Document of The World Bank FOR OFFICIAL USE ONLY

Transcription

1 Public Disclosure Authorized p Document of The World Bank FOR OFFICIAL USE ONLY Repot No Public Disclosure Authorized PROJECT COMPLETION REPORT INDONESIA SEVENTEENTH IRRIGATION (EAST JAVA PROVINCE) PROJECT (LOAN 2119-IND) Public Disclosure Authorized MAY 28, 1991 Public Disclosure Authorized Agriculture Operations Division Country Department V Asia Regional Office This document has a restricted distribution and may be used bv recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

2 CURRENCY EQUIVALENTS At appraisal (March 1982) - US$1.00 = Rupiahs (Rp)625 (For exchange rates throughout implementation see Attachment, Table 1) FISCAL YEAR OF BORROWER April 1 - March 31 ABBREVIATIONS AOU Advanced Operations Units BULOG National Food Procurement and Distribution Agency DGWRD Directorate General o4 Water Resources Development (in MPW) DOA Department of Agriculture DOI Directorate of Irrigation (in DGWRD) DTW Deep Tube Wells DPP Directorate of Planning and Programming (in DGWRD) EJIS East Java Provincial Irrigation Service EOM Effective Operation and Maintenance GOI Government of Indonesia IPEDA Land Tax ISSP Irrigation Sector Support Project (Loan 2880-IND) MPW Ministry of Public Works O&M Operation and Maintenance P2AT Groundwater Development Agency (in DPP) PIBD/PROSIDA Special Agencies within DGWRD responsible for implementing Bank group - Assisted Water Resource Projects PME Project Monitoring and Evaluation SAR Staff Appraisal Report of Indonesia Seventeenth Irrigation (East Java Province) Project, dated March 3, 1982 (Rep. No.3648-IND) SSIS South Sulawesi Provincial Irrigation Service WUA Water Users Association

3 THE WORLD BANK Washington, D.C U.S.A. FOR OFFCIAL USE ONLY Olice de Ovcte.cowai * Op* etat Evakation May 28, 1991 MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT SUBJECT: Project Completion Report on Indonesia Seventeenth Irritation (East Jaya Province) Proiet (Loan 2119-lND) Attached, for information, is a copy of a report entitled "Project Completion Report on Indonesia - Seventeenth Irrigation (East Java Province) Project (Loan 2119-IND)" prepared by the Asia Regional Office with Part II of the report contributed by the Borrower. No audit of this project has been made by the Operations Evaluation Department at this time. Attachment This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

4 PROJECT COMPLETION REPOT FOR OFFICIAL USE ONLY INDONESIA SEVENTEENTH IRRIGATION (EAST JAVA PROVINCE) PROJECT (LOAN 2119-IND) Table of Contents Preface Evaluation Summary iii PART I: 1. Project Identity Background a Project Objectives and Description Project Design and Organization Project Implementation Project Results Project Sustainability S. Bank Performance.9.0.O Borrower Performance Project Relationship Consulting Service Project Documentation and Data PART II: BORROWER'S COMENTS FART III: STATISTICAL DATA 1. Related Bank Loans Project Timetable Loan Disbursements Project Implementation Project Costs and Financing Project Results Status of Covenants Use of Bank Resources Attachment 1: Implementation Schedule, Planned and Actual.. 32 Attachment 2: Economic Analysis Attachment 3: Tables MAPS IBRD 16037R1 IBRD 16315R This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.

5 PROJECT CCMPLETION REPORT INDONESIA SEVENTEENTH IRRIGATION LEAST JAVA PROVINCE) PROJECT (LOAN 2119-IND) MIPACE This is the Project Completion Report (PCR) for the Seventeenth Irrigation (East Java Province) Project for vhich a loan of US$70 million (Loan 2119-ind) was made to the Government of Indonesia (GOI) in April The project wao co-financed by IFAD (Loan 94-ID of SDR 21 million). The loan closing date was extended from March 31, 1988 to March 31, The last disbursement was made on January 25, The undisbursed loan balance of US$3,020, (4.3S of the loan amount) was cancelled under the same date. The PCR was jointly prepared by the FAO/CP (Preface, Evaluation Swmnary, Parts I and III) and the Borrower (Part II). Parts I and III were prepared by an FAO/CP mission based on a visit to Indonesia in April/May 1990, on a PCR that had been issued by Government in February 1989 (Directorate of Planning and Programming of the Dirnctorate General of Water Resources and Development/Kinistry of Public Works), and is based, inter alia, on the Staff Appraisal Reports the Loan, Guarantee, and Project Agreements; supervision reports; correspondence between the Bank and the Borrower; and internal Bank memoranda. i

6 INDONESIA V SEVENTEENTH IRRIGA?ION (EAST JAVA PROVINCE) PROJECT (Loan 2119-IND) PROJECT COMPLETION REPORT EVALUATION SUMMARY Introduction The Seventeenth Irrigation (East Java Province) Project was the first Bank-financed project to be concentrated in a single province and largely implemented by a provincial irrigation service; the previous 15 water resources projects assisted by the Bank Group, as well as the swamp reclamation project, were implemented chiefly by the Directorate General of Water Resources Development (DGWRD) units, due to the magnitude and dispersion of the work and limited capacity at the provincial level. Objectives The project's principal objectives were to: (a) improve the productivity and incomes of about 150,000 farm families in East Java through the rehabilitation of surface irrigation schemes serving over 50,000 ha, the construction of tertiary irrigation networks in those schemes and the development of about 240 production tubewells; (b) lay the basis for continuation of rehabilitation and groundwater development programs by providing survey and design of 15,000 ha of rehabilitation, through large scale groundwater exploration; (c) improve operation and maintenance (O&M) through upgrading of already rehabilitated systems in two pilot irrigation districts; (d) prepare for future construction on Java and Sulawesi through studies and designs for three projects; and (e) recommend how best to strengthen the South Sulawesi Provincial Irrigation Service (SSPIS). Implementation Experience The project had a late start and implementation progress during the initial three years was slow, mainly due to severe budgetary constraints, prolonged land aquisition processes and shortage of staff. Under the Rehabilitation Sub-Proiect construction of main systems lagged behind schedule and by 1986/87 only about 60Z of the Staff Appraisal Report (SAR) targets had been achieved. The improved financial situation in the following two years led to an overachievement of targets by 26Z. Tertiary development was also delayed initially by design and mapping problems. After implementation of about 8,000 ha, tertiary works had to be halted in 1986 due to the withdrawal of GOI funds for this category. Upon Bank intervention, agreement was reached in 1988 to resume financing for tertiary works and overall 75Z of the SAR target was achieved. Targets for Upgrading for Efficient Operation and Maintenance of 140,000 ha had to be reduced to 127,000 ha which was identified as the maximum available for upgrading within the areas that had been earmarked for this subproject. Upgrading works were completed in in all the revised target iii

7 area and improved O&H procedures introduced. Under the Groundwater Development Sub-project only 209 deep tube wells (DTW) have been completed against an SAR tar&et of 240 largely due to delays in appointments of consultants, procurement problems and budgetarr constraints. Conceptional and technical problems regarding water discribution systems could largely have been avoided if performance of existing DTW development in East Java had been more critically evaluated. The Studies and Design component has been completed according to schedule. Results As designed, the success of the project depended on its ability to deliver sufficient water to grow a second rice crop. The project was intended to result in substantial incremental production attributable to larger irrigation flows, extended irrigation season and more reliable and timely water deliveries. Implementation experience and limited production data indicate mixed success and over-optimistic assumptions at appraisal. As could be expected, the 48 schemes to be rehabilitated under the Rehabilitation Sub-project show great diversity. Data on cropping pattern for the Tanggul sch0me. which at appraisal was chosen as representative for all schemes, suggest, for example, a decline in the area under paddy by 12? and an increase by 36? in the area under soybeans. This is in contrast to the SAR, which assumed an increase of 92 i the area under paddy and an increase of 10 in the area under soybeans. The Groundwater Sub-Project was to develop groundwater in water-short areas where there was no other water supply for irrigation during the dry season. This objective was strictly applied to only about 60 DTWs which were sunk in rainfed areas, while about 150 DTWs were installed for conjunctive use with existing irrigation schemes. The intended main benefit of the inclusion of a second rice crop in the tubewell areas was only partially achieved. in conjunctive areas paddy plantings increased by only 13? and from tubewell areas under rainfed conditions no additional paddy planting is reported. The incremental benefits of the sub-project are generated mainly during the dry season, i.e. through increased production of palowijo crops, such as soybeans, maize and groundnuts. Sustainability Although success after scheme rehabilitation has been varied the available data suggest that a recovery and improvement of output in terms of yield increases and increased returns from higher value crops has taken place. Sustainability of these project benefits will depend on the success initiated by the project to strengthen O&M services. With the recent increase in the O&M budget, functioning of the project facilities can be expected to be fully sustained over the economic life of the schemes. Benefits will improve if and when the development of tertiary systems is extended over all the project area as anticipated. Findings and Lessons Learned The overall project concept of supporting irrigation development in East Java proved to be appropriate both in terms of rehabilitation efforts and developing groundwater in water deficient areas. The project was innovative in iy

8 that it combined physical imnrovement measures with the strengthening of provincial and district authorities, and it tried out various distribution systems for the groundwater subproject. With inclusion of the subproject for upgrading schemes for effective O&M the Bank gave new impetue to a long standing effort to improve O&M standards in Indonesia on a scale that can be replicated. Since groundwater is widely available in East Java there was no rationale for limiting groundwater development under the project to deep tubewells, excluding shallow wells with their lower costs and more appropriate technology. The experience gained in two previous groundwater pilot projects was insufficiently applied, leading to considerable implementation delays and uinduly costly solutions. At preparation stage more time should be spent on evaluating relevant experience, particularly when, as in the case of groundwater development, an important step is taken from pilot to full scale development. The Department of Agriculture (DOA) should be more directly involved in implementation of both rehabilitation and groundwater projects. v

9 INDONSSIA SEVENTEECNT IURIGATION (IHST JAVA PROVINCE) PROJFeT (Loan 2119-IND) PROJECT COMPLETION UEPORT 1. Project Identitv PART I Project Name s Seventeenth Irrigation (East Java Province) Project Loan No. : Loan IND RVP Unit Country Sector Sub-Sector s Asia Region : Indonesia : Agriculture : Irrigation 2. Background 2.1 Despite a favorable performance of the Indonesian economy that followed the dramatic increase in oil revenues of the early 1970's, it was estimated that in 1978, almost 50? of the population, some 65 million people, were living in conditions of absolute poverty. Household expenditure surveys indicated that the core of the poverty problem continued to be in rural Java, where landless laborers form a large segment of the population. At the time, the major national objectives for the agricultural and rural sactor included the creation of productive employment to raise incomes of the rural poor and the increase of domestic food supply to keep pace with rising demand and to ensure productive, sustainable use of the country's varied land, water and other natural resources. In Java, it was widely felt that rice croppirng intensity could be raised through water storage, groundwater development and flood control projects. Yields and cropping intensity were to be increased also by improving water management at all levels. 2.2 The Seventeenth Irrigation Project was initiated at the request of the GOI to support its program of irrigation development in the Province of East Java and comprises: rehabilitation of existing surface irrigation systems; development of groundwater irrigation systems; upgrading for efficient operation and maintenance of irrigation systems and establishment of improved methods of operation and maintenance; and strengthening of the East Java provincial irrigation service (EJIS). The latter was in line with the 1

10 goal of increasing EJIS capacity for irrigation development in order to reduce demands on the Central Government's DGWRD in the Ministry of Public Works (MPW). At the time, GOI also requested assistance for studies and designs for proposed projects located in Java and Sulawesi and to study how best to strengthen the SSPIS. 3. Proiect Oblectives and Description 3.1 The project's principal objectives were to: (a) improve the productivity and incomes of about 150,000 farm families in East Java through the rehabilitation of surface irrigation schemes, the construction of tertiary irrigation networks in those chemes and the development of production tubewells; (b; lay the basis for continuation of rehabilitation and groundwater development programs by providing survey and design for rehabilitation and through large-scale groundwater exploration; (c) improve OEM by the upgrading of already rehabilitated systems in two pilot irrigation districts; (d) prepare for future construction on Java and Sulawesi through studies and designs for three projects; and (e) recommend how best to strengthen the SSPIS. 3.2 The project comprised three subprojects and a studies and design component: (a) under the rehabilitation subproject some 40 schemes covering a total of about 50,000 ha were to be rehabilitated in whole or in part, and an additional 15 schemes were to be designed for future rehabilitation; (b) under the O&M subproject two irrigation districts which had benefitted from large irrigation rehabilitation programs were to be used as pilot districts for developing and implementing an appropriate O&M system to sustain full agricultural production; (c) the groundwater subproject was located throughout East Java in areas identified as watershort areas and having sufficient groundwater resources to be exploited. Development was to be concentrated in four areas for a total of about 13,000 ha. The principal project works were to be irrigation wells and upgraded or newly constructed distribution system channels; and (d) the studies and design component was to include feasibility studies and detailed design for irrigation systems to serve a total of 52,000 ha in Central and South Sulawesi and the collection and analysis of additional hydrological data on river flows in Central Java. 3.3 Total project costs were estimated at US$144 million. The Bank loan of US$70 million would cover foreign exchange, about 50Z of total project costs. In line with the responsibility of provincial level irrigation staff for O&M and national tertiary program operations the rehabilitation and O&M subprojects were to be implemented through EJIS. This was also in lire with the goal of GOI to gradually entrust large scale rehabilitation programs to the prcvincial irrigation services. The groundwater subproject was to be implemented through the Groundwater Development Agency (PZAT) with the assistance of foreign and local consultants. Technical assistance was also to be provided to the agencies within DGWRD responsible for implementing Bank Group-assisted water resource projects, i.e. PIBD/PROSIDA, which were to carry out the studies and design component. The agricultural impact ';f the project was to be largely in terms of an increase in rice production. 2

11 4. Prolect Dealan and Oraani.ation 4.1 The overall project concept of v4pporting irrigation develcpment in East Java proved to be appropriate both in terms of supporting rehabilitation efforts and developing groundwater in water deficient areas. The focus on a large number of small schemes whick, since their establishment in the 1940's, had received little maintenance/rehabilitation attention was justified. The project was innovative in that it coupled these physical improvement measures with a strengthening of the provincial and district irrigation authorities. The separation of the project from the Irrigation XVI project was intended to support the decentralization effort and facilitate project implementation (see *Com&ients* under Part III, Para. 2). Roles and responsibilities of agencies responsible for implementation, including consultant services, were adequately defined and understood. However, the mechanism for post-project integration of the project office, in which much implementation experience was concentrated into.the overall EJIS structure should have been addressed more specifically. A better definition of the rehabilitation vis-a-vis the upgrading component would have avoided somo confusion. Implementation experience shows that a more critical review at project preparation of existing designs, previous experience (groundwater) and agricultural performance, would have avoided certain delays (tertiary development) and conceptual problems. 4.2 The project would have benefitted from inclusion of the DOA in its organizational structure for project implementation as well as better utilization of the facilities provided (extension, demonstration, performance evaluation). Although the project consultants prepared relevant guides and work schedules for an extension/demonstration program, this was implemented only partially due to budget constraints. 4.3 Project monitoring and evaluation (PME) was not given the attention in project design that it deserved, considering the pioneering role of some of the project components. Although the central PHE institutions (DPP) received Bank support through Credit 995-IND, there were no specific budget provisions made for PME activities under the project. 5. Prolect Implementation 5.1 General. The project had a late start and implementation progress during the initial 3 years was slow, mainly due to severe budgetary constraints, prolonged land acquisition processes and shortage of staff (see Implementation Schedule attached). Through loan reallocation effected in 1986, the share of expenditures for civil works was increased from 222 of the total loan amount to 31Z, while that for equipment was reduced from 31 to 171. This stimulated progress in following years. Some targets, however, had to be reset and an extension of the project up to end March 1989 was needed and also granted. All civil works were undertaken by local contractors under the supervision of EJIS and P2AT, involving their own staff as well as consultants. The higher than anticipated level of disbursement during the 3

12 first two project years resulted mainly from payment of consultant fees and from meeting start-up cost for project implementation. 5.2 Rehabilitation of Irrigation Systems. Although survey and design of main systems under this subproject plogressed largely according to schedule, construction lagged behind and by end-1986/87 only about 59 percent of the SAR target for that date 1 been achieved. The improved financial situation in the following two years resulted in the completicn of a further 67 percent of target and, conseluently, an over achievement by 26 percent. The start of tertiary development was initially delayed by ona year when it was found that prepr,-ject designs and mapping could not be used immediately for construction. After implementation of about 8,000 ha, 1/ tertiary works had to be halted in 1986 due to the withdrawal of GOI funds for this category. Although no formal statement was obtained, it was understood that all future tertiary development was to be the responsibility 3f water users. Apart from minor completion works no further tertiary development took place during FY1986/87 and 1987/88. Upon Bank intervention, agreement was reached in 1988 to resume financing of tertiary works. Thus in FY88/89 a total of about 27,800 ha were completed, raising overall achieveme to about 37,600 ha or 75 percent of the SAR target. 5.3 The mapping and design for tertiary development available at appraisal was not of adequate standard. It is now clear that this should have beent firmly established during project preparation so that such designs are fully compatible with those for the main system. 5.4 Upgrading for Efficient Operation and Maintenance. The SAR target of 140,000 ha had to be reduced to 127,000 ha which was identified as the maximum available for upgrading within the areas that had been earmarked for this subproject. Upgrading works were completed in 1987/88 in all of the target area, and improved O&M procedures have been introduced covering the entire 127,000 ha. However scheme-specific O&M manuals were prepared for only about 68,000 ha. Some 1,280 staff attached to 90 sections offices have received training in efficient O&M procedures, two Advanced Operation Units (AOU), each covering some 5,000 ha were established as model cases. While most maintenance machinery and vehicles were procured as planned, the tender for telecommunication equipment was canceled for fear of costly O&M. 5.5 Irstitutional Strengthening of EJIS was a major project objective geared to the planning, design, construction and maintenance of rehabilitation and upgrading works. The intended role of Technical Assistance in this respect was compromised by the short-term objective of completing the project targets on schedule. However, by 1988 a core design team at Surabaya and 10 district design teams bad been established which are currently active in rehabilitation activities under the Irrigation Subsector Project (ISSP, Loan 2880-IND) and other projects. Construction supervisior. capability has been substantially strengthened but weaknesses prevail in planning, where reliance on external consultancy inputs is still heavy. This Is the official record while in one SPN report a figure of 3,000 ha is given. 4

13 5.6 Groundwater Development. The under performance in this subproject (209 DTWs completed of which 39 are still without pumpsets, as against an SAR target of 240) resulted from several factors, including: excessive delays in appointment of consultants, budgetary constraints, conceptual and technical problems regarding water distribution systems and excessive procurement delays. 5.7 The conceptual and technical problems could largely have been avoided if performance of existing DTW developments in East Java, especially concerning the type of canal lining had been more critically evaluated. Instead, the project went through a time-consuming and expensive selection and learning process of its own before, after halting the implementation of distribution systems for over two years, a solution consisting of precast reinforced concrete channel segments was finally adopted. Justification for this alternative as against the previous use of stone masonry linings appears weak: stone masonry, if made to required standards (curing), should be qualitatively comparable to the precast channel lining, is likely to be less expensive over time and is more labor-intensive. By not improving construction standards and supervision the opportunity was lost to implement the sub-component faster and at less cost. 5.8 On the positive side, the project successfully tested piped distribution systems, an innovation which has meanwhile been adopted widely under the ongoing ISSP. The subproject also substantially increased P2AT's implementation capability, including the use of advanced drilling techniques. 5.9 Procurement delays, caused by complex procedures, bidding problems and delayed customs clearances prevailed throughout the project. Thus the delivery of 70 pump units ordered in 1988/89 is still outstanding Studies and Designs. This component has been completed according to schedule. The detailed designs for Parigi-Poso have been included for implementation under the ongoing ISSP while the feasibility study for an additional 8,000 ha of irrigated area is to form part of the Provincial Integrated Agricultural Development Project (PIADP), currently under preparation The Kali Progo (Central Java) hydrological studies were a continuation of works initiated under Irrigation X (Loan 1578-IND). They confirmed the feasibility of a proposed reservoir scheme and a project is in active pipeline for financing by ADB under the Integrated Irrigation Subsector Project Completed feasibility studies and detailed designs for four irrigation schemes in the Polmas-Sidrap area of South Sulawesi (Sadany, Lanrae, Batubassi and Mambu) are under consideration for development under the PIADP. The feasibility study for the Maloso scheme is under revision after detailed design work carried out by another consultancy firm revealed deficiencies. The project is under considerat on for bilateral assistance (CIDA). 5

14 5.13 Prolect Monitoring & Evaluation (PME). Overall this has not been a very successful activity under the project. The causes appear to have been shortage of funds for carrying out field activities, lack of coordination between the project and the regular EJIS/P2AT services, '/ lack in clarity of implementation and poor motivation. PME for surface schemes was started only in 1984/85. After a slow start, reasonable progress has been reported which included a gradual expansion of PME to cover over 15,000 ha of sample project area In the groundwater subproject monitoring of water levels was initiated in 1982 but a comprehensive PME, including technical as well as production and socio-economic parameters, started only in 1987/88, and that too on a very limited scale The socio-economic benchmark survey of 1984/85 and subsequent PME activities are not comparable as far as yields and production of major crops and cropping pattern are e-3ncerned. Interpretation is made difficult by the fact that they were carried out by different consulting firms using different methodologies. Apparently DPP which has developed a considerable M&E capability should have played a more authoritative role in the PME process. In conclusion the PME, despite repeated assurances, did not succeed in providing an acceptable data base for benefit evaluation after completion of the project. 6. Proiect Results 6.1 The success of the project as designed depended on its ability to make available additional quantities of water both through restoring deteriorated supplies by means of rehabilitation/upgrading and through the development of groundwater. 'Where this would be achieved the project would result in substantial incremental production, attributable to larger irrigation flows, extended irrigation season and more reliable and timely water deliveries. The latter was to stimulate the optimization of cropping calendars and increase in farm inputs used. 6.2 Implementation experience and limited production data indicate mixed success and over-optimistic appraisal assumptions, both for rehabilitation and groundwater development. Due to the poor performance of the PME system no reliable assessment could be made at PCR stage of project impact on poverty alleviation and income distribution. 6.3 Rehabilitation subproject. As could be expected, the 48 schemes rehabilitated under the project show great diversity in size, soils, water availability, cropping pattern, calendar and yields. The evaluation of 5 schemes, totalling about 7,100 ha (11Z), monitored by EJIS from 1982/83 to 87/88, show slight shifts in cropped area percentages. As indicated below by the increase in fallow, the overall cropping intensity, including the wet season, decreased slightly, from 254? to 247Z. Because diffee sysems of data collection were used.

15 Ooecad Are In 1Ha1/ Chanc In lo-vw I Ha L%2 Paddy 2,368 2, S8yb_a 1,821 1, Maie 3,035 3, Caava a &Vu=Mrcn So Other 1,919 1, Falow 3,235 3,W Land Logt io Other ToWal 3/ A / Sumn of Pakowjo Iand N coitespondlng to 2 croppin sasn. 21 Pent of net ouiabis ae. 3/ Sugarwo and land bm are counted twice. 04 CorpondIg date for thtanggswhoem (772 ha?, which at appai was chon as reresetav for the nt*e subpmw% are avaable for the peid 1984/85 to 67/88 orly, and indicate te following shfts: Actu SAR Paddy Soybeans MaIz Caava 0-14 Sugaroane +2 n.a. Oer Crops -27 n.a. Falow -2 n.a. 6.5 Considering that the scheme, including tertiary development, was rehabilitated in 1983/84, the above cropped area shifts should reasonably well reflect the transformation from the *without" to the 'with project' situations. The shifts in paddy and soybean production, apparently resulting from a recent GOI policy towards increased soybean and less emphasis on paddy production, could not be anticipated at appraisal. The absence of mother crops, in the appraisal projections does not allow a valid interpretation of actual shifts in cropping pattern. The variance in cropping pattern between Tanggul and the other 6 schemes, for which data were available, indicate that Tanggul is not as representative for the 48 schemes rehabilitated as believed at appraisal. 7

16 6.6 Available PME data on crop yields are limited to four rehabilitation schemes whtch however are not among those for which cropping pattern had been recorded. This further limits the usefulness of the PME surveys, which are not compatible with a project baseline survey conducted in 1984/85 (para 5.15). Based on the entire subproject the ERR has been re-estimated at 30Z. This compares with a rate of 25? at appraisal. For mission estimates of crop yields and other assumptions see Attachment. 6.7 Groundwater subproject. The project was intended to develop groundwater in water-short areas where there was no other water supply for irrigation during the dry season. Actually this objective was strictly applied to only about 60 DlWs which were sunk in rainfed areas, while about 150 DTWs were installed for conjunctive use within existing surface irrigation schemes. Aggregate net command area is about 10,000 ha as against an SAR target of 13,000 ha. The time lag between the SAR assumption and actual full development of the subproject is about five years. The intended main benefit of the inclusion of a second rice crop in the tubewell areas was only partially achieved. This is also indicated in the table below. In conjunctive areas planted paddy area increased by only 13Z while no additional paddy planting is reported for previously rainfed tubewell areas. Main benefits of the subproject instead are generated through increase in polowijo crop production, especially during the second half of the dry season (3rd crop). Shift in Cropping Pattern, Pre-Project to Full Development, (Weighted Average) PCR (Z) SAR (Z) Paddy Soybeans Maize +22 _ Groundnuts +30 _ Fallow The average cropping intensity is estimated to have increased from a pre-project level of 2002 to some 2802 at full development. An additional benefit in previously rainfed DTW areas has been the occasional supplementary irrigation of wet season paddy, a benefit which the appraisal did not take into account. In conformity with the unexpectedly small increase in dry season paddy the actual number of pumping hours per year has stabilized at only about half of the 2,800-3,200 hours per year estimated at appraisal. This is largely explained by farmers' attachment to traditional farming practices, unfamiliarity with irrigation, reluctance to use water that has to 8

17 be paid for, as well as market and price factors. It points to a weakness in project design (para 4.2) which did not provide funds for extension, demonstration and training in farm/field water management. This became particularly apparent in the groundwater subproject. Its ERR, at appraisal established at 24X, is re-estimated at 42 (Section III, Para. 6, Table 8). GOI had reestimated the ERR at 20X. These calculations: (a) did not include equipment replacement costs; (b) overestimated the economic value of paddy; and (c) did not adjust phasing of O&M costs and benefits on the basis of build-up of net irrigated areas. With these adjustments and paddy used as a proxy, the ERR would drop to 52 (Attachment, Table 8A). 6.9 Upgrading for efficient operation and maintenance. Project objectives under this component were generally achieved, which is confirmed by the fact that the entire project area of 127,000 ha has qualified for inclusion under the national scheme for Effective Operation and Maintenance (EOM) which is supported under the ISSP. 7. Prolect Sustainabilitv 7.1 Available agricultural data indicate that productivity was declining substantially until scheme rehabilitation took place. Although success after rehabilitation has been varied and a thin data base precludes reliable quantification, the indications are that production recovered in terms of yield increases and a shift to higher value crops. Sustainability of project benefits will depend on the success of efforts initiated by the project to strengthen O&M services. Both the rehabilitated schemes and the areas with upgraded irrigation facilities/services, are now under the EOM system which is providing an annual O&M budget of about Rp 25,000 per ha, compared to a provincial budget provision of about Rp 7,000 in recent years and an allocation of Rp 14,000 per ha in 1990/91. With the financially as well as technically strengthened O&M services, functioning of the project facilities can be expected to be fully sustained over the economic life of the schemes. Benefits would improve if and when the development of tertiary systems would be extended over all of the project area, as intended. On the other hand there is a risk of declining benefits if water users fail to fulfill their share of maintenance responsibilities. 7.2 In order to sustain the groundwater subproject GOI has accepted full financial and technical responsibility for DTW replacement needs and major repairs of physical facilities. Responsibility for operation and routine maintenance lies with the beneficiaries who are organized in Water User Associations (WUAs). Prior to the project the provincial P2AT agency was weak in mechanical staff and had no maintenance organization. The post-project institutional framework and its capabilities seem to be gearel more towards further groundwater development than towards sustainability of existing DTWs. There are already reports of failing pumps and problems with corrosion of screens and casings.

18 S. lank Performance 8.1 After implementation of 15 large and widely dispersed water resources projects by DGWRD, this was the first Bank supported project to be concentrated in a single province and largely implemented by a provincial irrigation service. This was in line with GOI policy of decentralization but required a modification of the original project proposal which, because of its wide geographical spread and national issues involved, would have severely hampered the innovative decentralized implementation. The Bank was instrumental in molding the components located in East Java into one distinct project. It also expanded the loan period, from the originally designed three years to five years which also meant a larger project. This was justified, considering the existing groundwater potential of East Java and the availability of numerous schemes still urgently requiring rehabilitation. 8.2 Individual project components should have been more thoroughly prepared. Experience gained in two previous groundwater pilot projects was insufficiently applied, leading to considerable implementation delays, costly solutions (para 5.7), and overoptimistic estimates of benefits (para 6.7). 8.3 Since shallow groundwater is widely available in East Java there was no rationale for limiting groundwater development under the project to deep tubewells, to the exclusion of shallow wells, with their lower costs and more appropriate technology. 8.4 With inclusion of the subproject for upgrading schemes for efficient O&M, the Bank invigorated a long standing effort to improve O&M standards in Indonesia on a scale that could be replicated. The rationale for the proposed composite measures, including technical assistance, training, O&M equipment and civil works for upgrading the irrigation systems, was correct in its intention to facilitate O&M of schemes, thereby at least partially offsetting the negative effects of chronic under-budgeting of O&H services. However, sustained benefits from the investment still depend largely on increased O&M budgets, which are available only because of renewed external support (ISSP), and not from improved cost recovery, or more intense participation by water users. 8.5 The SAR did not clearly spell out the financial implications of the proposed investment in DTWs. Since participating farmers are not required to contribute to recovery of investment and replacement costs attention should have been drawn to the resulting burden on GOI budget. The role of the DOA in assuring agricultural support, trial demonstrations and training in water management in the groundwater subproject was not eufficiently defined. 8.6 The main strength in Bank supervision performance lay in groundwater development technology, while the weakest area was agricultural/extension backstopping and in directing consultants. Of considerable significance was the introduction of piped distribution system technology in tubewell development. In only one out of nine missions did an agronomist participate. From available records it appears that there was an unexplainud break in supervision between February 1985 and August

19 8.7 Since PMI was glven insufficient attention at appraisal, supervision missions soon identified substantial deficiencies which they tried to rectify through lmprovement of methodology and computer-aided data processing. However, the outcome was a system too complex to be handled successfully under the budgetary and staff constraints. The utility of PME efforts could have been greatly improved by limiting the number of parameters to be covered. Data collection should have been focussed on carefully selected sample schemes and more motivation for the exercise was needed. 8.8 The Bank's flexibility in fund reallocation greatly helped to ease budget constraints that threatened project implementation in its early years. The Bank also granted a one-year extension of th6 loan closing date which greatly helped to achieve, and even exceed, SAR targets. 8.9 Many of the constraints experienced in earlier projects resurfaced under this project, notably inadequate beneficiary participation, inadequate cost recovery, poor construction quality control and continued excessive dependence on consultant services. The main lessons which emerge from project implementation, which may be relevant to irrigation projects elsewhere, relate to the following: (a) Project preparation should be given more time and better direction in terms of evaluating previous experience more carefully, especially when, as in the case of groundwater development, an important step is taken from pilot to full scale development, but also in terms of fully appreciating and incorporating agricultural aspects. (b) During supervision more attention should be given to the role, activities and performance of consultants. particularly in projects with a comparatively high consultancy input (18Z of civil works, equipment and supplies in this case) and where consultants have a significant responsibility in institution building. (c) Delays in implementation due to late appointment of consultants could be avoided by stipulating that consultancy contracts be signed prior to loan effectiveness. (d) Project proposals that will result in substantial investments per unit area, as in the case of groundwater developmenthrough DTWs, should be analyzed at appraisal not only in economic but also in financial terms. (e) Economically viable and sustainable groundwater development requires a degree of interaction between engineers and agronomists which can best be attained through active participation of DOA in project implementation. Adequate budget provision should be made for extension, demonstration and training in tubewell command areas. 11

20 9. Borrower Performance 9.1 Despite difficult implementation conditions (budget constraints, shortage of staff) the project was effectively managed. Apart from generally achievng its physical targets it also acted as a vehicle for implementing the GOI policy of decentralization of DGWRD responsibilities. The strengthening of EJIS could however have been broader if consultant inputs had been more specifically directed towards strengthening of planning and design capabilities. 9.2 The financing of tertiary development, which was an integral part of the system rehabilitation package, should not havy been discontinued without an adequate alternative solution based on water user i.v.-olvement. 9.3 Compliance with covenants has been generally satisfactory. The task of involving MOA, Ministry of Home Affairs and other agencies in training and other assistance to WUAs was only partially achieved, mainly due to inadequate budget provisions. Also the covenant related to funding for O&M was not entirely complied with. 9.4 The borrower did not adequately evaluate and apply experience gained in two previous groundwater pilot projects regarding water distribution systems, and provided insufficient quality control, to the construction of conventional stone masonry and concrete slab linings. Procurement of pumps and other equipment was unduly delayed. 9.5 The objectives of the PME program have not been achieved. The program was started late, was not well conceived in that it duplicated already established monitoring of certain parameters, and was too complex to be widely understood. Although large quantities of data have been collected, their limited comparability has considerably reduced the overall usefulness of the exercise. 9.6 Training activities were conducted successfully under the project. Particularly the approach using mobile training units was much appreciated and was extended to cover all six irrigation districts of East Java. 9.7 Lessons Learned. A lesson already learned and applied under the ongoing ISSP and other projects is that wherever aquifer conditions permit, shallow tubewells should be preferred to deep tubewells, mainly because of their lower investment costs per unit irrigated area and their simpler technology. 9.8 Since groundwater development in East Java is likely to expand substantially in the future, the institutional decentralization of its implementation and of operation and maintenance should be pursued vigorously. For pumps and engine maintenance and repair it may be advantageous to promote privately run workshops and spare part supplies. 12

21 9.9 In order to respond properly to the policy of expanding crop production through irrigation a development project requires adequate and timely budget allocations. 10. Proloct Relationship 10.1 The Bank maintained good relationships with GOT and DGWRD through its resident mission. This was of particular significance in successfully maneuvering the project through times of severe budget constraints and in extending it by one year in order to achieve important project targets. A member of IFAD, the cofinancing agency, participated in one of the supervision missions. 11. Consulting Services 11.1 With a share of about 20? of total project costs consulting services constituted a major investment, which was basically justified considering the absence of sufficient planning and design capacity in DGWRD and EJIS. However, the heavy consultant input in groundwater development, where the SAR cost estimate was exceeded by 32 percent, was out of line with physical accomplishments in the field, both in quantity and quality. The role of consultants in strengthening the EJIS services, although eloquently defined, was diluted when too much attention was given to achieving physical targets rather than to the training of counterparts. Resources were wasted when consultants designed and tendered for a telecommunication system which then was not installed. Lack of coordination and/or guidance of two consulting firms involved in monitoring and evaluation led to sets of data which are not comparable. 12. Prolect Documentation and Data 12.1 The SAR and loan agreement provided a generally adequate framework for project implementation. The provisions of the loan agreement were generally observed (Part III, Para. 7). The borrower in 1989 prepared a.r which provided a useful source of data for this report, after updating and enhancement of the analytical contents. 13

22 SEVENTEENTH IRRIGATION (EAST JAVA PROVINCE) PRQJECT LOAN No IND PROJECT COMPLETION REPORT PART II - BORROWER'S COMENTS A. The adequacy and accuracy of the factual information contained in Part ITI. It is surpricing that the EIRR of Groundwater Development drops from 24 % ( in the SAR ) to 4% or 5% (see table 4 and table 8.a ). GOI had reestimated the EIRR at 20%. These calculation i) did not include replacement cost for equipment; ii) over estimated the economic value of paddy ; iii) made on adjusments for the phasing of costs for 0 & M, nor for the phasing of benefits, during the development of irrigation areas. ad i) replacement costs for equipment were not included as this is part of 0 & M ; ad ii) the incremental benefit is not only based on the economic value of paddy, but also on the value of palawija. The Groundwater Development Project is badly needed in those areas where there is shortage of water. Therefore the EIRR is not the only parameter to be considered. B. Comments on the analysis in Part I of the PCR 1. The Tanggul scheme (772 ha) was selected as being representative for the entire sub project. However, else where (in fact on the same page ), it is stated the variance in cropping patterns betwvma the Tanggul scheme and the other 6 schemes for which data were available, indicates that the Tanggul scheme can be considered representative to what was assumed during the project's appraisal. The choise of the Tanggul scheme as a sample of 48 schemes can not be accepted. The choice should be based on a statistical evaluation and verifiable criteria. 15

23 2. The figure for the achievement of the project as regards upgrading for Efficient Operation and Maintenance is stated on page ii as 127,000 ha out of 140,000 ha, while this figure is 126,500 out of ha Ln the PCR by GOI. On page iii, the total number of DTW's is given as 210, while this should be 209. As these things have happened for other projects as well, the Bank is advised to obtain unbiased data. 3. -On page 9 it is stated that teh Provincial P2AT does not have a maintenance organization. However, P2AT disposes over workshops which are responsible for all DTW's which have been handed over to the provincial government are maintained by these wokshops. - According to the report, the postproject institutional framework and its capabilities seem to be more greared towards further groundwater development than towards sustainability of existing DTW's. In fact, not only for groundwater irrigation projects, but also for surface irrigation,more attention should be paid to existing irrigation..there are reports of failing pumps and problems with corrosion of screens and casings. According to P2AT however, the total number of pumps failing 0? showing other problems, is only 7 % of the total number of DTW's. C. Bank's performance 1. Lessons Thn five main lessons issued by the Bank will be helpful for future, similar irrigation projects. 2. Appraisal and implemerntit.n : From the table on Projo-t Implementation (page 18, part III), from the table on Proj',! Result (page 21 and 22),and from the table in Annex I, it 'nn he concluded that some of the targets from the SAR sould he achieved, but not all. The great discrepancy between the SAR targets and actual implementation should also be reevdliatpd, as it seems that some of the SAR targets were too optimistic. 16

24 3. Field visits Table B on page 2C, Part III, shows that 9 reguler missions were sends to the field; it olso shows the number of days in the field and the specializations involved. Considering that some actual implementation is still far below the SAR target, and that the area is scattered throughout the entire province of East Java, supervision by the Bank should be increased. Field visits should have been organized at least twice a year during the period , and more agronomists should have been involved as mentioned by the Bank. 4. Supervision : During supervision mission by the Bank, the Indonesian side should be more involved, in order to ensure that the Bank's suggestions are followed up. 5. Appraisal : During appraisal missions of the Bank, the Indonesian side shall be more involved, especially with regards to the collection and preparation of the Benchmark Information, in order to avoid overestimation of benefits. D. Borrower's performance Lesson learned : It is suggested by the Bank, that whenever aquifer conditions permit so, shallow tubewells should be preferred to deep tubewells, mainly because of their lower investment cost per unit irrigated area and their simple technology. Preference for shallow tubewells must be based on costs, technology and incremental benefit. Comparison of water price based on operation cost - DTW = Rp. 50,8/liter - ITW = Rp. 80,7/liter - STW = Rp. 205,3/liter The shallower the tubewell, the more expensive the price of water produced by well ( source P2AT ). The calculation of incremental benefits of ITW and STW shows no date. Anyway, at present P2AT has been developing 83 DTWS, 195 ITWS and 180 STW in East Jawa and Sulawesi since

25 E. Bank. Borrower relationship. The offectiveness of the relationship between Bank and Borrower during the implementation and evaluation of the project has been excellent. For implementation of the project according to the planned schedule, Bank and Borrower follow their own procedures, but usually the Borrower's procedure is more complicated. When the Bank's or the Borrower's procedure can not be met because the procedures are different, the procedures on both sides should be interpreted as simple as possible. 18

26 PART XII STATISTICAL INFORMATION 1. Rotated Back Loans/IIDA Credits i~~t!.~pwdoz I/ Yer Of S e Commeat Fowlh ri. Projet RWhblto VWd eipoey 1972 C ampltd (C:.) wofd on w ater deveomn h Eat Jav (PakWe Saen and ledk1). ESham brig. Project I upwonnding 1977 Cop d (UL.14344ND) Eas Java (adku). Fourlm4h bitg. ProCt kvug g h 1960 Compl (Lt18114ND) Est Jav (Sooegr and Lwer S0o0 r Bsaw). Fifteenth brig Project (r.6b8nd) hitiorhl trengthening for DGWRD Compl Meniod In SAR wilh epeto svtrengtheing Otftf Evakutin Secion of DPP In DGMWRD. oxeenth ri. Projet TA for I rstiiona 1962 Compbl Durig prepaatn (d.n21184nd) etnllgd of DGWRD and compon ocated in in~provement of management East Java were Informat. rutm for rmoved to form th kdgato seco. phhcal omponen of Irgaton XVN. g. SSctor (Ln. Emflio O&M 1967 Orgoig Proision of finance for IND) *efficlent 08W In areas upgraded for ta purpose under XVN. -rglo I/ As far as retd to Inigation XVN. 19

27 2. Project Tmetable Item Date Planned Date Revised Date Actual Identification August / Preparation February 18-March 17, / Appraisal Mission May 1981 Loan Negotiations December 1981 January 28-February 9, 1982 Board Approval March 30, 1982 March 30, 1982 Loan Signature April 5, 1982 April 5, 1982 Loan Effectiveness December 14, 1982 Loan Closing March 31, 1988 March 31, 1989 March 31, 1989 Loan Completion January 25, / 1/ Date of initiating project brief. 2/ Preappraisal. 3/ Date of payment against final applicatioi. Comments (Issues raised at each stage of pr3ject cycle) Identification/Preparation Project Origin and Status of Preparation The programs and works included in Irrigation XVII were originally proposed!ir inclusion in Irrigation XVI Project. It gradually became apparent that tite provincial level focus, issues and problems (related to decentralization and ds olution of responsibility from the central to provincial levels; improvement.f operation and maintenance; development of groundwater) would in practice hecome totally overshadowed by outstanding national level issues should all components be included in a single project. In addition, the geographic dispersion of even the major physical components would make final preappraisal, appraisal, and supervision totally unwieldy, possibly to the detriment of the technical quality of appraisal and supervision. On this basis those components located in the province of East Java, the implementation of which would require a high degree of cooperation and transfer of responsibility between Central and East Java Province agencies, were removed from Irrigation XVI and formed the physical components of Irrigation XVII Project. 20

28 Hain Pro1ect Issues. The main issue associated with the project and its objectives related to the optimum extent and pace of devolution of responsibility for irrigation development and operation from centralized DGWRD to provincial and local authorities. A second issue directly affecting the size of the proposed project was the period to be covered by the loan. Originally, the two major physical components (rehabilitation/upgrading program and groundwater development) had been formulated to cover a three-year project period (1982/ /85) which would approximately cortespond to the remainder of the Third Five-Year Plan period. A longer period for a separate operation had, however, to be provided to accommodate a larger project, since the Province's groundwater potential and needs for irrigation rehabilitation/upgrading far exceeded the initial targets. Project Processing. As the project comprised programs and works originally intended for inclusion in Irrigation XVI Project, no formal project preparation was undertaken and considerable work remained to be done during appraisal. As the components of Irrigation XVII were previously included in a large national package, the status of the dialogue with the central government (including DGWRD and BAPPENAS) concerning the objectives and content of this project was quite advanced, as it was with the consultants who had been working in East Java for many years. However, contacts with the East Java government were at the time not well developed, and the appraisal mission had to devote considerable effort to explaining the project at the level of the Government's office and provincial planning board, to assessing the capabilities of the provincial irrigation service and its regional sections, and to coming to broad agreement on objectives, content, procedures, and inputs at these levels. Appraisal Project Finance and Implementation. The appraisal mission proposed that the groundwater component be financed on a time slice basis, that is, the Bank would finance only the first three years of the groundwater program and that finance for later slices of the program be considered by the Bank under a future loan. This procedure was suggested to avoid over committing scarce Bank resources while at the same time not interfering with the implementation of the program and also tc reduce the commitment charges to the GOI. The funding channel and lines of responsibility for the rehabilitation and operation and maintenance subproject to be implemented by the Provincial Irrigation Service with DGWRD assistance required clarification by the Government. It was further agreed that the Bank would review progress of all contracts required for implementation with GOI during negotiations. Subject to this review, DGWRD should have the following contracts fully cleared within GOI and ready for signature before the project is presented to the Board: i) construction of at least 6,000 ha upgrading/rehabilitation works in East Java; ii) drilling 35 production wells for the groundwater project; iii) consultant services for engineering, design, construction upgrading/rehabilitation subproject; iv) consultant services for construction supervision and implementation of the groundwater project. 21