Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Public Disclosure Authorized. Report No.

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1 Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Project Name Region Sector Project ID Borrower Guarantor Report No. PID6342 Guyana-El Nino Emergency Recovery Project Latin America and the Caribbean Infrastructure GYPE57271 Government of Guyana (GOG) Government of Guyana Implementing Agencies Guyana Water Authority (GUYWA) Georgetown Sewerage and Water Commission (GS&W) Ministry of Agriculture (MOA, D& I Div) Date Initial PID Prepared April 13, 1998 Project Appraisal Date May 8-15, 1998 Project Board Date June, Background: While Guyana's coastland comprises only about 5t of its total area of about 96,000 square miles, it accounts for almost 90t of the population and all of its rice and sugar production, together with most of its other cash crops. About 80t of the country's GDP is produced in this belt. The coastal area is a flat narrow plain with a mean elevation level about 4-6 feet below average high tide. It requires protection from the ocean and rivers by expensive coastal sea walls, which in many sections suffer frequent ruptures resulting in flooding and salt water infiltration. There are two rainy seasons, December-January and May-June. 2. Along the coast, there is a complex system of lakes and reservoirs linked by canals and ditches which irrigate about 80t of the rice and cane fields. The system uses a series of sluice gates along the sea walls to allow the outflow of fresh water during low tide and to block the inflow of salt water during the high tide. While to some degree, almost everyone on the coast depends upon the sea-defense system, farmers in Guyana's islands do not have the irrigation canals and reservoirs found on the coastland; they depend entirely upon rainfed agriculture or fresh river water when this is available. The country's drainage and irrigation system is managed by the Ministry of Agriculture through its National Drainage and Irrigation Board. 3. For potable water, GUYWA, the national water authority serves most of the coastal areas while the GS&WC has responsibility for the Georgetown system. Almost all residents have tanks to collect rainwater and those in the remote interior areas usually use the creeks and rivers as their primary water source. While about 50t of the GS&WC water comes from surface source (the rest being wells), all of GUYWA's water comes from wells. For the coastal areas, there is generally access to potable water, thanks to ongoing rehabilitation works and a household connection rate of about 90%.

2 4. Primary Problem. In 1996, Guyana suffered a severe flood which resulted in losses in several sectors, especially agriculture. The first 1997 crops were very good but because of the El Nino Southern Oscillation (ENSO) phenomenon, between September 1997 and February 1998, rainfall was only about 25t of normal precipitation over the coastal areas. Almost all of the lakes, reservoirs and other irrigation sources are now almost completely dried up. As farmers struggle to avoid another bad crop by pumping residual water from both the drainage and irrigation ditches, they also accelerate salt-water intrusion as sea water moves inward. In many of the main rivers and creeks, salt water has reportedly reached as far as thirty miles inland (in normal times the salt water usually is some distance from the sea coast). 5. Rice. In early 1997, farmers sowed about 185,000 acres in both rainfed and irrigated lands. In 1998, responding to ENSO warnings, about 40,000 acres were not sown. Of the approximately 145,000 acres sown, about 20,000-35,000 acres were lost and overall yields have been reduced because of lack of irrigation water. Instead of about 170,000 tonnes, total output is now estimated at about 120,000 tonnes. According to the Guyana Rice Development Board, the export earnings loss to farmers and millers would be about US$20 million. About 1,300 rice cultivators, most of them small farmers, are estimated to have lost their entire crop. Many farmers owe suppliers and banks and are owed by the millers for their previous year's crops so their situation is rather precarious. 6. Sugar. GUYSUCO, the national sugar producing company, estimates that ENSO reduced sugar production by about 13t of the targeted spring season output. This amounts to about US$7 million in lost export earnings. The high concentration of sugar lands along with a very sophisticated irrigation and water-management system ameliorated such losses. In spite of this, it is estimated that about 1,000 small sugar-cane growers suffered crop losses and would need assistance. 7. Other Crops. Plantains, cassava and various vegetables and other crops are cultivated and consumed primarily on a subsistence basis. Cassava is a primary component in the diet of most of the indigenous communities. Initially, it was estimated that the impact of the drought on cash crop cultivation was minimal; however, there is growing evidence that most of these crops are suffering from the drought. In many coastal areas with access to potable water, residents are resorting to using this water for watering their crops and avoiding total losses. While this has exacerbated the potable water problem, it has helped to maintain an adequate level of food supply. Apart from losses and low yields from cash crops, there is an acute scarcity of seeds, cassava cuttings, etc. for the next cropping season. Some communities have also reported caterpillar and other insect infestation on surviving plant stocks. 8. Forest Fires. There are forest fires in several areas of the country and while still relatively small, they are destroying large tracts and creating health problems. In the settlements bordering Brazil, there is smoke from fires in both Brazil and the local grasslands and fleeing wild animals compete at water holes with local residents and domestic animals. 9. Illnesses. In many communities, the incidence of water-related illnesses such as diarrhea has increased. There have also been reported increases in malaria and dengue fever and the lack of adequate nutrition, especially among - 2 -

3 the young, has also been reported as a problem. 10. Government Actions. The GOG took several actions as the impact of ENSO worsened and more information on its duration and characteristics became clearer. The Drainage and Irrigation Board (D&I Board) kept farmers abreast of expected weather conditions and the Ministry of Agriculture provided advice to them. Also, in November 1997, the D&I Board prepared a study on the expected effects of ENSO and the GOG sought and received UNDP's assistance for a more detailed water study and recommendations. Efforts were also made to redistribute and ration water to farmers in several areas. In the potable water sector, GUYWA and the GS&WC took several preventative measures aimed at mitigating ENSO's effects. Among these were a water conservation education program, sinking of new wells and rehabilitation of old ones. As conditions worsened, a special unit was formed in the Presidential Secretariat to help in water distribution to areas suffering from severe supply problems. Finally, on March 26, 1998, the GOG declared a state of emergency and the Civil Defense Committee (CDC), in coordination with several donors and relief organizations, began to mount a program of nationwide relief assistance. 11. Even though the GOG took several actions aimed at mitigating ENSO's impact, indications are that more often than not, the target groups (farmers and households) were not as responsive as they could have been under the circumstances. A common complaint was that many farmers ignored the advisories on acreage to plant and they routinely ignored requests to limit their water intake from the system. Several of them opened water control gates and pumped water illegally. Also, in several cases, lack of routine maintenance for decades left many of the drainage and irrigation facilities in disrepair, allowing inflow of salt water and reducing the GOG's ability to manage and control the supply. 12. Relief Efforts. The CDC, with the help of the international donor community, appears to have a good relief program in place. Field visits show that some of the relief supplies are beginning to arrive and there are adequate provisions being made for their appropriate storage and distribution. Some more efforts appear to be needed to make the operating criteria transparent and accessible to all, both in the central and regional distribution systems. Also, because of the distance and difficulty of traversing several regions (even in the dry weather), it may be advisable for the GOG to consider sending cash to the authorities in remote areas bordering Brazil and make arrangements for purchases of relief supplies there. Apart from cutting transport costs, this could allow for more appropriate types of food purchases and save in storage and redistribution costs. It could also reduce the potential for food poisoning, especially from canned products in a tropical area. 13. Project Objectives. The primary objective of the proposed project is to help to prevent further drought-associated losses and to help restore the drainage and irrigation and potable water systems so that farmers would not lose another planting season and households would have easier access to drinking water supplies. Given the historical record, a complementary objective is to help the GOG to be prepared for the heavy rains and floods which invariably follow ENSO in Guyana. To achieve these objectives, it is proposed that the Bank finance a package of mitigation and preventative investments. -3-

4 14. Components. Drainage and Irrigation. Rehabilitation of key sluices, kokers, and other related structures countrywide (including Georgetown), which need to be renovated or replaced in order to ensure protection against further infiltration of sea water during the current drought period and which will also assist in draining the excess water during the rainy season. Associated activities include complementary priority dredging or rechanneling works needed for these structures to function properly. To facilitate efficient use of the drainage and irrigation network, it was also agreed that the D&I Board would submit a list of key pumping equipment (both mobile and fixed) needed to improve water-resource management and reduce the effects of extreme drought and flood conditions. Acquisition of some essential hydrometeorological equipment would also be included in this component. 15. Potable Water. This component includes restoration, rehabilitation and/or digging of important wells in key locations as well as investments in distribution networks in vulnerable areas (e.g., rural schools and cluster settlements in remote regions). These investments would be made with the aim of having well-functioning basic services in key locations (schools, community centers, health centers, markets, etc.) so that isolated or marginal communities would not face the hardships they currently face in the absence of such facilities. Among the items to be considered are water tenders, water pumps, wells with hand pumps, rehabilitation of key service systems, storage tanks, pipes and fittings, retrofitting of existing wells to prevent flooding and contamination during the rainy season. 16. Project Cost. It is expected that the priority works (including incremental administrative costs of the project and any required TA) will cost about US$ 11 M of which the Bank credit would be for about US$ 10M and the GOG will provide up to about US$ 1 M in counterpart funding. 17. Implementational Arrangement. It is envisioned that the implementation of the above works would be done by the entities which have been traditionally responsible for such tasks in the sector. This means that the drainage and irrigation works would be done by the Ministry of Agriculture's D&I Board while the water components would be done by GUYWA and the GS&WC. Coordination of the works would be the responsibility of a project unit (PU) which would be within the Presidential Secretariat and comprise a coordinator knowledgeable with the water sector along with about two technical experts (in procurement and finance). An appropriate financial and accounting system for the project would have to be in place. The heads of the implementing entities would be on the board to which the PU would be responsible. 18. Since this would be an emergency operation, its timely implementation would be very crucial. It is expected that it would not take more than two years to be implemented. One favorable point in this respect is that most of the goods and works required under the proposed project are not large or complicated (many are off-the-shelf items), and the proposed agencies routinely implement similar works and make similar purchases. Nevertheless, in light of past experience, prior agreement with the Bank would be sought for improved procurement arrangements. It is expected that once an agreement is reached with the GOG on the procedures, criteria and related issues, procurement through the Central Tender Board would be expedited consistent with its "Fast Track" procedures (standard contracts, basic designs and bills of quantities). -4-

5 19. Project Sustainability and Risks. While the importance of these structures and systems to Guyana's economy are well recognized and have high priority, other priorities have arisen in the past, the result being little or no sustained maintenance. To overcome this weakness, there are several ongoing initiatives by IDB, CDB and others, aimed at getting users to form groups and to assume greater responsibility for the facilities which they use. It is envisioned that under the proposed project, such operation and maintenance considerations would be an integral part of the process for determining the list of priority works. After the works are done, the GOG would be asked to take regular follow-up measures a to ensure that the system functions well and would be ready for both normal and emergency uses. 20. In terms of risk, there are several significant ones. At the country level, Guyana has just had an election, the result of which the opposition party is contesting along with a boycott in the legislature. If this problem is not resolved soon, it could escalate into open conflict. At the institutional level, there is the risk that with so many infrastructure works underway, both the supply of equipment and machinery and the implementation capacity of the GOG entities would be low. The capacity (organizational, administrative, financial, etc.) of the users to form groups to efficiently operate and maintain the facilities is also not assured in spite of several ongoing initiatives. 21. Lessons Learned and Reflected in the Proposed Project Design. The project is designed to be very simple and to be focused only on the key components needed to help restore services or prevent further losses. For institutional building as well as efficiency goals, it will be implemented by the entities which normally do such tasks and it will incorporate basic designs normally used by these entities. While there would be no cost recovery or similar requirements, it would incorporate the user- group model to encourage users to be responsible for the normal operation and maintenance costs, along with decisions governing operation of their system. The short implementation period (two years) and priority works selected are designed to ensure that only essential works are done and the project does not replace the need for more comprehensive sector reforms and lending at a later time. 22. Program Objective Category. Emergency lending 23. Environmental Aspects. The project would not finance the construction of new infrastructure of significant size which would have adverse environmental impact. Rehabilitation activities such as dredging of small outlet channels for existing sluices will have guidance criteria to minimize any adverse impact. None of the component is planned within any natural protected zone. The drainage and irrigation component would support activities aimed at a more rational use of water resources. The potable water component would reduce dependence of the population on unsafe sources associated with adverse health conditions. Contact Point: The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C Telephone No. (202) Fax No. (202)

6 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending May 8,