Document of The World Bank FOR OFFICIAL USE ONLY Report No. PF3368-BD REPORT AND RECOMMENDATION OF THE PRESIDENT OF THE INTERNATIONAL DEVELOPMENT ASSOCIATION TO THE EXECUTIVEDIRECTORS ON A PROPOSED CREDIT IN AN AMOUNT OF SDR 60.5 MILLION (EQUIVALENT TO US$68. TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR A SECOND DEEP TUBEWELLSPROJECT July 22, 1982 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 a.t.oriz|tion; Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
Document of
The World Bank
FOR OFFICIAL USE ONLY
Report No. PF3368-BD
REPORT AND RECOMMENDATION
OF THE
PRESIDENT OF THE
INTERNATIONAL DEVELOPMENT ASSOCIATION
TO THE
EXECUTIVE DIRECTORS
ON A
PROPOSED CREDIT
IN AN AMOUNT OF SDR 60.5 MILLION (EQUIVALENT TO US$68.
TO THE PEOPLE'S REPUBLIC OF BANGLADESH
FOR A
SECOND DEEP TUBEWELLS PROJECT
July 22, 1982
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank a.t.oriz|tion;
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CURRENCY EQUIVALENTS
The Bangladesh Taka (Tk) is fixed in relation toa basket of reference currencies, with the Pound Sterlingserving as intervention currency. On January 11, 1982,the exchange rate was set at Tk 38.3720 buying andTk 38.4720 selling per Pound Sterling. Depending onexchange rate movements between Sterling and the US dollar,the Taka/Dollar crossrate is subject to change. In recentmonths, this rate has fluctuated between Tk 21-22 per USdollar. Throughout this report the rates shown below havebeen used:
US$1 - Tk 19.5
Tk 1 - US$.0513Tk 1 million - US$51,300
WEIGHTS AND MEASURES
I acre (ac) - 0.405 hectare (ha)1 metric ton (ton) - 26.8 md1 cubic foot per second - 0.0283 cubic meter per second(cusec) (cusec)
PRINCIPAL ABBREVIATIONS AND ACRONYMS USED
ADAB - Australian Development Assistance BureauBADC - Bangladesh Agricultural Development CorporationBB - Bangladesh Bank
DTW - Deep TubewellFAO/CP - Food and Agriculture Organization/Cooperative ProgramGOB - Government of BangladeshICB - International Competitive BiddingIMP - Irrigation Management ProgramIRDP - Integrated Rural Development ProgramKSS - Krishi Samabaya Samity (Village Cooperative Society)LCB - Local Competitive BiddingLLP - Low Lift PumpMTFPP - Medium Term Food Production PlanODA - Overseas Development AdministrationPP - Project Proforma
SB - Sonali BankSTW - Shallow Tubewell
TCCA - Thana Central Cooperative Association
FISCAL YEAR
July 1 to June 30
BANGLADESH FOR OFFICIAL USE ONLYSECOND DEEP TUBEWELLS PROJECT
CREDIT AND PROJECT SUMMARY
Borrower: People's Republic of Bangladesh.
Beneficiaries: Integrated Rural Development Program (IRDP) rnoperativeSystem
Amount: SDR 60.5 million (US$68.0 million equivalent).
Terms: Standard.
Relending Government of Bangladesh (GOB) would onlend US$22.9 millionTerms: through the Thana Central Cooperative Association/Krishi
Samabaya Samity (TCCA/KSS) to cover part of the installationcosts of deep tubewells (DTW).GOB to Bangladesh Bank (BB): Annual interest rate of 3% forBB refinancing of Sonali Bank (SB); repayment period of upto 12 years inclusive of up to 2 years grace; refinancingup to 100%; BB to bear foreign exchange risk.BB to SB: Annual interest rate to be not less than 4% foronlending through TCCA/KSS; installment repayment to coincideapproximately with agreed collections from ultimate borrowersand refinancing up to 90% of individual loans.SB to TCCA: Annual interest rate to be not less than 6.5%;installment repayment to coincide approximately with agreedcollections from ultimate borrowers; and refinancing up to100% of individual loans.TCCA to KSS: Annual interest rate to be not less than 10-1/2%;installment repayment to coincide approximately with agreedcollections from ultimate borrowers; and refinancing up to100% of individual loans.KSS to Ultimate Borrowers: Annual interest rate to be notless than 14%; borrowers' contribution 10% plus obligatorypurchase of KSS shares; repayment periods to be based on theultimate borrowers' repayment capacity, but not to exceednine years inclusive of grace period of up to one year.
Project The proposed project would seek to increase foodgrain pro-. Description: duction through increasing the area under irrigation and
strengthening the TCCA/KSS cooperative system. The projectincludes: (a) procurement and installation of 4,000 two-cusecDTW; (b) procurement of 25 rotary drilling rigs and aux4liaryequipment; (c) provision to Bangladesh Agricultural Develop-ment Corporation (BADC) of additional staff, thana officefacilities, vehicles, and monitoring and testing equipment;(d) technical assistance for BADC, staff training and studies,monitoring and evaluation; (e) provision to IRDP of technicalassistance, additional staff, thana facilities, housing,vehicles, and staff training; (f) provision of medium term
This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without World Bank authorization.
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credit to cover part of the installation costs of UTW; and(g) provision of diesel fuel for IDA financed minor irrigationfacilities.
Risks: The project faces no major risks. A possible risk would bethe under-utilization of tubewells but the expansion of theIrrigation Management Program (IMP) is expected to reducethis risk. Another possible risk would be insufficientdemand in the project area. The project provides for amid-term review of demand and for possible expansion of theproject area.
EstimatedCosts: Local Forin Total
…US$ million -
Procurement of DTW 2.82 44.66 47.48Installation of DTW 29.07 9.64 38.71Drilling Rigs & AnxilliaryEquipment 1.90 7.58 9.48
BADC Capital & IncrementalOperating Costs 1.18 0.46 1.64
IRDP Capital & IncrementalOperating Costs 2.62 1.28 3.90
Appraisal Bangladesh: Deep Tubewells Project II,Report: Report No. 3835-BD, dated June 30, 1983.
I
INTERNATIONAL DEVELOPMENT ASSOCIATION
REPORT AND RECOMMENDATION OF THE PRESIDENT
TO THE EXECUTIVE DIRECTORS ON A PROPOSED CREDITIN AN AMOUNT OF SDR 60.5 MILLION (EQUIVALENT TO US$68.0 MILLION)
TO THE PEOPLE'S REPUBLIC OF BANGLADESH FOR ASECOND DEEP TUBEWELLS PROJECT
1. I submit the following report and recommendation for a proposeddevelopment credit to the People's Republic of Bangladesh for SDR 60.5 mil-lion (the equivalent of US$68.0 million), on standard IDA terms to helpfinance a Second Deep Tubewells Project; SDR 20.4 million (the equivalent ofUS$22.9 million) would be onlent to IRDP for medium term credit to cover partof the installation costs of the DTW. Parallel co-financing will be providedby the Australian Development Assistance Bureau (ADAB; A$9.0 million [US$9.0million equivalent]) and the Overseas Development Administration (ODA; L17.35million [US$31.1 million equivalent]). The contribution of bothco-financiers will be provided to the Government of Bangladesh in the form ofgrants.
PART I - THE ECONOMY 1/
Introduction
2. An economic report entitled "Bangladesh: Recent Economic Develop-ments and Selected Development Issues," (Report No. 3768-BD, dated March 3,1982) has been distributed to the Executive Directors.
3. The first years of independence were difficult for Bangladesh. Itseconomy was disrupted and its infrastructure severely damaged by the strugglefor independence. The country was afflicted by poor harvests and devastatingfloods in the early 1970s. Agriculture and manufacturing production felldrastically and only recovered to pre-independence levels in the mid 1970s.Inflation, declining real wages, rapid population growth, labor unrest andpolitical instability added to the difficulties. In these early years,Bangladesh's policy makers were by necessity largely preoccupied with mattersof relief and rehabilitation and the need to shape a national government outof a provincial administration. The First Five-Year Plan (FY74-78) had to bescrapped and replaced by a scaled-down and refocussed three-year "HardcoreProgramme" (FY76-78) in response to the enormity of the country's difficul-ties.
4. Economic progress and increased political stability in the secondhalf of the past decade provided planners the opportunity to turn their
1/ Parts I and II of this report are substantially the same as Parts I andII of the President's Report for the Rural Electrification Project(Repott No. P-3337-BD), dated May 26, 1982.
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rose by about 6.3% annually between FY75 and FY80, most of this growth takingplace outside the jute industry. Although shortfalls in domestic foodgrainsupplies and increases in international petroleum prices led to a deteriora-tion in the balance of payments in FY80, the concluding years of the decadewitnessed a number of encouraging developments and positive policy measuresto attain longer-term development goals. These included a strengthening ofbudgetary policies, improvements in agricultural and food distributionpolicies and steps to promote a more active role by the private sector indeveloping the economy.
Recent Economic Developments
5. The economic consolidation during the second half of the past decadewas followed by continued improvements in production in FY81. Favorableweather and stepped-up provision of agricultural inputs helped to increaserice production by 9% to a record level of 13.7 million tons and wheatproduction by 33% to 1.1 million tons. As output in industrial and servicessectors also increased substantially over their FY80 levels, GDP at marketprices increased by about 7% in real terms. Notwithstanding these improve-ments in production, Bangladesh experienced growing financial difficultiesduring FY81. Sharply higher petroleum prices, declining export prices forjute goods and a shortfall in commodity aid availabilities below the Govern-ment's expectations affected the balance of payments. The shortfall in aidreceipts, an unanticipated shortfall in debt service payments from publicenterprises, and substantial expenditures on food procurements which werenecessary in order to maintain farmgate prices in a record crop year alsoaffected the budget; and a budget deficit of Tk 5 billion, equivalent toabout 2 1/2% of GNP at market prices, emerged in FY81. As a result, creditceilings for June 1981 established in the context of the EFF arrangement withthe IMF were exceeded by a substantial margin and the EFF arrangement wassuspended.
The Balance of Payments
6. Bangladesh's balance of payments is characterized by a massive struc-tural trade deficit and heavy dependence on foreign aid; export earnings arecurrently less than 30% of the import bill. A sharp decline in export pricesof raw jute and jute goods (which account for two-thirds of total exportearnings) and of major non-traditional exports, notably leather and fishproducts, led to a 2% decline in export earnings in FY81, although the volumeof exports increased by 10%. Imports, on the other hand, increased by 6% invalue terms as a result of increased prices of crude petroleum and petroleumproducts and of other imports. Bangladesh's terms of trade deteriorated by22% in FY81 mainly as a result of higher import prices and the sharp declinein export prices noted earlier.
7. The current accounc deficit--US$1.43 billion in FY81--has been con-siderably smaller than the trade deficit, due mainly to the rapid growth ofworkers' rerittances from the Middle East; these receipts are now the secondmost import4.1t source of foreign exchange earnings. The payments gap waslargely covered by aid disbursements estimated at US$1.15 billion, close tohalf of merchandise imports. Although project aid disbursements increasedsubstantially, reflecting in part the country's growing absorptive capacityas well as a build up in the project pipeline, there was, as noted earlier, acrucial shortfall in commodity aid availabilities and new commitments.Bangladesh also made considerable use of IMF resources, including initialdrawings on a SDR 800 million EFF arrangement which became effective inDecember 1980 and which was subsequently suspended.
8. The balance of payments outlook for FY82 remains difficult. Exportearnings are expected to decline sharply, due to depressed prices for jute,and terms of trade to decline further by 15%. Aid inflows are expected to beonly about 5% more in nominal terms than in FY81. Given the tight foreignexchange position, imports will have to be reduced below FY81 levels in realterms with consequent detrimental effects on production, especially in themanufacturing sector. Gross reserves may have to be rundown by about US$100million by the end of FY82 to around US$150 million, the equivalent of threeweeks imports; and in addition, net short-term borrowing of about US$170million have been increased to bridge the external financing gap for FY82.
9. Debt service payments on medium and long-term debt totalled US$94million in FY80 and US$92 million in FY81. Bangladesh's debt service ratio,about 12.9% in FY80 following some debt relief measures undertaken by variousdonors, remained at this level in FY81. The debt service ratio might exceed20% by the mid-1980s, unless careful debt management policies are nursued andaid is provided on concessional terms. Bangladesh's total outstanding anddisbursed external public debt amounted to just under US$3.6 billion as ofJune 30, 1981 with IDA credits and the single IBRD loan accounting for 30% ofthe total. In FY81, the Bank Group accounted for 3% of the Bangladesh'stotal debt service payments; because assistance is now entirely in the formof IDA credits, debt service to the Bank Group will rise slowly.
Public Finance
10. Government finances have deteriorated over the past two years. InFY81 partly as a result of expenditures for investments in foodgrain stocks,and lower than expected budgetary contributions by the major public sectorcorporations, resource availability for development expenditures wereseverely constrained. Faced with these difficulties, although the Governmentcut back the development budget by about 13%, the deficit for FY81 substan-tially exceeded revised forecasts (see above). The budgetary situation hasremained tight in FY82 as the severe balance of payments situation has had asubstantial impact on tax revenues. The tax/GDP ratio has fallen from 90% in
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.Y8I to 8.47 in FY82 Tn order< to .nwX#-.tain the buudget deficit to Waldgeableproportions, the Governmnett reduced thre developmetit budge-t by 10% below thebudgeted level. ti the 7Y93 budget the Govenmentrecently litroduced asubstantial package of new tax meastit'u.6s amoutiting to 0.5% of GDP. Neverthe-less the impact of the import constrairt on the Government budgetary positionwill cottnue into FY83> and the levelc of development expenditures for FY83has had to be restrained at the same nomisinal level a in FY821e
13. The Governnent has shown a growing awareness of the need to improvethe financial performance of the public sector enterprises and utilities andto reduce major subsidies. In recent years, GOB has ralsed foodgrain rationprices and a number of utility rates and commodity sales prices of publicsector enterprises. In sotne cases, these price adjustments only kept pacewith inflat ion, but in others--notably fertilizer and foodgrains--they servedto reduice the unit sibsidy in real termns. Petroleum product prices have beenraised by roughiv 200% since November 1979.
12. Foodgrain prices remained stable during FY81, but the cost of otheressentials conti nued to increase and pushed the general cost-of-living indexup by about 9% for FY81 as a whole. Measured by the implicit GDP deflator,aggregate inflation-which had spurlted from a rate of 6.57 in FY79 to 14.9%in FY80--declined substantially in FY8I to only about 6%. However, as aresult of the rapid credit expansion during FY81 and of the disappointingfoodgrain crops during the first hal f of iY82, inflation again acceleratedsharply to an estimated annual rate of about 18% during the first eightmonths of the year0 The imposition of tight credit controls early in FY82,improved foodgrain availability from sales of public stocks and from newcrops and the overall downturn in economic activity and in consumer incomesand demand then combined to arrest the rise in prices diring the final monthsof FY82. The outlook for FY83 is still somewhat uncertain. Foodgrain pricesare expected to remain relatively stable, but higher import prices and sub-stantial upward adjustments in the prices of commodities and services sup-pl'ed by public sector agencies will exert upward pressure on the generalprice level in the economy in FY83. Overall inflation during FY83 isexpected to be on the order of i2-15%3 with prices of imported and industrialgoods rising significaitly faster than those of agricultural products.
Development Planning and Policy Issues
13. The Second Five-Year Plan (issued in draft form in May 1980) accordshigh priority to four major goals: (i) achievement of self-sufficiency infoodgrains by FY85, with domestic foodgrain production targeted to increaseto 20 million tons by FY85; (ii) reduction of the population growth rate witha view to bringing down the net reproduction rate to unity by 1990; (iii)progress towards mass literacy through free universal primary education; and(iv) priority -Co energy development, particularly through acceleratedexploitation of know n reserves of natural gas.
14. The potential for increasing foodgrain output in Bangladesh is con-siderable. Surface and groundwater resources permit a substantial expansionof irrigation, which in turn would permit increased fertilizer use and shiftsto high yielding varieties of rice. The Government has formulated, withassistance from IDA, a Medium-Term Foodgrain Production Plan (MTFPP) whichprovides an investment portfolio geared towards the attainment of the SFYPtarget of 20 million tons of foodgrains. While this target is feasible, itsachievement will depend considerably on the allocation of sufficient resour-ces to provide needed inputs to farmers and to permit the private sector toplay an expanded role in the provision and servicing of modern agriculturalimplements and inputs. Other necessary requirements are adequate levels offoreign aid to finance imported inputs, improved extension services andtraining, and appropriate producer incentives.
15. Achievement of the second objective, reduction of the populationgrowth rate, will require more determined efforts than have been made thusfar, especially with regard to birth control efforts which have generallysuffered from poor implementation and have had only limited success.Recently, however, birth control activities within the Government have beencoordinated, while training programs for field staff have been revised andare now, for the first time, considered adequate. GOB is now preparing, withbank assistance, a medium-term implementation plan for the population sector.
16. The third major objective of the SFYP is the attainment of generalliteracy. The planners recognize that it will take longer than five years,but they have set themselves the ambitious target of introducing universalprimary education and enrolling 90% of all children of primary-school age by1985. This program is to be supplemented by a national non-formal masseducation scheme for those already past primary school age. IDA is assistingGOB in preparing a medium-term plan for the education sector.
17. A Plan aimed at effecting significant departures from past trendswill place severe strains on financial resources and managerial skills. Amajor challenge which the Government is now facing is to translate the objec-tives of the SFYP into an operational implementation program on an annualbasis. The Government is now revising the draft SFYP, but more work andconsiderable discipline will be needed in identifying core programs andprojects and protecting them to the extent possible in a situation ofresource scarcity. A critical factor will also be the extent to whichproject implementation capabilities are improved. Although immediateimprovements can be made, it is unlikely that the efforts of public agenciesalone would be adequate to achieve the targeted breakthrough. The Governmentrecognizes that in certain key areas greater reliance will have to be placedon the private sector. It also believes that, to a certain extent,activities such as education and rural development should be carried out in a
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decentralized fashion, with greater emphasis on local initiative andgrass-roots participation. 1/
18. Over the past few years, a series of studies undertaken by IDA, GOBand other organizations have concluded that existing trade and industrialpolicies have distortionary effects on resource allocations within theindustrial sector. The Government is now preparing a program for trade andindustrial policy reform which is expected to lead to a medium-term programof actions to be pursued across a broad front, including modifications in thetariff structure, the pattern of domestic indirect taxation, investmentincentives, export policies and the mechanism for industrial promotion andplanning.
PART II - BANK GROUP OPERATIONS IN BANGLADESH
19. Bangladesh became a member of the Bank and IDA in 1972. Initially,Bank Group operations in Bangladesh concentrated on the reactivation ofeleven credits, amounting to US$147.11 million, made originally to Pakistanbefore 1971; in addition, a consolidation loan of US$54.90 million and creditof US$31.04 million to cover liabilities arising from projects located inBangladesh and completed prior to independence was approved in 1974. As ofMarch 31, 1982, 58 new credits have been approved, totalling US$1,804.67million; of these, US$765 million have been for import credits (ten importsprogram credits and two fertilizer imports credits). Annex II contains asummary statement of IDA credits and disbursements as of March 31, 1982, andnotes on the execution of ongoing projects. On June 18, 1976, Bangladeshbecame a member of the IFC, and three investments (for a shipbuilding com-pany, an investment promotion company and a leather factory) have beenapproved.
20. The focus of IDA assistance in recent years has been on agriculture(19 of the 46 new projects approved as of March 31, 1982, and two fertilizerimports credits). This is consistent with the country's needs and theGovernment's priorities. Particular emphasis continues to be placed onprojects that provide agricultural inputs, including fertilizer, fertilizertransport, irrigation, improved seeds, extension, and credit and storagefacilities. In addition to agricultural projects, emphasis is also beingplaced upon complementary infrastructural projects in sectors whichfacilitate agricultural development or which reduce bottlenecks constrainiingthe economy's overall performance. In the power sector, for example, IDA is
1/ A review of the (draft) Second Five-Year Plan is contained in the Bank's1981 economic report, No. 3309-BD, dated February 23, 1981.
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assisting in rural electrification and elimination of shortages of generationcapacity and distribution facilities which have been a major impediment toutilization of existing industrial capacity.
21. Industry has been the main beneficiary of the ten imports programcredits approved to date. Given the need for substantial net transfers ofresources and the persistent structural imbalance and weakness of theeconomy, program lending will continue to be an important component of IDAoperations in Bangladesh. The industrial sector has also benefited from twofertilizer production projects, a jute industry rehabilitation project,several DFC and small-scale industry projects and three IFC loans.
22. The enormity of Bangladesh's population program makes this anextremely high priority sector as well, limited only by its absorptivecapacity. IDA has made two credits available in support of GOB's populationprogram, which is now making some progress. Improved education andavailability of trained manpower are also crucial, and lending in this fieldhas emphasized agricultural, technical and vocational training, and primaryeducation. In addition, the proposed project would help improve thecountry's business management capability.
23. Disbursement of the imports program credits has proceeded satisfac-torily. Project disbursements have lagged behind expectations, owing largelyto delays in the release of local funds, approval of contracts, employment ofconsultants, and appointment of staff. Underlying these delays were seriousconstraints that included a shortage of qualified staff, overcentralizedbureaucratic procedures and organizational deficiencies. IDA and GOB havegiven increased attention to regular monitoring and supervision in order toidentify and resolve potential problems. IDA is providing assistance bothunder specific projects and under technical assistance credits to improveplanning, project preparation and implementation capabilities.
24. In view of Bangladesh's difficult foreign exchange position andsavings/investment gap, IDA credits should continue to cover all foreignexchange cost and a portion of local currency expenditures also in certainpriority areas such as energy, education, agriculture and rural development,including small-scale and cottage industries.
25. Economic and sector work continues to provide the basis for adialogue between the Bank Group and the Government on economic policy anddevelopment strategy. It is also designed to enhance the coordination ofexternal assistance within the framework of the Bangladesh Aid Group. Recentactivities have concentrated on food policy, irrigation strategy, energydevelopment, industrial investment strategy, and increased domestic resourcemobilization and have been undertaken in the context of the recent detailedreview of the Government's Second Five-Year Plan.
PART III - THE AGRICULTURAL SECTOR
26. Agriculture dominates the Bangladesh economy, accounting for 55% of
GDP, 70% of employment and, directly or indirectly, over 80% of the country'sexports. About 74% of the agricultural GDP (in FY81) is derived from cropsand the rest from forestry (6%), fisheries (8%) and livestock (12%).Bangladesh has about 22.5 M ac under cultivation at a cropping intensityaveraging 140% in recent years. Rice, by far the most important crop,accounts for about 78% of the cropped area; jute, the principal export, for6%; and a variety of other crops such as wheat, pulses, oilseeds, sugarcaneand vegetables for the remainder. Agricultural productivity in Bangladesh isamong the lowest in the world; paddy yields average only about 0.5 tons perac.
27. There is high potential for increasing agricultural production inBangladesh because of fertile soils and abundant and as yet hardly exploitedgroundwater resources. However, there are also serious constraints toagricultural development such as the heavy pressure of population on land,scarcity of cultivable land, limited potential of part of the cultivatedland, climatic hazards, lack of irrigation facilities, and deficient tran-sportation for moving farm inputs and produce. Given the constraintsinhibiting a more rapid growth of the agricultural sector, any effectivepolicy to raise significantly the level of production and assure long-termgrowth must provide for a more timely and adequate supply of modern farminputs and an effective input/output pricing policy to provide suitableincentives to farmers. The Government recognizes the need for such policymeasures and, with the assistance of the Bank Group and other external aidagencies, is taking steps to implement them. Fertilizer distribution hasbeen partly turned over to the private sector at the wholesale levelthroughout the country with BADC operating out of about 90 distributionpoints; the wholesale and retail distribution of pesticides is now beinghandled entirely by the private sector; and pump repair and maintenanceservices have been opened up to the private sector. In addition, the Govern-ment has taken a number of other significant steps to improve the overallefficiency of the agricultural sector. Over the past two years subsidies onfertilizers, irrigation equipment and diesel fuel have been reduced through aseries of price/rental charge increases, thereby freeing scarce resources forother priority investments. A start has been made in selling irrigationequipment to private owners rather than renting them out at heavily sub-sidized rates; the procurement prices for paddy, rice and wheat have beenincreased to levels close to international prices for comparable grades ofgrain; and the number of grain purchasing centers has been increased substan-tially in an effort to ensure that farmers obtain prevailing incentive pricesfor their crops at harvest time.
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Minor Irrigation
28. Since increased production must come essentially from land alreadyunder cultivation, the provision of irrigation facilities will be the prin-cipal means of increasing land use intensity, particularly d-ring the dryseason (November to March). Earlier government policies had emphasized thedevelopment of large-scale gravity irrigation and flood control projects.However, by the early 1960s, there was a change in emphasis with prioritybeing given to greater reliance on the use of low lift pumps (LLP) andtubewells. Tubewells to exploit groundwater offer the best prospect forquick-yielding high return expansion of irrigated areas where surface wateris not available. Three kinds of tubewells are used in Bangladesh--deeptubewells (DTW-typically using 20 hp diesel engines, yielding about twocusecs with a command area of about 80 acres), shallow tubewells(STW-typically equipped with 5 to 6 hp diesel engines yieldings less thanone cusec with a command area of about 15 acres), and hand tubewells(HTW-capable of irrigating about 1/2 ac).
29. DTW are expected to play a major role in the GOB's groundwaterdevelopment program. Although DTW are the most expensive of the tubewellsused in Bangladesh and have posed other problems in terms of installation,group management and under-utilization, there are certain areas where theyare required because of aquifer conditions. About 13,000 DTW have alreadybeen installed. Under the MTFPP, GOB plans to install 18,000 additional DTWby 1985 and has either secured or is negotiating financing for about 13,000DTW. The proposed project would be an integral part of GOB's efforts topromote the minor irrigation sector.
3o. Responsibility for the procurement and distribution of all minorirrigation equipment, including servicing, has been handled by the publicsector. The Bangladesh Agricultural Development Corporation (BADC) in par-ticular has successfully introduced minor irrigation services in Bangladesh,but the volume of activities has now become too large for this agency tohandle effectively. Moreover, it has become increasingly evident that publicownership of equipment and seasonal rental to farmers is unsatisfactory: thefinancial burden on the Government, with subsidies on some types of equipmentranging to over 90% of the cost in recent years, has become exorbitant due tothe rapid growth in the size of these rental programs. In recognition of theneed for greater involvement of the private sector in the financing, owner-ship and management of minor irrigation facilities, GOB has turned increas-ingly toward equipment sales. At the same time there has been evidence ofgrowing private sector interest in supplying irrigation equipment and relatedservices. Under the Imports Program Credit X (Cr. 1194-BD), the Governmenthas agreed that existing rental programs for DTW and LLP be run down asrapidly as possible, with used equipment to be sold at prices discounted toreflect age and type. In addition, all new minor irrigation equipment
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procured by BADC after June 30, 1981, would be sold--unless such sales con-travene the provisions of specially concluded foreign economic assistanceagreements. Over 90% of the rented DTW in Bangladesh are handled by BADC.The rental rate has increased from Tk 1,800 to Tk 3,400 in July, 1982 andduring the period in which the rental program is being phased out, BADC wouldfurther increase annual rental rates per unit to the following levels: (a)by July 1, 1983, to Tk 5,000; (b) by July 1, 1984, to Tk 7,500; and (c) byJuly 1, 1985, to Tk 10,000 (Section 3.13(c) of the draft Credit Agreement).These increases would be further adjusted to take account of future priceinflation. Moreover, BADC would raise collection rates for DTW rentals fromits present low level of between 30% and 40% to the following levels: (a)for FY83, at least 60% and (b) at least 75% for FY84 and thereafter (Section3.13(d) of the draft Credit Agreement). The Government would make availablemedium term credit to farmers or groups of farmers who are presently rentingDTW from BADC for the purchase of DTW (Section 3.14(b) of the draft CreditAgreement).
31. Water Resources Management. As water resource development inBangladesh is still at an early stage it will be many years before regionalhydrological constraints are approached. However, to minimize futureproblems it is imperative for GOB to start preparing suitable legislation foran orderly development of the country's surface and groundwater resources assoon as possible. In the IDA assisted Shallow Tubewells Project (Cr. 724-BD,July 1, 1977), the government had agreed to appoint an inter-ministerialcommittee to review this issue and the committee was to have submittedproposals for IDA review by December 31, 1979. Because of coordinationdifficulties, this committee was never established. A task force on waterresources management has now been set up to study the need for regulation,the type of regulation which would be appropriate for Bangladesh and proce-dures for implementing it. The Government would prepare and furnish to theAssociation for review and comment not later than December 31, 1983 proposalsfor the regulation of surface and groundwater development (Section 3.11 ofthe draft Credit Agreement).
32. Irrigation Management Program (IMP). Minor irrigation equipment iscurrently irrigating an average of 20-25 acres per installed cusec, conserva-tively the potential is at least 50 percent greater. The main reasons forthe sub-optimal utilization of equipment are: unreliability of equipment,technical deficiencies in water distribution and in cropping patterns, andpoor organization and management of user groups. To remedy this problem, IMPwas introduced in the IDA assisted Rural Development Project (Credit 1631-BD)in 1979-80. BADC, IRDP and Department of Agriculture Extension officers atthe district and thana levels are jointly responsible for implementing theprogram which aims at working with the KSS to increase the command area perunit of irrigation equipment and thus reduce irrigation unit costs. The IMPincludes a) training of key KSS and other village-level officials; b)preparation of land maps and land registration; c) implementation of a block
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water rotation system; d) preparation of an irrigation budget; and e) collec-tion of water charges. The program has been very successful. During 1979/80a pilot program which included 20 DTW, increased the area irrigated per DTWon an average from 52 to 94 acres. Similar success was achieved when the IMPwas gradua-y expanded in 1980/81 and 1981/82. Because of such promisingresults, GOB has decided to replicate IMP on a nationwide basis and haspublished a comprehensive manual in Bengali for implementing IMP. Theproposed project area would receive priority for implementing this program.Since training of district and thana level staff of all the concerned agen-cies is the most important aspect of IMP, the project would provide funds andfacilities for this training. The Government would undertake to implementthe IMP in the project area in accordance with the implementation schedulefor the sale and installation of DTW under the project (Section 3.12 of thedraft Credit Agreement). The expanded IMP would include criteria for siteselection and procedures for loan applications.
The Bangladesh Agricultural Development Corporation (BADC)
33. BADC was established in 1961, as a semi-autonomous agency under theMinistry of Agriculture and has become one of the largest organizations inBangladesh with a staff of about 26,000. In addition to minor irrigationequipment, it procures and supplies fertilizer and seed. The IrrigationWing, which comprises more than 50% of BADC's total staff, is organized bytype of irrigation equipment which has resulted in duplication of effort andpoor coordination. Under the IDA assisted STW Project (Cr. 724-BD) theIrrigation Wing in the North West Region was to have been restructured.However, this restructuring has not been implemented. Restructuring wouldrequire considerable time to carry out since major organizational changesaffecting about 15,000 people would be necessary. The key elements of theproposed restructuring are: (a) formation of an installation division respon-sible for all operational fieldwork which would eliminate duplicaion ofeffort and provide needed operational flexibility; and (b) establishment ofseparate supply and maintenance divisions which would allow BADC managementto focus greater attention on these critical but neglected areas. BADC hasnow agreed to restructure its Irrigation Wing on a national level and inorder to prepare and carry out the proposed changes, it has established a
Management Development Unit. Assurances were obtained that BADC would (a)maintain and operate the Management Development Unit; (b) prepare through
this Unit and furnish to the Association by September 30, 1983 for review.proposals for reorganizing BADC's Irrigation Wing and (c) by September 30,1984, complete implementation of these proposals (Section 3.09 of the draftCredit Agreement).
The TCCA/KSS Cooperative System
34. The beneficiaries of the proposed project would be members of theTCCA/KSS cooperative system. The main objectives of the system are to form a
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KSS of 40-60 farmers in every village and to federate KSS at the thana levelinto a TCCA. KSS are expected to collect thrift deposits, introduce groupmanagement of irrigation equipment and provide regular training, institu-tional credit, inputs and marketing services. TCCA now cover abouttwo-thirds of the thanas in the country and twenty percent of all farmfamilies in thanas covered by TCCA have joined as active members. The DTW IIproject is expected to make a major contribution to improving the TCCA/KSScooperative sector, as it would strengthen IRDP services and TCCA/KSS wouldbe its primary beneficiaries in distributing irrigation equipment. In fact,it is generally recognized that GOB's ambitious development programs forirrigation and cooperative development are interdependent: the best nucleusaround which to build a strong TCCA/KSS cooperative system is irrigationdevelopment, while equitable and efficient irrigation development can best beachieved by using the TCCA/KSS system. The achievement of this twin objec-tive is the primary goal of the Second Deep Tubewells Project.
The Integrated_Rural_Development Program (IRDP)
35. IRDP is an agency of the Ministry of Local Government, Rural Develop-ment and Cooperatives which was set up nearly a decade ago to initiate thenational replication of the TCCA/KSS. Unfortunately, over the years therapid expansion of the TCCA/KSS system has led to a deterioration of itsquality and loss of focus. The objective of creating self-financing,self-managed farmers' associations has been lost sight of and the TCCA hasbecome an extension of the IRDP bureaucracy, which itself has tended tobecome Dacca bound and administration and control oriented. The Governmenthas recognized the shortcomings of IRDP and that a number of improvementswill have to be made in its organization, training programs, credit distribu-tion, and marketing as well as in its general operating environment. Thestatus of IRDP as a program ended June 30, 1981 and since then, IRDP has beenoperating under a temporary extension of its "program" status. The Govern-ment would take all necessary measures by December 31, 1982 to strengthen orrestructure IRDP in a manner satisfactory to the Government and the Associa-tion to enable IRDP to carry out its functions under the project (Section3.16 of the draft Credit Agreement).
Sonali Bank (SB)
36. Sonali Bank, which is government-owned, is the largest commercialbank in Bangladesh with the most experience in agricultural lending. Itoperates through 917 branches (630 rural) and has established a rural creditdepartment with a 28 man professional staff at head office. SB has been theexclusive refinance agency for the TCCA/KSs cooperative system since 1973/74.SB's total assets increased from Tk 8,965 M to Tk 17,595 M between 1976/77and 1978/79, while deposits grew from Tk 4,661 M to Tk 8,388 M over the sameperiod. In 1978/79 total income was Tk 611 M and net profits amounted to
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Tk 96 M. While profitable overall, 55% of branches (mostly newly estab-lished) showed losses. Sonali has been most successful of the commercialbanks in recovering agricultural loans with 72% collection reported for1979/80.
The North-West Tubewell Project (Credit 341-BD)
37. The North-West Tubewell Project was the first minor irrigationproject in Bangladesh financed by IDA. The project originally became effec-tive in September 1970, but due to the war of independence the project had tobe reappraised and became effective in January 1973. The project financed3,000 new two cusec deep tubewells each designed to irrigate about 60 acres.Project implementation took considerably longer than anticipated and theoriginal closing date of December 31, 1976, was extended three times, finallyto June 1982. Project implementation delays were mainly due to problemsBangladesh had to face after the war of independence and also to delays inprocurement, lack of BADC experience in supervising drilling contractors,lack of experience and inadequate resources of the drilling contractors, anddelays in commissioning the tubewells. The distribution of benefits alsobecame a matter of concern during project implementation because it was foundthat in certain cases larger farmers dominated the user groups and the sitingof the DTW. The low rental for DTW was also a disincentive to large farmersto fully maximize the command area. To address these problems, the Irriga-tion Management Pilot Project was introduced in the project area (seeparagraph 32). All 3,000 wells were finally commissioned and the averagecommand area exceeded the 60 acres predicted at appraisal and will eventuallyaverage 70 to 80 acres. In designing the proposed second project, only KSSwould be able to purchase DTW and special emphasis would be placed on stream-lining procurement and installation procedures and to promoting command areadevelopment through expansion of the IMP. Also land holdings in the proposedproject are smaller than under the first project and the DTW would be sold toKSS at a price considerably higher than the former rental rate (see paragraph30).
PART IV - THE PROJECT
38. The proposed project, which was requested by GOB and prepared byFAO/CP, was appraised by a mission that visited Bangladesh inOctober/November 1981. A Staff Appraisal Report (Report No. 3835-BD datedJune 30, 1982) is being distributed separately. Supplementary Project dataare summarized in Annex III. Negotiations for the proposed credit were heldin Washington, D.C. in June 1982; the Bangladesh delegation was led by Mr.A.N.M. Eusuf, Chairman, BADC.
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Pro~jec-t._Objectives. and,! ecription
39. The project primarily aims at increasing foodgrain production in theproject area through (a) increasing the irrigated area under DTW from 345,000acres in 1980-81 to about 665,000 acres in 1985-86, (b) strengthening of theTCCA/KSS cooperative system, and (c) enguring that farmers have access toessential production inputs through the TCCA/KSS system.
40. The project area comprises 35 thanas, including 10 thanas of theMymensingh, 11 thanas of the Kishoreganj and 14 thanas of the Dacca dis-tricts. However, should the demand for DTW in the project area be insuffi-cient, expansion into adjacent regions would be considered. Farm holdingsaverage about 3.5 acres in the northern part of the project area and 2.5acres in the southern part; the average plot within a DTW command area wouldrange from 0.75 to 1.5 acres. TCCA have been established in all 35 thanas inthe project area. Total membership of KSS is currently about 128,270 or 13%of total farm families, By the end of the project it is expected that about8,850 KSS with a membership of about 400,000 would be established. Onlythose TCCA which have met agreed performance criteria would be eligible topurchase DTW; at present, about 30% of the TCCA have met these requirements.
41. The project would include: (a) procurement and installation of 4,000two-cusec deep tubewells including screens, casing, and pumpsets, and spareparts for maintaining these wells; (b) procurement of 25 reverse circulationrotary drilling rigs and auxiliary equipment for these and 45 existing drill-ing rigs; (c) strengthening of BADC through the provision of additionalstaff, office facilities, vehicles, and monitoring and testing equipment; (d)technical assistance - 25 man-years of consultancy for (i) BADC staff train-ing; (ii) IRDP and extension staff training and command area development(IMP); (iii) pilot studies to solve some technical problems related to welldesign and operation, and (iv) regional groundwater studies outside theproject area, particularly in the Sylhet and Comilla districts;(e) strengthening of the IRDP and TCCA/KSS system through the provision ofincremental staff, thana facilities, vehicles for field offices, and trainingof thana staff and KSS members; (f) the provision of medium term credit toTCCA/KSS for the installation of DTW; (g) provision of consultants to monitorand evaluate the progress of the project by establishing base line data, andmaking mid- and full-term impact assessments; and (h) provision of dieselfuel to cover fuel requirements in FY83 for all IDA financed minor irrigationfacilities.
Provision and Installation of.Deep-Tubewells
42. BADC would procure and install through local contractors 4,000 DTW.Spare parts, sufficient for five years maintenance and repairs would also beprovided. In addition, 200 spare diesel motors and turbine pumps would beprocured for standby. Well components would include locally made steel
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casings and imported screens; 3,600 of the tubewells would be equipped withline shaft turbine pumps powered by diesel engines and the remainder would beelectrically powered. The project would also finance the construction oftransmission lines and transformers to connect the latter to the nationalelectricity grid.
Provision of Drilling Rigs
43. The project would provide for (a) 25 reverse circulation rotarydrilling rigs; (b) 140 tractors and trailers suitable for hauling drill pipeand casing; (c) 55 well testing and development pumpsets; (d) 37 compressors;(e) 70 small generators; and (f) 85 welding sets. These items would beimported by BADC which would then sell them to selected drilling contractors.
Strengthening BADC
44. To strengthen BADC's capacity to plan, design and supervise theinstallation of DTW and to carry out the proposed hydrogeological studies theproject would expand BADC's technical staff, provide consultants and supplyvarious items of hydrogeological equipment. Salaries, allowances, transportand office facilities would be financed for the additional BADC staff. BADCwould employ, until completion of the project, three Executive Engineersnecessary for its efficient operation (Section 3.04(a) of the draft CreditAgreement). A condition of effectiveness would be that the three ExecutiveEngineers had been appointed (Section 6.01(d) of the draft Credit Agreement).
Technical Assistance
45. The project would provide the services of a consultant team consist-ing of the following specialists: (a) team leader (groundwater engineer);(b) irrigation engineer; (c) hydrogeologist; (d) field engineei;(e) electrical and mechanical engineer; (f) modelling specialist;(g) hydrologist; (h) cooperative adviser; and (i) irrigation agriculturist.Overall, technical assistance would require about 300 man/months of foreignconsultant services and have an estimated total cost of about US$3.3 million.The average man/month cost, including salaries, fees, international traveland subsistence, is expected to be about US$11,000. The Government wouldcause consultants to be employed with qualifications and experience satisfac-tory to the Association (Section 3.02(a) of the draft Credit Agreement).
46. The project would provide for groundwater studies in the project areaas well as in Comilla and part of Sylhet districts. These studies wouldinclude exploratory drilling, test tubewell construction, and pump testing.The project would also provide for a pilot scheme to study improved distribu-tion of water and test alternative DTW designs. By June 30, 1983, theGovernment would prepare and furnish to the Association, for its review,detailed proposals for the carrying out of the pilot program and employ,
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until completion of the pilot program, an Executive Engineer whose qualifica-tions and terms of reference would be satisfactory to the Association (Sec-tion 3.10 of the draft Credit Agreement).
,Stent/ninC fCXRPVTroK Poram
47. Because of the projected increase in the number of KSS, their member-ship and increased workload of implementing the IMP for 4000 DTWs by the endof the project period, the project would provide for incremental staff. IRDPwould appoint and employ until completion of the project one Deputy Directorat its headquarters and one Deputy Director at each of the three districts inthe project area (Section 3.04(b) of the draft Credit Agreement). A condi-tion of credit effectiveness would be that the four Deputy Directors of IRDPhad been appointed (Section 6.01(e) of the draft Credit Agreement). Staffoffice facilities are essential for successful project implementation. Atpresent, only 16 TCCAs have offices. The project would provide financing forthe construction of 19 additional TCCA buildings. Staff accommodation is ofhigh priority as in most thanas private housing for staff to rent is limited.The staffing requirements for a full TCCA/KSS program vary between 18 to 26officers per thana. At present, there are only 74 twin quarters in theproject area. To provide a minimum of four twin quarters per thana, theproject would construct 66 additional twin quarters in the project area.IRDP staff and project related staff would be given priority in the alloca-tion of these quarters. In addition, the project would provide one vehiclefor headquarters, 3 vehicles for the 3 districts and 38 motorcycles and 500bicycles for the thanas.
Diesel. Fuel
48. To ensure that irrigation facilities fielded under IDA-supportedprojects will not be affected by a shortage of diesel fuel during the FY83irrigation season, the project would provide the foreign exchange needed(US$10 M) to finance the import requirements for diesel fuel (29,000 tons)for all minor irrigation equipment expected to operate under IDA financedirrigation projects during FY83. Uncertainties in diesel availability couldnot only adversely affect foodgrain production during the FY83 dry season,but also have a detrimental impact on farmers' demand for additional equip-ment being made available, in particular DTW to be provided under thisproject.
Rural Credit
49. The project would provide US$25.4 million of medium term credit toTCCA/KSS to help finance their contribution for part of the local costs of
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installing DTW. 1/ Of the total amount for medium term credit, IDA wouldfinance 90% and the remainder would be financed by SB. The Government wouldrelend US$22.9 million to BB under a Subsidiary Loan Agreement upon terms andconditions satisfactory to the Association which would include the following:(i) the Government would charge BB an annual interest rate of 3% for financ-ing SB's onlending through TCCA and KSS; (ii) the repayment period would beup to 12 years inclusive of a maximum grace period of 2 years; and (iii) BBwould bear the foreign exchange risk (Section 3.01(b) of the draft CreditAgreement). BB wiould enter into a Participation Agreement with SB providingfor the on-lending to TCCA and KSS of the funds lent to BB by the Government,upon terms and conditions satisfactory to the Associaton (Section 3.01(d) ofthe draft Credit Agreement). 2/ Interest rates charged to KSS members wouldbe not less than 14%. Although the rate of inflation has recentlyaccelerated, the rate is expected to decline to about 11-12% in the mediumterm resulting in a positive interest rate to final borrowers. However, theGovernment would review, in consultation with the Association, the interestrate structure and, if necessary, adjust the interest rate to the KSS toensure that it remains positive in real terms (Section 3.15 of the draftCredit Agreement). A condition of effectiveness of the proposed credit wouldbe that the Subsidiary Loan Agreement and the Participation Agreement hadbeen entered into (Section 6.01(b) of the draft Credit Agreement).
Project Execution
50. During project implementation, BADC would be responsible for:(i) procuring well equipment and organizing and supervising DTW drilling,construction and commissioning; (ii) carrying out groundwater studies andmaintaining and updating the groundwater model; and (iii) providing technicalsupport to TCCA/KSS in command area development. The Ministry of LocalGovernment, Rural Development and Cooperatives through IRDP would be respon-sible for organizing and supervising the operation and management of TCCA/KSSand, jointly with BADC and the Department of Agriculture Extension, forexpansion of the IMP in the project area; the Ministry would also be respon-sible for constructing thana facilities.
51. At the national level a small Project Coordination Committee would beset up with representatives from all participating agencies and would be
1/ The purchase price for a DTW includes part of the installation costs.Because of the large subsidy of the DTW sale price (see paragraph 66),the price paid by the farmers covers only 55% of installation costs anddoes not include the foreign exchange cost of the equipment.
2/ The terms and conditions for onlending are given in the Credit andProject Summary.
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chaired by the Secretary, Ministry of Agriculture and Forestry (Section 3.03of the draft Credit Agreement). The Superintending Engineer, BADC, would bein charge of the BADC component and the Director of Field Services IRDP,would be responsible for implementing the IRDP component. The Government
would establish in each district of the project area, a District CoordinationCommittee with representatives of the departments or agencies concerned withimplementation of the project, and these committees would meet at leastquarterly (Section 3.03 of the draft Credit Agreement). The district commit-tees would be chaired by the Deputy Commissioner of the district. A condi-tion of effectiveness would be that the Project Coordination Committee andall the District Coordination Committees had been established (Section6.01(c) of the draft Credit Agreement).
52. All DTW would be installed by local drilling contractors. BADC wouldimport the drilling equipment and sell it to the contractors. The Governmentwould from its own resources make available to the drilling contractors themedium-term credit necessary for the purchase of drilling rigs to be providedunder the project (Section 3.14(a) of the draft Credit Agreement). Based onpast performance, it is evident that a sufficient pool of experienceddrillers exists. By grouping construction contracts for 40-60 wells perthana, there would be adequate financial incentive to ensure participation bycontractors.
Preject. Costs
53. Total project costs are estimated at about US$142 M equivalent,including US$9.5 M in taxes and duties. The foreign exchange component isestimated at US$92 M or about 65% of total project costs. Physical contin-
gencies included in the estimate amount to 5.5% of base costs. Estimatedcosts to be financed by IDA and GOB are based on price levels prevailing inOctober 1981 adjusted for expected domestic and international inflation toexpected mid-1982 levels. Physical contingencies amount to 5.5% of basecosts. Price contingencies for foreign exchange costs have been estimated at8% per annum for FY83 and 7.5% for FY84-86; local costs have been estimatedon the basis of the following annual domestic inflation rates: 15% in FY83,13% in FY84, 11% in FY85, and 10% in FY86. Estimated costs to be financed byODA and ADAB are based on prevailing mid-1982 price levels in the UnitedKingdom and Australia and expected future price levels in these countries.
Finaneing
54. The proposed IDA credit of US$68 M would finance about 51% of total
project cost net of taxes and duties or 56% of foreign exchange costs and 40%of local costs. IDA financing would contribute to all project componentsexcept consultancy services and drilling equipment. IDA would help finance:(a) the procurement of DTW components (diesel engines and spares, turbinepumps and gear boxes, upper well casings, well screens and reducer and bale
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plugs); (b) medium-term credit to be extended to TCCA/KSS for the purchaseand installation of DTW; (c) the importation of diesel fuel; (d) civil works;(e) staff salaries and training; and (f) monitoring and evaluation. UnitedKingdom grant aid (ODA) of about US$31.1 M would finance the procurement ofDTW components (lower well casings, GRP screens, diesel engines and electricpump sets) and the foreign exchange costs of consultancy services includingstudies and training. Australian grant aid of about US$9 M would finance thepurchase of drilling rigs and auxilliary equipment. Thus, foreign aid wouldtotal US$108 M and cover about 82% of total project costs, net of taxes andduties. It would finance all foreign exchange expenditures (US$92 M) andabout 40% of local costs (US$40.5 M). A condition of credit effectivenesswould be that all conditions required for the effectiveness of the ODA andADAB agreements would have been fulfilled (Section 6.01(a) of the draftCredit Agreement). The balance of project financing would be covered bylocal sources; farmers (2.1%), Sonali Bank (1.9%) and GOB (14.3%, excludingtaxes). Most of the local financing would be required to finance the con-struction and installation costs for the 4,000 DTWs to be installed duringproject implementation. A condition of effectiveness would be that ProjectProforma (PP) satisfactory to IDA had been approved by GOB (Section 6.01(f)of the draft Credit Agreement). 1/
Procurement
55. Delays in procurement of deep tubewell components and equipment havecreated unusually long "lead ins" to the implementation of past and ongoingprojects. To avoid such delays, draft tender documents were prepared andmutually agreed between IDA and GOB immediately after appraisal. Procurementof goods and services out of the funds provided by agencies other than IDAwould be subject to terms and conditions agreed upon between GOB and theconcerned lending agencies.
56. Tenders for Well Drilling and Installation (US$23.21 M). Contractsfor well construction would not be suitable for ICB because the work would betoo small-scale and dispersed to attract international interest. Drillingcontracts would be let for the number of DTW required in each geographicalarea (thanas). Each contractor would be awarded contracts to construct about40-60 wells (each costing US$5,800). The contracts for well constructionwould therefore be let following Local Competitive Bidding (LCB) proceduressatisfactory to IDA. The tendering would be supervised by BADC which would"post qualify" the tenderer to determine the number of wells each tendererwould be qualified to contract for. Ex-post review by IDA would be under-taken of a 25% sample of these contracts.
1/ An internal GOB document approval of which is necessary for the appoint-ment of staff and the release of funds.
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57. Tenders for Deee Tubewells Comn onents (US$29.8 M) and Vehicles(US90.29 I). The DTW components would include 1,150 diesel engines plusspares; 3,600 turbine pumps and gear boxes; upper well casings, well screensand reducer and bale plugs for 4,000 DTW. The DTW components and vehicleswould be purchased under IDA guidelines for ICB procedures. Local manufac-turers would be allowed a preference of 15X or the applicable duty, whicheveris lowert in accordance with IDA guidelines. Tender documents for DTW com-ponents exceeding US$100,000 would be submitted for IDA review. Vehicles(US$0.29 M) would also be purchased under ICB procedures.
58. Civil Works (US$3.8 M) would not be suitable for ICB because theywould include relatively small simple structures widely distributedthroughout the project area. Construction of thana facilities would bethrough contracts with local contractors let under local competitive biddingprocedures which are satisfactory to IDA. Ex-post reviews would be under-taken of a 25% sample of these contracts. Civil Works (US$0.8 M) for channellining would be carried out by force account.
59. Furniture and office equipment (US$0.19 M) would be procured by localcompetitive bidding. Off-the-shelf items costing not less than US$25,000 andnot more than US$200,000 in aggregate would be procured by prudent shoppingthrough normal commercial channels.
60. Diesel Fuel (US$10 M). The Bangladesh Petroleum Corporation has soleresponsibility for importing refined petroleum products and would procurediesel fuel for BADC in accordance with procedures for negotiated contractsacceptable to IDA.
Disbursements
61. Disbursement swould be made against:
(a) DTW equipment; vehicles; motorcycles; bicycles and officeequipment (US$26.40 M).
(i) directly imported; 100% of foreign expenditures;
(ii) locally manufactured; 100% of ex-factory cost;
(iii) locally procured (off-the-shelf); 65% of local expenditures.
(b) Civil works:
(i) construction of office buildings, staff housing and sheds:90% of local expenditures (US$2.90 M).
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(ii) command area development (channel lining and piping):90% of local expenditures (US$0.50 M).
(c) Amounts disbursed by BB to refinance medium-term loansmade by SB; 100% of local expenditures (US$17.70 M).
(d) Project Monitoring and Evaluation: 100% of local expenditures(US$0.20 M).
(e) BADC and IRDP salaries for local project staff; and IMPtraining; 60% of local expenditures (US$0.50 M).
(f) Diesel fuel; 100% of foreign expenditures (US$10.0 M).
(g) Unallocated; (US$9.80 M).
Disbursments under (a), (b(i)), and (f) above would be fully documented.Disbursements under (b(ii)), (d) and (e) would be made under statement ofexpenditures, certified by the Superintendent Engineer, BADC. Disbursementsunder (c) would be made against Bangladesh Bank certified statements of loansmade by SB and refinanced by BB. BB would verify each application forrefinance by SB which would carry out sample checks. The supporting documen-tation would not be submitted to IDA but retained at a central location andmade available for inspection by IDA staff on request. Expenditures disbursedagainst certified statements of expenditures would be audited annually byindependent auditors, acceptable to IDA.
Accounts and Audit
62. BADC and IRDP would have their accounts and financial statements foreach fiscal year audited by independent auditors acceptable to the Associa-tion and furnish them to the Association not later than six months after theend of each year (Section 4.01 of the draft Credit Agreement). Auditingprocedures of participating institutions are satisfactory but those forTCCA/KSS are not up to date. GOB would (a) prepare and furnish to theAssociation, by March 31, 1983, an inventory of TCCA and KSS in the projectarea, showing the date of the last audit for each and (b) carry out a phasedprogram to bring to a level satisfactory to the Association by June 30, 1985,the audit of each and every TCCA and KSS in the project area and quarterlyinform the Association of the progress of the program (Section 3.08 of thedraft Credit Agreement).
Monitoring and Evaluation
63. The project would provide funds for technical assistance in evaluat-ing project performance. Project evaluation would involve three reports, a
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benchmark survey at the start of the project; a mid-project review and an
evaluation report at the end of the project. The mid-project review wouldinclude an assessment of demand for DTW to determine the need for the projectarea to be expanded. The Government would prepare and furnish to the
Association, not later than March 31, 1983, for comments by the Association,detailed plans for the carrying out of project monitoring, and evaluation(Section 3.07 of the draft Credit Agreement). The Government would employconsultants whose selection, qualifications, experience and terms and condi-tions of employment would be satisfactory to the Association (Section 3.02(b)of the draft Credit Agreement).
Production and Marketing
64. The provision of tubewell irrigation water in the project area wouldlead to increased cropping intensity and the availability of an assured watersupply. The assured water supply would make larger and more effectiveapplication of high-yielding varieties, fertilizers, and pesticides moreattractive to farmers, while the strengthening of TCCAs and KSS would enablean increasing number of farmers to obtain credit for purchasing inputs. Atfull development incremental annual production of paddy and wheat would beabout 282,000 and 197,000 tons, respectively. It is estimated that between10 and 20% of the incremental paddy and wheat production would be absorbed inhousehold consumption and as wages paid in kind. The remaining 80-90% wouldenter market channels. The traditional marketing system in the project areais well developed. No serious demand and marketing problems are anticipatedand increased grain production would easily be absorbed locally or find aready market in major cities.
Cost. Recovery
65. As with other agricultural inputs, all minor irrigation equipment
was until recently heavily subsidized. In the case of DTW, this subsidy wasnearly 100%. To improve resource allocation, GOB has adopted a policy toreduce such subsidies and sell minor irrigation equipment to farmers at fullcost in the future. However, the very high cost of DTW (around Tk 400,000)would make the implementation of such a policy too great a burden on farmerswho have no alternative to DTWs for their water requirements. Hence, a joint
GOB/IDA review of the minor irrigation sector recommended that DTWs should besold at a price which would equate the cost of irrigation water from DTW withthat from STW, thus putting STW and DTW users on an equal footing. Althoughthis pricing recommendation has been accepted by GOB, actual selling pricesfor DTWs have so far been below the STW equivalent price. The official DTWselling price has been increased from Tk 70,000 to Tk 85,000 in July, 1982;the present STW equivalent price for DTW is estimated at about Tk 140,000.
66. The KSS group's cash flow situation with the project would be ade-
quate. to finance a DTW at its estimated STW equivalent price. However, this
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would represent a sharp increase in price which could affect demand and, froma social and political point of view, would be difficult to introduce in onestage. It is, therefore, proposed that the full STW equivalent price bereached in 1986/87. This would mean that farmers' contribution to thefinancing of DTWs would increase from about 21% of total cost in 1982/83 to35% in 1986/87. The Goverment would at least annually review with theAssociation and adjust the unit price for the sale of DTW with a view toprogressively reducing the subsidy. The Government, taking into account theresults of the reviews, would ensure that the DTW selling price per unitwould be set at the following levels or adjusted as necessary to such higherlevel as would take into account the annual inflation rate: (a) by July 1,1983 at Tk 100,000; (b) by July 1, 1984 at Tk 110,000; (c) by July 1, 1985 atTk 120,000 and (d) by July 1, 1986 at Tk 140,000 (Section 3.13(a) of thedraft Credit Agreement). All spare parts for DTW rented by BADC or soldwould be sold at a price which covers full cost inclusive of duties and taxes(Section 3.13(b) of the draft Credit Agreement). All operation and main-tenance costs would be borne by DTW users from the outset. The applicationof the STW price equivalent policy would be a major improvement compared withpractices in the past.
Project Benefits.and Economic Rate.of, Return
67. Strengthening and expanding the TCCA/KSS operations in the projectarea would make it possible for small farmers to benefit from productionactivities to which individually they could not aspire. The installation ofa DTW would not only increase farmers' income, but also act as a catalyst forsmallholders to organize themselves into cooperatives. Assuming that member-ship in DTW irrigation groups would vary between 60 and 90 families, about300,000 farm families would directly benefit from the project. The profileof project beneficiaries would to a large extent reflect prevailing landownership patterns in the project area. It is estimated that at presentabout 30% of project's beneficiaries would live at the poverty line. Thesmall farmer who receives irrigation through the project would increase hisannual income by anywhere from Tk 1,200 to Tk 2,050 per acre irrigated,representing an increase of between 25% and 50%. Much of this increasedincome would derive from more productively employing farm family members.
68. Increases in employment opportunities due to the project would besubstantial. The more intensive land use under the project would createadditional labor requirements of about 27 million man-days for farming opera-tions at full development. Most of the additional employment opportunitieswould benefit under-employed farm family members, in particular during thedry season when agricultural employment is low. About 40% of the additionalfarm labor requirements would be for hired labor, mostly landless laborerswho would thus also benefit from the project.
- 24 -
69. The economic rate of return for the project is estimated at about30%. Sensitivity tests indicate that the project is sensitive to changes incommand area, yields and output prices. However, even for a combination ofpossible adverse circumstances, the project maintains an economic rate ofreturn above the opportunity cost of capital.
P-rejeet,;Risks70. The project faces no major risks. A possible risk would be theunder-utilization of tubewells but the expansion of the IMP is expected tominimize this risk. Another possible risk would be insufficient demand inthe project area. This risk is minimized through a mid-term review of demandand the possible expansion of the project area. Also, the project could facerisks due to institutional weaknesses and lack of coordination among thevarious government institutions involved in project implementation. However,provisions made under the project to: (a) strengthen IRDP and BADC services,(b) implement strict gite selection criteria for DTW installation,(c) provide adequate medium-term credit for TCCA/KSS, (d) recruit a consult-ant team, and (e) regularly monitor project performance should reduce theseorganizational and institutional risks.
PAR,T, V_*. LEGAL, INSTRUNENTS. AND, AUXTHOR1ITY
71. The draft Development Credit Agreement between the People's Republicof Bangladesh and the Association, and the Recommendation of the Committeeprovided for in Article V, Section l(d) of the Articles of Agreement arebeing distributed to the Executive Directors separately.
72. Special conditions of the project are listed in Section III ofAnnex III. Additional conditions of credit effectiveness are: (a) appoint-ment of three BADC Executive Engineers (paragraph 44); (b) appointment offour IRDP Deputy Directors (paragraph 47); (c) the Subsidiary Loan Agreementand Participation Agreement be entered into (paragraph 49); (d) the ProjectCoordination Committee and all District Coordination Committees be estab-lished (paragraph 51); (e) fulfillment of all conditions for effectiveness ofODA and ADAB Agreements (paragraph 54); and (f) approval of the projectproforma (paragraph 54).
73. I am satisfied that the proposed credit would comply with theArticles of Agreement of the Association.
- 25 -
PAR.T VI--RECOMMENDATION
74. I recommend that the Executive Directors approve the proposed credit.
A. W. ClausenPresident
byWashington, D.C. Munir P. BenjenkJuly 22, 1982
- 26 - Annex IPage 1
TABLE 3ABANGLADESH - SOCIAL INDICATORS DATA SHEET
BANGLADESH REFERENCE GROUPS (WEIGHTED AVRAGESAREA (THOUSAND SQ. KM.) - MOST RECENT ESTIMATE)-
TOTAL 144.0 MOST RECENT LOW INCOME MIDDLE INCOMEAGRICULTURAL 97.3 L960 /b 1970 /b ESTIMATE /b ASIA & PACIFIC ASIA & PACIFIC
GNP PER CAPITA (US$) 40.0 70.0 130.0 261.4 890.1
ENERGY CONSUMPTION PER CAPITA(KILOGRAMS OF COAL EQUIVALENT) .. 24.9 39.7 448.7 701.7
POPULATION AND VITAL STATISTICSPOPULATION, MID-YEAR (THOUSANDS) 53491.0 68117.0 88513.0URBAN POPULATION (PERCENT OF TOTAL) 5.1 7.6 11.0 17.3 32.4
POPULATION PROJECTIONSPOPULATION IN YEAR 2000 (MILLIONS) 141.0STATIONARY POPULATION (MILLIONS) 321.3YEAR STATIONARY POPULATION IS REACHED 2125
POPULATION DENSITYPER SQ. KM. 371.5 473.0 600.7 158.1 255.9PER SQ. KM. AGRICULTURAL LAND 561.9 703.0 889.0 355.9 1748.0
POPULATION AGE STRUCTURE (PERCENT)0-14 YRS. 44.3 46.3 42.8 36.8 39.9
INCOME DISTRIBUTIONPERCENT OF PRIVATE INCOMERECEIVED BY
HIGHEST 5 PERCENT OF HO'JSEHOLDS 18.3/i .. 14.6/kHIGHEST 20 PERCENT OF HOUSEHOLDS 44.571 44.1/ 42.2..LOWEST 20 PERCENT OF HOUSEHOLDS 6.97i 8.7/ 6.97'LOWEST 40 PERCENT OF HOUSEHOLDS 17.97i 19.s7 18.27..
POVERTY TARGET GROUPSESTIMATED ABSOLUTE POVERTY INCOMELEVEL (US$ PER CAPITA)
URBAN .. .. 139.0/c 133.8 194.7
RURAL .. .. 111.0/' 111.1 155.1
ESTIMATED RELATIVE POVERTY INCOMELEVEL (US$ PER CAPITA)
URBAN .. .. .. .. 178.2
RURAL .. .. .. .. 164.9
ESTIMATED POPULATION BELOW ABSOLUTEPOVERTY INCOME LEVEL (PERCENT)
URBAN .. .. 86.0/c 43.8 24.4
RURAL .. .. 86.0/c 51.7 41.1
Not availableNot applicable.
NOTES
/a The group averages for each indicator are population-weighted arithmetic ceans. Coverage of countriesamong the indicators depends on availability of data and is not uniform.
ib Unless otherwiae notec, data for 1960 refer to any year between 1959 and 1961; for 1970, between 1969and 1971; and for Most Recent Estimate, between 1978 and 1980.
/c 1977; /d 1976; /e 1975; /f Registered, not all practicing in the country; / 1972; /h 1973; /i 1964;/ 1967; /k 1974.
May 1982
Annex I- 28 -
DEF1NITI05S CF SOCIAL :NOICAToHs
40..- A"-casa ohs i-ota r dten tfot .our... generaly lodged riha mee oa -diein o r--be.I oldao . Iteh- 1 ty ay not be I.Cta-
Onelst.aetll I ddcieagr fmsioe s1a.tetl.edIttcrrncransu Ifrne etenotre .,.T.d. ,_h
-lec reetocP. are (I) the iee -- oerr 5teep of the sujet oaty and 2) a co-ntY gro-P wii, -o-ehat higher a Seag loca- th- nba -- ntygrAtct eajatconty(tnpt fat 'igh lIn-- Oil f,,Porgr st-P Crete Middle incom North Afti-a00 MiddLe fee be hoe c eattrnredboc~trl r lile) I herfeeo.gou ec heaerg. t pplaIn Cigtedaitmti ea.fo ac ndcto nd_ots aytie
gelrity at th atie ma rop hAd d.te for thet iniao Si_r h asaeo onre mn a I a"caor depend.C, ondteoebnl fdtandbenh JcIa., anbng .eth exentleed Sc. _ua f. useg of one indiCabeI hnae bs vrg.aeaib eblhceahgteals
odid cahonen ` t9.nn. thnr-baniaa.,r Hoen ..a _a1tte . ra. an Irne Popla la lca
Icia - Trot orfe eon. cderlang1bnd -re and Labe-g 1aes 979 dana. Hra.on aol iiCo i orei -b-en ic-d br tbebilto
far rop. astac., eret and kLChtat gard-g or to IL. fali1it 1H79 date. hatilibtt.ioretre oPit ...ar eaaIleiteot pemanntl stle
ISP Phi CAIPTA, ILhS$ GNIP per coiaebmte ncre .... e p..c....a..dly cr r notlolhy.ded ue opnb.tose.iouehatc...idby ameccn.rere method ac Idoeld leak ria- 11978480 boaef.9h.adrdclcntr o amrn h-Ptt1ed by e itysCLag11 hbut by
19C"or 1980t atat meOhtal eeelerern.C tar.. mIwfe t.) bhc ie tpe eterdenitee ra prious a lien.d retl of medial fanlItie o rse
FOihI'! 19SlTh2TIO Phi .127Th -Actual cteceptir of aorial enery anal haI ycrpaee ocra Onepirls inclue WHit pircipelgeoertl oepitay
Idol Paclataca. 10-fear nloaaaoo) - ha a Jul 1; 1980, 1975 .d 9.0.Cdii 19
total cpclahbo ayageaaseu at neOn ertails ama feglliry tt... veiltog. ceepeubreby.2eelIiae saclde agd-. rme... atroattee an~P PU rnlacn1 ITAL 5paranantr S fo etlt a. oieo heieeeaae nCcah;Pled paLine. b I-bbI .
ouooOr) c:blln can ago1 hrs ibr. -bewle esaIntg de.ilig ; inoIoe. re.ad moe'P' iosreenbgyerr imoaccrd ng c Ito~ et._a- pacs femi - p-lit.e perfonmecce.i 11. b.I. -I. V
1r9frtif 60mn. for0 pr)cro piepoets.. Adicehh fooIdeo taceW d iPrcoercnrcalnlo19 inr opbnogte.Isa rotAucePier coo oal e. u eec-ccert.Cml ndIel
roe rylacaenn lndl o ugh et rPtoa tg ee O.si r eoaratbdn ynare baCdjse frdp_rrtlngh f_rIerocarot.oci nme calaet tsef nac ly Th sanlnar ppabnig als ea.ccartiaeeir asinrea edcslonerr111nisoyrucad1001eren
stcatao etal fan nlcte heetretn fth ooato iresm Fr.ae ec i rn teoftolbshoia.the ear 000.aud it h tasofdci ffetliyr.e. epae Peoo dt poch -total moeadlmis-CtndeaOe;eo ds
hor 1r ornnoubcarIerecet-Th rs ee e-anoespMpuTih. prerdeegetrob.coe tir .. orIaceI raIr..e.at10.tr oIo be ill htea.ha. ohe..y F-L0ton S i -er foe;crepnanecasear nea1
Ic. atcr. lehoihtPa reclyll_ugpIed.. In P"i.IyErr ;.0.-Ctya-oea. -cpc#-A ae h sooaea lobem i_er (10 hectae i,cfE CAocONide eobencecn fucnsv oaInll.bo
Per so f:11IS. a lnd frcat ra laud -Cj Conatdemee, oragiaioillrOetld ort e attaseeoseonr Oitie.
onLy _ 190.:00:nh179daa.. .... nhr en prmr.atO.tred -L Ttl tdet erlldi
,,.lyyace;oe.al ...eyeamaaendn n10.175 n 90 ercctrteelam Ilaen.- .In&
,,W 1:z,11,79 dftI~~~~~~~~~~pullcatlOn1Zy1.1 l dnepr sly, toll reogt, I seea .eee.It Iscoede
00 t. teec laded) 9oggergete prodnantt at Litit ltintr11le haaedot 1-diOdI 958f
hpOths,i.. en cag, 1 n9 tct Nnscpls-eclad athited,nst. dfnrsn.o.nn Fmae sotfoce.imhstAtf iilIhu Ioneonatillh k.tand0 i9 t7dpoaig. td..h le ., tohd_etdib tia. geqere- -lao oreisfela.frent.hst n
nan ioppy o... prdy.itepl ffeli ainde b,.i. oiityrn,eaeeo ras_ tonl mel.. te eul ao freahoieae fr llcctttmeretblgied y 80 prvla or lu preeeeesof eel.alean Palepoolsle odal ae.r.fanieIyellroras f 6 oc oftotl ponec. eedayad2 rm f.dtS m 90 90 and 91096ta.Them se eato 15 _. prtcIptIn'rr
dorig Tad hone; 19014. 1970-etr197 lena. no the nartol lab-Or farceLOnrodeito retelc soolr from elmel ond oise-Protee e.plp o toolddincItd Ice obmlo nd tclae s g pe da; 96195,197 ao 197 dsa. I90U lHThIffiL
1001.10 ~ ~ jr. POf TTy f?IZUP
FIcieN cNoTliriLo ortny nea vr oatoro er fo eenteT.6 loLlettee _etatm are Chy p0 tat cmra feaetlrl.
Ind.oot traIynt ornc-d)-dnuldah floen ea r year fenmetd. dbelftL P_nrt lnomIsol100paItela -oba sI cr
_erof ..pl (ntlChho n rri it atnbl rn t neafodbealo opy lnunrese ufaa aeeoIannrdhssearmosed frmhtgeaIsPvrr eoeLre_00pecrie abr r o.
erneean aetha tro prsened oretoin. ernn.. nd asdtr, ell) te Stel rlatre pverp ieom leel l or-niirdof asrte pr crin
rgniy ecJotnCtnond frlotrati ileroral cooresme of oroalanuonl - lotal. orhen ted, ranal -21:1 b
uar Af h..o(otl non e atl eve y.er. ipetlrnureregs f te t eaeoIn... pot=aine fPr's dItp= l eDlebd
bun allobda co Ilaote. tuh o elteni Lraanf.bof b emoomiand edete-o ta by O terb.rn spars or the ae fof p --pi I. tedli-
lot £-na..topbd. - b..f- .eu-Oi.
clroqall nd "Cet a lss ice ahe en arveriry ''.1 co ic eiae n."5ena epeP.r .2LIao pa1,6oot ure -Pptl9lediiedb u" pfreniam .... 1.f96t12 .b
Y ooaou .o;naeoOorceo raiaan dfeane prstau hare eeltro fn fadPlblChtIbco.
29 Annex IPage 4
BANGLADESH
ECONOMIC INDICATORS
Population: 91.5 million (January 1982)
GNP Per Capita: US$120 (FY81)
Amount Average Annual Increase (%) Share of GDP at Market Prices (X)
(million US$ (in constant FY75 prices) (in current prices)in current prices)
Education) - 40.00 37.251065 1981 Bangladesh Small Scale Industry III - 35.00 34.701071 1981 Bangladesh Imports Program IX - 65.00 17.701091 1981 Bangladesh Bakhrabad Gas Development - 85.00 72.201096 1981 Bangladesh Fertilizer Transport
Project - 25.00 20.20
1117 1981 Bangladesh Bangladesh Shilpa Bank II - 50.00 49.901124 1981 Bangladesh Technical Assistance IV - 16.00 16.001140 1981 Bangladesh Hand Tubewells - 18.00 18.001147 1981 Bangladesh Agricultural Credit - 40.00 40.001184/b 1982 Bangladesh Drainage and Flood
Control II - 27.00 27.00
1194 1982 Bangladesh Imports Program X - 100.00 100.001204/b 1982 Bangladesh Chittagong Urea Fertilizer - 15.00 15.0012057Ub 1982 Bangladesh Textile Industry Rehabili-
tation - 30.00 30.001215/b 1982 Bangladesh Extension and Research II - 27.00 27.00
Total 54.90 1,982.82 869.80of which has been repaid - 0.40 -
Total now outstanding 54.90 1,982.42 869.80
Amount sold 0.00
Total now held by Bank and IDA 54.90 1,982.42
Total undisbursed 869.80 869.80
/a Prior to exchange adjustments.__ Not yet effective.
- 33 -ANNEX IIPage 3
/aB. STATEMENT OF IFC INVESTMENTS (as of March 31, 1982)
Fiscal Amount in US$ MillionYear Obligor Type of Business Loan Equity Total
Total gross commitments 1.20 1.41 2.61less cancellations, terminations, repayments and sales - - -
Total commitments now held by IFC 1.20 1.41 2.61
Total undisbursed 0.65 - 0.65
/a The following IFC investment has been approved but not yet signed:
1981 Asia Leather IndustrialCompany Ltd. Tannery 2.1 .2 2.3
C. STATUS OF PROJECTS IN EXECUTION AS OF MARCH 31, 1982 1/
Agricultural Projects
Cr. No. 341 Tubewells Project; US$14.0 Million Credit ofNovember 6, 1972; Effective Date: January 17, 1973;Closing Date: December 31, 1982
Implementation of the tubewell component is complete and a PCRhas been issued. However, the credit remains open to permit completion of adelayed pilot command area development component which is also being financedunder the Extension and Research Project (Credit 729-BD).
1/ These notes are designed to inform the Executive Directors regardingthe progress of projects in execution, and in particular to report anyproblems which are being encountered, and the action being taken toremedy them. They should be read in this sense, and with the under-standing that they do not purport to present a balanced evaluation ofstrengths and weaknesses in project execution.
- 34 -ANNEX IIPage 4
Cr. No. 410 Cereal Seeds Project: US$7.5 Million Credit of June 29, 1973;Effective Date: January 30, 1974; Closing Date: December 31,1981
The project closed on December 31, 1981. The Bangladesh AgriculturalCorporation (BADC), the project lead agency, has been requested to initiatethe preparation of the PCR. It has been agreed that disbursements will con-tinue through April 30, 1982 against items contracted prior to December 31,1981.
Cr. No. 542 Barisal Irrigation Project: US$27 Million Credit of April 29,1975; Effective Date: September 30, 1975; Closing Date:June 30, 1984
The project design has been modified and the Closing Date extendedto June 30, 1984, to permit the irrigation of a wider area while retaining thenumber of primary pumping stations and sluices included in the original project.Civil works in the original project area are completed. About 735 low liftpumps were fielded in the FY80 boro season irrigating about 30,000 acres. How-ever, extension and cooperatives staffing constraints continue to inhibit fullutilization of existing irrigation facilities. They are, however, improving.
Cr. No. 605 Karnafuli Irrigation Project: US$22 Million Credit ofJanuary 28, 1976; Effective Date: February 24, 1976;Closing Date: December 31, 1983
Overall project implementation is about 2.5 years behind schedulewith about 60 percent of works completed. Construction contracts for remainingstructures were awarded by WDB in early 1981. Works on embankments, a majorproject component, have not started. The current project cost estimates prep-ared by WDB are about 30 percent higher than the appraisal estimate. WDB hasbeen urged to adopt additional cost saving measures, with particular regardto the requirements for the embankments, which are likely to be substantiallyreduced. Construction works for the hatchery complex, training hostel andstaff quarters related to the fisheries component are expected to be completedby April 1982. Fish seed production on a commercial basis has started in 1981and will reach full capacity in 1982.
Cr. No. 631 Rural Development Project: USS16.0 Million Credit of June 3,1976; Effective Date: August 3, 1976; Closing Date:June 30, 1983
After initial difficulties, project implementation is now proceedingsatisfactorily with project management much improved. The supply of irrigationequipment and inputs is now satisfactory and the rural works program is makinggood physical progress. However, contract supervision and maintenance of com-pleted works need improvement. GOB has requested that the credit closing datebe extended by one year to allow full completion of components which wereinitially delayed.
- 35 -
ANNEX IIPage 5
Cr. No. 724 Shallow Tubewells Project: US$16 Million Credit of July 1,1977; Effective Date: December 9, 1977; Closing Date:December 31, 1982.
Progress in procurement has been satisfactory. All 10,500 pumpsetshave been procured. About 55% of the pumpsets have already been sold. Theconstruction of workshops is proceeding with a modified program and workshopequipment has been ordered.
Cr. No. 725 Muhuri Irrigation Project: US$21.0 Million Credit of July 1,1977; Effective Date: January 6, 1978; Closing Date: June 30,1983.
Project implementation is about two years behind schedule. Recentdelays were experienced because of equipment break downs, lack of heavy equip-ment for excavation, and heavy rains. This has been resolved through thepurchase of new equipment and the renting of others. Construction worksof Feni Regulator considerably improved. Prequalification for the closure damand embankments, the only remaining major works, has been done. The designfor the works produced by the consultants is much more sophisticated thanenvisaged at appraisal. Though revised cost estimates are not availableto IDA, it is estimated that the cost overrun on this component could besubstantial. BWDB has been asked to prepare alternative design proposals.
Cr. No. 729 Extension and Research Project: US$10 Million Credit ofJuly 1, 1977; Effective Date: January 6, 1978; ClosingDate: June 30, 1982.
The project continues to make satisfactory progress; all procurementhas been completed and efforts are being made to speed up the civil worksprogram to ensure completion before credit closure at June 30, 1982. Althoughthe extension service is now well structured and better disciplined, themethodology needs continued improvement. Good extension/research linkageshave been established; the research program now places more emphasis onoff-station work aimed at finding practical solutions to farmer problems.
Cr. No. 765 Jute Project: US$21 Million Credit of February 8, 1978;Effective Date: April 14, 1978; Closing Date: June 30,1983.
Farmers have been encouraged to use higher quantities of fertilizer,resulting in higher yields. As expected, higher jute production forced marginaljute farmers to switch to rice production in the aus season. Consequently riceproduction has increased. IDA credit on lending problem has also been solved.Staff travel allowance is inadequate and that is hampering production creditrecovery effort. Staff housing component may be scaled down.
- 36 -
ANNEX IIPage 6
Cr. No. 787 Foodgrain Storage II Project: US$25 Million Credit of April 12,1978; Effective Date: September 29, 1978; Closing Date:December 31, 1982
The project had a slow start due to administrative difficulties,problems in land acquisition and material shortages. Implementation of theproject's 145,000 ton procurement storage component is now progressing satis-factorily, but the storage rehabilitation and relief storage programs havebeen taken up only recently. Quality control operations are yet to be improved,and paddy dryers still need to be procured. Consultants have been engaged forengineering, quality control and paddy drying; and the pilot marketing projectis doing well at the Muktagacha Thana Central Cooperative Association, thefirst one to participate in the project. The project is now anticipated to becompleted by December 31, 1982, six months behind schedule.
Cr. No. 828 Agricultural Research Project: US$6 Million Credit of June 16,1978; Effective Date: November 15, 1978; Closing Date:December 31, 1984
The Project is making satisfactory progress. The BARC headquartersbuilding is complete and fully operational. BARI station developments arealmost complete at Jessore and Janalpur, but Hathazari is behind schedule.The Research Grant Scheme is operating well and supports 40 research sub-projects in elpven institutes. An evaluation and monitoring system has beeninaugurated. The foreign training component finances 31 PhD students at 15universities. All Project funds fully committed.
Cr. No. 864 Drainage and Flood Control Project: US$19.0 Million Creditof December 22, 1978; Effective Date: October 19, 1979;Closing Date: June 30, 1984
Of the three sub-projects financed under the project, Chenchuri Beel(CCB) and Kolabashakhali (KBK) are expected to be completed on schedule inmid-1983. Delays have been experienced, however, in the implementation of theBrahmaputra Right Embankment (BRE). Agreement has recently been reached onretirement of the embankment and disbursement for this part of the project isexpected to accelerate.
Cr. No. 890 Oxbow Lakes Fishery Project: US$6 Million Credit of April 3,1979; Effective Date: February 13, 1980; Closing Date:June 30, 1984
After a slow start, construction of civil works in the centralhatchery complex has commenced in January 1982. It is hoped that the imple-mentation delays can be made up at least partially and that the centralhatchery will go into operation by June 1983. Total project costs areestimated to increase by Tk 26 million (23%). Such increase will necessi-tate an additional government input of Tk 18 million. IDA's share of theincrease can be absorbed within the Credit amount because of Taka devaluationof about 19% since appraisal.
- 37 - ~~~ANNEX II
Page 7
Cr. No. 955 Small Scale Drainage & Flood Control Project: US$25.0 MillionCredit of October 30, 1979; Effective Date: May 21, 1980;Closing Date: December 31, 1984
A total of 19 subprojects have been approved to date. Constructionhas been completed on nine subprojects, and tendering is in progress on theremainder.
Cr. No. 990 Low Lift Pump Project: US$37.0 Million Credit of April 4,1980; Effective Date: September 8, 1980; Closing Date:December 31, 1984
Three thousand two-cusec LLPs and 1,500 one-cusec LLPs, the Phase Isales program, were delivered in October 1980. Orders have also been placedfor the remaining 4,000 LLPs. Sales for the first phase has begun with about1,000 LLPs sold. A detailed project Action Plan has also been prepared.
Cr. No. 1042 Mangrove Afforestation Project: US$11.0 Million Creditof June 27, 1980; Effective Date: September 26, 1980;Closing Date: December 31, 1985
Overall progress is satisfactory. The Project Director and all keypersonnel are in post. The PTU consultant was appointed and visited the areasin July 1981. It has been agreed that SPARRSO (formerly Bangladesh LandsetProgram) should undertake the five year Remote Sensing Program and a draftscheme has been prepared; Landset imagery tapes obtained in February will beprocessed shortly; aerial photography was recently completed.
Cr. No. 1140 Hand Tubewells Project: US$18.0 Million Credit of July 8, 1981;Effective Date: February 11, 1982; Closing Date: March 31, 1985
Project staff are in place and tendering procedures for raw materialsto fabricate 90,000 tubewells are complete. However, procurement proceduresare being held up by inadequate budgetary allocations. A minimum of six monthslead time is required for procurement and local fabrication, and delays couldaffect tubewell availability and sales in the 1982/83 boro season. Priceparity between BADC carry-over stocks and project tubewells is yet to beestablished. Planning Commission has been alerted to both of these problems.
This project is designed to provide long-term credit for investmentsin minor irrigation and other agricultural development. The privatization ofshallow tubewell sales has not made much progress, primarily due to the pricedifferential between public sector and private sector sales and the reluctanceof government to issue import licenses to private dealers. Appointment ofconsultants to assist Bangladesh Bank, the implementation agency, is yet tobe made.
- 38 -
ANNEX IIPage 8
Cr. No. 1184 Second Drainage and Flood Control Project: US$27.0 MillionCredit of January 8, 1982; Closing Date: June 30, 1987
This Credit is not yet effective.
Cr. No. 1215 Second Extension and Research Project: US$27 Million Creditof March 16, 1982; Closing Date: June 30, 1988
This Credit is not yet effective.
Industry and Imports Program Credits
Cr. No. 527 Ashuganj Fertilizer Project: US$62.0 Million Credit ofFebruary 11, 1975, as amended by Amending Agreement of June 18,1979; Original Credit Effective Date: December 19, 1975;Supplementary Credit Effective Date: August 1, 1979;Closing Date: June 30, 1985
The project is being cofinanced by the Asian Development Bank, KfW,EEC, IFAD, the OPEC Special Fund, and the Governments of Iran, Switzerland,UK and US, for a total of about US$190 million equivalent, in addition to theIDA credit. The project is about three years behind schedule because of theadditional site works required to protect the proposed plant from earthquakerisks and initial delays in the placement of orders and construction planning.Because of the additional site works, the delays and currency fluctuations,supplemental financing was necessary and has been obtained. Plant has beenmechanically completed. Despite continuing minor commissioning problems,production of urea was started in December 1981, about six months later thananticipated at the time of supplementary financing, and total project costsare likely to be close to that approved at the time of IDA supplementaryfinancing but with an increase in foreign exchange requirement of aboutUS$12 million.
Cr. No. 632 Bangladesh Shilpa Bank Project: US$25.0 Million Credit ofMay 20, 1976; Effective Date: November 8, 1976; Closing Date:June 30, 1982
The institutional upgrading program instituted under the credit iscontinuing with improvement in BSB's operations, especially in the areas ofloan accounting and staff training. Areas of operational weakness, partic-ularly project appraisal and loan collections are receiving close GOB/IDAsupervision.
Cr. No. 825 Small Scale Industry II Project: US$7 Million of June 16,1978; Effective Date: September 15, 1978; Closing Date:March 31, 1983
Tha Project appraisal and processing capabilities of the implement-ing Banks have developed rapidly, and the Project is expected to be completedahead of schedule. There has been significant improvement in institutional
- 39 - ANNEX IIPage 9
capabilities of the commercial banks; and staff of the Small and CottageIndustries Corporation have begun preparation of subsector and area studiesfor small industry promotion. The project was fully committed by the commer-cial banks in July 1980.
Cr. No. 980 Eighth Imports Program: US$50 Million Credit of April 4, 1980;Effective Date: April 21, 1980; Closing Date: February 28, 1982
Implementation of action programs undertaken under this and precedingimport program credits are proceeding satisfactorily, although GOB has yet tomake the full FY81 infusions of equity agreed for public sector units in theJute and Textile Sectors. This situation will be monitored by forthcomingmission to Bangladesh. As of March 31, 1982 the credit has been fully commit-ted, while disbursements were US$47.2 million. Allowing for processing of pay-ments in the pipeline, the credit should be fully disbursed within the next fewmonths.
Cr. No. 1023 Fertilizer Industry Rehabilitation Project: US$29 Million Creditof June 4, 1980; Effective Date: September 8, 1980; Closing Date:December 31, 1983.
The reorganization of the project entities into three separatefertilizer manufacturing companies has been accomplished, and project financingagreements have been executed. Consultants for providing engineering serviceshave been selected and their contracts approved.
Cr. No. 1032 Jute Industry Rehabilitation Project: US$20 Million Creditof June 4, 1980; Effective Date: July 22, 1980; Closing Date:June 30, 1984
Project implementation has been fairly satisfactory though somedelay has been experienced in the recruitment of consultants. Tender Noticesfor procurement of spares have been issued and those for the construction oftwo new training centers are in preparation.
Cr. No. 1044 Second Fertilizer Imports Project: US$25 Million Credit ofJune 27, 1980; Effective Date: November 11, 1980; ClosingDate: March 31, 1982
As of March 31, 1982 US$23.26 million had been disbursed. The creditwas closed on March 31, 1982 and payment for commitments in the pipeline willcontinue.
Cr. No. 1065 Small-Scale Industry III Project: US$35 Million of October 17,1980; Effective Date: January 15, 1981; Closing Date:June 30, 1984
The credit became effective on January 15, 1982. The credit com-ponents of the project are moving well, particularly in the area of small-medium sized projects. Progress is also satisfactory on the technical andmarketing service components of the technical assistance elements of theproject.
- 40 -
ANNEX IIPage 10
Cr. No. 1071 Ninth Imports Program: US$65 Million Credit of October 17, 1980;Effective Date: November 11, 1980; Closing Date: December 31,1982
Progress on implementing ongoing action program requirementscontinue satisfactorily albeit somewhat behind schedule. During FY81,GOB has initiated a number of the policy changes required under the credit,particularly in the areas of agriculture/irrigation policy.
Cr. No. 1117 Bangladesh Shilpa Bank II Project: US$50.0 Million Credit ofMarch 31, 1981; Effective Date: August 12, 1981; Closing Date:April 30, 1986
This project continues IDA's involvement with BSB initiated underCr. 632-BD. Institutional upgrading programs initiated under that creditare being continued and GOB/IDA are monitoring carefully BSBs operationin the areas of loan recoveries and project appraisals. Action is alsounderway to strengthen BSBs sectoral review capabilities.
Cr. No. 1194 Tenth Imports Program US$100.0 Million Credit of January 26,1982; Effective Date: February 22, 1982; Closing Date: June 30,1984.
This Credit became effective on February 22, 1982.
Cr. No. 1204 Chittagong Urea Fertilizer Project; US$15.0 Million Credit ofFebruary 10, 1982; Closing Date: December 31, 1986
This Credit is not yet effective.
Cr. No. 1205 Textile Industry Rehabilitation Project: US$30.0 Million Creditof February 10, 1982; Closing Date: December 31, 1985
This Credit is not yet effective.
Education Projects
Cr. No. 621 Agricultural and Rural Training Project: US$12.0 MillionCredit of March 25, 1976; Effective Date: June 30, 1976;Closing Date: June 30, 1982
The project is nearing completion. All buildings in the threenew ATIs have been completed and only minor works, for which contracts havebeen let, remain. Of the four existing ATIs, construction and renovationare virtually complete. As a result of student strikes in 1981 no first yearstudents were enrolled and the institutions are currently operating at onlyabout 50% capacity. Staffing is adequate and most have received in-servicetraining under the project. The AMTI course has been successful and anextension of three years is now under consideration. RMB is closely super-vising the project and GOB have been asked to ensure that all taka fundsnecessary for completion of the project by June 30, 1982 will be provided.
- 41 -ANNEX IIPage 11
Cr. No. 912 Vocational Training Project: US$25.0 Million Credit of May 31,1979; Effective Date: November 2, 1979; Closing Date:June 30, 1985
The project is encountering major problems in the areas of manage-ment and institution building. The Project Implementation Unit is not opera-ting well, largely as a result of the lack of a full-time Project Director,
and also because the Project Manager is a consultant to the Governmentand therefore lacks financial authority. The functions of other PIU staffare still not clearly defined, and the Chief Technical Adviser of the ILOtechnical assistance team has recently resigned.
The National Council for Skill Development and Training has notfunctioned well since its inception, having met only once in two years.The various sub-committees have also only met irregularly. The appointmentof staff for the Secretariat is lagging considerably behind schedule, andas yet, no site has been acquired for the headquarters building.
The In-Plant and Instructor Training Programs are progressing,but at a slower than planned rate because of difficulties in financing therecurrent costs. The Revolving Fund established to facilitate this processhas not been replenished. Tenders have been called for the construction ofthe five new Technical Training Centers, but the program is still about 18months delayed. As a result of the February/March supervision, the Govern-ment has been advised that quick actions were needed to solve these problems.
Cr. No. 1054 Fourth Education (Primary) Project: US$40.0 Million Creditof June 27, 1980; Effective Date: December 1, 1980; ClosingDate: December 31, 1986
The project was declared effective on December 1, 1980. Activitiesplanned for the first year (1981), particularly the establishment of theproject implementation infrastructure, staff training, base line evaluation,materials production and distribution (girls uniforms and textbooks), andthe formation of the Directorate of Primary and Mass Education, Local Educa-tion Authorities and School Management Committees, have all been substantiallycompleted. The second year program has begun, but some delays are evidentprimarily in the construction program. The Government's decision to concen-trate on school repair and other minor works during the first year of thenational UPE has delayed the start of construction on the schools to whichIDA funds have been targeted. There is also some evidence that the recurrenttraining started during the first year may not, as yet, be achieving all ofits intended objectives. The Government has recognized these issues andhave taken appropriate steps to remedy the situation.
- 42 -
ANNEX IIPage 12
Population Project
Cr. No. 533 Population Project: US$15 Million Credit of March 10, 1975;Effective Date: September 25, 1975; Closing Date: September 30,1982
Except for Part A (Training and Service Facilities), implementationof five of the project's six main parts was completed in mid-1980. Progressin implementation of the Training and Service Facilities part of the project,in respect of which the original Closing Date was extended initially by oneyear, has improved slightly during the last six months, although it is stillslow and therefore unsatisfactory. Although 9 of the 21 project trainingand service facilities were fully completed by September 30, 1981 and 4 morewere expected to be handed over by December 31, 1981, the remaining 8 will notbe completed until mid-1982. In the circumstances and at the Government-srequest, the Closing Date has been extended for a second and final periodof nine months to September 30, 1982 to permit full project completion anddisbursement of credit proceeds.
Cr. No. 921 Second Population and Family Health Project: US$32.0 MillionCredit of May 31, 1979; Effective Date: April 1, 1980;Closing Date: December 31, 1983
Project execution, except for the first tranche of the Family WelfareCenter-s component, effectively commenced only in July 1980, about one yearbehind schedule. While the Information, Education and Motivation (IEM) andResearch and Evaluation parts of the project are proceeding satisfactorily,the civil works and Family Welfare Centers components of the servicedelivery and training parts of the project are significantly delayed andtheir completion within the original four year implementation period (July1979-June 1983) is no longer feasible, owing not only to the initial oneyear delay in implementation but also to weak implementation capacity ofresponsible agencies, and the impact of budget cuts following the Government'srevision of its Second Five-Year Plan. These problems combined with thede facto devaluation of the Taka since appraisal, will result in significantsavings. A two year extension of the project implementation period or areduction in the projects infrastructure components to match implementationcapacity with subsequent reallocation of the IDA credit are currently beingdiscussed with the Government.
Transport Projects
Cr. No. 408 Highways Project: US$25.0 Million Credit of June 29, 1973;Effective Date: August 7, 1973; Closing Date: December 31,1982
All works under the project are now complete. Arbitration on theSitalakhya Bridge contractor's claims has been completed, and the results areawaited. The Closing Date of the credit extended to March 31, 1981 has beenextended to December 31, 1982 to enable the use of uncommitted credit balance
- 43 -ANNEX IIPage 13
to cover short term protective Feni Bypass pavement work, and to meet the costof eligible components of the arbitration. Significant failures have appearedon Feni Bypass.
Cr. No. 735 Inland Water Transport II Project: US$5.0 Million Creditof September 30, 1977; Effective Date: March 13, 1978;Closing Date: December 31, 1982
Spare parts for BIWTA vessels, navigation aids, hydrographic andcargo handling have been ordered, and tenders for telecommunication equipmenthave been issued. Most spare parts for BIWTC cargo vessels and BIWTA servicevessels have been delivered and are on order. Consultants appointed to carryout studies on IWT sector, fleet scheduling of BIWTC and accounting systemsfor BIWTA and BIWTC have submitted their reports. Implementation of therecommendations of the accounting studies is in progress. At the request ofthe Borrower the closing date has been extended to December 31, 1982.
Cr. No. 964 Second Highway Project: US$10.0 Million Credit of December 21,1979; Effective Date: August 29, 1980; Closing Date: June 30,1984.
Project implementation has been seriously delayed by the Borrower-sfailure to award construction contracts in reasonable time. This failure hasresulted, and continues to result, in increased project cost due to inflation.The problem appears to result from factors outside the control of RHD, e.g.,the ineptitude of the "Procurement Committee" and standard Government proce-dures which are in conflict with IDA procurement principles.
Cr. No. 1096 Fertilizer Transport Project: US$25.0 Million Creditof February 13, 1981; Effective Date: July 24, 1981;Closing Date: December 31, 1984
Trial dredging at Chittagong Port has been completed and resultsof the survey are expected by mid-1982. Also dredging work at the inlandriver port of Baghabari has been completed and pontoons are to be in placeshortly. Tenders for procurement of railway material have been issued.Progress on other project components has been slow, but regular supervisionmissions are providing assistance to speed up implementation. Disbursementof funds, on the other hand, has been satisfactory.
Telecommunications Projects
Cr. No. 487 Second Telecommunications Project: US$20.0 Million Creditof June 26, 1974; Effective Date: July 23, 1974; ClosingDate: June 30, 1983
The project execution is largely behind schedule due to previousdelays in procurement, civil works and reduced output of the domestic telephonecables and switching equipment factories. Difficulties were also experiencedin completing the local construction and installation of the systems. TTB, a
- 44 -
ANNEX IIPage 14
Government board since April 1979, is making significant progress in organiz-ing its finances and accounts, and in managing its operations and development.TTB funds have until recently all been deposited in an overall Governmentaccount. This was changed and, since July 1981, TTB has a designated bankaccount to which all funds are deposited and withdrawn. Thus, TTB has achieveda level of financial autonomy that will permit it to adjust its developmentprogram within the overall framework of the agreed budget. Training on com-mercial accounts is about to be completed and commercial accounts will beprepared from FY82/83 onward. In general, financial performance of TTB isreasonably good. Covenants under the project are now being complied with.TTB has recently taken final procurement action to commit the funds remainingunder the project. Works related to last procurement will be completed byJune 1983. Adequate actions as would be required to further improve TTB'smanagement, operations and development capability, will be considered underthe proposed third telecommunications project.
Technical Assistance Credits
Cr. No. 872 Third Technical Assistance Project: US$10.0 Million Creditof December 22, 1978; Effective Date: January 19, 1979;Closing Date: June 30, 1982
35 subprojects, totaling about $9.0 million have been approved anda further 10 subprojects, totaling about $9 million have been approved inprinciple. Those that are finalized first would be considered under thiscredit (with the remainder being funded under the Fourth Technical Assistancecredit).
This Credit became effective on June 10, 1981. A number ofproposed subprojects have been agreed in principle and steps are being takento secure consultant services.
Power Projects
Cr. No. 934 Greater Khulna Power Distribution Project: US$28.0 MillionCredit of June 18, 1979; Effective Date: November 20, 1979;Closing Date: June 30, 1984
Foreign consultants (Motor Columbus - Switzerland) have been ap-pointed as scheduled and have begun design work. Project execution is aboutone year behind schedule due to administrative difficulties in preparing mapsfor the project areas and to the inability of the beneficiary (Power Develop-ment Board) to provide adequate local staff for project implementation. Toimprove the situation, local consultants have been appointed in September1981.
- 45 -ANNEX IIPage 15
Cr. No. 1091 Bakhrabad Gas Development Project: US$85.0 Million Creditof February 13, 1981; Effective Date: June 16, 1981;Closing Date: December 31, 1984
Pipeline design and preparation of procurement documents is pro-ceeding satisfactorily. After initial delays due to unseasonal rains andmaterials shortages, BK-2 well has been completed. Production tests confirmthe adequacy of reserves of the Bakhrabad gas fields, and the procurementof materials and services for the pipeline portion of the project has beenauthorized. Pipeline materials and construction contracts are expected tobe awarded in time to complete crossings and other preliminary phases duringthe 1981/82 dry season and the entire pipeline the following year, in linewith original schedule.
Water Supply and Sewerage Projects
Cr. No. 941 Second Dacca Water Supply and Sewerage Project: USS22.0 MillionCredit of June 29, 1979; Effective Date: November 30, 1979;Closing Date: June 30, 1983
DACCA WASA-s consulting engineers have completed design and it isexpected that procurement will be completed by mid-1982. Physical progressis one year behind schedule. Early delays resulted from slow startup andsluggish procurement but are currently due to land acquisition problems, whichhave recently been mostly overcome, and shortage of local currency with whichto pay civil works contractors. Also, recently, DACCA WASA raised its tariffby 30% and GOB paid off all arrears.
Cr. No. 1001 Second Chittagong Water Supply Project: US$20.0 Million Creditof April 4, 1980; Effective Date: April 9, 1981; ClosingDate: December 31, 1985
After early delays in selecting consultants for the project a firmis in place and design is now well advanced. Selection of a second consultantfor a sewerage/sanitation study has been made. An expatriate financialadviser has proved effective. Procurement has started but implementation willbe about 1-1/2 years behind schedule. A tariff increase is needed and WASAhas problems in collecting arrears from Government departments; there is alsoa land acquisition problem. GOB has been asked to ensure that all of thesematters are quickly resolved.
- 46 - ANNEX IIIPage 1
BANGLADESH
SECOND DEEP TUBEWELLS PROJECT
Section I: Timetable of Key Events
(a) Time taken to prepare project: 1 year
(b) Project prepared by: FAO/CP
(c) First presented to IDA: May 1981
(d) Preparation mission: July 1981
(e) Departure of appraisal mission: October 1981
(f) Completion of negotiations: June 16, 1982
(g) Estimated date of effectiveness: November 1982
Section II: Special IDA Implementation Action
None.
Section III: Special Conditions
Conditions of Effectiveness:
(a) the appointment of three BADC Executive Engineers andfour IRDP Deputy Directors (paragraphs 44 and 47);
(b) the Subsidiary Loan Agreement and the ParticipationAgreement have been entered into (paragraph 49);
(c) the Project Coordination Committee and all DistrictCoordination Committees have been established(paragraph 51);
(d) all conditions are fulfilled for the effectivenessof the ODA and ADAB Agreements (paragraph 54); and
(e) the approval of the project proforma (paragraph 54).
- 47 -
ANNEX IIIPage 2
Other Conditions
(a) Restructuring of BADC's Irrigation Wing (paragraph 33);
(b) Government would review the unit price for the sale ofDTW with a view to reducing the subsidy (paragraph 66).
a
IBRD 16189, .) goO o910 BANGLADESH FEFRUARY 1982
Thin -tp h. h bect prepared by theZ--i . )tt tWhtcttf;',,tkeSnttdS- ds DEEP TUBEWELL PROJECTth-e retina to wh,nh tis attached1t mTe d ennt d ntions teed and the
, - :' _ ~botuidternn hr wrt n this reap- -donotiply, o the part of the PROJECT AREA
World Rank and its eftitbs, any@2 ZI S 1 jttdg-entonth. lg.1 Vt-t/sf
DEEP TUBEWELL PROJECTThickness of Upper Clay and Silt
-26t t (9)' 'g1 \9XGoubot: Range of thickness ofr J-<utggot>Xf > < < ,< upper clay and silt (ft) 26_
Less than 3- Roads
N ,Kn) < A tR 2l@ fit 3 - 15 Railways
¢ got/hornt n 'i_n,Jn ; 15-50 - Rivers50 -80 International
boundaries
250 - CHIcttcsk~~~~~~~~~~~~80- 1
more than llS
t;~~~~~~~~~~~~~~~~~~~~~~hoa 2R 5 __-;-
-25'~~~~~~~~~2
, < it \ ? ' - s ' i k SI = - X ~~~~RANGAMAT-
This map h1as been etepered by ihe t- HiTGN World Bank s s ta ff exc lost vely f or .S - \ . * the csnyesrense of ithe readers of ') f thne report to wk,nk it s atarhed - = -.. .~- The denrEn'atitsusshed and the . ''- '- ' - -- -' Jkoosdar,es shown on thin map ,- .: .< , .- V2do not anpip. on the Port of the .1 : ~ ~ ~ .. ;- -Wo./d Batik and its affhiaten, any -- :-
sudkmeni on eke lepal statass op -- _any terniton, or any endorsement * -. , -or oncceptanne of sunk koondarles !- - - .z 9
I N DIA D-C0
- 0 2 25 50 75 MILE5S .2
2V
. ~ ~ ~~ ~ ~~~~0 50 100 KILOMETERS
SRI LANKA 99 2
BOGR ~ ~ ~ ~ 9090 2
I
'89 ~~~~~~~~~~9.92BANGLADESH
DEEP TUBEWELL PROJECTGeology and Dry Season Water Levels
b ~~~~lInterstream Deposits of Silt, m'~ Pleistocene Alluvium, mainlySand and Gravel, usually '~ 1- Madhurpur & Barind2SIhtly higher than surround- Pli- Pleistocene Dupitila-
De ltoo Dposits Sandytclayt & Pebble Beds(undaiffDerentiated Miocene Sedimentary Rocks
Z Beach Sand ,a Water Level Contaurs (as of'N K 0~~~~~~~~j~~~ ~Piedmont Deposits June, 1979, in feet)
Terrace & Meander Deposits -"-- Rivers4 % , 1;: f ',_ t wamp Deposits, mainly International Boundaries
