viable. Thesediment control studies are expected to be completed by mid-1981. Rehabili-
tation work on the Chatra Main Canal and procurement of construction equipmentare ongoing. Local consultants are completing designs for the first 13,000ha of the irrigation system and international tenders will be invited to submitbids for construction. An EEC Special Action Credit of about US$4.0 millionequivalent was approved in June 1979 to help finance a portion of the Govern-ment's share of the local cost.
Credit No. 856 - Narayani Zone Irrigation Development - Stage II ProjectUS$14.0 million Credit of November 27, 1978; EffectiveDate: January 8, 1979; Closing Date: December 31, 1983
Project implementation is proceeding steadily, although slower thananticipated. The major constraint is the weakness of local contractors.Construction is now on-going in five of the six irrigation blocks. Procure-ment of construction and O&M equipment is underway.
-28- ANNEX IIPage 6
Credit No. 939 - Second Rural Development Project - Mahakali HillsUS$11.0 million Credit of August 9, 1979; Effective Date:January 15, 1980; Closing Date: February 28, 1985
The Project Coordinator has been appointed, but project activitiesare approximately one year behind schedule. An earthquake hit the projectarea in July 1980. Efforts are being made to accelerate the infrastructurework under the project. This will contribute to reconstruction efforts.
Credit No. 1008 - Community Forestry Development and Training ProjectUS$17.0 million of May 22, 1980; Effective Date:September 19, 1980; Closing Date: June 30, 1986
Credit became effective on September 19, 1980.
Credit No. 1055 - Mahakali Irrigation Project (Stage 1) US$16.0 MillionCredit of September 29, 1980; Effective Date: December 30,1980, Closing Date: December 31, 1985
Credit not yet effective.
Credit No. 1059 - Third Water Supply and Sewerage Project US$27.0 MillionCredit of September 29, 1980; Effective Date: December 30,1980; Closing Date: December 31, 1985
Credit not yet effective.
ANNEX III-29-
NEPAL
BABAI IRRIGATION ENGINEERING PROJECT
SUPPLEMENTARY PROJECT DATA SHEET
Section I: Timetable of Key Events
(a) Time taken by the country to prepare the project
6 months
(b) The agency which has prepared the project
DIHM, with the assistance of the Bank staff.
(c) Date of first presentation to the Bank and dateof the first mission to consider the project
March 1979March 1979
(d) Date of departure of appraisal mission
January 2, 1980
(e) Date of completion of negotiations
December 1980
(f) Planned date of effectiveness
April 1981
Section II: Special Bank Implementation Actions
None
Section III: Special Conditions
(a) appointment of a Project Manager with qualificationssatisfactory to the Association (para 45);
(b) appointment of a road engineer to be responsible forthe design of the 30 km section of the East-WestHighway within the project area (para 45); and
(c) recruitment of a consulting firm acceptable to theAssociation to assist in the detailed designs andtender documents (para 45).
|o~ 83 0 E2 E4° 86 SEPTEMBER tv980
NEPAL
C H I N A BABAI IRRIGATION PROJECTINDIA ,/za -W.-:.vEm-s.- ~~~~~~~~~~~~~~~Project Location
Mountain Region P j Rioers
K Hill Region Develop.enet Region Boundaries
1/7Swo' e ~ A~jJjTJTJ<J1
lDner 'er 0Admin,stratioe Zonal Bound0ries
- RO4~~~~~~~~~~~~~~~~~~~~~0 ~~~~~~Teroi District Boundaries
ATAKt MEiandu Volny \ Internfionai Boundories
PRO _0;. Ongoing P'miects
ISTA GE ,T .:~~Proposed Project
N 5 ~~~,LC H I N
G A N~~<
WI ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~DANG EVELOPENTPOJC
Aise6iea KILOMETERS N D A SUNSARI MORODWANSPR
I ND I A I ~ ELiiP~,H,N
BU R M A ~ 80 PR O JE CT__ _ _ _ _ _ _ _ _ _ * _ _ _ _ _ _ _ _ _ _ _
