SCCD: N.G.

AFRICAN DEVELOPMENT BANK Language: English Original: English

APPRAISAL REPORT

NORTHERN PLAINS IRRIGATION PROJECT

REPUBLIC OF MAURITIUS

AGRICULTURE AND RURAL DEVELOPMENT DEPARTMENT ONAR NORTH EAST AND SOUTH REGIONS JANUARY 2004

TABLE OF CONTENTS Page PROJECT INFORMATION SHEET, CURRENCY AND MEASURES, LIST OF TABLES, LIST OF ANNEXES, LIST OF ABBREVIATIONS, BASIC DATA SHEET, PROJECT LOGICAL FRAMEWORK, EXECUTIVE SUMMARY i-viii 1. ORIGIN AND HISTORY OF THE PROJECT 1

2. THE AGRICULTURE SECTOR 2 2.1 General 2 2.2 Salient Features 2 2.3 Constraints and Opportunities 5 2.4 Government’s Strategy 6 2.5 Donor’s Intervention 7 3. THE IRRIGATION SUB-SECTOR 8 3.1 National Water Use and Balance 8 3.2 Irrigation Institutions 8 3.3 The National Irrigation System 9 3.4 Institutional Project Implementation Capacity 10 3.5 Development Perspectives 11 4. THE PROJECT 12 4.1 Project Concept and Rationale 12 4.2 Project Area and Project Beneficiaries 12 4.3 Strategic Context 13 4.4 Project Objective 13 4.5 Project Description 14 4.6 Production, Markets and Prices 16 4.7 Environmental Impact 18 4.8 Social Impacts 19 4.9 Project Costs 19 4.10 Sources of Financing and Expenditure Schedule 20 5. PROJECT IMPLEMENTATION 21 5.1 Executing Agency 21 5.2 Institutional Arrangements 22 5.3 Supervision and Implementation schedules 23 5.4 Procurement Arrangements 23 5.5 Disbursement Arrangements 25 5.6 Monitoring and Evaluation 25 5.7 Financial Reporting and Auditing 25 5.8 Aid-Coordination 25

TABLE OF CONTENTS (cont’d) Page 6. PROJECT SUSTAINABILITY AND RISKS 26 6.1 Recurrent Costs 26 6.2 Project Sustainability 26 6.3 Critical Risks and Mitigating Measures 27 7. PROJECT BENEFITS 27 7.1 Financial Analysis 27 7.2 Economic Analysis 28 7.3 Social Impact Analysis 28 7.4 Sensitivity Analysis 28 8. CONCLUSIONS AND RECOMMENDATIONS 29

8.1 Conclusions 29 8.2 Recommendations and Conditions for Loan Approval 29 This appraisal report was prepared by Mr. J. M. RIBEIRO (Senior Irrigation Engineer, Ext. 2427), Mrs. J. MWANGI (Principal Agricultural Economist, Ext. 2375), Mr. H. LAM (Principal Agronomist, Ext. 2713), Ms. S. PITAMBER (Senior Gender Specialist, Ext. 2310) and Mr. A. I. MAHDI (Principal Financial Analyst, Ext. 2677) following an appraisal mission to Mauritius in April 2003 and a joint post-appraisal mission with BADEA in December 2003. Any inquiries to this report may be referred to either the authors or to Mr. Ken B. JOHM, Acting Division Manager, ONAR.2, Ext. 2468.

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AFRICAN DEVELOPMENT BANK

Temporary Relocation Agency BP 323, 1002 Tunis Belvédère - TUNISIA

Tel.: (216) 71 10 21 70 Fax: (216) 71 33 43 35

PROJECT INFORMATION SHEET

The information given hereunder is intended to provide some guidance to prospective suppliers, contractors and consultants and to all persons interested in the procurement of goods and services for projects approved by the Board of Directors of the Bank Group. More detailed information and guidance should be obtained from the Executing Agency. 1. COUNTRY : Mauritius 2. PROJECT TITLE : Northern Plains Irrigation Project

3. LOCATION : Northern region of Mauritius

4. BORROWER : Government of Mauritius 5. EXECUTING AGENCY : Irrigation Authority 5th floor Fon Sing Building 12, Edith Cavell Street

Port Louis - MAURITIUS Tel: (230) 212 5391/92, 212 5311 Fax: (230) 212 7652 6. FINANCING ADB Loan

a) Amount : UA 8.41 million b) Currency : 50% in US$ and 50% in Euros c) Terms

(i) Interest : Floating Rate (ii) Commitment Charge: 0.75% per annum on the undisbursed balance of

the loan, commencing sixty (60) days after signature of the loan agreement.

(iii) Duration : 20 years including a 5 year grace period (iv) Repayment : In 30 consecutive semi-annual instalments

starting from the end of the grace period. (v) Other Financiers : BADEA Government of Mauritius (GOM)

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7. DESCRIPTION : The project consists of : Derocking and Land Preparation on 1,377 ha; Technical assistance for the detailed design of irrigation system and supervision of works, for training in Participatory Irrigation Management and in Gender sensitisation and Environmental aspects of irrigation projects; Installation of Irrigation infrastructure consisting of Centre Pivots and Solid set systems; Project Management and Institutional Support.

8. TOTAL COST i) Foreign Exchange : UA 10.45 million ii) Local Cost : UA 6.12 million 9. BANK GROUP FINANCING ADB LOAN : UA 8.41 million 10. OTHER SOURCE OF FINANCE BADEA : UA 3.92 million GOM : UA 4.24 million 11. DATE OF APPROVAL : May 2004 12. ESTIMATED STARTING DATE OF PROJECT AND DURATION : January 2005 – December 2009 (60 months) 13. PROCUREMENT OF

GOODS AND WORKS : All procurements in accordance with the Bank’s “Rules of Procedure for Procurement of Goods and Works”. International Competitive Bidding (ICB) for civil works among member countries of ADB State participants; National Competitive Bidding (NCB) for vehicles and equipment.

14. PROCUREMENT OF

CONSULTANT SERVICES : Shortlisting and call for proposals from Consulting firms among member countries of ADB State participants for design of irrigation systems and supervision of works, in accordance with Bank’s “Rules of Procedure for the Use of Consultants”. Shortlisting and call for proposals from Training Institutions in areas of irrigation projects design and management.

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CURRENCY AND MEASURES

Currency Equivalents (April 2003 Exchange Rates)

Currency Unit = Mauritius Rupee (MUR) 1 UA = MUR 37.7697 1 UA = US$ 1.37379 1 US$ = MUR 27.4930

WEIGHTS AND MEASURES

1 hectare (ha) = 2.471 acres 1 tonne (t) = 2,205 lbs 1 kilogram (kg) = 2.205 lbs 1 metre (m) = 3.281 ft 1 foot (ft) = 0.305 m 1 kilometre (km) = 0.621 mile 1 square kilometre (km2) = 0.386 square mile

FISCAL YEAR

July 01 – June 30

LIST OF TABLES Table 4.1 Summary of Project Cost Estimates by Component Table 4.2 Summary of Project Cost by Category of Expenditure Table 4.3 Sources of Finance Table 4.4 Expenditure Schedule by Component Table 4.5 Expenditure Schedule by Source of Finance Table 5.1 Tentative Implementation Schedule Table 5.2 Procurement Arrangements

LIST OF ANNEXES Annex Title Number of pages 1. Map of Country and Project Area 1 2. Project Organisational Chart 1 3. Organogram of the Irrigation Authority 1 4. Provisional List of Goods and Services 1 5. Calculation of Financial Internal Rate of Return 1 6A. Calculation of Economic Internal Rate of Return 1 6B. Assumptions made for the calculation of the

Economic Rate of Return 1 7. Financial Statements of the Irrigation Authority 2 8. Environmental and Social Management Plan Summary 3 9. Bank Group interventions in Mauritius 1 10. Project processing background 1

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LIST OF ABBREVIATIONS ADB = African Development Bank

APEXHOM = Association Professionnelle des Producteurs et Exportateurs

Horticoles de Maurice

AREU = Agricultural and Research Extension Unit

BADEA = Arab Bank for Economic Development in Africa

BCM = Billion Cubic Meters

EIRR = Economic Internal Rate of Return

EU = European Union

FSC = Farmers Service Corporation

FE = Foreign Exchange

GOM = Government of Mauritius

GPN = General Procurement Notice

IA = Irrigation Authority

MAFTNR = Ministry of Agriculture, food Technology and Natural Resources

MSIRI = Mauritius Sugar Industry Research Institute

MSS = Mauritius Sugar Syndicate

MUR = Mauritius Rupee

NPIP = Northern Plains Irrigation Project

NSC = National Steering Committee

SPMPC = Sugar Planters Mechanical Pool Corporation

SPCU = Sugar Productivity and Competitivety Unit

UA = Unit of Account

WB = World Bank

WUA = Water Users Association

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Year Mauritius AfricaDevelo-

ping Countries

Develo- ped

Countries

Basic IndicatorsArea ( '000 Km²) 2 30,061 80,976 54,658Total Population (millions) 2001 1.2 811.6 4,940.3 1,193.9Urban Population (% of Total) 2001 41.5 38.0 40.4 76.0Population Density (per Km²) 2001 573.9 27.0 61.0 21.9GNI per Capita (US $) 2001 3,830 671 1,250 25,890Labor Force Participation - Total (%) 2001 43.8 43.3 … …Labor Force Participation - Female (%) 2001 28.8 35.1 … …Gender -Related Development Index Value 1999 0.754 0.476 0.634 0.916Human Develop. Index (Rank among 174 countries) 2000 67 n.a. n.a. n.a.Popul. Living Below $ 1 a Day (% of Population) 1995 … 45.0 32.2 …

Demographic IndicatorsPopulation Growth Rate - Total (%) 2001 0.8 2.4 1.5 0.2Population Growth Rate - Urban (%) 2001 1.7 4.1 2.9 0.5Population < 15 years (%) 2001 25.3 42.4 32.4 18.0Population >= 65 years (%) 2001 6.3 3.3 5.1 14.3Dependency Ratio (%) 2001 46.6 85.5 61.1 48.3Sex Ratio (per 100 female) 2001 99.8 99.4 103.3 94.7Female Population 15-49 years (% of total population) 2001 28.1 23.6 26.9 25.4Life Expectancy at Birth - Total (years) 2001 71.7 52.5 64.5 75.7Life Expectancy at Birth - Female (years) 2001 75.6 53.5 66.3 79.3Crude Birth Rate (per 1,000) 2001 16.0 37.3 23.4 10.9Crude Death Rate (per 1,000) 2001 6.7 14.0 8.4 10.3Infant Mortality Rate (per 1,000) 2001 16.6 79.6 57.6 8.9Child Mortality Rate (per 1,000) 2001 17.4 116.3 79.8 10.2Maternal Mortality Rate (per 100,000) 1998 50 641 491 13Total Fertility Rate (per woman) 2001 1.9 5.1 2.8 1.6Women Using Contraception (%) 1995 75.0 … 56.0 70.0

Health & Nutrition IndicatorsPhysicians (per 100,000 people) 1995 86.6 36.7 78.0 287.0Nurses (per 100,000 people) 1995 232.9 105.8 98.0 782.0Births attended by Trained Health Personnel (%) 1994 97.0 38.0 58.0 99.0Access to Safe Water (% of Population) 2000 100.0 60.4 72.0 100.0Access to Health Services (% of Population) 1999 99.0 61.7 80.0 100.0Access to Sanitation (% of Population) 2000 99.0 60.5 44.0 100.0Percent. of Adults (aged 15-49) Living with HIV/AIDS 2001 0.1 5.7 … …Incidence of Tuberculosis (per 100,000) 2000 13.8 105.4 157.0 24.0Child Immunization Against Tuberculosis (%) 2000 87.6 63.5 82.0 93.0Child Immunization Against Measles (%) 1996 83.9 58.2 79.0 90.0Underweight Children (% of children under 5 years) 1995 14.9 25.9 31.0 …Daily Calorie Supply per Capita 2000 2,985 2,408 2,663 3,380Public Expenditure on Health (as % of GDP) 1998 1.8 3.3 1.8 6.3

Education Indicators Gross Enrolment Ratio (%) Primary School - Total 1998 106.0 80.7 100.7 102.3 Primary School - Female 1998 106.0 73.4 94.5 101.9 Secondary School - Total 1998 71.0 29.3 50.9 99.5 Secondary School - Female 1996 65.7 25.7 45.8 100.8Primary School Female Teaching Staff (% of Total) 1998 53.0 40.9 51.0 82.0Adult Illiteracy Rate - Total (%) 2001 15.0 37.7 26.6 1.2Adult Illiteracy Rate - Male (%) 2001 11.9 29.7 19.0 0.8Adult Illiteracy Rate - Female (%) 2001 18.2 46.8 34.2 1.6Percentage of GDP Spent on Education 1998 4.0 3.5 3.9 5.9

Environmental IndicatorsLand Use (Arable Land as % of Total Land Area) 1999 49.3 6.0 9.9 11.6Annual Rate of Deforestation (%) 1990-95 … 0.7 0.4 -0.2Annual Rate of Reforestation (%) 1990 2.0 4.0 … …Per Capita CO2 Emissions (metric tons) 1997 … 1.1 2.1 12.5

Source : Compiled by the Statistics Division from ADB databases; UNAIDS; World Bank Live Database and United Nations Population Division.Notes: n.a. Not Applicable ; … Data Not Available.

MAURITIUS: COMPARATIVE SOCIO-ECONOMIC INDICATORS

GNI per capita US $

0

1,000

2,000

3,000

4,000

5,000

1995

1996

1997

1998

1999

2000

2001

Mauritius Africa

Population Growth Rate (%)

0.0

0.5

1.0

1.5

2.0

2.5

3.0

1995

1996

1997

1998

1999

2000

2001

Mauritius Africa

111213141516171

1995

1996

1997

1998

1999

2000

2001

Mauritius Africa

Life Expectancy at Birth (Years)

Infant Mortality Rate ( Per 1000 )

0102030405060708090

100

1995

1996

1997

1998

1999

2000

2001

Mauritius Africa

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PROJECT LOGICAL FRAMEWORK

Narrative Summary Objectively Verifiable Indicators Means of Verification Assumptions/Risks

Sector Goal

To reduce income disparity within the farmers community.

Annual net-farm income increased from US$ 360 to US$ 2,150 by project year seven.*

Government statistics, Extension services records

Project objectives

To increase productivity of agricultural lands.

Sugar cane yields increase from 47.8 tons/ha to 89.2 tons/ha for sugar cane over 1,377 ha by project year seven.

Official Statistics, Water Users’ Associations records

European Union Market conditions remain stable and the EU-ACP Sugar Protocol prices are maintained.

Outputs 1. Irrigation water is made available at farm gate of small planters in the Northern Plains

2. Small planters agricultural lands in the Northern Plains are derocked. 3. Gender sensitisation and awareness is raised for communities, labourers, and staff of the PIU 4. Women are empowered and have improved participation skills 5. Farmers’ community have Improved mobilization and participation skills, and better understanding of mitigation/enhancement of irrigation environmental impacts 6. Capacity of the Irrigation Authority, the Agricultural Research and Extension Unit and the Water Users’ Associations is improved in terms of Participatory Irrigation Management (PIM).

1.1 A total of 1,377 ha of small planters’ land is under irrigation system by end of project year 5. 1.2 About 23 km of laterals are laid and 20 centre pivots are installed throughout the project area. 2. Stones of diameter comprised between 200 mm and 1000 mm are removed from surface and up to a depth of 450 mm, throughout the project area. 3. 10 campaigns on gender sensitisation and awareness are carried out. 4. 8 workshops on women empowerment and participation are organized. 5.1 10 workshops on rural mobilisation/ participation and environmental aspects of irrigation are hold. 5.2 The project recruits 2 social facilitators for accrued extension services to the farmers. 6. Six trainings are organized on Participatory Irrigation Management (PIM) for representatives of the IA, AREU and Water Users’ Associations

Baseline water flow survey Irrigation Authority financial statements Project quarterly progress reports Audit reports

Hydrologic conditions remain favourable Climatic conditions remain stable in terms of cyclonic events occurence

Activities 1. Installation of laterals and in-field irrigation systems 2. Derocking of agricultural lands 3. Detailed design of irrigation system 4. Gender awareness and sensitisation campaigns 5. Training on Participatory Irrigation Management (PIM) 6. Development of women participation skills

Inputs (UA million) 1. Derocking and Land Preparation 3.49 2. Technical Assistance 1.03 3. Irrigation Infrastructure 9.17 4. Project Management and Institutional Support 0.23 Base Cost 13.93 Phys. Contingencies 1.36 Price Contingencies 1.28 Total 16.57 Resources (UA million) ADB Group 8.41 BADEA 3.92 GOM 4.24 Total 16.57

Quarterly progress reports Audit reports

* The revenue of US$ 360 is due to the fact that the farmers grow only sugar cane, on a part-time basis. Upon project completion they are expected to work full time and also grow vegetables which are very profitable.

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EXECUTIVE SUMMARY Project Background 1.1 The Northern region of Mauritius is a water-deficit area where agricultural production is jeopardised by recurrent drought. Seven out of the last 12 years have been declared drought years. It is against this background that the Government of Mauritius has approached the Bank and the BADEA to assist in financing the installation of irrigation systems over 1,377 ha in the northern region of the country. 1.2 The project will concern about 1,530 small sugar cane planters and their families, who exploit plots of less than 4.2 ha each. The project will provide irrigation water from La Nicolière Reservoir through construction of water conveyance systems and irrigation infrastructure consisting of buried pipelines, centre pivots and solid set systems. Purpose of the Loan 1.3 The ADB loan of UA 8.41 million amounting to 50.8% of the total project cost will be used to finance 68.6% of the foreign exchange cost of the project and 20.4% of local costs. Sector Goal and Project Objectives 1.4 The project will contribute towards achieving the following sector goal: To reduce income disparity within the farmers’ community. 1.5 The project objective is: Increased productivity of agricultural lands in the northern plains region. Brief Description of the Project’s Outputs 1.6 In order to achieve these objectives, the project is focused on:

i. Derocking and Land Preparation on 1,377 hectares; ii. Technical Assistance; iii. Installation of Irrigation Infrastructure (Centre-Pivot and solid set systems); iv. Institutional support of the Irrigation Authority (IA) and the Agricultural

Research and Extension Unit (AREU). 1.7 Project Costs: The total project cost is estimated at UA 16.57 million out of which UA 10.45 million (63.1%) will be in foreign currency and UA 6.12 million (36.9 %) will be in local currency. 1.8 Sources of Finance: The project will be jointly financed by the African Development Bank (ADB), the BADEA and the Government of Mauritius. ADB will finance UA 8.41 million, BADEA will finance UA 3.92 million, and the Government will finance UA 4.24 million. The ADB contribution covers 68.6 % of foreign cost and 20.4% of the local costs. BADEA contribution covers 31.4 % of foreign cost and 10.4% of local cost. The Government contribution covers 69.2% of costs in local currency.

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1.9 Project Implementation: The duration of project implementation is 5 years starting from January 2005. The Ministry of Agriculture, Food Technology and Natural Resources (MAFTNR) will be responsible for the project on behalf of the Government and the Irrigation Authority will be the executing agency under supervision of the MAFTNR. The capability of the IA to undertake the project has been reviewed and found satisfactory on the premise of the number and quality of staff. A consulting firm will be recruited to design the installation of irrigation infrastructure and also to supervise field works, and contractors will be selected to implement the installation of irrigation infrastructure. Two social facilitators will be recruited for the project to facilitate grouping of farmers into Water Users’ Associations. Training institutions will be recruited to enhance capacity of the IA, the AREU and the farmers’ Water Users’ Associations in terms of Participatory Irrigation Management. Farmers will participate to workshops on Gender issues sensitisation, social and environmental aspects of irrigation projects. Conclusions and Recommendations 1.10 The Northern Plains Irrigation Project is an important part of Government’s strategy towards increasing the revenue of the sugar cane small planters and improving their standard of living. 1.11 The project is consistent with Bank’s Group country strategy, which, for the Agriculture sector, supports poverty reduction and food security. 1.12 It is recommended that a loan not exceeding UA 8.41 million from ADB be granted to the Mauritian Government for the implementation of the Northern Plains Irrigation Project as described in this report, subject to conditions specified in the loan agreement.

1. ORIGIN AND HISTORY OF THE PROJECT 1.1 The island of Mauritius is located just outside the tropics at 10° South Latitude and 57° East Longitude, in the Indian Ocean east of Madagascar and consists of an undulating central plateau with coastal plains in the North and East. While the central part of the island receives important rainfall amounts averaging 4,000 mm per annum, the northern part is a water-deficit area where agricultural production is jeopardized by occurrence of recurrent droughts. As a matter of fact seven out of the last twelve years have been declared drought years in the north. Even sugar cane, which is known to be drought tolerant, has suffered badly in some years and yields have gone down substantially. This is a critical situation for the country given that the northern plains region contributes to twenty percent of the national sugar cane production and about twenty five percent of the national food crop production. 1.2 In recognition of the above mentioned challenges the Government of Mauritius embarked on an ambitious irrigation scheme known as the Northern Plains Irrigation Project (NPIP). The NPIP is meant to bring more water to the Northern Plains and expand the irrigable area in the North in order to boost agricultural production and improve the income of small planters by enabling them to use more cost-effective production systems and reap the benefits of higher crop yields. The first phase of the NPIP began in 1978 and was completed in 1984. The GOM is now mobilising its efforts to implement the second phase of the NPIP, known as NPIP phase two, which aim is to make irrigation water accessible to 3800 small sugar cane planters exploiting about 3,500 ha in the northern plains through construction of water conveyance and irrigation infrastructure. 1.3 This project is part of the government’s NPIP phase two and covers a total area of 1,377 ha occupied by about 1,530 small sugar cane planters who exploit plots of less than 4.2 ha each. The project is expected to stop abandonment of lands by the small planters due to lack of water and to increase yields from 47.8 tons sugarcane/ha under rainfed production to 89.2 tons/ha under irrigation, thereby contributing to increase of income and reduction of poverty within the farmers community of Mauritius. The project was identified by a Bank mission that visited Mauritius in May 2001. In September 2001, the Government of Mauritius requested the Bank to consider co-financing the project together with the BADEA, which confirmed its interest for the project in the course of year 2003. This report is based on reports and studies prepared by the Government and FAO as well as an ADB appraisal mission which visited Mauritius in April 2003, and a joint ADB-BADEA post-appraisal mission which visited Mauritius in December 2003 in order to finalize the financing plan. 1.4 Overall, the assessment of the Bank Group Portfolio performance in Mauritius is satisfactory. The major problems have, however, been frequent cancellations of loans and few projects in the lending programme. Factors leading to recent cancellations of loans by the Government were discussed by recent Bank Country Strategy Preparation missions, and Government cited several factors including a prudent debt management policy and protracted Bank procedures and loan conditions which raised the relative cost of borrowing and thus forced the Government to seek alternative funding sources. The government indicated however a desire to recommence borrowing to finance a number of projects including the Northern Plains Irrigation Project.

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2. THE AGRICULTURE SECTOR 2.1 General The agriculture sector is of strategic importance to the Mauritian economy as it employs slightly above 16% of the total working population, meaning about 58,000 people, and is the first source of net foreign currencies for the country. It also provides a significant financial support to the process of development of other sectors as it accounts for a total value added of approximately MUR 7 billion (UA 185 million) per year, and ensures food security and self-sufficiency in certain crops for the population. 2.2 Salient Features 2.2.1 Land tenure: The agricultural lands in Mauritius represent about 46% of the national land mass or 85,790 ha. Their current use consists of 60% to 70% under rain-fed sugarcane cultivation and 8 to 10% under diversification crops (tomato, eggplants, chillies, green pepper, watermelon). Some 20% of the agricultural lands are abandoned due to the lack of water. Agricultural lands are generally privately owned and most planters are in possession of title deeds, which can be acquired or sold freely. The sugar cane planters tend to be divided into two categories, according to the area they cultivate: (i) the large/miller planters, who exploit more than 42 ha each and own 52% of the national agricultural land, and (ii) the medium/small planters, who exploit less than 42 ha each and own 48% of the national agricultural land. Within the latter group, the small planters are those owning plots with size varying from 0.25 ha to 2.5 ha. They represent about 34,000 individuals and their average land holding is 0.55 ha. 2.2.2 In Mauritius, women’s access to land for agriculture is mainly through the husband and for female heads of households. Use and ownership of land, is thus considered as a household asset, and income arising from it is primarily for household consumption and use. In view of the land fragmentation, which is very common amongst the small planters community as a result of inheritance practices, the government encourages two kinds of groupings, which are known as LAMU (Land area Management Units) and BMU (Block Management Units). In the case of LAMUs all regrouped plots are contiguous and the aim is to have a common management of all operations from land preparation to harvesting and transportation of cane to milling factory. Establishment of LAMUs have generated sugar cane yield increase of 10% on average, compared to non-LAMU planters. However LAMUs gained limited acceptance by farmers. BMU has wider success as it is a more flexible form of grouping to the extent that plots may not necessarily be adjoining. Indeed, planters act as a group for certain operations only, such as land preparation and harvest/transport of sugar cane to milling factories. 2.2.3 Agricultural Production: The agriculture sector in Mauritius is dominated by the sugar plantation industry, which has long been the backbone of the Mauritius economy. Sugar cane was introduced by the Dutch at the end of the 16th century and until 1970 sugar produced from cane milling accounted for one-third of the gross national product and more than 90% of the Mauritian exports. Since then the plantation economy has gradually changed and in the late 70s the Mauritian economy underwent major structural changes characterised by the rapid expansion of the industrialisation process that concentrated mainly on textile production in the Export Processing Zone, development of financial services and development of tourism. Today the share of sugar cane production in total agricultural production represents 53% in terms of total value added at factor cost of agricultural production. Production of sugar remains of strategic importance for the country as since 1975 Mauritius has had an export quota of about 500,000 tons per year under the Sugar Protocol of the Lomé Convention which links the European Union to the African, Caribbean and Pacific (ACP) countries. Currently over 95% of the sugar produced in the country is exported to the

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European Union and during the years 1995 to 2000 agricultural exports, essentially sugar cane, have represented on average 28% of total domestic exports. 2.2.4 The food crops production lags significantly behind the sugar cane production although it has registered an average annual increase of 5% over the 1995-2000 period, as a consequence of the government’s “diversification” policy, which encourages departure from the cane monoculture. The total harvested area under food crops increased from 2,600 ha in 1986 to 7,357 ha in 2000, compared with 74,000 ha which are under sugar cane cultivation. However, unlike the sugar cane, the food crop sub-sector does not represent a source of foreign exchange as most of the production is meant for local consumption with less than 1% of total production being exported. These exports consist essentially small amounts of vegetables, fruits, tea or cut flowers. Basic food items such as rice, flour, cereals are currently procured out of the country. The country also produces fish, some of which is exported. Livestock production is limited and meant essentially for internal consumption. 2.2.5 Gender: According to the recent census (2001), Mauritius has a population of about 1.2 million people of which about 50.4% are women, and about 14.8% are female heads of households. The same census indicates that in 2001, 30% of the female population aged 12 years and above were employed; 56% of the women were employed in the elementary occupations such as craft workers or plant and machine operators; a further 37% were employed in manufacturing, and these are mainly in the Export Processing Zone (EPZ) sector. Furthermore, only 11% of the women are employed in agriculture, mainly as labourers on smallholder sugar plantations as well as on vegetable and fruit farms. Due to increased mechanisation in the sugar sub-sector women are now looking towards the food crops for employment such as, growing vegetables, fruits, and export quality flowers and exotic plants in small plots around their homes or in the back yard garden on a small to medium scale for local markets. Nevertheless, a bigger majority of the women in the agriculture sector are involved in agro-processing of fruits and vegetables both for home consumption as well as for sales. 2.2.6 The GOM has adopted the strategy of promoting women’s participation and improving their income in the agriculture sector by increasing their participation in the agro-processing industry. The Farmer Services Corporation (FSC; see section 2.2.9) provides the necessary training and supervision to women in activities related to agro processing and marketing. The FSC provides training in technical and business skills; marketing, packaging and advertising as well as providing guidance in opening export markets for their respective products. Furthermore, women at all levels have opportunities to receive other entrepreneurial skills training which is provided through Women’s Centres established throughout the country by the Ministry of Women’s Rights, Child Development and Family Welfare. The opportunity to receive entrepreneurial training is a programme developed by GOM to retrain women who were previously employed in the EPZ sector and are now being laid off due to recent changes in the EPZ policies. The GOM is also making progress in reviewing the legal framework to address gender based violence, personal law and matters related to family. Furthermore, the GOM is also taking positive steps in improving the number of women in high-level decision making positions. 2.2.7 Poverty and employment: In Mauritius there is no official poverty line. However, the Poverty Alleviation Programme (PAP), established at the Ministry of Finance, has conducted a countrywide survey and identified some regions where there are pockets of people who have been continually marginalized in the economy. Through this survey, the Programme has estimated that a household consumption expenditure of MUR. 3,000 (UA 79.43) or less per month is to be considered low-income household. Thus, according to this estimated threshold approximately 10% of the population can be considered as a low-income group. In 2001, it was estimated that an average monthly income of a female-headed households was almost 40% less than that of the male-

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headed households. As a result of the development of the other sectors, employment in agriculture tends to be falling, and the annual average rate of decrease was 2.6% over the period 1995-2000 and current employment stands around 58,000 people. 2.2.8 Institutions and Support Services: The Ministry of Agriculture, Food Technology and Natural Resources (MAFTNR) is the main government body engaged in the agriculture sector. Its domain of activity includes agriculture in general meaning sugar and non-sugar activities, livestock, central services to the agriculture sector, food technology and natural resources. The structure of the Ministry evolves around three poles of activities, namely sugar and food technology, non-sugar activities and central services and livestock and natural resources. Each pole of activity is under the supervision of a Permanent Assistant Secretary. The overall Ministry is under the supervision and control of the Permanent Secretary with the Minister as the person responsible for any matter related to agriculture in the National Assembly. While the Ministry elaborates policies, projects are generally executed through different parastatal agencies under its responsibility. The parastatals that will have a significant role to play in the successful implementation of the project are briefly presented below and their scope of intervention outlined. The Central Water Authority and the Irrigation Authority, which are both parastatals intervening directly in the irrigation sub-sector are presented in Chapter 3.

Parastal agencies in the sugar sub- sector 2.2.9 Within the sugar cane sub-sector, the Farmers Service Corporation (FSC) has the mandate to assist the small sugar planters to increase their productivity and to reduce the cost of production per ton of sugar produced. The FSC has a wide range of objectives which include setting up and managing Farmers Services Centres, which provide essential services required by sugarcane planters while promoting the establishment of cane nurseries and the supply of seed cane to planters, promoting agricultural land consolidation for management, providing technical advice and support to farmers on cane cultivation, as well as providing training to sugarcane planters, devising agricultural credit schemes in consultation with financing agencies and promote implementation thereof. FSC conducts vocational training programme since 1990. To date some 3000 planters have followed the programme. The FSC is staffed with 30 senior professional and support staff, and supervises 13 Farmers Service Centres implanted throughout the island, and which provide assistance to about 34,000 planters covering 27,000 ha of cultivated land. 2.2.10 The Sugar Planters Mechanical Pool Corporation (SPMPC) has the mandate to keep, maintain and operate a fleet of agricultural machinery to assist planters in the derocking and preparation of their land. It provides services as light/heavy derocking, furrowing, levelling, soil compaction for in-field road making etc. SPMPC acts as a service-oriented organization that serves mainly the small planters irrespective of whether the size of their plots is small or located in very remote and not easily accessible regions. The tractor hire rates charged to small planters have remained unchanged for the past 12 years and are highly subsidized. SPMPC’s role with respect to the small planters community is ultimately to help them maximise the yields per ha. SPMPC maintains a pool of agricultural machinery in support to the sugar industry’s requirements for equipment. These are hired out to planters on request and at a subsidised rate. The fleet includes about 50 field machines (Crawlers, Pay loaders, Rollers, Excavators and tractors) and about 24 support vehicles (jeeps, lorries – crane, cars etc.). The SPMPC employs about 150 people in administration, finance, field section (machine operators) and other support sections. In view of the staffing and the resources at its disposal, the SPMPC has the capacity to achieve important works related to derocking and land preparation.

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2.2.11 The Sugar Productivity and Competitivity Unit (SPCU) has as objective to improve the sustainability of the sugar industry by reducing the cost of production. It is actually a coordinating unit created within the MAFTNR, with activities ranging from monitoring of project implementation and reporting to the permanent secretary, overseeing and monitoring action of parastatal bodies with respect to project implementation, advising MAFTNR on policy matters related to project implementation. SPCU staff is reduced as it comprises 1 Project coordinator, 1 technical officer, 1 clerical officer, but the various committees for which SPCU serves as secretariat involve staff from the different parastatals such as the SPMPC, the Irrigation Authority, Agricultural Research and Extension Unit, etc. 2.2.12 The Mauritius Sugar Industry Research Institute: The MSIRI was founded in 1953 with a mandate to promote, by means of research and investigation, the technical progress of the sugar industry. It complements AREU (see section 2.2.14) through research on sugar. It is financed mainly out of a global cess on sugar borne by all cane growers and has a scientific staff numbering 140. It particularly seeks to reduce the cost of production, increase sugar yields and sugar content of canes and safeguard the Environment. 2.2.13 The Mauritius Sugar Syndicate (MSS): The MSS is the marketing arm of the sugar cane industry. It employs locally about 30 persons and has a general overseas representation based in London, and one representative in Brussels and Geneva. It has an important role in the industry as it provides advance payment to planters as soon as they hand out their production for milling. The MSS basically helps the planters to achieve the best market prices.

Parastatal agencies in the Non-sugar sector

2.2.14 Within the general services and non-sugar sub-sector, the Food Agricultural Research Council (FARC) is responsible for coordinating, promoting and harmonizing research activities in agriculture, fisheries and food production, as well as to maximize benefits of such research. It includes the Agricultural Research and Extension Unit (AREU) whose functions are to conduct research and extension activities in non-sugar crops, livestock and food production. AREU has a critical role to play in the context of the diversification policy of the government. The “Association Professionnelle des Producteurs et Exportateurs de Produits Horticoles à Maurice” (APEXHOM) is a private association of growers and exporters of flowers, fruits and vegetables and is responsible for market development of non-sugar crops. As many small planters within the project area have shown interest in growing vegetables, APEXHOM is expected to play a role within this project. 2.3 Constraints and Opportunities 2.3.1 Constraints: In many parts of the island, especially in the north, west and south-east, the soil is rocky due to its volcanic origins and blocks of basaltic rocks of diameter up to 1,000 mm are present in surface as well as in sub-surface. The soils quality itself is good as 70% of it is constituted of reddish tropical latosols which are suitable for cane cultivation, but also for other crops such as tea, vegetables, fruits (litchis, pineapple etc.). However the extensive presence of rocks renders necessary the derocking which is an important constraint to the introduction of agricultural mechanization and irrigation. Actually this situation has also dictated the widespread use of the centre pivot irrigation system across the island because unlike other systems such as drip irrigation it requires only coarse derocking, the fine derocking being necessary only on the strips of land where the pivot wheels would circulate. Another constraint that is quite specific to Mauritius is the frequent occurrence of cyclones against which many crops are not resistant. This also explains partially the tendency of farmers to practice sugar cane monoculture that can withstand high-speed winds, as well as the use of centre pivots irrigation systems that can resist cyclones when properly parked. Finally, the annual rainfall is much varied across the island and renders necessary

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investments for irrigation systems before any significant agricultural development can take place. Indeed although the national average rainfall is 2,100 mm, regional quantities vary from 4,000 mm on the central plateau to only 900 mm in the north which is the driest region. As the average potential evapotranspiration (ETP) vary between 1,100 mm and 1,600 mm, there is a water deficit in many parts of the island as far as cane and tropical crops are concerned and implementation of irrigation schemes is necessary to resolve the water requirements deficits and optimise crop production. 2.3.2 Opportunities: Despite the above-mentioned constraints, Mauritius presents several advantages for development of agriculture, in particular for irrigated cropping. Indeed the weather is relatively good, with temperatures ranging from a maximum of about 32° C in the period December – April to a minimum of about 16°C in June-November, which allows crop growth and production throughout the year. Other advantages include availability of skilled labour with an important rate of literacy, good public infrastructures, and well-developed connections for international marketing of products. In terms of water resources Mauritius is well endowed, the country water resources include 5 main aquifers of total annual yield of 135 Mm3, 47 river basins among which 25 major, 5 storage reservoirs and one dam (the Midlands dam) of total capacity 88.44 Mm3. 2.4 Government’s Strategy 2.4.1 Government’s policy regarding the agriculture sector aims at optimising production from existing lands through better management of resources and adoption of improved technology. Acknowledging that the sugar cane sub-sector has always driven the whole national agriculture sector, and in anticipation of accrued competition in the world sugar market which will result from globalisation and trade liberalisation in the world sugar market under World Trade Organization regulations, as well as from the duty-free access of least developed countries’ sugar to the EU market taking effect in 2009, the Government of Mauritius is strongly committed to improve the competitiveness of the sugar sector. The current production cost for sugar in Mauritius is US$ 0.14/lb, which comes down from US$ 0.20/lb in 2000 following sustained efforts of GOM to increase the competitiveness of the Mauritius sugar sector. However, the production costs are still very high compared to the world market price of US$ 0.08/lb and further costs cuts are expected to be achieved. It is in this context that the Sugar Industry Efficiency Act was passed in 2001. The act laid ground for the government’s Sugar Sector Strategic Plan (2001-2005) which is currently being implemented with the following major targets: (i) reduce the cost of production by 22% over the period 2001-2005 and by a further 20% over the period 2006-2008, by increasing land productivity, and in order to achieve the target production cost of US$ 0.08/lb. (ii) reduce the number of sugar factories from 14 to 7 by centralizing sugar milling activities; (iii) prepare 60,000 ha of land for complete mechanisation and provide some 320,000 ha with irrigation water; (iv) right size man-power in the industry through the introduction of Voluntary Retirement Scheme (VRS). 2.4.2 Efforts of the Government towards reduction of the sugar production costs are likely to be successful to the extent that sugar cane yields have significantly increased at a rate of 0.5% per unit area per year over the last 40 years, as a result of the use of high yielding and high-sucrose varieties. The cane varieties currently grown are also resistant to the main diseases, adapted to the specific agro-climatic conditions of the island and are suitable for mechanized harvesting. In terms of sugar extraction, with an overall recovery of over 86%, Mauritian milling factories rank among the most efficient in the world and research institutions such as the Mauritius Sugar Industry Research Institute (MSIRI) endeavour to improve on this efficiency.

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2.4.3 However, as stated earlier, the government also encourages departure from cane monoculture through a crop diversification policy. In this context, the MAFTNR is implementing the Non-Sugar Sector Strategic Plan (2001-2005) which is articulated on the following major policy objectives: (i) increase food crop and livestock production, and maintain or increase self-sufficiency in certain essential commodities; (ii) liberalise markets and support private sector development; (iii) optimise the use of water resources through the introduction of efficient irrigation systems and the increase of water storage capacity; (iv) make optimal use of agricultural lands while maintaining annual sugar production between 625000 – 700000 tons; (v) diversify agricultural production for local consumption and export; (vi) ensure national food security through the production of adequate supplies of basic food items at competitive prices. 2.4.4 Besides objectives restricted to the sugar or non-sugar sectors, the government has as generic strategy to intensify research and development activities through biotechnology, delocalise agricultural production to the region through the establishment of strategic alliances, to promote agro-based industries, to promote an agricultural training policy and to develop appropriate marketing strategies for the country. 2.5 Donors’ intervention 2.5.1 As mentioned earlier, the EU has a strong cooperation with the country in the context of the EU – ACP Sugar Protocol, in which Mauritius has the biggest quota for sugar. The Sugar Protocol is the force driving Mauritius agriculture sector, especially in the current period as the price for sugar is fixed in Euros and that Euro currency reaches very high level. In the context of the whole NPIP project, government has been able to mobilise funds from various sources. The BADEA and the Kuwait Fund financed the construction of the Midlands dam, which was completed in December 2002. The European Union financed the rehabilitation and implantation of the M1 the A5 pipelines that bring water to the northern plains from the La Nicolière reservoir. Currently, the IFAD is financing the installation of irrigation infrastructure over a small area in the north known as block 8A as part of the NPIP phase II. Besides IFAD is currently providing technical assistance by financing the services of an expert who holds consultations with the planters in view of strengthening their capabilities to participate in the management and operation of the irrigation system. 2.5.2 Since the inception of Bank Group's operations in Mauritius in 1975, a total of 24 operations have been approved, comprising seventeen projects, one policy-based operation, one equity investment, one study and four lines of credit. Cumulative commitments to date amount to UA 187.98 million, of which UA 177.97 million is from ADB, UA 5.30 million from NTF and UA 4.71 million from ADF. However, about 50 per cent of total commitments have been cancelled, resulting in net commitments of UA 93.19 million, of which, UA 86.84 million is from ADB resources (including UA 39.45 million from the private sector investment), UA 3.47 million from ADF resources and UA 2.88 million from NTF resources. As for the Agriculture sector, the Bank approved in June 1991 an amount of UA 6.30 million for the Rose-Belles Sugar Rehabilitation project but 74.3% of the loan was subsequently cancelled resulting in a net loan of UA 1.62 million. The Rose-Belles Sugar Rehabilitation project is now completed. Other interventions of the Bank include the Northern Plains Irrigation Project phase 1 for which an amount of UA 8.00 million was approved from ADB resources in August 1979, and the Farmers Service Centres project for which an amount UA 2.00 million was approved from NTF funds in December 1993. Both of these loans were subsequently cancelled, due to a prudent foreign debt management policy adopted by the Government. Since then, the government has achieved good progress on that respect and it has indicated its desire to recommence borrowing in order to finance several projects, including the Northern Plains Irrigation Project.

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3. THE IRRIGATION SUB-SECTOR 3.1 National Water Use and Balance Irrigation in the country uses 466 million cubic meters annually out of a total used amount of 879 million cubic meters which means about 53% of mobilised resources, the other uses being for domestic and industrial purposes. The percentage of water used for irrigated agriculture is low compared to standards in most African countries where the percentage stands around 85% to 88%. This situation shows that the country receives indeed important rainfall which allows extensive dry land farming and also that the general efficiency of the irrigation systems used is good. As of now, irrigation is not putting pressure on the mobilised water resources and it is likely to remain so in the future. Indeed, the government plans to mobilize an additional 175 million cubic meters by 2040, and as from year 2005 some 10-12 million cubic meters treated effluent water will be used for irrigation in the western region. As for this project, the total water requirement will be 11.3 million cubic meters per annum. Satisfaction of this requirement will not create any difficulty to the extent that the construction of the Midland dam, which was completed in December 2002, has made possible mobilisation of 42 million cubic meters of rainwater with a quota of 28 million cubic meters per year for irrigation in the northern plains. 3.2 Irrigation Institutions 3.2.1 The main institutions involved in the irrigation and water sub-sector are:

! The Ministry of Energy, Water Resources and Postal Service which intervenes through the Central Water Authority (CWA)

! The Ministry of Agriculture, Food Technology and Natural Resources, which intervenes through the Irrigation Authority (IA)

! The farmers Water Users’ Associations (WUA) and Water Users’ Cooperatives (WUC) that regroups the beneficiaries of water services delivered by the IA.

3.2.2 The Central Water Authority (CWA): The CWA is the only body authorized to supply water for domestic, commercial and industrial use. It is responsible for data collection, correlation and interpretation for all water resources studies, the inventory of water resources, and the preparation of a policy for the utilization and monitoring of water resources. In the context of the NPIP, the irrigation water comes from the Midland dam, which was completed in 2002 and is operated by the CWA. The CWA makes the irrigation water available at the La Nicolière reservoir which is downstream of the Midland dam and which is fed by a 27 km feeder canal. 3.2.3 The Irrigation Authority (IA): IA was created in 1978 as a parastatal body in charge of operation, maintenance and management of irrigation assets in small planter’s lands around the island. The Irrigation Authority Act stipulates that IA is the main undertaker and is responsible for the implementation and the management of irrigation projects in every irrigated area. IA provides various services to farmers including the following: (i) helping beneficiaries in identifying, investigating, planning, designing and implementing irrigation projects; (ii) providing irrigation water at subsidized costs to planters and breeders within the boundary of an irrigation project; (iii) importing dripper lines and other irrigation equipments at duty free prices on behalf of planters; (iv) providing various certifications to planters in relation with their irrigation activities; (v) advising planters on irrigation matters related to water availability, design and irrigation equipment; (vi) offering facilities of drilling of boreholes at subsidized rates to planters or group of planters for the eventual implementation of an irrigation project in the vicinity of a borehole. The IA is also responsible for collecting irrigation dues to be paid by farmers. Under the IA act, the Government

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maintains full ownership of the fixed assets constituting the irrigation services facilities and is responsible for financing construction of new facilities and rehabilitation and major maintenance works of existing ones, but it gives the Authority the exclusive right to operate and maintain its irrigation network. 3.2.4 The Water Users’ Associations (WUAs) and Water Users’ Cooperatives (WUC): WUAs are regulated by the Registrar of Cooperative Act and there are currently twenty WUAs spread across the island. The WUAs are very active in about 60% of the 17 on-going projects managed by the IA. They start the equipments, monitor water distribution, manage minor reparations, collect irrigation dues to reimburse the IA, manage conflicts, etc. It takes about 6 months to form the WUAs by IA and about 3 or 4 WUAs will be created for the whole project depending on the planters. Alternatively to WUAs, planters can form Water Users’ Cooperative Societies (WUCS) which offer several advantages like auditing services from the Government free of charge, duty free facilities and grant for computer purchase. WUCS activities are to supply irrigation water, raise funds by different means (issuance of shares, loans, deposits) for irrigation facilities to members, operation and maintenance of irrigation facilities, and bulk marketing of farm products. However the WUCS tend to be less successful than WUAs probably because of the greater flexibility of the latter. 3.3 The National Irrigation System 3.3.1 Irrigated lands: Currently, cultivated areas under irrigation stand at 21,222 ha which represents one fourth (25%) of cultivated area, and there is a potential to irrigate an additional 12,000 ha in the North and West taking into consideration land suitability and availability of water. About 75% of the irrigated areas are private schemes, under free holdings, and the remaining is state land. The IA currently operates 17 projects across the island with an overall command area of 4,588 ha. Project sizes vary from 1895 ha for the NPIP I to less than 10 ha. These areas are exploited by a total of 3,927 small planters, who grow essentially sugarcane, tobacco, vegetables, onion, litchis and some food crops. 3.3.2 Irrigation methods: The irrigation technologies being used are generally efficient in terms of water use and there is a preponderance of low pressure overhead sprinklers coupled with solid set systems and drip irrigation. Surface irrigation is also present in the country but it is being gradually replaced by sprinklers and drip, because of its low efficiency which stands at about only 30% due to the high permeability of the soils and the high infiltration rates. Indeed soils in Mauritius tend to be shallow and on top of basaltic rocks, which generate rapid percolation of water. 3.3.3 Financing of Irrigation schemes: Aside from the 4,588 ha being directly monitored by the IA in its capacity of service provider to the small planters, the remaining 16,634 ha of irrigated land are exploited by planter-millers who operate as full private businesses. These private schemes can benefit of agricultural loans at attractive rates for their investments. As for the public irrigation schemes, the government undertakes the capital investment and upon completion; the IA operates the schemes. However, with the introduction of the Participatory Irrigation Management (PIM) system, the WUAs are increasingly called upon to gradually take over full control of day-to-day operations as well as meeting the associated costs. However, it must be noted that sugarcane plays an important socio-economic role in Mauritius through the creation of on-farm and off-farm employment, rehabilitation of abandoned lands, its potential for agricultural diversification to food crops and fruits. Moreover, the GOM is keenly investing in irrigation technology given its potential to increase the value of agricultural land assets, thereby favouring development of agricultural credit, and generating increased income in the planters’ communities. This view has led the government to substantially subsidize the irrigation sub-sector as discussed below.

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3.3.4 Irrigation dues: Irrigation dues are charged to the small planters in accordance with the IA act and are levied by IA through three possible ways: (a) at source – from the Mauritius sugar syndicate which is responsible for marketing the sugar for about 80% of the small planters, or (b) the Cooperative Societies which market the sugar cane for about 17% to 18% of the small planters, or (c) on an individual basis by direct payment to IA, for about 2% to 3% of the small planters. Beneficiaries of IA services pay for the irrigation water only after harvesting of the sugar cane. The dues are calculated on an area basis within each irrigation block, taking into account the volume of water supplied to each block. Individual metering systems have not been installed throughout due to the fact that there are hundreds of small plots. The collection rate is high and currently stands at about 95%; legal proceedings are routinely initiated against defaulters. 3.3.5 The calculation of dues to be paid by small planters is based on the concept of incremental profit resulting from irrigation as compared to rain-fed cultivation and on their effective capacity to pay for irrigation services. A recent study conducted by the Research and Investigation services of the Irrigation Authority found that the tariff of 1.70 rupees per cubic meter is adequate in view of the farms budgets of beneficiaries and this is the tariff that will be applied as from beginning of year 2005, including for this project. Actually, this tariff represents a significant increase from the past, in line with the policy of government to progressively recover the totality of the operation & maintenance costs. 3.4 Institutional Project Implementation Capacity 3.4.1 A number of strength and weaknesses within some of the parastatals that will be intervening have been identified during the NPIP phase I funded by the EU and the on-going project funded by IFAD and these are reviewed and discussed below. 3.4.2 The Irrigation Authority: The IA is headed by a General Manager and controlled by a Board of Directors, comprising ten members, which provides strategic direction to the running of the utility. The IA activities are divided between 5 departments: Irrigation and Planning Unit, Construction Supervision Dept, Operations and Maintenance Dept, and Accounting Dept. The number of staff is 310 among them the professional (Administration, Engineers and Scientists) rise up 40. It has good technical capacity and several of the technical staff also holds an MBA. However it has been observed that IA needs additional competence in the areas of Participatory Irrigation Management (PIM), as well as an accrued mobility to be able to meet farmers and supervise contractor’s works on the field adequately. An assessment of the financial situation of the Irrigation Authority is presented below. 3.4.3 The financial performance of IA has been assessed on the basis of its audited financial statements for the year’s ended 31 December 1998-2001 and un-audited accounts for 2002. A summary of IA’s historical statements is provided in Annex 7. The analysis of the statements indicated a deficit from operations. However, when taking into account the combined internally generated funds and capital grants receipts, its revenue, in the course of the past five years, increased from 39,9 million in 1998/1999 to 56,415 million MUR in 2001, representing an average annual increase equivalent to 10%. More than 80% of revenues are coming from donors and government grants and the irrigation dues paid by the farmers were estimated at 8,66 MUR in 2002, representing about 15% of the total income. Meanwhile, the recurrent expenditures rose from 60,163 million in 1998 to MUR to 86,658 million MUR in 2002, which represent a growth of 44%. Consequently, the statement of Revenues and Recurrent Expenditure indicate a yearly average deficit of 40 million MUR. This deficit is due to the low irrigation tariffs as compared to the irrigation operation and maintenance and administration overheads.

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3.4.4 Currently employee costs represent about 20% of recurrent expenditure, which is satisfactory, compared to similar utilities. In terms of IA’s balance sheet, the total asset base has increased from MUR 479,69 million in 1998 to MUR 604, 69 million, which represent 26% of increase. The growth is essentially due to the fixed assets (property, plant and equipment) that rose by 46,7% from 1998 to 2002. This is an indication of the substantial capital investment that the GOM has mobilized to invest in the sector. For the next three years revenues will start to increase from MUR 68,5 million in 2004 to MUR 91,66 millions in 2006 representing 34% overall increase. This increase would result from a combination of tariff rate increases, expanded irrigated area and 50% reduction in labor cost. The revenues from operations and capital grant receipts combined will be sufficient to cover all operating and maintenance costs and depreciation charges and would result in positive surplus. 3.4.5 In conclusion, the Irrigation Authority (IA) does not have, as of now, financial autonomy as it receives budgetary support from the Government’s through subsidies. However, the IA is a parastatal organization which is fully able to implement the mission entrusted to it by the Government and, in the context of the Government willing to transfer the totality of the operation and maintenance costs of all public irrigation schemes to Water Users’ Associations, the IA shows good prospects for enhanced financial sustainability. 3.4.6 The Agricultural Research and Extension Unit (AREU): The extension service of MAFTNR has a critical role to play in the agriculture sector of Mauritius in view of the crop diversification policy of the Government. In the context of the Northern Plains Irrigation Project it is foreseen that 20% of the new irrigated lands would be devoted to non-sugar crops and AREU is in charge of providing guidance for selection of crops and varieties, as well as to coordinate the technical assistance that would be needed by farmers opting for diversification. In that context it lacks of portable equipment that would allow rapid in-situ land sampling and analysis as well as vehicle for an accrued mobility. 3.4.7 The Water Users’ Associations: WUAs are not usually pre-existing entities with the status of being able to make choices on behalf of members, in a way which all of them would regard as binding. However, although loose in structure as presently established in the context of NPIP phase I, the existing WUAs seem to be able to support most of the key functions of formally taking over, operating, maintaining shared irrigation structures, and acting as a channel of advice and contact for training. However in light of the government’s will to promote increased participatory irrigation management and accrued responsibilities for the WUAs, there is clearly a need for training of some WUAs leaders on management of irrigation projects. 3.5 Development Perspectives The government has achieved in recent years a significant reduction in the yield gap between sugar cane miller planters (big planters) and other planters including the small planters. As a matter of fact the yield gap was reduced from about 25% in the early nineties to about 16% presently, and this was achieved through adequate provision of inputs like fertilizers, herbicides or planting material, regrouping of planters which allows economies of scale, efficient mechanization of field operations and improved logistics of harvest, loading and transport, introduction of irrigation, agricultural extension and training. Implementation of irrigation schemes proved to be instrumental in achieving successful results especially when farmers have been adequately sensitised.

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4. THE PROJECT 4.1 Project Concept and Rationale 4.1.1 As a result of its water deficit, the Northern part of Mauritius has a sugar cane yield of only 67.3 tons/ha and that is actually the lowest across the island, which has an average of 71.6 tons/ha. The north also has the lowest sugar extraction rate among all the regions of the Country. Apart from the water deficit, which adversely impacts on the production and the quality of sugar cane production, the North has other limiting factors for development of agriculture that include rockiness and land fragmentation. This project will seek to alleviate the above constraints and boost the agricultural production over 1,377 ha of the northern plains. A total of 1,530 small planters, about 5% of the small planters community of the country, will have access to irrigation water on a continuous basis once the project is completed. The project will consist of activities of derocking and land preparation, installation of sub-main and infield irrigation systems, and institutional support for the Irrigation Authority and the AREU. 4.1.2 The project design builds on the lessons learned from the first phase of the NPIP on several respects. As for the irrigation technology, options that have been considered include drip irrigation and a combination of centre pivots and solid set systems, as these technologies are water efficient. Experience with drip irrigation in phase 1 of the NPIP revealed a number of socio-economic problems such as high incidence of vandalism experienced particularly in the headworks and a high susceptibility of the drip systems to wear and tear. Further drip irrigation requires costly preliminary works for derocking and elimination of unnecessary roads, as well as a high level of technical know-how and managerial capabilities that are generally lacking amongst the planters community. Therefore a combination of centre pivot/solid set systems has been preferred on the basis of the good performance in terms of water efficiency (80% to 85%), familiarity of the small planters with that technology which is due to the fact that centre pivot irrigates presently more than 4,000 hectares in Mauritius, their extended lifetime and low maintenance costs and the fact that only coarse derocking is required for the system to operate properly as fine derocking is needed only along the wheel tracks. Wherever a group of farmers would not want the centre pivot system, they will be given an adequate water tapping and in that case they would finance their own infield systems. In order to provide the possibility for farmers using the centre pivot to grow food crops under the pivot system, an appropriate scheduling of the irrigation water application will be adopted, consisting of 12.5 mm every 3.5 days instead 12 mm per week, which is standard for, sugarcane. 4.2 Project Area and Project Beneficiaries 4.2.1 Project Area: The project will target an area of 1,377 ha located in the Northern part of the island and currently being exploited on dry farming conditions, essentially for sugar cane production. Soils are reddish latosols like in most parts of the island. Water availability has always been the main limiting factor for agricultural production in the project area as for the whole North. The yearly average rainfall is around 900 mm, which is much lower than the average of 2,100 mm across the island, and the decreasing tendency of rainfall observed over the past 30 years in the north is still continuing. The water shortage problem in the project area is compounded by the fact that the soils have a high infiltration rate, which coupled with low rainfall, results in extended period of moisture deficit. As many other parts of the island, which is of volcanic origin, the project area has a high degree of rockiness comprised essentially of basaltic boulders. 4.2.2 Social environment and Beneficiaries: In terms of population, the project area is characterised by a fairly high concentration of small planters. The vast majority of these small planters grow sugar cane traditionally, although a shift towards crop diversification has been

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observed in the last seventeen years. The project will therefore deal essentially with small planters growing sugar cane, but it is expected that up to twenty percent of the land may, in the long run, be devoted to growing food crops. Specifically the project will concern directly 1,530 small planters representing about 5% of the community of small planters of the country and exploiting about 2500 individual plots. It is also expected that an estimated 15% of this target population will be women who are female heads of households and mainly engaged in growing food crops. In light of that, the project is expected to increase significantly the financial autonomy of women within the project area. The small planters community produces about 40% of the national sugar production. As marginal benefits accruing from such tiny plots are not very attractive, small farmers are generally not full-time but “gentlemen farmers”. Indeed, up to 90% small farmers farm only after working hours or during the weekend. 4.2.3 As for land tenure aspects, the project is targeting existing agricultural lands, which are owned by farmers of the project area. The farmers are in possession of title deeds and there will be no resettlement or regrouping of land. 4.3 Strategic Context 4.3.1 Technical studies have shown that the situation in the Northern Plains of Mauritius can be significantly improved with irrigation. Potentially, sugar cane yields per hectare can increase by 85% and land currently abandoned can be viably cultivated. In order to reach all these good prospects, GOM has already made a number of strategic investments. These investments include (i) the construction of the Midlands Dam which was completed successfully in December 2002, and which will regulate an additional flow of about 41 Mm3 (for a total regulated flow of 82 Mm3) and alleviate the problem of water shortage in the north; (ii) the rehabilitation of La Nicolière Feeder Canal, which takes water from the Midlands Dam to La Nicolière reservoir over 27 km; (iii) the replacement M1-Pipeline delivery main with a bigger diameter of 1200 mm; (iv) the construction of the A5-pipeline for the conveyance of water to the project area. These strategic investments already made by the GOM ensure that all pre-conditions are met for the successful implementation of this project. 4.3.2 The project will allow exploitation of abandoned agricultural lands, promote use of modern irrigation technology and increase productivity of cultivated lands. At the same time, the project will facilitate diversification in terms of crops production as it is expected that about 20% of the irrigated areas will be devoted to production of other crops than sugar cane. In these respects, the project fully complies with both Government’s Sugar Sector Strategic Plan (2001-2005) and Non-Sugar Sector Strategic Plan (2001-2005). This project is also in line with the Bank’s Vision of poverty reduction in regional countries, and with the Bank Group assistance strategy for the public sector in Mauritius, which for the period 2004-2006 will aim at supporting infrastructure development in Agriculture (in particular Irrigation), Water and Sanitation, and Transport sectors. 4.4 Project Objective The sector goal of the project is to reduce income disparity within the community of farmers. The specific project objective is to increase productivity on 1,377 ha of agricultural land occupied by some 1,530 small planters, through introduction of irrigation. This will contribute to increase small planters’ income in the north through better crop yields and will promote sustainable growth through possibilities of diversification of the agricultural base.

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4.5 Project Description

Project Components 4.5.1 The project will concern five irrigation blocks totalling 1,377 ha and identified as: (i) block 4 with an area of 412 ha; (ii) block 5 with an area of 397 ha; (iii) block 6 with an area of 438 ha; (iv) block 7 with an area of 90 ha; and (v) block 8B with an area of 40 ha. The project will have the following four components: A. Derocking and Land preparation: this will concern half of block 5 and all of blocks 6, 7

and 8B only; as the block 4 and half of block 5 are currently being derocked by the government;

B. Technical Assistance: This will include recruitment of social facilitators, trainings and

workshops in Participatory Irrigation Management (PIM) and in Social, Gender & Environmental awareness of stakeholders, consultancy works for the detailed design of irrigation system and work supervision;

C. Installation of Irrigation Infrastructure: this will involve installation of laterals and of

infield irrigation systems consisting of centre pivots and solid set systems over all five blocks;

D. Project Management and Institutional Support: the project will seek to strengthen the

operational capacity of the Irrigation authority and the AREU.

Detailed Outputs and Activities 4.5.2 Derocking and Land preparation: The objective of derocking and land preparation process is threefold: (i) to remove all physical obstacles prior to the installation of the irrigation systems, (ii) extend the area of cultivable land by removing surface and sub-surface rocks, and (iii) to improve the scope for mechanisation of field operations. The land preparation process itself comprises two activities, which are derocking up to a depth of 450 mm and disposal of rocks. The derocking activities involve bulldozing of rocks and heaps, ripping and raking, and ripping/sub soiling. These tasks will be undertaken for the removal of rock piles and surface rocks of a diameter greater than 200 mm. Following derocking, the extracted rocks and rock piles will be disposed of by carting away. 4.5.3 To date, derocking has been completed on block 4, and on half of block 5, representing nearly 44 % of the project area owned by small planters. It is estimated that some 1.53 million tons of rocks will have to be removed from the remaining 766 ha. Derocking, which will be undertaken as an integral part of the project, will remove all major physical obstacles that are presently restricting the use of mechanisation in the project area. After the coarse derocking process, small planters will only be left with fine derocking (which involves the manual removal of gravels) and this level of derocking will enable planters to mechanise loading of sugar cane. 4.5.4 The derocking will be done from surface up to a maximum depth of 450 mm and will concern rocks of diameters 200 mm to 1,000 mm. When diameters are over 600 mm, the rocks will be fractured on site first before they are carried away. The rocks are essentially of basaltic type, with an average density of 2.5 ton/m3, and can be used for aggregates in roads construction. The derocking activities will produce on average 2000 tons/ ha. Derocking activities concern 90% removal of rocks per se and 10% land preparation.

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4.5.5 Technical Assistance: Under this component, the project will support training in gender sensitisation and community empowerment as well as improving community participation. This training will be targeted towards the communities, the technical staff of the PIU, construction labourers and supervisors, and women-only groups. The different training groups will be composed of both men and women equally, except for the latter group. The gender focal person of the Ministry of Agriculture will coordinate and supervise the implementation of these training activities and provide progress reports to the PIU and the Bank on activities accomplished. Specifically, the following activities will be undertaken: (i) 10 Campaigns for Gender Sensitisation and awareness raising for communities, labourers, and staff of the PIU; (ii) 8 workshops for Women’s empowerment and improved participation skills; (iii) 10 workshops for Improved community mobilization & participation skills and Environmental awareness. 4.5.6 This component will also involve the undertaking of independent project’s account audits and preparation of detailed engineering design and bidding documents for implementation of irrigation works. The latter will build on the feasibility study already available and which was financed by BADEA. The Consultant will investigate and present in his reports all issues related to implementation of the irrigation development project. The thematic aspects that will be presented will include in particular data collection, analysis and consolidation (topographical, geo-technical and hydrological) numerical simulation of hydraulic and hydrologic aspects (water abstraction, conservation, etc.); detailed design of structures and detailed planning of all field work; project implementation schedule; estimates of investment costs and expenditure schedules, list of goods and services and list of contracts; definition of generic requirements for Contractors (experience, staffing, financial etc.); preparation of technical drawings, maps, data compendiums in CD–ROM; preparation of bidding documents and any other required detailed technical analysis for successful project implementation. All maps to be produced will have to be in compliance with standards for detailed engineering design and bidding documents. 4.5.7 Installation of Irrigation Infrastructure: The irrigation systems for this project will consist of low-pressure overhead sprinklers disposed either on centre Pivots or movable solid sets. Centre pivots have been extensively used over the past 10 years by sugar estates in Mauritius and, through improvements; they are able to resist strong cyclonic winds when properly parked. Because the geometric moisture created by the rotating frame is circular, the soil area between adjacent pivots, which is not wetted, will be irrigated by a solid set system. These consist of a gun fixed on to hydrants that are located on predetermined positions, on a grid system. The hydrants are fixed to laterals fed by mains. While the delivery mains, the laterals, sub-laterals and the hydrants are permanent fixtures; the guns can be displaced according to an irrigation schedule to suit crop water requirements. It is usual to have a single gun to be displaced over an area of one hectare on a rotational basis. 4.5.8 Low overhead sprinklers and centre pivots present the advantage of having minimal requirements in terms of operation and management as compared to other systems such as drip irrigation. Further they do not pose a problem for the mechanization of harvesting and loading of sugar cane as the pivots can be parked away, and the system has low labour requirements, low operation and maintenance costs and is tolerant to water presence of particles in irrigation water. In order to allow cultivation of food crops besides cane, the system will be configured to apply irrigation doses of 12.5 mm net every 3.5 days, instead of irrigation doses of 25 mm every week, which is typical for sugarcane. This high frequency/low dose schedule suits vegetables, as 1300 mm/year is their upper level of requirement. The irrigation systems will not make provision for drainage as the terrain is naturally drained. Further, there is no need for sub-surface drainage as there is no water logging risks because of the high soil permeability and the coarse nature of the substratum.

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4.5.9 To bring water to the individual farmers’ plots, the project will lay some 23 km of laterals branching off from the A5 pipeline. Ductile iron pipes have been chosen on considerations of durability, lower cost, minimal maintenance requirement, and its resistance under load or to vandalism. Following this work and as part of the infield irrigation systems, the sub-laterals and infield pipe work will be constructed prior to the installation of the centre pivots and solid set irrigation systems. About 20 centre pivots will be installed throughout the project area. 4.5.10 Project Management and Institutional Support: The project will seek to improve operational capacity of the Irrigation authority and the AREU. Two social facilitators will be recruited to work full-time with the IA and assist in the grouping of farmers. This component will also seek to strengthen the understanding and the capacity of the stakeholders in terms of Participatory Irrigation Management (PIM). This aspect of modern irrigation environment is particularly important in the context of the progressive transfer of public irrigation schemes operation & maintenance to associations of the end users. Six 6 trainings in PIM will be supported by the project and will involve two representatives from the project’s Water Users’ Associations, two staffs from the Irrigation Authority and two staffs from the Agricultural and Rural Extension Unit (AREU). A set of equipment will be purchased by the project for AREU including portable data logger, pest and disease diagnosis set, seedlings equipment set etc. A total of five vehicles will be purchased by the project including two for the project implementation unit (PIU), which will be created within the IA (see section 5.2.3), two for the social facilitators that will be recruited and one for the AREU focal person for the project. 4.5.11 One major objective of the institutional support is to create all favourable conditions for the successful grouping of farmers in the initial stages and to encourage planters to take ownership of the various responsibilities involved in the project. Overtime, the operations, minor maintenance and management of the systems will be progressively transferred to the beneficiaries. Given the high concentration of small planters in the Northern Plains, effective grouping of planters is critical for the implementation of the project for the following reasons: (i) Derocking operations, which constitute an important component of the project, is only feasible on large units of land. Since landholding in the area to be derocked is highly fragmented (average plot size of 0.6 ha) regrouping is imperative for the successful conduct of this operation; (ii) the eventual introduction of mechanisation on the project area is only feasible on larger plots of land. Planters’ group will facilitate the pooling of resources for better utilisation of mechanised field operations such as planting, weeding, harvesting, loading and application of fertilisers; (iii) Centre pivot generate an irrigated circular patch of 50 hectares and this implies that the cropping pattern of the area under the command of each centre pivot must ideally be similar as the timing of irrigation and amount of water supplied for different crops differ. Synchronising the cropping pattern in terms of crop mix, timing of planting, harvesting, application of chemicals, etc. over a command area of 50 ha would require clear agreements between the planters concerned. Such arrangements can only be effective if the planters are organised into groups. 4.6 Production, Markets and Prices 4.6.1 Production: Sugar remains an important contributor to the Mauritian economy. In early 70s, sugar exports accounted for more than 90% of all exports. However, the Government of Mauritius has since undertaken policies of diversification, first based on manufacturing sector and then tourism and services sectors, so that the Mauritian economy has in the process moved away from its quasi-exclusive dependence on sugar to a more broad based and diversified one. To date sugarcane contributes 53% of the total agriculture contribution to GDP, while sugar accounts for 86% of all agricultural exports. Agriculture occupies around 43% of the country’s land resources of which sugar occupies 90%. In addition, the sugar sector accounts for 10% of total direct employment, with more than half mostly involved in sugar production. National sugar production is

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currently estimated at 620,000 tons on average. The production is mainly by small planters who number about 34,000, and who cultivate about 60% of the national crop. 4.6.2 The current yield levels of smallholder sugarcane growers under rain fed conditions in the project area, is 47.8 tons per ha. The target is to reach, with the project, an average yield of 89.2 tons per ha under irrigation. At full development, the project will produce 119,260 tons of cane or about 13,120 tons of sucrose from a total of 1,377 ha that will be put under irrigation. Total national sugar production at full development of the project will increase to about 633,120 tons, an increase of about 2%. This is a very small national increase. 4.6.3 World sugar production is estimated at 138.8 million tons in 2002/2003. The increase in sugar production in Mauritius would thus be a very small proportion (about 0.01%) of the world production. It would therefore have no effect on the sugar availability in the world market. 4.6.4 Mauritius is a net importer of foods. In 2000 it imported food worth MUR. 7.70 billion representing 14% of total imports. The main foods imported include cereals and cereal preparations, dairy and meat products, fruits, vegetables, vegetable oils and fat, beverages, tobacco and live animals. There are, however, 7,918 ha under food crops, mainly cabbages, carrots, tomatoes, potatoes and onions. Food crops account for 17% of the total agriculture contribution, while livestock accounts for 12%. Flowers, fruits and forestry account for 4%. There are 7 main species of fruits grown in the country: pineapple, bananas, citrus, litchi, mangoes, papaya and passion. They cover 2121 ha, mainly in small orchards and backyard gardens, Mauritius also exports very small quantities of high value crops such as flowers and foliage which accounts for 2% of total agriculture exports, tea 0.1%, vegetables 0.7% and other food products 10.6%. In 2001, total horticultural production (vegetables and fruits combined) was 129,010 tons. With the project, the country will be able to produce an additional 3,370 tons of vegetables and 2,410 tons of fruits. This is a very small increment and would mainly be for domestic consumption to substitute for imports. 4.6.5 Marketing: The marketing of sugar in Mauritius is handled by the Mauritius Sugar Syndicate (MSS), which is responsible for the domestic and export sugar marketing, and the distribution of revenues to sugarcane producers. Sugarcane millers and growers are members of the MSS. Sugarcane producers deliver cane to the mills where a control board establishes the sugar content on the basis of which MSS makes 80% advance payment to producers. The rest of the payment is made after the sugar is milled and sold. In the project area, sugarcane produced is milled at the Fuel Factory. MSS also markets molasses and bagasse produced in the country. 4.6.6 Mauritian sugar is sold in the domestic and export markets. In the export markets Mauritius has a preferential quota under the EU Sugar Protocol where it sells most of its bulk raw and special sugars, about 500,000 tons, and a smaller Special Preferential Sugar (SPS) quota, also to the EU of about 35,000 tons. It has also a United States Tariff Rate quota of about 12,000 tons. In the open world, Mauritius sells only special sugar amounting to about 8,000 tons, while the local market absorbs about 40,000 tons. About 95% of the Mauritian sugar is therefore sold in preferential markets. The sugar market is thus well established and the sugar produced under the project will be marketed in the same way. 4.6.7 Marketing of vegetables is carried out in different markets. There are 3 wholesale auction markets in the country where 60% to 70% of food crops are sold. One of these markets is in the capital city Port Louis, one in the East and another one in Central West. The auction market in Port Louis is open 6 days a week and the others three days a week. There are 20-30 auctioneers who collect produce from the producers and take it to these wholesale markets after paying farmers in cash. In some cases, the auctioneers advance farmers’ cash or inputs to enable them to produce

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food crops, which they sell back to them. Farmers also sell on retail in village markets. In addition, there are fairs where farmers sell their produce in stalls during these fairs, which are held 2-3 days a week. There are 18 of these open fairs. 4.6.8 Prices: Mauritius obtains high prices for its sugar from the preferential markets. The 2001/2002 crop fetched an average of US$ 535 per ton (about US 24¢ per lb) in the protocol market, US$ 528 per ton (also about US 24¢ per lb) in the SPS market, US$ 478 per ton (US 22¢ per lb) in the U.S market and US$ 192 per ton (US 9¢ per lb) in the domestic market. The Sugar Protocol is varied until 2008/2009 while the SPS agreement is varied until 2005/2006. With the pressure from globalisation and hence trade liberalisation in the world sugar market, there may be reduction in receipts from sugar sales when Mauritius no longer enjoys preferential treatment from its traditional export markets. However, as discussed in chapter 2, the country is determined to ensure that its sale receipts are maintained close to the current receipts. For this purpose, the Government has laid down various reforms which include: (i) reduction in cost of production through centralisation of the mills and a computerised control system; (ii) complete utilisation of the cane (the country is producing about 21% of its electricity production from bagasse); (iii) enhanced productivity through production of high yielding varieties and irrigation; etc. These measures are expected to reduce the cost of sugar production from US 18¢ per pound to about US 14¢ per pound. This is close to US 13¢ per pound experienced by Brazil, Colombia and Guatemala, the three countries with the lowest cost of sugar production. It is way below the cost of production by EU countries, which is about US 30¢ per pound, and yet the EU countries produce about 40% of the world production share of sugar. 4.6.9 The farm gate price of sucrose paid to farmers is obtained by averaging the prices from all the different markets including the proceeds obtained from the sale of molasses and bagasse. From these prices is removed the cost of freight and insurance, port handling, the global cess and the insurance on the crop. The net price arrived at is shared between the mill and the farmers at a ratio of 78% to the farmers and 22% to the mill to meet its milling costs. The sucrose content directly determines the price per ton of sugarcane. In 2002, the farm gate price was MUR 12,835 per ton of sucrose. 4.6.10 Food crop prices peak between February and April. IN 2001, retail prices for the major vegetable crops ranged from: cabbages MUR 4.50/kg to MUR 9.60/kg, carrots MUR 20.40/kg to MUR 43.60/kg, onions MUR 17.00/kg to MUR 24.00/kg, potatoes MUR 14.00/kg to MUR 17.90/kg and tomatoes MUR 14.9/kg to MUR 57.60/kg 4.7 Environmental Impact 4.7.1 The project is classified as Category 2. It has limited environmental impacts that will be mitigated by undertaking specific activities described below. Activities related to physical project implementation consist essentially of derocking and land preparation, which involves removal of rocks having diameter between 200 mm and 1,000 mm, and laying of water conveyance pipes for laterals, which will require temporary excavation along the pipes layout during implementation. Potential negative impact includes the population in the project area being exposed to nuisance caused by noise of machines during derocking and land preparation. There will be also temporary excavation to lay the irrigation network pipes but the excavations will be limited along the pipes layout. Other potential negative impacts may result from excessive use of fertilizers and pesticides. 4.7.2 The mitigation/enhancement measures consist of restricting derocking and land preparation activities to take place exclusively during the day and on working hours. Also, in order to prevent any production loss due to the temporary excavations, the contractors will be requested to lay the pipes preferably on existing machine tracks and only after the harvesting periods. Further, the

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Agricultural Research and Extension Unit (AREU), the Mauritius Sugar Industry Research Institute (MSIRI) and project’s awareness campaigns on mitigation / enhancement of environmental impacts of irrigation projects will sensitize the farmers community on proper use of fertilizers and pesticides so as to prevent excessive use. Finally, the use of the centre pivot and solid sets system irrigation technology will not occasion extended contact of farmers with irrigation water which will prevent water-borne diseases. 4.7.3 The Ministry of Environment and National Development Unit will be represented in the Project Steering Committee to ensure compliance with prevailing regulations. The Technical Assistance component of the project provides for training in environmental aspects of irrigation planning and project management for project officers of the Irrigation Authority, the Agricultural Research and Extension Unit (AREU) and representatives of the farmers’ Water Users’ Associations. A summary of the project environmental and social management plan is appended as Annex 8. The total costs of the social benefits enhancement measures and of environmental mitigation are estimated at UA 0.19 million and have been fully incorporated in the project costs. 4.8 Social Impacts The project is expected to have positive impacts on the lives of people in the area. It is expected that due to the increased land brought under cultivation, the project beneficiaries will also experience an improvement in per capita income. Furthermore, as a result of increased production and sales, it is expected that the standard of living of the population will be improved in many ways. On-farm employment opportunities will be increased, especially for women who are traditionally employed as labourers on sugar plantations. An additional beneficial feature of the project is off-farm employment creation. There is a wide scope for backward and forward industry linkages to develop. Entrepreneurial activities in supplying inputs and other support services to the production activity will develop creating jobs for skilled and semi-skilled artisans. 4.9 Project Costs 4.9.1 The total cost of the project is estimated at UA 16.57 million (MUR 625.78 million) out of which UA 10.45 million or 63 % will be in foreign currency and UA 6.12 million or 37 % will be in local currency. Physical contingency of 10% has been applied to all civil work costs while no physical contingency has been applied to the Institutional Support costs. Different price contingencies have been applied for local and foreign costs. Price contingencies have been applied to local costs at the current annual inflation rate of 6% compounded, while for the foreign costs, price contingencies have been applied at an annual rate of 2.5% compounded. The latter is the most recent estimate of projected increases in the world commodity prices (as reflected by the index of Unit Value of Manufactured Exports (MUV) for 2000-2010). Total contingencies amount to UA 2.64 million (MUR 99.64 million) or 15.9 % of the total project cost. The costs have been estimated net of taxes.

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Table 4.1

Summary of Project Cost Estimates by Component

COMPONENT (MUR

Million) (UA

Million) % F. E. Local Foreign Total Local Foreign Total

A. Derocking and Land Preparation 131.97 0.00 131.97 3.49 0.00 3.49 0 B Technical Assistance 2.27 36.75 39.02 0.06 0.97 1.03 94C. Installation of Irrigation Infrastructure 53.88 292.47 346.35 1.43 7.74 9.17 84D. Project Management and Institutional Support 1.51 7.18 8.69 0.04 0.19 0.23 83Total Base Costs 189.63 336.40 526.02 5.02 8.90 13.92 64 Physical Contingencies 18.59 32.82 51.42 0.49 0.87 1.36 64 Price Contingencies 22.95 25.27 48.22 0.61 0.67 1.28 52Total Project Cost 231.17 394.49 625.66 6.12 10.44 16.57 63

Table 4.2 Summary of Project Cost Estimates by Category of Expenditure

CATEGORY (MUR

Million) (UA

Million) % F.E. Local Foreign Total Local Foreign Total I. Investment Costs A. Civil works 183.58 292.47 476.05 4.86 7.74 12.60 61 B. Equipment 0.00 7.18 7.18 0.00 0.19 0.19 100 C. Services 2.27 36.75 39.02 0.06 0.97 1.03 94 Total Investment Costs 185.85 336.40 522.25 4.92 8.90 13.82 64 II. Recurrent Costs A. Operation and Maintenance 2.27 0.00 2.27 0.06 0.00 0.06 0 B. Staff allowance 1.51 0.00 1.51 0.04 0.00 0.04 0 Total Recurrent Costs 3.78 0.00 3.78 0.10 0.00 0.10 0Total Base Costs 189.63 336.40 526.02 5.02 8.90 13.92 64 Physical Contingencies 18.59 32.82 51.42 0.49 0.87 1.36 64 Price Contingencies 22.95 25.27 48.22 0.61 0.67 1.28 52Total Project Costs 231.17 394.49 625.66 6.12 10.45 16.57 63 4.9.2 Cost estimates summarised in tables 4.1 and 4.2 above are based on prices that prevailed in April 2003 and updated in December 2003. Cost for the civil works is based on quotations received from local contractors and suppliers, and costs incurred for similar works in the country. Vehicles and equipment costs are based on quotations from local suppliers. Costs for consultancy services are based on international rates, while salaries for the recruited staff are based on the local private sector’s salary scales. Costs of other activities are based on the costs of similar activities undertaken in the country. 4.10 Sources of Financing and Expenditure Schedule The project would be financed by ADB, BADEA and GOM. The ADB loan amounting to UA 8.41 million will finance 100% of the installation of the irrigation infrastructure in blocks 4, 5 and 7 amounting to UA 6.96 million or 64% of the activity cost, 100% of the technical assistance costs amounting to 1.27 UA million, 100% of the Project Management and Institutional Support activities amounting to UA 0.18 million. BADEA loan will finance 100% of the installation of irrigation infrastructure in blocks 6 and 8B amounting to UA 3.92 million. The Government funds will finance 100% of the cost associated with derocking amounting to UA 4.15 million and 100 % of the

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operation and maintenance cost for the irrigation infrastructure amounting to UA 0.09 million. ADB resources will contribute 50.7% of the total project cost, while BADEA’s resources will contribute 23.7%. The Government’s contribution will amount to 25.6%. In addition, the Government will meet all the taxes. The source of finance is detailed in Table 4.3. The expenditure schedule is presented in Table 4.4 and 4.5 below while the provisional List of Goods and Services is detailed in Annex 4.

Table 4.3 Sources of Finance (in UA million)

SOURCE Foreign Exchange Local Cost Total % of Total ADB 7.17 1.24 8.41 50.7 BADEA 3.28 0.64 3.92 23.7 GOM 0.00 4.24 4.24 25.6 Total 10.45 6.12 16.57 100.0

Table 4.4 Expenditure Schedule by Component (in UA million)

2005 2006 2007 2008 2009 TotalA Derocking and Land Preparation 1.40 1.40 0.70 - - 3.50B Technical Assistance 0.36 0.18 0.18 0.18 0.13 1.03C Installation of Irrigation Infrastructure 0.00 2.24 3.02 3.08 0.82 9.17D Project Management and Institutional

Support 0.07 0.02 0.11 0.01 0.01 0.23

E Total Base cost

1.85 3.84 4.01 3.27 0.96 13.93

F Physical Contingency 0.18 0.38 0.39 0.32 0.09 1.36G Price Contingency 0.06 0.26 0.40 0.40 0.16 1.28H Total Project Cost 2.09 4.48 4.80 3.99 1.21 16.57

Table 4.5 Expenditure Schedule by Source of Finance (In UA million)

Source 2005 2006 2007 2008 2009 Total ADB 0.48 1.84 2.62 2.64 0.83 8.41 BADEA - 0.94 1.30 1.33 0.35 3.92 GOM 1.59 1.69 0.89 0.03 0.04 4.24 Total 2.07 4.47 4.81 4.00 1.22 16.57

5. PROJECT IMPLEMENTATION 5.1 Executing Agency The overall responsibility for implementation of the project will rest with the Ministry of agriculture, food technology and natural resources (MAFTNR) and the executing agency will be the Irrigation Authority. The IA will act under supervision of a Project Steering Committee, which will report to the Permanent Secretary of the MAFTNR. The capacity of IA as an executing agency has been reviewed and found satisfactory on the grounds of staffing and experience. Further, it will receive background support from other parastatal agencies such as the Agricultural Research and Extension Unit (AREU) and Farmers Service Corporation (FSC). The roles of the different interveners are outlined below.

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5.2 Institutional Arrangements 5.2.1 The institutional arrangements that will be put in place for the successful implementation of this project are outlined in the organizational chart presented in annex 2 and are described below. A Project Steering Committee will be set up to provide programmatic and strategic guidance, direction, and oversight to the project. The steering committee will ensure that project objectives are achieved, in the framework of the government’s strategy, and that the project remains within budget and on schedule. Steering committee members will be nominated by each parastatal organization (SPCU, IA, AREU, SPMPC and FSC) and will have senior expertise in their area of specialization. The steering committee will also include representatives of the Ministry of Finance to ensure coordination with the other projects, of the Ministry of Environment and National Development Unit to ensure compliance with prevailing regulations, as well as a three representatives of the farmers of the project area amongst which at least one woman. The project steering committee will review and approve annual work plans and will receive and review annual substantive and financial reports on project activities. The steering committee is expected to meet at least every three months. The permanent secretary of the MAFTNR will chair the committee, while the IA will provide secretariat support to the committee. 5.2.2 As the Executing Agency, the IA will report to the project Steering Committee and will be responsible for, inter alia, (i) supervising the consultants in charge of the detailed design of the irrigation system, (ii) supervising the civil works contractors that will install of the irrigation system, (iii) preparing and sending progress reports to the Steering Committee, BADEA and the ADB, (iv) any other activity concurring to successful project implementation such as arrangements for project supervision by BADEA and ADB, timely submission of audit reports, follow up of disbursement and procurement issues, etc. 5.2.3 Within the IA, a Project Implementation Unit (PIU) will be constituted to be responsible for the day-to-day implementation and monitoring of project activities. The PIU will be composed of (i) one engineer with an experience of at least 10 years to be the Project Manager, (ii) one engineer with an experience of not less then 5 years to be the Assistant Project Manager, (iii) one representative of SPCU, (iv) an accountant, (v) two social facilitators that will be recruited specifically for this project and (vi) a driver. Within the PIU, the two social facilitators will be responsible to organize the trainings and workshops on gender sensitisation, community empowerment as well as improvement of community participation. These trainings and workshops will be targeted towards the communities, the technical staff of the PIU, construction labourers and supervisors, and women-only groups. The different training groups will be composed of both men and women equally, except for the latter group. The gender focal person of the Ministry of Agriculture will coordinate and supervise the implementation of these training activities and provide progress reports to the PIU and the Bank on activities accomplished. 5.2.4 The FSC will intervene to facilitate the grouping of smallholdings of planters into WUAs, with collaboration of IA, and to monitor the derocking and land preparation works with assistance from the SPMPC. It will also help planters to improve their cultural practices against the constraints related to the small size and fragmentation of their holdings. In cooperation with FSC, AREU will provide research and extension services to the planters for better agricultural production, and to meet the policy requirements of the government in terms of agricultural diversification and food production. The MSS will be responsible for selling the additional sugar produced from the command area. The SPMPC is already carrying out derocking and land preparation for this project under contract to the Government, which is responsible for execution of this component. Some of the work related to this component (like stone carting, furrowing) are however expected to be undertaken by the farmers themselves who may rent agricultural machinery from the SPMPC at a subsidised rate.

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5.2.5 Water Users’ Associations (WUAs) will be set up and organized by FSC in collaboration with the IA and AREU, who will ensure gender equity in the respective WUAs according to the participating farmers gender representation. The objective of the WUAs shall be to establish, promote and improve irrigated agriculture in the territory of the Association. Their functions will be in particular to collect water charges and irrigation charges and dues from the members as needed; to receive for the benefit of its members, donations, financial and technical assistance and other necessary services related to the development of irrigated agriculture and water management; and to promote the introduction of new irrigation techniques with a view to improving water utilisation, agricultural production and economic benefits. 5.3 Supervision and Implementation Schedules

The implementation phase of the project comprises derocking and land preparation, survey and planning, detailed design of the project, preparation of contractual documents and work execution. The project activities will start in January 2005 and are expected to be completed in December 2009. Table 5.1 below presents the tentative implementation schedule. Regular supervision missions will be carried out at intervals agreed by IA and ADB, with an average of 1.5 supervisions per year during project implementation. The Government and the Bank will undertake a Mid-Term Review at the end of the second year of project implementation, tentatively in June 2007. The ensuing report would include a thorough analysis of implementation issues and any possible changes in project activities and budget requirements.

Table 5.1

Tentative Implementation Schedule

Activity Start End ResponsibilityPresentation to ADB Board Loan signature General Procurement Notice Satisfaction of conditions for Loan Effectiveness Satisfaction of conditions for First Disbursement

April 04 May 04 June 04 June 04 Sep 04

- - - - -

ADB ADB & GOM

ADB GOM GOM

Recruitment of Consultant for detailed design and work supervision Recruitment of Contractors for installation of Irrigation infrastructure

July 04

Oct. 05

Nov. 04

Jan. 06

GOM (IA),

ADB

GOM (IA), ADB

Derocking and Land Preparation Detailed design of irrigation system Installation of Irrigation Infrastructure

Jan. 05 Feb. 05 Mar. 06

June 07 Sep. 05 Mar. 09

Contractors Consultant Contractors

Joint ADB / BADEA Supervisions: 2 every 3 years Mid-Term Review

ADB / BADEA

June 2007 5.4 Procurement Arrangements 5.4.1 Procurement arrangements are summarized in Table 5.2 below. All procurement of goods, works and acquisition of consulting services financed by the Bank will be in accordance with the Bank’s Rules of Procedure for Procurement of Goods and Works or, as appropriate, Rules of Procedure for the Use of Consultants, using the relevant Bank Standard Bidding Documents.

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Table 5.2 Procurement Arrangements

UA million

Project Components ICB National Shopping

Shortlist Non-Bank Funded

Total

1. Civil Works 1.1 Infrastructure

11.11 (6.96)

3.92 15.03 (6.96)

2. Goods 2.1 Equipment and Machinery

0.18 (0.18)

0.18 (0.18)

3. Consulting Services 3.1 Studies and Supervision 3.2 Technical Assistance 3.3 Training

0.72

(0.72) 0.30

(0.30) 0.25

(0.25)

0.72

(0.72) 0.30

(0.30) 0.25

(0.25) 4. Miscellaneous 0.09 0.09

Total 11.11 (6.96)

0.18 (0.18)

1.27 (1.27)

4.01 16.57 (8.41)

Note: Figures in parenthesis are the amounts financed by the ADB loan 5.4.2 Civil Works: Procurement of civil works will be carried out under International Competitive Bidding (ICB) procedures. Two such contracts will be awarded for the installation of irrigation infrastructure in irrigation blocks 4, 5 and 7, and valued in total at UA 6.96 million. The first contract will cover blocks 4 and 7 with an estimated value of UA 3.67 million, and the second contract will cover block 5 with an estimated value of UA 3.29 million. 5.4.3 Goods: Contracts for goods will be awarded under the National Shopping procedure. Three contracts will be awarded for the procurement of five vehicles, a set of specialised equipment (portable data logger, pest and disease diagnosis equipment set, seedlings equipment set and processing services equipment set), and a set of IT equipment, and valued in total at UA 0.18 million. The National Shopping method of procurement has been selected in view of the small amounts involved and the availability of local suppliers. 5.4.4 Consulting Services and Training: Procurement of consulting and training services will be undertaken in accordance with the Bank’s “Rules of Procedure for the Use of Consultants”. Two contracts will be awarded for the detailed design of the irrigation system & work supervision and for training on irrigation management, and valued in total at UA 0.72 million. The selection procedure will be that based on technical quality with price consideration and a weight ratio of 70:30. 5.4.5 Executing Agency: The Irrigation Authority will be responsible for the procurement of goods, works, consulting services and training services. The resources, capacity, expertise and experience of the Irrigation Authority are adequate to carry out the procurement. 5.4.6 General Procurement Notice: The text of a General Procurement Notice (GPN) to be agreed with the Irrigation Authority and it will be issued for publication in Development Business, upon approval by the Board of Directors of the Loan Proposal. 5.4.7 Review Procedures: The following documents are subject to review and approval by the Bank before promulgation:

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o Specific Procurement Notices o Tender Document or Requests for Proposals from Consultants o Tender Evaluation Reports or Reports on Evaluation of Consultants’ Proposals, including

recommendations for contract award o Draft contracts, if these have been amended from the drafts included in the tender invitation

documents. 5.5 Disbursement Arrangements The ADB’s loan will be disbursed through the special account method and the direct payment method. The Borrower will open a special account in a local bank acceptable to the ADB. The special account will be used to deposit part of the loan resources and will be replenished after the Executing Agency has provided valid justifications of at least 50% of the previous deposit. The opening of the special account will be a condition precedent to first disbursement. 5.6 Monitoring and Evaluation The IA will be responsible for monitoring the projects inputs, outputs and impacts, under the supervision of the National Steering Committee and the MAFTNR. The IA will prepare progress reports every three months for submission to the Bank and the Government. The reports will provide information, analysis and recommendations on progress in the execution of the various components of the project, namely on derocking activities and installation of irrigation systems and will include the following technical items: (i) evolution of performance indicators such as area derocked, tractor hours used, quantity of rocks carted away, installation of laterals and in-field systems by area / km, number of users to the system; (ii) status of work in progress against key project milestones; (iii) revised implementation schedule; (iv) analysis of current versus budgeted expenditures; (v) updated costs estimates; (vi) project bottlenecks and remedial actions taken. The social facilitators recruited by the project will report on the various aspects related to the beneficiaries such as formation of Water Users’ Associations, organisation of training or extension sessions, involvement of women in management and field activities, etc. 5.7 Financial Reporting and Auditing 5.7.1 The Borrower will open an account in a local commercial bank specifically for the project funds and will ensure that the project funds are not commingled with any other funds from either GOM or any other source. IA has an accountant who will be responsible for the management of the accounts of the project. S/He will ensure that the accounts are maintained by category of expenditure, source of funding and that a system of internal control is put in place to ensure prompt recording of transactions, timely production of accounts and reports and safeguard the project assets. The IA will maintain the financial records in accordance with internationally acceptable accounting procedures. 5.7.2 The financial statements of the project will be audited by independent auditors to be recruited under this project. The audited financial statements will be submitted to the Bank for review no later than six months after the end of each accounting year.

5.8 Aid Co-ordination 5.8.1 At the national level the aid coordination is done through the Ministry of Finance. UNDP is the body that plays coordinating role for donors and technical partners. Very few agencies and international institutions have their offices in Mauritius. The majority of the organisations are stationed in the region as they have regional functions and mandates in the Indian Ocean. Others

26

operate from their respective headquarters. There is no formal coordination mechanism among donors. However, the UN Resident Coordinator has initiated the preparation of a Donor’s Profile intended to be a mechanism for better coordination among donors and an instrument to foster resource mobilisation and partnership by providing information on the activities of the international community in Mauritius. The profile indicates which donors are represented in Mauritius, as well as non-resident agencies with programme activities in the country. It also highlights their areas of interest and identifies the niches in which they are likely to intervene. 5.8.2 In the context of this project the BADEA and ADB will cooperate on a regular basis through the respective project officers. However, each donor will operate independently in terms of disbursement and procurement given that a fully parallel financing scheme has been adopted and that the co-financiers are providing funds for different irrigation blocks. 6. PROJECT SUSTAINABILITY AND RISKS 6.1 Recurrent Costs

The recurrent costs of the project comprise operation and maintenance costs for the irrigation infrastructure and for the project vehicles, and will be supported by the government. However, in line with the government policy which targets full recovery of all operation and maintenance costs of public irrigation schemes, the totality of the recurrent costs related to operation and maintenance of the irrigation infrastructure will be taken over by the farmers once the crops have matured and are generating income. The recurrent costs of the project are low because operation of the irrigation system does not require pumping, as water pressure will result from gravity. Indeed, the water will flow from the Midlands dam, which is located upstream. 6.2 Project Sustainability 6.2.1 The sustainability of the project is good in terms of maintenance requirements of the irrigation system, which is robust. Indeed, the pipes are buried and have a nominal lifespan of 25 years while the centre pivots have a lifespan of 12 to15 years. The main maintenance activities will consist in replacing sprinklers from time to time. In terms of the project environment, an appropriate institutional support has been put in place by the government since NPIP I to create conditions for project’s sustainability. The project beneficiaries will be able to count on the Mauritius Sugar Syndicate for marketing their sugar cane products, on AREU and APEXHOM to assist on developing and marketing the food crops that would be produced by those opting for diversification. Moreover farmers have access to training programs organised by the Farmers Service Corporation to improve their skills and managerial capabilities. The institutional support given by this project and which will include training program for beneficiaries will also help to strengthen the project sustainability. As for the effective management of the project the first phase of the NPIP project has shown that the WUAs can work on a satisfactory fashion and the grouping of planters for this project is therefore expected to operate in an effective manner. 6.2.2 In the project start, system operation and maintenance will be done by IA and this will broadly comprise regular inspection, testing and repairs, control of water flow and collection of dues for consumption. However, in keeping with government’s policy, the WUAs will progressively take over to operate and maintain the irrigation system, and to pay for 100% of costs related to operation and maintenance. As a result of that cost transfer, projections of the Irrigation Authority income and expenditure account show a general surplus of MUR 15.83 millions in 2006, up from a general deficit of MUR 5.04 million in 2003, due to the progressive increase of irrigation dues paid by farmers and also to progressive decrease of irrigation overheads following the transfer of operation and maintenance to WUAs.

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6.3 Critical Risks and Mitigating Measures 6.3.1 The heavy reliance of the agriculture sector on the sugar industry, which is itself dependent on the single European Union market constitutes a critical risk factor for the continued prosperity of Mauritius and the success of this project. The sugar sector competitiveness of the island tends to be relatively low as compared to countries such as Brazil or Mozambique due essentially to its higher labour cost. However, Mauritius has good ties with the EU and, among all ACP countries, only Mauritius has met its export quota every year. Further the possibility given under this project to produce food crops under the diversification policy of the Government opens new horizons and helps to mitigate risks associated with sugar cane monoculture. 6.3.2 In terms of availability of water resources the risk is considered to be low as the Midland dam, which was completed in 2002, was full at the end of 2003. This should facilitate the management of extraordinary droughts such as the one of year 1999. As mentioned earlier, the project has a quota 28 mm3/year that does not constrain the use of resource for other purposes. With regard to the cyclones, risks are minimal as sugar cane is resistant to high-speed winds and the centre pivot can be protected adequately through judicious parking. Actually the loan will be subject to the IA acquiring the required area to park the centre pivots in prevision of cyclone occurrence. 6.3.3 Bank’s projects in Mauritius have shown in the past a high rate of partial or total cancellation, as it can be seen from section 2.5.3. Lessons outlined in the project completion report of the Rose-Belles Sugar Rehabilitation project, which registered a 74.3% cancellation, have been incorporated in setting this project up. Indeed, in terms of project implementation, the Special account method of disbursement has been preferred to the Reimbursement method so as to avoid unnecessary disbursement delays and accumulation of commitment fees, which are susceptible to lead to project cancellation. Further, realistic targets have been set to the extent that actual derocking is already underway by the government and that the physical implementation bottlenecks are already well known by the executing agency, as this project is part of the second phase of the NPIP. Finally, full adherence and cooperation of beneficiaries to the project will be sought and motivated through the work of two social facilitators that will be recruited by the project. 7. PROJECT BENEFITS

7.1 Financial Analysis

The project is financially viable, with the Financial Internal Rate of Return estimated at 21.6% over 25 years. In order to undertake the financial analysis, farm budgets were prepared for production of sugarcane and food crops (vegetables and fruits). At farm level, farmers growing sugarcane on 80% of their 0.55 ha, and food crops on the remaining 20% would earn an average net income of about US$ 2,150, at the current farm gate price of sugar and food crops. This is a significant increase from the US$ 360 that would be earned per farmer without the project. Such high returns would be a result of growing vegetables, which, with irrigation would be grown at least three times a year, and their farm gate prices are significantly higher than sugar farm gate prices. They are, however, more susceptible to cyclones and sugarcane production is necessary to cushion the farmers during the years of cyclone. At full development of the project, the total net income generated would average about US$ 4.6 million or MUR 129 million. The calculation of the FIRR is presented in Annex 5.

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7.2 Economic Analysis

In order to assess the economic viability of the project, the Economic Internal Rate of Return (EIRR) has been calculated at April 2003 constant prices. The project costs and benefits have been projected over a period of 25 years. The benefits have been calculated on the incremental production of sugar on 80% of the project area and vegetables and fruits on 20% of the project area. The costs include the investment cost, operating costs of the project and incremental sugar, vegetables and fruits production costs. At full development of the project, which is estimated to be the 7th year of the project when all cane would be planted, the economic value of the incremental net benefits accruing to the project would average about MUR 114.86 million (US$ 4.13 million) per year. The EIRR has been estimated at 16.4%. Although this EIRR has been attained as a result of growing both sugar cane and food crops, it is worth noting that about 26% of the investment cost relates to derocking, an activity, which is peculiar to Mauritius, and one that inflates the project cost. Without this activity, the EIRR would have been higher, and therefore the project would still be viable even with the production of sugar alone. The calculation of the EIRR is presented in Annex 6A, while the assumptions made in calculating the EIRR are presented in Annex 6B. 7.3 Social Impact Analysis 7.3.1 The project is expected to significantly improve the livelihood of household headed by women in the project area by increasing their production of food crops and resulting income. Furthermore, it is expected that women and youth will particularly benefit from increased opportunities in the agro-processing sub-sector, with improved opportunities for local as well as export marketing. Entrepreneurship and small business development provide a base for economic diversification and will be particularly favourable for the youth, single women and landless individuals who are presently economically disadvantaged and who make up a greater majority of the unemployed in the country.

7.3.2 The project will also strengthen women’s empowerment and community participation skills through targeted sensitisation, awareness raising, and effective consultation mechanisms in project implementation. Furthermore, the production models used are based on smallholder farming resulting in increased numbers of farmers producing high-value/ high-income crops. This in turn will increase employment opportunities through increased demand for labour. Farmers’ risks are considerably reduced through irrigation and improved technology and cropping strategies. This will contribute to greater food security and better standards of living. 7.4 Sensitivity Analysis 7.4.1 Sensitivity analysis has been done for various possible situations. The most likely negative situations identified for this project are the following: (i) reduction in the price of sugar in the export market together with reduction of food crop prices in the domestic market, and hence reduction in the benefits; (ii) escalation of investment cost of the project; and (iii) delay in the implementation of the project. A reduction in the price of sugar by 10% would reduce the EIRR to 15.9% while a reduction in the price of vegetables and fruits by 10% would reduce the EIRR to 14.6%. An increase of 10% in project costs due to escalation in cost of construction would reduce the EIRR to 15.%. A delay of 2 years in project implementation was also considered and found that it would reduce EIRR to 12.2%. The sensitivity analysis shows that the project is fairly sensitive to changes in the cost of construction and price of vegetables and fruits, and very sensitive to delay in project implementation. It is not very sensitive to changes in price of sugar.

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7.4.2 Familiarity of the executing agency with the type of works involved are likely to reduce risks of delays in implementation, as the phase 1 of the Northern Plains Irrigation Project was successfully implemented. Despite that, some measures have agreed upon with the executing agency and the government in order to reduce risks of delays: (i) the project is planned over 5 years and reasonable targets in terms of implementation rates have been set; (ii) the use of the special account method of disbursement will facilitate quick implementation by reducing delays of payment; (iii) preparation of requests for proposals for the consultancy services will be initiated following the advance procurement action procedure; (iv) the government is already proceeding to implement the first project component which is derocking and land preparation. Finally, it is worth mentioning that the government has undertaken to proceed quickly with the satisfaction of loan conditions as soon as the loan agreements are signed with ADB and BADEA. 8. CONCLUSIONS AND RECOMMENDATIONS 8.1 Conclusions The project described in the present report is one of the Government’s high priority. It is technically and economically viable, socially and environmentally sound. Given the social and economic importance of the project area, which is characterized by a fairly high concentration of small farmers, Government has embarked on a large irrigation project. The Northern Plains Irrigation Project is an important part of Government’s strategy towards increasing the revenue of the small planters and improving their standard of living. The project is consistent with Bank Group’s country strategy which, for the Agriculture sector, supports poverty reduction and food security. 8.2 Recommendations and Conditions for Loan Approval 8.2.1 It is recommended that a loan not exceeding UA 8.41 million from ADB be granted to the Mauritian Government for the implementation of the Northern Plains Irrigation Project as described in this report, subject to conditions specified in the loan agreement. A. Conditions Precedent to Entry into Force of the Loan Agreement

(i) The entry into force of the loan agreement shall be subject to the conditions of Section 5.01 of the General Conditions Applicable to Loan Agreement and Guarantee Agreements of the Bank.

(ii) The Government provides evidence of BADEA’s undertaking to co-finance the

project.

B. Conditions Precedent to First Disbursement

(i) Evidence that a special account has been opened by the Borrower to receive the ADB loan proceeds (paragraph 5.5);

(ii) Evidence of the establishment of the PIU which will be composed as follows: (i) one

engineer with an experience of at least 10 years to be the Project Manager, (ii) one engineer with an experience of not less then 5 years to be the Assistant Project Manager, (iii) one representative of SPCU, (iv) an accountant, (v) two social facilitators and (v) a driver (paragraph 5.2.3)

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(iii) Evidence of the establishment of a Project Steering Committee which will be composed as follows: The permanent Secretary of the Ministry of Agriculture, food Technology and Natural Resources, who will be the chairperson; one representative of each of the parastatal organizations intervening in the project (SPCU, IA, AREU, FSC and SPMPC); one representative of the Ministry of Finance; one representative of the Ministry of Environment and National Development Unit; three representatives of farmers of the project area, amongst which at least one woman. (paragraph 5.2.1).

C. Other Conditions

(i) Evidence that IA has finalised the organisation of Water Users’ Associations by year

two of the project (section 4.5.11).

Annex 1

MAP OF MAURITIUS AND PROJECT AREA

This map was provided by the African Development Bank exclusively for the use of the readers of the report to which it is attached. The namused and the borders shown do not imp ly on the part of the Bank and its members any judgment concerning the legal status of a territory nor any approval or acceptance of these borders.

Annex 2

PROJECT ORGANISATIONAL CHART

CONTRACTORS

IAIrrigation Authority

MAFTNR

(Agric. Research & Extension)

Water User Associations

(Derocking Component)

CONSULTANTSDesign & Supervision

SMPC

WUAs

(Steering Committee)

Civil Works

AREU

F E L o c a l T o t a l F E L o c a l T o t a l B A D E A A D B G o v .1 . G o o d s1 . 1 P o r t a b le D a t a L o g g e r 0 . 3 8 0 . 3 8 0 . 0 1 0 . 0 1 0 . 0 11 . 2 P e s t a n d D is e a s e D ia g n o s is E q . S e t 0 . 7 6 0 . 7 6 0 . 0 2 0 . 0 2 0 . 0 21 . 3 S e e d l in g s E q . S e t 0 . 7 6 0 . 7 6 0 . 0 2 0 . 0 2 0 . 0 21 . 4 P r o c e s s in g S e r v ic e s E q . S e t 1 . 5 1 1 . 5 1 0 . 0 4 0 . 0 4 0 . 0 41 . 5 V e h ic le s 3 . 4 0 3 . 4 0 0 . 0 9 0 . 0 9 0 . 0 91 . 6 I T E q u ip m e n t 0 . 3 8 0 . 3 8 0 . 0 1 0 . 0 1 0 . 0 1

2 . W o r k s2 . 1 D e r o c k in g a n d L a n d p r e p a r a t io n 1 3 1 . 9 7 1 3 1 . 9 7 3 . 4 9 3 . 4 9 3 . 4 92 . 2 I r r ig a t io n I n f r a s t r u c t u r e b lo c k 4 8 4 . 7 6 1 4 . 9 6 9 9 . 7 1 2 . 2 4 0 . 4 0 2 . 6 4 2 . 6 42 . 3 I r r ig a t io n I n f r a s t r u c t u r e b lo c k 5 8 8 . 2 9 1 5 . 5 8 1 0 3 . 8 7 2 . 3 4 0 . 4 1 2 . 7 5 2 . 7 52 . 4 I r r ig a t io n I n f r a s t r u c t u r e b lo c k 6 9 1 . 8 2 1 6 . 2 0 1 0 8 . 0 2 2 . 4 3 0 . 4 3 2 . 8 6 2 . 8 62 . 5 I r r ig a t io n I n f r a s t r u c t u r e b lo c k 7 1 4 . 1 3 2 . 4 9 1 6 . 6 2 0 . 3 7 0 . 0 7 0 . 4 4 0 . 4 42 . 6 I r r ig a t io n I n f r a s t r u c t u r e b lo c k 8 B 1 3 . 4 8 2 . 3 8 1 5 . 8 6 0 . 3 6 0 . 0 6 0 . 4 2 0 . 4 2

3 . C o n s u l t a n c y S e r v i c e s3 . 1 D e s ig n a n d w o r k s u p e r v is io n 2 2 . 4 0 0 . 0 0 2 2 . 4 0 0 . 5 9 0 . 5 9 0 . 5 93 . 2 S o c ia l F a c i l i t a t o r s s a la r ie s 2 . 2 7 2 . 2 7 0 . 0 6 0 . 0 6 0 . 0 63 . 3 A u d i t in g S e r v ic e s 6 . 8 0 6 . 8 0 0 . 1 8 0 . 1 8 0 . 1 8

4 . O p e r a t i n g C o s t s4 . 1 O p e r a t io n & M a in t e n a n c e 0 . 0 0 2 . 2 7 2 . 2 7 0 . 0 6 0 . 0 6 0 . 0 6

5 . M i s c e l l a n e o u s5 . 1 T r a in in g o n P I M 1 . 5 1 1 . 5 1 0 . 0 4 0 . 0 4 0 . 0 45 . 2 T r a in in g o n S o c ia l & E n v i r o n . A w a r e n e s s 6 . 0 4 0 . 0 0 6 . 0 4 0 . 1 6 0 . 1 6 0 . 1 65 . 3 P r o j e c t I m p le m e n t a t io n S t a f f 1 . 5 1 1 . 5 1 0 . 0 4 0 . 0 4 0 . 0 4

B a s e C o s t s 3 3 6 . 4 0 1 8 9 . 6 3 5 2 6 . 0 2 8 . 9 0 5 . 0 2 1 3 . 9 2 3 . 2 8 7 . 0 9 3 . 5 5P h y s . & P r ic e C o n t in g . 5 8 . 0 9 4 1 . 5 4 9 9 . 6 4 1 . 5 4 1 . 1 0 2 . 6 4 0 . 6 4 1 . 3 2 0 . 6 9

T o t a l C o s t 3 9 4 . 4 9 2 3 1 . 1 7 6 2 5 . 6 6 1 0 . 4 4 6 . 1 2 1 6 . 5 6 3 . 9 2 8 . 4 1 4 . 2 4

A N N E X 4

M U R m i l l i o n U A m i l l i o n C o - f i n . ( U A m i l l i o n )C a t e g o r y

P R O V I S I O N A L L I S T O F G O O D S A N D S E R V I C E S

ANNEX 6B

Assumptions made for the calculation of the Economic Rate of Return. 1. A world price of US 10¢ per pound was used to calculate the export parity price of sugar. This price represents the average price achieved during the last 12 to 15 years in the world market. Considering that the EU which has the highest cost of sugar production supplies about 40% of the world production share of sugar, any abolition of the sugar regime and hence the preferential sugar prices currently enjoyed by developing countries in selected developed countries would only increase the world price of sugar. This is because the EU countries would no longer be competitive in sugar production thus removing about 40% of sugar supply from the world market. This would reduce the preferential prices, which are as high as US 25¢ in some European markets and at the same time increase the world sugar price above the estimated US 10¢ per pound as a result of reduced sugar supply. According to some studies, which have been undertaken, a complete liberalisation of sugar policies in the US, EU and Japan would lead to about 41% increase in world prices. 2. As a result of the Government's efforts to diversify agricultural production from dependency on sugar, it was assumed that 20% of the land under the project would be planted with vegetables and fruits. Nevertheless, considering the country’s susceptibility to severe cyclones, the country would still continue to put most of the land under sugarcane, which is able to withstand the cyclones. 3. Local market prices for the vegetables and fruits has been used to calculate the benefits to be achieved from vegetables and fruits

Year 1998 1999 2000 2001 2002ASSETSNon current assets

Fixed Assets(property, plant & equipment) 336.988 461.335 455.612 485.26 493.797Development Expenditure 117.298 74.609 70.797 66.282 85.891Expenses(intangible assets) 2.487 2.073 1.658 1.244 0.993Sub total 456.773 538.017 528.067 552.786 580.681

Current Assets

Inventories 1.746 1.718 1.687 1.451 1.088Trade and other receivable 19.66 13.668 8.527 15.838 21.976Cash in han and at Bank 1.515 1.078 4.047 0.028 0.951Sub total 22.921 16.464 14.261 17.317 24.015Total Assets 479.694 554.481 542.328 570.103 604.696

EQUITY AND LIABILITIES

Capital and reserves

Capital Grants 429.393 502.619 490.11 512.929 535.686Deficit -273.542 -288.681 -299.468 -301.087 -308.043Sub total 155.851 213.938 190.642 211.842 227.643

Non-current liabilityBorrowings 237.914 237.844 237.382 240.789 247.227

Current liabilityAccounts Payable 85.93 102.699 114.304 117.471 129.827

Total equity and liabilities 479.695 554.481 542.328 570.102 604.697

Net current liabilities 393.764 451.782 428.024 452.632 474.869

Financed by

Capital Grants 429.393 502.619 490.11 512.929 535.686Revenu deficit -273.542 -288.681 -299.468 -301.087 -308.043Borrowings 237.914 237.844 237.382 240.789 247.227

393.765 451.782 428.024 452.631 474.87

Annex 7

FINANCIAL STATEMENTS OF IRRIGATION AUTHORITHYBALANCE SHET FROM 1998 TO 2002 IN MUR

Page 1 of 2

Page 2 of 2

Year 1998 1999 2000 2001 2002

INCOME

Revenue grants 31.147 31.000 41.52 49.371 44.797Irrigation dues 7.824 7.656 8.126 8.669Interset income 0.453 0.444 0.556 0.658 0.556Other income 0.497 0.585 1.121 1.03Irrigation overhead adjustment - - 0.508 0.348 2.393Sub Total 39.921 39.685 43.705 59.533 56.415

EXPENDITURE

Irrigation overheads ( excluding water charges) 24.233 27.025 28.511 33.933 33.41Administrative overheads 13.648 14.378 17.468 17.296 17.959Sub Total 37.881 41.403 45.979 51.229 51.369

Balance beteween Income and Expenditure 2.04 -1.718 -2.274 8.304 5.046

Water charges 2.239 1.685 1.955 2.047 1.839Finance costs 6.569 5.895 6.182 6.468 6.719Gain on translation on foreign loans 1.135 -0.068 -0.462 -0.012 1.879Auditors renumeration 0.039 0.043 0.05 0.075 0.081Ligitation cost (building lease) 4.6Amortisation of intangible assets 0.414 0.414 11.047 0.414 0.433Depreciation of property, plant and equipment 9.846 13.751 18.286 18.464 19.292Sub Total 20.242 26.32 37.058 27.456 30.243

General Deficit before release from Capital Grants -18.202 -28.038 -39.332 -19.152 -25.197Release From Capital Grants 7.739 12.899 28.545 17.533 18.241

General Deficit For the Year -10.463 -15.139 -10.787 -1.619 -6.956

Some Ratios

Current ratio 0.27 0.16 0.12 0.15 0.18Deb ratio 0.50 0.43 0.44 0.42 0.41Operation ratio 0.95 1.04 1.05 0.86 0.91Debt Service Coverage(times) 1.53 1.11 1.25 1.14 1.09Operation Profit (loss) -0.20 -3.40 -4.23 6.26 3.21Net profit(loss) -18.20 -28.04 -39.33 -19.15 -25.20

2003 2204 2005 2006

Total income 59.05 68.5 93.27 91.66Total Operting expenses 51.2 53 51 50Balance beteween Income and Expenditure 7.85 15.5 42.27 41.66Other charges 31.39 33.47 51.43 50.83General Deficit before release from Capital Grants -23.54 -17.97 -9.16 -9.17Release From Capital Grants 18.5 19.2 22 25General Deficit/Surplus For the Year -5.04 1.23 12.84 15.83

INCOME AND EXPENDURE ACCOUNT

Higlights of income and expenditure account projection

Annex 7

ANNEX 8 Page 1 of 3

ENVIRONMENTAL AND SOCIAL MANAGEMENT PLAN SUMMARY PROJECT TITLE : NORTHERN PLAINS IRRIGATION PROJECT PROJECT NUMBER : P-MU-AAC-002 COUNTRY : MAURITIUS DEPARTMENT : ONAR DIVISION : ONAR.2 a) Brief description of the project and key environmental and social components The project comprises four components as follows: The Derocking and Land preparation component involves removal of stone and boulders of volcanic origin from 767 ha of agricultural land in order to facilitate cultivation and mechanization. The Technical assistance component consists of detailed design of the irrigation system, training for capacity building of two institutions involved in the project management, campaigns for gender sensitisation and awareness, and for sensitisation on environmental aspects of irrigation, workshops for women empowerment and improved participation skills, and workshops for improved community mobilization and participation skills. The Installation of irrigation infrastructure component of the project will consist of laying some 23 km of laterals made of iron pipes and installation of about 20 centre pivots. The Project Management and Institutional Support component covers overall project coordination. b) Major environmental and social impacts

Environmental Impacts Positive Impact: These include, firstly, reducing the sea water intrusion in the coastal area bordering the northern plains as eventual excess irrigation water resulting from sprinkler irrigation practice will recharge the aquifer and alleviate this problem. This is particularly valuable during the drought periods when the aquifer is depressed. Secondly, the derocking activities will make available sizeable quantities of rocks of good quality, which can be used for roads and houses construction. Negative Impact: Potential negative impact includes the population in the project area being exposed to nuisance caused by noise of machines during derocking and land preparation. There will be also temporary excavation to lay the irrigation network pipes but the excavations will be limited along the pipes layout. Other potential negative impacts may result from excessive use of fertilizers and pesticides.

Social Impacts There will be no resettlement as the project concerns already established farms. The project is expected to increase on-farm employment, as new opportunities will be generated on currently abandoned land that will be put on cultivation. The benefits will accrue especially to women who are traditionally employed as labourers on sugar plantations. An additional beneficial feature of the project is off-farm employment creation.

ANNEX 8 Page 2 of 3

c) Enhancement and mitigation program Mitigation of Negative Environmental Impacts of the Project:

• The derocking and land preparation activities will take place exclusively during the day, on working hours. • In order to prevent any production loss due to the temporary excavations the contractors will be requested to lay the pipes preferably on existing machine tracks and only after the harvesting periods. • The Agricultural Research and Extension Unit (AREU) and the Mauritius Sugar Industry Research Institute (MSIRI) will sensitize the farmers on the adequate amounts of fertilizers and herbicides to be used, so as to prevent any excess. • Two social facilitators will be recruited by the project and will organize awareness campaigns and trainings directed towards the community of farmers, in order to enhance their knowledge about measures for mitigation/enhancement of environmental impacts of irrigation projects. • Use of the centre pivot and solid sets system technology will minimize extended contact of farmers with irrigation water that will prevent water-borne diseases. d) Monitoring program and complementary initiatives The environmental monitoring activities will be conducted in compliance with prevailing regulations in particular the Environment Protection Act 2002. The Irrigation Authority in collaboration and in coordination with the Meteorological Services, the Central Water Authority, the Mauritius Sugar Industry Research Institute, the Farmers Service Corporation and the Ministry of Environment and National Development Unit will monitor environmental quality. Environmental indicators include salt content of soils, presence of heavy metals, water quality of the aquifer, plants diseases. The social facilitators recruited by the project will report on the various aspects related to the beneficiaries such as formation of Water Users’ Associations, organisation of training or extension sessions, involvement of women in management and field activities, and sensitisation on gender issues. e) Institutional arrangements and capacity building requirements The overall responsibility for implementation of the project environmental management plan rests with the Irrigation Planning Unit of the Irrigation Authority. The Ministry of Environment and National Development Unit will be represented in the Project Steering Committee to ensure compliance with prevailing regulations. The Technical Assistance component of the project provides for training in environmental aspects of irrigation planning and project management for project officers of the Irrigation Authority, the Agricultural Research and Extension Unit (AREU) and representatives of the farmers’ Water Users’ Associations.

ANNEX 8 Page 3 of 3

f) Public consultations and disclosure requirements Public consultations were carried out at each stage of project development. The project was identified out of a process that was carried out with community participation. At preparation, extensive field visits to actual project sites were undertaken and a meeting with stakeholders organized by Bank team with the IA and Farmers Service Corporation validated the project formulation. During implementation, funds have been set aside for use by two social facilitators to be recruited under the project for extensive beneficiary sensitization and women empowerment and participation enhancement. g) Estimated costs: Project environmental and social activities The total costs of the environmental mitigation and social benefits enhancement measures are estimated at UA 0.19 million and have been fully incorporated in the project costs. h) Implementation schedule and reporting Implementation schedule and reporting are integrated with that of the project implementation and performed by the Irrigation Planning Unit of the Irrigation Authority. The project quarterly progress reports will inform both the Bank and GOM of problems and achievements in the implementation of the project environment and social management plan.

Annex 10

PROJECT PROCESSING BACKGOUND This project was identified in May 2001 by a Bank identification mission that visited Mauritius and the Government’s request for financing was received in September 2001. The project was included in the Bank’s pipeline in May 2002 and classified as Category II in terms of its potential environmental impacts. After receiving clearance from the Government of Mauritius, the Bank fielded a mission in Port Louis to appraise the project from April 4 to 27, 2003. The appraisal mission was composed of Mr. H. Lam, Agronomist and Mission leader, Mrs. J. N. Mwangi, Agricultural Economist, Mr. J. M. Ribeiro, Irrigation Engineer and Ms. S. Pitamber, Gender Specialist. In the course of the appraisal mission work, different government and non-governmental institutions and various stakeholders were visited, including: The Ministry of Agriculture, Food Technology and Natural Resources (MAFTNR) and its parastatal organizations (the Irrigation Authority, the Agricultural and Research Extension Unit (AREU), the Sugar Planters Mechanical Pool Corporation (SPMPC), the Mauritius Sugar Syndicate (MSS), the Ministry of Finance, Small sugar cane planters, Food crop planters, Water Users Associations and Farmers’ cooperatives. In particular an important meeting was organized to discuss the project with the beneficiaries in the northern plains, in presence of the Irrigation Authority and the Farmers’ Service Corporation. About 40 farmers, comprising about 20% women were present and expressed their views on project design and scheduling. Many showed interest in growing food crops if the market conditions are favourable, but insisted on growing sugar cane as a sure source of cash. The conclusions of the appraisal mission were later communicated to the Government and BADEA, who were approached by the Government to participate in financing the project. Following BADEA confirming its interest for the project in July 2003, the Bank fielded a post-appraisal mission to discuss the financing plan together with BADEA and the Government. That mission was composed of Mr. J. M. Ribeiro, Irrigation Engineer and Mission Leader and Mr. A. I. Mahdi, Financial Analyst. The post-appraisal mission visited Port Louis from 10 to 21 December 2003. The present document is the result of the process described above and has undergone the normal Bank review process including two internal working group (IWG) meetings, respectively in July 2003 and January 2004, one Interdepartmental Working Group (IDWG) in February 2004 and one Senior Management Committee meeting in February 2004. The document has been scheduled for Board presentation in May 2004.

MAURITIUS: NORTHERN PLAINS IRRIGATION PROJECT

Addendum 1 : INFORMATION NOTE

1. Purpose of the Information Note

The purpose of this note is to highlight the main changes that occurred on the appraisal report ofthe Mauritius – Northern Plains Irrigation Project, between the first version that was distributedin March 2004 and the revised version that was distributed in December 2004.

The version of March 2004 was the result of a field appraisal mission that took place inDecember 2003 while the version of December 2004 was the result of an update mission, whichtook place in July 2004. During the update mission of July 2004 the objective of the project, itscomponents and institutional arrangements were all re-assessed and confirmed. In January 2005,in collaboration with the Mauritius counterparts, the Bank project team conducted a deskassessment of all aspects of the appraisal report, including the institutional settings and theproject costs. On that occasion, all the provisions of the appraisal report distributed in December2004 were confirmed.

2. Changes

i. The Borrower: In the March 2004 document the Government of Mauritius (GOM) wasidentified as the loan Borrower while in the Revised version the Borrower is the IrrigationAuthority (IA). The reason for such a change is that the GOM requested that the IrrigationAuthority (IA), which is a parastatal organization in charge of all public irrigation schemes inMauritius, be the loan Borrower instead of the Government. This request was in line with thewill of the Government to favour the progressive development of all parastatal organizations intoautonomous entities. Upon formal notification of this request by the GOM in April 2004, theBank undertook a series of internal consultations as well as exchanges with other donorinstitutions, and considered favourably the request of the GOM on two conditions: (i) that theGovernment amends the IA Act so as to give it explicit borrowing powers; (ii) that theGovernment gives a sovereign guarantee for the loan. The Government adhered to the Bank’sstand and initiated a process to obtain parliamentary approval. By July 2004 it was necessary tofield a mission to update the appraisal report, in line with Bank’s procedures. The GOM finalizedthe amendment of the IA Act in December 2004, giving it explicit borrowing powers as requiredby the Bank. It is to be noted that the BADEA, which is a co-financier of the project, harmonizedits position with that of the Bank and accepted that the IA be the Borrower. The BADEA loanhas already been signed.

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ii. The Loan amount and other figures in foreign currency: All figures in foreigncurrency were amended to reflect the fluctuation of the exchange rate between the Unit ofAccount and the Mauritius Rupee, from the date of appraisal (December 2003) to the date ofrevision (July 2004). Most prominently, the total project cost, which remained MUR 625.66million, was changed from UA 16.57 million to UA 15.24 million. The loan amount changedalso from UA 8.41 million to UA 7.74 million.

iii. References to dates: To reflect the time slippage, most of the time references wereamended. More specifically: (i) the approval date was changed from May 2004 to January 2005;(ii) the Table 5.1 presenting the Tentative Implementation Schedule was revised to reflect newtentative dates for start of the various project activities. It is to be noted that the Governmentcontinued with the pre-implementation activities and have gained time in anticipation of Bankapproval, which makes that the overall time span for project implementation remains January2005- December 2009.

iv. Editorial: Some editorial corrections were introduced. In particular a typographical erroron the total number of farmers benefiting from the project was corrected to be 2400 instead of1530.

MAURITIUS : NORTHERN PLAINS IRRIGATION PROJECT

CORRIGENDUM

1. On the Outcome of Negotiations

The amounts in US Dollar and in Euro that figure in the Outcome of Negotiations areamended to reflect the exchange rates of July 2004, which is the time when the projectwas updated. Paragraph 2 of the Outcome of Negotiations now reads:

“The Government opted for a floating interest rate loan for an amount of fivemillion six hundred seventy four thousand US Dollars (USD 5,674,000) and fourmillion six hundred sixty eight thousand Euros (EUR 4,668,000)”.

2. On the Appraisal Report, paragraph 1.12 of the Executive Summary:

As the Irrigation Authority is the Borrower, this paragraph is amended to read as follows:

“It is recommended that a loan not exceeding UA 7.74 million from ADB begranted to the Irrigation Authority for the implementation of the Northern PlainsIrrigation Project as described in this report, subject to conditions specified in theloan agreement.”

3. On the Appraisal Report, Table 5.2, Procurement Arrangements:

In the last line and last column, the totals are corrected as “15.24 (7.74)” instead of“15.24 (7.12)”.

4. On the Appraisal report, Annex 9:

The status of Audit for the three on-going projects in the public sector is added asfollows:

There are no pending issues related to Audit for the three on-going public sectorBank projects in Mauritius: (i) as for the Southeastern highway project, the firstaudit report is due on 31 Dec. 2005 only; (ii) as for the Plaines Wilhem Sewerageproject, there has been no disbursement yet; (iii) as for the Support to the NationalHealth Plan, there have been no disbursement yet.