Tajikistan: Agriculture Rehabilitation Project

Transcription

1 Performance Evaluation Report Tajikistan: Agriculture Rehabilitation Project Independent Evaluation

2 Performance Evaluation Report November 2014 Tajikistan: Agriculture Rehabilitation Project This document is being disclosed to the public in accordance with the Asian Development Bank s Public Communications Policy Reference Number: PPE: TAJ Project Number: Loan Number: 1980 Independent Evaluation: PE-773

3 NOTES (i) (ii) In this report, $ refers to US dollars. For an explanation of rating descriptions used in ADB evaluation reports, see ADB Guidelines for Preparing Performance Evaluation Reports for Public Sector Operations. Manila. Director General Director Team leader Team members V. Thomas, Independent Evaluation Department (IED) B. Finlayson, Independent Evaluation Division 2, IED S. Palle Venkata, Evaluation Specialist, IED M.J. Dimayuga, Senior Evaluation Officer, IED E. Li-Mancenido, Associate Evaluation Analyst, IED M. Fortu, Senior Evaluation Assistant, IED C. Regodon, Administrative Assistant, IED The guidelines formally adopted by the Independent Evaluation Department on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of the management of the Independent Evaluation Department, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, the Independent Evaluation Department does not intend to make any judgments as to the legal or other status of any territory or area.

4 Abbreviations ADB Asian Development Bank EIRR economic internal rate of return FGD focus group discussion FMU farm machinery unit FOB free on board ha hectare IEM independent evaluation mission IWRM integrated water resources management M&E monitoring & evaluation MOA Ministry of Agriculture MOF Ministry of Finance MWRLR Ministry of Water Resources and Land Reclamation O&M operation and maintenance PCR project completion report PIU project implementation unit PMO project management office PPER project performance evaluation report PVR PCR validation report PWS potable water supply SERF shadow exchange rate factor TA technical assistance WSC water and sanitation council WUA water users association Currency Equivalents Currency Unit somoni (TJS) At Appraisal At Project Completion At Evaluation (22 February 2002) (20 October 2010) (22 April 2013) TJS1.00 = $0.339 $0.228 $0.210 $1.00 = TJS2.953 TJS4.382 TJS4.770

5 Contents Acknowledgements Basic Data Executive Summary v vii ix Chapter 1: Introduction 1 A. Project Description and Expected Results 1 B. Evaluation Purpose and Process 2 Chapter 2: Design and Implementation 4 A. Formulation 4 B. Rationale 4 C. Cost, Financing, and Executing Arrangements 5 D. Procurement, Construction, and Scheduling 5 E. Design Changes 6 F. Outputs 6 G. Consultants 9 H. Loan Covenants 9 I. Policy Framework 9 Chapter 3: Performance Assessment 12 A. Overall Assessment 12 B. Relevance 12 C. Effectiveness 13 D. Efficiency 14 E. Sustainability 14 Chapter 4: Other Assessment 16 A. Impact 16 B. Asian Development Bank Performance 17 C. Borrower and Executing Agency Performance 17 D. Technical Assistance 17 Chapter 5: Issues, Lessons, and Follow-Up Actions 19 A. Issues 19 B. Lessons 19 C. Follow-Up Actions 20 Appendixes 1. Evaluation Methodology Project Costs and Contract Awards Project Framework and Achievements Rehabilitation of Irrigation and Drainage Systems Water Supply Status of Compliance With Loan Covenants Socioeconomic and Environment Indicators Economic Analysis 43

6 Acknowledgements This performance evaluation report for the Agriculture Rehabilitation Project in Tajikistan was prepared by a team led by Srinivasan Palle Venkata, Evaluation Specialist, Independent Evaluation Department (IED), under the supervision of Bob Finlayson, Director, Division 2, IED, and guidance of Vinod Thomas, Director General, IED. The report was prepared with support from Ma. Juana Dimayuga, Elizabeth Li- Mancenido, Myrna Fortu, and Charina Regodon. Clarence Dingcong, consultant, assisted with the analysis and the preparation of the report. Peer reviewers Andrew Brubaker, Toshiyuki Yokota, and Karl Hughes provided valuable comments to strengthen the report. The team is grateful to Asian Development Bank staff and Government of Tajikistan officials for their assistance and participation in the interviews. IED retains full responsibility for this report.

7 Basic Data Loan 1980-Tajikistan: Agriculture Rehabilitation Project Item Appraisal Estimate ($ million) Actual ($ million) Total project cost Foreign exchange cost ADB loan amount/utilization Mission Key Dates Loan negotiations November 2002 Board approval 18 December 2002 Loan signing 2 May 2003 Loan effectiveness 14 August 2003 First disbursement 22 October 2003 Loan closing 20 October 2010 Borrower Executing Agency Republic of Tajikistan Ministry of Water Resources and Land Reclamation Mission Data Type of Mission Number of Missions Number of Person-Days Consultation 1 4 Appraisal waived Inception mission 1 52 Loan review Project completion 2 24 Independent evaluation 1 6 Project Performance Report Ratings Implementation Period Development Objectives Implementation Progress 9 21 April 2003 Satisfactory Satisfactory 22 April June 2003 Satisfactory Satisfactory 24 June December 2004 Satisfactory Satisfactory 22 December August 2005 Satisfactory Satisfactory 25 August November 2007 Satisfactory Satisfactory 1 December January 2008 Satisfactory Satisfactory 1 February December 2008 Satisfactory Highly satisfactory 22 December April 2009 Satisfactory Highly satisfactory 1 May September 2009 Satisfactory Highly satisfactory ADB = Asian Development Bank. Source: Asian Development Bank database.

8 Executive Summary On 18 December 2002, the Asian Development Bank (ADB) approved a loan of $35 million from its Special Fund resources to the Government of Tajikistan for the Agriculture Rehabilitation Project. The project s objectives were (i) to reduce poverty and improve living conditions of farming communities in the project area, and (ii) to institute measures to sustain the benefits of improvements under the project. These objectives were to be achieved through (i) enhanced crop yields brought about by improved irrigation and drainage as a result of infrastructure improvements; (ii) improved access to potable water, which improves health conditions; (iii) capacity building of water users associations (WUAs) and water sanitation councils (WSCs); and (iv) transfer of management of the irrigation, drainage, and potable water systems to the beneficiaries after they are adequately trained to manage them. The project had four components: (i) agricultural support services for dehkan farms (privately managed farms) in the form of farm demonstrations on soil fertility and crop husbandry, promotion of improved seeds, and establishment of farm machinery units (FMUs); (ii) rehabilitation of irrigation and drainage systems covering about 85,000 hectares (ha), and related institutional support; (iii) improvement of potable water supply (PWS) systems within designated areas, to serve 87,000 beneficiaries who did not have a safe source of water; and (iv) project management, monitoring, and evaluation. A. Project Outputs Agricultural support for dehkan farms. During project implementation, eight demonstration farms of 10 ha each were established for soil and seed improvement and crop husbandry trials. The demonstration farms and training provided to farmers helped increase farm productivity, and increased the knowledge of farmers on improved farm technologies, diversified cropping, and better use of land. However, the envisaged continued provision of farm demonstrations after project completion was not realized. The assistance provided to dehkan farms was limited to the duration of the project and no mechanism was put in place to ensure sustainability beyond the life of the project. The demonstration farms and support services to dehkan farms ceased after the project was completed. As envisaged at appraisal, three FMUs were established. Subsidiary loan agreements of $1 million each were made with the Ministry of Finance (MOF) to each of the three FMUs. Initially, the demand for machinery services from dehkan farms was adequate for FMUs to repay their loans on time. However, the increased availability of leased agricultural farm equipment and machinery to farmers decreased the demand for FMU services. Farmers began to have the option to lease more modern, mobile, and relatively cheaper equipment. Over time, FMUs were not able to generate sufficient revenues to recover costs, resulting in failure to pay their loans on time. The FMUs,

9 x Tajikistan: Agriculture Rehabilitation Project however, succeeded in encouraging farmers to use machinery and also in developing a private rental market for such equipment. Rehabilitation of irrigation and drainage systems. The project fully rehabilitated the irrigation and drainage facilities of three major systems comprising: (i) the Khojabakirgan irrigation system in B Gafurov and J Rasulov districts of Sughd region; (ii) the Vakhsh irrigation system in Bokhtar, Vakhsh, and Kolkhozabad districts of Kurgan- Tyube Zone in Khatlon province; and (iii) the Kyzylsu-Yakhsu irrigation system in Vose District of Kulyab region. The construction and rehabilitation undertaken by the project met the target of providing a steady supply of irrigation water to about 85,000 ha of land. In terms of outreach, the target of 471,000 beneficiaries reached by the improved irrigation and drainage system was met, as project areas were rehabilitated as expected at appraisal. Following the rehabilitation of irrigation infrastructure the average yields of cotton increased from about 1.9 tons/ha to 2.7 tons/ha, exceeding the targets set at appraisal. However, total production of cotton in project areas declined and was not at the level expected at appraisal. The general decline in production of cotton was mainly due to the reduction in the area planted with cotton, as farmers diversified to more profitable crops. The government s policy of allowing farmers freedom in crop selection encouraged this diversification. Nonetheless, cotton and wheat continue to dominate the cropping pattern. In 2003, when the project started, the two crops together accounted for 93% of the area cultivated, and in 2008 it was 89%. During implementation, it was agreed with ADB that 20 WUAs rather than the 30 originally agreed would be established in five districts to better reflect hydrological factors such as the borders of irrigation and command areas, and the boundaries of administrative units. As of the end of December 2012, the number of WUAs in project areas rose to 36 as a result of government s continued efforts to transfer management of irrigation and drainage systems to beneficiaries. To build institutional capacity in water management, 15 water resource management agencies within the Ministry of Water Resources and Land Reclamation (MWRLR) were supported with equipment and vehicles. Annual training was also conducted during on the promotion of water resources management to build the capacity of these agencies. Improvement of water supply systems. The water supply infrastructure constructed in selected communities of five districts expanded the area covered by the water supply distribution network, increasing the number of beneficiaries. At project completion, the estimated number of people reached by the improved water supply was 180,546 higher than the appraisal estimate of 87,000. Seven WSCs were established to manage and operate the delivery of potable water to these beneficiaries. The project provided further support to sanitary and epidemiological stations of the Ministry of Health in the five districts through building refurbishment and provision of office and laboratory equipment. Project management, monitoring, and evaluation. As envisaged in the project design, the project management office (PMO), three project implementation units (PIUs), and a high-level project steering committee were established. A monitoring and evaluation (M&E) unit was established within the PMO to monitor the environmental and social impact of the project. The program of environmental monitoring and social impact assessment was developed for the project implementation period and did not continue after project completion.

10 Executive Summary xi B. Performance Assessment The project is rated successful overall. The objectives of improving living conditions in project areas and instituting measures such as WUAs and WSCs to sustain the benefits derived from the project were largely met. The project contributed to an increase in incomes, reduced waterborne diseases, and provided greater access to safe drinking water. The project was rated relevant. At appraisal, the project was relevant to the stated objectives of the government and ADB, namely poverty reduction in the project areas. It addressed the needs of rehabilitating the irrigation systems and restructuring agriculture through privatization. The construction of PWS systems addressed the need for increasing access to safe drinking water, reducing waterborne diseases, and improving living conditions in the project areas. The project design was adequate in addressing the key constraints of defective irrigation, poor water resource management, limited agricultural support services, and lack of access to potable water in the project areas. The financing instrument comprising a loan from ADB Special Fund resources and a technical assistance (TA) grant to support the resolution of accumulated farm debt was appropriate. The project was rated effective in achieving the expected outcomes. It improved the living conditions of farming communities in the project area and implemented measures to sustain the project benefits. Average monthly nominal wages in the project area steadily increased from TJS32 in 2003 to TJS195 in The rehabilitation of irrigation and drainage systems increased yields of cotton by about 34% and wheat yields by 31%. Real farm income increased by 44% for cotton and 41% for wheat. The improvement in PWS significantly reduced the incidence of waterborne diseases. Between 2004 and 2009, reported cases of malaria fell by 96%, acute intestinal disease by 78%, typhoid fever by 55%, and hepatitis by 15%. As of the end of December 2012, safe drinking water was made available to 198,600 people, substantially higher than the 87,000 target set at appraisal. WUAs and WSCs were established as envisaged. Prior to the project the area had no WUAs and WSCs. The creation of these institutions empowered the beneficiary communities to manage irrigation and potable water supplies, organize water distribution, and arrange operation and maintenance (O&M) of their systems. These institutions have remained operational and continued to collect fees from members for O&M. This is likely to sustain the benefits of the rehabilitated irrigation and potable water systems. The introduction of FMUs has been effective in encouraging the use of farm machinery, by stimulating market entry and reducing the costs of leased farm equipment. This resulted in a decline in demand for the services of FMUs. The demonstration farms were beneficial to dehkan farms but no mechanism was put in place to sustain these benefits beyond the life of the project. Sustaining the services provided by the demonstration farms to dehkan farms would have entailed additional operation and management costs. The project was rated efficient in terms of the benefits achieved relative to the costs incurred. The economic internal rate of return (EIRR) was calculated at 18%, indicating efficient use of resources in achieving the outcome. The positive net present value at a discount rate of 12% indicates economic viability. This re-estimated EIRR is much lower than the EIRR of 22.9% estimated at appraisal and is also lower than the

11 xii Tajikistan: Agriculture Rehabilitation Project EIRR calculated by the project completion report (19%). It should be noted, however, that the re-estimated EIRR included the economic value of PWS benefits, which was not the case at appraisal. If the benefits are limited only to irrigation, the re-estimated EIRR drops to 15.84%; however, this would still mean the project is efficient. In terms of efficiency of process, the project is rated less than efficient. Deployment of staff for the PMO and PIUs was delayed, which in turn delayed the recruitment of implementation consultants for civil works. Consequently, the implementation of the civil works was delayed by about 2 years. The delay in implementation start-up also had an effect on the other components. The work on agricultural support for dehkan farms was 12 months behind schedule, while delays in the construction of water supply systems ranged from 15 to 30 months. The project outcomes are less than likely sustainable. Proper maintenance has been carried out by the MWRLR on project infrastructure in primary and secondary systems. However, the capacity of WUAs for effective O&M of tertiary systems has been constrained by the insufficiency of fees collected from dehkan farms to cover costs of maintenance, and the lack of adequate equipment and machinery. As a result, WUAs generally have been unable to properly maintain tertiary systems. The sustainability of the demonstration farms is unlikely as many of these farms have been distributed by the government to the rural population and no longer provide services to dehkan farms. Further, support for the management, operation, and maintenance of these farms was not continued after project completion. The project had a significant socioeconomic impact. The expected impact of the project was poverty reduction in the project areas, from 88% at project appraisal to 43% at project completion. The incidence of poverty using the national poverty line fell from 88% at appraisal (2002) to an average of 41% in 2008 for the five project districts, indicating that the expected impact on poverty was realized. At the national level, the poverty headcount ratio fell from 72.4% in 2003 to 47.2 in Outcomes could not be monitored beyond the project duration as the M&E system established within the MWRLR was discontinued after the PMO was closed. The institutional impact of the project was significant. The project facilitated the creation of WUAs and WSCs, which were nonexistent in the irrigation schemes prior to rehabilitation. The institutional capacity of the MWRLR was strengthened through: support for national and local networks for the establishment and expansion of WUAs, training on water resource management, and provision of equipment and vehicles. The project had no adverse effects on the environment. C. Issues The capacity of WUAs to properly maintain and operate tertiary systems is limited by the water user fees collected from dehkan farms. O&M of the irrigation systems by the WUAs and expansion on a sustainable basis, is only possible if sufficient revenues are generated to fully cover the cost of equipment, machinery, and manpower. Although cotton farming is economically profitable, given the high world price of cotton, financial viability becomes an issue as the farm gate price of cotton tends to be low. Levying of export taxes by the government and lack of competition due to market distortions, such as local government control on the movement of cotton, tends to decrease the prices received by farmers, affecting their profits. This in turn affects the farmers ability to pay user charges for water. Institutional reforms are also needed to strengthen the WUAs capacity to allocate water more efficiently and collect user charges more effectively.

12 Executive Summary xiii The FMUs are unlikely to be sustainable as their profitability has declined due to the increased availability of modern machinery and equipment through lease. As a result, their ability to repay their loans to the MOF on time is doubtful. D. Lessons and Follow-Up Actions The lessons identified are as follows: (i) (ii) (iii) If mechanisms were incorporated in the project design for sustaining farm demonstration units beyond the project life, agricultural extension services could have been provided to dehkan farms on an ongoing basis; Measures for achieving full cost recovery in a phased manner should have been identified early in the implementation process so that sustainable O&M of tertiary systems by the WUAs was possible; Establishing a permanent M&E system within the MWRLR and not just for the implementation period could have provided project-specific data for evaluating long-term outcomes. The follow-up actions to consider are: (i) (ii) monitor closely cost-recovery measures for sustainable O&M of tertiary systems, and also the MWRLR s maintenance of primary and secondary systems; discuss with the MOF options to privatize the FMUs, since they have served their purpose of introducing agricultural mechanization to farmers and catalyzing a lease market for machinery.

13 CHAPTER 1 Introduction A. Project Description and Expected Results 1. On 18 December 2002, the Asian Development Bank (ADB) approved a loan of $35 million from its Special Fund resources to the Government of Tajikistan for the Agriculture Rehabilitation Project. 1 The project was expected to reduce poverty in four project area districts. The expected outcomes were (i) improvement in living conditions of farming communities in the project area, and (ii) instituted measures to sustain the benefits of improvements made under the project. These were to be achieved through (i) enhanced crop yields brought about by improved irrigation and drainage as a result of infrastructure improvements; (ii) access to improved potable water, which will reduce efforts in fetching water and improve health conditions; (iii) capacity building of water resources institutions, and organization and training of water users associations (WUAs) and water sanitation councils (WSCs); and (iv) transfer of management of the irrigation, drainage, and potable water systems to the beneficiaries after they are adequately trained to manage them. 2. The project area comprised three major irrigation systems: (i) (ii) (iii) Khojabakirgan irrigation system in B Gafurov and J Rasulov districts of Sughd region; Vakhsh irrigation system in Bokhtar, Vakhsh, and Kolkhozabad districts of Kurgan-Tyube Zone in Khatlon region; Kyzylsu-Yakhsu irrigation system in Vose District of Kulyab region. 3. The project had four components: (i) agricultural support for dehkan 2 farms that included farm demonstrations on soil fertility and crop husbandry, promotion of improved seeds, and establishment of farm machinery units (FMUs); (ii) rehabilitation of irrigation and drainage systems covering about 85,000 ha, and related institutional support; (iii) improvement of potable water supply (PWS) systems within designated areas to serve 87,000 beneficiaries who did not have a safe source of water; and (iv) project management, monitoring, and evaluation. 1 ADB Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to Tajikistan for the Agriculture Rehabilitation Project. Manila. 2 Dehkan farms are privately managed farms, either individually or cooperatively, on state-owned land allocated to them by state authorities. Following the breakup of the Soviet Union, most of the collective farms in Tajikistan were converted to dehkan farms. The other types of farms in Tajikistan are enterprise farms resulting from the privatization of specialized state farms, and household/kitchen plots.

14 2 Tajikistan: Agriculture Rehabilitation Project B. Evaluation Purpose and Process 4. The purpose of the project performance evaluation was to: (i) assess the project s relevance, effectiveness, and efficiency in achieving its objectives and outputs, sustainability of outcomes, and impact; (ii) assess the performance of ADB, the executing agency, and implementing agencies; and (iii) identify key lessons for future ADB operations in the agriculture sector. 5. The project performance evaluation report (PPER) was based on a review of project documents and related material; discussions with ADB staff and with key informants during the independent evaluation mission (IEM); and data and information provided by the executing and implementing agencies. 3 Benefits to households were assessed based on information obtained from focus group discussions (FGDs) with project beneficiaries and data gathered from farms. Details on the methodology used for this evaluation are presented in Appendix 1. The PPER will feed into a bigger evaluation study, the country assistance program evaluation for Tajikistan in The project completion report (PCR) was prepared in December Overall, it rated the project successful. The project loan was rated relevant to the needs of restructuring agriculture through farm privatization and irrigation rehabilitation in the context of government and ADB poverty-reduction strategies. It was rated effective in achieving the expected outcomes of (i) improving living conditions in project area farming communities and (ii) instituting measures to sustain the benefits from improvements implemented under the project. The project was rated efficient by the PCR. The economic internal rate of return (EIRR) was estimated at 19%, indicating that the project was highly efficient and economically viable when assessed against an assumed opportunity cost of capital of 12%. However, the process was rated less efficient as delays in mobilizing consultants resulted in an almost 2-year delay in the physical implementation of the project. Lastly, the PCR rated the project less likely sustainable. While the Ministry of Water Resources and Land Reclamation (MWRLR) carried out maintenance on project infrastructure in primary and secondary systems, tertiary systems that were the responsibility of WUAs had little or no maintenance, due to a shortfall in the levy paid by farmers. 5 Further, the demonstration farms were rated less likely sustainable because farmers were less likely to pay to attend field days after project completion. 6 The PCR did not rate the impact of the project, but nonetheless assessed it as having a notable impact on living standards in the project areas. 7. The PCR validation report (PVR) conducted by the Independent Evaluation Department in October 2011 concurred with the PCR s successful, relevant, efficient, and less likely sustainable ratings of the project. 7 The PVR rated the project relevant in that it addressed poverty in the poorest part of the country and was consistent with government and ADB objectives. The project was rated effective in that the physical 3 The independent evaluation mission was fielded to Tajikistan on April ADB Completion Report: Agriculture Rehabilitation Project in Tajikistan. Manila. 5 Primary irrigation systems comprise the main or primary canal that taps water from a source such as lake or reservoir. Secondary structures are smaller canals that branch out from the main canal to distribute water to the tertiary canals, which are even smaller. It is the tertiary canals that irrigate the farmers fields. 6 Farmers operating the demonstration farms received support under the project and provided advice, but it was expected that the effort and costs of providing this service would eventually deter farmers from continuing to provide it for free. 7 Independent Evaluation Department Validation Report: Agriculture Rehabilitation Project in Tajikistan. Manila: ADB.

15 Introduction 3 targets were met for rehabilitation of irrigation and drainage infrastructure, expansion of the command area, and improvements to water supply systems. The PVR rated the project efficient although it noted a methodological error in the recalculation of the EIRR in the PCR. 8 The magnitude of benefits from the water supply component was not quantified, which would likely have resulted in a high EIRR. The sustainability of the project was rated less likely in view of the failure of WUAs to properly maintain the rehabilitated infrastructure, and the fact that farmers were unlikely assume the costs of operating the demonstration farms for free. The PVR rated the impact of the project substantial. 8 The PCR EIRR calculation was based on crop production only. No separate EIRR calculation was done for the potable water supply component, which resulted in significant economic benefits. Further, the PCR stated that the numeraire was the domestic price and a standard conversion factor was used for shadow pricing. The PVR pointed out that this was incorrect because traded goods should be adjusted by the shadow exchange rate factor when domestic price is the numeraire.

16 CHAPTER 2 Design and Implementation A. Formulation Improving the performance of irrigated agriculture required rehabilitating irrigation and drainage systems and implementing more efficient water management The project aimed to support the Government of Tajikistan in the rehabilitation of selected irrigation and draining facilities 8. At the time of appraisal in November 2002, the project was consistent with the government s rural development strategy that focused on (i) continuing the farm reorganization program, (ii) improving the efficiency of irrigation water use, (iii) developing a rural credit system, (iv) rehabilitating key irrigation facilities, and (v) implementing a poverty reduction program with a substantial agricultural component. The interim operational strategy for Tajikistan approved by ADB in 1998 was formulated prior to the Poverty Reduction Strategy of 2002, and thus did not have an explicit poverty focus. Nonetheless, the interim strategy for Tajikistan included agriculture as one of the key sectors for support. 9. The project was formulated by a technical assistance (TA) project carried out in February July The TA was built on the previously completed Agriculture Sector Assessment Project. 10 The formulation of the project addressed a key constraint to agricultural production by rehabilitating defective irrigation facilities. The other key constraints identified were poor water resource management, limited agricultural support services and lack of access to potable water in many rural communities. B. Rationale 10. At the time the project was formulated, agriculture in Tajikistan contributed about 20% of gross domestic product and provided a livelihood for 52% of the workforce (footnote 1). About 73% of the population lived in rural areas. Agricultural production depended on irrigation, without which the land had little production potential. Extensive irrigation systems, mostly built during the former Soviet era, covered nearly half of the country s relatively flat land. The irrigation and associated drainage systems rapidly deteriorated due to poor management during the civil war, and the lack of maintenance. Improving the performance of irrigated agriculture required rehabilitating irrigation and drainage systems and implementing more efficient water management. Accumulated debts were widespread across farms due to poor loan administration and a drop in the world price of cotton fiber. Widespread poverty, inefficiency of traditional farm structures, and weak fiscal capacity slowed the progress of agricultural reforms. The reform process needed to be expanded and deepened to restore farmers incentives, enhance the productivity and profitability of agriculture, and improve the living conditions of the rural population. 11. In this context, the project aimed to support the Government of Tajikistan in the rehabilitation of selected irrigation and draining facilities, provision of associated farm production support services, and construction of rural water supply in the main cotton production regions of Khatlon and Sughd. In parallel with these, the project 9 ADB Technical Assistance to Tajikistan for Agriculture Rehabilitation Project. Manila. 10 ADB Technical Assistance to Tajikistan for Agriculture Sector Assessment Project. Manila.

17 Design and Implementation 5 aimed to accelerate the agricultural reform process by building the capacity of public sector agencies and farmers organizations. C. Cost, Financing, and Executing Arrangements 12. The project cost was estimated at $43.75 million, comprising $24.43 million in foreign exchange costs and $19.32 million in local currency costs (Appendix 2, Table A2.1). It was to be financed by an ADB Special Fund loan of $35 million, government funds of $7 million, and contributions from beneficiaries of $1.75 million. The actual project cost was $49.97 million, comprising foreign exchange costs of $34.50 million, and local currency costs of $15.47 million. ADB financed $40.10 million, 11 the government $8.11 million, and the beneficiaries $1.76, mainly in the form of labor during construction and rehabilitation works. The emergency assistance to rehabilitate the Dehkanabad canal and reconstruct the embankment on the Pyanj River amounted to $7.94 million. Technical assistance of $960,000 was approved to provide advisory support to the project, of which $918,941 (96%) was utilized. 13. The implementation arrangements as proposed at appraisal were followed. The MWRLR was the executing agency, responsible for the overall management and implementation of the project. The Agriculture Academy of Sciences was responsible for implementing the subcomponent on farm demonstrations and promotion of improved seeds. A high-level project steering committee was established and functioned during project implementation to facilitate interministerial coordination and to provide oversight and guidance on implementation. A project management office (PMO) was established within the MWRLR to manage project activities on a daily basis, and to liaise with ADB and the coordinating bodies. Three project implementation units (PIUs), one in each project area, were set up for project implementation and maintaining liaison with the PMO, local administration, and beneficiary organizations. D. Procurement, Construction, and Scheduling 14. ADB Procurement Guidelines (2013, as amended from time to time) were followed in the procurement of goods and services. In total, 155 contracts were awarded amounting to $48.29 million (Appendix 2, Table A2.2). Of these, 78 civil works contracts worth $35.90 were awarded. Only one was awarded through international competitive bidding procedures, while the remaining 77 civil works contracts were awarded through national competitive bidding. Agricultural equipment costing $2.90 million was procured for use by the FMUs through international competitive bidding and shopping. Equipment, machinery and vehicles amounting to $5.8 million were procured by direct purchase, shopping, and limited international bidding. Contracts for consulting services amounted to $2.55 million. International competitive bidding was used to contract international consultants. 15. The schedule for project implementation was for 6 years, Loan effectiveness was slightly delayed to 14 August 2003 from the expected date of 31 July 2003, due to the time involved in obtaining the borrower s legal opinion. Deployment of staff was delayed for the PMO and PIU, which began to function fully only in mid- December This delayed consultant recruitment, which in turn delayed the implementation of civil works. Specifically, the rehabilitation of the Vakhsh irrigation scheme was delayed by 21 months, while for the Khojabakirgan scheme it was delayed 11 The increase in the dollar-denominated loans was due to the decline in the dollar special drawing right rate.

18 6 Tajikistan: Agriculture Rehabilitation Project Training was provided to 960 farmers on seeds selection, crop diversification, use of fertilizers, and on-farm water management The assistance provided to dehkan farms was limited to the duration of the project and no mechanism was set in place to ensure sustainability beyond the life of the project by 12 months. The rehabilitation of the Kyzylsu-Yakhsu scheme was on schedule, as it was not due until the third quarter of These delays caused further delays in the implementation of other components. The implementation of agricultural support for dehkan farms was 12 months behind schedule. As regards the component on improving PWS, the delays in constructing water supply systems ranged from 15 to 30 months. To compensate for the start-up delays, a revised implementation schedule was approved by ADB. Closing of the loan was scheduled for 30 September 2009, but a grace period of 3 months was allowed to ensure payments for expenditures incurred prior to the closing date. E. Design Changes 17. On 15 February 2006, a major change in scope was approved by ADB to reallocate loan proceeds to fund the emergency rehabilitation of the Dehkanabad canal in the Chubek irrigation system that was damaged by severe flooding in Khamadoni District. The flooding damaged about 600 homes, of which 148 were completely destroyed, and 16,000 people were evacuated. The supply of drinking water to the population was also interrupted. Specifically, the change in project scope included (i) rehabilitation of 10.4 kilometers (km) of the Dehkanabad canal and (ii) strengthening of 4.4 km of flood embankment along the Pyanj River. F. Outputs 18. The outputs of the four project components are discussed below. Appendix 3 presents the project framework and achievements. 1. Agricultural Support for Dehkan Farms 19. The component on agricultural support for dehkan farms was envisaged to promote improved farm technologies, establish demonstration farms, and to set up three FMUs. The Agricultural Academy of Sciences was the implementing agency for the subcomponents on farm demonstrations and promotion of improved seeds. During project implementation, eight demonstration farms of 10 ha each were established for soil and seed improvement and crop husbandry trials. 12 Training was provided to 960 farmers on seeds selection, crop diversification, use of fertilizers, and on-farm water management. The demonstration farms and training provided to farmers helped increased farm productivity, and increased farmers knowledge on improved farm technologies, diversified cropping, and better use of land. It was envisaged that the activities of the demonstration subprogram would continue after project completion. However, this was not realized. The assistance provided to dehkan farms was limited to the duration of the project and no mechanism was set in place to ensure sustainability beyond the life of the project. The demonstration farms and support services to dehkan farms ceased to operate after the project was completed. Most of the demonstration farms were later distributed to the population by the government As envisaged at appraisal, three FMUs were established. Subsidiary loan agreements of $1.0 million each were made with the Ministry of Finance (MOF) to each of the three FMUs, one in each project system. These FMUs were to provide farm 12 Three in Khojabakirgan, three in Vakhsh, and two in Kyzylsu-Yakhsu. 13 For example, a 439-ha demonstration farm in Vakhsh visited by the independent evaluation mission was distributed to individual and family dehkan farms after completion of the project.

19 Design and Implementation 7 machinery services to dehkan farms collecting service charges determined on a commercial basis, and were to become eligible for privatization once their loans from the MOF had been repaid. Initially, the demand for services was adequate for FMUs to repay their loans on time. However, the increased availability of leased agricultural farm equipment and machinery reduced the demand for FMU services. Farmers began to have the option to use more modern, mobile, and relatively cheaper equipment through lease agreements. Over time, FMUs were not able to generate sufficient revenues to recover costs, resulting in failure to pay their loans on time Rehabilitation of Irrigation and Drainage Systems 21. The project fully rehabilitated the irrigation and drainage facilities of three major systems comprising: (i) Khojabakirgan irrigation system in B Gafurov and J Rasulov districts of Sughd region, (ii) Vakhsh irrigation system in Bokhtar, Vakhsh, and Kolkhozabad districts of Kurgan-Tyube Zone in Khatlon region, (iii) the Kyzylsu-Yakhsu irrigation system in Vose district of Kulyab region. The construction and rehabilitation undertaken by the project met the target of providing a steady supply of irrigation water to 85,000 ha of land. As of the end of December 2012, the area covered by the three rehabilitated irrigation systems had increased to 93,000 ha (Appendix 4, Table A4.1). 22. In terms of outreach, the target of 471,000 beneficiaries reached by the improved irrigation and drainage system was met, as project areas were rehabilitated as expected at appraisal. As of the end of December 2012, the number of beneficiaries covered by the rehabilitated infrastructure had increased to 521,000 (Appendix 4, Table A4.1). 23. Following the rehabilitation of irrigation infrastructure, the average yields of cotton increased from about 1.9 tons/ha to 2.7 ton/ha, exceeding the targets of tons/ha set at appraisal. 15 However, total production of cotton in project areas declined and was not at the level expected at appraisal (Appendix 4, Figure A4.1). In the Khojabakirgan scheme total production fell from 52,800 tons in 2003 to 31,057 tons in 2011 (Appendix 4, Table 4.2). In Vakhsh, total production decreased from 69,681 tons in 2003 to 52,528 tons in In the Kyzylsu-Yakhsu scheme, total production also declined from 25,556 tons in 2003 to 19,323 tons in The general decline in production of cotton was mainly due to the reduction in area planted with cotton, as farmers diversified to more profitable crops. The government s policy of allowing farmers freedom in crop selection encouraged this diversification (paras ). In , there was an increasing trend in the production of crops other than cotton, such as wheat, cereals, vegetables, fruits, potatoes, melons and gourds in the five project districts (Appendix 4, Figures A4.1 A4.2). Nonetheless, cotton and wheat continue to dominate the cropping pattern. In 2003, when the project started, the two crops together accounted for 93% of the area cultivated, and in 2008 accounted for 89% The rehabilitation of the Dehkanabad canal and strengthening of the embankment along the Pyanj River was an emergency response to severe flooding in Following the rehabilitation of irrigation infrastructure, the average yields of cotton increased from about 1.9 tons/ha to 2.7 ton/ha, exceeding the targets of tons/ha set at appraisal 14 Repayment of loans was agreed over a 20-year period, to be made in semi-annual payments. As of April 2013, Khojabakirgan FMU made its last payment in September 2008, Vakhsh FMU in August 2010, and Kyzylsu-Yakhsu FMU in December Based on data derived from focus group discussions with farmers representing the three irrigation systems, and from the MWRLR. 16 Based on data derived from the government completion report, 2009.

20 8 Tajikistan: Agriculture Rehabilitation Project The number of WUAs in project areas rose to 36 on account of the government s continued efforts to transfer management of irrigation and drainage systems to beneficiaries The water supply infrastructure constructed in selected communities of five districts expanded the area covered by the water supply distribution network Khamadoni District and was not included as a component at appraisal. The physical targets for this assistance were met, in rehabilitating 10.4 km of the Dehkanabad canal and strengthening 4.4 km of flood embankment. 25. The project envisaged the establishment of 30 WUAs in six districts. During implementation, it was agreed with ADB that 20 WUAs rather than the 30 originally agreed would be established in five districts, to better reflect hydrological factors such as the borders of irrigation and command areas, and the boundaries of administrative units. These WUAs covered 327 dehkan farms totaling 42,620 ha and 304,700 farm household beneficiaries. 17 The WUA boards and staff were trained in WUA establishment, operation, financial management, and collection of fees. About 27% of the combined board membership of these WUAs was made up of women. As of the end of December 2012, the number of WUAs in project areas rose to 36 on account of the government s continued efforts to transfer management of irrigation and drainage systems to beneficiaries. To support operation and maintenance (O&M) of irrigation and drainage systems, WUAs collect fees from members based on the volume of water used, which includes a markup over the rate charged by the MWRLR to WUAs. On top of this, WUAs also charge a flat fee per hectare cultivated by farmer members. 26. To build institutional capacity in water management, 15 water resource management agencies within the MWRLR were supported with equipment and vehicles. 18 Yearly training was also conducted during on the promotion of water resources management, to build the capacity of these agencies. 3. Improvement of Water Supply Systems 27. The project aimed to improve PWS systems within the command areas of the designated irrigation systems, to serve 87,000 beneficiaries who did not have a safe source of water. The proposed works included the installation of 225 pumps for lifting groundwater in Vakhsh District. However, due to the high mineral content found in 80% of the groundwater, it was decided to rehabilitate the main water pipeline in Vakhsh, which used to supply water to most areas of southwest Vakhsh but had fallen into disrepair due to lack of maintenance. This extended the area supplied with potable water and increased the number of beneficiaries in Vakhsh District to 23,630 people from the target of 9,200 people. 28. The water supply infrastructure constructed in selected communities of five districts expanded the area covered by the water supply distribution network increasing the number of beneficiaries. At project completion, the estimated number of people reached by improved water supplies was 180,546, of which more than 66,000 were women. The number of beneficiaries is more than twice the appraisal estimate of 87,000 (Appendix 5, Table A5.1). Seven WSCs were established to manage and operate the delivery of potable water to these beneficiaries. The project provided further support to sanitary and epidemiological stations of the Ministry of Health in the five project districts through building refurbishment and provision of office and laboratory equipment. 17 Household members engaged in farming are considered members of their WUA. WUAs cover only areas where farms have been privatized. 18 Support for equipment included measurement devices, communication facilities, electrical equipment, and computers.

21 Design and Implementation 9 4. Project Management, Monitoring, and Evaluation 29. As envisaged in the project design, the PMO and three PIUs one in each of the three project areas were established on 13 May A high-level project steering committee chaired by the first deputy Prime Minister was established and functioned in providing policy guidance and facilitating interministerial coordination during implementation. The PMO was led by a project director and the PIUs by deputy project directors. 30. A monitoring and evaluation (M&E) unit was established within the PMO to monitor the environmental and social impact of the project. This monitoring program was developed for the project implementation period and was not continued after project completion. G. Consultants 31. ADB Guidelines on the Use of Consultants (2013, as amended from time to time) were used in the selection of consultants. A $2.5-million consulting services contract, including input of 87 international person-months and 1,862 national personmonths was awarded to Louis Berger Group (LBG) in June The consultants began to perform their duties in July In accordance with their contract, in September 2004, LBG subcontracted the design institute of Tojikgiprovodkhoz to conduct field surveys; prepare designs, drawings, and bills of quantities; and estimate the costs for the irrigation and drainage rehabilitation works. The institute provided experienced staff and adequate field equipment to carry out the tasks. As a result, consultants were not needed for this work and therefore the national consultant inputs were reduced by 154 person-months. To support the emergency flood rehabilitation works on the Dehkanabad canal 6.65 international person-months and national person-months of consulting services were added. At the completion of the contract, international person-months and 1, national person-months of consulting services had been utilized. The consultants demonstrated flexibility in adjusting the structure of consultancy inputs to the needs of the project and delivered satisfactory outputs. On the whole, the performance of the consultants was satisfactory. H. Loan Covenants 33. The covenants were relevant and were complied with except for one that is ongoing (Appendix 6). The ongoing covenant pertains to developing a program for the recovery of O&M costs of the irrigation and drainage systems on a phased basis over 10 years. The MWRLR sources funds for the O&M of primary and secondary systems from water charges and annual budgetary allocations. Without the budgetary allocations, the water charges are not sufficient to fully recover the cost of O&M. Likewise, WUAs rely on the markup over the rate charged by the MWRLR and on the flat fee charged per hectare cultivated by members. These have been inadequate to fully recover the cost of O&M. The consultants demonstrated flexibility in adjusting the structure of consultancy inputs to the needs of the project and delivered satisfactory outputs I. Policy Framework 34. The project was formulated within the context of the government s reform initiative to transform the agriculture sector into a competitive market-led economy.