Document of

The World Bank

FOR OFFICIAL USE ONLY

6E SZ5 g ZReport No. 9003-BD

STAFF APPRAISAL REPORT

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT FUMP IRRIGATION PROJECT

MAY 7, 1991

Sgriculture Operations Division'ountry Department Itsia Region

ument has a restricted distribution and may be used by recipients only in the performance ofcial duties. Its contents may not otherwise be disclosed without World Bank authorization.

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CURRENCY EQUIVALENTS(as of July 1990)

Currency unit - Taka (Tk)Tkl.00 US$0.0287US$1.00 - Tk 34.9 (Official Rate)

Tk 35.6 (Free Market WageEarner's Rate)

WEIGHTS AND MEASURES

1 kilometer (km) - 0.621 mile (mi)1 hectare (ha) - 2.471 acres (ac)1 horsepower (hp) - 0.745 kilowatt (kW)1 liter per second (l/s) = 0.035 cubic feet per second

(cusec)1 metric ton (ton) = 2,204.6 pounds (lbs)1 meter (m) 3.28 fooc: (ft)1 cubic meter per second (m3/s) = 35.31 cubic feet per second

(cusec)1 millimeter (mm) 0.039 inches

ABBREVIATIONS. ACRONYMS AND OTHER TERMS USED

ADB - Asian Development BankADP - Annual Development ProgramAman - Rice planted before or during the monsoon and harvested in

November or DecemberARCP - Agricultural and Rural Credit ProjectASSP - Agricultural Support Services ProjectAus - Rice planted during March or April and harvested during June or

JulyB. - When preceding a crop, means broadcast (B. Aman)BADC - Bangladesh Agricultural Development CorporationBB - Bangladesh BankBoro - Rice planted in January or February and harvested in May or

June. The term is also used locally for unirrigated rice whichis planted in November or December in the drained out floodplains

BWDB - Bangladesh Water Development BoardCCIE - Chief Controller of Imports and ExportsCIF - Cost, Insurance and FreightDAE - Department of Agricultural ExtensionDistrict - Also called by its local name Zilla, which is an administrative

unit comprising a number of Upazillas, in the charge of aDeputy Commissioner

DSSTW - Deep Set Shallow TubewellDTW - Deep Tubewell

FOR OFFICIAL USE ONLY

ABBREVIATIONS. ACRONYMS AND OTHER TERHS USED

EEC - European Economic CommunityERR - Economic Rate of ReturnFCD - Flood Control and DrainageFRR - Financial Rate of ReturnGDP - Gross Domestic ProductGOB - Government of BangladeshHYV - High-Yielding VarietiesICB - International Competitive BiddingIDA - International Development AssociationIFDC - International Fertilizer Distribution CenterIFPRI - International Food Policy Research InstituteIPC - Import Program CreditKharif - Summer cropping season (May through November) and comprises

Kharif I (Aus Crop) and Kharif II (Aman Crop)LCB - Local Competitive BiddingLLP - Low Lift PumpLV - Local VarietyMEU - Monitoring and Evaluation UnitMOA - Ministry of AgricultureMonsoon - Period of rains starting in June and ending in OctoberMOSTI - Manually Operated Shallow Tubewell InstallationMP - Muriate of PotashMUV - Manufactured Unit ValueNWRPA - National Water Resources Planning Agency (formerly

Master Plan Organization, MPO)NMIDP - National Minor Irrigation Development ProjectNWP - National Water PlanNGO - Non-Governmental OrganizationODA - Overseas Development AdministrationOMS - Open Market SalesPCR - Project Completion ReportPIU - Project Implementation UnitPPAR - Project Performance Audit ReportRabi - Winter cropping season (November through March)SAFE - Special Account in Foreign ExchangeSCF - Standard C.nversion FactorSTW - Shallow TubewellT. - When preceding a crop, means transplanted (T. Aman)TSP - Triple SuperphosphateUNDP - United Nations Development ProgramUpazilla - Administrative unit of local governmentUSAID - United States Agency for International Development

FISCAL YEAR

July 1 - June 30

This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

BANGIDESI

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Credit and Project Summary

tx: People's Republic of Bangladesh

SDR 52.2 million (US$75.0 million equivalent)

Standard IDA terms, with 40 years' maturity

The project obDjectives are to increase agriculturalLt-io: production, income and employment by supporting increased

investment by farmers in simple, low-cost minor irrigationequipment sold by private equipment dealers under theGovernment of Bangladesh's (GOB) liberalized/deregulatedpolicy framework for private sector-led minor irrigationdevelopment.

By providing a foreign exchange facility to allow privatesector dealers to import small engines for shallow tubewellsand low lift pumps, as -'ell as power tillers, for sale tofarmers, the project is expected to provide over a three-yearperiod (FY92-94): (a) irrigation for about 340,000 ha ofland using an estimated 75,000 shallow tubewells (STW);(b) irrigation for approximately 120,000 ha of land usingsome 6,000 low lift pumps (LLP); and (c) improved tillagefor around 460,000 ha of land using about 18,000 powertillers. These numbers are indicative, since the actualtypes and quantities of equipment installed will depend ondemand from farmers. Support for these investments will beprovided in the context of consolidating the existing policyframework for private sector-led minor irrigationdevelopment, and additional liberalization measures in theclosely related areas of fertilizer distribution andfoodgrain marketing. The project will be implemented by GOBthrough the Bangladesh Bank (BB) and the Ministry ofAgriculture (MOA).

ts: At full development, the project is expected to result in:(a) incremental annual foodgrain production of 1.3 milliontons valued at US$240 million; (b) additional annualemployment of 47 million days; and (c) an increase in theaverage annual per capita income of some 525,000 farmfamilies from US$48 to US$78, thereby lifting them above thepoverty line of US$68 per annum.

Risks relate to potential reversals in GOB policy leading toa contraction of private sector activity and farmer access tominor irrigation equipment, complementary inputs and outputmarkets. This risk is addressed through a series of agreedactions.

il

Estimated Costs:Local Foreign Total Cgst-------- (US$ million) ------------

Investment Component

Shallow Tubewells 40.0 40.0 80.0

Low Lift Pumps 5.8 7.0 12.8

Power Tillers 0.0 24LA 23A

Subtotal 45.8 70.4 116.2

Monitoring and Evaluation 0.0 _Q l 0X1

Base Cost 45.8 70.5 116.3

Physical Concingencies 0.0 0.0 0.0

Price Contingencies 5.9 .la 10.4

Total Projects Cost II 7.2 126.7"

Financing Plan:PL

Local Foreign Tgtal

----------- (US$ million) ---------

GOB 0.1 0.0 0.1

Farmers 51.6 0.0 51.6

IDA 0.0 75.0 75.0

Total 51.7 75.0 126.7

Estimated Disbursements:

IDA FY 92 93 95

------------ (US$ million) ---------------

Annual 14.0 29.4 23.8 7.8

Cumulative 14.0 43.4 67.2 75.0

Economic Rate of Return: over 50X

Ka: IBRD 22593 - Areas Suitable for Shallow Tubewell Development

SA The total cost net of taxes (US$5.8 million) is US$120.9 million.

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

STAFF APPRAISAL REPORT

Table of Contents

Page No.Credit and Project Summary . . . . . . . . . . . . . . . . . . i

I. SECTORAL BACKGROUNDA. Stru:tura and Performe-nce . . . . . . . . . . . . . .. 1

Salient Features . 1

Towards a Sectoral Strategy . . . . . . . . . . . . . . 2Government Objectives and Policies . . . . . . . . . . . 3

B. IDA's Sectoral Strategy . . . . . . . . . . . . . . . . . 4Past Operations. . . . . . . . . . . . . . . . . . . . 4Current Program .... . . . . . . . . . . . . . . . . 5Future Lending Strategy . . . . . . . . . . . . . . . . 6

C. Rationale for IDA Involvement . . . . . . . . . . . . . . 7

II. THE PROJECTA. General. 8

Evolution and Concept. 8Objectives and Strategy. 8Intended Beneficiaries, Impact on Poor, Women and Landless 8

B. Detailed Features. 9Investment Component. 9Nonitoring and Evaluation . . . . . . . . . . . . . . . 11

C. Environmental Aspects .11

III. PROJECT COSTS AND FINANCINGA. Cost Estimates .12B. Financing Plan and Flow of Funds . . . . . . . . . . . . . 12C. Procurement .13D. Disbursement .14E. Accounts and Audit .14

IV. ORGANIZATION AND INPLEMENTATIONA. Bangladesh Bank . . . . . . . . . . . . . . . . . . . . . 15B. Participating Banks . . . . . . . . . . . . . . . . . . . 15C. Dealers .... . . . . . . . . . . . . . . . . . . . . . 16D. Monitoring and Evaluation Unit . . . . . . . . . . . . . . 16E. Project Coordinating Committee . . . . . . . . . . . . . 17

This report is based on the findings of an appraisal mission to Bangladesh inJune/July 1990. Mission members included Messrs. D. Lister (Task Manager) andS. Gafsi (IDA), G. Schokman and F. Siddique (Consultants). The report hasbeen endorsed by Messrs. S. Asanuma (Country Department Director) andC. Helman (Sector Operations Division Chief). The peer review team comprisedM/M P. Suriyaarachchi, E. Goldstein and M. Mudahar who reviewed the project'soverall policy aspects, foodgrain management actions and investmentconsiderations, respectively.

hP-g No.V. FINANCIAL RETURNS AND FARM INCOME

A. Financial Returns . . . . . . . . . . . . . . . . . . . . 18B. Farm Income . . . . . . . . . . . . . . . . . . . . . . . 18

VI. BENEFITS. JUSTIFICATION AND RISKSA. Benefits and Beneficiairies . . . . . . . . . . . . . . . 20

General .... . . . . . . . . . . . . . . . . . . . . 20Production Benefits . . . . . . . . . . . . . . . . . . 20Employment Benefits .... . . . . . . . . . . . . . . 20Income Distribution and Poverty Alleviation . . . . . . 20

B. Economic Justification .21C. Risks . . . . . . . . . . . . . . . . . . . . . . . . . . 22

VII. AGREEMENTS REACHED AND RECOMMENDATION . . . . . . . . . . . . 23

TABLES IN THE TEXT

3.1 Project Cost Summary .123.2 Financing Plan by Project Component .133.3 Methods of Procurement . . . . . . . . . . . . . . . . . . . . 13

5.1 Summary of Financial Returns . . . . . . . . . . . . . . . . . 185.2 Sunmary of Annual Farm Budgets .19

6.1 Summary of Economic and Sensitivity Analyses . . . . . . . . . 22

ANNEXESf

1. Shallow Tubewells .... . . . . . . . . . . . . . . . . . . 25

2. Low Lift Pumps . . . . . . . . . . . . . . . . . . . . . . . 30

3. Power Tillers .... . . . . . . . . . . . . . . . . . . . . 34

4. Action Program for Policy and Institutional Reforms . . . . . 36

5. Detailed Cost Estimates . . . . . . . . . . . . . . . . . . . 41

6. Estimated Schedule of Disbursements . . . . . . . . . . . . . 42

7. Financial and Economic Analysis . . . . . . . . . . . . . . . 43

8. Selected Documents and Data Available in the Project File . . 55

A= - Implementation Schedule . . . . . . . . . . . . . . . . . . 56

- IBRD 22593 - Areas Suitable for Shallow Tubewell Development

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

I. SECTORAL BAKRON

A. Structure and Performance

Salient Featusre

1.1 Agriculture in Bangladesh contributes about 50X of GDP, employs75% of the labor force and generates 602 of the country's export earnings.Agricultural value added increased at an annual rate of almost 32 during theperiod FY81-86. During FY87-89, however, the growth rate fell to 1.72 perannum, due to a slowdown in irrigation development, the exceptional floods of1987 and 1988 and a sharp cutback in development expenditures for agricultureand water resources. Sector growth rebounded in FY90, reaching over 62 perannum, due to a combination of favorable weather conditions and improvedGovernment policies. Agricultural production in the crop subsector continuesto be dominated by foodgrains, which account for about 852 of the cultivatedarea. Foodgrain production increased at an average rate of 2.62 per yearduring FY81-90 (about 0.22 higher than the increase in population during thesame period). About two-thirds of this increase came from irrigated dryseason crops. Reliable irrigation typically increases land productivity byabout 30% during the monsoon season and makes production possible during thedry season. IDA analysis indicates that an annual increase of the irrigatedarea by about 250,000 ha will be required to sustain a 4X-52 annual increasein foodgrain production.

1.2 The 1986 draft National Water Plan (NWP) estimated that the thenirrigated area of about 2.3 million ha could almost triple using relativelyinexpensive minor irrigation equipment to exploit readily available ground andsurface water resources. About 2.6 million ha amenable to irrigation fromgroundwater and 1.2 million ha amenable to irrigation from surface waterremain to be developed. Irrigation using groundwater is being developedthrough two principal modes: (i) suction mode pumps, known as shallowtubewells (STWs), which can be used effectively in areas where the depth ofthe static water level is less than six meters; and (ii) force mode pumps,known as deep tubewells (DTWs) which can lift water from greater depths.Irrigation using surface water is being developed through low lift pumps(LLPs), extracting water principally from natural drainage channels and smallstreams. In certain cases, the natural supply of water in these channels canbe augmented through regulation of tidal flows, primary pumping from a largerriver/stream using pontoon mounted pumps or improvement in the physicalcondition of the drainage channels to allow a greater and more reliable flowfor secondary lifting by LLPs. The investment cost of these minor irrigationtechnologies has been in the order of US$250/ha for STWs, US$800/ha for DTWs,and US$200/ha for LLPs.

1.3 The productivity of investment in minor irrigation equipment can begreatly enhanced by the use of power tillers and complementary seasonalinputs, consisting mainly of fertilizer and high-yielding varieties (HYV) ofseeds. Power tillers facilitate speedy land preparation, especially in theshort time available between paddy crops. They also enjoy cost advantages incomparison with draft animal power, which is becoming increasingly scarce dueto the shortage of land required to raise feed and fodder. After water,fertilizer is the next most productivity increasing input that farmers can

2

use. HYV seeds require fertilizer, timely cultivation and a regular supply ofwater to be fully effective.

Towards a Sectoral Strategy

1.4 Substantial sector work undertaken by IDA over the past two yearsin close collaboration with the Government of Bangladesh (GOB) and otherdonors, and discussed at the 1989 Donors Meeting on Agriculture, chaired byIDA, has identified the chief constraints to accelerated minor irrigationdevelopmentlas:

(a) barriers to private sector distribution of minor irrigationequipment in the form of:

(i) high customs duties and standardization requirements onimported equipment and power tillers;

(ii) siting regulations for equipment; and

(iii) high public sector stocks of equipment which have deterred theprivate sector from entering the business;

(b) the absence of a well functioning credit system;

(c) limited arcess by the private sector to predominantly importedtriple superphosphate (TSP) and muriate of potash (MP) fertilizersand HYV seeds which has constrained timely supply to farmers ofthese critical inputs; and

(d) excessive reliance on public sector imports of foodgrains andrestrictions on private sector trade in foodgrains which havereduced producer prices for the main outputs of irrigatedagriculture: rice and wheat.

1.5 With respect to (a) above, the basic problem has been thepreferential treatment afforded to the public sector, consisting mainly of theparastatal Bangladesh Agricultural Development Corporation (BADC), as opposedto the private sector, made up presently of about 315 traders. Before early1989, standardized equipment imported largely by the public sector was subjectto a preferential 151 customs duty while non-standardized equipment importedchiefly by the private sector was subject to a 501 customs duty. Under theGroundwater Management Ordinance of 1985 and the Groundwater Regulations on1987, siting of shallow tubewells (STW) in non-surface irrigation areas wasrestricted by licensing requirements for new wells and spacing regulationsbased on installed capacity criteria, supposedly to prevent encroachment intoexisting tubewell command areas. The accumulation by BADC of large stocks

Iv World Ban - Agricultural Sector Note, October 1987.World Bank - Public Expenditures Review, February 1989.World Bank - Selected Issues in Foodgrain Development (Report No.

83',4-BD, dated June 29, 1990)UNDP - Bangladesh Agriculture Sector Review: Bangladesh

Agriculture Performance and Policies, February 1989.

3

consisting of 11,000 STW and 16,000 LLP also discouraged the private sectorfrom entering the business.

1.6 Concerning (b) above, about 90X of credit requirements for suchinvestments as STW, LLP and power tillers are met from informal, non-institutional sources, and this zituation is not likely to change in themedium term because of the problems of recovery, etc. This means that theinstitutional credit system is not a very effective channel for outsideassistance in support of these important investments, and that alternativedelivery systems have to be found if minor irrigation development is not to bedeprived of funds.

1.7 Regarding (c) above, farmer access to fertilizers has beenhandicapped by the large unit subsidies on TSP and MP fertilizers distributedby the public sector which have reduced the incentive for the private sectorto purchase and distribute these fertilizers to farmers.

1.8 As for (d) above, foodgrain importing is dominated by GOB which hastended to overestimate requirements. The private sector is only allowed toimport when the Public Food Distribution System cannot ensure adequatesupplies (e.g. in time of natural calamities). Until recently, the privatesector was also not allowed to store grains beyond certain minimal levels dueto anti-hoarding and grain holding regulations. There were also restrictionson credit for the acquisition of storage facilities. These factors havecombined to limit marketir-, opportunities for foodgrains and depress producerprices.

Government Obiectives and Policies

1.9 Influenced by the findings of the above sector work, GOB, withdonor support, has developed a minor irrigation based development strategy forthe agricultural sector for the next 10-15 years. As part of this strategy,it aims to liberalize the trade and regulatory framework for minor irrigationdevelopment with a view to allowing a larger role for market forces andprivate initiatives.

1.10 In pursuit of these objectives and policies, GOB embarked on a longoverdue program of liberalization, deregulation and privatization designed toremove the constraints to private sector involvement in minor irrigationdevelopment. Customs duties and standardization requirements on smallimported engines suitable for the operation of STW and LLP were suspended, aswere regulations govlerning the siting of STWs and LLPs. This led to a sharpincrease in demand from farmers for STWs and LLPs. According to the latestavailable (June 1989) Census of Minor Irrigation Equipment conducted by theMinistry of Agriculture (MOA), the number of STWs and LLPs grew each by morethan 22X from 1988 to 1989: in the case of STW, from about 188,000 to 230,000(Annex 1); and in the case of LLP, from 45,000 to 55,000 (Annex 2).Tentative figures for 1990 indicate a further growth of 21X for STWs and 18Xfor LLPs. Customs duties and standardization regulations for power tillerswere also suspended, after whici investments rose by 400X, from some 1,700 in1988/89 to 7,000 in 1989/90 (Annex 3). Privately owned workshops have alsosprung up in many villages to repair and maintain this equipment, raising theprospect of a self-sustaining development process which will eventually takeover from ongoing public sector projects and become irreversible. GOB is noweager to consolidate these reforms and to complete the transition to the new,

4

more liberalized regime. However, it is concerned about its ability tofinance the foreign exchange cost o& i*he increased private investments inminor irrigation equipment and power tillers estimated at over US$30.0 millionper year. Financed largely from farmers' savings and/or non-institutionalcredit, which has traditionally provided 90X of credit requirements, they arenot directly supported by any donor assistance program. Donor assistance i8now required so that the private sector can meet the increased demand for STW,

LLP and power tillers, sales of which are presently handled on a competitivebasis by about 315 private equipment dealers located mainly in Dhaka,Chittagong and other cities and towms throughout the country.

1.11 With assistance from the International Fertilizer DistributionCenter (IFDC), financed by the United States Agency for InternationalDevelopment JSAID), GOB has also been reforming its fertilizer marketingpolicies in order to create a less distorted business environment for theprivate sector. Among the recent measures taken was allowing the privatesector to procure urea directly from the factories and removing restrictionson fertilizers imports. The major obstacle now to increased private sectordistribution and greater farmer access is the remaining subsidies on TSP andMP.

1.12 With help from the International Food Policy Research Institute(IFPRI), financed by the USAID, GOB is also currently reexamining the legaland regulatory framework for foodgrain marketing with a view to ailowing alarger role for market forces and private initiatives.W Already GOB hastaken several important steps in this direction including subjectingcommercial foodgrain imports to a special clearance procedure, removingobstacles to private sector foodgrain storage, including restrictions oncredit for storage purposes and anti-hoarding and grain holding regulations.

B. IDA's Sectoral Strat&gy

Past Operations

1.13 Since 1972, IDA has approved 37 credits to Bangladesh foragricultural development totalling US$843.2 million, net of cancellations.Significant lessons have been learneA' from tho implementationt o,. previousprojects which supported minor irrigation development and agricultural policyreform, and these have been reflected in the design of the proposed project.Lessons learned from implementing the Agricultural Credit Project (Credit1147-BD),V which supported inter alia investment in STW, include the need to

ensure adequate maintenance and repair facilities for STWs. This is addressedunder the proposed project through the eligibility criteria for private

vI IDA has also initiated a review of the Government's food policy toensure that it is consistent with sustained growth in agriculture andthat it effectively alleviates food insecurity among the poor. Thereview will address inter ala: (i) producer and consumer pric_..ngpolicy; (ii) incentives for foodcrop processing and marketing;(iii) international trade policy; (iv) food aid policy; and(v) subsidized rationing programs.

vI A Project Completion Report (PCR) for this project has been prepared(Report No. 8581, dated April 30, 1990).

5

equipment dealer access to project funds (pars 4.4), one of which requires thedealers to import equipmient with warranties, and provide those warranties tofarmers. Experience in implementing the ongoing DTW II Project (Cr. 1287-BD)demonstrated the need to reduce subsidies on DTW technology and liberalize thepolicy and institutional environment for private sector distribution of minorirrigation equipment. While the subsidized DTWs were to be lirited to areasunsuitable to STWs, in fact they proliferated throughout the country at greatfiscal and ecenomia cost, thereby discouraging the introduction of moreaffordable and manageable STW and LLP technology. The subsidy also preventedprivate sector participation and investment in the supply of DTWV, cre.ting apublic sector monopoly. The DTW subsidy will be eliminated under the NationalMinor Irrigation Development Project (para. 1.15). Lessons learned f.om theexecution of Import Program Credits (IPC) IX-XIIIW also highlight the need toliberalize the policy and institutional environment for distribution of minorirrigation equipment in order to permit a larger role for the private sector inthe sale and servicing of minor irrigation equipment and to allow farmers tochoose the equipment best suited to their specific agronomic, hydrological andeconomic circumstances. They also draw attention to the need to complete thetransition to a fully deregulated and privatized marketing system for fertilizerdistribution, where private distributors would be allowed to operate withoutbeing undercut by Government subsidies. The need to improve foodgrainmarketing, notably through a larger role for the private sector in foodgrainstorage was also emphasized. These issues will be addressed under the propcsedproject.

Current Program

1.14 IDA lending to Bangladesh has emphasized the agricultural sector,particularly developing water resources, strengthening agricultural services,and developing complementary infrastructure. Consistent with GOB's priorities,inc.eased production of foodgrains has been the main target of IDA's lending inagriculture. Ongoing IDA-supported projects include:

Agricultural Extension II (Cr. 1215-BD)Rural Development II (Cr. 1384-BD)Deep Tubewells II (Cr. 1287-BD)Bangladesh Water Development Board (Cr. 1467-BD)

(BWDB) Small SchemesAgricultural Research II (Cr. 1455-BD)Flood Control and Drainage (FCD) III and IV (Cr. 1591 and 1784-BD)Shrimp Culture (Cr. 1651-BD)Forestry II (Cr. 1634-BD)Small-Scale Flood Control and Drainage II (Cr. 1870-BD)BWDB Systems Rehabilitation (Cr. 2099-BD)Third Fisheries (Cr. 2146-BD).

Damage repair works on water control infrastructure following the floods of 1987and 1988 are being financed by IDA under the Flood Rehet)ilitation II and IIIProjects (Cr. 1876-BD and 2048-BD, respectively) and under the Small Scale FloodControl and Drainage Project (Cr. 1870-BD). IDA is assisting GOB in developing

MI A Program Performance Audit Report (PPAR) has been prepared for thesefive projects (Report No. 8871, dated June 29, 1990).

6

a basis for policy formulation through sector work and special studies. Inaddition, IDA is the Executing Agency for the UNDP-financed NWP Project, whichentered its second phase in 1988. Finally, IDA has helped formulate an ActionPlan for Flood Control and is chairing a panel of experts to oversee theimplementation of a series of studies which will generate informationnecessary to formulate policies and projects required to protect Bangladeshagainst lisastrous floods, and to effectively utilize natural resources.

Future Lending Strategy

1.15 GOB, in close collaboration with IDA and the Asian Development Bank(ADB), has developed a list of investments and input requirements linked to anAction Provr;rm for Policy and Institutional Reforms for the minor irrigationsubsector (Annex 4) covering minor irrigation equipment and power tillers,complementary inputs, foodgrain management and institutional reform. ADB issupporting this package with a quick-disbursing Foodcrops Development ProgramLoan financing a broad positive list of agricultural equipment and inputs.IDA plans to support the policy and investment program through four proposedprojects designed to meet the specific investment needs associated with theprogram. These are:

(a) the project described in this report which will finance simple, lowcost investments by farmers in STWs, LLPs and power tillers, sold"off the shelf" for cash by private dealers, without any publicsector involvement in their installation/delivery or operation;

(b) the National Minor Irrigation Development Project (NMIDP) whichwill finance mainly the more complex and expensive DTWs, whichrequire organization of farmer groups, technical assistance andpublic sector support in the initial stages; while the procurementand installation of this equipment will initially be led by thepublic sector, the project will create the environment necessaryfor private sector involvement and make it possible for the latterto supply most of the DTWs by the end of the project;

(c) the Agricultural and Rural Credit Project (ARCP) which will focuson improving the performance of the agricultural creditinstitutions and finance institutional credit for a wide range ofagricultural investments, including investments by farmers in minorirrigation equipment and power tillers; while presentlyinstitutional credit accounts for only a small share of theseinvestments (about 10 based on past experience), its relativeimportance could increase in the future if the performance of thecredit institutions improves.h; and

2 Apart from "Selected Issues in Foodgrain Development" (para 1.4), IDAhas completed a "Fisheries Sector Review" (Report No. 8830-BD, datedAugust 31, 1990).

Of However, initially the improvements will involve a much strictertreatment of credit applications and may result in a decline in thevolume of credit.

7

(d) the Agricultural Support Services Project (ASSP) which will financeintX ali extension activities of HOA to improve water management,seed supply and crop diversification.

The NMIDP will be cofinanced by the European Economic Community (EEC). TheARCP will be financed jointly with ADB, with USAID financing the technicalassistance component. ODA will finance the technical assistance requirementsof the ASSP.

1.16 Since the success of the Government's private sector-led minorirrigation development strategy hinges on the maintenance by the public sectorof the supportive policy environment, which has already been agreed to by GOB,IDA and ADB, the proposed project will provide for the continuation andrefinement of the new policy framework for minor irrigation development basedon STW, LLP and power tillers. It will also support additional measures toliberalize fertilizer distribution which is vital for the continuedproductivity of investments in minor irrigation. The NMIDP will supportreforms related to DTW development; the ARCP, reforms pertaining to credit;and the ASSP, reforms concerning seed supply.

C. Rationale for IDA Involvement

1.17 IDA has worked closely with GOB to formulate and introduce policymeasures aimed at liberalizing the trade and siting of minor irrigationequipment. The experience IDA has acquired over the years in the context ofpolicy dialogue and through past projects in support of minor irrigation givesit a comparative advantage among donors in providing effective support to GOBin implementing of this project. In addition, IDA's financing of this projectwill support deepenirg the liberalization process in the areas of fertilizerand foodgrain marketing which are important components of the sectoral reformagenda pursued by IDA in its policy dialogue with GOB since the early1980s21. The proposed project will also provide an opportunity for IDA tomake a contribution in an area of special emphasis: private sectordevelopment.

ZJ See "Bangladesh - Review of Experience with Policy Reform in the 1980s"(Report No. 8874, dated June 29, 1990).

8

II. THE P2QJECT

A. General

Evolution and ConceRt

2.1 The project was identified in the course of sector work undertaken byIDA and other donors in close collaboration with GOB over the past two years.This sector work highlighted the need to allow a greater role for the privatesector in the distribution of minor irrigation and related equipment (para 1.5).One way for IDA to support private sector distribution of minor irrigationequipment is through the institutional credit system, and this will be donethrough the APCP. However, as noted above (para 1.6), most of farmers,investment is for cash provided by savings and/or the informal credit systemwhich covers 90X of credit requirements. The proposed project has been designedto support these cash investments. The project was prepared by GOB withassistance from IDA and ADB during the period October 1989 to February 1990.Preappraisal of the project was carried out in March/April 1990 by a jointIDA/ADB team. The project was appraised in June/July 1990.

Obiectives and Strategv

2.2 The project is intended to promote agricultural production, income andemployment by supporting increased investment by farmers in simple, low costminor irrigation equipment and power tillers sold for cash by private equipmentdealers under GOB's liberalized/deregulated policy framework for private sectorled minor irrigation development. It will accomplish this by providing aforeign exchange facility to allow private equipment dealers to import smallengines of up to 20 hp for STW and LLP, as well as power tillers. Monitoringand evaluation of these activities, including the establishment of and operationof a Monitoring and Evaluation Unit (MEU) in the Ministry of Agriculture, willalso be provided. The project will cover the entire country except areas havingsaline groundwater (see Map IBRD No. 22593), thereby complementing the proposedNMIDP which will concentrate on areas where only the more complex DTW technologycan be used due to the relatively deep aquifer (para 1.2). The project isexpected to be completed by June 30, 1994.

2.3 To sustain the demand from farmers for STW, LLP and power tillers, thepresent policy and institutional framework for private sector-led minorirrigation development needs to be consolidated. This requires a commitment byGOB to: (a) keep customs duties low on imported minor irrigation equipment andpower tillers; (b) maintain the removal of restrictive standardization andsiting regulations; and (c) dispose of public sector stocks of STW and LLP. Italso requires a supportive policy and institutional environment for thedistribution by the private sector of complementary inr.uts, particularlyfertilizer and seed, and for the marketing by the private sector of the mainoutputs of irrigated agriculture, rice and wheat.

Intended Beneficiaries. Impact on Poor. Women and Landless

2.4 The project will directly benefit farm families using STW, LLP andpower tillers, but its indirect benefits will also be very significant. Besidesthe direct production benefits, the increased level of economic activityresulting from the project is expected to benefit the poor, including poor womenand the landless poor, by creating additional employment opportunities forunskilled and semi-skilled labor in weeding and harvesting. It is alsoanticipated that some landless entrepreneurs will operate power tillers on a forhire basis. By increasing the supply of water, stimulating competition and

9

generating lower water rates, the project will contribute to the reduction of"waterlordism," whereby farmers with access to water have exploited otherfarmers without such access.

B. Detailed Features

Investment Component

2.5 Over the three-year period, FY92-94 (see Chart), the project willsupport investment by farmers in:

(a) an estimated 75,000 STW to irrigate some 340,000 ha of land;

(b) about 6,000 LLP to irrigate around 120,000 ha of land; and

(c) about 18,000 power tillers to cultivate approximately 460,000 ha.

2.6 Since the investment decision will rest with the farmer, the numbersof STW, LLP and power tillers are indicative. The project will support theseinvestments while consolidating th existing policy framework for privatesector-led minor irrigation develoement, as well as additional reforms in theclosely related area of complementary inputs supply which are important forproject success.

2.7 Shallow Tubewells (base cost US$80.0 million). As indicated above(paras 1.2 and 2.2), STW offer a low cost solution to irrigation developmentbased on available groundwater in most parts of Bangladesh (Annex 1). STW aretypically hand-drilled tubewells, cased with a 75 mm diameter galvanized ironpipe which is slotted against aquifer material, and equipped with centrifugalpumps normally powered by under 10 hp diesel engines. They yield about 14 l/s.The STW has the pump unit mounted at land surface and can pump water at levelsdown to about 6 m below land surface. To pump water at levels down to about 9 mbelow land surface, STW may be mounted in a sump about 3 m deep, in which casethey are referred to as deep-set shallow tubewells (DSSTW).

2.8 The demand for STW is estimated at about 45,000 per annum, includingreplacements. Ongoing and planned programs supported by GOB and donors areexpected to provide financing for about 20,000 STW per year. This will leave afunding gap for the remaining 25,000 STW per annum, or a total of 75,000 overthree years to be filled by the project.

2.9 Low Lift PumRs (base cost US$12.8 million). Even less expensive perha than STW (para 1.2), LLP may be installed on any accessible source of water,either flowing or static, to lift water onto land for irrigation (Annex 2). Themost common pump units have been of 56 1/s capacity, though a considerablenumber of 28 l/s pumps have been fielded. Almost all of the pumps are poweredby diesel engines. The command area assumed for 56 l/s pumps is 20 ha.

2.10 An analysis of the potential for minor irrigation development based onLLP carried out for the appraisal of the NMIDP, and reviewed for the presentproject, indicates that surplus water flows on minor to medium river systems(i.e., other than the Ganges, Brahmaputra, Padma and Lower Meghna) could bedeveloped to serve about 360,000 ha, using an estimated 18,000 LLP, includingreplacements. Programs are underway and others are planned to provide primarysupplies for about 2,000 LLP per annum or a total of 6,000 LLP over the nextthree years. The project will provide for these LLP which are not covered byany other donor assistance program.

10

2.11 Power Tillers (base cost US$23.4 million). Demand for power tillersis currently running at about 7,000 per annum or 21,000 over the three-year lifeof the project. Since an estimated 3,000 power tillers are expected to befinanced from other sources, including some 2,000 under the ARCP, the projectwill provide funding for the remaining 18,000.

2.12 As indicated above (para 2.3), the current liberalized/deregulatedpolicy and institutional framework for private sector distribution of STW, LLPand power tillers needs to be sustained for the project supported investments tomaterialize. To this end, aereements were obtained at negotiations that GOBwill:

(a) ensure that customs duty and tariff on imported engines of up to 20 hpfor use in minor irrigation equipment, as well as on power tillers, donot exceed the rate of 5S of their free on board (FOB) value;

(b) abolish and thereafter not institute standardization requirements onimported minor irrigation equipment; and

(c) abolish and thereafter not institute restrictions on siting oftubewells in non-surface irrigation areas.

2.13 On instructions from GOB, BADC has disposed of approximately 16,000STW/LLP, representing about half of its original stock of 27,000 units. Atnegotiations, an agreement was obtained that GOB will require BADC to sell orotherwise dispose of its entire stock of STW/LLP, including spare parts, byMarch 31, 1992 through direct sales to farmers or auction to private dealers,and thereafter to refrain from further purchases of STW/LLP.

2.14 Given the importance of improved fertilizer and foodgrain marketingfor the productivity of investment in minor irrigation equipment, agreementswere also obtained at negotiations that GOB will:

(a) remove all restrictions on fertilizer imports (TSP, HP and urea);

(b) ensure that all contracts for commercial import of foodgrain areawarded on the basis of open international tender; and

(c) abolish and thereafter not institute any restrictions on credit forstorage of foodgrain and take steps to facilitate foodgrain storage bythe private sector.

2.15 As part of its fertilizer market liberalization program, GOB recentlyreviewed the ex-factory price of urea and found it to be at world market levels.In addition, agreements were obtained at negotiations that GOB will:

(a) abolish at least 30X of subsidies on TSP and MP fertilizers as acondition of effectiveness;

(b) abolish at least 60X of such subsidies by October 31, 1991;

(c) abolish 1001 of the subsidies by March 31, 1992; and

(d) thereafter not directly or indirectly subsidize fertilizer prices.

I

11

Monitoring and Evaluation

2.16 To assist GOB in monitoring and evaluating the project, a projectMonitoring and Evaluation Unit (MEU), consisting of a locally recruitedeconomist and support staff, has been set up in MOA. The economist has beenappointed. The MEU will be equipped with a vehicle, a personal computer andother office equipment (e.g. a copier), and will coordinate its operation withthe extensive monitoring and evaluation activities to be carried out under theNMIDP. Evaluation of project results will be contracted out to consultants, forwhich a provision of eight staff months, estimated to cost US$100,000 in total,has been included in the project cost. The consultants qualifications,experience and terms and conditions of employment will be satisfactory to IDA.GOB approval of the Proforma for the carrying out this part of the project willbe a condition of effectiveness.

C. Environmental Aspects

2.17 An Environmental Assessment for this and the three other agriculturalprojects (NMIDP, ASSP and ARCP) was carried out by an independent teamcommissioned by ODA and IDA&'. It concluded that overall the project wouldhave major societal benefits, but that there were negative environmental impactswhich could develop as follows: seasonal aquifer drawdown could temporarilyimpact on other groundwater uses, including drinking water wells; ground andsurface water could become contaminated due to increased use of agro-chemicals;and saline intrusion into groundwater aquifers and surface water channels couldincrease. For reasons of economy and efficiency, these and other environmentalissues will be addressed together under the NMIDP and ASSP where the necessarystaff resources will also be provided. Specifically, these operations willaddress: (a) establishment of a monitoring system to quickly identify excessiveabstraction of groundwater which might jeopailize sustainability of groundwaterdevelopment; (b) establishment of a basis for assessing agro-chemicalconcentrations in soil and water to identify and correct potential hazards; (c)rehabilitation of domestic water supply wells affected by the project; (d)exclusion of the coastal area from the groundwater development program toprevent salinity intrusion; and (e) inclusion of control structures in channelsto limit saline intrusion.

PJ An Environmental Assessment of Four Agricultural Projects in Bangladesh(December 1990), a report prepared by Environmental Resources Limited.

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III. PROJECT COSTS AND FINANCING

A. Cost Estimates

3.1 The total project cost is estimated at Tk 4.4 billion (US$126.7million equivalent), including a foreign exchange component of US$75.0 millionequivalent, or 59X of the total cost (Table 3.1). This cost estimate is basedon February 1991 prices.

3.2 The project cost includes US$5.8 million equivalent in taxes. Thereare no physical contingencies. If farmer demand for STW, LLP and power tillersis higher than anticipated, this will be reflected in a shorter projectimplementation period. Farmer demand for the project investment items has beenestimated on the basis of current levels, as confirmed by recent survey datafrom MOA (para 1.10). Price contingencies are estimated on the basis of WorldBank projections of international price increases of 3.6X per annum, and thefollowing rates of local inflation: 8.0X in FY92; 7.0X in FY93; and 6.01thereafter. Annex 5 presents the detailed cost estimates by nature and purposeof expenditure.

Table 3.1: PROJECT COST SUMHARYSt(million)

TAKA USS % Total-------------------------------- --------------------------- 5 Foreign Sase

Local Foreign Total Local Foreign Total Exchonge Costs

A. INVESTMENT COM4PONENT1. SHALLOW TUBEWELLS 1,395.9 1.395.9 2,791.8 40.0 40.0 60.0 60.0 66.82. LOW LIFT PUMPS 201.0 245.7 446.7 5.8 7.0 12.8 55.0 11.03. POWER TILLERS 0.0 817.4 817.4 0.0 23.4 23.4 100.0 20.1

Sub-Total 1,596.9 2,459.0 4,056.0 45.8 70.4 116.2 60.6 99.9S. MONITORING & EVALUATION 0.6 3.8 4.6 0.0 0.1 0.1 82.2 0.1

Total BASELINE COSTS 1,597.7 2,462.6 4,060.5 456S 70.5 116.3 60.7 100.0physical Contingencies 00 .0.0 .0 .0 .0.0 0.Price Contingencies 204.5 155.4 360.0 5.9 4 5 10 4 43 2 , 6.9

Total PROJECTS COSTS 1,602.3 2,618.2 4,420.6 51.7 75.0 126.7 69.2 108.9.................. ................ .... ...... .......... ................ ...........................

f Figures may not add due to rounding.

B. Financing Plan and Flow of Funds

3.3 The IDA credit of SDR 52.2 million (US$75.0 million equivalent)will finance 621 of the total project costs, excluding taxes. Except forUS$100,000 to support the operations of the MEU, the IDA credit will bechannelled through the Bangladesh Bank (BB) which will establish a foreignexchange facility on which eligible private equipment dealers, operatingthrough their commercial banks, will be able to draw to finance theimportation of small engines for assembly into STW and LLP and power tillersfor sale to farmers. Onlending arrangements are not applicable, since thetransactions between farmers, dealers, and the dealers'. commercial banks willbe on a cash basis, and the commercial banks will deposit the Taka receivedfrom the dealers simultaneously with the disbursement of IDA funds to foreignequipment suppliers. Farmers will finance the local costs of the projectinvestments estimated at US$52.0 million, and GOB will finance the local costsof monitoring and evaluation estimated at US$50,000. Table 3.2 summarizes theproject financing plan by component.

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Table 3k2: FINANCING PLAN BY PROJECT COMPONENTAt(US$ million)

IDA Goverr ent Farmers total Local-----------------------------------------------.-- For. IExet. Duties

Amount . Amount Amount . Amount %. Exeh. aexes ) Txa.w~~~~~~~~.. 0............................

14VESTMENT COMPONENT 74.9 59.2 0.0 0.t 81.6 40.8 126.5 99.9 74.9 45.8 5.8MONITORING & EVALUATION 0.1 67.0 0.0L 33.0 0.0 0.0 0.1 0.1 0.1 0.0 0.0

Total Disbursement 7. .0 59.2 O.Ob/ 0.0 61.6 40.6 126.7 10.0 78.0 48.6 8.6

........................ 0................

Figures may not add due to rounding.USS5o.0oo does not appear due to rounding.

C. Procurement

3.4 Procurement of the STW, LLP and power tillers to be provided under the

project will be done by private equipment dealers following establishedcommercial practices. With some 315 private dealers located in Dhaka andChittagong, as well as other cities and towns throughout the country (para 1.10),

competing for farmers, business in a liberalized policy framework, the market for

project supported equipment is economic and efficient, and may be relied upon to

produce reasonable prices. However, to ensure competition for large import

orders, any single contract estimated to cost US$1.0 million or more will be

procured by ICB. ICB procurement, if any, will be subject to prior IDA review.

In addition, on an annual basis, IDA supervision missions will conduct an ex-post

review of a reasonable sample of the transactions entered into by three dealers.

The equipment for MEU will be procured by MOA using local shopping procedures.

Consultants for monitoring and evaluation with qualifications, experience and

terms and conditions of employment satisfactory to IDA will be selected by MOA in

accordance with the procedures set out in "Guidelines for the Use of Consultants

by World Bank Borrowers and by the World Bank as Executing Agency."

Table 3.3 METHODS OF PROCUREMENTIL(US$ Million)

Project Element ICB Othe_rL Total

Investment Component

Shallow Tubewells - 87.6 87.6(42.5) (42.5)

Low Lift Pumps 14.0 14.0(7.5) (7.5)

Power Tillers - 24.9 24.9(24.9) (24.9)

Monitoring and Evaluation - 0.1 0.1_ ~~~(O .1) (O .1)

TOTAL - 126.7 126.7(75.0) (75.0)

^./ Figures may not add due to rounding. Figures in parentheses are amounts to

be financed by IDA.

k/ Includes established commercial practices, local shopping and consultantsselection procedures.

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D. Disbursement

3.5 Disbursements will be made against lOOX of the CIF price ofimported equipment and lOOX of consultants' services. It is expected that theproposed credit will be fully disbursed within three and a half years (Annex6). The project closing date will be December 31, 1994. The disbursementprofile for projects in support of water resources development in Bangladeshis nine years, but this is based on complex operations planned forimplementation by public sector agencies over a 5-7 year period. These havelittle in common with the proposed project which is simple in nature. ASpecial Account in Foreign Exchange (SAFE), with an initial deposit of US$7.0million equivalent, representing four months requirements, will be establishedin the BB. It will be used both by the private dealers, acting through theircommercial banks, on a "first come, first served" basis, to provide irrigationequipment and power tillers to farmers, and by MOA to equip MEU. Withdrawalsfrom the special account will be on the basis of actual eligible expenditures.Withdrawals under statement of expenditure (SOE) procedures will be permittedfor equipment contracts with a value of less than US$50,000 equivalent.Withdrawal applications for import contracts amounting to an aggregate ofUS450,000 or more will be fully documented. Supporting documents forwithdrawal applications under SOE procedures will be retained by BB for reviewby IDA representatives. The special account will be replenished by IDA on thebasis of withdrawal applications prepared by BB.

E. Accounts and Audit

3.6 BB and MOA will maintain separate accounts for project expendituresin accordance with internationally accepted accounting principles andpractices. The accounts, including the special account in BB (para 3.5) andSOE accounts, will be audited annually by the Comptroller and Auditor Generalof GOB, or other independent auditors acceptable to IDA. Certified copies ofthe audit report, including a separate opinion on SOE accounts, will befurnished to IDA no later than six months after the end of each fiscal year.

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IV. ORGANIZATION AND IMPMENTATION

4.1 The project will be implemented by GOB through BB and MOA. BB willhave primary responsibility for facilitating the flow of funds in support ofproject activities. This will entail close collaboration with ParticipatingBanks who will be handling the financial transactions associated with theDealers' activities, including opening letters of credit with the banks offoreign equipment suppliers. MOA will be responsible for monitoring andevaluation. Implementation of the policy measures supported by the project(paras 7.1-7.2) will be the responsibility of an inter-ministerial ProjectCoordinating Committee (para 4.6), chaired by the Secretary of MOA.

A. Bangladesh Bank

4.2 BB will administer the foreign exchange facility (special account)on which participating banks will draw to finance letters of credit opened onbehalf of Dealers for the importation of project financed equipment for saleto farmers. Within BB, the Exchange Control Department will manage thespecial account. To launch the project, and as a condition of effectivenessof the proposed credit, BB will issue to participating banks a modelParticipation Instrument and a model Dealer Agreement, satisfactory to IDA,along with a description of the procedures under which the proceeds of theCredit will be made available to finance project investment expenditures.

B. Participating Banks

4.3 To participate in the project, Participating Banks will be requiredto sign a Participation Instrument with BB on terms and conditionssatisfactory to IDA, and an agreement to this effect was obtained atnegotiations. Under the Participation Instrument, the participating bankswill:

(a) provide the following documents to BB when applying for iz,eignexchange from project funds:

(i) all standard documents required by BB for opening letters ofcredit;

(ii) copies of all documents furnished by the Dealer in accordancewith the standard requirements of the Participating Bank,including shipping documents; and

(iii) a copy of the Dealer Agreement signed by the Dealer (para 4.4);

(b) at the time when the foreign supplier's bank is paid in foreignexchange from project funds, pay BB the equivalent in Taka; and

(c) be disqualified from the use of project funds if found in non-compliance with the Participating Instrument by MEU or IDA, orhaving failed to enforce any Dealer Agreement to which it is aparty.

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C. DealeXs

4.4 Dealers wishing to participate in the project will be required tosign a Dealer Agreement with the Participating Bank on terms and conditionssatisfactory to IDA, and an agreem2nt to this effect was obtained atnegotiations. Under the Dealer Agreement, the dealers will:

(a) provide evidence to the Participating Bank of the procurementprocedures followed (to ensure compliance with agreed procurementprocedures);

(b) limit the sale of small engines and power tillers to farmers whowill use them in the irrigation and cultivation of land (to reducethe risk of units being sold for non-Project purposes);

(c) import small engines and power tillers having due regard foreconomy and efficiency on the basis of reasonable prices (to avoidmisuse of funds);2/

(d) import only small engines and power tillers having at least sixmonth warranties and provide those warranties to farmers, includingany applicable after sales service (to ensure the availability ofspare parts and repair and maintenance facilities);

(e) keep a list of the farmers to whom engines and power tillers aresold (to provide a basis for monitoring the end use of theequipment);

(f) permit the inspection of the documents listed in para 4.3(a) aboveby the Participating Bank, MEU and IDA; and

(g) be disqualified from applying for further letters of credit underthe Project if found to be in breach of the Dealer Agree. srt by theParticipating Bank, MEU or IDA.

D. Monitoring and Evaluation Unit

4.5 The MEU has recently been established in MOA (para 2.16). Inparticular, it will monitor:

(a) compliance with Participation Instruments and Dealer Agreements;

(b) price at which equipment under the Project is sold to farmers;

(c) use of equipment sold to farmers to ensure that it is used for thepurposes of the Project.

2/ In practice, the prices of imported equipment will be checked by theParticipating Banks as part of the approval process for opening lettersof credit. To assist them in this task, MEU will provide them withimport price data on a half yearly basis. IDA supervision missions willalso check that the prices of equipment imported under the proiect areconsistent with prevailing import prices.

17

An agreement to this effect was obtained at negotiations. MEU will alsomonitor the effects of irrigation on the resource base (e.g., groundwaterAbstraction, levels of groundwater pollution, and effects on potable watersupplies and fisheries). Problems will be brought to the attention of theSecretary of MOA in his capacity as Chairman of the Project CoordinatingCommittee. Not later than December 31, 1992, GOB will review with IDA theimplementation of the project, and promptly thereafter take all actionsrequired as a result of the review. An AgSn=U= to this offect was obtainedat negotiations. Towards the end of the project, consulta..ts selected by theMEU will undertake a study evaluating the project's resulte, including interAU& the costs and benefits (areas irrigated, yields and production obtained,farm families involved, employment created, etc.). The MEU will also prepare:(a) semi-annual progress reports in a format satisfactory to IDA; and (b) theGOB section of the Project Completion Report (PCR) in accordance with IDAguidelines.

E. Project Coordinating Committee

4.6 An inter-ministerial Project Coordinating Committee has beenestablished to ensure timely implementation of the policy actions included inthe project (paras 7.1-7.2), most of which go beyond the authority of any oneministry. The Committee, which will meet quarterly and at other times asrequired, will be chaired by the Secretary of MOA and include representativesof the Ministries of Plan.ning, Finance (Economic Relations Division), andIrrigation, Water Development and Flood Control, as well as BB.

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V. FINANCIAL RETURNS AND FARM INCOME

A. Financial Returns

5.1 Based on experience from ongoing minor irrigation projects forwhich financial and other data are available, an analysis has been undertakento assess the probable returns from investment in STW, LLP and power tillers.Details of the analysis are given in Annax 7 and are summarized in Table 5.1.

Table 5.1: SUMMARY OF FINANCIAL RETURNS

Investment Present Cash Inflow with Increm- FRREquipment Cost Inflow Project ental (M)--------- .......................... Taka.STW 34,900 33,116 62,708 29,592 39

LLP 69,800 82,790 174,250 91,460 60

Power Tiller 41,880 184,939 416,762 231,823 59

5.2 Cash profiles for all equipment types show that beneficiaries,total net cash inflow with the project would increase significantly.Financial ratos of return to all resources used in the production activitieswould be high: about 39X for STW; 60% for LLP; and 59X for power tillers.The investments would clearly be attractive to farmers.

B. Farm Income

5.3 The impact of the project on annual farm income has been analyzedon the basis of representative farm budgets for a 1 ha farm size. This modelprimarily reflects the situations of with and without irrigation facilitiesand an average cropping pattern for all the agro-ecological zones ofBangladesh.

5.4 Because of a lack of reliable data on off-farm and otheragricultural incomes, only crop production activities have been taken intoaccount in estimating farm income. Specific cropping patterns, yields andinput requirements used for the analysis are presented in Annex 7, Tables 1and 2. The prices used in the financial analysis are given in Anrex 7, Table3.

5.5 The analysis of the farm model reveals that the investmentssupported by the project would have a pronounced impact on the incomes of farmfamilies. This would mainly come from the higher cropping intensities,changes in the cropping pattern and more intensive cultural practices.Analysis of the indicative farm budgets show that a farm of 1 ha size with theintroduction of irrigation could expect to increase its average annual incomefrom farming from about Tk 8,300 to Tk 14,500, an increase of 75X. Details ofthe farm model analysis are in Annex 7 and summarized in Table 5.2.

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Table 5.2: SUMMARY OF ANNUAL FARM BUDGETS

Futurewithout Future wlthProject Proie:t Increment

Farm Area (ha)Net 1.00 1.00 --

Cropped 1.36 1.66 0.30Cropping Intensity (%) 136 166 30

.................. ...................

Gross Value of Production 12,713 27,116 14,403Cost of Production 4,434 12,602 8,168Net Value of Production 8,279 14,514 6,235Percentage Change -- - +75

5.6 The farm budget analysis reveals that irrigation plays the dominantrole in increasing farm income. It also reflects the high potentialproductivity of irrigated agriculture and its immediate effect on crop yields.It has been assumed that irrigation development would take place over a periodof three years before reaching full development, and that the farmers wouldalso adopt the recommended level of inputs within this period.

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VI. BENEFITS. JUSTIFICATION AND RISKS

A. Benefits and Beneficiaries

General

6.1 The project will increase agricultural production, income andemployment by reducing the risks of cultivation on about 460,000 ha of landthrough irrigation. The direct beneficiaries will be an estimated 525,000farm families. The overall impact of the project in terms of increasedagricultural production, employment generation and farm families benefitted atfull development is summarized below:

Summary of Proiect Impact at Full Development

Total Area to Benefit ha 460,000Total Farm Families to Benefit no 525,000Annual Incremental Foodgrain Production tons 1.3 millionAnnual Incremental Agricultural Employment days 46.7 million

Production Benefits

6.2 At full development, the project will raise foodgrain productionfrom project farms by about 1.3 million tons per annum, an increase of about242X over the "without project" production. This will rbduce Bangladesh'sneed to import foodgrains by the same amount. Paddy is estimated to be about91X of this incremental production. The value of the annual incrementalproduction at farmgate economic prices in 1990 constant terms will be about Tk8,400 million (US$240 million).

EtmloyMent Benefits

6.3 Against the background of extensive unemployment andunderemployment in Bangladesh, the project will create substantial additionalemployment. The total demand for labor will increase from 172 days/ha to 284days/ha at full development, an increase of 651. This increase will resultfrom adoptior. of transplanted HYV of Aman paddy, an increase in the area ofHYV Boro paddy and wheat, an increase in the cropping intensity, moreintensive care of crops and higher labor needs for harvesting. Theseinc:reased labor requirements will reduce the present high level ofunemployment and underemployment in rural areas. Agricultural laborers, smallfarmers and women will benefit from an increased labor demand and fromoff-farm employment opportunities generated by the project due to increaseddemand for marketing, transportation and processing.

Income Distribution and Poverty Alleviation

6.4 The project will result in a substantial reduction in the incidenceof poverty. This is based on a comparison of per capita farm family incomefrom farming "with" and "without" the project for a 1 ha farm against thepoverty line, estimated at 401 of GNP or US$68 per capita per amrum. Presentper capita income from farming is estimated to be US$48 per annum for 1 hafarm families. The project will raise the average per capita income for suchfamilies to US$78 per annum at full development. Since the major result ofthe project will be to increase the productivity of land, the distribution of

21

direct benefits will largely follow the land ownership and tenurialarrangements, but women and landless sharecroppers will benefit too. Womenare expected to benefit from the additional employment opportunities forunskilled labor in weeding, harvesting, etc. which are expected to result fromthe increased level of economic activity generated by the project. Landlessentrepreneurs will also have the possibility of owning and operating powertillers provided by the project on a for hire basis.

B. Economic Justification

6.5 The economic analysis has been carried out for the project as awhole. The principal assumptions used in the analysis for the project aredescribed in Annex 7. The key benefit resulting from the project investmentsis the incremental agricultural production. Future farmgate prices forinternationally traded commodities have been derived from average World Bankprice projections for 1995, adjusted to 1990 constant terms with appropriateadjustments for freight, handling, processing and quality differences(Annex 7, Table 7). Non-traded cost and benefit items have been adjusted by astandard conversion factor (SCF) of 0.80 to bring them to the same price basisas the traded ones. The period of analysis has been taken as 20 years. Theeconomic cost and benefit streams are presented in Annex 7, Table 8.

6.6 On the basis of the incremental costs and benefits, the economicrate of return (ERR) and the Net Present Value (NPV) were computed for theproject as a whole. The ERR for the project is estimated to be 622, and theNPV, Tk 15.3 billion, assuming an opportunity cost of capital of 12X. Thehigh rate of return reflects inter ala the fact that in this sort of projectthe benefits accrue almost immediately upon completion of the investment andreach full development within a few years.

6.7 Sensitivity tests indicate that the project remains viable under avariety of assumptions regarding costs and benefits. As presented in Table6.1, with benefits reduced by 20X, costs increased by 201, a combination ofthe two, or a lag of up to three years, the ERR will remain well above 12X.Even using lower export parity prices for rice, the ERR would be 311. For theproject to become economically unacceptable, i.e., generate an ERR below theopportunity cost of capital of 121, benefits would have to fall by 401 orcosts increase by 3961. Such large changes in the benefits or costs arehighly unlikely.

22

Table 6.1: SUMMARY OF ECONOMIC AND SENSITIVITY ANALYSES

ERR (X) NPV @ 12X

Base Case 62 Tk 15,272 million

Sensitivity Analysis

Benefits Reduced by 20X 54Costs Increased by 20X 45Combination of Both 39Using Export Parity Prices for Rice 31

Switching values to bring ERR to 121

Total Benefits: command area, -40yields and/or output pricesInvestment Cost 369O & M Cost 157

Delay in Benefits by:

- 1 year 38- 2 years 27- 3 years 21

C. Risks

6.8 The major risk is that of potential reversals in GOB policy,leading to a contraction of private sector activity and farmer access to minorirrigation equipment, complementary inputs and output markets. This risk isaddressed through a series of agreed actions (paras 7.1-7.2). There is alsosome risk of the small engines financed under the project being used for non-project purposes (e.g., to power boats and/or operate rice mills). However,this risk will be minimized by the monitoring activities of the MEU (para4.5).

23

VII. AGREEMENTS REACHED AND RECOMMENDATION

7.1 At negotiations, agreements were obtained that GOB will:

(a) take all necessary action to:

(i) ensure that customs duty and tariff on imported engines of upto 20 hp for use in minor irrigation equipment, as well as onpower tillers, do not exceed the rate of 5X of their free onboard (FOB) value (para 2.12(a));

(ii) abolish and thereafter not institute standardizationrequirements on imported minor irrigation equipment(para 2.12(b));

(iii) abolish and thereafter not institute restrictions on siting oftubewells in non-surface irrigation areas (para 2.12(c));

(b) require BADC to sell or otherwise dispose of its entire stock ofSTW/LLP, including spare parts, by March 31, 1992 through directsales to farmers or auction to dealers, and thereafter to refrainfrom further purchases of STW/LLP (para 2.13);

(c) take all action to:

(i) remove all restrictions on fertilizer imports (TSP, MP andurea) (para 2.14(a));

(ii) ensure that all contracts for the commercial import offoodgrain are awarded on the basis of open international tender(para 2.14(b)); and

(iii) abolish and thereafter not institute any restrictions on creditfor storage of foodgrain and take steps to facilitate foodgrainstorage by the private sector (para 2.14(c));

(d) abolish its subsidies on TSP and MP fertilizer as follows: atleast 60% by October 31, 1991; 100% by March 31, 1992; andthereafter not directly or indirectly subsidize fertilizer prices(para 2.15(b), (c) and (d));

(e) cause BB to enter into Participation Agreements with ParticipatingBanks, and cause Participating Banks to enter into DealerAgreements with Dealers on terms and conditions satisfactory to IDA(paras 4.3 and 4.4);

(f) monitor:

(i) compliance with Participation Instruments and Dealer Agreements(para 4.5(a));

(ii) price at which equipment under the Project is sold to farmers(para 4.5(b));

24

(iii) use of equipment sold to farmers to ensure that it is used forthe purposes of the Project (para 4.5(c)); and

(g) not later than December 31, 1992, review the implementation of theproject with IDA, and promptly thereafter take all actions requiredas a result of the review (para 4.5).

7.2 As conditions of effectiveness of the proposed credit, GOB willhave:

(a) abolished at least 30X of the subsidies on TSP and MP fertilizers(para 2.15(a));

(b) approved the Proforma for carrying out the Monitoring andEvaluation Component of the project (pars 2.16); and

(c) had BB issue to participating banks a model ParticipationInstrument and a model Dealer Agreement, satisfactory to IDA, alongwith a description of the procedures under which the proceeds ofthe Credit will be made available to finance project investmentexpenditures (para 4.2).

7.3 With the above conditions and agreements, the project would besuitable for an IDA Credit to the People's Republic of Bangladesh of SDR 52.2million (US$75.0 million equivalent) on standard IDA terms, with a maturity of40 years.

25 ANNEX 1

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Shallow Tubewells

A. The Context

Hydrogeological Setting

1. Most of Bangladesh is covered by a thick sequence of Quaternary andRecent alluvial deposits, while consolidated sedimentary rocks of Tertiary ageform the Chittagong hill tracts and outcrop in parts of Sylhet and Comilladistricts. The alluvial sequence contains an important aquifer system, theaquifers being formed by beds of sand and gravel which are intercalated withbeds of silt and clay. Recharge conditions are favorable throughout thealluvial basin due to the heavy monsoon rains, the very extensive areas wherewater is ponded on the paddy fields during the wet season and the highincidence of areas subject to prolonged flooding. Groundwater levels aregenerally at shallow depth, and are at or near land surface during the latterparts of the monsoon in most of the alluvial area. The aquifers generallyhave high permeability. The quality of the water contained by the alluvialaquifer system is good for irrigation except in the coastal zone where theoccurrence of brackish and saline groundwater reflects the proximity of thesea and periodic flooding by tidal waves.

Groundwater Resource Evaluation

2. The National Water Plan (NWP), published in 1986, provides the mostcomprehensive assessment of the groundwater resources of Bangladesh. Theresource evaluation is based on the concept of potential recharge, which isthe recharge which would occur in a situation which was not constrained by theavailability of fillable groundwater reservoir. Attainment of potentialrecharge would generally require a lowering of the water table by the end ofthe dry season by groundwater abstractions to greater depths than would occurat present, in order to create the fillable storage to receive the potentialrecharge during the monsoon season. The assessment of potential recharge wasbased on calibrated water balance models of the aquifer systems in 66 planningareas covering the entire country except the Sunderbans in the extremesouthwest. The models provided an estimate of mean annual potential rechargeof about 68.7 billion m3 on a land surface of about 143,000 km2. Adjustmentswere then made to the potential recharge estimates to derive an estimate ofrecharge available for irrigation as follows:

(a) deduct 25? as a reserve covering possible errors in the modelestimate;

(b) make allowance for recharge in areas in which it could not be usedand for outflows to the river system; and

(c) establish a reserve for rural, municipal and industrial watersupply.

26 ANNEX 1

The results of these adjustments are summarized by regions below:

Phyeical Rural A AvaI lablePotential to constraint. & H a I for

Region Area char:* Reaerva outUlee.o reerve Irrigation

(km2) (m million).................................................... I

NW S0.161 176854 4.463 8,911 167 9,828

NE 84.755 28,740 5,e97 8.196 814 9,801

SE 80,068 11,956 2,989 7,429 17N 1.862

SC 14,264 4,814 1,208 1.810 76 1.725

SW 25.616 5,250 1,312 1.956 135 1,045

TOTAL 134,662. 68,622. 15,904. 2S.304. M. 23.556.

/ AFP * Active Flood Plain

Source: Tech Report No. S. NWP, 1987.

3. Abstractions by existing irrigation facilities are inventoriedperiodically (usually bi-annually) by upazillas to provide updated estimatesof the recharge available for new irrigation development. To date, only about3OZ of the total water available for irrigation has been developed, but thelevels of development vary widely between regions and between upazillas.

Modes of Groundwater Development for Irrigation

4. Groundwater abstracted from hand-dug open wells by manually operatedbucket mechanisms has been used to irrigate small areas in Bangladesh for manycenturies, and such facilities are still used to water many kitchen gardens.However, water abstracted from tubewells by various types of pumpingfacilities now provides almost the entire supply for groundwater irrigation inthe alluvial basin. There are three main types of tubewell facilities:

(a) Manually operated shallow tubewell installations (MOSTIs). Theseare hand-drilled tubewells typically of 30-50 m depth, cased with50 mm diameter galvanized iron pipe which is slotted againstaquifer material, equipped with a manually operated suction pump.They yield about 0.5 1/s from a maximum pumping water level ofabout 6.5 m below land surface. Thus they are confined to areaswith shallow water tables and with aquifers at relatively shallowdepth.

(b) Shallow tubewells (STWs) and deep set shallow tubewells (DSSTWs).These are hand-drilled tubewells of 40-60 m depth cased with 75 mmdiameter galvanized iron or PVC pipe which is slotted againstaquifer material, which are equipped with centrifugal pumpsnormally powered by diesel motors of about 5 hp capacity. Theyyield about 14 1/s. The STW has the pump unit mounted at landsurface and can be operated with pumping water levels down to about6.0 m below land surface. The DSSTW has the pump unit mounted in asump up to 3.0 m deep and they can be operated with pumping waterlevels down to about 9.0 m below land surface. Therefore, bothtypes of facilities are restricted to areas with shallow watertables and with aquifers at relatively shallow depth.

27 ANNEX 1

(c) Deep tubewells (DTWs). These tubewells are constructed by rotaryrigs or by the jet drilling technique and are equipped with deepset shaft-driven turbine pumps powered by diesel motors. Untilrecently, the design discharge capacity has been standardized at56 1/s. Such tubewells make a total depth of 80-100 m, and arecompleted with a 350 mm diameter upper well casing of mild steelpipe to a depth of about 30 m and a production string of 200 mmdiameter composed either of stainless steel wire wrapped screen andgalvanized iron pipe, or of glass reinforced plastic screen andpipe, or of PVC screen and pipe. The wells are gravel packed.Tubewells designed for discharges of 14 1/s and 28 1/s and equippedwith shaft driven turbine pumps will be introduced under the NMIDP.

5. The National Water Resources Planning Agency (NWRPA),U has madeestimates of the proportions of the available groundwater resource that couldbe developed using the various types of abstraction technology in combinationfor all upazillas. The results of these analyses are presented inconsolidated form by planning region below:

Rea i an [ |NW 5S. r S:C C E | A | T-ot -stI

Total avai labl 9,480 9161S l,3iE8 1,El lWO 1.335 25.749

Amount of rectharce mvyi lW by abstraction mode:

1. Manul puumping 95 96 1S 18 20 12 256

2. Centrifugal puMPS 8.200 4,950 787 1.071 1,880 1.109 17.997

3. Turbine pumps 1,185 4,569 736 712 80 214 7,496

TOTALS 9,480. 9,615. 1,538. 1.01 1,980 1.835. 25.749

i by centrifugal force 86 1 S1 59 95 88 70

S by turbinepump 13 48 48 40 4 16 29

a/ AFP * Active flood plain.

Source: Tech. Report No. 5; MP; 1987

6. The above estimates indicate that, on a country-wide basis, about70Z of the available groundwater resource could be developed using centrifugalpumps, 292 would require the use of shaft driven turbine pumps, and theremaining 12 could be developed by manual pumping.Y It should be noted thatthe proportions of the available resource which could be developed bycentrifugal pumps vary widely between regions, ranging from 51? in theNortheast and Southwest Regions to 95? in the Southeast Region.

1/ Previously the Master Plan Organization

2/ A different picture emerges if the pumping technology is restricted toone type. For example, if only centrifugal pumps were used (in STW orDSSTW), development would be restricted to 72? of the total availableresource, while exclusive use of MOSTIs would limit development to only502 of the available resource.

28 ANNEX 1

Present Status of STW Development

7. The hand-drilled STW designed for a discharge of about 14 l/s andequipped with an engine powered centrifugal pump offers a low cost motorpowered pumping solution for groundwater irrigation in a large part ofBangladesh where water levels are shallow enough for this pumping technologyto be applied with STWs or DSSTWs. Indeed, as noted in para 6, the NWRPAestimates that about 70Z of the available groundwater resource of Bangladeshcould be developed using this technology. Moreover, there has been a rapidexpansion of development of this type of facility as a private sectorinitiative in recent years, particularly since the market for STN equipmentand its inb%allation was freed from Government imposed constraints and wasallowed to develop as an increasingly demand driven activity since 1988.Countrywide censuses carried out by MOA in 1987 and 1989 showed the followinggrowth in installed STW facilities:

Numbers of STWs Installed Growth IndexIYearlYear Operational Non-operational Total (1986 - 100)

_~ Im

l 1986 145,222 8,547 153,769 100

1987 158,899 9,994 168,893 110

1988 183,195 5,264 188,459 123

1989 223,184 7,189 230,373 150

Source: Table 4.1; 1989 Census of Minor Irrigation Equipment, June 1989.

B. The Groundwater Development Component of the Project

Background

8. The NWRPA estimates that undeveloped groundwater potential existsfor expanding STW based irrigation development (over the next five years) toserve an area of 760,000 ha by installing about 170,000 STW facilities, eachserving an average command area of about 4.5 ha. This would bring thecountrywide inventory of STWs to in excess of 400,000 facilities. It is alsoestimated that, during the same five year period, about 50,000 existing STWswill require replacement. Thus the total STN requirement over the five yearperiod will be about 220,000 new or replacement facilities. Ongoing andplanned programs supported by GOB and other donors are expected to providefinancing for about 100,000 STWs during the period, leaving a financing gapfor about 120,000 facilities.

Scope of the Groundwater Development Component

9. The project, planned for implementation over a three year period,will support investments in about 75,000 STW facilities to serve about340,000 ha of irrigation. The tubewells will be hand-drilled or jet-drilledand constructed using galvanized iron or PVC tubular materials according to

29 ANNEX 1

farmers choice. A range of makes of power units (mainly imported) and locallymanufactured pumps will be available for sale to farmers through privatesector dealers from which the farmers may select their choice.

Location of Wells

10. There will be no restriction on the area in which the facilitiesfinanced under the project may be located except in defined areas in thecoastal zone where water quality deterioration may occur if groundwater isdeveloped for irrigation.

Cost Estimates of STW Facilities

11. The costs of STW facilities may vary fairly widely, reflecting thelocal aquifer conditions which effect the total depth of a well, and thematerial used in well construction and the make of the pump and power unit,which reflect farmers' choice. For the purpose of costing the project, a basecost of Tk 34,900 net of taxes has been assumed for the average facility, ofwhich Tk 17,450 is Zssumed to cover the cost of imported engine and Tk 17,450is taken for the total cost of the locally manufactured components (pump, pumpfittings, tubewell materials) and for construction of the well andinstallation of the pumping equipment.

End-Use of Equipment

12. Small diesel engines of the type used by STW facilities have severalpossible uses including irrigation, power for water transport, and grainmilling. To ensure the engines imported for the project are used for theintended purpose, participating dealers will be required to: (a) commit inwriting to sell the imported engines only to farmers; and (b) maintain a listof the farmers to whom the engines were sold which would be open toinspection.

Eligibility of Dealers for Access to Foreign Exchange

13. All dealers considered by commercial banks to be eligible to openletters of credit will be given access to foreign exchange available under theproject for import of engines provided that they commit in writing to:(a) provide the specified equipment performance warranties; and (b) makeavailable to BB authenticated copies of all documents relating to the importof equipment for which project funds are used.

30 ANNEX 2

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Low Lift Pumps

A. The Context

Hydrological Setting

1. Three major river systems drain to the Bay of Bengal throughBangladesh. The Brahmaputra-Jamuna River enters the country from the northand joins the Ganges River, flowing from the west about 90 km west of Dhaka.Downstream of the confluence, the combined stream, known as the Padma, flowssoutheasterly for 103 km to its confluence with the upper Meghna River, whichdrains the hill region of northeastern India and a large part of easternBangladesh. The combined rivers, known as the Meghna, flow southward todischarge to the Bay of Bengal through a complex estuary. Several independentrivers in the extreme southeast of the country drain the Chittagong hilltracts into the Bay of Bengal.

2. The generally flat alluvial plain of Bangladesh is crossed by alarge number of small rivers and channels. These form an intricate web andcarry monsoon runoff generated on the plain and from the surrounding hills inIndia, as well as distributing flows spilled from the main rivers.Approximately 902 of the total annual streamflow in Bangladesh comes fromupper portions of the Ganges, Brahma;utra and Meghna basins that lie outsideBangladesh in India, China, Nepal and Bhutan. Total outflows to the Bay ofBengal varies from about 7,000 ma/sec in February to 100,000 m3/sec in August,with present water use conditions.

3. Only about 15Z of dry season (January-April) stream flows are foundin the smaller rivers which form the local drainage network. During thisperiod, stream flow on the minor rivers is maintained by groundwaterdischarge.

4. The lower reaches of the streams and rivers discharging to the Bayof Bengal are saline during the low flow season. However, the salinizedreaches do not extend as far inland as the tidal limit. The maximum inlandpenetration of salinity during the dry season is in the Khulna-Satkhira areaof the Southwest Region, reflecting the changes imposed on the Gangesdistributary system following construction of the Farakka barrage on theGanges in India. The high discharge on the major rivers and minor streamsduring the monsoon season displaces the saline front to the Bay of Bengal.

Surface Water Resource Evaluation

5. The most comprehensive assessment of the water resources of themedium and minor river system is provided by the NWP, published in 1986 andthe assessment is reported in detail in Technical Report No. 27 of the NWP.The NWP defined some 200 catchments which cover the entire surface of

31 ANNEX 2

Bangladesh apart from the flood plains of the Ganges, Brahmaputra, Padma andLower Meghna rivers. Modelling techniques were used to generate monthlystream flows for 166 of these catchments at 501 and 801 dependable levels.Estimates of abstractions by all users in 1983 were made for each of themodelled catchments. In determining the resource available for development,the March outflow from a catchment at 501 dependability is taken as anindicator of the flow available. Significant surpluses (exceeding 10 m9/s) inMarch at the 50t dependable level are indicated for 18 catchments afteraccounting for present use. Seven of the catchments are located in theNorthwest Region, five in the Northeast and six in the Southeast/SouthcentralRegions. However, some of these surpluses are otherwise committed to projectsunder construction or planned (Teesta Barrage, Titas Project and the SoutheastRegion Water Resources Development Project). In other cases, the topographicconditions do not permit the use of the water by minor irrigation schemes.Nevertheless, an analysis of the NWP data and a conservative assessment ofdevelopment activities in 1990 indicates that a total of about 360,000 ha ofnew minor irrigation could be developed using the easily exploitable surpluswater supplies. The NHIDP envisages investments in works which will developabout 100,000 ha of irrigation from the above surpluses. However, most ofthese works will be to provide improved primary water supplies for secondarypumping by farmer-owned LLPs, and in this respect, support of investments inLLPs under the presently proposed project will complement the surfacedevelopment envisaged under NHIDP.

Historical Development of Minor Irrigation Based on LLPs

6. Minor irrigation development using LLPs was initiated in the 1950s.The units are installed during the irrigation season on any accessible sourceof either flowing or static water from which a water supply can be pumped onto the land for distribution for irrigation. The most popular pump units havebeen of 56 lis capacity, though a considerable number of 28 l/s pumps havebeen fielded. All the pumps are powered by diesel engines. The nationalaverage command area for 56 l/s pumps is about 16 ha.

7. BADC has been the main government agency involved in this type ofdevelopment, but BWDB has also had an involvement. Under the earlydevelopment program, LLPs were provided by BADC (and BWDB) on a seasonalrental basis to farmer groups who were expected to provide fuel. At first,the government agency also provided the operator under the rental charge, butlater this responsibility was given over to the farmer groups. The agenciesprovided major maintenance and recalled the pumps for overhaul at the end ofeach irrigation season. The issue of LLPs developed rapidly under the rentalsystem until 1970, when it stabilized at 45,000 (mainly 56 l/s) units.

8. Under the privatization policy adopted in the early 19809, BADC andBWDB were to have disposed of their LLPs by sales to farmers for theiramortized value. However, the sales policy has not been fully successful andthe agencies still retain ownership of several thousand units that areserviceable for issue on a rental basis.

9. The most accurate estimates of LLPs installed for irrigation use inBangladesh are provided by the nationwide inventories carried out by theAgriculture Sector Team of MOA in 1987 and 1989. The results of thesecensuses are summarized belows

32 ANNEX 2

- -'-2 ar*h Xndon Orooth XnbOLLPa ISmle --- Pa 19OBi.0

|a O*ratina Total (1986 * 100) * (i1T96100)

--------- 4--4 .No -. --------- ------ Nos ---------------

1906l 30.494 .241 38.7835 100 6998 a" 7,848 100

1967 12.868 4.1I8 36.731 109 7?991 757 8,748 116

1o" 88.27 2,411 86386 l06 m.292 464 *,7" 116

199" 40.768 3,442 4 197 181 10,040 672 10,712 142

Soure.s Conwu. of Minor Irrigation Equipmnt. 1967 and 19

10. The above figures show that the season of 1989 experienced aremarkable growth on the numbers of LLPs fielded (21.6Z in the case of thelarger units and 22.32 for the smaller units over the 1988 level of fieldedunits). It is noteworthy that the overall growth in LLP pumping capacity hasnot been very marked since 1970, vhen the government agencies fielded 45,000units (mainly 56 l/s capacity) under their rental schemes (para 7), whereasthe total inventory of fielded units in 1989 was 54,900 units, of which 22Zwere < 28 11 capacity. Nevertheless, there has been a very marked change inthe ownership of the facilities since the decision was made to privatize theoperation in the early 19809.

B. The Surface Water Development Component of the Project

Background

11. An analysis of the potential for additional development of minorirrigation based on LLPs carried out for appraisal of the NHIDP and reviewedfor the present project indicates that surpluses water flows on rivers andstreams other than the Ganges, Brahmaputra, Padma and Lower Meghna could bedeveloped by minor irrigation facilities to serve about 360,000 ha (para 5).

Scope of the Surface Water Development Component

12. The project aims to develop an area of 120,000 ha of new irrigationbased on LLPs. It is expected that the pumps will be installed on rivers,streams, drains and state water bodies where farmers perceive that there aredry season water surpluses for development. The pumping equipment will befully owned, operated and maintained by individual farmers or farmer groups.Given that LLP development is now almost completely in the private sector andthat there is no legal mechanism to control the siting of LLPs, it must beaccepted that there is a risk that additional pumps may be installed onessentially fully developed streams to the detriment of downstream users.Nevertheless, it is considered that this risk should be considered asacceptable when measured against the potential development disadvantages ofimposing bureaucratic control through siting licenses or any other means.

33 ANNEX 2

Cost Estimates for New LLP Facilities

13. The surface water development component is based on fielding 6,000LLPs of 56 1/s discharge capacity (total discharge capacit- 336,000 1/i) ortheir equivalent in lower discharge units. The average cost of a 56 itsfacility is taken as Tk 69,800 of which Tk 46,500 for the imported engine(usually a diesel motor) and Tk 23,300 -'or the locally manufacturedcentrifugal pump and ancillary pipe work. The above costs are net of taxes.The relatively high unit price taken for costing purposes reflects thepossibility that farmers may chose smaller units (which have higher costs interms of unit discharge than the 56 1/s facility) and to allow for pricedifferences due to different makes of equipment (particularly the power unit).

34 ANNEX 3

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Power Tillers

Background

1. Power tillers are not, as yet, extensively used in Bangladesh, but amarket has been established for this type of equipment by the private sector.Power tillers are cost-effective for those farmers who use them, either asowners or through rental arrangements. Mechanical draft power enjoys costadvantages in comparison with animal draft power, which is becomingincreasingly scarce. There is an acute shortage of feed and forage inBangladesh, and draft animals are often sick and weak and require more time toprepare land than power tillers. The equipment has additional uses totillage. It can be fi'.ted with a small trailer and then finds multiple usesfor transport, as evidenced elsewhere when this type of machinery becamepopular, e.g., in China, Thailand and the Philippines. When fitted for abelt-drive take-off from the engine, the equipment can be used to power asimple LLP from a surface water supply (single stage propeller pumps poweredfrom the tiller engine are very commonly used to lift irrigation water fromdrainage canals in the lower Chao Phraya river basin in Thailand) or to powera centrifugal fitted on a shallow tubewell (as is fairly common in bothThailand and Philippines).

2. There can be no doubt that use of power tillers will increase inBangladesh as intensification of cropping develops. The opportunities forincreasing the quantity and quality of draft animals are limited by thescarcity of land and a corresponding scarcity of feed and forage, and theshortage of draft power is already a constraint in several areas. Reportsfrom the field indicate that the equipment is very popular and cheaper thancattle for plowing. Equipment owners provide custom services for plowing atrates in the range of Tk 800-1,000/ha for three passes to prepare land forpaddy, which lowers the cost of land preparation to small and marginal farmerswho formerly hired cattle for plowing at higher prices.

3. In the short run, power tillers could replace some labor, but thiswould be negligible. Overall, they are likely to increase employment byenabling the speedy land preparation often required for double cropping,especially when the interval between crops is short. The UNDP's recentBangladesh Agriculture Sector Review (1989) supported a policy for import ofpower tillers by private individuals provided that the transactions are notsubsidized, either directly or through the credit system.

4. The Market in Power Tillers. At present, power tillers are importedas complete units. However, there appears to be no reason why there shouldnot be a shift to local assembly or manufacture of part or all of theequipment. Imports of power tillers in 1989 have been unofficially reportedat about 7,000 by representatives of the China Agricultural MachineryCorporation in Dhaka, the major source of equipment at present. This may betaken as indicative of the scale of imports of power tillers in 1989-90.

35 ANNEX 3

Imports of agricultural machinery in 1988-89, as reported by the BangladeshBureau of Statistics, totalled about Tk 6 million in value which would beequivalent to about 1,700 power tillers, through the statistics do notdifferentiate between different types of agricultural machinery. Comparisonof the above rough estimates of imports of power tillers indicate an increaseof more than 4002 from 1988-89 to 1989-90. Reports from shop-levcl dealers inpower tillers indicate great optimism for expanding sales, and it isconsidered that, despite the large increase in imports in 1989-90, supply didnot catch up with demand.

The Power Tiller Component of the Project

5. The project, includes provision for about 18,000 pcwer tillers,although the actual number will depend on demand from farmers. It isestimated that each tiller, powered by a diesel engine in the power range of9-12 hp, would provide tillage for land preparation of about 25 ha of paddyfor each of two cropping seasons. Thus the proposed import of tillers wouldsupport cultivation on about 450,000 ha of irrigated land. This is roughlyequivalent to the irrigation development planned by the STW development(340,000 ha) and the LLP development (120,000 ha) proposed under the project,though these would be no direct linkage between the sales of STWs and LLPs andthe sales of power tillers.

Component Cost Estimate

6. The average cost of an imported power tiller is taken as Tk 41,880,net of taxes.

Eligibility Criteria for Dealers

7. All dealers considered by commercial banks to be eligible to openletters of credit will be given access to the foreign exchange to be madeavailable under the project, provided they (a) commit in writing to: (i) limittheir sales of power tillers to farmers; and (ii) provide the purchasers ofthe equipment with the necessary performance warranties; (b) keep lists of thefarmers to whom the power tillers are sold; and (c) make available toBangladesh Bank authenticated copies of all documents related to theimportation and sale of the power tillers.

ESHLAKSSHALLOW TUBEiELL AND LW LIFT PUMP IRRIGATION PROJECTAction Proaram for Policy and Institutional Reforms

GOWElIENT OBJECTIES ISSUES/CURRENT STATUS ESIRES TO BE TAKEN IN THE SHORT TERN' NASIRES TO ME TAKEN IN THENEDILE TERX*

MHnor Irriomtion Euomaent andhtwer T111ers

Liberalize and deregulate the Before early 1989, Imports of minor irrigation Limit customs duties payable on inported Design and introduce newsupply system for minor quipmnt nd power tillers were subject to 501 engines of up to 20 hp and power tillers tariff structure for minorIrrigation equipent and power custom duty for non-standardized equipment, to the lowest band (0-5%) until new tariff irrigation equipment and powertillers as a means of lbported minly by the private sector. structure is introduced.*** tillers consistent withaccelerating growth in the Standardized equipment, imported mainly by the Government s macroeconomicagricultural sector. public sector, was subject to a preferential 15% framework and the sector's

custm duty. This policy restricted farmer choice require ent for inexpensivend biased It in favor of more expensive minor irrigation equipment.

standardized quipmnt. The application of customsduties on imported engines suitable for the odify customs duties payable on alloperation of SWs and LLPs, as well as on power classes of imported irrigation equipment,tillers. was suspended following the 1988 floods, components thereof and spare parts so thatresulting along with other factors in a 22% the private sector pays the sme ount,increase in investment in STW and LLP. and a 400% or receives the same exemption, as theincrease in investment in power tillers in 1989. public sector.*"

betore early 1989. the Ministry of Agriculture Abolish standardization requiraments.***specified a list of standardized minor irrigatfonequimnt approved for use in agriculture. Thispolicy restricted the range of minor Irrigationequipmnt available to farmers. It WAS suspendedin January 1989 by Ninistry of Agriculture order.

Under the 6roundwater Management Ordinance (1985)and the 6roundwater Regulations (1987), siting ofSTV In non-surface Irrigation areas was restrictedby licensing requirements for new wells andspacing regulations based on Installed capacitycriteria. supposedly to prevent encroaclhent intoexisting tubewell cimand areas.

_I

* To be confirmed by Ministerial Order or Cabinet Approval." To be conditioned under National Minor Irrigation Development Project* To be conditioned under Shallow Tubewell and Low Lift Pump Irrigation Project- To be Ural I

6VERM"T OBECTIS _To1! TITHE -L_

The application of this policy was suspended in In non-surface irrigation areas, abolish In surface irrigation areas,early 1989. Under surface Irrigation schemes, restrictions on siting of all we11s (STIY carry out a study to: assesOM8 prohibits farmers from installing STW in and DTV).*** options for developent ofthe comand area which prevents them from having ground and surface irrigationaccess to water during the dry season when the within existing BWDB surfacesurface schemes do not provide adequate water, irrigation schems; based on thestudy, prepare specificproposals for the effectiveutilization of existing surfaceirrigation schems nd forcrlentary investwnts ingroundhater developnt, ndfhplmnt recondation fnconsultation with IDA and ADS.

ONT are currently subsidized by 70X which Eliminate subsidy on all 2 cusec OTN Further reduce subsidy on allencourages their use in areas where cheaper procured from now on; reduce subsidy on existing stock of 2 cusec DOV totcimology could be used. existing stock from 7X to 45X ** 30L**

Restrict siting of subsidized 2 cusc ONTto areas not suitable for STV nd LLP inaccordance with National Water Planguidelines.

-aHigh levels of BADC stocks of SN, LLP and ON UC to dispos of 13.000 STl and LLP MDC to dispoLe of the remningdiscourage private sector from entering (8.000 SNl out of current stock of 11,000 STVALP stocks and spre partsbulinesS, units and 5.000 LLP out of current stock through direct sales to fa

of 16.000 units) through direct sales to or auction to private delers,farenrs or public auctions to private nd not to acquire any nodealers and not to acquire any new ones".ones.***

UDC to refrain from further procurment MC to prepare and initiateof 2 cusec OTN until current stock Is implmentation of an action plandisposed of through direct sales or to dispose of all installed ON1auction to private dealers; UKC to base currently _wied by: sellng offany further procurnt on farmes these operational; repiring andchotce selling those requiring

rehabilitation; and taing thannot found suitable for rpairoff its bowks**

Denelp_nt of minor Irrigation through DIN rroedn base of formation of water u#stechnology hts bn_ restricted by excsive groups by allwing establishunt ofreliance on the village-based (KSS) cooperative cmand are bd water usrsystm wihch dos not permit mmbership of all assciations under the Societinfarmrs in the c_iand area. Registration Act of 160.**

' To be confirmd by Rtnisterial Order or Cabinet Approval.To be conditioned under National Ninor Irrigation Developoent ProJect

**' To be conditioned under Shallow Tubewil and Low Lfft Pump Irrigation ProJect* To be conditioned under Agricultural Support Services Project

601hERII@IEIIT 08JECTIVES ISS11ESACIEHT STT-16 lEASIIRES TO K TAKEN IN THE SHORT TERN' NEASIRES TO CE TAREN IN TiEEOIIUNi TERN'

BADC has maintained a dominant role in the Allow the private sector to participate

supply of minor irrigation equipment, primarily in the iaportation of donor-funded minor

due to the predoinance of public sector Irrigation equipment (and fertilizers)programs and preferential import tenms accorded and require the distribution of such

to BADC. This has constrained the development of conodities at full market prices through

the private sector. the private and public sectors on equalterms.

Improve farmer access to Besides constituting an unnecessary burden on Reduce unit subsidies on TSP and MP by Abolish remaining subsidies on

chemical fertilizers and the budget. the present large unit subsidies on 30% using import parity prices as a TSP and MP. and maintain

seeds as a mans of realIzIng iported TSP (32%) and MP (31%) sold by WDC reference; review the ex-factory price of unsubsidized prices thereafter

the full growth potential of reduce the incentive for the private sector to urea and adjust it, if necessary, to on all chemical fertilizers.***

investment in minor iport. export parity levels.***

irrigation equipmnt.Rationalize TSP fertilizer distributionarrangements to enable SCIC to selldirectly to both the private and publicsectors on equal terms.

Fertilizer imports are restricted for the Remove restrictions on imports ofprivate sector. even though recent experience fertilizer (TSP. NP and urea)."** 'with direct private sector lifting of urea from G

factories has resulted In Improved fertilizer In case of public sector imports, allow

availability at lower prices. private sector to lift TSP. MP and ureadirectly from the ports (ships).

Vith over 90% of mrketing of urea, representing WDC to concentrate on performing only an

2/3 of all fertilizer use, now handled by the intervention role in fertilizer marketing

private sector, BAC's network of TOP and POP by mintaining a buffer stock and

has become largely redundant. TSP and MP ensuring fertilizer availability In areasmarketing has also shifted substantially from unlikely to be served by the private

the POP and TOP directly to the ships. sector.

Privatize LADC's fertilizer distribution Dispose of an additional 30 POP

facilities: close 2 of the 6 existing and rationalize use of remainingTOP; and privatize 20 of the 60 existing 10 POP consistent with 0ADC'sBADC-operated POP, intervention role in fertilizer

marketing.

To be confirmed by Ministerial Order or Cabinet Approval." To be conditioned under National Minor Irrigation Development Project"' To be conditioned under Shallow Tubewell and Low Lift Pump Irrigation Project"" To be conditioned under Agricultural Support Services Project

TERN*

Low level of private sector activity in seed Restrict BADC's marketing of seedsretailing has limited farmer access to seeds, to wholesaling to private dealers.

and initiate implementation ofaction plan to modify BADC's role inthe seeds sector covering pricing,seed testing, production andmultiplication and market researchand information.****

Limited Import of breeder and foundation Allow private sector to import seeds andseeds by the public sector and lack of genetic material (subject to plant healthprivate sector access to locally produced requirements), and have access to breederbreeder and foundation seed has constrained and foundation seeds from local publicthe availability of improved genetic material sources (BADC/research institutes).""to farmers.

Foadmrain Manac ent

Improve foodgrain management Procurement prices are primarily determined Establish producer floor prices forto stabilize prices on the on a cost plus basis. In practice, the foodgrains taking into consideration

damestic market around intended support has been ineffective since findings and recmondations of

opportunity costs. local market prices fall by up to 30X below ongoing IFPRI study In consultationthe procurement price at harvest due to lack with IDA ADD and USAID; procureof Government buying capacity, quantities of foodgrains of fair

average quality necessary to supportthese floor prices; announce floorprices prior to the planting seasonsfor both rice and wheat.

The anti-hoarding law and grain holding law Remove obstacles to private sectorhave been suspended, but not abolished. foodgrain storage, including restrictionsCredit for storage purposes is restricted. on credit for storage purposes and anti-

hoarding and grain holding regulations.***

The emphasis on imports as means of ensuring All Government comercial foodgrain 1mports Formulate an action plan taking into

food security has constrained the beyond usual market requirements (UN) and consideration the recommendations of

Government's ability to procure domestically. related food aid to be cleared by the Food the IFPRI study and. in consultationPolicy and Monitoring Comimttee; undertake with IDA, ADB and USAID. Initiatecormercial foodgrain i1ports under open Its ieplewntation in order to:international tendering.*** rationalize foodgrain stock

requrements for food security andoperational purposes; progremdomestic foodgrain procurement n apriority basis and imports as aresidual; and streamline PFDSoperations.

* To be confirmed by Ministerial Order or Cabinet Approval.To be conditioned under National Minor Irrigation Development Project

* To be conditioned under Shallow Tubewell and Low Lift Pump Irrigation Project"" To be conditioned under Agricultural Support Services Project

EIITa OIIJECTIES ISSUES/CtRRENT STATUS NEASIUES TO E TKEN II THE SHIR TER WASIES TO IK TEO 111 THE

Government monopoly of foodgrain imports Remove foodgrains fron the list of

impedes the transmission of world market restricted imports.price signals to farmers and rules outincreased efficiency through competition.

The current ban of foodgrain exports removes Reove ban on exports of foodgrain

any incentive for the private sector to to encourage production of high

develop export markets, quality rice and possibly othercereals.

iamtitutim Naf

Rationalize institutional A UIDP study of BADC carried out in 1988 Finalize action plan for reform of

fraomrk for winor recinended that MDC be reoriented away from SADC's role, in keeping with its

irrigation led agricultural commercial functions toward developmental primry function as an institution

developmnt activities, to encourage developmnt, andinitiate Its implementation.

An FAO study conducted in 1988 recoamended Initiate reorganization of 06f in line with Strengthen FPNU to Ihprove food

that the Directorate General of Food (DBF) be recandation of FAD study to improv its policy and foodgraln procurement

restructured to have its directorates management and financial efficiency activities.

represented at three levels (headquarters,regions and districts). to decentralizemonitoring and control of stock movmet andimprove planning, monitoring and control atall operational levels.

Emviro_mt

Avoid damage to enviroment Possible overdraft of aquifer with adverse Prepare a plan to establish a

by agricultural development effects on some groundwater users. Potential sectorwide monitoring systm for the

progrm for agro-chmicals to contaminate drinking enviromntal Impct of agricultural

water and fisheries. dmelopment program; and, inconsultation with IDA and ADS, agreeon a timtable to implment theplan.

QlNtrix/April 26. 19911

* To be confirmed by Ninisterial Order or Cabinet Approval.T To be conditioned under National Ninor Irrigation Developmnt ProjectT To be conditioned under Shallow Tubell and Low Lift Pump Irrigation Project

*"' To be conditioned under Agricultural Support Services Project

BANGLADESSH.

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECTDetailed Cost Estimates

Taka

INVESTHE NONITORI Physical PriceNT UC a Contingencies Contingecfies

COPUOEN EVALUATI ....T ON Total X AonMt X% Ant

1. INVESTHENT COSTS....................

A. ENGINES 3238.5 0.0 3238.S 0.0 0.0 9.S 306.0B. PoRER TILLERS 817.4 0.0 817.4 0.0 0.0 6.3 51.6C. EQUIPMENT 0.0 0.9 0.9 0.0 0.0 3.0 0.0

........................................................................

Total I N SlHENT COSTS 4056.0 0.9 4056.8 0.0 0.0 8.9 359.6

II. RECURRENT COSTS...................

A. STAFF 0.0 0.2 0.2 0.0 0.0 11.6 0.0S. CONSULTANTS 0.0 3.S 3.5 0.0 0.0 9.3 0.3

........... ........ ....... ..................... .... ...................................................... 0

Total RECURRENT COSTS 0.0 3.7 3.7 0.0 0.0 9.4 0.3

Total EASELINE COSTS 4056.0 4.6 4060.5 0.0 0.0 8.9 360.0Physical ContingencIles 0.0 0.0 0.0Price Contingencles 359.6 0.4 360.0 0.0 0.0

........... ......... .......................... ;..........................

Total PRWOJECT COSTS 4415.6 4.9 4420.5 0.0 0.0 6.1 360.0

Taxes 203.0 0.1 203.2 0.0 0.0Foreign Exchange 2614.2 4.1 2618.2 0.0 0.0

................... r..............................................................

Values Scaled by 1000000.0 2/1/1991 12:32

42

ANNEX 6

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Estimated Schedule of Disbursements(US$ million)

Cumulative UndisbursedIDA FY Amount 2 Amount 2 Amount z

92

December 31 7.0 9 7.0 9 68.0 91June 30 7.0 10 14.0 19 61.0 81

93

December 31 14.7 19 28.7 38 46.3 62June 30 14.7 20 43.4 58 31.6 42

94

December 31 15.8 21 59.2 79 15.8 21June 30 8.0 11 67.2 90 7.8 10

95

December 31 7.8 10 75.0 100 - -

Estimated Project Closing Date: December 31, 1994

43 ANNEX 7

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Financial and Economic Analysis

A. Financial Analysis

General

1. Financial analyses have been undertaken at the farm level and forSTW, LLP and power tillers to assess the financial viability of the activitiesto be supported under the project. Cash flow analyses indicating theestimated FRR have been carried out for STW, LLP and power tillers, and areincluded in this Annex. Details of the assumptions used in the analyses arepresented below.

Input/Output Prices

2. Financial prices of all inputs and outputs are based on estimatedfarmgate prices. All cash flows are baced on mid-1990 constant prices,assuming inflation affects costs and returns in equally. The cost of hiredlabor has been determined as a weighted average of peak and off-peak wagesprevailing in the country. The use of hired labor varies according to thefarm size and the corresponding cropping patterns. However, for the analysesit has been assumed that about 25Z of the total labor is hired. Financialprices are shown in Table 3.

Costs of Seed and Manure

3. Although there is no cash outlay if farmers use their own producefor seed, a cost has been included because there is a financial opportunitycost to the farmers of retaining their own seed. Also, many of the smallfarmers have to purchase or borrow their seed requirements. Seed costs havebeen estimated as the farmgate price of the crop plus a premium of 252 toallow for the costs of storage, quality, wastage and transport. Farm yardmanure is used quite extensively on all crops, but little is actually traded.Since the cash expenditure on manure is low, the cost has been ignored in theanalysis.

Cropping Patterns and Input Use

4. The average cropping pattern for all the agro-ecological zones hasbeen assumed. It is estimated that with the introduction of irrigationfacilities the cropping intensity will increase substantially, and thisrepresents the general increase that is expected to occur as increasingpopulation and land pressures stimulate a more intensive land use, especiallyon smaller farms. Input use for both the present and future with projectsituations are presented in Table 2. Irrigation cost per crop per ha is basedon the estimated crop water requirement and the associated running hours. Thebenefit build-up period has been assumed to be three years (502 in the firstyear, 80? in the second, and 100Z in the third), and the farmers would alsoadopt the recommended level of inputs within this period.

44 ANNEX 7

Parm Budgets

S. The impact of the project on farm incomes has been analyzed on thebasis of a representative farm budget for a 1 ha farm size. This modelprimarily reflects the assumption of with and without irrigation facilitiesand an average cropping patterns for all the agro-ecological zones ofBangladesh. Specific cropping patterns, yields and input requirements usedfor the analysis are presented in Tables 1 and 2.

6. The analysis of the farm bvtdgets shows that the investments underthe project would have a strong, positive impact on the incomes of the farmfamilies. This would mainly come from the higher cropping intensities,changes in the cropping pattern, and more intensive cultural practices.Analysis of the indicative farm budgets show that a farm of 1 ha size, withthe introduction of irrigation, could expect to increase the average annualincome from the present Tk 8,279 to Tk 14,514 at full development. Thegreater intensity of cropping at full development of 1662, compared with 1362at present, would require the average family to devote more of its collectiveeffort to the family farm and less to off-farm activities. Details of thefarm model analysis are presented in Table 4.

7. The farm budget analysis reveals that irrigation plays the dominantrole in increasing farm income in the agro-climatic environment of Bangladesh.It also reflects the high potential productivity of irrigated agriculture andits immediate effect on crop yields.

Investment Models

8. Based on experience from the ongoing minor irrigation systems forwhich financial and other data are available, an analysis has been Amdertakento assess the probable returns from, and the financial viability of, theproposed STW, LLP and power tillers to be provided under the project. ThePRR, net present value, and the sensitivity (switching values) are based onthe respective command areas and average cropping patterns. The detail cashflows are presented in Tables 5 and 6.

9. Cash profiles for the STW, LLP and power tillers show thatbeneficiaries' total net cash inflow with the project would increasesignificantly. In all cases, total net earnings would be able to meet theminimum subsistence requirements of a typical farm family. Financial rates ofreturn to all resources used in the production activities would be quitehigh -- about 39Z for STW and about 60Z for LLP, and 59Z for the powertillers. Cash flow projections clearly indicate that the investments would befinancially attractive.

B. Economic Analysis

10. The economic analysis has been carried out for the project as awhole. The methodology and principal assumptions used in the analysis for theproject are described below.

(a) Prices. All values have been expressed in constant 1990 prices.The economic farmgate prices of all traded agricultural inputs and

45 ANNEX 7

outputs are based on projected 1995 world market prices taken fromthe World Bank Commodity Forecasts of January 1990. These havebeen adjusted to a 1990 level using the Manufacturing Unit Value(MUV) index. Other goods and services for which internationalprice projections are not available bave also been valued in 1990constant prices. For valid comparison with other Bank fundedprojects in Bangladesh, a Standard Conversion Factor (SCF) of 0.80has been applied on all local costs including materfnls, draftpower, human labor, local handling, etc.

(b) Foreign Exchange Value. Since the Bangladeshi Taka was linked totraded weighted basket of currencies in June 1980 with the U.S.dollar as the intervention currency, the exchange rate hasfluctuated considerably and has progressively devalued.Conversion to border prices has been made at the official exchangerate of Tk 34.90 - US$1.

(c) Value of Unskilled Labor. Agricultural wage rates in ruralBangladesh vary significantly over time and across differentregions. Reliable national data on farm labor wage rates are alsonot available. Widespread unemployment and under-employmentindicates that market wage rates, in general, overstate the trueopportunity cost of labor in rural areas. Seasonal variatio.3have also been averaged out in the calculation of wage rates,before adjustment by the SCF of 0.80.

(d) Investment and Operating Costs. All costs associated with theinstallation of the irrigation equipment, except pricecontingencies, taxes and duties, have been included in theanalysis. Local costs are expressed in border Taka after applyingthe SCF of 0.80. Annual operation and maintenance of theirrigation equipment has been included. A substantial amount ofthe cost not covered by the project but necessary for generatingproject benefits has also been included in the analysis (e.g.,replacement of pump unit, construction of distribution systems forLLPs etc.)

(e) Development Phasing. Based on the implementation period of threeyears with an uptake rate of 20Z, 40Z and 402, and a gradualchange in the croppina patterns and intensities, full developmentin terms of incrementa. production would be reached in the sixthyear of the project life. On-farm development would take threeyears to reach full development. These rates are realistic giventhe conservative estimates of yields and cropping patterns.Besides, irrigation facilities already exists in the country andthe farmers are familiar with HYV crops.

(f) Project Benefits. The value of the incremental crop productionhas been included in the project benefit stream. The benefits areexpected from an increase in the cropping intensities, andincreased yields caused by the intensification of productionsystems. Other indirect project benefits have not been included

46 ANNEX 7

in the analysis because of their conjectural nature or relativeinsignificance to the overall results.

11. On the basis of the costs and benefits, the ERR for the project isestimated to be 62Z. The NPV at 122, which is assumed to be the opportunitycost of capital in Bangladesh, is Tk 15,272 million. This high rate of returnappears to be due to a number of factors. First, it is characteristic of thlstype of project that benefits accrue immediately, with few years of negativebenefits in the cash flow. Second, the cost of line agency support serviceslike DAE, which are very crucial element in achieving the production increase,have not been accounted for in project costs as they do not form part of thecost and their magnitude is also uncertain. Economic costs and benefits aredetailed in Table 8.

47

BANGLADESH ANNEX 7SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT Table 1

Cropping Patterns and Yields for Farm and Investment Models

PRESENT/FUTUREWITHOUT PROJECT FUTURE WITH PROJECTArea Yield Area Yield

CROP (ha) (ton/ha) (ha) (ton/ha)

Early kharifB. Aus LVl/ 0.22 1.00 0.05 1.00T. Aus HYV1/ 0.00 0.00 0.20 2.80B. Aus/Amanl/ 0.02 1.70 0.00 0.00Jute 0.09 1.90 0.01 1.90

Late kharifB. Aman LVlI 0.41 1.20 0.11 1.20T. Aman LVl/ 0.32 1.6f 0.08 1.60T. Aman HYVl/ 0.00 0.00 0.42 3.00

RabiBoro LVl/ 0.04 1.80 0.00 0.00Boro HYVli 0.00 0.00 0.57 3.75 21Wheat HYV 0.00 0.00 0.10 2.80Oilseeds3l 0.11 0.85 0.06 1.10Potato 0.00 0.00 0.00 0.00Pulses4/ 0.14 0.60 0.03 0.75Vegetables5/ 0.00 0.00 0.02 5.00

PerennialSugarcane 0.01 38.00 0.01 55.00

Total croRped area 1.36 1.66

Net cultivated area 1.00 1.00Cropping intensity 1.36 1.66Irrigated area 0.00 1.29

1/ Paddy (to convert to rice, multiply by 0.66).

2/ Although Boro hYV paddy yields could reach over 5.00 tons/ha with correctfertilizer application, crop husbandry practices, etc., 3.75 tons/ha hasbeen used in the project analysis to allow for possible disruptions infertilizer supply and learning oa the part of farmers.

3/ Mustard and linseed.

4/ Lentils and gram.

5/ Various species.

BANGLADESHSHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJET

Use of farm inputs per crop per hectare - Present/FWO Project

--------------------------------------------------------- __------------------__-------------------

Seed F e r t i 1 i z e r Pesti Labor Draft Manure Irri-Urea TSP MP cides Animal gation

Crop Kg Kg Kg Kg TkIHa M days A days Ton Tk/Ha_________________________10__________20_____________0___-_0____________________40_______0_____0__

B.Aus LV 100 20 5 0 0 146 40 0 0B. Aus/Aman 100 0 0 0 0 140 0 0 0B.Aman LV 100 0 0 0 0 120 40 0 0T.Aman LV 30 60 35 15 0 150 40 0 0T.Aman YV 0 0 0 0 0 0 0 0 0Boro HYV 0 0 0 0 0 0 0 0 0Wheat HYV 0 0 0 0 0 0 0 0 0Jute 9 0 35 35 0 200 45 0 0Oilseeds 15 0 20 0 0 50 30 0 0Pulses 30 0 0 0 0 S0 30 0 0Sugarcane 5,000 20 50 0 0 200 44 0 0

Use of farm inputs per crop per hectare - Future with Project

Seed F e r t i 1 i z e r Pesti Labor Draft Manure Irri-Urea TSP MP cides Animal gation

Crop Kg Kg Kg Kg Tk/Ha H days A days Ton Tk/Ha------------------------------------------------------------------- __--------__-------------------

B.Aus LV 100 20 5 0 0 130 40 0 0T.Aus HYV 30 150 60 40 150 168 48 0 1,060B.Aman LV 100 0 0 0 0 108 40 0 0T.Aman LV 0 0 0 0 0 0 0 0 0T.Aman HYV 30 100 60 53 150 177 40 0 600Boro HYV 30 185 100 92 150 200 40 0 2,570Wheat HYV 140 90 90 20 0 105 40 0 600 ZJute 9 0 35 35 0 200 45 0 0Oliseeds 15 30 60 15 75 75 30 0 40Pulses 30 0 0 0 0 60 25 0 0A I 0 1 0'I 150 100 225 300 60 0 510

49

ANNEX 7Table 3

BANGLADESHSHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Prices Used in Financial and Economic Evaluation

UNIT FINANCIAL ECONOMICA. OUTPUTS:

Paddy 11 Ton 5,628 6,042Paddy 2/ Ton 5,360Wheat 1/ Ton 5,628 7,943Wheat 2/ Ton 4,824Jute Ton 6,700 7,581Oilseed Ton 12,060 13,079Potato Ton 1,608 1,335Pulse Ton 5,360 4,449Sugarcane Ton 600 1,498Vegetables Ton 2,144 1,780

By-products:Paddy straw Ton 600 480Wheat straw Ton 300 240Jute sticks Ton 900 720

B. INPUTS:

Seed/planting material:Paddy, LV Kg 7.04 7.55Paddy, HYV Kg 7.04 7.55Wheat, HYV Kg 6.70 9.93Jute Kg 30.00 30.00Oilseed Kg 15.08 16.35Potato Kg 2.01 1.61Pulse Kg 6.70 5.36Sugarne Kg 0.75 1.87Vegables Kg 100.00 80.00

Fertilizers KgUrea 5.00 5.25TSP 4.75 10.47DAP 5.00 11.21MP 4.00 7.60

Pesticides 3/ Kg/lit 300 390Draft animals Pr-day 45.00 45.00Labor Staff-day 25.00 20.00

1/ Government procurement prices for 1990-91.2/ Average free-market prices for 1990-91.3/ Average of Diazinon, Furadon, Dimecron, Malathion and Nogos. Financial

price modified by ECF of 1.30.

8ANGLADESHSHALLOW TUSEWELL AND tUKLFTPUMP IRRIGATION PROJECT

Family 8udgett for Farm odel -Average fsrm *ize: 1 ha

PRES. FWO ................ FUTURE WITH PROJECT.YEARS 1 2 a 4 5+................................... Tae ................................ ....

DWLOWGross value of production 12,713 12,718 12,718 19,808 24,989 27,116 27,116

TOTALS 12,713 12,718 12,713 19,808 24,896 27,116 27,864

OUTFLOWDirect crop cost 2,978 2,978 2,978 3,740 4,222 4,563 4,568Indirect cost- hired labor at Tk 25 /g9d 9585 98s6 1,081 1,100 1,141 1,141- irrigation V 0 0 0 2,527 4,171 5,174 5,174- loan intor 20 208 206 489 S88 662 682- eiellan owus 3 818 al8 818 671 898 1,042 1,042

Sub-totals 1,481 1,481 1,481 4,667 6,757 8,039 8,089TOTALS 4,484 4,484 4,484 8,406 10,979 12,802 12,602

GROSS FAMILY DICOME l/ 6,279 8,279 8,279 11,400 18,416 14,514 14,514DIREMENTAL I0068 FAIILY INCOME - - 0 8,121 5,187 6,256 6,236

RETURN TO FAMILY LaborFamily labor (man-days) 112 112 112 124 132 137 187N.V. of Production/amn-day 74 74 74 92 102 106 106N.V. of Incr.Prodln/man-day - - 0 18 28 82 82

RETURN PER FAMILY MEMBERAvrage no. o f_amily members 6 6 6 6 6 aN.V. of Production/person 1,476 1,478 1,478 2,086 2,896 2,596 2,525N.V. of Incr.Prodsn/purson - - 0 568 918 1,114 1,114

VALUE OF HOME CONSUWTION f/ (Tk/kg)Cereals - 161 kg/ceput at 6.83 5,074 5,074 6,074 5,074 5,074 5,074 5,074Oilseeds - 12 kg/caput *t12.00 819 819 819 619 819 819 819Pulse - 2.18 kg/caput at 5.86 65 65 65 6 S6 e6 65Vegetables - 20 kg/caput at 2.14 240 240 240 240 240 240 240

TOTALS 6,19 6, 198 6,198 6,198 6,196 6,198 6,198

INCREMENTAL CASH INCOMEOwner-operator - -- 2,080 5,201 7,218 8,816 8,816 0Owner-cum-Sharecropper y - -- 491 2,726 4,168 4,929 4,929 41

Y P nt/FWO based on avialabl, reports, documents and govt. publications.2F ave./irrig. ha: Taks 4011 (based on invstment model).I Short-term credit for 80% of cash cost4 for 6 onths 0 17.5X p.a.

I/At 10X of total cash costs Including loan interest.At Bangladesh standard lovols for cer lIs and others (source 9SO, 1989).Typical split of 76% owned, 25% sharecropped between types of tenure on mixed tenure holding.

4 100X of inputs and kosp 60% of crops.

411W 1TUIBE19L AND 15 mR R0A1TIN PRDJECT

FDANCIAL ANAL8S FOR 21 L/ LLP

1. DFW W110u1 YEAR 1 2 3 4 5 6 7 8 9 10.

PMJECT . T. ...

Grp value of apoduction 7 127.130 115.690 216.928 271.160 271.160 271.160 2711,10 271,160 271,160 271.160

TOTAL 127.10 127.180 135.560 216.920 271.160 271.110 271.160 271.160 271,160 271.160 271.160

2. WTFLrInvesten1t 69,600 0 0 0 0 0 0 0 0 0

Co reedction cost t US 0 44340 87.140 59s424 74.200 74.200 74,2e0 74 280 74,260 74.280 74.280

Irr gation 0 & II fl 0 29,657 22680 22.630 22,630 22,630 22,630 22,630 22,630 22,630

TOTAL 44,840 114,140 66.797 e2.054 96.910 96,910 96,910 S6,910 96.910 96,910 96,910

Not l;nfit Safoer Financlng(1-2)TOTAL 62.790 12 990 66 788 134 874 174 250 174 280 174 250 174 280 174,280 174.250 174.250

U4rEAL '- -69:800 -14.007 82.064 91,460 91.460 91.460 91.460 91.460 91.40 91.460

FD* 8t o WV 1312 Take a49.945

Switching Velue, to berIng F to 12h Revenue -2 Cost 575

Thres pwr build-up of ;leida an asaoeat benaf tit and production coss (60N. 85 10).

I At full cost of the supeaont th$9.600, for initial Investment and tlk 69,800 for replecemant of pump unit in year 11.

Includes full cost of _aterini inputs an 255 of total huan labour.Include flouod 0A charga nat includid in production eost esti_tes.

FWCIL ANLYSIS FIR 14 US ST IV

1. INW WITHSr aR 1 2 8 4 5 6 7 8 9 10.

PR0.r ......................... . . Take.............................

aroas value of production 50.82 0.682 U4.282 66,m 108.464 108.464 106.484 106,464 106.464 106,464 106.484

TOTm. 80.662 50.652 54.282 86.7F1 106l464 106,44 108,464 106,464 106.464 106.464 10S.484

2. 001r8.0Inestment 13 S4.900 0 0 0 0 0 0 0 0 0

Cr roduion oeet 2 17.7316 17.736 14.856 2S,770 29,712 29,712 29.712 29,712 29,712 29,712 29,712

Irrigation 0 & N 5/0 0 16.044 16.044 16.044 16.044 16.044 16.044 16.044 16.044 16.044

TOTAL 17,736 52.66 3,.900 89.014 45,756 45.786 458756 45.706 45,756 457586 45.756

Nat Sa;fIt Ilfore Finning(1-2)lMAL 86.116 -1.784 2S SS2 46 98e 62 708 62 706 62 6 62.706 62 706 62.708 62.70S

NPITAL - 44.900 -9.764 13.642 29.592 295o92 29.592 29.592 29.592 29.592 29.92

FM 895 NWV 1i Taks 89.486

Switching Values to bring F to 125 Revenue -1u Cost 255

Thre e _er bld-o y njd sesociated benef ts and production cos t01S.605 endlOOS) u

/At fullos of tehnipt ;_tM 900 for initil ;mns and tk 34,9co for replacemnt of pump unit in year 11.

Vuds full cost aftroI iniput and 265 of totI humn labur.Includs fised 0 charges not Inuded In production esb _timte.

iIb

m

3ANOLAIDESKSHALLOW TUSWELL AND LOW UFT PUMP IRRIATION PROJECT

FNNCIAL ANALYSIS FOR POUR TILLER

1. DNFLOW WITHOUT YEfAR I 2 a 4 5 6 7 3 9 10o

WE CT

.......................................... ... .....................................

rora value of productlon 817,625 817,625 SU,UO 677,000 677,900 677,900 677,900 677,900 677,900 677,900 677,900

TOTAL 817,625 817,026 888,960 677,900 677,900 677,900 677,900 677,900 677,900 677,900 67,900

2. OUTRLOWInr u es nt 3/ 251,230 0 0 0 0 0 0 0 0 0

Crop production cost V 182,886 182,886 115,515 281,00 281,030 281,080 281,030 281,030 2M1,030 281,030 281,030

O a N cost 3 0 0 80,103 30,106 30,106 30,106 30,106 30,106 30,106 30,106 30,106

TOTAL 182,0886 4,166 145,628 261,138 261,138 261,188 261,138 261,18# 261,188 262,1#8 261,1#8

Not so It oere Ft anciag(1-2)TOTAL 164,989 -66,341 190,827 416,762 416,762 416,762 416,762 416,762 416,762 416,762 416,762

DOCUMENTAL --251,200 6,88 281,328 281,28 21,628 1,628 231,62 281,628 281,828 281,323

FIRR s o9% NPV 12X Take 1*065,006

Switching Value to bring FIRR to 121: Revenue -245 Coot 52X

Two yoer build-up of ylolds and asciated benefits and production coOt (50%,30 and 1005).

At full coost of the equipment; &209,400 to buy nmm of $TW to support 1 power ti l ler at Tk 41pO.0.

V tocludW tfuIl cot of materl Input and 251 of total human labour.

y lncl_ud, fixed 01 charso not Included In productlon cost estimates.

BANGADESHSHALLOW TUIEWELL AND LCow MuP IIRIGATION PROJECT

Consutation of Economic Price of Internationally Traded Coemodities

Sugar-A. AT IMPORT PARm Rie /paddy Whet Soyabeen*2/ cane TSP MP

.. US6,wn. ........................Projected 1990/96 value at FOB source J 242 1s0 261 811 189 104qali ty factor 0.75 0.90 1.00 1.00 1.00 1.00Adjueted fOB value 161 185 261 811 18t 104Freight and Inurance / as 70 so 70 6o 66Volve CIF at entry poar 219 20C 827 J81 255 170

............Tak/tonne ..............................Val" CIF at port of entry US1 1 Tk. 84.90 7,668 7,147 11,400 18,296 0,6U7 5,922Pert don/handling etc. j 1,400 1,400 1,400 1,400 1,400 1,400Handling/tronsport/etorage 899 899 899 899 899 89Va l u ex-.tors/Iarket 9,457 8,940 18,199 15,097 10,6O 7,721Transport./hdl lIng 120 120 120 120 120 120Proceng co 820 0 0 0 0 0P elg Ratio 0.07 0.90 - 0.10 --Ferugate PrnIc 6,042 7,948 18,079 1,496 10,566 7,601Faru price/kg 6.04 7.94 18.06 1.50 10.57 7.60

S. AT EXPOT PMI Rice/Padd Jut Ure*-....................US 8/tonns ........... U

Val" FOS detimton 242 800 194.................. Taka(tonne .......... .

Value FOB at etit port U# 1 * Tk. 84.90 6,446 10,458 6,765Port deIe/Wileg etc. I/ 1,120 1,120 1,120Hoedling/tr prtorge 19 819 819Valu e" re/wk.t 7,007 9,014 5,84TrApert/nllg 96 9gPcng Cen 820 0 0Precog Rie 0.67 0.5 Fare t prIe 4,410 7,561 5,250Fsngate pric /kg 4.42 7.6C 5.26

)/ Surce of projection: World Dank Coemdity Price Projoctions January, 1990. At 1995 projection in 19l6 constantdellore lflated to 1990 valuoo by 6k. Incrse_ in Mbnufacturing Unit Value(MW) as Index of lnterational Inflationof 44X.

Price hees-ice: That, millod, N broken, FOP Bangkok/ FOB Chittagong or Chalns Sugr: FOB Caribbean port- Wats Ca_ ton NO. 1 Weetern Redapring, Trunder Bay TSP: FOS US Gulft- Jubes: Whlit D, Otaladeb, FOB Chain lP: FOB US Gufi- Soyab en: US, CIF Rotterdm Urea: FOB Chittegong/Cha lna

2 Sovaa and mustard/li d ar a eumd to b of equal vlue. Iv Sbto "CkitatgengCkal and eource or deretinatien. ,,

Aea geo* Taa 1400 conrte to bord valu b n ECF of 1.00.

54

ANNEX 7Table 8

BANGLADESHSHALLOW TUBE WELL AND LOW LIFT PUMP IRRIGATION PROJECT

Proiect Economic Analysis

Million Taka---------------------------------------------------------------- __-

Year Project Incr. value NET INCREM.investments 1/ 0 & M of prod. BENEFIT

--------------------------------------------------------------- __--

Pre/FWO 0.00 0.00 0.00-------------------------------------------------------------------

1 804.14 0.00 0.00 -799.542 1,603.68 344.98 566.29 -1,382.373 1,603.68 1,034.93 1,982.02 -656.594 0.00 1.724.89 3,964.04 2,239.155 0.00 1,724.89 5,096.62 3.371.736 0.00 1,724.89 5,662.92 3,938.037 0.00 1,724.89 5,075.95 3,938.038 0.00 1,724.89 5,075.95 3,938.039 0.00 1,724.89 5,075.95 3,938.0310 0.00 1.724.89 5,075.95 3,938.0311-20 799.54 1,724.89 5,075.95 2,138.49

BASE CASE ERR --> 622NPVQ12Z(Tk. Mil) -- > 15,272

SENSITIVITY ANALYSIS ERR

- Cost Increase by 202 542- Benefits Decrease by 202 451- Costs Increase by 202 and 392Benefits Decrease by 202

- At Export Parity Price of Rice/Paddy 312

SWITCHING VALUES TO BRING ERR TO : 122

- Incremental Benefit -40- Capital Costs 369- 0 & H Costs 157DELAY IN RECEIPT OF PROJECTED BENEFITSAPTER INVESTMENT COMPLETED ERR

- 1 Year 382- 2 year 272- 3 year 212

I/ Includes cost of MEU and farmers' own investment for construction ofdistribution systems and replacement of equipment as and when required.

55

ANNEX 8

BANGLADESH

SHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

Selected Documents and Data Available in the Proiect File

Al. "Working Paper on Food Policy Management," FAO/CP Cooperative Programme

Investment Center (Report No. 172/89 CP-BGD.73 WP, dated 22 December 1989)

A2. "Private Sector Import of Fertilizers in Bangladesh," International

Fertilizer Development Center, April 1990

A3. "Potential and Constraints of Rice Export from Bangladesh, A Supporting

Study for the World Bank's Shallow Tubewell and Low Lift Pump Irrigation

Project," by A.S.M. Jahangir Under a Contract with World Bank, August 1990

A4. An Environmental Assessment of Four Agriculture Projects in Bangladesh,

Environmental Resources Limited, December 1990

B1. Miscellaneous Working Papers, by David Gisselquist, April 1990

B2. "Equipment Dealers and Their Operations," Associated Services, July 1990

BANGLADESHSHALLOW TUBEWELL AND LOW LIFT PUMP IRRIGATION PROJECT

ImDlementation Schedule

Project year 1 2 3

Fiscal year 92 93 94

Shallow Tubewells (STW) *EUU(15,000)UUUEUUUUEUEUEUE(30,000)UEUEUUUUUUU(30,000)UUUENUNOE-

Low Lift Pumps (LLP) *EusE(1,200)uuumOssmmmumsmm(2,400)uuumuuumuuuu(2,400)NNEuNuummu

Power Tillers (PT) *UUU(3,660)E0ENNENEUo UEEN(7,320)oUouUUEUoUUU(7,320)uUUUEEEUsU

Konitoring and Evaluation

MAP SECTION

B9~~~~~~~~~~~~~b

4 i'\ 9 a ~~~~~I N DIA B A N G L A D E S H- INDIA SHALLOW TUBEWELL BANDLADESHTPUM IRRIGATION PROJE

AREAS SUITABLE FOR SHALLOW TUBEWELL DEVELOPMENT

Upozitc Headcl.ofets

26 ~ ~ ~ .~ %x ( .AZ la Headcl.oeem

-76 @ 3 ~~~~~~~~~~~~~~~~~~~~~~~~Upozillres Under Project e Ninal Capito

$~~~~~~~~~~~~~~~~~~~~~~~~~~~Rgo ' auL dsorift rudvce Zilptud. i

RJo~~ ~ ~ ~~~~~~~~~~~~~~~~~~p,xmt Li.iti o.- Salnet,,urnoNiionclBoundories

24' ~ ~ ~ K'/ , yy

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~I N D I A

INDIA

\ < boy tJ B~~~~~~ay of Ben galt

J /Xh,owr {1 0 10 20 39 oa S' MEES _

A --xm -te 41ii

saline groundwafer~~~~~~~~~~~~~~~~~~~~~~~~~~~9

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