world bank document - irrigation sub-sector project kcl - potassium chloride mis - management...

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Repot N. 8199

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* * ~~~~~~PROJECT COMPLETION REPORT

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* ' ~~~~~~SIXTEENTH IRRIGATION PROJECT* *(~~LOAN 2118-IND)

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4 , ~~~~~FAO/ WORLD BANK COOPERATIVE PROGRAMME.. * t t t PROJINVESTMENT CENTRE-

* * * t ~~~~~NOVEMBER 27, 1989

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CURRENCY EOUIVALENTS

At Apgraisal (1982) Comoletion (19881

US$1.00 = Rupiahs (Rp) 625 Rpl,700RplOO = US$0.16 US$0.06Rpl million = US$1,600 US$588

WEIGHTS AND MEASURES - METRIC SYSTEM

1 meter (m) = 39.37 inches1 kilometer (km) = 0.62 miles1 hectare (ha) = 2.47 acresI cubic meter (m3) 35.31 cubic feet1 litre (1) = 0.264 gallons (USA)1 kilogram (kg) = 2.2 pounds1 metric ton (t) 2,205 pounds

CONVERSION FACTOR FOR RICE

1 ton paddy (g3bah) = 650 kg milled rice

INDONESIAN FISCAL YEAR

1 April - 31 March

ABBREVIATIONS AND GLOSSARY

DGFCA - Directorate-General of Food Crops AgricultureDGWRD - Directorate-General of Water Resources

DevelopmentDOI II - Directorate of Irrigation IIERR - Economic Rate of ReturnFAO/CP - Food and Agriculture Organization/World Bank

Cooperative ProgrammeGOI - Government of IndonesiaIBRD - International Bank for Reconstruction

and DevelopmentISSP - Irrigation Sub-Sector ProjectKCl - Potassium ChlorideMIS - Management Information SystemMPW - Ministry of Public WorksO&M - Operation and MaintenanceOECF - Overseas Economic Cooperation FundPCR - Project Completion ReportPIBD - Proyk Irigasi Bank Dunia - Special agency within

DGWRD responsible for implementing IBRD-assistedwater resources projects

PPAR - Project Performance Audit ReportRSI - World Bank Resident Staff in Indonesiasawah - Bunded and levelled flat land suitable for growing

wet riceTSP - Triple SuperphosphateSAR - Staff Appraisal ReportWUAs - Water Users AssociationsWUT - Water Users Training

FOR OFCIL UE ONLYTHE WORLD BANK

Washington. DC 20413USA

OllIc of D'wctoe.G'wtaIOsetin Itwakiw rnf

November 27, 1989

MEMORANIDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Completion Report on Indonesia SixteenthIrrigation Proiect (Loan 2118-IND)

Attached, for information, is a copy of a report entitled"Project Completion Report on Indonesia - Sixteenth Irrigation Project(Loan 2118-IND)" prepared by the FAO/World Bank Cooperative Programme. Noaudit of this project has been made by the Operations Evaluation Departmentat this time.

Attachment

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

FOR OMCIAL USE ONLYrINGNSIA

JjTEENTH IRRIGATION PRODECT(LOAN 2118-IND)

PRQJECT COMPLETTON REPORT

Table of ContentsPage

Preface iEvaluation Summary i

PART I

1. Project Identity 12. Background 13. Project Objectives and Description 24. Project Design and Organization 25. Project Implementation 36. Project Results 5

- Sitiung II 5- Study and Design 7- Institutional Strengthening 7

7. Project Sustainability 88. Bank Performance 89. Borrower's Performance 1010. Project Relationship 1011. Consultants and Contractors 1012. Project Documentation and Data 10

PARTI- 11

PART .II

1. Related Bank Loans and Credit 152. Project Timetable 163. Loan Disbursements 174. Project Implementation 185. Project Costs and Financing 19

- A. Project Costs 19- B. Project Financing 20

6. Project Results 21- A. Direct Benefits of Sitiung II 21

* - B. Economic Impact of Sitiung II 21- C. Financial Impact of Sitiung II 22- D. Studies and institutional Support 23

7. Status of Covenants 25B. Use of Bank Resources 26

- A. S;aff Inputs 26- B. Missions 27

ANNEX 1 - Economic Re-evaluation of Sitiung II 29

MAP - IBRD No. 16003R1

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

SIXTEENTH IRRIGATION PROJECT (IANJ 2118-IND)

PROJECT COMPLETION REPORT

P-REr'ACE

This is the Project Completion Report (PCR) for the SixteenthIrrigation Project in Indonesia, for which Loan 2118-IND in the amount ofUS$37 million was approved on March 30, 1982. The loan was closed onDecember 13, 1988, one year behind schedule. The last disbursement tookplace on July 27, 1989.

The PCR was prepared by the FAO/World Bank Cooperative Programme(Preface, Evaluation Summary, Parts I and III). On August 8, 1989, theBank sent the Borrower Parts I and III with the request to prepare Part IIby September 26, 1989, but none was received.

'.his PCR is based, inter alia, on the Staff Appraisal Report; theLoan, Guarantee and Project Agreements; supervision reports; correspondencebetween the Bank and the Borrower; and internal Bank memoranda.

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INDONESIA

SIXTEENTH IRRIGATION PROJECT (LOAN 2118-IND)


EVALUATION SUMMARY

Introduction

1. The World Bank has been lending for irrigation projects in*ndonesia for almost 20 years. During that period, twenty-one loans weremade for irrigation, and two for swamp reclamation, providing a total ofsome $1.5 billion to GOI. This PCR is for the Sixteenth Irrigation Projectwhich consisted of an irrigation project, and several other components.

Implementation Experience

2. Construction of the Sitiung II Irrigation system was generallyslow due partly to lack of local funding. The Piruko and Siat headworksand headrace canals were completed behind schedule and areas brought underirrigation to date at about 2,300 ha have been far less than originallyplanned because of delay in land clearing and development and tertiaryconstructions. Indigenous farmers were generally reluctant to eradicatetheir rubber and perennial trees so long as they were income-generating.In areas where irrigation was provided farmers were not knowledgeable aboutproper water management practices and this, in conjunction with highdemands from the porous sandy loam soils, caused high water use andresulted in shortages of water at the tail-end of the completed tertiaries.

3. The water users' training program started slowly due to delay insigning the foreign consultants' contract, but later accelerated after thecooperation of officials from local government and other ministries hadbeen ensured. It has proved useful in solving problems related to opera-tion and maintenance of tertiary canals.

4. The strengthening of DGWRD management information system experi-enced difficulties due to lack of clear definition of the objectives, theinexperience of the local consultant, and the difficulty of establishingDGWRD's requirements. However, after considerable pressure and assistancefrom the Bank, five systems have been established.

5. The implementation of the remaining aspects of the project pro-ceeded generally satisfactorily.

Results

6. The SAR had assumed that the benefits accruing from the construc-tion of Sitiung II irrigation system would be the incremental agricultural

production from 6,700 ha and the saving in the cost of pumping water toStage I area of 3,300 ha.

7. In actual fact, the pumping station stopped working in 1986because the pumps were damaged, largely due to pumping silty and sandywater. They were repaired using funds for the Sitiung II project. The re-estimation of the ERR for the Sitiung II component in the PCR is therefore,based on the assumption that without the project the pumps would not havebeen repaired and that all incremental agricultural production is, there-fore, due to the project. As such, the results are not strictly comparablewith the SAR estimates. Nevertheless, the ERR, which has been recalcu-lated, is now estimated to be only 4% and is substantially less than 18Xestimated at appraisal. This is due to lower economic price for rice, costoverruns and slower build-up of benefits.

Sustainability

8. It is doubtful whether the Sitiung II (and Sitiung I) project asoriginally planned will ever fully develop. About 8,000 ha do not yet havetertiary development and it is no longer GOI policy to finance tertiarydevelopment. If the development of the project area is completed, the riskis that the irrigation system will not be adequately maintained and theremay be insufficient flow supplies for the area served. To augment thewater supply by pumping, substantial budget would be required to operateand maintain the pumping station and also to maintain a silt-free intakechannel.

Findings and Lessons Learned

9. The concept of the project and its components were not clearlydefined before appraisal and in fact the major Sitiung II component wasadded to the project at appraisal. As a result, it appears that a largenumber of incompletely prepared components were packaged together in theproject. Thus, if project preparation and appraisal are unduly rushed,there are risks of the project being unsuccessful.

10. For reasons of institutional expediency, the only implementingagency was DGWRD. The Sitiung II project indicates that involvement of theDepartment of Agriculture in irrigation projects, and allocation of loanfunds for land development activities, particularly where there is newlydeveloped land, is essential if the project is to be successful.

11. Institutional support components such as the strengthening ofDGWRD MIS require detailed preparation. This is most likely to be achievedif it is insisted that a full description of the objectives and methods areincluded in the SAR. This was done for the hydrology and water users'training components which were successfully implemented but not for the MISwhich had limited success.

12. Delays in the start of consultancies might be avoided if it is acondition of loan effectiveness that consultants' contracts have beensigned, instead of consultants having been appointed.

INDONES-IA

SIXTEENTH IRRIGATION PROJECT(LOAN 2118-IND)


PART I

1. Project Identity

Project Name: Sixteenth Irrigation Project

Loan Number: 2118-IND

RVP Unit Asia - ASIVP

Country: Indonesia

Sector: Agriculture

Sub-sector: Irrigation

2'. Backgrounld

2.1 In the early 1980s, Indonesia's drive towards achieving greaterself-sufficiency in food supply focussed on increasing rice productionthrough greater use of fertilizers; better pest-resistant varieties;expanded extension and research services; continued upgrading andrehabilitation of existing irrigation systems and construction of tertiarynetworks, drainage and flood protection works; and constructing a series ofdams to provide dry season irrigation water, hydropower, and flood control.Indonesia had about 4 million ha under irrigation. Over the last few years,Indonesia had initiated each year the rehabilitation and upgrading of about100,000 ha of existing irrigation systems, construction of about 50,000 haof new systems, and installation of river control, flood protection arndswamp reclamation works to improve about 130,000 ha of agricultural land.

2.2 Extensive use was being made of foreign assistance for the largeirrigation improvement programme, especially from the Bank Group which haduntil 1981 made available US$757.5 million through 15 loans and credits forirrigation and one loan for swamp reclamation. The Bank had an importantrole in irrigation policy, setting standards for studies, engineering designand construction, and in assessing investment priorities. Increasingly Bankassistance had emphasized institutional building, particularly of theDirectorate-General of Water Resources (DGWRD). For the Sixteenth IrrigationProject, the Government of Indonesia (GOI) requested Bank Group assistancefor further strengthening DGWRD; water users training (WUT); for studiesand engineering design of two major sub-projects in Central and West Javafor future construction (Cisanggarung and Jatigede); and for extendingirrigation systems to serve about 6,700 ha at Sitiung, which straddles theboundary between West Sumatra and Jambi Provinces.

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2.3 This report was prepared by the FAO/World Bank CoopprntiveProgramme (FAO/CP) on the basis of a PCR prepared by DGWRD and a mission toIndonesia in March 1989.

3. Project ObieLtives and Description

3.1 Obiectives. The project's objectives included: constructing theSitiung II irrigation system; institution strengthening; establishing atechnically and economically feasible viable means to control floods in thecoastal area of the Cisanggarung Basin and addressing water shortages in thebasin during the dry season; addressing the important policy issue of therole of water users associations (WUAs) and making a clear definition ofresponsibility amongst the several government agencies working with suchassociations.

3.2 The project was to assist the GOI to progressively introduce andimprove computer-based budget procedures and systems which would clearlyidentify annual and multi-year budget commitments for projects underconstruction, proposed new projects, and proposed sources of funding.

3.3 Project Description. The project would comprise construction of thesecond stage of the Sitiung irrigation system in Sumatra to provide agravity-fed supply of irrigation water to serve about 6,700 ha oftransmigrant and local farmer lands: this supply would also supersede apumped supply for 3,300 ha constructed under the first stage; improvement ofmanagement information systems of the DGWRD; training and support for waterusers and their associations; exoansion of DGWRD's basic hydrological datanetwork; studies for development of the Cisanggarung River Basin anddetailed design of the Jatigede Dam.

4. Proiect Design and Organization

4.1 The Sitiung II component, which was based on feasibility studies byforeign consultants, was not well formulated. Risks foreseen by an FAG/CPreview mission in September 1980 included the high capital cost of theproject at around US$6,200/ha, while the benefits from growirg rice onunsuitable soils would be low. While many transmigrants would persevere withrice growing if inputs were provided free, most indigenous families wouldprobably continue to tap rubber for higher financial rewards and notcultivate rice. FAO/CP considered the best approach would be to include thearea as part of a rubber project. Even if all land was brought underirrigation within five years of water being available, FAO/CP estimated thatthe ERR would be only about 6X. These forecasts, which have been shown to bebroadly correct,<1> were not supported in the SAR which said that GOI andtransmigrants strongly preferred irrigated rice tc rubber. The Bank did notfinance land clearing and levelling<2> and had insufficient leverage toensure that this was done so that benefits from irrigation could be realizedsoon after completion of irrigation facilities.

<1> Actual cost US$5,800/ha. ERR 4X if the whole area is developed.<2> 1,800 ha (1 ha/family) was cleared for transmigrants in 1977-1979

and a similar area was to be cleared by GOI for indigenous farmers.Land levelling was to be farmers responsibility.

4.2 The concepts for the study and design components were generallysatisfactory. The strengthening of OGWRD's management information systemswas not adequately thought out and, whereas an experienced consultant mighthave been able to establish DGWRD's needs and design suitable systems, thisdid not turn out to be the case due to the inexperience of the appointedconsultant.

4.3 More attention was given at appraisal to collection and processingof hydrological data and water users training (WUT). Upgrading of financialcontrol and auditing procedures was not thought through and agreed with GOI.This component was eventually dropped at GOI's request.

5. Proiect Implementation

5.1 The project costs changed as shown in Part III and summarizedbelow:

....... SAR ....... .PCR.(US$ million) (%) (US$ million) (%)

Construction of Sitiung II 47.5 62 52.1 76Study and design 7.7 10 5.1 8Institutional support 1. _2 11.1 1

Total 76.6 100 68.3 100

5.2 Sitiung Ji. The main change from the appraised project was theincrease from 1,100 ha to 2,400 ha in the incremental area to be irrigatedfrom the Batang Piruko (see Map ). This made it necessary to build anadditional diversion weir on the Palangko River to augment the water supplyfrom the Piruko. Rehabilitation of the six pumps in the Sitiung I BatangHari pumping station became necessary: three pumps were repaired under theproject and parts were imported for the other three pumps.

5.3 The main reason for the increase in area commanded by the BatangPiruko system was the need to provide irrigation to areas of sawah that werespontaneously developed in flat land in valley bottoms along the headracecanal. DGWRO considered it preferable to build proper offtakes from theheadrace canal rather than risk illegal ufftakes which could cause seriousdamage.

5.4 Constructijn progress was generally slow due partly to lack offunds. In order to alleviate domestic budget constraints, disbursementpercentages were increased in 1986 and additional finance was provided underthe Irrigation Sub- sector Project (ISSP, Loan 2880-IND) to complete partsof the project. The closing date of the loan was postponed one year topermit completion of 70% of the main system and a part of the tertiarysystem.

5.5 The Piruko headworks and headrace canal were commissioned in early1986, about nine months behind the appraisal estimate. This enabledirrigation to continue without using the pumps but only about 1,800 ha wereready for irrigation. The main and secondary canals are now complete butonly about 2,500 ha can be irrigated from the Piruko because land clearance(2,500 ha), land development (2,800 ha) and tertiary development (3,000 ha)

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have not been completed. The Siat headworks and headrace canal are completeand the first 1,600 ha are expected to be irrigated in 1989. The rate atwhich future land clearance, land development and tertiary development takeplace is discussed in paras 6.4 and 6.5.

5.6 By financing the pump rehabilitation, the Bank has taken one steptowards enabling double-cropping in the Piruko area. However, unless a meansis found of desilting the intake channel and keeping it clear, the projectedhigh cropping intensity will not be sustainab'le over the whole area.

5.7 Development of the project area for cropping was slow. Landclearing, levelling and bunding was delayed because no funds were providedby the project and there was no provision of credit to farmers. Sometertiaries were completed ahead of land development, but others were delayeddue to slow land development and lack of interest of indigenous farmers.Farmers are generally reluctant to eradicate their rubber or perennial treesso long as they are income-generating. This was not taken into account atappraisal.

5.8 Farmers were not knowledgeable about proper water managementpractices and this, in conjuction with high demands from the porous sandyloam soils, caused high water use and resulted in shortages of water at thetail end in a number of areas.

5.9 Involvement of agricultural institutions, in particula;- theDepartments of Agriculture and Cooperatives, was minimal during the projectperiod. There were no agricultural staff in the project office. Agriculturaldata were compiled by the water master. In many areas, farmers complained ofunavailability or untimely supply of fertilizers, widespread damage by brownplant-hoppers and rats and lack of credit to purchase essential inputs.

5.10 Project risks were not fully appreciated at appraisal. Thereluctance of farmers to cut down forest rubber, the slow progress of landclearing and land levelling due partly to lack of GOI budget, the difficultyof keeping the pumping station intake free of silt, and the high maintenancecosts associated with this, although foreseeable (see para 4.1 above), werenot realistically assessed at appraisal.

5.11 The Cisanagaruna River Basin study proceeded generally according toplan with no major change. The resulting feasibility report recommended twonew dams, the raising of one dam and river improvements on the Bangkaderisand Crucuk Rivers.

5.12 Jatigede Dam Detailed Design. Following completion of thefeasibility study financed under Irrigation XIII (Loan 1691-IND), thedetailed design was completed as proposed in the SAR. Additional studies ofenvironmental effects, reservoir operation and resettlement were made.

5.13 Strengthening DGWRD MIS experienced difficulties due to lack ofclear definition of the objectives, the inexperience of the local consultantand the difficulty of establishing DGWRD's requirements. However, afterconsiderable pressure and assistance from the Bank, five systems wereestablished.

5.14 Collection and orocessing of hvdrological data were generallyimplemented satisfactorily.

5.15 Water users trainina started slowly due to delay in signing theforeign consultants contracts. Although the work star.ed, until thecontract was signed the lack of official sanction restricted theavailability of funds for travelling. Initially, obtaining the cooperationof officials from local government and other ministries and then receivingtheir approval to the content of the training courses took time. Once thegood results of the training became known, obtaining the necessarycooperation and approvals became much quicker. Further WUT continues underthe ISSP.

5.16 Uoarading of financial control and auditing grocedures waw deletedfrom the project after the Ministry of Public Works (MPW) decided to reviewaccounting systems throughout the Ministry, making a seDarate study of DGWRDsystems unnecessary.

5.17 Mangower develogment olannina was added to the project to initiateand guide the implementation of manpower planning (prepared under an earlierconsultancy) in selected units of OGWRD.

6. Project Results

SitiunQ II

6.1 Introduction. The project comprised the second stage of thedevelopment of irrigation for the Sitiung area. Under the first stage, whichwas not yet complete at the start of this project, 3,300 ha were to beirrigated by pumping water from a temporary pumping station on the BatangHari. The second stage was to irrigate a further 6,700 ha by gravity fromtributaries of the Batang Hari which would also replace the pumped supply to3,300 ha of Stage I. The SAR assumed the benefits would be the incrementalagr:cultural production on 6,700 ha and the saving in cost of pumping for3,300 ha.

6.2 In '1986, the pumping station stopped working because the pumpswere damaged, largely due to pumping silty and sandy water. The pumps wererepaired using funds from the Sitiung II project. For the purpose of re-estimating the ERR of Sitiung II, this PCR is based on the assumption thatwithout the project the pumps would not have been repaired and that allincremental agricultural production is therefore due to Stage II.

6.3 Since the PCR has estimated tne effect of the project on thecombined areas of Stage I and Stage II, the results are not strictlycomparable with the SAR estimates. It can be argued that GOI would havereplaced the pumps even without Sitiung II and the ERR for this scenario hasalso been estimated.

6.4 Due to the slow rate of development of irrigation (only some2,300 ha <1> of the 12,300 ha in the project area have so far receivedirrigation), it is difficult to predict accurately the eventual results ofthe project, particularly concerning the rate of land development andtertiary construction and the willingness of farmers to convert existingmixed forest and rubber to sawah. The following comparisons of the PCR

<1> 1,800 ha of this in the Stage I area. Area berved by Piruko whichcould be irrigated now is 2,500 ha (see para 5.5).

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mission's estimates with those of the SAR assume that the whole area willeventually be converted to sawah.

Area in Command Irrigation IX r1rigation XVI ... Total.'iR EaB .1SAR PCR SAR PCR................... .(ha)

Batang Piruko 3,300 3,300 1,000 2,400 4,300 5,700Batang Siat __ _ 5.7M 6.fif 5.700 6.600

Sitiung 3,300 3,300 6,700 9,000 10,000 12,300

Following detailed survey and design during implementation, it was foundthat command areas had changed; 263 ha of high land in the area to be servedfrom the Piruko had to be excluded because it was out of command, but thiswas compensated for by the inclusion of 410 ha of irrigable land adjacent tothe Piruko headrace canal. In the command area of the Siat. 450 ha ofhigh land was excluded from the project area and conlverted into rubberplantation.

6.5 Crooned Area and Cropping Intensitv. Indigenous farmers arereluctant to convert mixed forest to sawah and it is not certain that theproject will ever reach full development. Nevertheless, for the purpose ofestimating an ERR, the PCR has assumed that full development of theirrigated area will be reached in the year 2000. The assumptions are shownin Annex 1, Table 3, and summarized below:

........... .SAR.... ........... PCR.::lrsentFuture F'uture Present Future Future

(1981) without wiAth (1988) without withProject Project Project Project

...................... .(000 ha).

Rainfed crops 4.4 4.4 0 3.90 5.33 0Irrigated crops 0 0 12.2 4.57 0 21.65Mixed forest 2.3 2.3 0 5.85 6.91 0Cropped area 6.7 6.7 12.2 14.32 12.24 21.65Net cultivated area 6.7 6.7 6.7 12.24 12.24 12.24Cropping intensity (%) 100 100 182 117 100 177

6.6 At project completion (end of 1988), cropping intensity has onlyincreased by 17% (or 33% if the area of mixed forest is excluded) due tonumerous constraints affecting agricultural development (para 5.7).

6.7 Crop Yiglds. Comparison of appraisal and mission estimates of cropyields are shown in Annex 1, Table 3. The very low yields estimated atappraisal for the future without the project were probably due to poor soilfertility before project commencement as a result of bad land clearing andlevelling techniques whereby most of the top soil had been removed. Sincethen, soil ftertility has improved through continuous application of organicmanure by farmers and new land clearing has been more careful.

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6.8 prgduction. The annual production of paddy is estimated to increasefrom 4,200 tons without the project to 93,000 tons with the project at fulldevelopment. compared with the SAR estimates of 1,700 and 37,200 tons,respectively (Annex 1, Table 3). Production of rainfed crops such asgroundnuts and maize is expected to be negligible.

6.9 Farm Income. Land in the project area is allocated to tra ,n'igrantsor is community land. No data are available concerning the cultivable area(cropped or uncropped) and the area under mixed forest and rubber (andproductivity), owned by an average indigenous family. The farm modelassumed at appraisal (1 ha of land in the command area for transmigrants anu4 ha for indigenous families) do not appear to be representative of thecurrent situation: many transmigrants have up to 1.75 ha in the command areaand the average land holding per iidigenous family is smaller than assumedat appraisal. Based on interviews with village chiefs, one farm model of1.75 ha has been prepared by the PCR mission. The estimated net income atfull development is summarized below:

Net Family ReturnIncome ger Man-daX(RpO000) (Rp)

Present (1988) 600 5.700Without project (2000) 226 2,700With project (2000) 2,109 13,400Incremental 1,883 10,700

6.10 ERR. In estimating the ERR, the many assumptions that have beenmade concerning the future development of the project have tended towardsthe optimistic. Nevertheless, the ERR, which has been recalculated inAnnex 1, is now estimated to be only 4%. This is substantially less than 18%estimated at appraisal due to lower economic price of rice, cost overrunsand slower build-up of benefits.

Study and Design

6.11 Cisanggaruna River Basin Study. Resulting from the study, riverimprovement works have been constructed on the Crucuk River to protectagricultural land from flooding.

6.12 Jatigede Dam Design. Lack of finance has delayed the start ofconstruction and therefore the design has not yet been used. Theresettlement study which was added to this component left several importantquestions unanswered; however, it is impracticable to finalize resettlementplans until it is known that construction will actually proceed.

Institutional Strengthening

6.13 DGWRD MIS established five systems. The personnel system listsdetails of staff including personal history and is generally only used bypersonnel departments. The equipment inventory system does not appear to beextensively used. The inventories of irrigation schemes and irrigated sawahare of little value because data entered into the systems are inaccurate and

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out-of-date. The system for monitoring ongoing contracts appears to be thesystem most used. This is a computerized version of a previously manually-operated system to measure financial progress of contracts each month andcompare it with targets. Information is sent on paper from provinces andprojects each month to DGWRD headquarters for entering. There appears to beno feedback to provinces and projects and only directorates in the main MPWcomplex can be connected to the system (0OI II at Cawang is not connected).Information supplied is often inaccurate, incomplete and late. This systemis being gradually improved.

6.14 The collection. grocessing and evaluation of hydrological datacomponent exceeded the number of data collection stations proposed and madea good start on producing data yearbooks. However, after the departure ofthe consultant, the rate of production of yearbooks slowed down and has notachieved the appraisal target.

6.15 The water users' training component identified and resolved manyproblems at district level and below, related to operation and maintenanceof tertiary canals and established successful training systems for variouscategories of people. This component has so far operated in 14 districtswhere it has improved cooperation between officials from different agenciesand within WUAs; this is less than 10% of the number of districts whichwould benefit from such training. The consultancy is continuing under theISSP.

6.16 The manpower develr. -Pnt planning component was only partiallysuccessful. Only 9 out o. the planned 23 DGWRD units were prepared by theconsultants for implementatior. of the manpower planning system. Even now theDGWRD Personnel Division claim they do not understand the system which theyare supposed to be implementing.

7. Project Sustainability

7.1 Sitiuna II. There is doubt whether thn project will ever becompleted. Although contracts have been awarded for construction of all mainand secondary canals, some 8,000 ha do not yet have tertiary development andit is no longer GOI oolicy to finance tertiary development. More than5,000 ha of this requires the land to be cleared; much of this land growsforest rubber and the indigenous population are often reluctant to convertthis to sawah. If the development of the project area is completed, therisks of not maintaining acceptable levels of net benefits are that theirrigation system will not be adequately maintained and that there may beinsufficient water for the area served from the Piruko. To augment the waterby pumping from Batang Hari requires substantial budget for operation andmaintenance of the pumping station, both for supply of diesel fuel andmaintenance of a silt-free intake channel.

8. Bank Performan,:e

8.1 Project preparation was very uneven. The concept of the project andits components were not clearly defined before appraisal. None of thecomponents included in the appraised project were considered in the initialstages of preparation. Only the WUT and the hydrological components wereconsidered before appraisal for inclusion in the project.

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8.2 A8Eraisal. The major component, Sititing II. was added to theproject during the appraisal mission. Although a consultant's report hadindicated that this was a feasible scheme, the appraisal mission overlookedan F(AO/CP review which correctly foresaw many of the risks (see para 4.1).Some of these risks might have been avoided had the Bank financed landclearing and land levelling, but these were not financed nor was landlevelling taken into account when estimating the costs and the ERR. The lackof preparation of the institutional strengthening components, also addedduring the appraisal stage, is indicated by the poor results from the MISstudy and the eventual omission of the upgrading of financial control andauditing procedures. It appears that the Bank's anxiety to achieve thelending programme target may have persuaded the appraisal mission to packagea large number of incompletely rrepared components in the project. TheBank's forecast of the 1995 price of rice used at appraisal was 250% higherthan the current forecast.

8.3 Sugervision. Formal supervision missions were staffed almostentirely by engineers; only the first included an agronomist. More attentionby an agronomist might have emphasized the delays in land clearing and landlevelling and encouraged GOI to allocate funds for this. In addition toformal supervision missions, staff from Washington and RSI and an MISconsultant gave advice. This was particularly important to the MIS componentwhich otherwise might have achieved nothing; the Bank insisted on changingthe MIS consultant's contract from being based on man-months provided tobeing based on results; this and the Bank's insistence on a supervisingconsultant being provided by GOI ensured that some results were obtainedfrom the MIS consultancy. The PCR mission's review of project filesindicates that staff time-was devoted overwhelmingly to Sitiung and, to alesser extent, to MIS and appeared to nealect other components.

8.4 Lessons Learngd. For reasons of institutional expediency, the onlyimplementing agency was DGWRD. The Sitiung project indicates thatinvolvement of the Department of Agriculture in irrigation projects,particularly where there is newly developed land, is essential if theproject is to be successful.

8.5 If project preparation is rushed, possibly because of anxiety tomeet the Bank's lending programme target, there are risks of the projectbeing unsuccessful.

8.6 Institutional support components such as the strengthening of DGWRDMIS require detailed preparation. This is most likely to be achieved if itis insisted that a full description of the objectives and methods areincluded in the SAR. This was done for the hydrology and WUT componentswhich were successfully implemented but not fcr the MIS which had limitedsuccess, nor for the financial control and auditing component which wascancelled.

8.7 Delays in the start of consultancies might be avoided if it is acondition of loan effectiveness that consultants' contracts have beensigned, instead of consultants having been appointed.

- 10 -

9. Borrower's Performance

9.1 Many of the criticisms of the Bank's performance during thepreparation and appraisal could also be made of the borrower. Other thanSitiung II, which was strongly pushed, there appeared to be doubts aboutwhat should be included in the project. During implementation, the borrowerwas unable to meet the commitment to allocate adequate funds but otherwisegenerally performed satisfactorily. Coordination between DGWRD andDirectorate-General of Food Crops Agriculture (DGFCA) could have beenimproved but this would not necessarily have overcome the problem of delayedland clearing and land levelling, which was mainly due to lack of funds.

10. Project Relationship

10.1 The Bank maintained good relationships with GOI and DGWRD throughthe RSI. The Bank appears to have been too willing to finance theconstruction of Sitiung II because GOI wanted this, even though the projecthad been shown to involve serious risks. More contact with DGFCA might haveimproved progress on land clearing and land levelling.

11. Consultants and Contractors

11.1 Strengtheninig DGWRD MIS. The local consultant appointed for thiswas insufficiently experienced and, even with considerable advice andassistance from Bank staff and consultants and another consultant appointedby DGWRD to supervise, the result was disappointing (see para 6.13).

11.2 Mangower Development. The results obtained from the foreignconsultants were disappointing. The consultants project director was not inIndonesia and did not delegate to his staff in Indonesia nor providesuitable direction (see para 6.16).

11.3 Other consultants were generally satisfactory.

12. Project Documentation and Data

12.1 The SAR and loan agreement provided an adequate framework forproject implementation. Some minor modifications were agreed between theborrower and the Bank. The provisions of the loan agreement were generallyobserved (see Part III, Table 7). The project documents were unusual forirrigation projects in that there was no provision for recovery from thebeneficiaries of costs of construction and operation and maintenance of theSitiung II works.

12.2 The borrower prepared a PCR which formed a useful source of datafor this report but gave little analysis of the impact of the project andlessons learned.

- 11 -

PART II

Part II, in accordance with the new guidelines, has not beensubmitted by the Borrower. However, we are attaching the followingcomments from them.

- 12 -

REPUBLIK INDONESIADEPARTEMEN PEKERJAAN UMUM

DIREKTORAT JENDERAL PENGAIRAN

DIREKTORAT BINA PROGRAM PENGAIRANJALAN PATTIMURA NO. ZOIPERC. 7 TILP. 73I16 (3 atutl) P.O. QOX 2131 KUY. - KESAYORAN OAh

JAKARTAAlu st DOYJEN AIR

at ' RFeef. Jakarta, Septemtber Zt,, 1989At tachicrit s I copy.

-il al. trabam DonaldsonOJpe-rationi E% a uation DepartnientThe World 8anaak%iAs1IiI1gt.oaI Dcl:SA

Comnment foL Fro.ject Complet icn Report ofI rri at ion X VI Pro.iect _tlaaq 11 18-INIIL,

Dear Mr. bonaldsoia,

Wit.h reference to s.'.ur letter dated Augtist1 8, 1989

*UIneres i tng t II* *pt. i oila su.,jet, t we .erebL uould like to vojave.N

tiLe DGtWRDh' s * ommeniat as at ached, it) ohte kin ta L tcc:.im.tlAtefi ill the

i .1 1 e I tp;ol I

Wt** t,ia,t Ith t-r voti kiiiji oc..ip- vata. iori.

"i n

V 7t,:,J l*±,. . _ rolaiii, jtig

F 0g ag - 1J(;1RD

;j . '- tot .j fe -tI V .I . aa-. to f a aO (etaerd I .,I hUhD_. *E.astart illtrector hienetaa-l of WRla,

.. f-d.l Iie . .ftII of I .I I i i re a f.i I. I£ a t I IIor-IsppeasllS,4. 1ire..tz, ol la a iatI ha ll,.j. * Iji+l Stlb iit. F1'Ak-IJ,.. * klated sab bi t . *l io,lee l.aIa.at ior.-DPr,, . tcb I Fc W.L i .1d hi.'l.,hi. F ile

el I . - II 1 %% I j)ti I

- 13 -

COMMENT FOR PART I and III 1/

1. Page 2, para 4.1. the inclusion of rubber area as part of projectarea was in line with the result of indigenous farmers interviewcarried out prior to the implementation of the project. Thefarmer's perception was, in fact, strongly influenced by therelatively high financial reward of the irrigated crop areasenjoyed by the transmigrant of Sitiung I. But then most of the.indigenous farmers were not converting their rubber trees int.osawah because they expected the Government to clear and developtheir land as compensation to them for providing land totransmigrants.

2. Page 3, para 5.4. the report stated and we agree that constructionprogress was generally slow due partly to lack of funds. Otherreason also worthwile to be mentioned is the need to redesign thefoundation of weir to meet with field condition. Initial designassumed, based on former geotechnical investigation, r ock layerexist but, in fact, it was not.

3. Page 8, para 6.15. at the end of this para, suggested to add thefollowing :"Therefore, the on going WUTP should be continued as well as beexpanded to the area where the irrigation development orrehabilitation has been completed. Besides, the WlJTP should covertraining in the area not only for surface water irrigation, butalso ground water, swamp and fishpond area".

4. Page 17, table 6 A, paddy production (t/ha).

Written Revised 1)

Appraisal Estimate 5.3 3.5Estimated at closing date 1.2 3.8Estimated at full devep. 7.3 4.5

1) Based on Annex 1, table 3.

CORRECTION FOR PART II

1. Basic Data,Table 7 B,Actual ERR written 17.6%, revised to be 8.93%.

2. Page 2, in line 2 after the word "was signed in ........ " add "April5'"

3. Page 2, in line 4 after the word "became effective in ...........add "July 5"

4. Page 6, in line 13, delete the word "contracts" and replace with"contacts".

5. Page 10, para 2.06, at the end, add new item - GOT financialconstraints especially in the provision of rupiah counterpart.

1/ The Agriculture Operations Division, Country Department 5, Asia Region, concurswith GOt's comments.

- 14 -

(K Page 17, para 2.18, delete t.he title and replace wit.h "Study orManlpower De%eLopment Planyiing for DGWRD Personnel D)vision".In thea last sentence, delete the words ' a local consultant. of 1988wi t.h t rost of' lTS$ 14, 890. and repla(.e with the woLids " .... SGVconsultarnts in 1988 with a cost of IJSS 109,.222.

7. Pasge 18, itl iine 9 and 10, delete the slritenue "t he cost tindlerruAnin ternms of rupiah workeed out to be .....

-0cC.()oo-

- 15 -

PART IT

1. Related Bank Loans and Credit

Loan/credit Purpose I/ Year of Status Comments

Ltll Aorroval

Irrigation IV Feasibility studies 1972 Completed

(Credit 289-IND) of Jatigede Dam onthe Cimanuk Riverin West Java.

Irrigation VI The construction 1975 Completed

(Loan 1100-IND) of a new barrage,tertiaries and drainsat Rentang. Rehabilita-tion of run-of-the riverirrigation system in theCirebon area. Audio-visual training.

Irrigation VII The design of drainage 1976 Completed

(Loan 1268-IND) improvement for thePemali-Comal area.

Irrigation VIII Audiovisual training. 1977 Comp eted

(Loan 1434-IND)

Irrigation IX The construction of 1977 Completed

(Loan 1435-IND) Sitiung Stage I, atemporary low-lift pumpirrigation scheme fromBatang Hari River toserve 3,300 ha ofSitiung area. Manage-ment advisory team forPIBD.

Irrigation XI lmproving hydrological 1978 Completed

(Loan 1579-IND) data base.

Irrigation XII DGWRD training 1978 Completed

(Loan 1645-IND) advisor.

Irrigation XIII Peview of feasibility 1979 Completed

(Loan 1691-IND) of 1979 Jatigede Dam.

Irrigation Completion of second- 1987 Ongoing

Sub-Sector ary canals for 1,710 ha(Loan 2880-IND) and tertiary development

for 5,417 ha in Sitiungarea.

.1/ Only the purposes related to Irrigation XVI are listed. i

- 16 -

2. Project Timetable

item ate Planned Date Revised Date Atu

Identification(Initiating Project Brief) August 1980

Preparation Sept 1980-Feb 1981 Feb-April 1981

Appraisal Mission May 1981 May 1981

Loan Negotiations October 1981 28 Jan-9 Feb 1982

Board Approval 30 March 1982

Loan Signature 5 April 1982

Loan Effectiveness 7 July 1982 9 August 1982

Loan Closing 31 Dec 1987 31 Dec 1988 31 Dec 1988

Loan Completion Not yet completed(March 1989)

Cnmments:

The initiating project brief suggested the inclusion of four sectorcomponents and a number of construction projects depending on their state ofpreparation with a project cost of about US$415 million and a loan of aboutUS$200-225 million. None of the components listed in the initiating projectbrief was included in Irrigation XVI, though some were included in otherprojects. FAO/World Bank Cooperative Programme reviewed the foreignconsultants feasibility study for Sitiung II in August and September 1980as preparation for a proposed Irrigation XVIII project and concluded thatthe project's concept was not sound and the project was not recommended(Part I, para 4.1).

A further project brief in April 1981 included improvement to water usersassociations (WUAs) and the hydrological network, both of which were finallyincluded in the project, but none of the other components was included atthis stage. The uncertainty about the content of the project continuedthrough appraisal. The Sitiung component was added to the project during theappraisal mission which also further considered improving of WUAs and thehydrological network and studies and designs in the Cisanggarung Basin.Issues raised, following the appraisal mission, were the capacity of DGWRDto implement new projects and availability of GOI funds. Tertiarydevelopment in four provinces and studies in the Pemali-Comal area, althoughincluded during the appraisal mission, were subsequently omitted. Duringnegotiations, rehabilitation of the South Jatiluhur irrigation system wasdropped at GOI request because of restrictions on local budget funds.

- 17 -

3. Lgan Disbursements

FY 1983 18 25 1fi 2z 1ai 18

Appraisal estimate 1.5 7.5 14 20 26 33 37

Actual 1.44 11.96 16.33 23.05 27.41 33.65 34.6

Actual as % ofestimate 96 159 117 115 105 102 94 <1>

Date of finaldisbursement

(1> At 21 March 1989.

Comments:

The SAR was unusual in that it showed disbursement continuing for 18 monthsafter the loan closing date in the Loan Agreement. It was expected inMarch 1989 that final disbursement would be before the end of June 1989 andthat close to 100X of the loan would be disbursed.

- 18 -

4. Project Imnlementation

Indigators AQoraisal Actual or PR Commgnts,Estimate Es±imfi

Sitiung IIArea irrigated (ha):

- Batang Piruko 1,000 <1> 2,403 <2> Being completed- Batang Siat 5..7Q L.56 under ISSP.

Total 6,700 8,970Cisangoaruna Basin StudyConsultant man-months - Foreign 117 168 Completed.

- Local 102 211Jatioede Dam DesignConsultant man-months - Foreign 109 186 Completed.

- Local 160 255DGWRD MIS StudyConsultant man-months - Foreign 0

- Local 400 <3> Completed.

Hydrological Data ImorovementInstruments installed: Including 35

- water level recorder stations 90 102 instruments instal-- rainfall recording stations 30 78 led at existing

stations.- climatological stations 40 74 Including 33

instruments instal-led at existingstations.

Water Users TrainingConsultant man-months - Foreign 120 14 Continues under

Local 120 161 ISSP.Training:(a) middle-level officials 2,000 1,478(b) local officials & WUAs

representatives 5,000 6,172(c) farmers and village

leaders 9,000 4,572- training officers 40 179- instructors 80 136

Ungrading Financigl Control and Ministry of PublicAuditing Procedures Works decided in

1986 to reviewConsultants man-months - Foreign 8 0 accounting systems

- Local 12 0 throughout theMinistry. Thiscomponent for DGWRDonly was thereforedropped from theproject.

Mannower Develonment Planning 0 12 Added to theproject.

<1> In addition to 3,300 ha in Sitiung I. <2> In addition to 3,268 ha inSitiung I. But, so far, only 2,300 ha in the Sitiung I area has beenirrigated. <3> Contract changed from man-months to payment by results.

- 19 -

5. Project Cncts and Einancing

A. Prnject Cost

Agnraisal Estimate <1> Revised Estimate <2> - Actual <3>Lcal E£L Ial LQI E I.A La1 EEL 1T..................... ..(USS million).

Sitiung II 28.6 18.9 47.5 60.0 51.6 0.5 52.1

D5igo L Stud

CisanggarungBasin 1.3 3.0 4.3

Jatigede DamV-sign 1_5 1.9 3A

Sub-.otal 2.8 4.9 7.7 6.1 1.1 4.0 5.1<4)

InstitutionalSupport

DGWRD MIS 2.2 2.5 4.7 1.1 0.7 1.8Hydrology 2.6 5.1 7.7 1.3 2.6 3.9

<4>Water UsersTraining 5.9 2.8 8.7 3.0 2.3 5.3

Audit 0.1 0.1 0.2 0 0 0ManpowerPlanning n a .-1 o

Sub-total 10.7 10.6 21.3 13.4 5.4 5.7 11.1

Total 42.1 34.5 76,6 79.5 58.1 10.2 68.3

<1> Taken from SAR, Annex 1, Table 1. Annex 1, Table 3 give. slightlydifferent figures.

<2) February 1985.<3) Sitiung II includes estimated future costs (see Annex 1, Table 1).

Otherwise costs to date.<4> Breakdown into local and FE is a mission estimate since no other data

available.

Comments:

For the Sitiung component, costs have increased only by 10% from appraisalestimates when expressed in US dollars but, when expressed in rupiah, thecost overrun is 129%. This is due to more rapid inflation than anticipatedat appraisal, combined with a longer construction period and the addition ofitems not included in the SAR; land development, pumping station repairs,laad acquisition at Batang Siat and increased area developed at BatangPiruko. The estimated cost of Sitiung II is about USS5,8OO/ha in currentdollars. The reductions in costs of the other components are, despitegenerally increased inputs, due to the devaluation of the rupiah and othercurrencies paid to foreign consultants and overestimation in the appraisalreport.

B. Project Financing

Source Loan Agreement Final Comments........ (USS'000) .

IBRD Irrigation XVI As at Feb 1989(not final)

Category 1 Civil Works 15,700 20,061 Disbursement %increased Jan 1986

2 Equipment 4,000 2,7733 Training 3,800 1,571 100% of cost disbursed4 Consultants 11,100 10,101 100% of cost disbursed5 Unallocated 2.400 .. 2494

Sub-total 37,000 37,000 Assuming fulldisbursement

IBRD IrrigationSub-sector Project 0 6,700 Rpll,637 million for

Sitiung II

OECE Loan 0 800 Rpl,370 million forSitiung II

Domestic 39.600 23...iLaQ

Total 76,600 68,300

Comments:

The Bank agreed to reallocations of loan proceeds during implementation. Thepercentages disbursed against civil works were increased in January 1986 inorder to decrease the local funds required.

- 21 -

6. Project Results (see Annex 1)

A. Direct Benefits of Sitiung 11

Indicator Appraisal Estimated at Estimated atEstimate Closing Date Full Develooment

IncrementalPaddy Prediction (t) 35,500 15,000 89,000

(t/ha) 5.3 1.2 7.3No. of Beneficiaries(families) 7,000 3,000 7,000Incremental Farm Labour(man-days) 2 million 0.6 million 2.1 millionIncrease in Family Income(%) 150-200 111 833Foreign Exchange Savings(US$ million) 20 2 11

Comments:

The PCR estimate of incremental paddy production is much greater thanestimated in the SAR due to the increased area and higher estimated cropyields. Due to lack of data, the PCR estimate of th*^ number of beneficiarieshas been based on the incremental area divided by 1.75 ha per family. TheSAR assumed that 1,800 transmigrants would have 1 ha in the project area andthe remaining 4,900 ha would be in 4 ha holdings. It is not clear how theSAR estimate of 7,000 direct beneficiaries (plus 1,000 indirect) wasderived.

B. Econnmic Impa_t of Sitiung II

Economic Rate of Return Angraisal Estimate PCR Estimate(%) (X)

Underlying assumotion

Sitiung II with adenuatesystem maintenance:

- Base case 18 4- Benefits of pump repair 2

excluded- Stages I and II combined 1

Comments:

The SAR assumed a 1990 price of rice of US$638/t in 1981 vaiues. Thiscorresponds to US$857lt in 1988 prices. The PCR has based the estimatedbenefits on an assumed 1995 price of US$243/t in 1988 prices. The basis forthe analysis is explained in Annex 1.

- 22 -

C. Financial IMnact of Sitiung II

Annual Farm Income SAR EStimate <1> PCR Estimate <2>TLrans- Indigenoumigrants

Present (1988) 600,000

With project (Rp) 487,000 637,000 2,109,000

Without project(Rp) 243,000 378,000 226,000

Increase due toproject (%) 100 68 833

<1> In 1981 Rp.<2> In 1988 Rp at full development.

- 23 -

0. Studies and Institutional Sunport

Purpose as Defined Status Impact of Study,at AoDraia

Studv

Cisanggarung To find technically and Completed Recommended raisingeconomically viable means 1984 one dam and con-of controlling floods in structing two dams.coastal area and providing river improvement :nadditional water during Bangkaderis riverdry season. and Crucuk River.

Only works on CrucukRiver have beenconstructed. Catch-ment protection hasbeen carried out.

Jatigede Detailed design of Jatigede Completed Additional studiesDam and appurtenant by 1987 of environmentalfacilities and power plant effects, resettle-

ment and reservoiroperation alsocarried out. Re-settlement is anissue. Dam not yetbuilt.

InstitutionalSupport

Strengthening Improving MIS throughout Completed Partially successful.DGWRD MIS DGWRD and introduction of 1989 Progress of contracts

computer-based system monitored monthly.Personnel and equip-ment inventories oflimited use. Irrigat-ed areas and irriga-tion systems invent-ories mainly wrongand of very littleuse.

Improving Expanding hydrological data Completed Objectives generallyHydrological base by installing a wider 1986 ;7chieved but produc-Data network of river and rain- tion of hydrological

fall gauges and climaate data yearbooks stillstations and improving delayed.DGWRD's hydrologicalanalytical capacity.

- 24 -

Purpose as Defined Satus Impact of alaiat AQLraisal

Water Users To achieve a unified Continues Identified and re-Training understanding of technical under solved many problems

and organizational aspects irrigation at district levelof tertiary system operation sub-sector and below. Improvedamong staff of agricultural loan. cooperation betweenextension, irrigation and officials fromlocal government, WUAs different agenciesofficials and key farmers. and with WUAs in 14

districts (less than10% of the districtswhich would benefitfrom such training).

Upgrading Improved financial control Cancelled None.Financial and audit procedures forControl and DGWRD agencies implementingAudit Bank-assisted projects.Procedures

Manpower Initiate and guide the Completed Only partiallyDevelopment implementation of manpower successful. OnlyPlanning planning systems in selected 9 out of the(added to units of DGWRD; identify planned 23 DGWRDproject in weakness in division of units were1987) personnel; prepare personnel prepared by the

units for projects under consultants forirrigation sub-sector loan; implementationimprove implementation of of tne manpowermanpower planning system. planning system.

- 25 -

7. Status of Covenants

Covenant in SUbJeCt Deadline for Status <1>Loan Agrgement 9CoLmrlange

3.01 (c) Ensure sufficient funds 3for budgeted expenditure

3.02 Appoint consultants 1 April 1983 <2> 2

3.04 (a) Furnish plans, specification 2

(b) Maintain records 2

(d) Prepare and furnish PCR 2

3.05 Acquire land 3

4.02 (a) Maintain appropriate 2accounting records

(d) Furnish audited financial 31 December 2statements each year

4.03 (a) Cause canals to be adequately 2operated and maintained

(b) Provide adequate staff and 15 August 2funds for proper O&M and each yearmake budgeted amountavailable

(c) Inform Bank of cost 1 May 2per ha of O&M each year

4.04 WUAs to participate in design 3of tertiaries

4.04 (a) WUAs to agree to operate and 3maintain tertiary networkbefore design

4.05 Study WUAs and O&M of 1 July 1983 2tertiary systems; reportto Bank

4.06 Clear 1,800 ha and provide 1 April 1983 4credit for clearing 2,500 haand sawah formation on6,100 ha

- 26 -

Footnotes

<1) 1 = unavailable; 2 = in compliance; 3 = partially in compliance;4 = not in compliance; 5 to be waived/deleted;6 = no longer relevant; 7 = to be amended; 8 = not yet done.

<2> There were three deadlines for appointing consultants:

- 1 August 1982 for construction supervision;

- 1 January 1983 for MIS (this was late) and upgrading financialcontrol and audit procedures (deleted because componentcancelled);

- 1 April 1983 for Water Users Training for which consultants wereselected but there was delay in signing their contract.

Cnmments:

Supervision reports (and this table, which is largely based on thesupervision reports) tend to ERR on the favourable side when reporting thestatus of covenants. For example, Status 2 is given even when compliance islater than deadline. The mission understands that the involvement of WUAs indesign of tertiaries was rare and, although Status 3 is not incorrect, itcould give a misleading impression.

8. Use of Bank Resources

A. Staff Inputs(man-weeks)

Stane ofProject Cycle Planned Revised Final Comments

Through Appraisal 44.4 Mission dataindicates 66man-weeks infield. Seebelow.

Appraisal to 12.4Board Approval

Board Approvalto Effectiveness

Supervision

Total 174.7

Comments:

No details of planned inputs are available before FY1989; 31% of plannedi - for FYI I l used ' n 9 F r ^v 1 i

- 27 -

B. Missions

Stage of Month/ Ng. of Days in Sgecial- Perfor- I=QProiect Cvcle Yea Petsons Eield ization manc QL

ReBre- RatiQg Problemsente Statu&<1> <2>

ThroughAppraisal <3> 9-10/80 5 150 N/K

2-3/81 5 140 IIIEu4-5/81 6 174 IIIAUU

Appraisal toBoard Approval 3/81 4 N/K INUU

Board Approval N/Kto Effectiveness

Supervision 9/83 2 8 IA 2 Technical11/84 1 4 I 2 Technical11/85 1 N/K I 2 Project

ManagementDevelopmentImpact

8/86<4> 1 4 M12/86-1/87 1 N/K I 2 Development

Impact9-10/87 1 6 I 2 Development

Impact7/88 1 4 I 2 Development

Impact

Note: N/K Not known.

<1> I = Irrigation Engineer; E = Economist; A = Agriculturalist; U = Unknown;N = Environmentalist; M = Mangement Information System Consultant.

<2> 2 = moderate problems.<3> This record which may not be complete conflicts with information in

Table A above taken from MIS which indicates less staff time. Apossible explanation is that missions were not working only onIrrigation XVI project.

<4> Mission for MIS component only.

- 29 -

ANNEX 1

INDONESIA


ECONOMIC RE-EVALUATION OF SITITUNG II

Table of Contents

General 1Project Costs 1Benefits 2Prices 2Economic Rate of Return 2

TABLES

1. Sitiung II Investment Costs2. Economic Values3. Area, Yield and Production at Sitiung4. Financial Crop Budget per Hectare5. Sitiung: Economic Benefits of Production at

Full Development6. Sitiung: Area Irrigated and Pumping Needs (Case 1)7. Economic Cost and Benefit Streams for Sitiung II (Case 1)8. Sitiung: Area Irrigated and Pumping Needs (Case 2)9. Economic Cost and 3enef.t Streams for Sitiung II (Case 2)10. Economic Rate of Return for Combined Sitiung I and II11. Derivation of Economic Prices (1995 in Constant 1988

Prices)

- 31 - 8NEX 1

INDONESIA


ECONOMIC RE-EVALUATION OF SITIUNG II

Gene.-al

1. The SAR assumed that Sitiung II project would have no effect on theagricultural production of the 3,300 ha in the Sitiung I area which was tohave been developed under Irrigation IX. The only benefit in this area wouldbe a saving in the cost of pumping water from Batang Hari, which would bereplaced by water flowing by gravity from the Piruko. However, owing to thefailure of the pumps and the slow agricultural development (only about1,800 ha of the 3,300 ha in Sitiung I area has so far been irrigated), it isdifficult to accurately differentiate between the future benefits due toeach stage. In an attempt to simplify the economic analysis, the PCR hasestimated the f.ture development of the whole Sitiung project and thenproportioned the incremental benefits of agricultural production from thewhole project in proportion to the areas that would have received irrigationwith and without the project based on two assumptions (see Part I, paras 6.2and 6.3):

Case 1 - Without the project, the pumps would not have been repaired.

Casg 2 - Even without the project, GOI would have repaired the pumps.

As in the SAR, previous construction was treated as a sunk cost and was notincluded in the main economic evaluation.

Project Cost

2. All investment costs since the start of the Sitiung II project,which pertain to irrigation development in the project area and arenecessary to complete the project works and land development, have beenincluded in the cost streams. Past expenditures have been brought to 1988price levels using wholesale price indices (Table 2). The financial costsshown in Table 1 have been adjusted to economic costs using the conversionfactors given in Table 2. The estimated operation and maintenance costs ofRp25,000/ha/year (financial cost excluding pumping), which have beenincluded in the cost streams, assume that the system will be adequatelymaintained.

- 32 -

Benefits

3. Incremental crop production at full development, which is assumedto be achieved in 2000/01, has been calculated for the combined areas ofSitiung I and II on the basis of the assumed future cropping patterns andyields presented in Table 3. Financial production costs and benefits perhectare are shown in Table 4 and the economic net benefits at fullproduction in Table 5. These are based on gravity irrigation. Theincremental pumping requirements are shown in Table 6 for Case 1 and Table 8for Case 2: pumping costs are in Tables 7 and 9. Benefits due to Sitiung IIhave been assumed to increase as shown in the tables.

Prices

4. Input and output prices are given in Table 2. Economic prices fortraded commodities have been derived on the basis of IBRD commodity priceforecasts for 1995. Import parity prices have been used for maize,groundnuts, TSP and KCl and export parity prices for urea. Indonesia was anet importer of rice until 1982. From that year onwards, however, it hasbecome just self-sufficient. It is difficult to forecast with certaintywhether the country will import or export rice in the future. An averageprice of import and export parity has therefore been used in the analysis.The economic cost for draft animals has been assumed to be the same as thefinancial. A conversion factor of 0.8 has been used to convert the financialcost of farm labour to economic values. A conversion factor of 0.9 has beenused to convert financial prices of cassava to economic value.

Economic Rate of Return

5. Based on the above assumptions, an ERR of 4% has been estimated forthe Sitiung II project (Case 1) over 30 years as shown in Table 7. The ERRis considerably lower than the 18% estimated at appraisal. Reasons for thisare the 40% lower (when expressed in 1988 terms) economic price for rice,cost overrun (130%) on construction and a slower build-up of benefits thanforeseen in the SAR. These factors are partially offset by higherincremental production. If full development is not reached by 2000, the ERRwould of course be lower.

6. If it is assumed that even without the project GOI would haverepaired the pumps (Case 2), the ERR reduces to 2%. The ERR is not sensitiveto changes in the cost of pumping. When the costs and benefits of Stage Iare combined with Stage II, the ERR becomes -4% (Table 10).

7. The above results assume that the completed systems are maintainedin full working order. If this is not done, benefits would graduallydecrease and rehabilitation would be necessary. This would result in a lowerERR.

INDONESIA


SitiunQ 11 Investment Costs <1> <2>

Iotal 1981182 1982183 1983184 1984185 1985/86 1986/87 1987188 1988189 1989/90 1990191 1991/92

................ ........................ milion ............... ......................

Batan PrukaLand acquisition 182 68 37 61 7 9

Headworks 1.589 271 863 325 130

Main system 5,346 485 1,422 2.027 1,037 99 276

Tertiary 2.294 125 244 245 180 1.500(3>

Land clearing 848 145 <4> 146 <4> 54 <4> 503<3>

Land development 2.255 146 (4> 146 <4> 55 <4> 600<3> 1.308<3>

Pump repairs 497 80 40 250 <3> 127(3>

Intake regulator gate (3> 1.000 SOO SOO

Recondition excavator (3> 30 30

8atana S1atLand acquisition 2,094 131 876 186 512 39 260'3> 90(3> W

Neadworks 5.442 356 822 1.171 2,060 1,033

Main system 35.712 1.182 2.780 3,523 2,942 6.809 5.782 9.982 2,712

Tertiary 2.971 267 293 710(3> 401<3> 1.300(3>

Land clearing 588 588<3>

Land development 1.893 1.893(3>

OtherConsultants 930 83(5> 170(5> 141<5> 250<5> 165 121

Administration 4,190 526 604 770 806 SS5 304 175 175<6> 175(6> 100<6>

Total Investment 67,861 193 2,605 6.989 8.660 7,052 9,983 7,741 10,960 6,380 4.398 2.900

Rp/USS 625 700 970 1,050 1,120 1.410 1.650 1.700 1.700 1.700 1,700

USS million 52.05 0.31 3.72 7.21 8.25 6.30 7.08 4.69 6.45 3.75 2.59 1.71

__ ________ ____---___-------c

(<I Includes works financed under Irrigation Sub-sector Project (Loan 2880-INO) and by OECF. m

<2> Source: Unless noted Sungai Dareh Sitiung Project. _ _

(3> Ura1an Singkat Proyek Irigasi Sungal Dareh Sitiung. December 1988.

<4> Source: As 3 but assumes average Rp300.000/ha. 49.5X of which is for land clearing. However. November 1984 supervision mission reported

sawah development had not yet started.<5> Source: Draft PCR by OGWRD.(6> Mission estimate.

- 34 ~~~~ANNEX1Table 2

INDONES IA


Egonomic Values

1. Factors to convert financial value to economic value:

S0urce

Civil works and O&M 0.82 1Administration 0.90 1Consultants 1.00 1Equipment 1.00 1Farm labour 0.80 1 <1>Diesel fuel 1.40 2 <2>

2. Financial and economic prices:

Unit Financial Econgmic(1988) (1995)......... (Rp) .

InputsUrea kg 150 407TSP kg 150 468KCl kg 150 326Agrochemicals litre 2,500-3,000 10,000 <3>Seed:- Rice kg 400 355- Groundnuts kg 1,120 940- Maize kg 200 188- Cassava kg 25 20

Paddy kg 250 222Groundnuts kg 1,125 940Maize kg 200 188Cassava kg 40 36

1981/82 UZjM 3LB4JZ T8 LM AL& ALL& fBLB9

3. Exchange Rate(Rp/USS) 625 700 970 1,050 1,120 1,410 1,700 1,700

4. Reciprocal of 1.92 1.73 1.49 1.36 1.31 1.24 1.07 1.00Wholesale PriceIndex

<1> PCR for Irrigation XV.<2> Indonesia Energy Options Review, Report 6583-IND, August 1987.<3> SAR for Irrigation Sub-sector Project, October 1987.

INDONESIA

SIXTEENTH IRRIGATION PROJECT(LOAN 2118-HND)

Area. Yield and Production at Sitiuna

Present Future Without Proiect <2> Future With Prolect (21Area Yield Production Area Yield Production area Yield Production

('000 ha) (tlha) (t000 t) ('000 ha) (t/ha) ('000 t) ('000 ha) (t/ha) (t000 tt

(1981)

Upland rice (1> 1.70 0.3 0.51 1.70 0.3 0.51Groundnuts 0.56 0.2 0.11 0.56 D.2 0.l1Maize 0.56 0.4 0.22 0.56 0.4 0.22Cassava 0.95 2.0 1.90 0.95 2.0 1.90 IMixed forest 2.32 2.32Existing sawah (1> 0.61 2.0 1.22 0.61 2.0 1.22 1.22 3.5 4.27 I

New sawah <1> _10.97 3.0 32.94 1Total cropped area 6.70 6.70 12.19 37.21Net cultivable area 6.70 6.70 6.70Cropping intensity X 100 100 182

PCR (1988)

Rainfed rice (1> 3.15 1.3 4.10 4.18 1.0 4.18Groundnuts 0.20 0.6 0.12 0.55 0.6 0.33 0.8 0.8 0.64Maize 0.20 1.8 0.36 0.40 1.0 0.40 0.2 2.0 0.40Cassava 0.35 16.0 5.60 0.20 12.0 2.40Mixpd forest 5.85 6.91Irrigated rice <1> 4.57 3.8 17.37 - 4.5 92.93 a ZTotal cropped area 14.32 12.24 21.65 cr zNet cultivable area 12.24 12.24 12.24 m x

Cropping Intensity X <3> 117 100 177

<I) Rice yields are in tons/ha of dry gabah.<2> At full development in 2000/01.(3> To be consistent with SAR, mixed forest has been 1ncluded.

ItlONFISIAt

SIXTE "IT" IRRIGATIoN PROJECT(LOAh 2118-INO3 OE

Financial Crop 8udoet per leetar

IrrAeat tt Ratnfetd Groudt AbiLMt Casv Mat XltdfAMI I"b ~~~~~~~~~~~~~~~~~~forest

lix hkia 3lu aimt X flu. "in J lu. LIUn e LU. lix lu. lAi(ape000) (kp'O°O) (ARpOOD) (p OOO) IRPO00) (apO000)

1, AlEm Clii II PxOJFtT

yield (tonslha) 3.3 - 1.3 - 0.6 - 1.8 16Pric (IRpOOOlton) 250 - 250 - 1.125 200 - 40.06ross VJlue (ap 000ha) - 950 - 325 675 360 - 6400 342.0!rst tfot eea t- (RpDOOOiha)Cultivation (bulllck patr-days) 25 75.0 14 42.0 10 50.0 14 70.0 14 70.0 -

S4 (kg) 4* 16.0 SO 20.0 SO 56 0 40 8.0 2.SOO 62.5Urea (kg) 150 22.5 o- - - S 7 5TSP kg) 100 IS.0 - - - - - - -

*Ct kgx) - - -thsers-ea l) it) 3 9.0 4 12.0 - - I 2. Total (excl. hired labour) 137.5 74.0 116.0 68.0 132.5

(mIK. hired labour) *oo e 2o; 312 5 -

Net Intose (R OoOl/ha)tncl. hired l1bour and texie) 511.0 L0 4 0 205 0325 0 t6

Laour Seauliramant (mend-d")Total 150 " 190 5 70 218.0 68 126.0 120 300.0 130 325.04ired IOS 262.5 SO 108.0 As ISO.0 35 65.0 72 180.0 65 162.0

11 um T Imnuau?T Pleaate 0bald (tonslb) - - 1.0 * 0.6 - 1.0 - 12.0Price (Rp OOO/he) - - - 250 - 1.125 -200 4.0 0Gross Value (ReOOO/sha) _ 250 675 200 - 480.0 294.0

Preduetpgt I eex ' Ro OOha)Cultivation (bullack poer-days) - 14 42.0 10 SO.0 10 SO.0 10 SO.0Saads (kg) - - SO 20.0 50 5<60 40 8.0 2.SOO 62.5Ure xkg) - - so 50 7.5 - -TSP kgI) - . _ CCI (kg) - . . . _ . _ . .

haush tao)al) - - 2 S.0 - * 1 2.5 - -

Total (cxCl. hired labOur) 67.0 106.0 68.0 112.S(Intl. hired labour) - 175.0 256.0 14.5 271.5

n4ot Incme (Fp OOO/he - 73L 01. 4t.tSI 2DLI a140u(loi. htred labour ld tax x

Labor 1eAi,lt (an-days)Totel - - s 184.0 70, 218.0 S8 107.5 tO1 270.0 120 300.0Wired - - 50 108.0 48 ISO10 25 46.5 64 159.0 60 150.0 - D

111. tloT c uITH PltO1C ?ZYVWld 4.5 - - O 0 - 2.0 - - - M 0ZPrfce (ap 000Iton) - 250 - - - 1.125 - 200 - - -

6,0s5 value (RpOOO/ha) - I.125 - - 9OO 400p£u ±ction..StS (UpCOOlha)Cultitvation (bullock pair-days) 25 75.0 _ 14 70.0 14 70.0Seads (kg) 35 14.0 - - SO 56.0 40 8.0 - - -

Orea (kg) 200 30.0 - - 50 7.S 50 7 5TSP (kg) ISO 22.5 - 100 IS.0 300 15.0 XCI (kg) SO .S- -SO 5 7. - - -

aro-c0ttfi.6aj ,(1) 4 12.0 - - 3 7.S 2 5.0 - -Total (eax.l hired labour) 161.0 - 163.5 IOS.S

(intl. hired tabour) 431.0 329.0 170.SWot Income (RP OOOlbh)

(mnc. hired labour and taxes) A"2.8 - s69q 2.L.lLabour reopuirent (nan-dayS/ha)

Total 160 400.0 - - 74 231.5 70 130.0 - -Hired IOS 270.0 - 53 165.5 35 65.0 - -

Land tax - 5.0 2.0 2.0 2.0 - 2.0 4.0

INDONESIA

SIXTEENTH IRRIGATION PROJECT

(LOAN 2118-IND)

Sitiuna: Economic Benefits of Production at Full Develooment

............. .Without Project i...... ......... ..... Wth Project.

Ame Economic Net Value of Productlon Area Economic Net Value of Production

('000 ha) (Rp-OOOlha) (Rp million) (1000 ha) (ip'ooO/ha) (Rp million)

Rainted paddy 4.18 -4.7 -19.6 1

Groundnuts 0.55 292.0 160.6 0.8 336.7 269.4 w

Maize 0.40 13.9 5.6 0.2 107.4 21.5

Cassava 0.20 117.5 23.5

Mixed forest 6.91 54.0 373.1

Irrigated paddy 20.65 383.7 7.923.4

543.2 8,214.2543 2

Incremental net value 626.7 7.671.0

to z

Vw -

* ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~C .

NDONESIA

SIXTEENTH IRRIGATION PR9,JECI(LOAN 2118-INO)

Sitiuna: Area Irrigated and PumDina Needs (Case ll (1I

..................... Batanq Piruko .................... B atana Slat Total Incremental

Without Proiect With Proiect Ae Area

Area Area Area Area Irrigated <5) Irrigatedliar: Irriaated <Pumped Irig.ted (3) Pmed (4..(ha).

........................ (ha).

1986 0 0 1,863 0 1,863

1987 0 0 2.110 0 2.110

1988 0 0 2,288 0 0 2,2881989 0 0 2,524 <2> 0 547 <6> 3,071

1990 0 0 2,524 0 1.094 3,618 o

1991 0 0 2.524 0 1.642 4,1661992 0 0 2,874 0 2,189 5,0631993 0 0 3,223 53 2,736 q 9601994 0 0 3.573 403 3,28A 6,857

1995 0 0 3,923 753 3,831 7,754

1996 0 0 4,272 1.102 4.378 8.6501997 0 0 4,622 1,452 4,925 9.547

1998 0 0 4,972 1,802 S,472 10,444

1999 0 0 5,321 2.151 6,020 11.341

2000 0 0 5,671 2,501 6.567 12,238

2009 0 0 5,671 2.501 6,567 12.238

___ --__ -__ -__-___-__ -____-_ er z

<1> Before 1986 there was no Impact of Sitiung 11 project. m

(2> Area cannot exceed 2.524 ha until land clearing and levelling, scheduled for 1991/92, have been completed. __

(3> Actual areas until 1988. Assumed linear increase from 1991 to 2000.(4) Assumes on average gravity flows can irrigate 3.170 ha. Area pumped is that part of the area irrigated

for which it Is assumed pumping would be necessary.(5> Assumed linear increase from 1989 to 2000.(6> Although 1.600 ha are expected to be irrigated in 1989, it is not expected that full benefits will be

obtained. A smaller area has therefore been entered in the table.

INDONESIA


Economic Cost and Benefit Streams for Sitiuna II (Case 11

Year Construction Incremental incremental Net IncrementalCosts <1> Q&L Cost <2) Pumplnn Cost <3> Production Benefits

Benefit <4)....... ............................... (Rp million).

1981/2 304 -3041982/3 3.768 -3.7681983/4 8,633 -8,6331984/5 9,783 -9,7831985/6 7,693 -7,6931986/7 10,280 1,168 -9,1121907/8 6,826 1,322 -5.504198U;9 9,046 116 1,434 -7,7281989/90 5,298 149 1,925 -3,5221990/1 3,642 251 2,267 -1,626199112 2,386 251 2.611 -261992/3 251 3,173 2,9221993/4 251 11 3,735 3,4731994/S 2S1 81 4,297 3.965199S/6 251 151 4,859 4,457 40

1996/7 251 220 5.421 4,9501997/8 251 290 5,983 5,4421998/9 251 360 6,545 5,9341999/2000 251 430 7,107 6,4262000/01 251 500 7,C70 6,919

2010/11 251 SOO 7,67C 6,919

ERR 4.3X

(1) In 1988 values, including pumping station rehabilitation.(2> Actual for 1988/89. Thereafter Rp25,000/yr in financial terms (Rp20,500 in economic) for each cr z

Incremental hectare for which main system is completed. O&M cost is included in construction f rncosts before 1988/89.

<3> Assumes 24 litres of diesel fuel per 1,000 m3 of water pumped; 24,000 m3/yr of water (at head ofmain canal) for each hectare Irrigated; average area that can be irrigated from Piruko is3,170 ha; pumping costs Rp200,000/ha/yr in economic terms including approximately 20% offuel cost for other costs (see Table 6).

<4) Area from Table 6 x Rp6Z6,700/yr/incremental hectare.

INDONESIA


Sitiuna: Area Irrioated and Pumoina Needs fCase 21 (1>

........... ...................... Batang Piruko ..... Batana S...jj Total IncrementalWithout Prolect With Proiect Incremental ArMa AreaArea Area Aria Area Area Area Irrigated (5> Irriaated

Irrioated <2> Pumped Irrigated (3> Pumed (4> Irrigated Pumped ............... (ha)....... .. ............................(h ).. .................................

1986 0 0 1.863 0 1,863 0 1,8631987 0 0 2,110 0 2.110 0 2,1101988 0 0 2.288 0 2,288 0 0 2,2881989 2.524 2.524 2,524 (2> 0 0 -2,524 547 (6> 5471990 2,524 2,524 2,524 0 0 -2,524 1,094 1.0941991 2,524 2,524 2,524 0 0 -2,524 1,642 t.6421992 2,874 2,874 2,874 0 0 -2,874 2,189 2,1891993 3.223 3,223 3,223 53 0 -3,170 2,736 2,7361994 3,268 3,268 3,573 403 305 -2,865 3,284 3,5891995 3,268 3,268 3,923 753 655 -2.515 3,831 4,4861996 3,268 3,268 4,272 1,102 1,004 -2,166 4,378 5,3821997 3,268 3.268 4,622 1,452 1.354 -1.816 4,925 6,2791998 3,268 3,268 4,972 1,802 1,704 -1.466 5,472 7,1761999 3.268 3.268 5,321 2,151 2,053 -1,170 6,020 8,0732000 3,268 3,268 5,671 2,501 2,403 -767 6,567 8,970

2009 3,268 3,268 5,671 2,501 2,403 -767 6,567 8,970

____________________________ cr Z(1> Before 1986 there was no impact of Sitiung It project. x<2> Area cannot exceed 2,524 ha until land clearing and levelling, scheduled for 1991/92, have been completed. Zaximum area -_

wfthout Sitiung It would be 3,268 ha.(3> Actual areas until 1988. Assured linear Increase from 1991 to 2000.(4) Assumes on average gravity flows can irrigate 3,170 ha. Area pumped Is that part of the area Irrigated for which It is

assumed pumping would be necessary.(S> Assumed linear increase from 1989 to 2000.(6> Although 1,600 ha are expected to be Irrigated in 1989, it is not expected that full benefits will be obtained. A smaller

area has therefore been entered in the table.

INOONESIA


Economic Cost and Benefit Streams for Sitiuna 11 lCase 21

BeAU Construction Incremental Incremental Net IncrementalCosts <1> O& Cost <2> Pumpina Cost <3> Production Benefits

Benefit <4>.. . ( Rp million) ...........

1981/2 304 -3041982/3 3.768 -3,7681983/4 8,633 -8,6331984/5 9,783 -9,7831985/6 7,693 -7,6931986/7 10,180 1.168 -9,0121967/8 6,783 1.322 -5,4611988/9 8.796 49 1,434 -7,4111989190 4.736 82 -505 343 -3,9701990/1 3.232 184 -505 686 -2.225199112 2.386 184 -505 1.029 -1,036199213 184 -575 1.372 1.7631993/4 184 -634 1,715 2,1651994/5 184 -573 2,249 2,6381995/6 184 -503 2,811 3,130199617 184 -433 3,373 3,622199718 184 -363 3,935 4,1141998/9 184 -293 4,497 4,606199912000 184 -234 5.059 5,1092000/01 184 -153 5.621 5,590

2010/11 184 -153 5,621 5,590 _4 3Wa z

ERR 2.5% crm

(1) In 1988 values, excluding pumping station rehabilitation which It is assumed would have been done % without tha project.

<2> Rp25.000/yr In financial terms (Rp2O.500 in economic) for each incremental hectare for whichmain system is completed.

43) Assumes 24 lItres of diesel fuel per 1,000 m3 of water pumped; 24,000 m3/yr of water (at head ofmain canal) for each hectare irrigated; average area that can be irrigated from Piruko Is3,170 ha; pumping costs Rp200,000/ha/yr in economic terms including approximately 20% offuel cost for other costs (see Table 8).

(4) Area from Table 8 x Rp626.7001yr/incremental hectare.

INONESIA


Economielcate of Return for Combined Sitiuna I and 11

......................... Stung t <1 ......................... St1tuna 11 .................. Combined.tear Construction Ld "if 1 Total Costs 0 b J Pumlna Benefit Net Cash Flow

eveloment (1988 Rp million) ....... ............. (1988 Rp million).. ................ (1985 Rp million).

1977178 1,568 1.568 2,034 -2.0341978/79 12.860 12.860 16,683 -16.6831979/80 1,818 1,818 2,358 -2.3581980/81 5,705 46 5,751 7.461 54 -7,4071981/82 1,057 156 70 1,283 1,664 304 149 -1,8191982/83 0 173 270 443 575 3,768 408 -3.9351983/84 289 106 481 876 1,136 8,633 667 -9,1021984/85 88 679 767 995 9,783 1.094 -9,6841985/86 79 636 715 928 7,693 1,132 -7,4891986/87 79 79 102 10,280 1,168 -9.2141987/88 6,826 1,322 -5.5041988189 9,046 116 1.434 -7.7281989/90 5.298 149 1,925 -3.5221990/91 3.642 251 2.267 -1,6261991/92 2,386 251 2,611 -261992(93 251 3.173 2,9221993/94 251 11 3,735 3,4731994/9S 251 81 4,297 3,9651995/96 251 151 4,859 4.4571996197 251 220 5,421 4,950 c z1997/98 251 290 5,983 S,442 cr m1998/99 251 360 6,545 5,934 x1999/2000 251 430 7,107 6,426 -

2000/2001 251 SOO 7,670 6,919 0

2010/2011 251 SOO 7,670 6,919

------------------------ - ERR * 1.4X<1> From PPAR for Irrigation tX.

- 43 -ANNEX 1Table 11Page I

INDONESIA


Derivation of Economic Prices (199S in Constant 198B Prices)

Unit Imgort Unt Exoortparity Paritv

RiceThai 5% brokens, FOB Bangkok USS/t 243 USSIt 243Quality adjustment 10% 219 15% 207

Rp/kg 352Freight and insurance +30 0CIF/FOB price 249

Rp/kg 423Port handling, storage, losses 5% +21 5% -18Transport port to wholesaler +5 -5Transport mill to wholesaler -3 -3Traders margins -10 -10Ex-mill price 436 316Conversion to paddy 6r 283 65% 205Milling cost -10 -10Transport farm to mill -12 -12Economic farm gate price Rp/kg 261 183Average import/export Rp/kg 222

GroundnutsGroundnuts oil price US$/t 744Ratio Indonesian importgroundnuts oil price(1982-84) 0.72

CIF Indonesia shelledgroundnuts US$/t 536

Rp/kg 911Port handling, storage, losses 5% +46Transport to wholesaler +5Traders margins -10Transport farm to wholesaler -12Economic farm gate price Rp/kg 940

FOB US Gulf Port US$/t 95 USS/t 95Quality adjustment 15% -14Freight and insurance +20CIF Indonesia US$It 115 US$/t 81

PDp/kg 195 Rplkg 138Port handling, storage, losses 5% +10 -7Transport to whosesaler +5 .5Traders margins -10 -10Transport farm to wholesaler -12 -12Economic farm gate price Rp/kg 188 104Average import/export 146

-44- ANNEX 1

Table llPage 2

Unit Importllnit ExportParitv Parity

Ure (46% N)FOB Europe US$/t 198Freight and insurance +15Ex factory Palembang,Indonesia US$/t 213

Rp/kg 362Transport to wholesaler +20Storage and wholesalers margin +15Transport to farm +10Economic farm gate price Rp/kg 407

Trigle Super-phosghate(TSP, 46% P205)FOB Florida US$/t 194Freight and insurance +55CIF Indonesia US$/t 249

Rp/kg 423Transport to wholesaler +20Storage and wholesalers margin +15Transport to farm +10Economic farm gate price Rp/kg 468

KCiFOB Vancouver US$/t 100Freight and insurance US$/t +45CIF US$/t 145

Rp/kg 246Domestic marketing andtransport Rp/kg +80

Farm gate price Rp/kg 326

101 XT 101140 IOIow I N D 0 N IRRrlA 02OOD4 ~~~~~~~~~~~~~~~~~INDONES I A

IRRIGATION PROJECT XVISITIUNG 11 SUB PROJECT

EXISTING P95900EDe ------- ,,_

-=_s, MAIN CANAL

SECONDARY CANALtt% ' Sun~I DareS - -K STATNON HEADWORKS

BA TANG MINPI

ST__I0MEAOWOA/S%./ SPUPtSTTIO

F- IlEAO<VDRltS .Np" > - V-V @sSIiunS J_ 1IRRIGATION AREA(STAGE IIAl,,,,,, Stat &//~~~~~~~~~~~~~~~~~~~7/Z ~~~IRRIGATION AREA(STAGE II)

-ROADS1. ' - '~~~~~~~~~~~~~~~~~~~- ~~~RIVERS

fi' ""' N - . -.- PROVINCE BOUNDARIES

/ #9 4~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~024681R^rA~~~~~G *,0 V e,>, < (enSin ~~~~~~~~~~~~~KILOMETERtS |, 61O

V -~~~~~~~R r. ANG P/tRuK 02G-

IIEADOWRKS ls

IUNG II SUBPRQJECTimolic Flow Diagram

P1 OaKS 75 nP,rnr 511/agS

Tt 6m3jec _ BSTRuCTuRt ; X , b47TAILA,NDe, BRN 5' -' -HILIPPNES \A/.

nEADWOAIIS ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~~~BU,% 'CA

ISt.? 61 1152'"), CAA NALApglA.p,4 ' wut P4

NGP0/11

if~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~iy

w , = X] R *~~~~~~ z,_w a %] < | t , _~~c -cz

N0VEWBEI

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