Document of The World Bank · Document of The World Bank Report No: ICR00002877 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IBRD-47070 IDA-37960 TF-57070) ON A LOAN IN THE AMOUNT

Document of

The World Bank

Report No: ICR00002877

IMPLEMENTATION COMPLETION AND RESULTS REPORT

(IBRD-47070 IDA-37960 TF-57070)

ON A

LOAN IN THE AMOUNT OF US$35.0 MILLION

AND A CREDIT

IN THE AMOUNT OF SDR 18.4 MILLION

(US$25.0 MILLION EQUIVALENT)

TO THE

REPUBLIC OF UZBEKISTAN

FOR A

DRAINAGE, IRRIGATION AND WETLANDS IMPROVEMENT PHASE-I PROJECT

April 25, 2014

Sustainable Development Department

Central Asia Country Unit

Europe & Central Asia Region

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CURRENCY EQUIVALENTS

(Exchange Rate Effective 00000000)

Currency Unit =

1.00 = US$ 0.00045

US$ 1.00 = 2,200

FISCAL YEAR

ABBREVIATIONS AND ACRONYMS

AMD Akchadarya Main Drain M&E Monitoring and Evaluation

ASBP Aral Sea Basin Program MAWR Ministry of Agriculture and Water

Resources

BCM Billion Cubic Meters MFERIT Ministry of Foreign Economic

Relations, Investments and Trade

M&I Municipal and Industrial

CAS Country Assistance Strategy MMS Maintenance Management System

CD Collector Drain MTR Mid-Term Review

CIS Commonwealth of Independent

States

NGOs Nongovernmental Organizations

CMS Cubic meters per second NPV Net Present Value

DIWIP Drainage, Irrigation and

Wetlands Improvement Phase I

Project

O&M Operations and Maintenance

EA Environmental Assessment OP Operational Policy

EMP Environmental Management

Plan

PIU Project Implementation Unit

ERR Economic Rate of Return PAN-ISA Pakhta-Arna Nayman Irrigation

System Administration

EU European Union PAD Project Appraisal Document

FRR Financial Rate of Return PMR Project Management Report

FARAH Financial Accounting,

Reporting and Auditing

Handbook

PPF Project Preparation Facility

FFS Farmer Field School PS Pumping Station

FM Financial Manual RESP Rural Enterprise Support Project

FMS Financial Management System SA Social Assessment

FS Financial Management

Specialist

SK South Karakalpakstan

FSK Former Sovkhoz or Kolkhoz SKMC South Karakalpakstan Main

Collector

FT Field Team SKMD South Karakalpakstan Main Drain

iii

FY Fiscal Year SEE State Ecological Expertise

GOU Government of Uzbekistan TA Technical Assistance

GWL Ground Water Level TACIS Technical Assistance Program to

CIS Countries (EU)

ICB International Competitive

Bidding

TST Technical Support Team

ICR Implementation Completion

and Results Report

Tuman District

IDA International Development

Association

VAT Value Added Tax

I&D Irrigation and Drainage WCA Water Consumer Association

IFAS International Fund for the Aral

Sea

WUA Water Users’ Association

ISR Implementation Status and

Results Report

WUG Water Users’ Group

KHE KK Hydro-Geo Amelioration

Expedition

US$/US

D

United States Dollar

KPCC Karakalpakstan Project

Coordination Committee

UZS Uzbekistan Som

LAWM

O

Lower Amudarya Water Basin

Management Organization

MCM Million Cubic Meters

Vice President: Laura Tuck

Country Director: Saroj Kumar Jha

Country Manager: Takuya Kamata

Sector Manager: Dina Umali-Deininger

Project Team Leader: IJsbrand de Jong

ICR Team Leader: IJsbrand de Jong

ICR Author: Daniel Gerber, Jeren Kabayeva

iv

UZBEKISTAN

DRAINAGE, IRRIGATION AND WETLANDS IMPROVEMENT PHASE-I PROJECT

CONTENTS

DATA SHEET

A. Basic Information .............................................................................................................v B. Key Dates .........................................................................................................................v

C. Ratings Summary .............................................................................................................v D. Sector and Theme Codes ................................................................................................ vi E. Bank Staff ....................................................................................................................... vi F. Results Framework Analysis ......................................................................................... vii

G. Ratings of Project Performance in ISRs ...................................................................... xiii H. Restructuring (if any) ................................................................................................... xiv

I. Disbursement Profile ......................................................................................................xv

1. Project Context, Development Objectives and Design ...................................................1 2. Key Factors Affecting Implementation and Outcomes .................................................10 3. Assessment of Outcomes ..............................................................................................16

4. Assessment of Risk to Development Outcome .............................................................27 5. Assessment of Bank and Borrower Performance..........................................................28

6. Lessons Learned ............................................................................................................30 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners ...............31

Annex 1. Project Costs and Financing ......................................................................................32

Annex 2. Outputs by Component..............................................................................................33 Annex 3. Economic and Financial Analysis .............................................................................46 Annex 4. Bank Lending and Implementation Support/Supervision Processes .........................52

Annex 6. Stakeholder Workshop Report and Results ...............................................................62 Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR .................................63

Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders ...................................69 Annex 9. Overview of the project area .....................................................................................70

ANNEX 10. Analysis of Copt Yield Evolution in the Project Area in 2005-2012 .................71 Annex 11. List of Supporting Documents ................................................................................73 MAP…………………………. .................................................................................................74

v

A. Basic Information

Country: Uzbekistan Project Name:

Drainage, Irrigation &

Wetlands Improvement

Project - Phase 1

Project ID: P009127 L/C/TF Number(s): IBRD-47070,IDA-

37960,TF-57070

ICR Date: 04/14/2014 ICR Type: Core ICR

Lending Instrument: SIL Borrower: GOVERNMENT OF

UZBEKISTAN

Original Total

Commitment: USD 60.00M Disbursed Amount: USD 57.25M

Revised Amount: USD 54.27M

Environmental Category: A

Implementing Agencies:

Ministry of Agriculture and Water Resources

Cofinanciers and Other External Partners:

B. Key Dates

Process Date Process Original Date Revised / Actual

Date(s)

Concept Review: 12/14/1999 Effectiveness: 02/20/2004 02/20/2004

Appraisal: 03/26/2003 Restructuring(s):

11/04/2009

06/03/2011

03/28/2013

Approval: 06/19/2003 Mid-term Review: 11/05/2007

Closing: 06/30/2010 06/30/2013

C. Ratings Summary

C.1 Performance Rating by ICR

Outcomes: Moderately Satisfactory

Risk to Development Outcome: Moderate

Bank Performance: Moderately Unsatisfactory

Borrower Performance: Moderately Unsatisfactory

C.2 Detailed Ratings of Bank and Borrower Performance (by ICR)

Bank Ratings Borrower Ratings

Quality at Entry: Moderately

Unsatisfactory Government:

Moderately

Unsatisfactory

Quality of Supervision: Moderately Satisfactory Implementing Moderately Satisfactory

vi

Agency/Agencies:

Overall Bank

Performance:

Moderately

Unsatisfactory Overall Borrower

Performance:

Moderately

Unsatisfactory

C.3 Quality at Entry and Implementation Performance Indicators

Implementation

Performance Indicators

QAG Assessments

(if any) Rating

Potential Problem

Project at any time

(Yes/No):

No Quality at Entry

(QEA): None

Problem Project at any

time (Yes/No): Yes

Quality of

Supervision (QSA): None

DO rating before

Closing/Inactive status:

Moderately

Satisfactory

D. Sector and Theme Codes

Original Actual

Sector Code (as % of total Bank financing)

General public administration sector 4 4

Irrigation and drainage 96 96

Theme Code (as % of total Bank financing)

Land administration and management 14 10

Participation and civic engagement 14 10

Pollution management and environmental health 14 15

Rural services and infrastructure 29 35

Water resource management 29 30

E. Bank Staff

Positions At ICR At Approval

Vice President: Laura Tuck Johannes F. Linn

Country Director: Saroj Kumar Jha Dennis N. de Tray

Sector Manager: Dina Umali-Deininger Joseph R. Goldberg

Project Team Leader: IJsbrand Harko de Jong Masood Ahmad

ICR Team Leader: IJsbrand Harko de Jong

ICR Primary Author: Daniel P. Gerber

Jeren Kabayeva

vii

F. Results Framework Analysis

Project Development Objectives (from Project Appraisal Document) 1. To increase the productivity of irrigated agriculture, employment and incomes in

Karakalpakstan, one of the poorest regions in Central Asia.

2. To improve water quality of the Amu Darya river by safe disposal of the drainage effluent,

and enhance quality of wetlands in the Amu Darya delta.

3. To develop the institutions for improving water management, operation and maintenance

(O&M) of the irrigation and drainage systems, and for promoting sustainable irrigated

agriculture through participatory irrigation management.

Revised Project Development Objectives (as approved by original approving authority)

Project Development Objectives were not revised.

(a) PDO Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : To increase the productivity of irrigated agriculture, employment and incomes in

Karakalpakstan, one of the poorest regions in Central Asia

Value

quantitative or

Qualitative)

Cropped area in South

Karakalpakstan (SK) is

65,000 ha.

Yield increase:

Baseline average of

project area 2006:

Cotton – 1.69 t/ha

Wheat – 1.86 t/ha

Increase in

cropped area to

115,000 ha and

increase in yields

by 10-20%

85,000ha with

cotton yields up

31% and wheat

yields up 110%

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Original value of 115,000 ha reflected cropped area including double cropping.

System area is 103,000ha, Yields improvement exceed expectations at design.

Indicator 2 : To improve water quality of the Amu Darya river by safe disposal of the

drainage effluent, and enhance quality of wetlands in the Amu Darya delta

Value

quantitative or

Qualitative)

River salinity

March 2006 - 1270 mg/l

November 2006 - 1050

mg/l

Salinity reduction

0.05g/l

March 2012 - 1050

mg/l (-0.22 g/l)

November 2012 -

850 mg/l (-0.20 g/l)

In comparison of 3

year average (2005-

viii

07 to 2009-12): -

0.13 g/l

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Value reflects project end and includes significant changes during the course of

the year and between years depending on river flows, snow covers upstream, etc.

Indicator 3 :

To develop the institutions for improving water management, operation and

maintenance (O&M) of the irrigation and drainage systems, and for promoting

sustainable irrigated agriculture through participatory irrigation management

Value

quantitative or

Qualitative)

Reliability: Ratio of

actual water supplied to

demand planned for

delivery weekly,

monthly, yearly

No baseline

In 2012 season

95.4% of water for

leaching, and

88.7% during

vegetation.

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

27 new WUAs established by the project. Data on water delivery reliability

available only for 2012. 2011 was a dry year with works not yet completed and

saw significant shortfalls at system tail end. Improvements expected with a

follow up project.

(b) Intermediate Outcome Indicator(s)

Indicator Baseline Value

Original Target

Values (from

approval

documents)

Formally

Revised

Target

Values

Actual Value

Achieved at

Completion or

Target Years

Indicator 1 : SKMD including SKMC and AMD constructed

Value

(quantitative

or Qualitative)

0% 100% 100%

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved

Indicator 2 : Selective rehabilitation of collector drains carried out

Value

(quantitative

or Qualitative)

0% 100 % 100%

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved. Additional works were performed on interfarm network relative to

original design due to savings on major contract early on in the project.

Indicator 3 : WUAs established in the Beruniy and Turtkul Tumans

Value No WUAs exist WUAs formed 27 WUAs covering

ix

(quantitative

or Qualitative)

covering an area

of 60,000 ha in

Beruniy and

Turtkul districts.

66,708 ha

established in

Beruniy and

Turtkul districts.

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved

Indicator 4 : Training for improving I&D within the WUAs carried out. WUAs remain weak

due to difficulties in collecting water fees.

Value

(quantitative

or Qualitative)

No training exist

160 farmers will

be trained on

demonstration

plots during

cropping season

and 400 farmers

by site visits.

691 farmers

participated in in 55

farm field schools.

Farmer Information

Support Desk and

Farmer Information

Support Center

established.

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved

Indicator 5 : Agriculture demonstrations performed; and Farmers' Information Services Desk

established

Value

(quantitative

or Qualitative)

No demonstration plots

exist

12 demonstration

plots established

12 demonstrations

held throughout

project area.

Farmer Information

desk established.

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved

Indicator 6 : Selective I&D improvements in the WUA areas carried out

Value

(quantitative

or Qualitative)

0 ha 65,000 ha 65,000 ha

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved. As of March 1, 2012 all works under the contracts DIWIP/MS/1,

DIWIP/CAR/1, DIWIP/DI/2 were completed at 100%.

Indicator 7 : Selective improvements in main and secondary irrigation system carried out

Value

(quantitative

or Qualitative)

0% 100% 100%

x

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved, and due to savings more works were delivered than originally

planned.

Indicator 8 : Works stipulated in EMP carried out

Value

(quantitative

or Qualitative)

No works for Badai

Tugai riverine forest,

Lake Ayazkala mitigation

and AMD mitigation, and

monitoring of

groundwater near castles

have not started

Badai Tugai

works, Lake

Ayazkala

mitigation works

for closure and

AMD mitigation

works completed

and monitoring of

groundwater near

castles continues.

Badai Tugai works

completed, Lake

Ayazkala dust

control works

cancelled due to

slow drying and

some natural

vegetation growth

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Partial achievement based on recommendation from Uzbek Environmental

Committee.

Indicator 9 : M&E carried out effectively with useful feed-back for project design,

implementation and O&M provided

Value

(quantitative

or Qualitative)

PIU staff were not trained

and M&E reports were

not prepared

PIU staff are

trained and M&E

reports are

prepared

100%

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Achieved. Regular progress reports and comprehensive completion report were

prepared and submitted to the Bank on time.

Indicator 10 :

Improved capacity of MAWR and Karalpakstan to establish WUAs; plan and

design projects, undertake procurement, and implement, operate and maintain

I&D projects.

Value

(quantitative

or Qualitative)

MAWR staff were not

trained in establishing

WUAs, assisting WUAs

with implementation of

I&D rehabilitation,

irrigation scheduling

techniques and O&M

planning

MAWR staff were

trained in

establishing

WUAs, assisting

WUAs with

implementation of

I&D

rehabilitation,

irrigation

scheduling

techniques and

O&M planning

Several training

rounds held and

monitoring

software developed

but not yet fully

used.

Date achieved 03/10/2003 06/30/2013 06/30/2013

xi

Comments

(incl. %

achievement)

Due to the nature of the sector only limited reforms could be implemented at the

institutional level of water authorities operating the primary and secondary

infrastructure. A follow up project will push for further improvements.

Indicator 11 : Operational water user associations created and/or strengthened (number)

Value

(quantitative

or Qualitative)

0 21 27

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)

Indicator is duplicative, but is being added for corporate monitoring purposes.

Indicator 12 : Technologies demonstrated in the project areas (number)

Value

(quantitative

or Qualitative)

0 12

12 technologies

demonstrated,

including crop

mixes, rotations,

deep ripping, laser

levelling, soil

preparation,

seeding practices,

fetilization, pest

management,

harvest

optimization, etc..

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)


Indicator 13 : Client days of training provided (number)

Value

(quantitative

or Qualitative)

0 160

An estimated 4750

client days of

training provided

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)


Indicator 14 : Area provided with irrigation and drainage services (ha)

Value

(quantitative

or Qualitative)

65,000 ha 85,000 ha

Date achieved 03/10/2003 06/30/2013 06/30/2013

Comments

(incl. %

achievement)


xii

Indicator 15 : Enhanced quality of wetlands e.g. the Badai Tugai (riverine forest reserve)

Value

(quantitative

or Qualitative)

The Badai Tugai forest

reserve was on the verge

of disaster. This was due

to: the growing shortage

of water in the lower

reaches of the Amu

Darya, absence of natural

flooding of its floodplains

and disposal of highly

saline drainage water into

the river.

As of December

2012: Construction

of objects in the

reserve Badai-

Tugai

were completed:

Water via

Saukumjargan

(Budyoniy

canal) was

delivered to the

reserve in the

amount of 800,000

m³, or 12.7% of

the needs.

Date achieved 03/10/2003 06/30/2013

Comments

(incl. %

achievement)

Water levels in the Amudarya River were high, water in the Kokdarya canal

came from late June through mid-September 2012, thus supplying water to

distribution canals from Kokdarya to the reserve Badai-Tugai which received

over 7 million m3 of water.

Indicator 16 : Wetlands in the area of SKMC and AMD are supported

Value

(quantitative

or Qualitative)

No wetlands in the area

of SKMC and AMD

Total area of

wetlands is 2250.8

ha,

all of them

identified as stable,

presenting

adequate living

conditions for

animals,

plants and

providing a corridor

for

migration of fish

and birds.

Date achieved 03/10/2003 06/30/2013

Comments

(incl. %

achievement)

Achieved.

Indicator 17 : Irrigation efficiencies increased

Value

(quantitative

or Qualitative)

no baseline

up to area of

WUA +10%

within the WUA

area +15%

Based on PAN data

the current

efficiency

of irrigation system

xiii

is 0.56

(main canals: 0.9;

inter farm canals:

0.4;

intra farm network:

0.74).

Date achieved 03/10/2003 06/30/2013

Comments

(incl. %

achievement)

Indicator 18 : Amount of drainage water reduced to not more than 3,000 m3/ha

Value

(quantitative

or Qualitative)

Not more than

3,000 m3/ha

Total drainage for

2010-2011

hydrological year

was 351.63 million

m³.

With a total drained

area of 98,810 ha,

discharge of

drainage water is

3,558

m³/ha per year

(2011-2012: 473.24

million m³ in total,

4,789 m³/ha per

year

Date achieved 03/10/2003 06/30/2013

Comments

(incl. %

achievement)

Achieved.

G. Ratings of Project Performance in ISRs

No. Date ISR

Archived DO IP

Actual

Disbursements

(USD millions)

1 07/25/2003 Satisfactory Satisfactory 0.00








xiv





13 10/19/2008 Satisfactory Moderately

Unsatisfactory 34.19

14 01/26/2009 Satisfactory Moderately

Unsatisfactory 36.29

15 06/29/2009 Satisfactory Moderately Satisfactory 38.27






21 06/28/2013 Moderately Satisfactory Satisfactory 57.32

H. Restructuring (if any)

Restructuring

Date(s)

Board

Approved

PDO Change

ISR Ratings at

Restructuring

Amount

Disbursed at

Restructuring

in USD

millions

Reason for Restructuring &

Key Changes Made DO IP

11/04/2009 S MS 41.11 Reallocation and closing date

extension.

06/03/2011 S MS 50.03 Reallocation

03/28/2013 S S 56.69 Reallocation and partial

cancellation

xv

I. Disbursement Profile

1

1. Project Context, Development Objectives and Design

1. The Aral Sea Disaster: Once the world’s fourth largest lake, the Aral Sea has

been steadily shrinking since the 1960s after the Amu-Darya and Syr-Darya Rivers were

channeled and dammed to provide irrigation to agriculture. Today the Aral Sea is ten per

cent of its original size. Karakalpakstan and Khorezm regions in Uzbekistan, due to their

proximity to the Aral Sea and their location at the tail-end of major command areas, were

hit hardest both in terms of agricultural yields and health. The receding sea left huge

plains covered with salt and toxic dust – the results of pesticides and fertilizer used in

cotton production – which were picked up and carried by the wind causing health

problems for the population, as well as reducing agricultural productivity due to land and

water salinization. The people in these regions suffered from high levels of anemia,

together with rising levels of tuberculosis, liver, kidney and respiratory diseases, and

cancer. In Karakalpakstan the fishing industry that once employed tens of thousands of

people was gone, and agricultural land was no longer productive, leading to a rapid loss

of employment opportunities for local people.

2. The Drainage, Irrigation and Wetlands Improvement Phase I Project

(DIWIP) was part of the Aral Sea Basin Program (ASBP) approved by the heads of

five Central Asian States in 1994 that recognized the urgency of the Aral Sea crisis and

sought assistance from international donors. As part of ASBP, the International Fund for

the Aral Sea (IFAS) was established as an apex organization for coordinating ASBP

implementation, attracting international attention to this environmental disaster, and

mobilizing financing to address the problems, in particular surrounding the Sea. In the

context of interstate cooperation in the Amu Darya basin, an important feature of the

project was that it would help Uzbekistan to comply with an agreement it signed with

Turkmenistan regarding the joint and rational use of Amu Darya water resources. The

agreement required that both countries would stop discharging drainage water from both

banks of the Amu Darya starting from 1999. With the project, Uzbekistan was expected

to close the Beruniy station, which pumped saline drainage effluent into the Amu Darya,

and instead dispose this saline effluent by gravity towards the Aral Sea.

1.1 Context at Appraisal

3. Background: At appraisal Uzbekistan was an upper low income, doubly-

landlocked country strategically located in the heart of Central Asia. During the 1990s the

country enjoyed the best performance of all former Soviet republics, but after the re-

imposition of foreign exchange control in 1996, reforms slowed, and since 2000

Uzbekistan lagged behind other countries in the Commonwealth of Independent States

(CIS) in terms of economic growth rates1. The country’s economic record was subject to

controversy over the reliability of official statistics, and whether its development path

was sustainable. Strong remnants of the Soviet system for controlling information flows

severely restricted public access to information. The overall lack of limited statistical data

1 Pomfret, Richard (2007), “Distortions to Agricultural Incentives in Tajikistan, Turkmenistan and

Uzbekistan”

2

available in Uzbekistan was a serious constraint to analyzing the country’s

macroeconomic and structural reform performance. Based on official statistics, the

country had seen steady growth of around 5 percent annually since the mid-1990s and

recorded relative macroeconomic stability. The Bank analysis, however, suggested that

job opportunities remained limited and the poverty rate was high2.

4. “Strategic Crops” as Constraints to Rural Incomes: Agriculture was, and still

remains, the backbone of the Uzbek economy. At project appraisal stage, it accounted for

35% of GDP, 60% of foreign exchange receipts, and 45% of employment3

. Yet

agricultural productivity growth and incomes were constrained by significant state

intervention. The Government, in pursuit of its objectives of stabilizing cotton export

revenues and achieving wheat self-sufficiency, maintained state controls over “strategic

crops” – cotton and wheat – which accounted for 80 percent of cultivated land4. The state

also intervened through pricing, exchange rate and procurement policies. While the

implicit taxation of agriculture had been reduced, primarily by narrowing in the gap

between the prices paid for state procurement and international prices, it still remained

significant. Taxation took place mainly through exchange rate policies. A sizeable

amount of tax revenues were returned to the agricultural sector in the form of subsidies,

the most substantial of which were irrigation subsidies and periodic debt write-offs.

However, agricultural enterprises, especially involved in cotton, regularly incurred losses.

Price distortions combined with mandatory cropping patterns led to inefficient output mix

and land use5.

5. From Kolkhozes to Shirkats and Dehkan Farms: By 2000, approximately half

of the kolkhozes or Soviet era collective farms were transformed into shirkats or

cooperatives. In spite of the replacement of collective farms by shirkats, these rural

enterprises were still subject to many of the same centrally planned mechanisms (output

targets, state supplied inputs, mandated planting times, etc.) and strongly resembled the

farm enterprise they replaced. The period since 2000, and especially 2001, had also seen

the liquidation of unprofitable shirkats and their conversion into private farms. By March

2003, there were more than 80,000 private farms covering about 1 million hectares (or

25%) of arable land. This period of farm restructuring had led to the loss of jobs in the

enterprise sector from the transformation of the collective farms into shirkats

(approximately 150,000 workers), and the liquidation of shirkats (approximately 250,000

workers)6. Despite rural enterprise restructuring, a number of avenues of increasing

productivity, crop diversity, and rural incomes were blocked off because of poor

incentives within the collective farms.

6. Shallow Groundwater Levels (GWL), Drainage, and Soil Salinization as

Hurdles to Irrigated Agriculture: Agriculture in Uzbekistan is highly dependent on

2 Interim Strategy Note for the Republic of Uzbekistan, World Bank, July 2006

3 DIWIP Project Appraisal Document, World Bank, May 2003

4 Republic of Uzbekistan, Country Economic Memorandum, World Bank, April 2003

5 Uzbekistan Living Standards Assessment, World Bank, May 2003


3

irrigation. The deteriorated status of irrigation and drainage (I&D) systems, shallow

GWL and soil salinization in the country posed additional challenges for agricultural

growth and productivity. About one-third of all irrigated land in Uzbekistan had a

shallow GWL. Further, one-third of irrigated land in the country was estimated to be

already saline, with resulting decreases in crop yields of about 30%. The area with

“highly saline” soils had increased by 27% over the 1993-2003. The soils in the region

had already inherent saline characteristics but the problem was exacerbated by irrigation

induced salinity and the movement of salts in the soil from capillary rise. One of the

major problems was that the drainage systems were inadequate. Most of the irrigation

systems developed during the Soviet era in the 1960s and 1970s were constructed in haste

and generally lacked adequate field drainage. As a consequence large amounts of water

for “leaching” were used to keep the soil salinity below the root zone. A large part of this

water was used to flush the salts from the soil surface and a substantial portion (often

about 40% of the total amount diverted) disappeared into the surface drainage system. In

this process, the high water table was perpetuated, the process of soil salinization

continued, and the leaching process had to be repeated each season.

7. Low Water Use Efficiency: The water use efficiency in the irrigation sector was

extremely low at around 30% with some estimates as low as 25%. The main reasons for

low water use efficiency were thought to be: (a) a lack of incentives for farmers; (b)

inadequate drainage, resulting in waterlogging and soil salinity requiring large water

applications for leaching and ever higher land salinization. This was compounded by (a)

deteriorated I&D infrastructure; (b) poor irrigation practices due to poorly graded fields,

long furrows, reliance on shallow groundwater levels for meeting crop water

requirements between the long irrigation application intervals; and (c) inadequate

institutional capacity for proper management, operation and maintenance (O&M) and a

lack of O&M charges or cost recovery.

8. DIWIP – a Prioritized Project by the Government and Bank: Comprehensive

strategies and massive plans to tackle the country’s severe salinity and drainage problems

were prepared in the second half of the 80s. However, few of these plans were

implemented because funding for the proposed works dried up with the break-up of the

Soviet Union. The Bank had assisted the Government in evaluating and prioritizing the

various proposals for providing drainage in irrigated areas on the right bank of the Amu

Darya in Kashkadarya, Bukhara and Karakalpakstan. This project was the first phase of a

program of investments that included selective interventions to improve drainage in

South Karakalpakstan in the lower Amu Darya. The overall series of investments

(including the new South Karakalpakstan Water Resources Management Improvement

project that is currently under preparation) were expected to improve water use

efficiency, reduce the amount of drainage water generated, provide safe disposal of the

drainage effluent, and hence over time improve the Amu Darya water quality in its lower

reaches. The project also intended to improve institutional aspects of O&M by

establishing Water User Associations (WUAs) to be responsible for O&M within former

kolkhozes. These critical improvements in the management of I&D systems were

believed to contribute to increasing crop production, reducing poverty and improving

living standards. The project was fully consistent with the Country Assistance Strategy

4

(CAS) of FY2002-04, and supported one of the four key objectives, i.e. to assist

Uzbekistan in maintaining and improving the efficiency of the country’s extensive

irrigation and drainage infrastructure.

9. Karakalpakstan: Before the Project - Prior to the project, Karakalpakstan was

listed among three poorest regions in Uzbekistan with the poverty rate of 32 percent

higher than the national average7. The desiccation of the Aral Sea and the damage to the

river deltas continued to result in serious economic, social, human and animal health, and

environmental consequences. In addition, conditions for agricultural production in the

region had deteriorated due to waterlogging and salinity caused by inadequately designed

drainage disposal systems and a declining irrigation infrastructure. At project preparation

in Khorezm and Karakalpakstan, in the Amu Darya delta, more than 80 percent of the

irrigated area was affected by shallow ground water level (GWL). In the lower reaches of

the Amu Darya, potable drinking water was also in short supply. The situation had

declined further in the aftermath of two consecutive years of drought in 2001-02 in

Karakalpakstan resulting in two years of crop failure that had undermined the local

economy which was dependent on agriculture. Ultimately, all above challenges faced by

the region required immediate attention and intervention to avert environmental and

human disasters.

1.2 Original Project Development Objectives (PDO) and Key Indicators

10. The project development objective was three pronged and formulated as: (1) To

increase the productivity of irrigated agriculture, employment and incomes in

Karakalpakstan, one of the poorest regions in Central Asia; (2) To improve water quality

of the Amu Darya river by safe disposal of the drainage effluent, and enhance quality of

wetlands in the Amu Darya delta; and (3) To develop the institutions for improving water

management, operation and maintenance (O&M) of the irrigation and drainage systems,

and for promoting sustainable irrigated agriculture through participatory irrigation

management.

11. The progress towards achieving the development objective was measured through

the following key performance indicators of the water management services, quality of

land resources and agriculture production:

Agriculture Production: Agriculture production increases for main crops.

Drainage and Soil Salinity: Reduction in area with shallow groundwater level

and soil salinity.

Reliability: Ratio between actual amounts of water supplied to the project area

and the demand planned water supply for the project area on a weekly, monthly

and annual basis.


5

Efficiency: Increased canal conveyance efficiency to the former sovkhozes and

kolkhozes (FSKs) and increased efficiency within the FSKs, and reduced

discharges of drainage water.

Sustainability: Number of Water Users’ Associations (WUAs) established in the

project area. O&M budget for irrigation and drainage (I&D) systems rehabilitated.

1.3 Revised PDO (as approved by original approving authority) and Key Indicators,

and reasons/justification

The PDO was never revised.

1.4 Main Beneficiaries

12. The project beneficiaries were the residents of the tumans of Beruniy, Ellikala and

Turtkul in Karakalpakstan covered by the works to be completed under the project. Land

owners and farmers, WUAs (later re-named to Water Consumer Associations/WCAs),

and local water management authorities were the primary beneficiaries of the project.

However benefits also accrued to the region from preservation of cultural sites near the

historic town of Khiva as well as the Badai Tugai protected area. Benefits further accrue

to the populations along the Amu Darya as the reduced salinity in the water helps also

with drinking water along the river. The slow flow and percolation of drainage effluents

of the Akchadarya Main Drain (AMD) through the wetlands along the Jana Darya was

expected to ultimately improve water quality in the Aral Sea and for the residents close

by.

1.5 Original Components

Component A: South Karakalpakstan Drainage Disposal System (Cost US$51.8

million).

13. The drainage effluent from South Karakalpakstan (SK) was disposed of to the

Aral Sea by connecting the existing collector drains in the area to the formerly partially

constructed South Karakalpakstan Main Collector (SKMC), which took this effluent to

the AMD, which was partly constructed but required completion. The major drain thus

formed, namely the South Karakalpakstan Main Drain (SKMD), was the backbone of the

drainage system in SK, starting near the Amu Darya in the east and running along the

northern boundary of the project area and then conveying the drainage effluent to the

Aral Sea. The existing collectors connecting to the SKMD were cleaned and rehabilitated

in order for the whole drainage system to work effectively. The overview of the project

area is provided in Annex 9.

14. South Karakalpakstan Main Collector (SKMC). Works for the about 100 km

long SKMC included: (a) remodeling the Beruniy collector drain (CD) [2 1.8 km], which

used to drain into the Amu Darya, by reversing its flow towards the Akchadarya, thus

eliminating the need for the Beruniy pumping station; (b) linking the Beruniy CD with

the Ayazkala CD, mostly through the existing EK-2 and Kyzylkum CDs (in total 35.4

6

km), which for that purpose was enlarged; thus eliminating the need for the Kyzylkum

pumping station; (c) enlarging the Ayazkala CD (43.5 km) up to its outfall in the

Akchadarya. The design capacity of the SKMC was set at 25m3/s at its junction with the

AMD. The SKMC flow passed through the two existing Kurgashinkala wetlands, which

combined to develop a larger wetland. Additional works for regulating the flows to, and

water levels in these wetlands were carried out to enhance the environmental,

biodiversity and social worth of these wetlands.

15. Akchadarya Main Drain (AMD). The AMD connected the SKMC with the Jana

Darya, an old (dry) river bed of the Syr Darya which runs to the Aral Sea. The AMD

mainly followed the Akchadarya channel (an old Amu Darya river bed) over a length of

about 200 km. Its construction had been partially completed over a stretch of about 40

km, starting from its junction with the SKMC; construction was mostly completed for the

next stretch of about 80 km, while construction on the remaining 80 km up to the Jana

Darya were completed by the project. Works to be carried out for the SKMC and the

AMD included channel excavation, channel protection works to prevent breaches that

could damage the actively grazed rangeland or important archaeological sites; providing

crossings for livestock; wetland control structures, and; the provision of hydrometric

gauging stations.

16. Improvements to Collector Drains (CDs). Selective improvements were made to

the main and secondary CDs in South Karakalpakstan (in the Beruniy, Ellikala and

Turtkul Tumans). The works consisted of general CD cleaning, deepening where

required, removal of constrictions, hydraulic and protection works at the junctions with

the SKMC, and selective rehabilitation of other related canal structures.

Component B: Irrigation Improvements and Command Area Development (Cost

US$15.0 million).

17. The main objective of the I&D component was to promote sustainable irrigated

agriculture in SK through rehabilitation and improvements in the I&D infrastructure and

technical assistance (TA) to improve reliability and efficiency of irrigation and drainage

systems. The component consisted of the development of participatory irrigation

management, rehabilitation of key irrigation infrastructure; I&D improvements within the

areas managed by the WUAs, improving O&M and water management, and the

promotion of improved irrigation and agricultural practices. Technical assistance was

provided to achieve these objectives.

18. Development of Water Users Associations. WUAs were established in the

Beruniy, Turtkul and Tumans districts, following the same concepts as developed and

agreed for the Ellikala Tuman under the Rural Enterprise Support Project (RESP)8. Main

features included, the development of a two-tiered system of organizations, Water Users’

8 The RESP was a Bank-funded project implemented by the Government of Uzbekistan in 2001-2008 with

the aim to increase the profitability and sustainability of agriculture through the privatization and

restructuring of farming and associated agribusiness activities into privately operated units.

7

Group (WUGs) covering a hydrological unit, and WUAs consisting of several WUGs for

I&D management on the territories of the former sovkozes and kolkhozes (FSKs), on

areas of about 1,500 to 3,000 ha. The WUAs participated in irrigation management, in

particular in water distribution, O&M of the system and collection of O&M charges.

They also were involved in identifying and prioritizing the rehabilitation works and were

to participate in monitoring of works implementation.

19. TA and Training for Improving I&D and Agricultural Practices. The

development of WUAs, the technical assistance and training under this component aimed

at increasing agricultural production in the project area through three main activities (a)

Farmers’ Participatory Training, involving training of specific target groups in various

ago-technical fields and farm management; (b) demonstration of improved and modem

technologies to increase production, improve water use efficiencies and reduce

environmental degradation. For this purpose demonstration plots were established in the

Beruniy and Turtkul Tumans. Equipment and services for laser land leveling was to be

provided, as well as limited agricultural extension services; and (c) the establishment of a

Farmers Information Services Desk in the project area to provide relevant information to

farmers through different means (pamphlets, videos, radio, TV, weekly papers, etc.).

20. I&D Improvements within the areas managed by the WUAs. Generally these

areas formed one hydrological unit (possibly two in some cases) and were served with

water by the district level irrigation organization (raiselvodkhoz). Critical infrastructure

was improved as prioritized by the WUAs and WUGs. The average investment costs

were to be limited to $130 per ha. This was considered sufficient to remove the most

critical bottlenecks in the I&D systems controlled by the WUAs. These works could

include land leveling and or the construction of additional field drains.

21. Main and secondary irrigation system improvements. Selective improvements

were made to the main and secondary irrigation canals (ICs) in SK covering the Beruniy,

Turtkul and Ellikala Tumans. The improvements concentrated on rehabilitation of water

control structures (especially the rehabilitation of control gates and provisions for flow

measurement up to and including the intake gates for the WUAs), removing constrictions

if any, canal cleaning, etc.

22. Environmental Management Plan (EMP) Works. This involved mitigation

works as identified in the environmental management plan, including protection works

for the Badai Tugai (Forest) Reserve; installation of monitoring wells for archaeological

sites; other monitoring equipment; measures, for Lake Ayazkala; livestock passages

across the AMD; costs for buffer zones along the SKMC and AMD, etc. To the extent

possible EMP works were to be included in the drainage and irrigation component

contracts.

Component C: Monitoring and Evaluation of the Project Impact and

Environmental Management Plan (Cost (US$1.3 million).

8

23. The Monitoring and Evaluation (M&E) activities were to provide continuous

feedback to the MAWR, the Karakalpakstan Project Coordination Committee (KPCC),

the Project Implementation Unit (PIU) and other implementation agencies, so that

corrective actions could be undertaken in a timely manner. Particularly, the

implementation of the environmental management plan (EMP) was to be monitored

carefully. The M&E activities included: (i) environmental impact of construction

activities in the project area in particular of the SKMC and AMD on archaeological sites,

including the handling of any “chance-finds” of archaeologically important objects,

affected wetlands, population and livestock, as well as (ii) the impact of the I&D

improvements in the command area on ground water levels and quality, and soil salinity;

irrigation water supply and drainage flows; on-farm water use; water use efficiency at

various levels; cropping patterns and yields; and livestock population, health and

production; and (iii) the impact on the level of unemployment and household incomes in

the project area; estimation of the project’s overall benefits and economic rate of return,

etc.

Component D: Project Management, Institutional Development and Training

(US$4.8 million).

24. This component supported Government in implementing the project and

preparing a follow-on project. It included: (a) support for the operation of the PIU, and

financing of overall project management, as well as technical assistance in such areas as

detailed design, contract administration and construction supervision, procurement,

financial management, and agricultural development; (b) a modest institutional

strengthening program composed of: (i) the introduction of modern tools for irrigation

scheduling in the project area, at the project level and at the tuman and raiselvodkhoz

level; (ii) assistance with budgeting and accounting for project O&M; and (iii) training

and study tours; (c) a study for improving water management in Uzbekistan, the

operation of key hydraulic infrastructure on the river, in particular operation of

Tuyamuyun reservoir and Takhiatash barrage during extreme flood and drought periods,

passing controlled floods for maintaining channel conveyance capacity and managed

flooding of lands next to the river where it is desirable such as for the Badai Tugai forest;

and (d) project preparation (feasibility studies and preparation of bidding documents) for

a Phase II project possibly including development of drainage and disposal systems in the

Karshi and Bukhara area. This involved the financing of consulting services, equipment

and software.

1.6 Revised Components

25. The components financing rehabilitation and construction works were

substantially implemented as designed and most outputs were delivered.

26. Component A - major savings were realized on the large contract for the SKMD

and AMD where the lowest bid received was 30 percent below estimates. This freed up

some resources to reallocate to works to clean up some lower sections of secondary

collector thus reducing the length of drainage flows and contributing further to lowering

9

the ground water table and improve drainage reliability. The contract for replanting of

trees along the main drainage collectors and canals was cancelled mainly because of the

difficulty they represent for subsequent maintenance/cleaning works.

27. Under component B - works focused on smaller on-farm works that were

substantially executed to plan albeit with some delays. The deep ripping and laser land

leveling that were part of this component however presented a considerable logistical

challenge. The original intent was to procure equipment, however the team was

confronted with issues of ownership and O&M responsibilities. It was then decided to

contract deep ripping and laser leveling of demonstration plots with a local contractor

(under the contract MS/1) who also was responsible for on-farm irrigation/drainage

rehabilitation works. The contractor had no experience with such work and was unable to

mobilize the proper equipment or machine operators. Consequently, that contract was

cancelled and the decision went back to purchase a number of tractors, laser levels and

deep rippers to perform this task. Finally, the equipment was procured and provided to

the local government owned machine stations contracted to deliver this service under the

project. The machine station continues to perform these services with farmers paying a

reduced fee. Arriving to this solution involved a number of contract cancelations,

repackaging and re-bidding processes before finally arriving at a workable solution.

28. Component C - was substantially implemented as foreseen at appraisal however

with significant delays with the M&E contractor only mobilized in 2006 with a contract

up to the foreseen project end in 2010. A new bidding process was launched and a new

consulting firm was hired in 2011 for M&E for the duration of the project extension.

29. Component D – This component included the establishment of a field office and

was otherwise delivered as designed albeit with higher than the originally intended

expenses in part due to the establishment of the field office. The only significant change

was the cancellation of the design work for the rehabilitation of Amu Bukhara I&D

system, as well as for the Kuyu-Mazar Dam.

1.7 Other significant changes

30. Overall, DIWP underwent two restructuring processes for reallocating resources

between components and closing date extensions due to delays with works.

31. The first restructuring in December 2009 involved a project closing date

extension of three years and the reallocation of loan proceeds in light of significant

savings that resulted from the main drainage works contract and the realization that a

number of works contracts could not be completed within the initial closing date of June

30, 2010. The need for restructuring stemmed from the recognition at the Mid-Term

Review (MTR) stage in November 2007 that substantial savings had accumulated and

resources would need to be reallocated to other activities to use the full credit and loan

amounts. There was a nearly 2 year delay with the Government sending the request for

reallocation of the project which meant that while the process was initiated already in

January of 2008, it was finally completed in December 2009. Given that major contracts

10

had accumulated significant delays the reallocation was processed along with a project

closing date extension to June 30, 2013. A subsequent and final restructuring in March

2013 involved the cancellation of some US$5 million from the loan proceeds that were

not contracted by that date and could not be completed by June 30, 2013. This last

restructuring although processed, was never countersigned by the client and the resources

were eventually cancelled as part of project closure.

2. Key Factors Affecting Implementation and Outcomes

2.1 Project Preparation, Design and Quality at Entry

32. The project preparation benefitted from a number of studies and work that had

been developed as part of the Aral Sea Fund and related donor activities aiming at

mitigating the environmental disaster that was in the Aral Sea Basin. The works

supported under the project had been to a large extent already conceptually developed

and substantially designed, in some cases works had already been undertaken but never

completed due to lack of funding after the collapse of the Soviet Union. The original

discussions involved a design that would have combined both, the drainage works

undertaken under this project, and extensive works on irrigation simultaneously. The

proposal was rejected as it would require too large of a financial envelope and presented

significant implementation risks that would be involved with such a large operation.

Consequently, the project concept was split into two projects, this one addressing mainly

the drainage issues that plagued the region, while a follow up project would be prepared

at a later date that would address primarily the irrigation related issues. As this was the

first in a series of planned investments in Uzbekistan’s extensive I&D system of which

sustainability was complicated by the distorted agricultural production and marketing

environment, risks to the development objective at appraisal were rated substantial.

33. Overall the project was on sound technical footing and many of the potential risks

and challenges where identified appropriately. However the project development

objective (PDO) was overly complex and ambitious. It consisted of three parts with the

second and third parts of the PDO adequately linked to project activities, but its first part

appeared to be ambitious in its aspiration to assess increased incomes and employment

given these are influenced by many factors beyond the project interventions. Moreover, it

was overly ambitious with respect to the pace at which WUAs and WUGs would develop

and take over management of the irrigation systems, given the institutional/governance

environment of Uzbekistan and that this could be completed during the project period.

Experience in other countries suggests that WUA development can take 10 or more years.

The project performed very well against its key ambitions to address (i) the inefficiency

of the irrigation systems, resulting in considerable water losses and waste; (ii) the

problem of soil salinization and waterlogging due to inadequate drainage; and (iii) the

deteriorating I&D infrastructure as captured well in the second part of the PDO. Adhering

to the objectives that better captured major project activities, for which the bulk of

investments was allocated, the project would have been in a better position to

demonstrate its strong and solid results.

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2.2 Implementation

(i) Project’s Unpredictable Factors

34. In general, the project progressed fairly well throughout its implementation,

though it faced some chronic constraints and challenges, solutions of which were largely

beyond the control of this project, and Bank as a whole. As already mentioned, most of

essential risks were well identified by the team at appraisal, however the circumstances

that followed and accompanied implementation were not easy to predict. Moreover, they

prevented the project from the achievement of a few outcomes (eg. increased income and

employment, and adequate O&M by WUAs) in an envisaged and desired manner.

35. Bank Engagement: The operational environment for the Bank in Uzbekistan was

difficult during the project implementation period. The CAS of FY2002-04 attempted to

establish a framework for policy dialogue and set policy triggers for various scenarios.

However, this approach proved to be ineffective due to the authorities’ gradualist state-

led development strategy. Triggers were often perceived as imposed external

conditionalities, and there was thus little ownership for the reforms proposed by the Bank.

A CAS was prepared in 2005 for discussion at the Board, but was eventually converted to

an Interim Strategy Note (ISN) approved in July 2006, given the disagreements between

the Bank and Government over the role of the state, including in agriculture. Despite the

Bank’s efforts, both at the project and portfolio level, agricultural reform moved at a slow

pace, ultimately negatively affecting the project’s achievement of key outcome indicators

and their sustainability.

36. “Strategic Crops:” The Government continued to exercise extensive control in

agriculture, particularly in cotton and wheat production, which were still referred to as

“strategic” crops. Although the area for cotton production was reduced (from 1.83 million

ha in 1990 to 1.28 million ha in 2013), it still remained significant. The cotton and wheat

supply chains in Uzbekistan remain dominated by the government, with farmers acting

like “contract farmers.” The state provides subsidized inputs to cotton and wheat farmers,

occasional debt write-offs, and support to cover I&D investments and O&M costs. The

state cotton procurement price for the new season is announced near harvest time, based

on a cost-plus method plus an allowance for a nominal profit. This eliminates price risks

for farmers, but fixes the price well below world market prices. With respect to this

project specifically, there is an assumption that while farmers may have benefited from

the Government’s support such as subsidized inputs, including irrigation, and occasional

debt write-offs, depressed prices set for cotton affected the project’s ability to generate

greater impact on beneficiaries’ incomes and employment.

37. Access to Data: The CAS of 2008 stated that general access to data had improved

over time, but unpredictability and ad hoc data provision continued, and it required a

special effort from the Bank to ensure smooth data exchange with the government.

However, until project closure the situation with data did not improve as access to

information on government policies and their outcomes, as well as data on living

standards of the population posed a challenge. The limited access and poor quality of key

12

economic, financial, and social data impeded a detailed, realistic assessment of the

project’s selective baseline benchmarks and final targets.

38. WUAs/WCAs: At the project’s design stage, WUA were an established part of

the institutional landscape, at least on paper. In reality, there were a few that functioned

adequately. The WUAs were originally based on the boundaries of the large kolkhozes

and sovkhozes that existed prior to independence, except where these were restructured

to form “shirkats” and “dehkan” farms. The effective establishment and functioning of

the WUAs was, and still is, hampered by inadequate legal environment and budgetary

limitations. While there are yearly agreements signed between Pakhta-Arna Nayman

Irrigation System Administration (PAN-ISA), local agriculture departments and WUAs,

these agreements do not spell out the final decision authority on water allocations.

Consequently, local administrations responsible for the state quota of cotton and wheat

interfere with water distribution activities which should be the distinct responsibility of

WUAs. It is also a known fact that following delivery of the harvest, the farmer's account

is charged by the state in the first place for such inputs as seeds, fertilizer, pesticides,

machinery services after which the farmer is left with insufficient funds to cover WUA

fees. Further, their status as NGOs did not allow them to perform profit-oriented

activities (eg. provision of agronomical technical assistance to farmers for a fee). Lack of

funding remains the biggest challenge for WUAs in Uzbekistan which ultimately leads to

(i) inadequate O&M of the on-farm I&D network by WUAs; and (ii) high turnover of

staff because of low salaries, which in turn reduced the effectiveness of WUA training

conducted under the Project.

Project’s Operational Issues

39. On the ground, the project encountered another set of operational issues and

delays that obstructed smooth implementation of project activities as described below.

40. The project was approved by the Bank’s Board on May 08, 2003 and the Loan

and Credit Agreements were signed only on February 5, 2004 some 9 months later while

project effectiveness was achieved only 2 weeks later on February 20, 2004. Given that

the project had benefitted from project preparation pre-financing, the PIU in Tashkent

had already been established by then. The field office, however took nearly a year to be

established and start functioning. Once in place though, it considerably improved

communications and coordination between the project area and headquarters in Tashkent.

41. This was one of the first larger works projects from the Bank in Uzbekistan which

meant that a steep learning curve was ahead of counterparts in managing procurement

and contracts in accordance with internationally accepted practices. In the first two years

of project implementation, the issue of counterpart funding was raised at each supervision

visit. While the issue never flared to the point of recorded contract stoppages, it appears

to have played a role in the scheduling of contracts in the first few years of the project.

42. The Project Appraisal Document (PAD) included a tentative procurement plan for

works goods and services. In discussions between the PIU and the supervision team the

13

plan was modified and a number of the larger contracts were cancelled to accommodate

smaller contracts that would allow local contractors to have a chance at bidding on their

own rather than as junior partners part of large foreign joint ventures. They would thus

gain experience of working on internationally-funded projects as well as having a

significant quantum of work in their order book. Simultaneously, it would provide a

stronger stimuli for the local economy as financial resources would be spent on salaries

and equipment locally. The management of the smaller contracts in the end created a

heavier contract management burden for the PIU and some of the contractors selected

had major difficulties in getting the proper equipment and mechanization mobilized. The

issue of cash flow available to these contractors was also raised on several occasions and

played a role in the delays with contract completion.

43. The successful tender for the SKMD contract was, at US$ 36 million, two-thirds

of the budgeted US$ 50.80 million. After making due provision for contingency, this

allowed additional works to be funded that had not been envisaged originally. The

financial windfall from these savings was largely disbursed on additional canal and

drainage works, on- and off-farm, within the irrigated zone. Implementation of a number

of contracts proceeded considerably slower than envisaged at signing. That was partly

due to a cautious approach applied by the project to ensure that funds are available to

effectively complete all envisaged construction activities; a practice applied by irrigation

projects generally in anticipation of rising costs during project implementation. The

Project was restructured and funds were reallocated after the mid-term review which

provided a clear assessment of works progress relative to plan and more certainty

prevailed as to the available funds for additional works. The availability of these

additional funds was an important factor in motivating the counterparts to request an

extension of the project implementation period.

44. Delays in works were also encountered as in some places the geology was

different than expected. Excavations works struggled with hard bedrock on some

stretches while other stretches with mostly sandy soils “running sands” were backfilling

the newly completed excavations requiring significant volumes of rework. Along the

AMD some unexpected but sometimes sizeable water bodies were encountered that

needed draining before works could proceed. Seasonal changes in drainage water flows

in collectors also affected progress where at time excavation had to take place with water

still in the collector thus impeding visibility and creating difficulties with geometric

leveling instruments to ensure proper slope of excavations. This meant frequent

rescheduling and work plan changes to move equipment where excavation could take

place in dry sections.

45. Chronic shortages of fuel (and sometimes poor quality fuel) caused problems and

delays at different times throughout implementation. These problems were particularly

severe from April 2010 onwards. The best efforts of the PIU to assist the contractors

access the limited supplies of fuel typically had little result. The quality of the fuel was

also often raised as an issue for the relatively high rate of breakdown of what sometimes

was quite old equipment.

14

46. Another persistent issue was the poorly performing concrete plant suffering from

frequent break down that delayed production and delivery of precast concrete elements

required for the various bridges and auxiliary structures along canals and collectors.

47. Delays were also caused by an elaborate system of clearances in the country after

import contracts were signed. The Ministry of Foreign Economic Relations, Investments

and Trade (MFERIT) presented particular challenges in this light. While not directly a

party in the legal agreements and project negotiations, this Ministry that emerged from

being a Department under the Cabinet of Ministers at appraisal, played a significant role

in delays with contract approvals. The Ministry’s practice of lengthy (three months or

more) price verifications, comparisons and negotiations after contracts are signed greatly

affected implementation. The same issues had also affected other Bank-financed, and

other internationally-financed projects in the country. These issues were resolved by

signing of the Memorandum of Understanding between the Bank and the Government to

allow for Bank procurement guidelines to be followed, but not until the end of project

implementation, thus affecting timely completion of project activities.

48. Most of the institutional support activities were delivered, including support to

farmers with information desks, demonstrations and assistance with building capacities of

WUAs. Design studies for the Bukhara dam and I&D system rehabilitation were dropped

in favor of preparing feasibility of Phase 1 for the Ferghana Valley Water Resources

Management Project. Staff was trained at the Ministry of Agriculture and Water

Resources (MAWR) as well as government offices in the project Tumans. Overall from

discussion with consultants and stakeholders, there appears to be appreciation for the

softer investments in WUAs and optimizing irrigation management at the local level,

though at the higher level administration there was substantial push back on institutional

development TA.

2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization

49. The project’s results framework comprehensively captured major parts of the

project activities, particularly the engineering part. However, it appears that projected

outcomes were also based on agronomic and social indicators (such as increased

agricultural productivity, employment and income), accuracy of which was highly

uncertain given the restricted access to data, and distortions still present in the

agricultural sector. In addition, the project baseline was established only in January 2007,

over two years into implementation. This was caused by a two year delay (after the

project became effective) in contracting an independent M&E consultant. While the

M&E Consultant established an accurate picture of the project’s engineering indicators in

the baseline report (the timing of the M&E baseline work coincided with the start of

project construction works), it was less successful in presenting the reality of what was

measurable with regard to the questionable agronomic and social indicators. Since the

methodology for measurement of these indicators was not defined and the respective

baseline values were not clearly identified at the onset of the project, no necessary

adjustments to the PDO and Results Framework were made during implementation

15

period. Lastly, when the original M&E contract then ended in late 2009, it took a year

before a new firm was contracted and mobilized.

50. Overall, the PIU and M&E consultants regularly monitored the set of indicators

agreed with the Bank and timely submitted the M&E progress reports. Key indicators

specified in the PAD were monitored throughout project implementation with an

exception of employment and income indicators that were left to be assessed at the end of

the project. In spite of the contractual difficulties, together with the information collected

by the supervision firm, the M&E reporting from the client side has been quite consistent

and comprehensive.

2.4 Safeguard and Fiduciary Compliance

51. Environmental and Social Safeguards: The project prepared an EMP with clear

requirements and activities to ensure that wetlands and the Badai-Tugai nature park and

the desiccation of the Ayskala Lake would not be negatively impacted. The planned

works therefore included a number of measures in including a canal to supply Badai-

Tugai when water supply outstrips irrigation demand in early summer when snow melts

in the upstream mountains are at their peak, measures to contain dust in the dry bed of

Ayskala Lake as well as reconstitution of wet lands for the loss of the lake. These works

were largely completed, however due to slower than envisaged evaporation of the lake,

the dust control measures were not implemented. The lake area shows plant regeneration,

and hence, dust control measures are deemed unnecessary. The social assessment

identified the needs of herders who live in the area who will be constrained in the

movement of the livestock with the new Northern collector. The mitigation involved the

building of several bridges across the collector to allow herders to move East and West

without hindrance.

52. Financial Management and Procurement: While there were a few issues related

to audits of the project with mostly clean “unqualified” auditor’s reports, the project

experienced difficulties with procurement where bid evaluation reports often took an

excessive amount of time and contract awards were delayed. As referred to previously,

contract and payment clearances by the Ministry of Foreign Economic Relations,

Investments and Trade offered a particular challenge. The documents would sometimes

be scrutinized for several months by the Ministry before being cleared. Another issue that

came to fore was the excessively high tax rate that was applied to imported goods with

the effect of reducing competition. In addition, there was a significant learning curve with

contract management, especially as it relates to effectively abiding by contract clauses.

This was perhaps aggravated by the aim of giving a chance to local firms to bid on some

of the works under the project. In some cases, contractors suffered from cash flow

problems which posed a challenge whenever equipment broke or unforeseen events

emerged.

2.5 Post-completion Operation/Next Phase

16

53. This project was designed as the first phase of a series of projects. The primary

objective was to improve the drainage and water quality situation in the project area first

but also in Karakalpakstan area more generally. However, investments were also made

for the formation of water users associations and participatory irrigation including on

farm and inter farm irrigation canal rehabilitation. The primary works related to

improving drainage and eliminating the discharge of the highly salty drainage water back

to the Amu Darya by rerouting it to the dry bed of the Jana Darya. The reversal of the

drainage flow has been completed which lead to the decommissioning of two large

pumping stations resulting in significantly lowering operation costs of the system and

value of energy savings estimated as US$1.2 million. The water table has dropped

substantially and overall salinization, which was reduced by 0.13 g/l (average of 2005-07

to 2009-12), is less of a problem throughout the region since the works have been

completed. The project also developed the Amudarya Basin Water Management studies

for improving water management in Uzbekistan. It is expected that the studies will serve

as a tool for the effective operation of key hydraulic infrastructure on the river, in

particular operation of Tuyamuyun reservoir and Takhiatash barrage during extreme

flood and drought periods.

54. To strengthen this achievement, the follow-up South Karakalpakstan Water

Resources Management Improvement Project intends to focus on irrigation aspects to

maximize the opportunities offered by less saline lands for (i) introducing better crop

rotations and variety, (ii) improving crop intensity. With improved water management the

project is also expected to substantially reduce the volumes of water abstracted from the

river and render the entire water management system in the region more efficient and

indeed environmentally sustainable. Water abstraction by over 20 floating pumping

stations will be replaced by a gravity off-take from Tuyamuyun reservoir. The follow up

SKWRMIP project would also continue strengthening the capacity of WUAs, and push

for reforms that would permit WUAs to operate more independently from the Pakhta-

Arna Nayman Irrigation System Authority (PANISA) and improve their capacity for

developing irrigation schedules and work closer with farmers to play a more participatory

role in water management at the local level.

3. Assessment of Outcomes

3.1 Relevance of Objectives, Design and Implementation

(to current country and global priorities, and Bank assistance strategy)

55. Uzbekistan remains a substantially agrarian society with agriculture as one of the

main employers that provides significant food security and hard currency earnings from

cotton and horticulture. Agriculture in Uzbekistan is highly dependent on irrigation.

Seventy nine percent of land under wheat production is irrigated, and similarly high

figures apply for cotton. However conditions for crop production deteriorated,

particularly in Karakalpakstan, due to waterlogging and salinity caused by inadequate

drainage disposal systems and a deteriorating irrigation infrastructure. Improving

drainage conditions, and making critical improvements in the irrigation and drainage

systems, as well as improving the operation and maintenance of the systems under the

17

DIWIP was expected to reduce waterlogging and soil salinity, and provide reliable and

efficient irrigation, in the region thereby reducing the risks of drought, increasing crop

production, allowing diversification to less salt-tolerant crops, reducing poverty and

improving living standards.

56. These goals are especially important for Karakalpakstan since it is one of the

poorest regions in the country with a significant percentage of the population living

below the absolute poverty level. Further, following the desiccation of the Aral Sea, the

region has faced devastating degradation of livelihoods. They include growing

salinization of land and water resources, lack of food security, exposure to dust storms,

poor quality of drinking water, and the declining health status of the local population that

forces many to relocate or endure severe living conditions at home.

57. The Government’s current vision for the country is to become an industrialized,

high middle-income country by mid-century. The approach toward achieving this goal,

among other elements, includes increasing the efficiency of infrastructure, especially of

energy, transport, and irrigation. The project is also fully consistent with the Bank’s

current Country Partnership Strategy, FY2012-15, which identifies water management as

one of the key challenges facing the country and optimizing water use and reduce water

waste remain a top priority.

3.2 Achievement of Project Development Objectives

Rating: Moderately Satisfactory

58. The following six PDO indicators measured the achievement of PDO in terms of

three distinct aspects: (i) increasing the productivity of irrigated agriculture, employment

and incomes in Karakalpakstan, one of the poorest regions in Central Asia; (ii) improving

water quality of the Amu Darya river by safe disposal of the drainage effluent, and

enhance quality of wetlands in the Amu Darya delta; and (iii) developing the institutions

for improving water management, operation and maintenance of the irrigation and

drainage systems, and for promoting sustainable irrigated agriculture through

participatory irrigation management. Below is the detailed description of achievements of

all PDO indicators.

59. Notwithstanding the challenges posed by a centralized manner of the Government

to manage the agricultural sector and the delays in implementation, the Project appears to

have largely achieved its project development objectives for the following reasons:

60. The first part of the objective was stated to increase the productivity of irrigated

agriculture, employment and incomes in Karakalpakstan. PDO PDO Indicators Baseline Target Achievement

1. 1.1 Sustained crop production

in South Karaklapkstan on

about 115,000 ha in Beruniy

and Turtkul Tumans on about

65,000 ha of irrigated lands

yield increases of 10-20% by

2006:

Cotton–

1.69 t/ha

Wheat-1.86

t/ha

Yield

increases

Cotton +10%

Wheat +20%

2012:

Cotton-2.22t/ha (+31%)

Wheat-3.9t/ha (+110%)

(Source: State Committee of

Statistics of the Republic of

Karakalpakstan)

18

Yr7 and, in conjunction with

the RESP, provision for main

system I&D improvements in

Ellikala Tuman for another

34,000 ha, resulting in similar

yield increases.

61. Productivity was to be measured by a 10% to 20% increase in yields over the

command area by year 7. The increased crop production was planned to be reached

primarily through construction of a better functioning drainage system consisting of the

SKMC and AMD, and the rehabilitation of the main collector drains in the project area.

Undoubtedly lower water tables and lower soil salinity, combined with reliable water

supply contributed to the increased productivity, but there could be other inputs as well

that played a key role in the yield increases. Measured against the objective to increase

the productivity of irrigated agriculture, the project has delivered, with significantly

increased yields across nearly all crops cultivated in the project areas. While areas

cropped have gone up from 75,000 ha to 85,000 ha which is short of the target envisaged

at project appraisal of 115,000ha. However, this target was imprecise as it included some

10% of double cropped area that was erroneously included and some area that has never

been put in use. The final design of the project determined the command area at 103,000

ha.

62. As it stands today the increased cropped area amounts to some 9%, while yields

of the primary crops, wheat and cotton in 2012 where 110% and 31% higher

respectively relative to 2006 (based on official data). Orchard crops, as well fodder and

horticultural crops showed similar and higher increases. The trend for the period

starting in 2005 but especially for the years of 2009-12 is clearly upwards across the

basket of crops. It is specifically worth noting that the project contributed to

diversification to less salt-tolerant crops in the project area. The project allowed for

expanding the area planted to horticultural crops and fodder, as well as for increasing

yields of these crops due to reduced soil salinity (see Annex 10). For example in average

for the three project districts over the period of 2005-2012, fruits and berries’ yields

increased by 56%, vegetables’ yields increased by 25%, and fodder yields increased by

18%.

63. As it relates to incomes, although farmer yields and output increased, given the

extensive involvement of government in the supply chains for cotton and wheat, this

likely affected the magnitude of the increase in incomes for farmers. Further, project

impacts on employment and income were more difficult to assess at appraisal as public

data on socio-economic indicators were either unreliable or restricted. The project

attempted to measure this indicator through a final household survey, but it was

confronted with the difficulty of obtaining income information from farmers where the

State controls much of the supply chains for the main crops and a general fear of tax

authorities. Based on the final household survey, the M&E Consultant states that the level

of income of the population increased over the past five years with rising incomes

observed more in rural areas than in cities. The main criterion for adequacy of income

used by the M&E Consultant was the adequacy of basic foodstuffs, particularly

19

consumption of meat, bread, cooking oil, flour, etc. While it may be difficult to quantify

actual income increases, there is no reason to say that farmers have not improved their

incomes. The income increase could be possible due to increased crop production and

increased cropping intensity (as described in detail in Annex 3: Economic Analysis) and

active use of household plots in the past 5 years, which would not have been possible

with deteriorating I&D system. In addition, cotton and wheat prices have shown a modest

but steady increase over time (while still significantly below world market prices), and

therefore farmers have been able to capture at least some of the benefits of the yield

increases. One more positive impact, i.e. the revival of the production of fish, muskrat

skin, and reeds from wetlands as a result of the project activities have contributed to a

substantial increase in income for the residents in the project area.

64. As it relates to employment, it was not possible to directly measure the project’s

employment impact. However, the increase in agriculture output, would lead to an

increase in employment for handling, transport and processing (cotton ginning and wheat

milling). The higher volume of crops harvested also clearly implies more secondary

employment for field preparation, sowing, and harvesting. Indeed, the agriculture output

in the region steadily increased from UZS 99.0 billion in 2006 to UZS 278.5 billion in

2012. Lastly, as stated in the economic analysis (see Annex 3), the project generated

additional and remunerative employment, such as opportunities in the project

construction works and related non-agricultural activities. In light of the above, the

achievement of this objective is rated as Moderately Satisfactory.

65. The second objective defined as to improve water quality of the Amu Darya

river by safe disposal of the drainage effluent, and enhance quality of wetlands in the

Amu Darya delta.

PDO PDO Indicators Baseline Target Achievement

2. 2.1 Reduction in salinity of

Amu Darya water by about

0.05 g/l, resulting in yield

increases in the order of 1%

in the irrigated area

downstream of Takhiatash

barrage.

2006

March-

1270 mg/l

November-

1050 mg/l

Salinity

reduction

By 0.05 g/l

2012

March-1050 mg/l (-0.22 g/l)

November-850 mg/l (-0.20 g/l)

In comparison of 3 year average

(2005-07 to 2009-12): -0.13 g/l

2.2 Enhanced quality of

wetlands e.g. the Badai Tagai

(riverine forest); the managed

wetlands in the SKMC and

AMD

n/a Qualitative

indicator Badai Tugai Reserve:

Water via Saukumjargan (Budyoniy

canal) is delivered to the reserve in

2012 to the amount of 800,000 m3,

or 12.7% of the needs which under

the contract with the WUA

“Biybazar” are 6.3121 million m3

per year. Water levels in the

Amudarya river were high, water in

the Kokdarya canal came from late

June through mid-September 2012,

thus supplying water to distribution

canals from Kokdarya to the reserve

Badai-Tugai which in total received

more than 7.0 million m3 of water.

20

Wetlands in the SKMC and AMD:

Total area of wetlands is 2250.8 ha,

all of them identified as stable,

presenting adequate living conditions

for animals, plants and providing a

corridor for migration of fish and

birds, seen as “an adequate substitute

for the eastern part of the drained

lake Ayazkala” (letter to the CC RK

of October 10, 2012)

66. This part of the PDO was to be measured through regular monitoring of the

ground water level and soil salinity in the project areas and water salinity in the Amu

Darya. The project was instrumental in achieving this part of the PDO. Water salinity in

the project area has dropped using a 3 year average comparing the period (2005-2007)

and the period (2010-2012) by some 130mg/l (0.13g/l) as compared to a target group of

0.05g/l estimated at appraisal. The values vary significantly during the course of the year

and between years depending on the volume of water, snow melts upstream, local

precipitations, and other factors, but show consistently lower than before works were

completed. This is further confirmed by data reflecting significant lowering of salinity of

drinking water downstream from the project area. In parallel, ground water levels have

dropped throughout the area and most importantly the lands under the various salinity

classifications have changed with an increase of about a 35% of the total area in non and

lightly saline lands and a reduction of 55% of highly saline lands. Households near towns

report improvements to their livelihood due to the possibility of planting gardens which

was impossible only a few years ago due to salinization. The lower water table also

reduces water intrusion and “flowering” on walls and moisture in houses has made living

conditions substantially more comfortable especially during the cool parts of the year. By

this measure the outcome towards this indicator is highly satisfactory.

67. Further, about 2,250 ha of sustainable wetlands have been developed at SKMC

and Ahchadarya Main Drain (AMD). Newly appeared wetlands were developed in the

bed of Janadarya River close to the former banks of the Aral Sea with a size of more than

30,000 ha. The wetlands compensate the drying-up of Lake Ayazkala, which is still partly

moist and covered by halophytic vegetation. According to the Uzbek State Committee for

Environmental Protection there is no danger to salt transfer or erosion to other areas, and

therefore specific measures of stabilizing the lake’s bed are currently not required. Badai

Tugai reserve is supplied with sufficient amount of water for genetic regeneration mainly

through the reconstructed Kokdarya River directly from Amudarya. Anecdotal evidence

from visits on site, and reports from the Committee indicate that the riverine forest in the

area are stable, while the wetlands present adequate living conditions for fauna and flora

and adequate substitution for the drained Eastern part of the Lake Ayaskala. With the

construction of the Bustan canal under the follow up project the supply of water to the

reserve will be further augmented as another supply route will be added improving the

distribution within the forest. The combination of the two variables of this objective

argues for a Satisfactory outcome rating.

21

68. The third and final objective was to develop the institutions for improving water

management, operation and maintenance (O&M) of the irrigation and drainage

systems, and for promoting sustainable irrigated agriculture through participatory

irrigation management.

PDO PDO Indicators Baseline Target Achievement

3. 3.1 Reliability: ratio of

actual water supplied to

demand planned for

delivery on weekly,

monthly and annual basis

n/a In three project areas during the

2011-12 hydrological year (from

October 1, 2011 to October 1, 2012):

Leaching period: 298.2 million

m3 allocated; actually received

284.5 million m3 of water

(95.4%);

Vegetation period allocated: 987.9

million m3; actually received

876.4 million m3 of water

(88.7%).

In years with water scarcity in the

Amu Darya river as in the vegetation

period 2011 water volumes received

dropped to 553.1 million m3 or

61.9%; some WUAs received less

than 40%.

3.2 Irrigation efficiencies

increased

n/a Conveyanc

e up to area

of WUA by

10%;

Within

WUA area

by 15%;

Amount of

drainage

water

reduced to

not more

than 3,000

m3/ha

Based on PAN data, the current

efficiency of irrigation system is 0.56

(main canal: 0.9; inter farm canals:

0.4; intra farm network: 0.74).

Total drainage for the 2010-11

hydrological year was 351.63 million

m3. With a total drained area of

98,810 ha, discharge of drainage

water is 3,558 m3/ha per year (2011-

12: 473.24 million m3 in total; 4,789

m3/ha per year)

3.3 Sustainability: Number

of effective WUAs, level

of participation in WUAs,

functioning of WUAs in

water distribution, dispute

resolution and in O&M of

the system, O&M budget,

% of area waterlogged, %

of moderate to highly

saline soils

WUAs:

27 WUAs created (13 in Beruniy

district with 33,115 ha of irrigable

land; 14 in Turtkul district with

33,593 ha, Ellikala 34,051 ha).

Effectiveness of WUA varies. WUA

actively participated in the object

design on contracts No

DIWIP/CAR/1 “Rehabilitation of

command area in Beruniy and

Turtkul districts” and NoDIWIP/DI/2

“Restoration of the drainage and

irrigation infrastructures”.

O&M Budget:

On average in 2011 all WUAs in the

project area could only collect 42.1%

22

of their planned O&M budget from

their members. At the expense of the

"Fund of melioration" (outside the

project) for the project area in 2012

for the project area 255.9 km of

drainage network was cleaned in the

amount of 1558.78 thousand UZS

($825,000)

% of area waterlogged, % of

moderate to highly saline soils:

From average of 2005-20079 to av.

2010-2012, the area with a GWL 0-

1.0 m (waterlogged) has decreased

by 5,535 ha (more than half), from

8.7% to 3.1 % of all monitored

irrigated land in the project area.

Area of saline soils in the project

area in 2012 as compared with 2006:

The area of non-saline lands

increased from 27,450 ha to

36,639 ha (+33.5 %);

The area of low-saline lands

increased from 25,413 ha to

34,409 ha (+35.4 %);

The area of medium saline lands

decreased from 30,778 ha to

20,650 ha (-33.9 %);

The area of high saline lands

decreased from 14,597 ha to

6,540 ha

(-55.2 %);

69. Important progress was made towards achieving this part of the PDO. In total, 27

WUAs were established (13 WUAs in Beruniy district with 33,115 ha of irrigated land

and 14 WUAs in Turtkul district with 33,593 ha). Staff of the Irrigation Management

System and the KK Hydro-Geo Amelioration Expedition (KHE) responsible for the

drainage system, staff of the KK Ministry of Agriculture and Water Resources as well as

the PIU for Water Infrastructure and the Lower Amudarya Water Basin Management

Organization (LAWMO) were trained. Significant capacity has been built at the level of

the MAWR and local administration to form and train WUAs including providing advice

on irrigation water management and water scheduling, holding elections and

responsibilities of the various organs of WUAs. More positively, and in line with new

institutions that attempt to represent their members, WUAs worked together with the PIU

9 An average of 3 years from the time before the construction (2005-2007) and the latest period with

available data at the end of project (2010-2012) was chosen to level the large influence on the GWL of the

annually varying available volumes of irrigation water. The calculation is based on annual averages of

interpolated GWL-areas based on monthly average GWL.

23

and implementation consultant in supporting the local water authority in prioritizing

works of the limited irrigation rehabilitation under the project.

70. The project modestly attempted to establish new WUAs in the project area and

strengthen their technical capacity, as well as to bring their function in line with

international standards. In this sense the project achieved this part of the objective.

However, as mentioned earlier, there are currently a number of factors, which are beyond

the project control, that affect their daily work and further sustainability. The project

WUAs are still weak which is partly due to the fact that on average only 40 per cent of

their O&M budget can be collected from their members. In addition, the legal standing of

WUAs is not sufficiently regulated, creating conflicts with local authorities over the

management of water resources, and thus reducing their responsibility for the

management of sparse water resources. In turn, farmers encounter other disincentives for

enlarging their production: state quotas for 70 percent of their crops, a discouraging

accounting system for credits and machinery (services) and disparity of product and input

prices, both set by state institutions. It is expected that the upcoming SKWRMIP will

reinforce the institutional development of WUAs in addition to the improvement of the

current legislative and executive government environment to enable adequate water

management, O&M of the I&D systems.

71. It is worth noting other output indicators that were added in the ISR to track

promotion of sustainable irrigated agriculture, albeit the project only kept track of

demonstration plots and individuals trained. The M&E report states that in total 15

demonstration plots were established (7 in Beruniy and 8 in Turtkul districts) and

successfully demonstrated the possibility of obtaining improved yields (more than 3.5

t/ha for cotton and more than 4t/ha for wheat). Besides, Farmer Field Schools (FFS) were

established in Beruniy and Turtkul districts. In total, 14,000 booklets, 860 bulletins and

100 posters issued and distributed. 691 farmers trained and 200 farmers participated in

various seminars. However, the sustainability of FFS is a concern due to limited financial

resources to maintain staff, office and transport facilities. Overall, an impressive number

of farmers were trained and publications were issued and distributed, but no attempt was

made at measuring the actual adoption of the activities and technologies introduced under

the demonstrations.

72. In addition, this part of the PDO was measured against (i) reliability: ratio of

actual water supplied to demand planned for delivery on weekly, monthly and annual

basis; (ii) increased irrigation efficiencies (conveyance up to the area of WUA by 10%,

and within the WUA area by 15%); and (iii) amount of drainage water reduced to not

more than 3,000 m3/ha.

73. The indicator defining reliability of water supply is important and is dependent on

good systems management (i.e. functioning institutions). However, this is also

significantly affected by the seasonality of the weather (e.g. occurrence of “dry” vs “wet”

years) which in turn can significantly affect the water available for delivery to farmers.

Such weather variability affected water deliveries in the project area in several years. For

example, due to the water scarcity in the Amudarya River in 2011 vegetation period, the

24

water volume received dropped to 553.1 million m3 or 61.9% and WUAs received less

than 40% of requested volume. In three project areas during 2011-2012 hydrological year

(from October 1, 2011 to October 1, 2012):

(i) Leaching period: 298.2 million m3 allocated; actually received 284.5 million m3

of water (95.4%);

(ii) Vegetation period allocated: 987.9 million m3; actually received 876.4 million m3

of water (88.7%).

74. Irrigation efficiency was defined as conveyance measurements up to and within

WUA command, and measuring drainage water volumes. Unfortunately, there were no

baseline data available. Based on the PAN-ISA data, the current efficiency of irrigation

system is 0.56 (main canals: 0.9; inter farm canals: 0.4; intra farm network: 0.74). The

local water authority reports an efficiency of some 56% which would be extraordinarily

high given the type of infrastructure, the nature of the soil in the area and the status of the

infrastructure. In a more recent study in preparation for the follow up project the current

irrigation system conveyance efficiency is estimated at 32% which is a significant

improvement from the estimated 25% - 30% reported at appraisal.

75. Volumes of drainage water from 2010/2011 season was at 3,560m3/ha while in

2011/2012 it was at some 4,800m3/ha and thus remains above project design thresholds

of 3,000m3/ha for both years. However when these drainage figures are taken over the

entire area drained (316,000 ha) by the system, the quantities per ha are about a third of

the figures above. This would also explain the 25% increase in 2012 when the area

reportedly had higher than usual precipitation. Nonetheless, discussions with

stakeholders, the design and supervision contractor and the M&E consultant confirm that

there remains a significant potential to further increase efficiency by better irrigation

management, lower leaching quantities and improved timing and organization to reduce

drainage volumes. As such the achievement towards this objective is rated as

Moderately Satisfactory.

3.3 Efficiency10

76. It is anticipated that the main project benefits would come from the increased

agricultural production in the project area. Other quantified benefits, which are were

included in the economic evaluation, were deriving from the decreased salinity in Amu

Darya River, resulting in the increased agricultural production in the downstream areas.

Among other benefits that were taken into consideration were the direct benefits coming

from wetlands that would come from the increased fish production, muskrat skin

production and reeds production. Savings from elimination of drainage and irrigation

pumping were also considered as project benefits and included in the analysis.

10 An Economic Analysis was prepared by Kairat Nazhmidenov, Investment Officer, FAO

25

77. A detailed project economic analysis was prepared and provided in Annex 3. The

period of analysis is 25 years to account for the long-term impact of the project

interventions. The scenario presented in the economic analysis is conservative. The

analysis presents the balance of costs and benefits of the project and it is based on the

actual data and results of the project. The analysis identified the quantifiable benefits that

directly relate to the activities undertaken following the implementation of the project, or

that can be attributed to the project’s implementation. The incremental quantifiable

benefit stream comprises of four main elements: (i) incremental agricultural production,

(ii) benefits from wetlands, (iii) downstream agricultural impact and (iv) savings from

elimination of drainage and irrigation pumping.

78. In total nine financial crop budgets and five economic cost-benefit models were

prepared for calculation of the overall benefit streams, on the basis of economic prices.

All local costs were converted into their approximate economic values. A Shadow Wage

Rate of 0.6 was also introduced into the analysis to identify the opportunity cost of labor

in the project’s civil work costs. All values are given in constant 2013 prices. Given the

above mentioned benefit and cost streams, the Economic Rate of Return (ERR) of the

project is estimated at 21.8%. The Net Present Value (NPV) of the Project’s net benefit

stream, discounted at 12%, is positive - USD 36.4 million.

79. The final table of the project economic analysis is presented in Table below.

Table: Project Economic Analysis, USD thousand

PY 1 (2006)

PY 2 (2007)

PY 3 (2008)

PY 4 (2009)

PY 5 (2010)

PY 6 (2011)

PY 7 (2012)

Y8 Y9 Y10-25

Project investments and running costs Project costs 12,000 10,000 12,000 10,000 8,000 9,000 5,000 - - -

Incremental yearly I&D maintenance costs - - - - - - 370 370 370 370

Total investments and running costs 12,000 10,000 12,000 10,000 8,000 9,000 5,370 370 370 370 Incremental Gross Incomes streams

Incremental agricultural benefit streams - - - 7,816 7,723 13,860 14,299 14,299 14,299 14,299

Benefits from wetlands - - - - 486 486 973 973 973 973

Downstream agricultural impact - - - - 443 443 886 886 886 886

Savings from elimination of drainage pumping - - - - - - 1,200 1,200 1,200 1,200

Savings from irrigation pumping - - - - - - 145 145 145 145

Incremental Gross Incomes, total - - - 7,816 8,653 14,789 17,503 17,503 17,503 17,503

Project Incremental Gross Income -12,000 -10,000 -12,000 -2,184 653 5,789 12,133 17,133 17,133 17,133

ENPV @12% (USD 000's) 36,360

ERR 21.8%

80. Sensitivity Analysis. Actual economic returns were tested against several

hypothetic scenarios of changes in benefits that can happen in the future. The analysis

shows moderate sensitivity to the changes in benefits and these changes will not have a

significant impact on economic return. For example, the economic viability will be only

marginally affected by a 20% decline in benefits and a fall in total project benefits by

30% can reduce the base ERR only up to 15.4%. In a hypothetic scenario if only

agricultural benefits would be taken into account, the project ERR would drop to 18.8%.

26

In another scenario with agricultural benefit decreased by 30%, the project economic

return would be at 15.4%. The summary results of the sensitivity analysis are presented in

the following table:

Tablev5: Sensitivity Analysis (hypothetic scenarios)

Sensitivity Analysis

(25-year period)

Base

case

Increase of

Benefits Decrease of Benefits With only

agricultural

benefits

With 30%

drop in

agricultural

benefits +10% +20% -10% -20% - 30%

ERR 21.8% 23.8% 25.6% 19.8% 17.7% 15.4% 18.8% 16.4%

ENPV (USD mln) 36.4 44.6 52.9 28.1 19.8 11.6 23.4 15.4

3.4 Justification of Overall Outcome Rating

Rating: Moderately Satisfactory

81. The overall project outcomes are rated as Moderately Satisfactory because the

project effectively achieved or exceeded the indicators for reduced ground water levels,

soil salinization and improved water quality in the Amu Darya while its impacts were

more modest on achieving agronomic performance, income and employment indicators.

3.5 Overarching Themes, Other Outcomes and Impacts

82. Water scarcity is one of the key risks the country faces that can only be

effectively addressed by reducing water losses in irrigation from improved infrastructure

and improved system management. As the first in an expected series of projects that

need to address the deficiencies of the irrigation systems in the Amu Darya basin, this

project contributes to the environmental sustainability of irrigation in this area.

83. (a) Poverty Impacts, Gender Aspects, and Social Development - As previously

mentioned irrigation in this part of the world is essential for life and any type of sedentary

agriculture. Agriculture in the region is the main economic activity and at peak season

employs much of the local population. Improved irrigation systems with more reliable

water combined with a lower water table and reduced salinization stimulates a whole host

of auxiliary activities. During its visit to the project area, the ICR mission visited a dairy

farmer that recently purchased some 50 Holstein cows for milk production, another small

farmer over the past 3 years had specialized in the production of seedlings for a variety of

vegetables as improved irrigation stimulates the demand by households to plant their own

vegetable gardens. These activities generated significant seasonal employment, especially

younger women, and the overall impression from informal discussions with residents in

the settlements was overwhelmingly positive as many household gardens that previously

had been so saline as to be uncultivable, have become again suitable for production of

vegetables. As of 2012, the year when all works have been completed, yields of both

cotton and wheat are up 31% and 110% respectively relative to 2006 while other garden

crops and orchards show even a greater increase.

84. Another positive impact – recovered production of fish, muskrat skin, and reeds

from wetlands would be a substantial income for some population in the project area.

27

Since 2006, the area of lake surface leased by fish farmers increased from 2,312 to 4,149

ha. The total catch of fish in the project area was 12.4 t in 2010; 31.7 t in 2011; and 123.8

t in 2012. At the same time an increase in pastures was noted as well as the development

of desert vegetation along the drainage collectors, in a strip of 5 km on both side of it.

While no further research was done on muskrat skin and reed production from wetlands,

it was observed that in the past three years the number of karakul sheep increased.

85. (b) Institutional Change/Strengthening – 27 WUAs established by the project

provide a good basis for participatory irrigation. The institutions that have been

responsible at primary and secondary PAN level have not changed and have not yet

developed trust in WUAs and often interfere with their activities. To make WUAs

function better, the responsibilities of each body will need to be harmonized so that roles,

responsibilities and rights are clearly defined for each party. At present this change is

somewhat impeded by the heavy hand of the state in determining quota areas for the

principal crops in the region, thus often forcing local administrations to interfere in the

prioritization of irrigation water access. The follow up project focusing more on

optimizing irrigation, will help in developing clearer mandates for each body involved

and with a more effective engagement of farmers also provide WUAs with a stronger

voice for advocating its priorities and assuming their responsibilities.

86. (c) Other Unintended Outcomes and Impacts (positive or negative) – It is

noteworthy to mention the project’s positive environmental impacts. On the routes and

collectors SKMC and Ahchadarya stable wetlands were formed with a total area of

2250.8 ha; wetlands also appeared in the old channel Janadarya. They provide habitats

for birds and other wildlife. In addition, it is expected that reduced water logging will

decrease long term damages to buildings, roads and other facilities in the project area; (ii)

better drainage in the area will also reduce risks of human and animal diseases. There is

also reduced risk of deterioration of cultural properties and archaeological sites in the

project area. The project lowered salinity of drinking water downstream. In parallel,

ground water levels dropped throughout the area, which in turn led to reduced water

intrusion and “flowering” on walls and moisture in houses, and made living conditions

substantially more comfortable especially during the cool parts of the year. Finally, the

project generated a considerable fiscal benefit, i.e. the savings from elimination of the

drainage and irrigation pumping that is estimated as USD1.2 mln and USD 145,000 per

year respectively. It is expected that energy savings would also produce positive impact

on the country’s climate change mitigation.

3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops

87. A household survey was undertaken by the M&E consultant at the end of the

project. The survey provided an overwhelmingly positive picture. A summary of the

results of the survey is reflected in Annex 5.

4. Assessment of Risk to Development Outcome

Rating: Moderate

28

88. The overall investment comes with lower operating costs due to reduced pumping

for drainage as well as for irrigation thus presents a fairly low risk investment. The

drainage systems that were in place before the project was not only suboptimal in design

and in terms of coverage design, but also expensive to operate due to dependency on

lifting from pumps. Given the priority for irrigation and power shortfalls, drainage pumps

often only ran when electricity was unavailable. The current gravity driven system offers

a much better perspective for future sustainability. While it too will require some O&M

to keep the collectors clean, operations will less directly depend on electricity or spare

parts to ensure continuity in operation. The weakest part of the project has been

institutional and the fact that still sizeable areas in the system suffer from poor water

supply reliability due to both suboptimal management but also constrained by the poor

state of the irrigation infrastructure. The follow up project under preparation will address

these two main constraints and thus minimize the sustainability risk of this current

investment.

5. Assessment of Bank and Borrower Performance

5.1 Bank Performance

(a) Bank Performance in Ensuring Quality at Entry Rating: Moderately Unsatisfactory

89. Project preparation was led by a seasoned team of engineers and water resources

specialists. The project design was based on studies developed as part of the multilateral

Aral Sea basin support program. Noteworthy were the early (pre-effectiveness)

arrangements and inputs for timely preparation of detail designs and tender

documentation for the projects main infrastructure works and the extensive efforts to

ensure adequate M&E arrangements also for the environmental safeguards. Although the

team was well aware of the complexities with the engineering part of the system, it

appears that the PDO was set at a high level. While the engineering indicators were for

the most part easily met, the agronomic and social indicators were at times insufficiently

closely linked to the project investments and lacked adequately defined mechanisms that

would ensure that data would be effectively collected.

(b) Quality of Supervision Rating: Moderately Satisfactory

90. The Bank team was in constant contact with the client/PMU and its

design/supervision consultants to expedite the design/implementation progress and to

address emerging design/technical issues. Overall, the Bank team responded proactively

with timely approval of justified contract variation orders. The Bank country

management, in its turn, was diligent and persistent in following-up with the MFERIT

regarding delayed import contracts, which expedited the process of obtaining required

procurement clearances. Finally, the Bank follow-up undertook an in depth Mid-Term

Review in 2007 that was used to reorient some of the priorities to improve performance.

In addition, the Bank’s procurement team kept a close watch to ensure that the client

maintain transparent and efficient tendering and contract-management procedures. The

29

Bank closely reviewed the M&E reports produced by the independent consultants under

the project and questioned aspects that appeared inconsistent or were in conflict with the

regular status reports provided by the supervision consulting firm. This overall positive

assessment is weakened by the fact that while it was aware of the challenges in collecting

some of the data and meeting some of the more socially oriented indicators, it failed to

address these aspects with a level 1 restructuring that would have helped in better

aligning outcomes with investments keeping in mind the socio political environment in

the region.

(c) Justification of Rating for Overall Bank Performance Rating: Moderately Unsatisfactory

91. This was a complex project in a difficult environment prepared by an experienced

team. The teams at preparation and supervision were responsive and managed this project

smoothly throughout entire implementation period. More care at design with the

formulation of the PDO and indicators or subsequent restructuring would have made the

Bank input Moderately Satisfactory. The above rating reflects the combined fact of good

technical assessment and decisions with the failure of ensuring stronger links between

investments and outcomes, and from the combining of the two previous separate ratings

in accordance with the ICR report guidelines.

5.2 Borrower Performance

(a) Government Performance Rating: Moderately Unsatisfactory

92. The Government of Uzbekistan saw these project objectives and investments as

key policy priorities. The Ministry of Agriculture and Water Resources (MAWR) as well

as the Ministry of Finance both readily met with the Bank implementation team and for

the most part readily accepted Bank advice and recommendations. The practices in

procurement and project, financial and contracts management presented a significant

learning curve for both the Government as well as for contractors. The commonly

accepted international standards and guidelines including concepts of competitiveness,

transparency and a focus on development outcomes were at times conflicted with

practices of local authorities and government. The overall socio economic reforms in the

sector identified at appraisal were only partially implemented and farmers still reap very

little benefit from their production. This affects farmer willingness and ability to invest

and improve production and make the entire irrigation system sustainable. While the

MAWR was overall responsive and keen to support the PIU with project implementation,

MFERIT on occasion posed serious difficulties with requirements that were in direct

conflict with Bank rules. Also, it took the Government nearly a year to established the

field office and set functioning. In the first 2 years of project implementation, the issue of

counterpart funding was raised at each supervision visit. While the issue never flared to

the point of recorded contract stoppages, it appears to have played a role in the

scheduling of contracts in the first few years of the project.

30

(b) Implementing Agency or Agencies Performance Rating: Moderately Satisfactory

93. The Project PIU had a steep learning curve and often had to contend with

stakeholders that were not familiar with International rules regulating procurement and

contract management. In spite of these challenges the PIU always managed to ensure that

communication between all stakeholders and overall policy affecting the project

remained on course. Procurement and Financial Management have remained

satisfactory throughout the project period. While contracting initially was slow and the

time elapsed between bid and signing of contracts took longer than necessary overall

contract management was considered satisfactory.

(c) Justification of Rating for Overall Borrower Performance Rating: Moderately Unsatisfactory

94. Overall the borrower remained committed to the project objectives and the

outputs defined at design. While the learning curve for adopting internationally accepted

commercial practices was steep the principles were generally respected and when the

Bank team raised commensurate action was taken. The rating for overall Borrower’s

performance is Moderately Unsatisfactory based on the combination of the two previous

separate ratings in accordance with the ICR report guidelines

6. Lessons Learned

95. Lesson 1 - The creation of WUAs and increasing user participation in irrigation

management is always a challenging task that demands time and may be rendered

considerably more difficult in an environment where the state used to fully provide these

services previously. User participation is a new model that represents both on the one

hand a new threat and an opportunity for both farmers and the local water authority. It is

important that both parties know clearly their responsibilities and that there is an

understanding of mutual dependence that needs to be adequately regulated in the laws

governing both the WUAs and the local/regional water authority.

96. Lesson 2 - Distortions in production systems where the supply chain is largely

controlled by the State and benefits are extracted from the region will undermine the

production growth potential even after base agronomic conditions may have significantly

improved.

97. Lesson 3 - There is a need for better awareness of the administrative clearance

process in country which can severely delay contract signature and procurement. This

could possibly be avoided if the governmental bodies providing such clearances would be

clearly named in the legal agreements along with responsiveness standards defined

already at negotiations.

98. Lesson 5 - While it is understandable that governments would like to see local

contractors participate in bids as much as possible to build up the local contracting

31

capacity, this usually entails increased supervision requirements and results in

implementation delays as these contractors often lack adequate equipment to perform the

required tasks.

99. Lesson 6 – A good results framework and strong M&E system are critical to

measuring project impacts. The Project indicators should be a set of Specific,

Measurable, Attributable, Relevant and Time-bound (SMART) indicators and closely

related to project activities It also requires strong attention by the task team to

undertaking a baseline and final impact surveys.

7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners

(a) Borrower/implementing agencies

100. A letter with detailed comments to the draft ICR was received on April 23, 2014

from Mr. Shermatov, Deputy Minister of Economy of Uzbekistan (the translated letter is

provided in Annex 7).

(b) Cofinanciers: n/a

(c) Other partners and stakeholders: n/a (e.g. NGOs/private sector/civil society)

32

Annex 1. Project Costs and Financing

(a) Project Cost by Component (in USD Million equivalent)

Components

Appraisal

Estimate (USD

millions)

Actual/Latest

Estimate (USD

millions)

Percentage of

Appraisal

Total Baseline Cost 60.00 57.00

A. Main Drainage Systems 39.55 33.91 86

B. I&D Systems

Improvements 12.70 23.86 188

C. M&E of Project Impact 1.30 1.82 135

D. Project Management 4.80 7.40 155

Physical Contingencies

0.8

0.00

0.00

Price Contingencies

0.2

0.00

0.00

Total Project Costs 74.20 0.00

Front-end fee PPF 1.30 1.03 .00

Front-end fee IBRD 0.35 0.35 .00

Total Financing Required 74.55 68.37 92

(b) Financing

Source of Funds Type of

Cofinancing

Appraisal

Estimate

(USD

millions)

Actual/Late

st Estimate

(USD

millions)

Percentage

of Appraisal

Borrower 14.55 n/a n/a

International Bank for

Reconstruction and Development 35.00 29.64 84.69

International Development

Association (IDA) 28.53

11 28.16 98.70

11 The IDA Credit was approved in the amount of SDR18 million (US$25 million equivalent at approval).

When the project was closed, the IDA credit was equivalent to US$28.53 million.

33

Annex 2. Outputs by Component

1.1.1 Overview

The project works were provided through four works contracts

The following sections identify the successes and constraints experienced during contract

implementation, first considering individual contracts and finally generic factors, related

to project or contract modifications and tendering, which arise from the institutional

setting.

Works contracts Component Contract reference Contractor

South Karakalpakstan Main Drain DIWIP/SKMD/1 Sino Hydro Corporation

Inter-Farm Irrigation and Drainage

Improvements

DIWIP/MS/1 Tupalangsuvgesqurilish

Command Area Rehabilitation in

Turtkul and Beruniy Districts

DIWIP/CAR/1 Consortium

Amubukharakanalqurilish,

Navoisuvqurilish and

Horazmsuvqurilish

Drainage and Irrigation Rehabilitation

Works

DIWIP/DI/2 Joint Venture:

Ojsc Amubukhorokanalqurilish

Aralsuuqurilish,

Ue Montazhchi JSC Thgk

1.1.2 DIWIP/SKMD/1: South Karakalpakstan Main Drain

(1) Original scope

The contract covered:

Construction of the new drainage disposal system (SKMD)

Certain works to mitigate potential adverse environmental impacts, known as

the “Environmental Management Plan works”.

The South Karakalpakstan Main Drain (SKMD) comprises two sections:

The South Karakalpakstan Main Collector (SKMC), which receives collector

drainage water (CDW) from drains located in the irrigated area, and

Akchadarya Main Drain (AMD) which conveys the CDW to the old

Janadarya river bed along which the CDW will be taken towards the Aral Sea

by gravity.

The SKMC is about 104 km long and runs between the now decommissioned Beruniy

pump station and the junction with VST-2 collector (end of the Wetland II). The AMD is

about 188.8 km long, from VST-2 collector to the Janadarya.

The formation of the SKMD comprised:

Reversal of the Beruniy Collector, construction of a connection to the

Ayazkala Collector and connecting it to Akchadarya Collector, while

deepening and widening the bed to provide gravity disposal of CDW.

Construction of the AMD, predominantly in the old channel of a former river

(the Akchadarya).

34

In addition to channel earthworks, the

contract involved replacement and

reconstruction of existing structures and

provision of new structures (Box 3.1).

Supplementing this were minor works

including channel protection works to

prevent ingress of wind-blown sand.

The Environmental Management Plan

works were focused on sustaining water supplies to the Baday Tugai reserve and the

hydrology of Lake Ayazkala.

The Baday Tugai works involved:

Remodelling of water supply canals of capacity 5 m3/s and above from

Nayman-Beshtam pump station to the reserve, including the Budeniy canal

Formation of a distribution channel (New Distributor Canal) within the Baday

Tugai forest reserve

Channel remodelling, bank raising and construction and replacement of

hydraulic structures, all to permit flow along the Kok Darya from the Amu

Darya.

At Lake Ayazkala, the planned works included:

Provision of an outlet structure from the lake into the SKMC

Construction of low earth dam to prevent future inflows into the western lobe

of Lake Ayazkala

Provisionally, measures to control windblown salts at the western lobe of

Lake Ayazkala, including planting vegetation

Provision of spare parts to Kyzylkum pump station and the maintenance

necessary to enable it to deliver water into the eastern lobe of Lake Ayazkala.

Significant scope changes

Following a decision to cease pumping into Lake Ayazkala, the planned engineering

works at the lake and pump station were removed from the scope of work. Because Lake

Ayazkala is still partly moist and covered by halophytic vegetation, the Uzbek State

Committee for Environmental Protection concluded that there is no danger to salt transfer

or erosion to other areas, and therefore specific measures of stabilizing the lake’s bed are

currently not required. Hence the measures to manage windblown salt were dropped.

Under the contract some 24 million m3 of earthworks were undertaken and 9 800 m

3 of

concrete placed, as summarised in table 2 below.

Summary of SKMD works

Location Volume (m

3) Collectors and

canals

(km)

Structures

(Nr) Earthworks Concrete

Baday Tugai 1 721 000 1 990 68.6 63

Ayazkala 70 000 - 3.6 -

Box 3.1 SKMD structures

Main structure types provided / upgraded:

Road and foot (on AMD) crossings

Junction structures (on inflowing collectors)

Water control structure at the outlet of Wetland II

Service pipe crossings (drinking water line, gas line)

Power and communication line crossings

Aqueducts (flume and box)

Water measurement structures

35

SKMC 15 905 000 5 320 116.1 48

AMD 6 304 000 2 510 122.2 13

Totals 24 000 000 9 820 310.5 124

Source: MMTS

1.1.3 DIWIP/MS/1: Inter-Farm Irrigation and Drainage Improvements

Original scope

During project design the option was initially left open on whether to undertake canal and

drainage system works under a single or two contracts. It was subsequently concluded

that combining the works in a single contract gave advantageous flexibility, allowing the

works to be tailored to the specific needs identified by the local stakeholders.

The main works of Contract DIWIP/MS/1 comprised:

Inter-farm irrigation and drainage system infrastructure

Rehabilitation of around 250 km of existing collector drains including

deepening and remodelling works

Rehabilitation of 12 existing canal structures

Construction of 13 new canal structures.

On-farm agricultural operations:

4 000 ha of land levelling and smoothing, to form fields suitably graded for

furrow or border strip irrigation [Subsequently reduced to 1500 ha]

4 000 ha of deep ripping to remove plough pan [Increased to 4526 ha]]

Mole drainage, over 250 ha, to demonstrate the applicability of the

technique [Cancelled]

Provisions for WUA training and the establishment of Demonstration Plots

and Farmer Field Schools.


There were no fundamental changes in scope aside from introducing some additional

works in the AMD and Janadarya. There was continued interaction with the stakeholders

(khokimyats, PAN and the KKP Hydromelieorative Expedition) during which they put

forward proposals for works which were then tested against the overall scope.

Implementation was consequently focused on raising water levels in the canals. Drain

works were aimed at remodelling drains where the required improvements could not

reasonably be incorporated into routine drain cleaning.

The pilot mole drainage was cancelled as it was, on examination, considered unfeasible

in the prevailing ground and soil conditions. For pragmatic reasons, land levelling was

reduced from 4 000 ha to 1 500 ha; however, deep ripping was increased from 4 000 ha

to 4 526 ha.

Additional works were instigated to allow the high discharges entering the AMD to be

accommodated after work on the DIWIP/SKMD Contract had been concluded.

Embankments were strengthened and some channel excavation undertaken.

36

Achievements

Under the contract some 2.5 million m3 of earthworks were undertaken and 4 900 m

3 of

concrete placed. In addition as noted above, land levelling and deep ripping was

implemented over modest areas.

Summary of Inter-Farm Irrigation and Drainage Improvements works

Location

Volume (m3)

Collectors

(km)

Structures

(nr)

Land

levelling

(ha)

Deep

ripping

(ha) Earthworks Concrete

Beruniy tuman 240 000 1 630 49.9 10 605 1 821

Ellikala tuman 1 301 000 1 510 155.2 7 - -

Turtkul tuman 1 003 000 1 720 88.7 11 896 2 705

Totals 2 544 000 4 860 293.8 28 1 501 4 526

Source: MMTS

1.1.4 DIWIP/CAR/1: Command Area Rehabilitation in Turtkul and Beruniy

Districts

Original scope

The Command Area Rehabilitation works were aimed at improving water management

and removing bottlenecks in the irrigation and drainage systems so that the greatest

benefits arising from improvements to the inter farm system completed under other

contracts could be reaped by the farmers. These works were not a complete rehabilitation,

but focused on the rehabilitation, replacement or new construction of key items of

infrastructure. These works were integrated into the existing infrastructure, much of

which remained unchanged.

The works were to be prioritised within an overall, average budget of 130 USD/ha.

The works were suggested by the Water User Associations (WUAs) and were undertaken

on a strictly limited budget. There were, at the time the works were executed, nine WUAs

in Beruniy tuman, and 12 WUAs in Turtkul. The total area of irrigated land on which the

works were undertaken was approximately 60 000 ha.

The main works of Contract DIWIP/CAR/1 included:

Inter Farm Infrastructure

Cleaning and remodelling of inter farm collectors

Replacement of culverts on inter farm collectors

Installation of new structures on inter farm canals

Rehabilitation of existing structures on inter farm canals

Improvements to the on-farm infrastructure

Installation of new structures on on-farm canals

Rehabilitation of existing structures on on-farm canals

Cleaning and re-profiling of on-farm canals

Replacement of pumps

Supply of portable metal check structures

37

Cleaning and remodelling of on-farm collectors

Replacement of culverts and aqueducts on on-farm collectors.

The WUAs were involved at all stages, commencing with a thorough briefing on the

scope and limitations. Work commenced with the two most institutionally advanced

WUAs, using these to pilot the process and to demonstrate to other WUAs the

implementation modality. The Pilot Area survey and design work were used to establish

standard procedures and designs, and to provide a guide to the cost of comprehensive

CAR works and what could be realistically be achieved within the financial constraints of

the project.


The earthworks in the bill of quantities were completed by the end of 2009, with concrete

works due to be finished after a further month’s work. However, more works were

required to finish all the works originally agreed with the WUAs. Fortunately these works

could be done within the Contract budget, as savings had been made. The Tender

Commission of MAWR approved the additional works and World Bank’s no–objection

to the additional quantities was received before the end of March 2010.

Additional Agreement No 1

By mutual agreement, the contract period was extended for one year, to 12 June 2010, as

the most pragmatic way of completing the Works.


Additional Agreement No.2 covered part of works from the DIWIP/DI/1 Contract (see

below). With the plans for water supply to the Baday Tugai reserve having had to be

changed, work was needed to modify the Kok Darya inlet works, and to improve check

structures on the Kok Darya.


Additional Agreement No.3 was an extension to Additional Agreement No.2, covering

very similar activity. It enabled the use of available funds to be maximised partly by

extending the implementation period.

Achievements

Some 3.9 million m3 of earthworks were undertaken and 16 000 m

3 of concrete placed

Summary of Command Area Rehabilitation works

38

Location Volume (m

3) Collectors

(km)

Structures

(Nr) Earthworks Concrete

Original Contract & Additional Agreement No 1

Beruniy Tuman 518 000 6 650 156.5 369

Turtkul Tuman 1 689 00 4 680 381.7 251

Kok Darya Works 0 520 0 4

Additional Agreement No 2 and 3

Beruniy Tuman 1 768 000 4 220 440.0 190

Turtkul Tuman 0

Totals 3 975 000 16 070 978.2 814

Source: MMTS

1.1.5 IWIP/DI/2: Drainage and Irrigation Rehabilitation Works

Original scope

The original scope (for the then proposed contract DIWIP/DI/1) was developed based on

projections of potential savings on other ongoing contracts and the overall budget

allocated to DIWIP.

The main elements identified were: Command Area

Rehabilitation An additional 207 farm outlets complete with provision for

flow measurement.

Inter-farm I&D

Infrastructure

Improvements

Rehabilitation and construction of hydraulic structures

Repair and installation of gates and hoists

64 flow measurement stations.

Additional

Groundwater

Monitoring Wells

Installation of new and rehabilitation of existing monitoring

wells.

Inter-farm Collector

Drains Re-routing and reshaping of drains in Beruniy district, to

maximise drainage benefit following the closing of Beruniy

pump station

Cleaning of additional drains

Construction of structures at the junction of on-farm and inter-

farm drains

12 new siphons under irrigation canals to replace existing

structures, but with lower cill levels.

The lowest evaluated bid for the DIWIP/DI/1 works was higher than the budget and there

were other technical issues with the bid that were of concern; this tender was therefore

cancelled.

Instead, about half of the DI/1 works was included in the existing DIWIP/CAR/1 contract

through an amendment (Additional Agreement No 2) and bidding documents for the

remaining works were prepared for issue as DIWIP/DI/2.


There were no significant scope changes during execution of DIWIP/DI/2 except for the

addition of certain works in the AMD to prevent damage occurring as a result of high

drain flows.

39

Achievements

The primary achievement of this contract was to address some of the remaining

infrastructure constraints to effective water management in the secondary and on-farm

systems in Beruniy and Turtkul together with extending the area of drain remodelling.

The latter in particular allows the benefit of the new drainage disposal system to be

experienced more widely.

Summary of DIWIP/DI/2 works

Location Volume (m

3) Collectors

(Nr)

Structures

(Nr)

Inspection

wells (Nr) Earthworks Concrete

Beruniy Tuman 0 0 0 0

Ellikala Tuman 332 0 12

Turtkul Tuman 2 176 023 3 252 651 197

AMD 576 969 47 0

Totals 2 752 992 3 584 - - 279 Source: MMTS

1.2 Supply contracts

The only supply activity, other than minor items for the PIU office and its refurbishment,

was for land levelling and deep ripping equipment. In the PAD it had been envisaged that

land levelling and deep ripping equipment would be procured for use in the project area,

commencing with the Demonstration Plots. However, once implementation of the project

had started, it became clear that the mechanisms for a government organisation to take

the equipment onto its balance sheet and be responsible for operating and maintaining it

did not then exist.

Thus, after discussion, plans for providing equipment though Contract Nr DIWIP/Gen/2

were dropped. Instead a small area of land levelling was included in DIWIP/MS/1 as a

works contract12

. This, it was thought, would as a minimum demonstrate the benefits of

land levelling.

This component of DIWIP/MS/1 took time to implement well. However, during this

period, and not least due to use of land levelling on the demonstration plots, interest in

land levelling grew. It was subsequently decided, taking advantage of the extended

duration of the project, that the institutional situation had changed and supplying tractors,

certain land levelling equipment and deep ripper frames was justified, provided that these

became the responsibility of the appropriate Machine and Tractor Park.

There was considerable debate on the specification of the equipment: in the end, the laser

levelling equipment selected was of a type (essentially a laser-controlled blade with no

carry-capacity) which had limited capacity for reforming the land profile. Rather it is a

finishing tool. It appears that nevertheless the equipment is being used to reprofile some

fields – which suggests that should a suitable opportunity arise, the existing equipment

12 Initially, Contract DIWIP/CAR/1/LL was tendered. But this was not successful.

40

should be complemented with equipment capable of efficiently reprofiling the land ahead

of finishing using the equipment purchased under DIWIP/LL and DIWIP/LL/2.

1.3 Capacity building and institutional support

This was provided under the DIWIP/Con/1 service contract (see below) and comprised:

Supporting development of Water Users Associations (WUA) together with

technical assistance and training for improving irrigation, drainage and

agricultural practices

Amu Darya basin water management studies

Introducing modern tools for irrigation scheduling in South Karakalpakstan

and providing training in modern irrigation management techniques for

operators of the South Karakalpakstan irrigation supply network

The outputs were captured in a series of working papers. The following text is a very

short summary of the contents of the Working Papers listed below, to which reference

should be made for more detail.

Working Paper AS3: AS3 Water Management (March 2010)

Working Paper AS4.1: WUAs (April 2010)

Working Paper AS4.2: Agriculture (March 2010)

Working Paper AS6: Amu Darya Basin Water Management Studies (March 2010)

Working Paper AS7: Tools for Irrigation Scheduling and Training in O&M

Techniques (April 2010).

1.3.1 Canal water management

A two day training programme was developed and delivered to irrigation service

authority (ISA) personnel, by an external specialist trainer. This made reference to

technical papers prepared on the methodology for measuring water flow in canals, and on

the organization of water measurement.

Implementing the approaches covered by the training was constrained by the lack of

measuring gauges and other equipment on structures and pressures to maintain historic

water allocations and gate settings at individual structures. These issues are to be

addressed in the proposed follow on project (SKWRMIP).

1.3.2 Water Users Association support

Four sub-components were addressed:

WUAs and WUG establishment support

Demonstration plots (DPs)\

Farmer Field Schools (FFS)

Farmer Information Support Desk (FISD) / Farmer Information Support Centre

(FISC).

41

Twenty seven WUAs, thirteen in Beruniy and fourteen in Turtkul were set up in the early months of the project.

All WUAs are registered with the Ministry of Justice of the Republic of Karakalpakstan. They are non- profit and

non-governmental organizations with significant tax exemptions.

During the period of project implementation WUAs and their functions have become reasonably well known by

many people, but it is not yet possible to say that they take an important place in the community.

The effective establishment of the WUAs as an integral component of water management has been hampered by

budgetary limitations.

In general Irrigation Service Fee (ISF) collection rates are poor, and so WUAs cannot implement the maintenance

components of their annual budget. WUAs have no effective sanctions against members who do not pay ISF. If

the WUA tries to refuse water to such a member, the khokimiyat usually overrides the decision in order to

maximise crop production. This obviously has a negative effect on ISF collection discipline.

ISF is always paid by transfer from the bank accounts of farmers out of the government seasonal loan. Even when

all formalities are completed, banks usually do not / cannot pay the total money allocated for WUAs. The banks

first make payments for other items, like fertilizers, seeds and chemicals. All the money transferred into WUA

accounts is spent on staff salaries or taxes. Even so, many WUAs have to pay staff salaries late; some reached 12

months in arrears.

Source: The M&E Final Project Completion Report

The DIWIP teams have provided guidance and suggestions to support the development of

WUAs, including:

Water User Groups: Experience in the first two years of the project demonstrated

that it would be beneficial to organize Water User Groups (WUG) in the WUAs

with their relatively large areas and where these have more than 100 members.

Each WUG covers an area of about 200 ha and has a leader.

The group leaders form the general assembly of the WUA.

A manual was prepared for the operation and maintenance (O&M) of WUA

irrigation and drainage systems. After approval by PAN ISA, the South

Karakalpakstan Main Collector (SKMC) system authority, raiselvodkhoses,

district khokimiyats and MAWR, the manual was issued to WUAs.

Training and Extension: Training programmes, concentrated in the first

two years of the project (2005-2006), were implemented successfully.

Subsequently, refresher training and support was given as needed, and

guidance provided on WUA operation. All training programmes were

agreed, through the PIU, with the khokimiyats which were given every

opportunity to observe and participate although there was no structured

institutional involvement.

Fourteen pamphlets were developed from the training materials, and were

distributed to WUAs and local authorities to act as a source of reference in

the future.

1.3.3 Soil and water management practice improvement

The project supported demonstrations of good agricultural practice and the dissemination

of good soil and water management techniques:

Through the use of demonstration plots DIWIP was able to demonstrate clearly

that substantial increases in yields of cotton and wheat are possible in lower

potential soils.

42

Farmer Field Schools (based on tried and tested international techniques) proved

an effective and popular way of distributing widely the methods of improved soil

and water management and agricultural practices used in the demonstration plots.

Substantial expertise in agricultural extension has been gained by South

Karakalpakstan specialists that should be made full use of in the future.

The consultant’s Farmer Information Support Desk, which became an

independent Farmer Information Support Centre before the end of the project,

established the basis for continuing provision of agricultural extension services.

Farmers realise that they need extension services and wish the FISC to continue

its activities.

It also became clear that the physical improvements made under the project,

particularly collector and drain remodelling and deep ripping to remove plough

pan and improve soil permeability, were having very positive impacts on yields,

even in areas where improved agricultural practices were not being used.

These are very positive outcomes. It is of course important that appropriate institutional

support is provided to ensure that the benefits are built upon in the future. In part, this

may be achieved through the proposed follow-on project SKWRMIP.

Demonstration Plots: DPs were used to show farmers “best practice” with respect to a

multiplicity of activities directed towards the improvement of soil properties and full

satisfaction of plant requirements for nutrient elements and water.

During the first three years of the project a total of seven DPs were established in Beruniy

(six for cotton / wheat / secondary crops and one for vegetables), and eight in Turtkul

(seven and one). The vegetable demonstration plots were added to the DP programme, to

ensure that the majority of households in the project area directly benefited from the

agricultural components of the project. This was to compensate for the fact that only a

relatively few have leasehold farms, which were the original main focus for the DP

programme. This is instrumental in the increase in vegetable production and productivity

in the project area. A manual, for the future use of any interested parties, on the

development and works to be done in DPs was issued (informally) in the English,

Russian, and Uzbek languages.

Farmer Field Schools: A Curriculum Development Workshop was followed by training

of trainers - the three Field Team members from each district. Between the beginning of

2006 and the end of 2009 a total of 691 farmers took part in 55 FFSs. The emphasis was

on practical training sessions. During the course of the work, an implementation manual

for FFSs was developed.

A Farmer Information Support Desk (FISD) was set up to provide current information

about agricultural production costs and prices, the tax system, and relevant laws and

governmental resolutions, and to act as an agricultural extension services tofarmers and

local authorities in the project area. FISD activities were also directed towards raising

farmers' awareness of DIWIP.

43

Booklets on 20 subjects and bulletins on 19 subjects were prepared; more than 14 000

booklets and 860 bulletins were distributed. For training and display purposes more than

100 posters were prepared. This extension service closed on 1 July 2008, when the

Farmer Information Support Centre (FISC) was officially established in its own offices in

Beruniy and Turtkul.

Farmer Information Support Centre: The function of the FISC is to provide similar

services to the FISD, but with the addition of publications for the visual and written

media in order to widen the impact of the extension activities. The intention was that the

FISC would become financially self-supporting, by charging fees to users of the services

provided. The FICS was registered in 2009, in Turtkul, as an NGO by its manager. After

project support was withdrawn, the FISC’s continued existence faced uncertainty.

However, the khokimyat has since provided support and as of early 2013 the FISC was

functioning with 3 technical staff.

1.3.4 Amu Darya basin water management studies

There are two major risks to the success identified related to DIWIP with respect to water

management in the Amu Darya Basin:

Reliability of irrigation water supply; and

Impact of flooding on the irrigation and drainage infrastructure and the irrigated

land in South Karakalpakstan.

Water allocation study

The water balance of the Amu Darya and the allocation of water in drought years were

reviewed, and the mechanisms used for allocation of water in such drought years

investigated. The current practice for managing floods was also studied. A tool for flood

routing from Tuyamuyun reservoir was developed. The recommendations made and the

tools provided will, if used, reduce the likelihood of flood damage to the irrigated land in

South Karakalpakstan.

A simple tool was developed to demonstrate the potential for incremental improvement

of the existing method of allocating water. This tool is based on the reporting / planning

format already used by the BVO, but has additional functionality. This then links with the

water user database and irrigation scheduling programme developed under DIWIP.

Flood management study

A preliminary evaluation of Tuyamuyun reservoir was undertaken (with a more detailed

assessment undertaken in the first phase of the follow on SKWRMIP study). This

highlighted the effectiveness of current operations, but also that refinements would be

beneficial for managing potential risk.

DIWIP investigated the risk of flooding to the South Karakalpakstan irrigation and

drainage infrastructure arising from flood discharges entering the canal network when

required to protect Tuyamuyun reservoir and the riverine areas downstream.

Such releases are accommodated through a combination of:

Spare conveyance and storage capacity in certain canals with river intakes

44

Many of the structures installed under DIWIP have overflows; existing structures

do not have these.

The wetlands at the end of SKMC provide some buffer storage to large flows

entering AMD, as do the wetlands along the AMD.

Baday Tugai

It appears feasible to provide controlled inundations of the Baday Tugai reserve. If these

could be done early in the summer before peak floods occur, to achieve the target

ecological benefit, such flooding could be achieved at relatively modest discharges. A

detailed assessment of the concomitant flood risk to other areas of the riverine strip needs

to be undertaken.

1.3.5 Irrigation scheduling and O&M

Tools for irrigation scheduling

A pilot area was delineated: part of the command area of the Nayman-Beshtam pump

station, covering about 22 000 ha. Following extensive discussion, a program was

developed based on the existing planning and management system as two mutually

interactive modules:

Water Use Planning in WUAs and

Water Use Planning in Pakhta’arna-Nayman ISA.

Input forms were developed for canals, farms, fields, and WUA, district and Irrigation

System Administration (ISA) data. Databases for the districts, WUAs and ISA were

constructed. Water management options for different supply and flow conditions were

investigated. The software was installed on the computers of the PAN ISA district offices

in Bustan, Beruniy and Turtkul, and training provided to a few selected individuals. A

Users’ Manual was also provided.

A key concern for the system operators was the considerably larger data collection,

verification and appraisal work required to make use of the scheduling software. In

particular the tool was developed on the premise that the user was the anchor for data

referencing. However, the higher turnover in irrigators at any individual outlet is a

complication which may subsequently be best resolved through geo-referencing.

Given the considerable advances in mobile phone and field-device technology, including

GPS functionality, it would appear feasible that in a relatively short period it should be

possible to collect the data relatively quickly and thus circumvent the valid concerns

currently held.

1.4 Service contracts

Three primary service contracts were let:

DIWIP/Con/1 Project Implementation Consulting Services

DIWIP/Con/2 Monitoring, Evaluation and Supervision of EMP

Consulting Services

45

DIWIP/Con/3 Follow-up Monitoring and Evaluation Consultancy

Services.

This report is prepared under DIWIP/Con/1.

DIWIP/Con/3 followed on from DIWIP/Con/2 to cover the extended project

implementation programme. There was a gap of about a year between the two contracts

as the procurement arrangements were completed for the follow on work.

The DIWIP/Con/1 services included:

Preparation of designs, procurement documentation and contract administration

Capacity building, particularly focusing on farmers and WUAs

General support to the PIU.

Co-location of the DIWIP/Con/1 team with the PIU in Beruniy allowed good

communications and enabled the PIU management to be confident they understood

progress and issues. It also meant the PIU were alerted to and able to support addressing

problems which arose.

Working across an extended site with multiple contracts, and with the underperformances

noted above, put considerable pressure on the supervision team. In this context, the

national target for capping contract supervision and administration costs (ie the

“engineering”) at 5% of the contract price is not necessarily beneficial. As contracts

become more complex (whether through interaction with other contracts or through the

amount of detail in design and execution) overall savings can potentially be achieved by

providing value engineering. This can be in the form of overall cost reductions through

rigorous design optimisation to save both capital and operating costs.

The two monitoring and evaluation contracts (DIWIP/Con/2 and DIWIP/Con/3) yielded

useful information on implementation and the impact of the project. There were several

occasions when information provided under these contracts was critical to decision

making.

Typical monitoring and evaluation activities were:

Collection of baseline data

General monitoring activities

Review of contractors’ Site Environmental Management Plans and Environmental

Auditing at construction sites

Adjusting datasheets for socio-economic data

Development, filling and testing of monitoring databank Seminars for local

stakeholders and discussions with relevant stakeholders on Lake Ayazkala, Lake

Akchakul, wetlands and Baday Tugai, including mitigation of salt blown by wind

and erosion of spoil banks

Enquiries for additional observation wells and hydro posts,

Delivery of ArcGIS, ArcView 9.2 (Russian version) for the Hydromeliorative

Expedition

Impact monitoring

Completion of annual reviews

46

Annex 3. Economic and Financial Analysis

1. The project’s ex-ante economic analysis was prepared during the project

preparation and included in PAD. Therefore the current ex-post economic analysis

compares the actual project results and performance under the baseline situation applying

the same analytical approaches and methods that were used at project appraisal. ERR:

21.8% and NPV: USD 36.4 million.

2. Primary data and information were collected from the project implementation

reports and from other similar WB projects. A conservative approach was applied to the

presented analysis.

3. Project benefits: The main project benefits will come from the increased

agricultural production in the project area. Other quantified benefits, which are also

included in the economic evaluation, are deriving from the decreased salinity in Amu

Darya river, resulting in the increased agricultural production in the downstream areas.

Among other benefits that were taken into consideration are the direct benefits coming

from wetlands that will come from the increased fish production, muskrat skin production

and reeds production. Savings from elimination of drainage and irrigation pumping were

also considered as project benefits and included in the analysis.

4. Agricultural Benefits. Agricultural benefits result from two main activities of the

project, (i) construction of better functioning drains consisting of SKMD and AMD and

the rehabilitation of the main collector drains in the project area; and (ii) the development

of WUAs for better irrigation management through users participation, and command

area improvements, including rehabilitation of the irrigation and drainage systems, and

introduction of land levelling in WUA areas, demonstration of improved irrigation

practices, and farmers’ information services.

5. The drainage improvements resulted in increased cropped area and reduction in

soil salinity levels, which in turn resulted in increased overall yields, crop production and

farm income in the project area. At project appraisal it was expected that crop yields in

the project area would increase from 5% to 15%. However, the actual yield growth was

different depending on the crops. For instance, for cotton it was only 12%, while for

wheat and potato it was much higher - 96% and 69% respectively. Relatively low yield

growth was recorded for fodder, while yield of oil seeds dropped by 30%.

Table 1. Averaged crops yield in project area13

WOP WP

Increase/

decrease

Cotton 1.9 2.1 12%

Wheat 2.0 3.9 96%

Oil seeds 2.1 1.4 -30%

13 WOP was estimated as an average yield for 2005-2007 while WP – as an average yield for 2010-2012.

47

Potato 7.4 12.4 69%

Vegetables 13.5 16.9 25%

Melon 9.9 12.7 29%

Fodder crops 9.3 10.0 7%

Fruit and berries 3.6 5.2 45%

Grapes 5.1 7.2 40%

6. It is estimated, that due to increase in crop productivity in Beruniy district, the

incremental net benefits for cotton will be about UZS 2.2 billion, for wheat UZS - 3.7

billion (for both commercial and dekhan farms), for tomato - UZS 229 mln and for

maize for silage - UZS 98 mln. In total, benefit stream of increased crops productivity

will amount yearly to about USD4.3 mln for Beruniy, USD 3.7 mln for Ellikkala and

USD 4.1 mln for Turtkul districts of the project area. However, in the presented analysis

only 75% of these benefit streams is conservatively considered as attributable to the

project, while the remaining 25% is assumed to be generated by activities and

improvements that are not directly associated with the project.

Table 2. Beruniy: benefits of increased agricultural productivity

14

Item Unit With Project

PY 1 (2006)

PY 2 (2007)

PY 3 (2008)

PY 4 (2009)

PY 5 (2010)

PY 6 (2011)

PY 7 (2012)

Y8 Y9 Y10-25

Cotton

Commercial farms

Cultivated area ha 13,304 13,264 13,012 14,307 15,043 12,400 12,400 12,400 12,400 12,400

Incr. net benefit per 1 ha UZS 000's 88.1 88.1 176.2 176.2 176.2 176.2 176.2

Incr. net benefits UZS mln - - - 1,260.4 1,325.3 2,184.9 2,184.9 2,184.9 2,184.9 2,184.9

Wheat (Commercial farms)

Cultivated area ha 3,420 3,551 4,156 4,272 4,302 3,349 3,377 3,377 3,377 3,377


Incr. net benefits UZS mln - - - 2,175.0 2,190.3 3,410.0 3,438.8 3,438.8 3,438.8 3,438.8

Wheat (Dekhan)

Cultivated area ha 566 588 688 707 712 554 559 559 559 559


Incr. net benefits UZS mln - - - 152.7 153.8 239.5 241.5 241.5 241.5 241.5

Potato (Dekhan)




Tomato ( Dekhan)




Melon (Dekhan)




14 Full tables for this and other project districts are available in working files.

48

Maize for silage (Com. Farms)

Cultivated area ha 1,512 1,150 910 2,353 1,968 1,950 2,576 2,576 2,576 2,576



Maize for silage (Dekhan)




Total Incr. agr. benefits UZS mln - - - 4,941 5,068 8,539 9,343 9,343 9,343 9,343

Total Incr. agr. benefits USD 000's - - - 2,246 2,304 3,881 4,247 4,247 4,247 4,247

7. Project cultivated agricultural area is increased by 12.4% in total. This increase

was mainly contributed by significant expansion of cultivated area under fodder crops

(maize and lucerne), vegetables and melon and increased cropping intensity. It is

estimated that the incremental benefit stream deriving from expanded cultivated area will

be about USD 5.3 mln per year.

Table 3. Project cultivated area15

WOP WP Increase/

decrease

Cotton 13,193 13,281 0.7%

Wheat 4,323 4,284 -0.9%

Other grains 436 726 66.6%

Oil seeds 163 315 93.5%

Potato 309 465 50.5%

Capsicum 256 378 47.6%

Tomato 256 378 47.6%

Melon 415 711 71.5%

Lucerne 381 692 81.8%

Maize for silage 1,522 2,767 81.8%

Fruit and berries 845 862 1.9%

Vineyards 99 88 -11.1%

Total 22,198 24,948 12.4%

8. Downstream Agricultural Impact. As a result of the project, the saline drainage

water will no longer be pumped from the Beruniy collector to the Amu Darya with a

positive impact on the quality of the river water and on crop production in the

downstream areas of North Karakalpakstan. The average salinity of the drainage water is

4.8 g/l, and by diverting this water from the Amu Darya, the salinity of the river

downstream will be reduced from 1.01 g/l to 0.96 g/l. The high level of salinity in spring

time will affect growing of cotton, wheat and other crops. It is estimated that this will

result in the following increases: 0.7% for cotton, 1.0% for wheat, 1.3% for fodder, and

2.3% for vegetables and orchards.

9. The total value of these increases for about 257,000 ha of downstream agricultural

area is cautiously estimated at US$ 885 thousand per year.

15 WOP was estimated as an average area for 2005-2007 while WP – as an average area for 2010-2012.

49

10. Benefits from Wetlands. The direct benefits from wetlands will come from three

sources: fish production, muskrat skin production and reeds production. It is estimated

that the value of fish production from about 93 ha of lakes in project wetlands would be

about US$9,300 per ha. The production of muskrat is estimated at about US$4,000 per

1000 ha of wetland. Reeds are used for fodder, as construction material and it is also used

as a fuel for cooking and heating. With average yield estimated at 15 ton/ha, total

production of reeds will be 135 tons per 1000 ha of a wetland. The net benefits are

estimated at about USS3,400 per 1000 ha of wetlands.

11. In overall, the total benefits coming from these sources of about 15,000 ha of

wetland in the project area are estimated at about USD972,000 per year. Other general

environmental benefits such as biodiversity, reductions of pesticides and other chemicals

in the drainage water and reduction in degradation of nutrients are not quantified.

12. Cost savings. A considerable economic benefit of the project is the savings from

elimination of the drainage and irrigation pumping that is estimated as USD1.2 mln and

USD 145,000 per year respectively.

13. Other benefits. The project would inevitably generate additional economic effects

which are not fully captured in the analysis of primary benefits. The project is expected to

increase general economic activities that can give rise to a multiplier effect of both capital

and recurrent expenditures and to increased activities in the agricultural sector. Other

secondary benefits include generation of additional and remunerative employment, such

as opportunities in the project construction work and related non-agricultural activities,

and generation of additional tax revenues. These benefits are not included in the

economic analysis.

14. With proper drainage and reduction in soil salinity, the quality of vegetation on

uncultivated land is expected to improve. The long term damage to buildings, roads, other

structures, and utility lines throughout the project area including the urban areas would be

reduced, significantly decreasing the maintenance cost of these facilities. Proper drainage

would reduce ponds, the standing water bodies in the area which provide breeding

grounds for malarial and other mosquitoes and vectors, and pollution from domestic and

industrial effluents, reducing risks of human and animal diseases, hence improving the

general public health and environmental conditions.

Project and O&M costs

15. The actual cost of the project used in the analysis is USD66.0 million including

the cost of implementation, design and construction supervision, project preparation cost,

technical assistance and training. The O&M cost for drainage pumping stations was

estimated at US$1.2 million per year which is expected to fall to USS0.83 million under

WOP case due to reduced pumping because of deteriorating condition of irrigated

agriculture and irrigation and drainage infrastructure. These costs are eliminated in the

WP scenario and the net increase in O&M cost with project is therefore, US$370,000.

50

Project Economic Analysis

16. The period of analysis is 25 years to account for the long-term impact of the

project interventions. The scenario presented in the economic analysis is conservative.

The analysis presents the balance of costs and benefits of the project and it is based on

the actual data and results of the project.

17. The analysis identified the quantifiable benefits that directly relate to the activities

undertaken following the implementation of the project, or that can be attributed to the

project’s implementation. The incremental quantifiable benefit stream comprises of four

main elements: (i) incremental agricultural production, (ii) benefits from wetlands, (iii)

downstream agricultural impact and (iv) savings from elimination of drainage and

irrigation pumping.

18. In total nine financial crop budgets and five economic cost-benefit models were

prepared for calculation of the overall benefit streams, on the basis of economic prices.

All local costs were converted into their approximate economic values. A Shadow Wage

Rate of 0.6 was also introduced into the analysis to identify the opportunity cost of labour

in the project’s civil work costs. All values are given in constant 2013 prices.

19. Given the above mentioned benefit and cost streams, the Economic Rate of

Return (ERR) of the project is estimated at 21.8%. The Net Present Value (NPV) of the

Project’s net benefit stream, discounted at 12%, is positive - USD 36.4 million.

20. The final table of the project economic analysis is presented in Table 4 below.

Table 4. Project Economic Analysis, USD thousand

PY 1 (2006)

PY 2 (2007)

PY 3 (2008)

PY 4 (2009)

PY 5 (2010)

PY 6 (2011)

PY 7 (2012)

Y8 Y9 Y10-25

Project investments and running costs Project costs 12,000 10,000 12,000 10,000 8,000 9,000 5,000 - - -

Incremental yearly I&D maintenance costs - - - - - - 370 370 370 370

Total investments and running costs 12,000 10,000 12,000 10,000 8,000 9,000 5,370 370 370 370 Incremental Gross Incomes streams

Incremental agricultural benefit streams - - - 7,816 7,723 13,860 14,299 14,299 14,299 14,299

Benefits from wetlands - - - - 486 486 973 973 973 973

Downstream agricultural impact - - - - 443 443 886 886 886 886

Savings from elimination of drainage pumping - - - - - - 1,200 1,200 1,200 1,200

Savings from irrigation pumping - - - - - - 145 145 145 145

Incremental Gross Incomes, total - - - 7,816 8,653 14,789 17,503 17,503 17,503 17,503

Project Incremental Gross Income -12,000 -10,000 -12,000 -2,184 653 5,789 12,133 17,133 17,133 17,133

ENPV @12% (USD 000's) 36,360

ERR 21.8%

21. Sensitivity Analysis. Actual economic returns were tested against several

hypothetic scenarios of changes in benefits that can happen in the future. The analysis

shows moderate sensitivity to the changes in benefits and these changes will not have a

51

significant impact on economic return. For example, the economic viability will not be

threatened by a 20% decline in benefits and a fall in total project benefits by 30% can

reduce the base ERR only up to 15.4%.

22. In a hypothetic scenario if only agricultural benefits would be taken into account,

the project ERR would drop to 18.8%. In another scenario with agricultural benefit

decreased by 30%, the project economic return would be at 15.4%.

23. The summary results of the sensitivity analysis are presented in the following

table:

Table 5. Sensitivity Analysis (hypothetic scenarios)

Sensitivity Analysis

(25-year period)

Base

case

Increase of

Benefits Decrease of Benefits With only

agricultural

benefits

With 30%

drop in

agricultural

benefits +10% +20% -10% -20% - 30%

ERR 21.8% 23.8% 25.6% 19.8% 17.7% 15.4% 18.8% 16.4%

ENPV (USD mln) 36.4 44.6 52.9 28.1 19.8 11.6 23.4 15.4

52

Annex 4. Bank Lending and Implementation Support/Supervision Processes

(a) Task Team members

Names Title Unit Responsibility/

Specialty

Lending

Mahwash Wasiq Senior Operations Officer SASDA

Janis Berstein Social Scientist ECSS4

Willem Van Tuijl Irrigation Engineer

Masood Ahmad Water Resources Engineer SASDA

John Otieno Ogallo Financial Management ECSC3

Hannah Koilpillai Disbursement Officer CTRFC

Naushad Khan Procurement Officer SARPS

Natalia Piadushkina Disbursement Officer

Zoe Kolovou Procurement Specialist LEGOP

Safwat Abdel-Dayem Drainage Advisor MNSWA

Fernando Gonzalez Irrigation Advisor

Ashok Subramanian Lead Water Institutions

Development Specialist AFTWR

Alessandro Palmieri Dam Specialist OPCQC

Kathy Sharrow Program Assistant ECSSD

Lynette Alemar Program Assistant ECSSD

Supervision/ICR

Galina Alagardova Financial Management Specialist ECSO3

Janis D. Bernstein Senior Urban Development

Specialist SASDU

Dilshod Khidirov Senior Rural Development

Specialist ECSAR

Ohn Myint Consultant SASDA

John Otieno Ogallo Sr Financial Management

Specialist ECSO3

Gurcharan Singh Senior Procurement Specialist TWICT

Mahwash Wasiq Senior Operations Officer SASDA

Ijsbrand de Jong Lead Water Resources Specialist ECSAR

Jeren Kabayeva Rural Development Specialist ECSAR

Daniel Gerber Rural Development Specialist ECSAR

(b) Staff Time and Cost

53

Stage of Project Cycle

Staff Time and Cost (Bank Budget Only)

No. of staff weeks

USD Thousands

(including travel and

consultant costs)

Lending

FY98 251.06

FY99 20.73

FY00 17.86 78.19

FY01 13.06 56.50

FY02 5.89 4.70

FY03 32.43 174.28

FY04 0.00

FY05 4.08

FY06 -0.24

FY07 0.00

FY08 0.00

Total: 589.30

Supervision/ICR

FY04 40.91 92.87

FY05 35.97 84.29

FY06 44.38 112.68

FY07 47.24 125.27

FY08 34.42 139.38

FY09 28.29 135.18

FY10 33.38 126.70

FY11 35.44 125.65

FY12 21.96 103.40

FY13 17.4 105.20

FY14 2.15 6.92

Total: 1157.54

54

Annex 5. Beneficiary Survey Results

The socio-economic assessment included:

Designing an evaluation methodology to assess the development of the population of the

project area, which includes:

formulation of evaluation questions for the indicators provided in the TOR of

DIWIP-1 and the selection of appropriate research tools for the description

negative and positive impacts on the people living around construction projects,

as well as around and Ahchadarya collector;

migration or emigration of the population and its relationship with the impact of

DIWIP-1;

together with an expert on health care, any changes in health status and determine

whether it is the influence of DIWIP-1;

impact on special populations like the shepherds and fishermen, specific ethnic

minority groups, etc.;

any other negative effects on the lives of people in connection with DIWIP-1.

assessment by collecting secondary data, primary data from administrations and

through questionnaires from the public;

data analysis and recommendations, together with stakeholders.

In the framework of the objectives of the Terms of Reference for the Consultant, the

implementation of social impact assessment was carried out through the following phases

of the study:

Expert interviews - 15 interviews;

A survey of households (HH) - A survey of 500 HHs;

Status of demography and migration on project areas: The results of the expert

interviews allowed describing the situation in the project areas. The population of the

project area is experiencing significant demographic changes that are characterized by an

actual decline in population in the districts. Despite the fact that official statistics reflect

the dynamics of positive natural population growth, provided a negative migration

balance, according to participants conducted expert interviews, the number of children

and fertility in the project area are reduced. One of the examples showing population

decline is the fact that some rural schools are not able to open the first class due to

insufficient number of children.

There are high levels of migration both within the areas from "desert" areas to the

"cultural" areas and out of the country as a whole. As a consequence, the population

increases in the villages and district towns, where the rate of irrigation is higher than in

those from where the population leaves. This is due to insufficient irrigation,

employment, income, and poor quality of infrastructure services (gas, electricity, etc.) in

remote areas.

The project areas are characterized by high population migration out of the country,

especially young men (aged 16-45 years) and the proportion of women to work. The

main directions of migration are Kazakhstan and the Russian Federation. The main

55

consequence of such a high migration is a gradual increase in the proportion of women,

children and elderly in the population and the decline in the proportion of men in the

labor market, especially skilled workers, machine operators, technicians.

Republic of Karakalpakstan has an out migration rate of 0.85% of the official inhabitants

(2007-2011, min. 0.6%, max. 1%). In the Project Districts the Net Out Migration was in

average 0.38 % between the years 2007 to 2011. Specifically, in Beruniy on average I tis

higher at 0.62 %, while in Turtkul at 0.28% and in Ellikkala at 0.24% it is below average.

There is a slight tendency of decline of the out migration. A relation to water availability

for irrigation could not be seen. The higher share of inhabitants leaving the region for

RK and Beruniy district might be related to the larger share of people living in cities

(Nukus and Beruniy). But to identify reasons for leaving would be pure speculation (less

jobs in cities, higher educated people leaving, less income from subsistence agriculture

possible). The trend would though fit with findings of the HH that income growth in

villages was higher than in cities. But this interpretation should be judged carefully as it

is based only on data from 4 years and could be check in an ex post evaluation in 2018

(10 years after redirecting the drainage flow to SKMD).

Current problems and their solutions: According to participants in the survey of HH a

major problem of the project areas are the poor quality of land (soil salinity) named by

one third of respondents and the lack of water for irrigation. Based on the current

problems of infrastructure and the environment in the project areas, the majority of

respondents noted that for more efficient operation of their farms, the following

improvements are needed:

Respondents per Districts - % Beruniy %Turtkul % Ellikkala

Increase the area of the farm 22.35 16.84 16.43

Allow farmers to decide what crops they want to

grow

35.88 37.89 49.29

To improve access to water 43.53 41.58 40.00

Improvement of the irrigation system 58.82 46.84 33.57

Improve access to mineral fertilizer 34.12 38.95 27.86

Improve access to petroleum products (fuel,

lubricants)

37.65 41.05 32.86

Improve the protection of rights of land and tenure

use

17.65 27.89 15.00

Simplify administrative procedures for business

activities

12.35 18.95 35.00

Facilitate purchase of equipment 29.41 18.95 26.43

Reduce tax burden 33.53 44.21 37.14

Simplify access and reduce interest rate on loans 24.12 22.63 40.71

Official authorization for re-seeding 12.35 12.63 32.14

Reduction in state control of prices and products 17.06 12.63 27.14

Education/training to improve performance of the

economy

2.94 6.32 17.86

Source: Results of the HHs Survey

56

Interviewed private farms (PF) ambiguously estimate optimization of land area after

acquisition of land from minor PF (10-20 ha) in 2011 and transfer them to a larger PF (50

hectares or more). PF consider this an optimal size for efficient management of land and

larger (100 ha and above) cannot be used effectively. The number of such large PF is

growing. However, some PF believe that the reduction of yield in some of the larger

farms is due to the fact that small PF are more carefully cultivating their land. In general,

over the last five years, the volume of production of primary products from the area of

land in the PF areas have increased, but the volume of production figures are still lower

than before the restructuring of the land.

Frequency of water supply to the irrigation canals: The main share of households

(60.0%) reported periodic delays in the supply of water in the irrigation system. The

largest number of farms, marking the periodic delays in the supply of water in the

irrigation system, is Turtkul district (70.5% of the surveyed households) and Ellikkala

district (67.9%). In Beruniy district periodic delays are marked by almost every second

household. Long delays in the supply of water in Ellikkala and Beruniy districts and

marked in every fifth household, in Turtkul - one in four. The major share of farms

marking long delays in the supply of water is located at the end of the irrigation system.

In general, households located near water sources are better supplied with water.

Potential yield losses through lack of irrigation water supply” Changes in the frequency

of water supply, lack of water for irrigation, low water and dry periods, the climatic

characteristics of the region lead to the fact that farms are losing crops. The estimated

potential losses are as follows: Losses in districts of % Beruniy % Turtkul % Ellikala

From 10% to 20% 0.0 0.53 1.43

From 20% to 50% 12.35 7.89 25.71

From 50% to 80% 68.24 63.16 59.29

Up to 100% 17.65 28.42 13.57

Source: Results of the HHs Survey

The majority of respondents say they are losing from 50% to 80% of the crop in case of

lack of water for irrigation in farming area. The largest number of farms with crop losses

of up to 80% is concentrated in Beruniy and Turtkul districts - 68.24% and 63.16%,

respectively. In Ellikkala district to 80% of the crop is losing more than half of the

respondents - 59.29%.

Changes to the irrigation and drainage system in the last five years: Over the past five

years, the greatest improvement in the condition and operation of the irrigation system

are marked by Ellikkala farms – 71.4% of the respondents. Significant improvement has

been almost one in five farm of the district against one in five surveyed farms, marking

the absence of changes in the state of the district irrigation system.

In Turtkul district the situation of the irrigation system, according to the majority of

respondents did not change over the past five years - 44.2%. 42.6% of the respondents

57

noted that there was improvement, of which only 4.7% of the respondents indicate

significant improvement and operation of the irrigation system in the district.

In Beruniy 45.9% of respondents note a deterioration of the irrigation system in the

district against 41.2% of those surveyed households that speak of the absence of changes

in the system over the past five years. Beruniy district has the smallest proportion of

respondents who noted improvements in the irrigation system in the area over the past

five years - 12.35% of the respondents.

Changes in irrigation performance % Beruniy % Turtkul % Ellikala

Improved Significantly 0.59 4.74 20.00

Slightly improved 11.76 37.89 51.43

Has not changed 41.18 44.21 20.71

A little worse 41.76 10.53 7.14

Deteriorated significantly 4.12 1.58 0.71

Hard to say 0.59 1.05 0.0

In general, the three project areas 40.4% of respondents noted improvements in the

irrigation system versus 36.6% of respondents who say that the situation in the last five in

the system has not changed. One in four respondents said that the situation with the work

of the irrigation system in the last five years has worsened.

The drainage system: Some 47.2% of all households surveyed noted improvements in

the drainage system, of which 14.6% reported significant improvement.

Changes in draineg performance % Beruniy % Turtkul % Ellikala

Improved Significantly 05.29 5.79 37.86

Slightly improved 14.71 44.21 38.57

Has not changed 55.29 36.84 17.86

A little worse 24.12 7.37 3.57

Deteriorated significantly 0.00 1.05 0.71

Hard to say 0.59 4.74 1.43

Improvement of the status and functioning of the drainage system is found in Ellikkala

district- 76.4% of the respondents, of which 37.9% marked significant improvements in

the system. One in six respondents indicates that there is no change in the operation of

drainage system in the last five years. Deterioration is marked only by 3.6% of the

respondents. Improvements in the drainage system are marked in Turtkul district - 50.0%

of respondents. At the same time 36.8% of the respondents said that over the past five

years, there is no change in the system. Deterioration is marked only one in twelve of the

respondents.

The activities of the WUA: From the point of view of the participants of interviews

WUA is a key institution for the project. WUA operate the management, maintenance,

rehabilitation, repair, and improvement of irrigation systems in the project areas.

Expert interviews reflect the following difficulties faced by the WUA in its activities:

58

The contributions of the PFs do not allow WUA to purchase vehicles and

equipment for the operational management of water, for the maintenance of

irrigation and drainage systems (IDS) and pumping stations (PS);

Low income of PF does not allow to increase the capacity of WUA;

The existing legislative environment is not adequately designed concerning the

level and needs of WUA. A non-governmental non-profit organization does not

allow the WUA and farmers to develop commercial relations between them. Due

to the uncertainty and the institutional weaknesses of some WUA, experts believe

that the WUA must be commercial organizations, and others – be state owned;

Management of water in the WUA: Based on the results of interviews and weak

institutions WUA environment for its operations due to the following causes and

consequences, namely:

Lack of and instability in the supply of water for the PF and DH, which are

located at the end of the irrigation system, or on elevated areas of land;

The absence or lack of water limits (normal delivery) for the "second" crop;

Wearing down and destruction of aqueducts within the irrigation system, siltation,

collapses channels laid in the ground, and the collapse of the concrete lined

channels;

Loss of water, water table rise and overflow of the drainage system due to the

reasons set out in paragraph 3;

Lack of equipment for cleaning inter-farm irrigation and drainage systems, and

labor - cleaning of irrigation and drainage systems within the lands PF and DH;

The need for pumps and power charge for lifting or delivery of water and the lack

of the possibility to offset these costs through product prices, which is bought in

these farms for the same price as in the farms with gravity irrigation;

Lack of participation in the design of PF and execution of works in the irrigation

and drainage systems;

Lack of authority of WUA and, accordingly, the lack of incentives for water

Conservation and imposing of penalties for excessive water consumption.

The need to improve the institutional role of the WUA: According to its farms and

interviewed experts in an environment where the state plays a key role in the planning

and procurement, strengthening of the institutional role of the WUA must be entrusted to

public bodies. Experts believe that the farmers are not ready to engage in the

development and strengthening of WUA own. Members of expert interviews among the

proposals to enhance the effectiveness and usefulness of WUA from the following:

WUA should have a sufficient number of vehicles and equipment for the

maintenance of irrigation and drainage systems (IDS) and pumping stations (PS);

It is necessary to increase the participation of WUA to inform water users about

the forecasts and plans for distribution of water. This will optimize and improve

the system of irrigation water saving;

There should be an honest and fair distribution of water;

Increase efficiency and transparency in the measurement of irrigation water

supply water;

59

Consolidate disparate group of PF in a single network service IDS;

Increase the right of PF for the available products and give PF guarantees for

stability of tenure;

Provide irrigation water on the principle "Aylanma" - from the end of the

irrigation system, where this is possible.

Experts believe that the achievement of these goals is impossible without investment to

the WUA, and especially without the provision of loans and leases based on mutual

responsibility of water users. In case of doubt about the return of loans, such loans and

leasing services should be given to groups of WUAs, united solidarity and a single

irrigation and drainage system. This kind of loans / leases will allow more effective use

of technology; will provide the basis for consolidation and cooperation of PFs around the

WUAs regarding water relations.

Most experts believe that the prospects of the WUA are unquestionable, but if the WUA

will not be supported in their institutional development, the WUA will turn into a quasi-

governmental subdivision or district ISM departments or District Departments of

Agriculture and Water Resources (DDAWR).

Participants of expert interviews in Beruniy district have come to decision that without

effective water management between users and enhancement of the capacity and role of

the WUA, the effect of the project will be below the potential. For this reason, they

recommended the following:

In the first place - save water and to introduce a progressive scale of sanctions for

not sparing use and incentives for saving water.

Allow farmers to guarantee a steady supply of water and / or crop insurance

Increase farmers' rights in matters of placement and crop rotation.

Increase the rights of WUA and relationships with farmers, strengthen the legal,

financial, technical and qualifying capacity of WUA and their employees.

Participants of the expert interviews in Turtkul district proposed the following:

To effectively use of canal requires action and investment of the water users in

water saving facilities and technologies. Hydro-structures to be built in the intra

farm canals of the project areas. This will better manage the distribution and use

of water resources and their economies.

Population and farmers need to be trained to manage the water and how to be

involved in this operation. The inefficiency of water management leads to such

effects as increased groundwater levels and soil salinity, which generally reduces

the effectiveness of the implemented project in the districts.

Management of water between users should be centralized in the WUA, while

now each farmer control water abstraction from the irrigation system by means of

pumps, which to a small extent will also remain in future.

The capacity of WUA should be strengthened by such measures as:

Mandatory monthly fees for services rendered by WUA;

60

Monitoring the contractual relationship between WUA and farmers by the

Ministry of Justice and the Ministry of Agriculture and Water Resources;

Monitoring of contractual relations and compulsory payments and contributions

of farmers from the Tax Authority.

Farmers should have accessible services of organizations that have excavators and

equipment to level the fields and parcels. The participants gave examples of such

organizations.

Conclusions and recommendations of the socio-economic assessment: According to the

results of the survey the DIWIP is relevant and in demand. Improvement of irrigation and

drainage system in the project area leads to land reclamation. The project is supported by

all stakeholders: Government, government and non-government organizations and

institutions, professionals, large and small agricultural producers are feeling the effects of

land degradation, as well as private households whose income for the overwhelming

majority is directly or indirectly dependent on the position of the agricultural sector. The

same is true also for owners of housing, industrial facilities and the social infrastructure.

The self-assessment of participant of the survey found that about half of the interviewed

noticed an increase of their well fare during the last five years while the other half did not

notice a change. A group of 19.4 % was found with little welfare and being socially

vulnerable or suffering from poverty. In general a rising income level was observed more

in villages than in cities, due to increased activities in vegetable and fruit production.

Although the logic model of increased production returns through improved drainage,

agricultural land and slightly improved irrigation water supply is still unquestioned, the

M&E Consultant could at this time of the M&E not find direct representative evidence

from the HH survey that this is directly related to the improvement of drainage and

irrigation.

Positive employment effects could not be observed. While the biological growth of the

population was positive, a migration from remote desert areas to farming areas and cities

was observed and further a working migration to the Russian Federation and Kazakhstan

overruled this effect. Seemingly the income alternatives through migration were more

attractive than additional income achievable as a result from improvements achieved by

DIWIP.

According to the survey the availability of irrigation water and quality of land is specified

as main constraints to agriculture also other additional improvements were wished by

farmers as the freedom to choose one’s individual production pattern, improved

availability of inputs as fertilizer and fuels and land ownership rights and a reduction in

tax burdens. In general the report on constraints in agriculture compiled by the

predecessor M&E Consultant (in his Annex 12.1 to the 2009 Annual Report) holds still

true.

There are many risks associated with insufficient capacities and abilities of farmers and

WUA to sustain the system of irrigation and drainage. Most WUAs are still not in a

position to protect the interests of farmers, because they themselves are in dire need of

61

improving their resources, human capacities and institutional development. These risks

need to be addressed through technical and financial support to the WUA, as well as

through the elimination of the then prevailing situation where there are objects that are

not listed on the balance sheet of any organizations, as well as a series of overlapping

responsibilities among organizations such as PAN, KHE, BM PSPG, WUA.

For the project realization there it is also required that the government will continue to

support the infrastructure of irrigation and after the project activities end to ensure the

sustainability of the positive change. A definite conclusion of the social survey is the

inability of agricultural producers to improve, maintain and support the irrigation and

drainage systems in good condition relying only on own funds.

Regarding the SK WRMI Project: In general, the experts interviewed within the frames

of the project, noted that the project will have the positive socio-economic outcomes,

such as:

Improvement of irrigation and drainage will not only put enough water to irrigated

lands, but also to restore abandoned and saline lands;

Increase the volume of water and improve the regularity of its filing will help

minimize the number and the level of conflict between the PF and the surrounding areas

within the district;

Rise of the volume and timeliness of delivery of water will increase the equity in the

distribution of water, and hence the productivity and well-being of the population as a

whole;

Reduce loss of farms in the production of agricultural products, increasing its

profitability and a corresponding increase in standard of living

62

Annex 6. Stakeholder Workshop Report and Results

(if any)

A final workshop was held on June 13, 2013 where achievements of the DIWIP based on

the M&E final assessment, as well as recommendations for future I&D projects in

Karakalpakstan were presented to all stakeholders. The workshop was attended by the

members of the KPCC, representatives of LABMO, SCNP RK, KHE, PAN, KK ASRuz,

NGO “Save the Aral Sea and Amudarya,” LLC UZGIP, SANIRI and others.

63

Annex 7. Summary of Borrower's ICR and/or Comments on Draft ICR

Comments to the Draft Report on Completion and Results of the

“Drainage, Irrigation and Wetland Improvement Project”

Received from the Ministry of Economy of Uzbekistan on April 23, 2014

The Completion Report for the Drainage, Irrigation and Wetland Improvement Project

(WHO DIWIP) generally provides a good foundation, summarizing the project needs and

creating a context for the project preparation period. However, in our opinion, the

criticism of the objectives expressed due to low calculations of the project, does not truly

reflect the opinion present during the project preparation. So, to some extent, the prices

of the year 2014 are being applied to the year 2004 situation. Moreover, the technical

success and the material environmental improvements have not been highlighted as

positively as they should.

With this in mind, we provide the following comments and remarks to the report:

1. In paragraph 2 on page 1, delete the words “As part of ASBP, “because IFAS is

not part of ASBP, as indicated on page 1. On the contrary, the ASBP was approved by

IFAS.

2. Paragraph 3 on page 1 should be excluded;

3. In paragraph 4 on page 2, the words “Taxation took place mainly through

exchange rate policies.” should be deleted;

4. In paragraph 10 on page 4, the words “one of the poorest regions in Central

Asia “should be deleted.

5. In paragraph 31 on page 9, the sentence “ The restructuring had been first

initiated already in January of 2008 but was only finally processed some 2 years later

to be approved in December 2009 “ should be replaced with “The final restructuring

was processed in December 2009.”

6. Eliminate par. 38 on page 11 and the footnote to the source www.uznews.net

because the text is not supported by reliable data.

7. Eliminate par. 48 on page 13.

8. In paragraph 57, the words “one of the poorest regions in the country with a

significant percentage of the population living below the absolute poverty level “ should be replaced with “a region in Central Asia most affected by the desiccation of

the Aral Sea.”

9. In paragraph 62, on page 18, the sentences “ On another note, the employment

situation could be affected by high population migration out of the country, especially

young men aged 16-45 years. The main consequence of such high migration is the

decline in the proportion of men in the labor market, especially skilled workers,

machine operators, technicians.” should be deleted.

10. Through the document, such geographical names as Turtkul, Beruniy,

Akchadarya, and Ayazkala should be corrected.

11. Paragraph 27 states that: “It was then decided to contract deep ripping and

laser leveling of demonstration plots with a local contractor who also was responsible

for on-farm irrigation/drainage rehabilitation works. The contractor had no

experience with such work and was unable to mobilize the proper equipment or

machine operators. Consequently, that contract was cancelled and the decision went

http://www.uznews.net/

64

back to purchase a number of tractors, laser levels and deep rippers to perform this

task.” It would be better to put it that “the work associated with deep ripping and laser

leveling were performed under the contract MS/1.”

12. Paragraph 31 states that: “Given that major contracts had accumulated

significant delays, the reallocation was processed along with a project closing date

extension to June 30, 2013.” In our opinion, within the scope of DIWIP there was only

one main contract SKMD/1, which has been extended by only 90 days, and stating a

strong delay would be unfair. The reason for the relatively lengthy renewals for some

other smaller contracts is that only two years after the mid-term review, the application

for restructuring was submitted to the World Bank. Moreover, it should also be noted

that during this additional time mainly those works were performed that had been made

possible due to the savings of the contract DIWIP/SKMD/1 but not the work provided

for in the initial scope of the project.

13. Paragraph 37 states that: “The limited access and poor quality of key economic,

financial, and social data impeded a detailed, realistic assessment of the project’s

selective baseline benchmarks and final targets.” Although it is recognized that 15-20

years ago there were problems in data collection, with the introduction of computer

technology the situation in data processing has been increasingly improving with every

day.

14. Paragraph 39 states that: “There are no effective agreements signed between

Pakhta-Arna Nayman Irrigation System Administration (PAN-ISA), local agriculture

departments and WUAs on the division of power for water distribution.“ Since the

distribution of water is carried out on the basis of contracts signed between PAN-ISA

and the WUA; and between WUA and farmers, making such a statement is not correct.

15. Further, paragraph 39 states that: “Lack of funding was the biggest challenge

for WUAs in Uzbekistan which ultimately led to (i) inadequate O&M of the I&D

network by WUAs; and (ii) high turnover of staff because of low salaries, which in

turn reduced the effectiveness of WUA training conducted by the Project.” It should

be noted that the WUAs are responsible for the maintenance of on-farm irrigation

network, and government agencies are responsible for the rest of the system. Especially,

after the Land Reclamation Fund was established in 2007 under the Ministry of Finance,

a well-organized program has been implemented for the rehabilitation and/or

construction of irrigation and drainage network.

16. Paragraph 45 states that: “Seasonal changes in drainage water flows in

collectors also affected progress where at time excavation had to take place with water

still in the collector thus impeding visibility and creating difficulties with geometric

leveling instruments to ensure proper slope of excavations.” Although the performance

of work during periods of high water levels in the reservoirs is not a big problem in

general, it should be noted that a sufficient scope of work was implemented in some

other sections allowing almost continuous performance of work under normal

conditions.

17. Paragraph 49: the project should be named as Ferghana Valley Water Resources

Management Project.

18. Paragraph 49 states that: “Overall from discussion with consultants and

stakeholders, there appears to be appreciation for the softer investments in WUAs and

optimizing irrigation management at the local level, though at the higher level

65

administration there was substantial push back on institutional development TA.” Given the level of support and interest on the part of local government bodies of

Karakalpakstan during the project, it would not be correct to mention a strong

disagreement with the technical assistance in institutional development by the higher

level administration.

19. Paragraph 50 states the following: “However, it appears that projected

outcomes were also based on agronomic and social variables which were highly

uncertain given the restricted access to data, political economy and distortions still

present in the agricultural sector. In addition, the project did not include surveys to

measure baseline values of these respective PDO and intermediate indicators, which

would have been appropriate given the issues with official statistical data. This was

probably caused by a two year delay (after the project became effective) in contracting

an independent M&E consultant.” The balseline values for PDOs and intermediate

indicators were provided in the Baseline Research and the Annual Report prepared by

M&E consultants and presented to the Bank. It should be noted that the contract

DIWIP/SKMD/1 only began in the last quarter of 2005 with the physical works starting

in early 2006 before the M&E consultants began their contract in the first quarter of

2006.

20. Paragraph 51 states that: “Key indicators specified in the PAD were

continuously monitored throughout project implementation with an exception of

employment and income indicators that were left to be assessed at the end of the

project.” There was no such agreement.

21. Paragraph 53 states that: “While there were a few issues related to audits of the

project with mostly unqualified auditor’s reports, the project experienced difficulties

with procurement where bid evaluation reports often took an excessive amount of

time and contract awards were delayed.” It should be noted that accounting firms were

selected through a tender based on their qualifications as a criterion. In addition, we are

of the opinion that the tender evaluation reports were prepared in a reasonable time and,

therefore, had no impact on the delays in awarding the contracts.

22. Paragraph 53 states that: “Another issue that came to fore was the excessively

high tax rate that was applied to imported goods with the effect of reducing

competition such as in the case of project car purchases and equipment that took often

several months.” This has never been the case with DIWIP.

23. Paragraph 53 states that: “In some cases, contractors suffered from cash flow

problems which posed a challenge whenever equipment broke or unforeseen events

emerged.” In accordance with the terms of the contracts, the contractors must submit

their cash flow forecast, and organize their work program accordingly to complete the

work in time. Those who were not able to perform this task, were fined in accordance

with the terms of the contracts.

24. Paragraph 55 states that: “The follow up SKWRMIP project would also

continue strengthening the capacity of WUAs, and push for reforms that would

permit WUAs to operate more independently from the Pakhta-Arna Nayman

Irrigation System Authority (PAN-ISA) and improve their capacity for developing

irrigation schedules and work closer with farmers to play a more participatory role in

water management at the local level.” Although SKWRMIP seeks to strengthen WUAs

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and other relevant organizations, one should recognize that there are some limitations to

the reforms efforts that must be achieved by the project.

25. Paragraph 60 states that: “However, this target was imprecise as it included

some 10% of double cropped area that was erroneously included and some area that

has never been put in use. The final design of the project determined the command

area at 103 000 ha. As it stands today the increased cropped area amounts to some

9%, while yields of the primary crops, cotton and wheat in 2012 where 20% and 13%

higher respectively relative to 2006.”. At the same time, in paragraph 79, the figures

showing an increase in productivity are stated the other way around.

26. Paragraph 61 states that: “Further, project impacts on employment and income

were more difficult to assess at appraisal as public data on socio-economic indicators

were either unreliable or restricted. The project attempted to measure this indicator

through a final household survey, but it was confronted with the difficulty of

obtaining income information from farmers where the State controls much of the

supply chains for the main crops and a general fear of tax authorities.” As legal

entities, farmers pay taxes according to the relevant legislation, and we believe it is

incorrect to mention any concerns about the tax authorities.

27. Paragraph 62 states that: “As it relates to employment, statistical information

does not point to an increase in the agricultural sector directly.” As the economy in

South Karakalpakstan almost exclusively dependent on agriculture and agricultural

industry, it would not be correct to argue that statistical information does not point

directly to an increase in the agricultural sector itself.

28. Paragraph 65 states that: “More positively, and in line with new institutions that

attempt to represent their members, WUAs have played a key role in supporting the

local water authority in prioritizing works of the limited irrigation rehabilitation

under the project.” It should be noted that the priority was determined by PIU and

implementation consultants.

29. Paragraph 66 states that: “In addition, the legal standing of WUAs is not

sufficiently regulated, creating conflicts with local authorities over the management

of water resources, and thus reducing their responsibility for the management of

sparse water resources.” It should be noted that the WUA, and other relevant

organizations operate in cooperation under the same legal framework.

30. Paragraph 67 states that: “Overall, an impressive number of farmers were

trained and publications were issued and distributed, but no attempt was made at

measuring the actual adoption of the activities and technologies introduced under the

demonstrations.” As mentioned in other parts of the report, the farmers required land

leveling and deep ripping of their fields.

31. Paragraph 69 states that: “For example, during water scarcity in the Amudarya

River in 2011 vegetation period, the water volume received dropped to 553.1 million

m3 or 61.9% and WUAs received less than 40% of requested volume.” It is not clear

what the 61. 9% refers to.

32. Paragraph 70 states that: “Unfortunately, there were no baseline data

available.” Although it should be accepted that an exhaustive analysis is not provided in

the baseline research and the annual report prepared by the M & E consultants, the data

on the total volume of irrigation water withdrawn and discharged drainage water were

provided that can be used for a meaningful evaluation.

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33. Paragraph 73 states that: “The incremental quantifiable benefit stream

comprises of four main elements: (i) incremental agricultural production, (ii) benefits

from wetlands, (iii) downstream agricultural impact and (iv) savings from elimination

of drainage and irrigation pumping.” While it is true that some of the pumps serving

the irrigation system were eliminated by building gateway regulators on the channels, it

should be noted that after the implementation of the SKWRMIP, the dependence on

pumping irrigation will be eliminated for more than 80% of the area.

34. Paragraph 76 states that: “For example, the economic viability will not be

threatened by a 20% decline in benefits and a fall in total project benefits by 30% can

reduce the base ERR only up to 15.4%. In a hypothetic scenario if only agricultural

benefits would be taken into account, the project ERR would drop to 18.8%. In

another scenario with agricultural benefit decreased by 30%, the project economic

return would be at 15.4%.” There are discrepancies between the figures presented in

the table and the text that need to be corrected.

35. Paragraph 81 states that: “The institutions that have been responsible at

primary and secondary PAN level have not changed and have not yet developed trust

in WUAs and often interfere with their activities. To make WUAs function better, the

responsibilities of each body will need to be harmonized so that roles, responsibilities

and rights are clearly defined for each party. At present this change is somewhat

impeded by the heavy hand of the state in determining quota areas for the principal

crops in the region, thus often forcing local administrations to interfere in the

prioritization of irrigation water access. The follow up project focusing more on

optimizing irrigation, will help in developing clearer mandates for each body involved

and with a more effective engagement of farmers also provide WUAs with a stronger

voice for advocating their priorities and assuming their responsibilities.” Within the

scope of SKWRMIP, SCADA system will be installed to reduce the issues.

36. Paragraph 84 states that: “The overall investment comes with lower operating

costs due to reduced pumping for drainage as well as for irrigation thus presents a

fairly low risk investment. The drainage systems that were in place before the project

was not only suboptimal in design and in terms of coverage design, but also expensive

to operate due to dependency on lifting from pumps. Given the priority for irrigation

and power shortfalls, drainage pumps often only ran when electricity was

unavailable.” It is unclear what is meant by the coverage. The drainage pumps can

function when electricity is available.

37. Paragraph 84 states that: “The weakest part of the project has been institutional

and the fact that still sizeable areas in the system suffer from poor water supply

reliability due to both suboptimal management but also constrained by the poor state

of the irrigation infrastructure. The follow up project under preparation will address

these two main constraints and thus minimize the sustainability risk of this current

investment.” The main purpose of SKWRMIP is to improve water management not

only by the physical implementation but also through institutional capacity

strengthening, so that the results achieved under DIWIP are sustainable.

38. Paragraph 85 states that: “While the team was well aware of the complexities

with the engineering part of the system, it appears that outcomes were too much based

on agronomic and social variables which were highly uncertain given the restricted

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access to data, political economy and distortions still present in the agricultural

sector.” 39. Paragraph 88 states that: “The commonly accepted international standards and

guidelines including concepts of competitiveness, transparency and a focus on

development outcomes were at times conflicted with practices of local authorities and

government.. . . . Also, it took the Government nearly a year to establish the field

office and set it functioning.” It should be noted that the Government of Uzbekistan

also seeks to increase the competitiveness and transparency in the use of scarce

financial resources.

40. Paragraph 91 states that: “Obtaining adequately precise data on income and

expenditures from farmers is particularly challenging in a socio economic

environment as found in Uzbekistan due to restricted public data and fear from

authorities and taxation.” Farmers, as legal persons, pay taxes in accordance with the

relevant legislation, and we believe it is incorrect to mention any fear of the tax

authorities.

41. Paragraph 92 states that: “Distortions in production systems where the supply

chain is largely controlled by the State and benefits are extracted from the region will

undermine the production growth potential even after base agronomic conditions may

have significantly improved.” 42. Item 94: What are the lessons learnt with regard to restructuring?

43. Item 95: It should be noted that as a result of the opportunities, such as leasing,

created for development contractors, obtaining proper equipment is no longer a

problem.

44. Item 96: As indicated above, it should be noted that WUA, and other relevant

organizations operate in cooperation under one and the same legal framework.

45. We propose to present some of the results contained in Section 1.3.3 of Annex 2,

in Section “Lessons learned”.

46. Contracts DIWIP/SKWRMIP/CON/1 and DIWIP/SKWRMIP/CON/2

DIWIP/FWRMP/CON/1 should be added to Section 1.4 of Annex 2.

47. It is necessary to edit the following statement in Annex 3: “However, in the

presented analysis only 75% of these benefit streams is conservatively considered as

attributable to the project, while the remaining 25% is assumed to be generated by

activities and improvements that are not directly associated with the project.“ – since

almost all of the factors affecting the benefits were considered in the project.

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Annex 8. Comments of Cofinanciers and Other Partners/Stakeholders

N/A

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Annex 9. Overview of the project area

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ANNEX 10. Analysis of Copt Yield Evolution in the Project Area in 2005-2012

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Source: A snapshot from the Beneficiary’s Project Completion Repot; based on official data

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Annex 11. List of Supporting Documents

Project Appraisal Document, Uzbekistan: The Drainage, Irrigation and Wetlands

Improvement Phase I Project, June 2, 2003;

Project Aide Memoirs, ISRs and Restructuring Paper;

M&E Baseline Report by Royal Haskoning (M&E Consultant);

Project Progress Reports by Royal Haskoning and AHT Group AG (M&E Consultants);

Project Progress Reports and Completion Report by Mott MacDonald – Temelsu

(Supervision of Construction Works and Institutional Development Activities);

Project Final Impact Assessment by AHT Group AG;

Country Assistance Strategy (FY02-FY04), World Bank, February 2002;

Country Economic Memorandum, World Bank, April 2003;

Cotton Taxation in Uzbekistan, World Bank, August 2005;

Interim Strategy Note (FY07-08), World Bank, July 2006;

Country Assistance Strategy (FY08-FY11), World Bank, May 2008;

Country Assistance Strategy (FY12-FY15), World Bank, November 2011;

Joint IDA-IMF Interim Poverty Reduction Strategy Paper, April 2005;

Joint IDA-IMF Poverty Reduction Strategy Paper, December 2007;

Living Standards Assessment, World Bank, May 2003

Living Standards Assessment Update, August 2007;

Reducing the Vulnerability of Uzbekistan’s Agricultural Systems to Climate Change,

World Bank Study, 2013;

Pomfret, Richard (2007), “Distortions to Agricultural Incentives in Tajikistan,

Turkmenistan and Uzbekistan.”

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MAP