project appraisal document +pad+ +disclosable version+ - p130014
DESCRIPTION
This is the project appraisal documentTRANSCRIPT
Document of
The World Bank
Report No: 79517 VN
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
FOR A CREDIT
IN THE AMOUNT OF US$ 180 MILLION EQUIVALENT
TO THE
SOCIALIST REPUBLIC OF VIETNAM
FOR AN
IRRIGATED AGRICULTURE IMPROVEMENT PROJECT
October 7, 2013
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.
CURRENCY EQUIVALENTS (Exchange Rate Effective)
Currency Unit
VND21,000
= VND Vietnamese Dong
= 1US$
FISCAL YEAR January – December 31
ABBREVIATIONS AND ACRONYMSAAA Analytical and Advisory Assistance
CPMU Central Project Management Unit (under
CPO)
CPO Central Project Office
CPS Country Partnership Strategy
CSA Climate Smart Agriculture
DARD (Provincial) Department of Agriculture
and Rural Development
DSU Dam Safety Unit
DWR Department of Water Resources
EAP Environnemental Action Plan
EIA
ECOP
Environment Impact Assessment
Environmental Code of Practice
EMDP Ethnic Minority Development Plan
FM Financial Management
GAP Gender Action Plan
GHG Green- House Gases
GOV Government of Vietnam
ha Hectare
IAIP Irrigated Agriculture Improvement
Project
ICB International Competitive Bidding
IDA International Development Agency
IDMC Irrigation and Drainage Management
Company
IMT Irrigation Management Transfer
IPF Investment Project Financing
ISF Irrigation Service Fee
MARD Ministry of Agriculture and Rural
Development
MIS Management Information System
MIS Management Information System
MOF Ministry of Finance
MOF Ministry of Finance
MONRE Ministry of Natural Resources and
Environment
MPI Ministry of Planning and Investment
NCB National Competitive Bidding
NGO Non-Government Organization
O&M Operation and Maintenance
OP/BP Operational Policy/Bank Procedure
ORAF Operational Risk Assessment Framework
PAP Project Affected People
PIM Participatory Irrigation Management
PISC Project Implementation Steering
Committee
POE Panel of Experts
PPC Provincial Peoples Committee
PPMU Provincial Project Management Unit
QCBS Quality and Cost Based Consultant
Selection
RAP Resettlement Action Plan
RPF Resettlement Policy Framework
SBV State Bank of Vietnam
SCADA Supervisory Control and Data
Acquisition
SOE Statement of Expenses
SRI System of Rice Intensification
TA Technical Assistance
VAWR Vietnam Academy of Water Resources
VND Vietnam Dong
VWRAP Vietnam Water Resources Assistance
Project
WUA Water User Association
WUO Water User Organization
Regional Vice President: Axel Van Trotsenberg
Country Director: Victoria Kwakwa
Sector Director: John Roome
Sector Manager: Jennifer Sara
Task Team Leader: Abdulhamid Azad
Cuong Hung Pham
VIETNAM
Vietnam Irrigated Agriculture Improvement Project
TABLE OF CONTENTS
Page
I. STRATEGIC CONTEXT .................................................................................................1
A. Country Context ............................................................................................................ 1
B. Institutional Context...................................................................................................... 2
C. Higher Level Objectives to which the Project Contributes .......................................... 2
II. PROJECT DEVELOPMENT OBJECTIVES ................................................................3
A. PDO............................................................................................................................... 3
B. Beneficiaries ................................................................................................................. 3
C. PDO-Level Results Indicators ...................................................................................... 3
III. PROJECT DESCRIPTION ..............................................................................................4
A. Project Components ...................................................................................................... 4
B. Project Financing .......................................................................................................... 5
C. Lessons Learned and Reflected in the Project Design .................................................. 5
IV. IMPLEMENTATION .......................................................................................................7
A. Institutional and Implementation Arrangements. ......................................................... 7
B. Results Monitoring and Evaluation (M&E) .................................................................. 8
C. Sustainability................................................................................................................. 8
V. KEY RISKS AND MITIGATION MEASURES ............................................................9
A. Risk Ratings Summary Table ....................................................................................... 9
B. Overall Risk Rating Explanation .................................................................................. 9
VI. APPRAISAL SUMMARY ..............................................................................................10
A. Economic and Financial Analyses .............................................................................. 10
B. Technical ..................................................................................................................... 11
C. Financial Management .............................................................................................. 12
D. Procurement ................................................................................................................ 12
E. Social (including Safeguards) ..................................................................................... 13
F. Environment (including Safeguards) .......................................................................... 14
i
.
PAD DATA SHEET
Vietnam
Irrigated Agriculture Improvement Project (P130014)
PROJECT APPRAISAL DOCUMENT .
EAST ASIA AND PACIFIC
EASVS
Report No.: 79517 VN .
Basic Information
Project ID Lending Instrument EA Category Team Leader
P130014 Investment Project
Financing
B - Partial Assessment Abdulhamid Azad
Cuong Hung Pham
Project Implementation Start Date Project Implementation End Date
1 April 2014 31 March 2020
Expected Effectiveness Date Expected Closing Date
1 April 2014 30 September 2020
Joint IFC: No
Sector Manager Sector Director Country Director Regional Vice President
Jennifer J. Sara John A. Roome Victoria Kwakwa Axel van Trotsenburg .
Borrower:
Responsible Agency: Ministry of Agriculture and Rural Development
Contact: Tran Kim Long Title: Deputy Director-General, ICD
Telephone: Email:
Responsible Agency: Central Project Office, MARD
Contact: Vu Dinh Hung Title: CPO Deputy Director General
Telephone: 84-945095908 Email: [email protected]
.
Project Financing Data(US$M)
[ ] Loan [ ] Grant [ ] Other
[ X ] Credit [ ] Guarantee
ii
For Loans/Credits/Others
Total Project Cost (US$M): 210
Total Bank Financing
(US$M):
180
.
Financing Source Amount(US$M)
BORROWER/RECIPIENT 30
International Development Association (IDA) 180
Total 210 .
Expected Disbursements (in US$ Million)
Fiscal Year 2014 2015 2016 2017 2018 2019 2020
Annual 10 20 25 35 35 35 20
Cumulative 10 30 55 90 125 160 180 .
Project Development Objective(s)
The Project Development Objective (PDO) is to improve the sustainability of irrigated agricultural
production systems in selected provinces in the Central Coastal and Northern Mountainous Regions of
Vietnam.
.
Components
Component Name Cost (US$ Millions)
Component 1: Improved Irrigation Water Management 10
Component 2: Irrigation and Drainage Scheme Level Improvements 170
Component 3: Support Services for Climate-Smart Agricultural Practices 23
Component 4: Project Management, and Monitoring and Evaluation, 7 .
Compliance
Policy
Does the project depart from the CAS in content or in other significant
respects?
Yes [ ] No [ X ]
.
Does the project require any waivers of Bank policies? Yes [ ] No [ X ]
Have these been approved by Bank management? Yes [ ] No [ ]
Is approval for any policy waiver sought from the Board? Yes [ ] No [ X ]
Does the project meet the Regional criteria for readiness for implementation? Yes [ X ] No [ ] .
Safeguard Policies Triggered by the Project Yes No
Environmental Assessment OP/BP 4.01 X
Natural Habitats OP/BP 4.04 X
iii
Forests OP/BP 4.36 X
Pest Management OP 4.09 X
Physical Cultural Resources OP/BP 4.11 X
Indigenous Peoples OP/BP 4.10 X
Involuntary Resettlement OP/BP 4.12 X
Safety of Dams OP/BP 4.37 X
Projects on International Waterways OP/BP 7.50 X
Projects in Disputed Areas OP/BP 7.60 X .
Legal Covenants
Name Recurrent Due Date Frequency
Section I of Schedule 2 NO N/A
Description of Covenant:
The recipient shall maintain the implementation arrangements as described in Section I of Schedule 2 to
the Financing Agreement. .
Conditions
Name Type
Description of Condition
Team Composition
Abdulhamid Azad Task Team Leader/Sr.
Irrigation Engineer
Irrigation and Drainage MNSWA
Cuong Hung Pham Co- Task Team Leader/ Sr.
Water Resources Specialist
Water Resources EASVS
Steven M. Jaffee Lead Rural Development
Specialist
Agricultural Development/
Diversification
EASER
Christopher Paul Jackson Lead Rural Development
Specialist
Agricultural Development/
Diversification
EASVS
Masood Ahmad Lead Water Resources
Specialist
Peer Reviewer SASDA
Jacob Burke Lead Irrigation Specialist Peer Reviewer TWAIWA
Yuling Zhou Lead Procurement
Specialist
Procurement EASR2
Toru Konishi Sr. Economist Water Resources EASVS
Mei Xie Sr. Water Resources Peer Reviewer WBICC
iv
Specialist
Nagara Rao Harshadeep Sr. Environmental
Specialist
Peer Reviewer AFTN1
Nina Masako Eejima Sr. Counsel Legal LEGEN
Kishor Uprety Sr. Counsel Legal LEGES
Son Duy Nguyen Sr. Operations Officer Portfolio EACVF
Khang Van Pham ET Consultant Environment EASVS
Miguel-Santiago
Oliveira
Senior Finance Officer Disbursements CTRLN
Mai Thi Phuong Tran Financial Management
Specialist
Financial Management EASFM
Tuan Anh Le Social Development
Specialist
Social and Gender EASVS
Huong Thi Mai Nong Associate Counsel Legal EACVF
Thang Toan Le Procurement Specialist Procurement EASR2
Thu Thi Le Nguyen Operations Analyst Climate Smart Agriculture EASVS
Tam Thi Do Team Assistant Team Assistant EACVF
Vansa Chatikavanij ET Consultant Water Resources SASDI
Non Bank Staff
Name Title Office Phone City
Chris Davey Sr. Irrigation and Drainage
Engineer, Consultant
King’s Lynn, United
Kingdom
Douglas Vermillion Institutional and Water
Management Specialist, FAO
Consultant
Spokane, Washington,
USA
Ravichandran Kannan Agronomist and Climate-
Smart Agriculture Specialist,
FAO Consultant
Chennai, India
Altaf Iqbal Sr. Agricultural Economist,
FAO Consultant
Lahore, Pakistan
John Weatherhogg Sr. Agriculture Economist
Consultant
Rome, Italy
.
Locations
Country Province Location - District Planned Actual Comments
Vietnam 1- Thanh Hoa
2- Ha Tinh
3- Quang Tri
4- Quang Nam
5- Ha Giang
6- Phu Tho
v
7- Hoa Binh
Institutional Data
Sector Board
Agriculture and Rural Development
.
Sectors / Climate Change
Sector (Maximum 5 and total % must equal 100)
Major Sector Sector % Adaptation
Co-benefits %
Mitigation
Co-benefits %
Agriculture (20%); Climate
change (20%); Irrigation and
Drainage (60%).
96% 13%
Total
I certify that there is no Adaptation and Mitigation Climate Change Co-benefits information
applicable to this project.
Themes
Theme (Maximum 5 and total % must equal 100)
Major theme Theme %
Environment and natural resources
management
Water resource management 80
Rural development Rural services and infrastructure 20
Total 100
1
I. STRATEGIC CONTEXT
A. Country Context
1. Over recent decades Vietnam’s agriculture has made major gains, playing an
important role in the achievement of national objectives related to economic growth, food
security, poverty reduction, social stability, and trade. Despite broader structural and
demographic changes, the sector still accounts for 22% of Vietnam’s GDP, 30% of exports and
60% of total employment. Area expansion, productivity improvements, and diversification into
higher value crops and animal products have each contributed to Vietnam’s impressive
agricultural growth story. Thanks to this widely acknowledged success, the challenges for food
security in Vietnam are no longer about total production of rice, but about addressing nutrition,
affordability, and pockets of vulnerability.1
2. Irrigation and drainage investments have had a strong impact on agriculture
intensification, productivity and diversification. Some 9.6 million hectares or 29% of
Vietnam’s total land area is cultivated. Around 4.5 million ha or 46% are irrigated and about
2.5million ha or 26% have drainage. Long-term gains have been achieved in paddy productivity
and cropping intensity. In 2012 milled rice export exceeded 8 million tons, making Vietnam the
second largest rice exporter in the world. Irrigation has also contributed significantly to
expansion of coffee, horticulture and aquaculture production.
3. However, the sustainability of these gains is at risk. Over half of the irrigation and
drainage systems are deteriorating and/or operating below their potential capacity. Rates of water
productivity are well below international standards and this poses a threat given climate change
impacts and increased competition for water resources. The financial sustainability of many
irrigation systems is uncertain. Irrigation service providers need to improve their performance to
meet the increasingly complex demands of farmers.
4. The Central Coast Region, dominated by large schemes for rice cultivation, faces
increasing challenges for water management. Inadequate drainage and flood management
infrastructure often leads to damage to lower end distribution systems, especially earth-lined
channels. Water demand for hydropower, aquaculture, municipal and industrial needs is
increasing, but institutional arrangements for water sharing are lacking. As a result of increased
water storage, withdrawals and climate change, saline intrusion is increasing. Although rice
continues to dominate, diversification into crops such as high value horticulture and sugarcane
is growing as a result of local government initiatives and nascent market forces.
5. The Northern Mountain Region has an underdeveloped potential for agricultural
commercialization. Its farming population is generally very poor. In this region there are
some pockets of successful sugarcane, livestock, and horticultural crop production. Irrigation
schemes tend to be small and often include pump stations. As in the Central Coast Region,
schemes are prone to flooding and drainage problems. Water storage - for multiple purposes - is
especially important in the mountainous terrain where catchments are narrow and steep.
1 “From Rice Bowl to Rural Development: Challenges and Opportunities Facing Vietnam’s Mekong Delta Region”, Jaffee et al.
(2012).
2
B. Institutional Context
6. Investments in irrigation, flood control, and to a lesser extent drainage have
dominated public expenditures in agriculture. The Department of Water Resources (DWR) at
the Ministry of Agriculture and Rural Development (MARD) is responsible for development and
management of the irrigation sub-sector. The Provincial Departments of Agriculture and Rural
Development (DARDs) are responsible for planning, operation and maintenance (O&M),
monitoring and regulation of irrigation at the provincial level under the guidance of the
Provincial People’s Committee (PPCs). O&M is financed through state and provincial budgets
and carried out by Irrigation and Drainage Management Companies (IDMCs). Farmers are
responsible for tertiary and on-farm level O&M. An increasing share of the IDMCs’ budgets is
allocated to staff salaries, while less priority is given to maintenance.
7. While irrigated agriculture has been highly successful, modernization of the
irrigation and drainage sector is needed in response to various drivers of change which
include evolving markets, competition for resources (public finance, land and water), and climate
change. Increased rice production has been achieved but consumption trends are shifting rapidly,
requiring cropping changes and more flexible irrigation systems. Systematic changes are needed
beyond infrastructure, including institutional changes, and a more equitable, precise, and flexible
service delivery. Irrigation and drainage improvement also needs to be accompanied by strong
agricultural support services for farmers to maximize investment returns and promote
sustainability. At present the participation of women in irrigation management and water users’
association decision-making processes remains limited.
8. Agricultural sector restructuring, a new Water Law, and a forthcoming Law on
Hydraulic Works present opportunities for irrigation modernization. MARD’s plan for
restructuring the agricultural sector, approved by the Prime Minister in June 2013, calls for
performance monitoring of returns on resources invested, and the added value to the economy.
The new Law on Water Resources stipulates that water must be allocated in an economically
efficient manner in anticipation of growing pressures on water resources from increased
urbanization, industrialization and climate change. Both these reforms require a more strategic,
efficient, and market-oriented approach. The new Law on Hydraulic Works (expected in 2015)
will provide an opportunity to promote new concepts of modernization for the sector, especially
with respect to institutions.
C. Higher Level Objectives to which the Project Contributes
9. This project is consistent with the World Bank Vietnam Country Partnership
Strategy (CPS) for 2012 to 2016 with respect to: (i) strengthening competitiveness through
increased productivity and land-use efficiency; (ii) enhancing sustainability through improved
water productivity; and (iii) broadening access to social and economic opportunity through
improved access to water services. It also supports CPS themes by: (i) strengthening governance
through enhanced accountability of irrigation service providers; (ii) increasing resilience to
economic and climate-related shocks through promotion of climate-smart agriculture activities;
and (iii) priority to gender issues and active participation of men and women in the project.
3
10. The Government of Vietnam has requested World Bank support to the irrigation
and drainage sub-sector. In support of MARD’s initiative of agricultural restructuring, the
Government has requested the Bank to fund selected investments and institutional strengthening
measures associated with irrigated agriculture in selected provinces located in the Central
Coastal and the Northern Mountainous Regions.
11. This project is closely linked to the World Bank portfolio in Vietnam, including
investment projects and analytical work. The World Bank currently has several active
irrigation projects in Vietnam. Small-scale investments in irrigation are also included in the
Second Northern Mountains Poverty Reduction Project. The Bank also supports policy and
institutional development in the irrigation sector in the ongoing Climate Change Development
Policy Operation Series.
12. The long-term vision is to support the Government in developing programmatic, results-
based approaches. This is predicated on the continued progression of institutional reforms, such
as irrigation management transfer to water users associations, and improvement of the
performance of the IDMCs, as well as necessary improvements in the legal, financial and
monitoring/reporting systems. Once these improvements are in place, Vietnam, like many other
countries, would benefit from launching a large-scale irrigation and drainage modernization
programme in which public-private partnerships could also play a role.
II. PROJECT DEVELOPMENT OBJECTIVES
A. PDO
13. The Project Development Objective (PDO) is to improve the sustainability of irrigated
agricultural production systems in selected provinces in the Central Coastal and Northern Mountainous
Regions of Vietnam.
B. Beneficiaries
14. The key beneficiaries of this project include farmers and other rural households,
irrigation and drainage entities, and water users organizations/associations in the project areas.
Through direct irrigation and drainage service investments (covering an area of 83,400 ha) and
on-farm water management focused in these areas, it is estimated that 243,000 farm families will
benefit from the project.
C. PDO-Level Results Indicators
15. The key PDO-level results indicators are (see Annex 1 for more details):
i) Area provided with improved irrigation and drainage services.
ii) Female and male water users provided with improved irrigation and drainage
services.
iii) Number of farmers adopting improved agricultural practices.
4
iv) Operational WUAs created and/or strengthened.
III. PROJECT DESCRIPTION
A. Project Components
16. Geographic Focus: The proposed project will focus on two regions of Vietnam: the
Central Coast Region (Thanh Hoa, Ha Tinh, Quang Tri, and Quang Nam provinces) and the
Northern Mountainous Region (Ha Giang, Phu Tho, and Hoa Binh provinces). The provinces
and their irrigation and drainage systems are representative of their respective regions and
therefore lessons learned under this project can be used elsewhere in the regions.
17. Project Components: The project will have four components. (Detailed descriptions are
provided in Annex 2.)
18. Component 1: Improved Irrigation Water Management (US$10 million). This
component will improve institutional capacity for modern, efficient, and accountable irrigation
and drainage service delivery. The establishment of a financially self-reliant and transparent
water services sector will enable reduction in recurring government expenditure on O&M of
irrigation systems in all project provinces and at Ministry level. The component will include: i)
formation or strengthening of water user organizations and associations and the application of
the concept of Irrigation Management Transfer (IMT); ii) enhancing irrigation and drainage asset
management and investment planning at provincial and scheme levels; iii) updating and applying
efficiency and performance standards for water user organizations and associations as well as
irrigation and drainage management companies; and (v) application of remote sensing imagery
for monitoring of crop performance.
19. Component 2: Irrigation and Drainage Scheme Level Improvements
(US$170 million). The poor condition of irrigation and drainage infrastructure in the project area
is a major factor in poor water service delivery and low efficiency. This component represents
the bulk of infrastructure investments in the project areas (83,400 ha). It will improve bulk water
delivery to irrigation systems, service delivery, and management in the selected irrigation and
drainage schemes through: (i) physical improvement of selected existing large, medium and
small-scale irrigation and drainage infrastructure such as canals, pumps, weirs, pipes, and control
structures; (ii) improvement of protection works for existing dams; (iii) rehabilitation or
construction of small multi-purpose village ponds; and (iv) construction of measuring devices
and installation of control and data acquisition systems for improved water management, with
associated logistical support.
20. Component 3: Support Services for Climate-Smart Agricultural Practices
(US$23 million). This component will build on the improved irrigation infrastructure and water
delivery activities realized under Component 2 to improve the productivity and quality of
agriculture, increase farmers’ incomes, and reduce their vulnerability to adverse climatic events.
It will involve: i) enhancing on-farm systems for crop intensification and diversification; ii)
provision of laser land-leveling services; iii) advisory services to facilitate shifts towards feed
and horticultural crop production; iv) identification and implementation of measures to reduce
the water and environmental footprints of cropping systems; v) promoting community-led
5
initiatives to increase ownership and accountability at the local level; and vi) stimulating
modernization by promoting the use of sprinkler and drip irrigation systems. Through Farmer
Field Schools (FFS) and other methods information will be disseminated and field
demonstrations will be organized. Each province will undertake research projects on technical
and policy-related issues to resolve specific problems which occur with regard to water
management and agricultural production as a result of climate change. This research will be
carried out during the first two years so that results can be applied during the last four years of
project implementation.
21. Component 4: Project Management, Monitoring and Evaluation (US$7 million). This component supports the operating costs of the implementing agencies including MARD and
the selected provinces. It will finance: (a) incremental operating costs; (b) equipment and
vehicles purchase; (c) monitoring and evaluation, including third-party monitoring; (d) staff
training; (e) internal and external audits; and (f) various consultancies for the design,
construction supervision, quality control support, a gender action plan, and safeguards
compliance.
B. Project Financing
22. The lending instrument is Investment Project Financing (IPF). The total project cost over
a six-year implementation period is estimated at US$210 million, of which the World Bank will
provide US$180 million. The Government of Vietnam will provide the remaining US$30
million.
Table 1: Project Cost and Financing Plan
(US$ Million)
Project
Project Cost and Component Cost
US$ million
Component 1: Improved Irrigation Water Management 10
Component 2: Irrigation and Drainage Scheme Level Improvements 170
Component 3: Support Services for Climate Smart Agricultural Practices 23
Component 4: Project Management, Monitoring and Evaluation 7
Total project cost (including physical and price contingencies) 210
Government of Vietnam (14%) 30
World Bank (86%) 180
C. Lessons Learned and Reflected in the Project Design
23. The project builds on international irrigation, drainage and agricultural sector experience,
gained notably from the recently completed Vietnam Water Resources Assistance Project
(VWRAP), and from the findings of the recent technical assistance (TA) on the Irrigated
6
Agriculture and Irrigation Systems Management Reform. The project design also recognizes
Vietnam’s irrigated agriculture sector’s vulnerability to climate change.
24. Irrigation and drainage improvement also needs strong agricultural support
services to maximize investment returns and promote sustainability. To maintain
productivity in the face of climate change impacts, and to diversify production systems in line
with changing economic conditions and demands, farmers need to acquire and apply knowledge
about improved agronomic and risk management practices.
25. Irrigation management and infrastructure improvements must go hand in hand. Extensive international experience has demonstrated that irrigation modernization is not merely a
matter of adding measurement and control structures, but also requires a mindset change:
irrigation services for farmers, and existing institutional arrangements and policies must be
systematically analyzed and redefined. Therefore, project design is based on a combination of
infrastructure improvement and management solutions (e.g. improvements in monitoring,
planning, institution strengthening, and operation).
26. Transparency and accountability are core elements of performance management
and service delivery. There is a need to strengthen accountability and governance on the side
of the providers (IDMCs) as well as the recipients (farmers) of the service. To overcome
chronic problems of poor maintenance and inadequate service delivery in irrigation schemes,
the aforementioned TA emphasized the importance of having a clear agreement between
IDMCs, WUAs and farmers about respective roles and responsibilities, proper financing
arrangements2, and transparency and accountability in monitoring the agreement
3.
27. IDMC business plans can be an effective tool to improve water delivery. The IDMC
business plans can clarify performance indicators, and specify methods and targets for
improving service delivery, human resources, asset management, cooperation with WUAs, and
financial accountability.
28. The Government’s decentralization of project planning and supervising has
improved irrigation performance. The project will further strengthen this decentralized
approach both at scheme level and at field level by supporting the formation of WUAs.
29. Scaling up local knowledge and initiatives on sustainable farming practices is
essential. A close linkage between farmers and researchers has been fostered under many
previous initiatives and has led to an increased capacity, nationally and locally, to design and
guide the implementation of climate-smart agriculture. This project will engage with local
research institutes and universities to support the (continued) application by water users
associations/organizations of sustainable farming practices and techniques in project areas.
2 A Government Decree 115/2008/ND-CP in 2008 exempted most farmers from paying fees for services provided
by the IDMCs. 3 The deficiencies of the current irrigation monitoring system have been acknowledge in MARD’s strategy
Restructuring the Agriculture Sector towards Greater Added value and Sustainable Development (August 2012).
7
IV. IMPLEMENTATION
A. Institutional and Implementation Arrangements.
30. The Ministry of Agriculture and Rural Development (MARD) will be the executing
agency for the project. Through previous projects, MARD has built substantial capacity and
knowledge about Bank procedures at the sectoral and project levels. MARD will establish a
Project Implementation Steering Committee (PISC) to be led by the Vice-Minister for Irrigation,
with the support of the Vice-Minister for Agriculture.
31. At ministry level the Vice-Minister for Irrigation will oversee project implementation,
provide policy and strategy related guidance, and chair the PISC. Within MARD, the Vice-
Minister for Irrigation is supported by the Department of Construction Management and the
Directorate of Water Resources (DWR) which are mandated to provide policy, planning, and
management oversight of irrigation schemes. The Department of Crop Production and of Plant
Protection will be responsible for overseeing the implementation of Component 3. To ensure
smooth implementation a clear division of responsibilities amongst the various implementation
departments within MARD has been defined and is presented in the Project Operational Manual
(POM).
32. The project owner would be MARD’s Central Project Office (CPO) which manages all
ODA-financed water resources sector projects. CPO staff, which include managers, engineers,
safeguards specialists, procurement specialists, and financial management specialists, are
familiar with both Governmental and Bank requirements. A Central Project Management Unit
(CPMU) has been established within CPO to provide day-to-day project management and
coordination support between the implementation agencies, the Bank, provincial authorities and
other relevant departments of MARD. This arrangement is in line with Government Decree 38
on management and utilization of ODA projects/programs.
33. The key principles of project management are as follows:
Full decentralization and empowerment will be granted from MARD and the provincial
authorities to the appropriate project implementing agencies at both the project and sub-
project levels.
MARD and CPO will provide supervision, monitoring and technical assistance support to
the project at all levels involved. They will also participate in the Bank’s regular
implementation support missions throughout project implementation.
34. Implementation of the subprojects will take place at the provincial level though the
existing Provincial Project Management Units (PPMU). The PPMUs will be composed primarily
of staff from the provincial Departments of Agriculture and Rural Development (DARD) and the
Irrigation and Drainage Management Companies (IDMCs), under the authority of the Provincial
8
People’s Committees (PPCs)4. Operating under the overall MARD project management
framework, the PPMUs will be responsible for launching the calls for proposals, conducting
proposal screening and short-listing, managing procurement for the subproject, supervising
construction activities, and making payments to contractors. MARD’s CPMU will oversee
management of the project designated account, the procurement of ICB and QCBS contracts, and
will ensure safeguards compliance. The CPMU will report to IDA and MARD as appropriate.
B. Results Monitoring and Evaluation (M&E)
35. The project’s M&E system will focus on tracking and assessing project implementation
progress, outputs, outcomes and impacts across the four components.
36. The CPMU will be responsible for monitoring implementation progress (see Annex 1
project results and monitoring framework). During implementation, the CPMU will recruit
dedicated staff to monitor project progress and update the monitoring indicators. Reports on
progress, financial and procurement information, as well as updated indicators will be provided
to the Bank on a semi-annual basis.
37. An external third-party agency, such as a university or research institute, will be
responsible for evaluating the project’s impact on beneficiaries. For this purpose, funding is
included to undertake baseline and final year surveys, including a provision for any thematic
studies that the Government and the Bank jointly regard as relevant, justified and supportive of
Components 1, 2 and 3. As an important part of M&E the project will utilize remote sensing
studies on an experimental basis to assess irrigated areas, water volume consumed by crops
(actual evapotranspiration) and agricultural production (yields).
38. Prior to the mid-term review, the CPMU will provide the Bank with a summary project
progress report, updated results indicators (as in Annex 1), updated project cost estimates, and
plans for completion. The CPMU will also prepare environmental and social safeguards
implementation reports,
C. Sustainability
39. Sustainability is a core project principle and has been factored into the project design
through the following features:
40. Commitment to institutional reform (related to Component 1): Long-term
sustainability of the project’s benefits depends primarily on the introduction of institutional
reforms supported by the provincial authorities under MARD oversight. The Government and
MARD recognize the need to develop appropriate legal codes and guides to improve public and
private sector governance, management and financing of irrigation and drainage systems.
Specifically, following the enactment of the Water Resources Law in January 2013, MARD is
drafting the Law on Hydraulic Works. The provisions of the current draft include the collection
of baseline surveys, planning, financing, management and institutional reform. The
4 Except for Ha Tinh province where implementation responsibility rests with the South-Ha Tinh Irrigation and
Drainage Management Company acting through its PPMU
9
Government’s commitment to institutional reform is evident through the project’s PIM programs
which will be established in each of the project provinces to help provide a forum for increased
farmer interaction with the IDMCs.
41. Irrigated agriculture investments (related to Component 2 and 3): Close engagement of
WUOs, WUAs and farmers as well as the Government is necessary to ensure adequate human
and financial resources for operation and maintenance of the investments, which is vital for
future sustainability. All activities, including the major infrastructure works and agriculture
packages are designed to involve stakeholder participation. For instance, the designs for the
rehabilitation of the infrastructure works will involve extensive community consultations,
involving both the Women’s Union and Farmer’s Union. This approach is considered critical to
ensuring that the investment impacts are long-lasting.
42. Service-delivery and physical asset sustainability. The project creates incentives and
provides support for good asset maintenance and management, including assets procured through
the project. With regard to institutional capacity, the PDO reflects the overall project focus of
building viable irrigation and drainage schemes and improved capacity for service delivery.
43. Borrower’s commitment and ownership: The Government’s commitment to the project
is evident through the resources it has allocated to the project such as: i) sufficient budget and
staff have been provided to various divisions under MARD to undertake preparatory work and to
ensure a smooth transition into project implementation; and ii) the GOV’s agreement to finance
14% of the total project cost.
V. KEY RISKS AND MITIGATION MEASURES
A. Risk Ratings Summary Table
Stakeholder Risk M
Implementing Agency Risk
- Capacity M
- Governance S
Project Risk
- Design M
- Social and Environmental M
- Program and Donor NA
- Delivery Monitoring and Sustainability M
Overall Implementation Risk M
B. Overall Risk Rating Explanation
44. The overall risk rating for this project is moderate given the high level of ownership
displayed at the Government, WUOs, and farmer’s level, as well as the experience of the
10
Government in implementing Bank-funded projects. Various consultations with a number of
Governmental departments and stakeholders have been conducted since the concept stage to
build ownership of the project at all levels. These consultations will continue during
implementation. MARD will continue to oversee and guide the implementation and monitoring
of all project activities in order to ensure synergy and coordination amongst activities and
relevant agencies. The risks identified and mitigation measures proposed are detailed in Annex 4,
the Operational Risk Assessment Framework (ORAF).
VI. APPRAISAL SUMMARY
A. Economic and Financial Analyses
45. Project Benefits: The project will improve the water services in each sub-project
command area, resulting in a more reliable, flexible, equitable, and responsive water delivery to
users, including farmers. The irrigation modernization component is expected to increase the
land area under full gravity-serviced irrigation, while reducing the non-irrigated and/or
unreliably irrigated land area. Improved water supply and irrigation will also provide farmers
with the opportunity to intensify and/or diversify their present cropping patterns. For example, an
increased diversification into higher-value crops such as peanuts and soy beans is expected to not
only provide farm families with increased income but also improve soil fertility, and reduce pest
and disease incidence by breaking the cycle of grain cropping.
46. The main benefits will be to agricultural production in the command area, and most of the
benefits will accrue as increases in crop production arising from the conversion from rain-fed to
irrigated agriculture, or from improvements in output of existing irrigated areas resulting from
more reliable and timely available water supply.
47. Economic Rate of Return: The analysis indicates that irrigation rehabilitation is
economically viable in all the regions, with internal rates of returns (ERRs) ranging from 14 to
24% as detailed in Annex 6. The overall ERR is calculated at 18% with a net present value at a
10% discount rate of US$66.0 million (VDN 1,386 billion). These results are robust across a
range of sensitivity tests relating to changes in project cost and benefit assumptions.
48. Financial Analysis. The farm-level analysis indicates that annual net margins for a
typical 0.34 ha full gravity-irrigated farm increases by around VND 1.84 million or US$88
annually at full project development. For the partially irrigated and pumped 0.34 ha farm the
increase is VND 2.2 million or US$ 107 annually. Overall, about 243,000 families will benefit
directly from improved irrigation and drainage. The irrigation improvement works would give
the greatest benefit to farms at the lower end of canal systems which presently suffer from
inadequate irrigation or flooding, and to farms currently only rain-fed. These areas are home to
the poorest families in the schemes and the project is therefore inherently poverty-targeted.
49. Fiscal Impact. The project is expected to have a positive impact in reducing the
Government’s O&M costs in several ways, including: (i) conversion of schemes from
(expensive) pumped to (cheaper) gravity irrigation; (ii) support to formation and strengthening of
WUOs and WUAs to enable them to take over an increased share of the O&M burden currently
resting on the IDMCs; (iii) reduction in O&M costs as a result of canal lining and other
11
improvements as well as expansion of the scheme command areas; and (iv) improvement in
overall management efficiency of MARD and the IDMCs. In addition to these cost reduction
benefits there would be an increase in tax revenue as a result of the increased agricultural
production.
50. The project will reduce the pump- irrigated area from 17,524 ha to only 2,159 ha in the
project areas. Associated pumping costs currently being paid by the farmers would be reduced by
88%. In monetary terms, this is equivalent to a reduction from VND 7.010 billion (US$ 0.334
million) to VND 0.864 billion (US$ 0.041 million) per annum. Savings in the pumping costs
would reduce the burden on the Government of subsidies being offered to the farmers.
51. The above cost savings and increased tax revenue from most schemes would likely be
sufficient to cover debt servicing at the provincial level, assuming continued government
subsidies to the IDMCs. Therefore, the overall fiscal impact of the project is expected to be
generally neutral.
B. Technical
52. The project will introduce innovations in the selected project provinces. These will
include (i) using the global best practice of climate-smart agriculture to ensure that agricultural
and water productivity are maximized; (ii) (continued) support to the state and provincial
agricultural and water agencies to enhance agricultural modernization plans; (iii) using the
project framework to help facilitate coordination across various programs and departments; and
(iv) introducing better water governance through improving information, water user
participation, and accountability for the irrigation and drainage service delivery.
53. Improvement of irrigation and drainage schemes will focus on structural and non-
structural measures. There is a need to improve both the physical systems, as well as institutional
arrangements for system operation. The physical works will be implemented by reputable
contractors under adequate day-to-day supervision by consultants appointed by DARD. Similar
irrigation projects have been carried out successfully, which gives support to the expectation that
the project works can be implemented without major difficulties.
54. The project will develop climate-smart agriculture which implies an effective and
efficient use of the irrigation and drainage systems. The effective adoption of climate-smart
practices will require intensive awareness building and training through farmer-field schools, and
learning-by-doing approaches.
55. The project proposes improvements in modern agricultural practices for improving both
technical and service delivery. It includes supporting farmers in adopting systems of rice
intensification (SRI) and crop diversification, introducing and promoting drip and sprinkler
irrigation systems, integrated pest management, improved fertilizer use based on soil tests and
the utilization of crop residues to reduce emission.
56. The project includes the conversion of irrigated areas from pumped irrigation to gravity.
One of the large-scale irrigation and drainage schemes will be converted to gravity by the supply
12
of water from a recently completed reservoir. Appropriate modern technologies (such as turbine
pumps and low-cost drip irrigation) will be introduced in some areas within the schemes.
C. Financial Management
57. The CPMU will be responsible for financial management (FM) at a central level. Key
financial management personnel will have experience in managing Bank projects. The financial
management function in the provinces will be performed by existing provincial PPMUs except in
the two new provinces Ha Giang and Hoa Binh where new PPMUs will be established. These
arrangements meet the Bank’s minimum financial management requirements at both central and
provincial level.
58. Fund flow will be channeled through the Designated Account and provincial project
accounts opened at commercial banks. There will be one segregated Designated Account (DA)
denominated in US$ dollars maintained by CPMU for the whole project. Each of the provinces
will maintain a provincial project account in VND at a commercial bank in the province to
receive funds from the Designated Account for the activities to be implemented by the provinces.
59. There will be a single auditor, hired by CPMU. CPMU will consolidate all provincial
financial statements to provide one overall project financial statement, to be audited and
submitted to the Bank annually within 6 months after the year-end. Interim Financial Reporting
(IFR) will be done on a semester basis to be submitted to the Bank within 45 days after the end
of each semester.
D. Procurement
60. The CPMU will lead and coordinate the procurement activities for the whole project,
provide guidance to the PPMUs on all procurement-related aspects, and monitor the procurement
activities to be carried out by the PPMUs, while PPMUs will be responsible for procurement
within their respective provinces. The capacity assessment of the CPMU and PPMUs has been
conducted by reviewing the project organization structure and functions, past experience of
implementing agencies, staff skills, quality and adequacy of supporting and control systems, and
the legal and regulatory aspects. The CPMU and several PPMUs are familiar with the Bank’s
procurement procedures. However, there is a risk that procurement delays occur at all stages of
the procurement cycle including planning, preparation of procurement documents, bid
evaluation, approval of bid evaluation report and award recommendation and contract
management.
61. Procurement plan and readiness for implementation. The procurement plan for
activities to be taken up during the first 18 months of project implementation has been agreed
and is available in the project files. The procurement of major civil works, goods and
consultancies has been identified. Detailed engineering designs and bidding documents for over
35,000 ha, or more than 42% of the project area have been completed. More details on the
procurement arrangements are provided in Annex 3.
13
E. Social (including Safeguards)
62. The project promotes transparency and informed participation of the target beneficiaries,
encouraging farmer participation and supporting the realization of the project’s expected broad
range of positive social impacts including reduced time and efforts needed to irrigate fields and
to maintain irrigation canals; reduced conflicts as a result of better on-farm water management
practices and more reliable irrigation services; improved access to water at tail-ends of the
canals; increased participation of women in water users organizations and associations and on-
farm irrigation, resulting from less physically-demanding operations at the farm outlet.
Agricultural productivity and resilience to climate variability and extreme weather events are
expected to increase with the improvement of irrigation and drainage infrastructure, the
promotion of enhanced climate-smart practices, and the building of stakeholders’ capacity.
63. A Social Assessment (SA) was carried out during project preparation to: (a) explore
potential positive and negative impacts of the project to inform the project design and impact
mitigation measures; and (b) to consult with ethnic minority peoples present in the project area in
accordance with OP 4.10. The SA confirmed that the overall social impact of the project is
positive, given its aim to strengthen national, provincial, and local capacities for better irrigation
management. However, some negative impacts, primarily related to acquisition of land to allow
for rehabilitation of existing infrastructure, is unavoidable. In some sub-project areas, land
acquisition is expected to affect ethnic minority households. The results of the SA are set out in
Annex 7 and summarized as follows:
64. Loss of land would affect some 4,500 households, but 95% of these would lose only
a small strip beside the canal. Affected households number 220, of which 13 may require
relocation. Some 97 ha would need to be permanently acquired and 105 ha temporarily
during construction. 65. Adverse impact on ethnic minority peoples is primarily due to land acquisition to
allow rehabilitation of the existing infrastructure. However, for them, too, the project will
lead to improved water availability. The project design has furthermore kept the number of
affected households to a minimum, project preparation included full consultation and the
ethnic minority peoples have indicated community support for the project and will be fully
involved in Participatory Irrigation Management (PIM).
66. Involuntary Resettlement (OP 4.12) was triggered due to the need for land acquisition
and a Resettlement Policy Framework (RPF) was prepared to guide Resettlement Action Plans
(RAP).
67. Indigenous Peoples (OP 4.10) was triggered and an Ethnic Minority Policy Framework
(EMPF) prepared. As detailed in Annex 7, the EMPF was developed to ensure ethnic minorities
have an opportunity to receive socioeconomic benefits from the project in a way that is culturally
appropriate to them, and to provide guidance on preparation of Ethnic Minority Development
Plans (EMDP) for sub-projects to be identified during project implementation.
14
68. Social safeguards implementation: The implementation of the RAPs and EMDPs will
be the responsibility of the respective PPMUs. Land acquisition will be financed by the
Government whereas the budget for EMDP will be funded by the Bank.
69. Gender mainstreaming: Females in the project area are generally at a disadvantage.
Although equality laws have been passed, men still dominate most aspects affecting agricultural
development, including implementing processes for improving productivity. Men dominate at
meetings where landowners meet, including extension training. Men also dominate in water
management since they are considered more able to resolve disputes and technical problems. In
community organizations about 30% of the members are women, but they mostly hold the lower
clerical-type positions. The GAP has been developed during project preparation, and it has
included consultation with relevant governmental mass organizations at the central level (Central
Women’s Unions and Farmers’ Associations). The GAP aims to change the ideas, attitudes and
behaviors of the community with regard to full participation of women in project activities,
which will benefit the position and power of women in the project areas. The GAP will be
implemented and monitored as part of Component 4.
70. Public Consultations and Information Disclosure: A series of public consultations
have been conducted in accordance with Bank policy requirements and national laws. Before
conducting public consultations, the relevant project documents have been disseminated to
project-affected groups and local NGOs. The Vietnamese and English versions of these
documents were disclosed at the Bank’s InfoShop and in Vietnam during the period from June
19 to July 16, 2013.
F. Environment (including Safeguards)
71. The overall environmental impacts of the project are expected to be positive. The
improvement and upgrading of irrigation and drainage infrastructure and on-farm irrigation and
drainage will lead to more efficient and productive use of irrigation water and increased crop
yields. The dissemination of irrigation technology and the strengthening of water users
associations and local farmer organizations will further improve overall water and land
management at the local level. For purposes of O.P. 4.01 on Environmental Assessment, the
project has been classified as Category B, given that no significant, irreversible or long-term
adverse environmental impacts are anticipated and that any identified adverse impacts can be
effectively addressed through appropriate preventative or mitigating measures. The project could
result in intensifying crop production in terms of vertical expansion, which could increase the
residual pesticide/ fertilizer load per hectare in some project areas. These and other
environmental issues were examined closely during the Environmental Impact Assessment (EIA)
and are addressed in the Environmental Management Plan (EMP). The CPMU will be
responsible for implementation of the EMP, whereas the day-to-day management of the
prevention/ mitigation activities will be undertaken by PPMUs. The EMP addresses the
environmental impacts identified by the EIA through a combination of preventative actions and
mitigation measures, including environmental monitoring/benchmarking and institutional
capacity building.
72. Further details are provided in Annex 7. The project triggers five environmental safeguard
policies, namely:
15
OP/BP 4.01(Environmental Assessment): The project has civil works for irrigation and
drainage schemes. An Environmental and Social Management Framework (ESMF) has been
prepared for the project and Environmental Management Plans (EMP) and Environmental
Codes of Practices (ECoP) have also been prepared for sub-projects in accordance with Bank
safeguards policies.
OP/BP 4.11 (Physical Cultural Resources): Relocation of 12 graves in Thanh Hoa sub-
project triggered OP/BP 4.11. Mitigation measures have been included in the EMP for this
sub-project. Also, a “chance find procedures” will be included in EMP and ECOP in case any
unexpected cultural resources are found during construction.
OP/BP 4.09 (Pest Management): The project will not finance the purchase of pesticides but
with the increase in irrigated land area to 83,400 ha the amount of agricultural chemicals
including fertilizers and pesticides will increase. An Integrated Pest Management Plan
(IPMP) has been prepared by MARD as part of the ESMF.
OP/BP 4.37(Safety of Dams): A Dam Safety Framework has been prepared to comply with
the requirements on dam safety.
OP/BP 7.50 (International Waterways): The sub-project to improve the South Ma scheme
will draw water from the Cua Dat Reservoir, located on the trans-boundary Chu River. This
project falls within the exception provided for in paragraph 7(a) of OP 7.50.
16
Annex 1: Results Framework and Monitoring
Irrigated Agriculture Improvement Project
.
Project Development Objectives
The Project Development Objective is to improve the sustainability of irrigated agricultural production systems in selected provinces in the Central Coastal
and Northern Mountainous Regions of Vietnam.
.
Project Development Objective Indicators
Cumulative Target Values
Frequency Data Source/
Methodology
Responsibility
for Data
Collection Description
(Indicator
Definition)
Indicator Name Core Unit of
Measure Baseline
Y
R1 YR2 YR3
YR4
YR5 YR6
Direct project
beneficiaries HHs 0 0 0 100,200 165,300 210,800 243,000 Yearly
Project
reporting PMU
Area provided
with irrigation
and drainage
services -
Improved
Hectare
0 0 5,450 31,760 57,520 75,370 83,400 Yearly
IDMC records,
Third party
supervision
consultancy
records
Not including
area for
aquaculture
Water users
provided with
improved
irrigation and
drainage
services
Number 0 0 0 252,900 450,800 633,900 674,800 Yearly
Water users
provided with
improved
irrigation and
Number
(Female) 0 0 0 125,900 224,600 316,000 336,700 Yearly
17
drainage
services
Water users
provided with
improved
irrigation and
drainage
services
Number
(Male)
0 0 0 127,000 226,200 317,900 338,100 Yearly
Farmers in
scheme area
adopting
improved
production
techniques
HHs Number 0 0 1,000 3,950 7,650 11,950 15,700 Seasonal Project report PPMU
Techniques
promoted for
adoption in each
location need to
fir the local
conditions.
Operational
water users
association
created and/or
strengthened
Number 0
0
2
5
10
20
20
Baseline,
mid-term,
yearly, and
final
WUA records,
IDMC
records, WUA
support
consultancy
records, impact
evaluation
surveys
Intermediate Results Indicators
Indicator Name Core Unit of
Measure Baseline
Cumulative Target Values
Data Source/
Methodology
Responsibility
for
Data
Collection
Description
(indicator
definition) YR1 YR2 YR3 YR4 YR5 YR6 Frequency
Component 1: Improved irrigation water management
Each province
develops and
implements a
five year and
Provincial
plans
Existing
plans not
comprehen
sive,
3 3 7 7 7 7
18
annual
modernized
irrigated
agriculture plans
partially
implement
ed
Improved
performance of
IDMC Score cards
To be
determined Yearly
IDMC annual
reports
DARD or
Consultant
The score card
will be based on
few easily
measured
indicators,
weighted to
provide an
overall score
WUAs -PIM
agreements
established and
implemented
Number of
service
contracts
0
0
2
5
10
20
20 Yearly
IDMC annual
reports
DARD or
Consultant
Percentage
increase in
WUAs
assessing
service delivery
by IDMC as
satisfactory
% of WUAs 0 0 0 30 40 50 90 Seasonal
Seasonal
interviews
with WUO
officer
DARD or
Consultant
Component 2: Irrigation and drainage scheme level improvement
Area provided
with irrigation
and drainage
services -
Improved
Hectare 0 0 5,451 31,763 57,515 75,368 83,425
Increase in crop
yields in project
areas
- Paddy
(winter-
spring)
0
- - 0.19 0.34 0.47 0.54
Remote
sensing data,
ground truth
data
Paddy 0 - - 0.18 0.35 0.49 0.57
19
(summer-
autumn)
collection,
impact
evaluation
surveys Maize 0 - - 0.11 0.19 0.26 0.29
Increase in
irrigation
intensity % 0 100 107 136 151 175 205
Component 3: Support services for climate smart agriculture practices
Seasonal
Farmers Field
School
establishes
Number 0 35 105 245 385 525 670 Seasonal Project report PPMU
Area under ICM
cultivation5 Hectare 0 0 800 1,500 5,000 12,000 20,000 Seasonal Project report PPMU ICM
6
Area under drip
irrigation Hectare 0 0 50 110 260 500 698 Seasonal Project report PPMU
New cropping
system with
technologies Number 0 0 28 28 28 28 28 Yearly Project report PPMU
Systems will
have better
profits and
reduced negative
impacts on the
environment due
to adoptions of
ICM.
5 Area under ICM cultivation in scheme commands including: appropriate varieties; good quality seed/seedlings; appropriate plant density; proper management of plants
(fertilization, irrigation, weeding); integrated pest management (IPM); appropriate harvest and post-harvest technique; and proper management of waste. 6 ICM is the complete technique package covering all the production steps from preparation to harvest and post-harvest. Depending on the local conditions, ICM can be
adopted completely or only partly. However, in any case IPM and appropriate balanced fertilizer regimes will need to be followed.
20
Annex 2: Detailed Project Description
VIETNAM: Irrigated Agriculture Improvement Project
Project Components
1. The project will have four components with a total investment of US$210 million.
Project
Project Cost and Component Cost
US$ million
Component 1: Improved Irrigation Water Management 10
1.1. Operationalizing the government regulations and guides
1.2. Strengthening irrigation and drainage management companies
1.3. Strengthening the knowledge base for service contracts, performance assessment
and introduction of innovative technology and management tools
1.4. Strengthening Water Users Organizations and Associations
Component 2: Irrigation and Drainage Scheme Level Improvements 170
1. Thanh Hoa province: South Ma irrigation and drainage scheme
2. Ha Tinh province: Ke Go and Rac river irrigation and drainage schemes
3. Quang Nam province: Phu Ninh and Khe Tan irrigation and drainage schemes
4. Hoa Binh province: Medium and Small scale irrigation and drainage schemes
5. Phu Tho province: Tam Nong and Thanh Thuy irrigation and drainage schemes
6. Quang Tri province: Medium scale irrigation and drainage schemes
7. Ha Giang province: Small scale irrigation and village ponds Component 3: Support Services for Climate-Smart Agricultural Practices 23
Component 4: Project Management, Monitoring and Evaluation 7
Total project cost (including physical and price contingencies) 210
Government of Vietnam (14%) 30
World Bank (84%) 180
Component 1: Improved Irrigation Water Management (Estimated Cost: US$10 million,
including contingencies).
2. The main objectives of the VIAIP are to improve the performance of irrigation
management services in terms of productivity, equity and sustainability. The project aims to
improve agricultural productivity, adapt agriculture to climate change, protect the environment
and enhance people’s standards of living. Component 1 focuses on a number of the immediate
interventions designed to promote institutional strengthening and develop good governance,
management and financing of irrigation and drainage systems. Strengthened capacity of
governmental institutions will allow for the development of effective irrigation and water
services policies, thus contributing to the project’s long-term objectives.
21
3. Government Regulations and Guides. A number of draft regulations (circulars or
decisions) and guides will be supported. This will include assessments, M&E, studies,
stakeholder consultations, and workshops for the preparation and finalization of these regulations
and guides.
4. Irrigation and Drainage Management Companies (IDMCs) and Public-Private
Partnerships (PPPs). This activity focuses on strengthening IDMCs’ capacity to improve
irrigation and drainage services; to manage demand; to develop business plans aimed to
strengthen professionalism and autonomy; to conduct research on the application of PPPs in the
irrigation sector; and to prepare the annual, mid-term and final reports for the sub-component.
5. Technical and Economic Norms, Service Contracts, Performance Assessment and
Introduction of Innovative Technology and Management Tools. This activity will support:
the review and update the technical and economic performance standards of the IDMCs and
WUOs for irrigation O&M and management at the provincial level; the development of criteria
to systematically assess the efficiency and operational performance of service contracts; prepare
a guide for adoption of technical and economic norms for I&D systems; implement I&D service
contracts between the IDMCs and WUAs; develop and implement Geographic Information
System (GIS) database with information on irrigation and drainage structures to aid the
development and implementation of service contracts; provide support for the installation of
SCADA systems at key regulating sites on some schemes, including transmitters and data control
centres; provide regulators and gauging structures at the interface between WUAs and IDMC
zones; develop irrigation scheme maps that include performance data used to support
decentralization of management; develop and implement databases for asset management and
service contract performance; and prepare the annual, mid-term and final reports on the
activities.
6. Development of WUAs and Irrigation Management Transfer (IMT). This activity
aims to support the establishment of new WUAs. The focus will be on selecting WUOs that can
be federated to form WUAs at secondary canal levels. The activities have been designed to link
with sub-components 1, 2 and 3 through reconfiguration of the institutional arrangements in
large and medium size schemes. The activities will include: (i) collect an inventory of the
existing types of WUOs in the project provinces and identify the locations where new WUAs can
be formed; (ii) identify locations where technical/managerial improvements are needed; (iii)
explore incentives and systems to increase the rate of water user payments of the Irrigation
Service Fee (ISF); (iv) prepare action plans for WUOs federation to form WUAs and IMT for the
selected WUAs; (v) introduce performance-based monitoring by the WUAs; and (vi) preparation
of annual, mid-term and final reports on this sub-component.
Since the Irrigation and Drainage Management Companies (IDMCs) have the responsibility
for operation and maintenance of the headworks and main canals and are responsible for the
supply of water to the WUAs, irrigation service agreements will be prepared, implemented
and monitored during implementation. In provinces where an IDMC is not appointed, the
irrigation service agreement will be between the Provincial Peoples Committee (PPC) and
the WUA.
22
More than 20 Water User Associations will be established or strengthened during project
implementation.
7. Funds are provided for training proposed for the WUAs on all aspects including
technical, management and operation processes, all aimed to improve the capacity of the WUAs
in overall efficiency of the management of the available water resources.
Component 2: Irrigation and Drainage Scheme Level Improvements (Estimated Cost:
US$170 million, including contingencies).
8. This component will support infrastructure improvement investments for a total
command area of 83,400 ha, including the upgrading and modernization of selected existing
irrigation and drainage projects in the project area as well as making provision for some small
multi-purpose village ponds (to serve livestock, irrigation and drinking water supply) in one of
the seven provinces. Increasing the numbers of water control structures will improve the capacity
for effective and efficient management of the water resources. On all schemes the existing
infrastructure including canals, pumps, weirs, and surface drains will be upgraded and/ or
modernized. Indicators showing the present situation on some of the projects are shown in the
following table.
Indicators Phu Ninh South Ma Ke Go Rac River Khe Tan
Designed Command Area, ha 19,427 11,525 21,538 8,532 3,500
Actual Area Irrigated (5 years average), ha 11,287 6,586 14,735 4,182 2,105
% of design area irrigated 0.6 0.6 0.7 0.5 0.6
Annual irrigation water supply (m3/ha)
26,113 18,106 22,116 35,530 21,344
Actual Water Delivery Service by the
Main Canals to the Second-level Canals Average Average Average Average Average
Actual Water Delivery Service to farms Poor Poor Poor Poor Poor
% of I&D Infrastructure in good
conditions 50% 60%
50% 50% 50%
% of command area with functioning
drainage 35% 40% 35% 35% 35%
9. Works include: remodelling canal systems to be hydraulically more efficient, replacing
primary, secondary or tertiary sluice gates with more effective and efficient options; constructing
small bridges; strengthening canal banks; upgrading and modernizing energy-efficient turbine-
pumps and associated weirs with appurtenant water delivery pipelines; refurbishing existing
infrastructure; and modernizing and increasing the efficiency of major drainage pumping plants.
10. With all the project schemes reliant on dams, improving dam safety and ensuring
appropriate monitoring systems are in place is an essential activity. Funds will be allocated for
each province to adequately upgrade existing dams and appurtenant works to the standards now
23
established by the Dam Safety Unit, including appointment of a POE to review all requirements
specified in the Dam Safety Framework completed for the project.
11. If a mid-term review concludes that works are significantly lagging and/or institutional
reforms such as irrigation management transfer are not progressing at an adequate pace, funds
could be reallocated to a better-performing province.
12. Detailed descriptions of the schemes are summarized below:
13. Phu Ninh Irrigation and Drainage scheme: The area under irrigation on this large scheme
will be increased from the present 11,287 ha to its original designed area of 19,427 ha by
upgrading the main and other canals and related works, ensuring water supplies to the tail end of
the system. The extension of one secondary canal across the Ba Ren River will increase the
command area by about 1,800 ha, providing gravity water supplies for that area, and allowing the
decommissioning of eight pump stations. This area had declining productivity due to intrusion of
saline water, in the river water as a result of climate change.
14. Southern Ma River scheme: This entire scheme will be converted by the project from a
pumped scheme, drawing water from the Ma River to a fully gravity fed irrigation scheme,
making it particularly energy efficient. This scheme will use water from the recently completed
Cha Dat Reservoir. About 80 pump stations will be decommissioned, including the Southern Ma
Pumping Station, and the conversion will save more than 6 million kWh per year.
15. Improvement of small irrigation and drainage schemes in Hoa Binh: The project will
improve small irrigation and drainage schemes covering about 4,270 ha scattered in the province.
Some schemes include upgrading the pump-turbines that raise water from rivers level to the
project areas. On other schemes project works will resolve problems such as inadequate spillway
capacity, poor construction quality control and inappropriate structural design, so as to ensure
stability and longevity of the structure.
16. Ke Go Irrigation and Drainage scheme in Ha Tinh Province: This scheme will be
improved by further upgrading of the canal system, including selective canal lining, introduction
of additional canal measurement structures, and SCADA system. All these actions will provide
the WUAs with tools to improve overall water management on the scheme and ensure that the
irrigated area increases from 11,900 ha to the original designed area of 21,563ha.
17. Rac River Irrigation and Drainage Scheme in Ha Tinh Province: The project will upgrade
the capacity of the canal system and the regulating structures for the full original design area of
8,523 ha, an increase of more than 3,600ha, including canal lining, and the introduction of flow
measurement structures. Installation of a SCADA system will assist the WUA in improving
management of the system.
18. Khe Tan Irrigation and Drainage scheme in Quang Nam Province: Only about 2,000 ha
of the original design area of 3,500 ha functions at present. The project will upgrade the main
and secondary canals, providing canal lining, regulators and other protection works to bring the
original full command area under gravity irrigation.
24
19. Truc Kinh Irrigation and Drainage schemes in Quang Tri Province: A major part of the
works on this scheme concerns essential works to ensure the safety of the dam. The project will
upgrade the main dam section and strengthen the spillways to pass the maximum design flood. In
addition, the intake electrical valve operators would be replaced, and the overall power system
for gate and headworks operation would be repaired. In addition the canal network which covers
an area of 2,350 ha would be upgraded, including selective canal lining works, rehabilitation of
surface drainage, upgrading regulators and off-takes and providing additional gauging structures,
and SCADA system.
20. La Nga Irrigation and Drainage scheme in Quang Tri Province: The project will upgrade
the main dam section and strengthen the spillways to pass the maximum design flood. In addition
monitoring equipment for seepage and subsidence will be installed. The electrical system
including intake electrical valve operators and the overall power system for gate and headworks
operation would be upgraded. The scheme covers an area of 2,000 ha. The improvement works
will include selective canal lining, and provision of regulators and measuring weirs control
structures and a SCADA system to allow efficient and effective management of available water
resources. Existing main drains will be reinstated, including upgrading gates and salinity
prevention sluices.
21. Ha Thuong Irrigation and Drainage scheme in Quang Tri Province: The upgrading of this
1.050 ha scheme includes stabilizing canal banks by selective lining, and provision of
measuring weirs, control structures and rehabilitation of surface drainage to allow efficient and
effective management of available water resources.
22. Tam Nong irrigation and drainage scheme in Phu Tho Province: Drainage infrastructure
will be provided under this scheme to benefit an area of 3,840 ha, including both agricultural
(partly irrigated) and urban areas. The drainage pumps will remove the excess rainwaters and
flood flows, and improving the irrigation and drainage canals and water control structures
serving the irrigated area.
23. Than Thuy irrigation and drainage scheme in Phu Tho Province: Drainage infrastructure
will be provided to service an area of 2,122 ha. The drainage pumps will remove the excess
rainwaters and flood flows. The pumping stations will remove up to 20m3/sec with a maximum
head of 7.2 m.
24. Small-Scale Irrigation in Ha Giang Province including village ponds: Multi-purpose
village ponds will be constructed. These rectangular tanks have a capacity generally between
3,000 to 5,000 m3
with a maximum depth of 3m. Village ponds are constructed for the following
purposes: (i) to provide safe drinking water for rural communities in areas which have droughts
and hence face substantial difficulties in getting daily water requirements; (ii) to provide water
for livestock and poultry which provide these rural communities with a major part of their
incomes; and (iii) to provide water for irrigation between 3 – 14 ha, these cultivated areas would
provide a major post in reducing poverty. A total of about 80 ha irrigated area would be
developed. To purify the drinking water the water is passed through a standard simple sand filter,
and then delivered by pipe to the closest downstream village. The water for livestock is released
25
untreated and is similarly delivered to the downstream village. The irrigated areas would be
partly provided with family drip irrigation systems (component 3), using the water under
pressure from the pond to cultivate vegetables and fruit trees (oranges).
Component 3: Support Services for Climate-Smart Agricultural Practices (Estimated Cost:
US$25 million, including contingencies)
25. This component will build on the improved irrigation and drainage infrastructure and
water delivery activities in Component 2 to improve the productivity of agriculture, increase
farmers’ incomes, and reduce their vulnerability to adverse climatic events.
26. The Farmer-Field-School (FFS) approach is proven to be an effective mechanism to
improve agronomic and water management practices, and also to augment institutional capacity
of WUAs for water management, operation and maintenance. The FFS will consist of 20-30
farmers serving about 15-20 ha. Some of the types of activities may include: i) season-long
farmer field studies on a range of agronomic approaches e.g. ridge and furrow irrigation, border
irrigation, raised and sunken bed; ii) crop-water budgeting sessions; iii) community interactions
and consultations; iv) sustainable intensification of crop production (e.g. soil testing for
integrated plant nutrient management) and ecosystem-based and ecologically-sound crop
protection practices (e.g. IPM); and v) FFS Field Days for sharing results with other WUOs and
WUAs farmers. With all these activities, the project aims to encourage at least 20,000 farmers in
scheme areas to adopt improved production techniques during the project period.
27. All provinces will implement demonstration areas and extension of new integrated
agricultural technology packages on farmer’s fields that will increase their resilience to climate
change. Such integrated packages will comprise relevant technologies that have been proven to
be successful in climate change adaptation, but are not widely known in project areas to date.
Packages may include improved seeding technologies, crop rotations, saline/ drought/ pest
resistant varieties depending on the local conditions, systems and techniques of rice
intensification, supplemental irrigation. In particular the project will promote the use of drip and
sprinkler irrigation on 700 ha in the seven provinces, with beneficiaries contributing part of the
cost. In areas most affected by poverty the cost of installation of these more modern technologies
would be covered substantially under the project.
28. The project will finance awareness building and communication on climate smart
agriculture to the wider range of stakeholders. This will include real-time information delivery
including weather-related risks and related responses through ICT, and information awareness
campaigns through professionally produced multi-media, including radio, television, websites,
technical training materials, brochures, and other promotional and extension materials.
29. In order to capitalize on a large potential of greenhouse gas (GHG) reductions in the rice
cultivation and help Vietnam reduce GHG emissions while enhancing economic growth and
reducing poverty, the project would provide platforms to integrate GHG assessment, develop
standardized baseline on GHG emissions from rice production and to monetize the benefits of
the GHG reductions.
26
30. Soil sampling and soil fertility testing will be undertaken so that chemical fertilizer is
applied according to fertilizer recommendations. This will result in more efficient application of
chemical fertilizers. Soil health cards and soil maps will be produced for WUOs and WUAs. Use
of organic fertilizers will be promoted. All provinces will undertake regular monitoring of
selected soil fertility properties at standard sites to evaluate the impact of soil and land
management practices on soil fertility status.
31. Finally, various types of crop residue management will be applied in all provinces to
improve soil organic matter content, soil moisture and nutrient retention. Crop residue
management will include mulching, spreading of crop residues on the soil surface to reduce
evaporation, mechanical crushing and chopping of crop residues and incorporating them into the
soil through tillage, and application of a biological agent prior to soil incorporation to speed up
crop residue decomposition.
Component 4: Project Management, Monitoring and Evaluation (Estimated Cost: US$7
million, including contingencies)
32. This component supports the operational costs and capacity development for the
implementing agencies within MARD to manage the project. The main content of this
component is: (a) project management and M&E consultation, technical consultation and
assistance for project management, consultation on implementation, monitoring, and auditing;
(b) support CPMU and PPMUs to implement the project management and implementation
activities; (c) capacity building, transfer technology, strengthen the project management and
implementation capacity of Management Units, especially the local sub-project management
units; and (d) support for implementation of the project Gender Action Plan (GAP).
33. The GAP will focus on efforts to promote participation of the whole community to
motivate them to develop the communities’ resources to achieve greater benefits, and create
favourable conditions d beneficiaries to participate in decisions affecting the project. The project
will provide more opportunities for women to become involved in the economic process,
including managing the WUAs. Empowerment of women aims to resolve the gender inequality.
The action plan will focus on (i) raising awareness at all levels of project management on gender
issues; (ii) encouraging local authorities to support gender development, and (iii) piloting
agricultural development models (including family drip systems) and strengthen WUAs with the
involvement of women.
27
Annex 3: Implementation Arrangements
Project Institutional and Implementation Arrangements
1. The Ministry of Agriculture and Rural Development (MARD) will be the executing
agency for the project. Through previous project engagements, MARD has built substantial
capacity and knowledge about the World Bank procedures at the sector and project levels. To
support the implementation of the project MARD will establish a Project Implementation
Steering Committee (PISC) to be led by the Vice-Minister in charge of irrigation with close
coordination with the Vice-Minister in charge of agriculture.
2. The Vice-Minister has the overall responsibility to oversee project implementation as
well as to provide policy and strategy related guidance. The Vice-Minister would be supported
by the Department of Construction Management on technical aspects and the Department of
Water Resources (DWR) on institutional aspects. These two departments are mandated to
provide policy, planning, and management oversight of irrigation schemes in Vietnam. The
Departments, according to the Ministry’s authority, are also responsible for verification, review
and to make recommendation for MARD concerning approval of the proposals prepared and
submitted by CPMU and the Project Provinces.
3. The existing Central Project Office (CPO) of MARD is assigned as the project owner and
is responsible for the management of the project following the Government Decree 38-ND-CP
on managing ODA-funded projects plus the coordination and monitoring of the project
implementation at different levels. CPO will act through its Central Project Management Unit
(CPMU) which will be established by MARD and located within the CPO.
4. The CPMU, established by MARD and dedicated to implement this project, has the
following responsibilities: i) liaising with the Bank and all concerned departments and provincial
authorities; ii) serve as the secretariat of the PISC; iii) review the draft annual work plan to
determine consistency with the project objective and with the overall implementation schedule;
iv) prepare consolidated annual work plans submitted by PPMUs and submit them to the Bank;
v) coordinate and monitor project activities based on the M&E and the environment management
plans; vi) review the semi-annual progress reports based on technical inputs from the PPMUs
and submit them to the Bank; vii) review the request letters and disbursement document of the
PPMUs to transfer funds from the Designated Account (DA) to provincial project accounts; viii)
consolidate the financial management report of the DA; ix) prepare withdrawal applications; x)
arrange special studies to fulfill the project development objective; xi) prepare procurement
guidelines, standards and specifications for equipment, vehicles and spare parts; xii) carry out
internal procurement review to PPMUs; xiii) support the preparation of the Mid-Term review
report and the implementation completion report; xiv) consolidate the financial management
reports; xv) perform TA support to project provinces in all aspects; xvi) ensure the processing
quality of prior review contracts, and then submitting them to the Bank for review and clearance;
xvii) prepare and implement training for staff involved in project implementation; and xviii)
address other policy matters, including as climate change.
Implementation Structure
28
5. Implementation of the subprojects will take place at the provincial level though the
Provincial Project Management Units (PPMUs) established by the respective Provincial People’s
Committee (PPC). The PPMUs will be composed primarily of staff from the provincial
Departments of Agriculture and Rural Development (DARD) and the Irrigation and Drainage
Management Companies (IDMCs), under the authority of the Provincial People’s Committee
(PPC). The PPMUs will carry out their duties and functions as guided by the CPMU,
Directorates and Departments of MARD as well as through the Provincial departments according
to current construction investment regulations and management. The PPMUs will receive
guidance and supervision from CPMU on the issues directly related to project implementation.
6. Operating under the general MARD project management framework, the PPMUs will
also be responsible for launching the calls for proposals, conduct proposal screening and
shortlisting, and handling procurement and supervise construction activities. MARD CPMU will
be responsible for the management of the project designated account, procurement of ICB and
QCBS contracts given the complexity of these procurement methods and their advantage in
foreign languages, payments of contractors, and ensure safeguard compliance. The CPMU will
report to IDA, MARD, and the GOV as appropriate.
7. A Project Operation Manual (POM) has been prepared which provides further detailed
implementation arrangements
8. The PPMUs will be authorized to manage the implementation of project within the
administrative boundary of provinces. These responsibilities include: i) prepare annual
procurement plans. The plans will be adjusted and updated annually by the PPMUs on the basis
of actual implementation progress. The plans will be reviewed by the CPMU and approved by
the provinces; ii) carry out the approved procurement plans and manage contracts in accordance
with the POM; iii) prepare annual funding plans (disbursement plans) for the provincial level and
submit it to the PPCs for approval; iv) prepare and submit resettlement and compensation plans
for approval; implementing compensation, land acquisition activities for construction; v)
supervise construction including environmental and social impacts supervision; vi) manage the
secondary project account at the provincial level; vii) procurement handling and payment for
contractors; viii) prepare transfer request letter and disbursement documentations for submission
to CPMU in accordance with the POM; ix) undertake liquidation and audit of subproject; and x)
conduct subproject handover in accordance with current regulations.
29
Description D
u
r
aComponent 1: Improved Water ManagementCPMU
TA consultant: assist MARD’s CPMU, Provincial PMUs, IMCs, in all technical
aspects in project implementation .
7
2
TA consultant: PIM and IMT, and other international consultants 7
2
GOODS: Quang Nam / Thanh Hoa / Quang Tri / Hoa Binh / Ha Tinh / Ha
Giang / Phu Tho
Supply office equipment, communication, computers etc 3
Develop & use a GIS-based database for asset management and irrigation
management system for IMC6
Install equipment to assist in management for WUAs 3
0
Component 2: Irrigation and Drainage Scheme
ImprovementsProject Supervision Consultant assist Provincial PMUs, IMCs in project
implementation
Quang Nam
Thanh Hoa
Hoa Binh
Ha Tinh
Quang Tri
Phu Tho
Ha Giang
Component 3: Agriculture support serviceConsultants in all aspects to support introduction and development
of CSA systems
Design and develop pilot CSA systems 7
2
Support to up-scaling of adoption of CSA practices and replication of the CSA
systems
3
6
Baseline surveys in each province to assess the outputs and results of the
activities
7
2
Assess the impacts of the CSA systems (economic benefits, emission
benefits, efficiency of water use...
Final evaluation and final workshop for lessons drawing and
recommendations
1
2
Component 4: Project management, monitoring &
evaluation
Technical assistance (TA) consultants7
0
Independent Supervision Consultants for Environment and Resettlement 4
8
Support for capacity building and training
2018 2019
Project Schedule
2014 2015 2016 2017
30
Financial Management, Disbursements and Procurement
9. The disbursement categories are as follows:
Category
Amount of
the
Financing
Allocated
(expressed
in US$
million)
Percentage of
Expenditures to be
Financed
(inclusive of Taxes)
Works, goods, services, training
including workshops and incremental
operating cost
180
100%
(Note: This amount will be stated in equivalent SDR in the Financing Agreement)
10. An assessment of the financial management (FM) arrangements for the proposed project
has been conducted based on the guidelines issued by the FM Sector Board with the conclusion
that the project meets the minimum Bank FM requirements, as stipulated in OP/BP 10.0.
11. The financial management manual will be updated by the CPO in accordance to the
agreed project implementation arrangement. The draft Financial Management Manual will be
submitted to the World Bank for review and concurrence prior to negotiation.
12. CPMU will be responsible for consolidating financial statements from provinces and
appointing an external auditor. The audit fee for the first three years of the project will be
included in the procurement plan prior to negotiation.
13. Account management and payments of provincial level component activities will be
conducted by each of the provinces, as to promote decentralization of project implementation.
Confirmation on the activities and level of payments will be confirmed with the Bank. The
description of fund flow and management of provincial project accounts will be included in the
financial management manual.
14. The CPO and provinces will identify (with high accuracy) the expected amount of
counterpart funding required each year. For the provincial sub-projects that require high
counterpart funds, the provincial authorities will provide the official commitment to the World
Bank prior to the approval of the sub-project.
15. In order to strengthen the financial management arrangements for the project and to
help further reduce the risk of fraud and corruption, particular attention will be paid to the
following areas: (a) clear FM responsibilities with avoidance of gaps and overlaps of duties has
been included in the FM Manual; (b) enhanced disclosure and transparency of financial
information by publishing project and entity financial statements; (c) internal audit and
inspection by MARD and Provincial People’s Committees for components implemented in
their local areas (country system); and (d) authorization of Expenditures Verification Agencies
(Provincial State Treasuries) will be obtained before any payment is made.
31
Disbursement
16. Disbursement will be made primarily via Advances. A segregated Designated Account
(DA) at a commercial bank acceptable to the World Bank will be maintained by the CPMU.
The DA will be denominated in United States Dollars (US$). The ceiling of DA will be fixed at
US$ 25,000,000. Supporting documentation required for documenting eligible expenditures
paid from the DA (and for Reimbursements) will be the Statement of Expenditure (SOE) and a
list of payment against the contracts that are subject to the Bank’s prior review, together with
Records. The frequency for documenting expenditures paid from the DA will be quarterly. The
Reimbursement, Special Commitment, and Direct Payments disbursement methods can also be
used. Direct Payments will be documented by Records. The Minimum Application Size for
Reimbursements, Special Commitments and Direct Payments will be US$ 2,000,000
equivalent.
17. The Project will have a Disbursement Deadline Date (final date on which World Bank
will accept applications for withdrawal from the Recipient or documentation on the use of
Credit proceeds already advanced by the World Bank) four months after the Closing Date.
This "Grace Period" is granted in order to permit the orderly project completion and closure of
the Credit account via the submission of applications and supporting documentation for
expenditures incurred on or before the Closing Date. Expenditures incurred between the
Closing Date and the Disbursement Deadline Date are not eligible for disbursement, except as
otherwise agreed with the World Bank.
Procurement
18. Procurement financed by the Bank under the proposed project will be carried out in
accordance with the Bank’s “Guidelines: Procurement of Goods, Works, and Non-Consulting
Services under IBRD Loans and IDA Credits & Grants by World Bank Borrowers” dated
January 2011; and “Guidelines: Selection and Employment of Consultants under IBRD Loans
and IDA Credits & Grants by World Bank Borrowers” dated January 2011; as well as the
relevant provisions under the Financing Agreement.
19. Procurement Capacity and Risk Assessment (PCRA) of the CPMU under MARD, and
PPMUs at provincial level was carried out during project preparation. The CPMU and several
PPMUs have been involved in the Bank financed projects and are familiar with the Bank’s
procurement procedures. However, the following risks are also identified: (a) possible
procurement delays could occur at all stages of the procurement cycle including planning,
preparation of procurement documents, bid evaluation, approval of bid evaluation report and
award recommendation and contract management and (b) possible non-compliance with Bank
procedures (including governance and corruption issues) may occur at the different levels.
Therefore the procurement risk for the project is rated “Substantial”. To mitigate the risks and
build up capacity, the Bank team has discussed and agreed with the CPMU that the following
key measures shall be taken:
CPMU shall appoint at least two qualified procurement specialists with adequate
experience on the Bank procurement procedures prior to the project effectiveness.
32
CPMU shall adopt a Project Operational Manual, including an adequate procurement
manual (covering clear rules, procedures and division of responsibilities, sample
documents and evaluation report for small procurements), prior to the project
effectiveness.
Each PPMU shall appoint at least two qualified procurement specialists by the project
effectiveness.
Staff of CPMU and PPMUs who are involved in procurement implementation should
receive intensive training on the Bank procurement procedures prior to the start-up of
the project and throughout the project implementation. CPMU and PPMUs will take
procurement actions according to the agreed procurement plans, including advance
procurement activities.
The Bank shall conduct regular procurement post reviews and provide feedback for
timely corrective actions as needed.
20. Procurement Plan: The CPMU has developed an acceptable procurement plan for the
initial 18 months of project implementation. The procurement plan includes contracts that are
to be awarded under advance procurement; all such contracts, irrespective of value, are subject
to prior review. The various items under different expenditure categories are described below in
Table 3.1. The procurement plan will be updated annually or as required to reflect the project
implementation needs. The procurement plan and its updates will be published on the Bank’s
external website in accordance with the Guidelines.
Table 3.1: Summary of Initial 18 months Procurement Plan
Ref.
No
Description Estimated
Cost US$
(million)
No. of
Packages
Review by
the Bank
(Prior/Post)
Comments
(Prior
Review
Contract)
1 Summary of the NCB (Works)
packages
95.74 82 Prior/Post prior-review
the first 2 or 1
contract(s)
depending on
the PPMU’s
capacity
2 Summary of the ICB (Goods)
packages
11.10 2 Prior
3 Summary of the NCB (Goods)
packages
1.75 14 Prior/Post prior-review
the first 2 or 1
contract(s)
depending on
the PPMU’s
capacity
4 Summary of the Shopping
contracts (Non-consulting services)
0.60 8 Post
5 Summary of number of contract
≥USD0.2m that will be let under
QCBS/QBS
6.18 5 Prior
6 Summary of number of contracts
<USD0.2m that will be let under CQS
1.73 11 Prior/Post prior-review
the first 2 or 1
contract(s)
depending on
the PPMU’s
33
capacity
7 Summary of Individual Consultant
Contracts
0.35 Multi-
contract
Post
Total 117.45
Table 3.2: Procurement Plan for Advance Procurement Activities
Contract No. Description
Estimated
Cost (US$
million)
Procurement
Method
Review by
Bank
Expected
Bid
Opening
CS5/TA/CPO/
2014
TA consultant for overall project
implementation 2.5 QCBS Prior Dec.-13
CS6/ISC/CPO/
2014
Independent Monitoring Consultant
(Third party) 0.75 QCBS Prior Feb-14
CS7/M&E/CP
O/2014 M&E Consultant 0.58 QCBS Prior Dec.-13
CS8/AUD/CP
O/2014 Financial Audit for the first 3 years 0.07 CQS Prior Jan-14
21. Prior Review by the Bank: Thresholds for the Bank’s prior review and thresholds for
procurement/selection methods, currently applicable for this project, are shown in the Table 3.3
below. Contracts with cost estimates below the thresholds of Prior review shall be subject the
Bank’s Post review, which will be conducted annually and cover 20% of the total post-
reviewed contracts.
Table 3.3: Procurement Method and Prior Review Thresholds
Category
Procurement Method Thresholds Prior Review Thresholds
Applicable
thresholds
(in USD
million)
Remarks Applicable thresholds (in
USD million) Remarks
Works
ICB ≥ $10 m All ICB contracts
NCB < $10 m First maximum 2 NCB
contracts for each CPMU /
PPMU
Shopping < $0.2 m None
Goods
ICB ≥$1 m All contracts
NCB < $1 m Where goods are not
normally available from
within Vietnam, the method
of procurement will be ICB
even if the contract value is
less than $1 m.
First maximum 2 NCB
contracts for each CPMU /
PPMU
Shopping < $0.1 m None
Consultant Services
CQS < $ 0.3 m Para 3.7 of Consultant
Guidelines.
Other methods (QCBS,
QBS, LCS) may also be
applied for contracts below
$0.3 m.
Firms: ≥$0.3 m (for
competitive selection) plus
the first contract for each
method (QCBS, QBS, LCS,
CQS) regardless of value.
SSS: All SSS contracts.
Essential individual
assignments will be
defined in the
Procurement Plan
34
All Audit contracts
Individuals: for essential
assignments (procurement
consultant, accountant…).
22. For achieving the project development’s objective the services of certain government-
owned universities and research centers and institutions will be critical for project
implementation. These agencies will provide services for capacity building, training and
institutional strengthening. These include: (a) Vietnam Academy of Agricultural Sciences and
Hanoi University of Agriculture provide services under Climate Change Agriculture practice
support (Component 3); (b) Vietnam Academy of Water Resources provides services under
water management improvement including Participation Irrigation Management (PIM)
program, Irrigation Management Transfer (IMT) program and national policies development
(Component 1&3&4); and (c) Hanoi University of Irrigation provides services under Irrigation
modernization capacity building and training (Component 4). These agencies are leading
national centres and are in a unique position to provide such services and have staff with strong
expertise and experience. The services would be procured in accordance with requirements
stipulated in paragraph 1.13(c) of the Bank’s Consultant Guidelines.
35
Annex 4 Operational Risk Assessment Framework (ORAF)
Vietnam: Irrigated Agriculture Improvement Project (P130014)
.
Project Stakeholder Risks
Stakeholder Risk Rating Low
Description: There is a strong
commitment and ownership from all
project stakeholders as evidenced by
consultations during project
identifications and preparation. MARD
has a good record of engaging various
stakeholders and getting them involved
in project preparation and
implementation. The stakeholder
assessment and consultation was
carried out with direct project
beneficiaries, farmers, ethnic
minorities, women’s union, WUOs,
farmers’ association, and NGOs during
project preparation. As the overall
expected impact of the project is
positive, stakeholders all provided their
support for the project objective.
Risk Management: Consultation of project affect people, beneficiaries, and other stakeholders will
continue through project implementation.
Resp: Stage: Recurrent:
Due Date: Frequency: Status:
36
Implementing Agency (IA) Risks (including Fiduciary Risks)
Capacity Rating Moderate
Description: Project lead implementing
agency MARD is familiar with Bank
procedures and policies including
fiduciary, safeguards, and monitoring and
evaluation. Some of the provinces have
ongoing Bank supported projects. The
capacity risks would be related to the new
provincial staff and their limited
knowledge and experience in applying the
Bank’s guidelines.
Risk Management: Project management offices will be fully staffed with appropriate skills sets
particularly on monitoring and evaluation. Whenever possible, staff with prior World Bank experience
will be used for this project. The Bank will continue to make sure low capacity issues will be
addressed. Newly hired staff will receive consultant support as well as training to meet procurement
requirements.
Resp: Stage: Recurrent:
Due Date: Frequency
:
Status:
Description: The projected is expected to
receive US$ 30 million of counterparts
funding. The CPMU and PPMUs will
identify (with high accuracy) the expected
amount of counterpart funding required
each year. For the provincial sub-projects
that require high counterpart funds, the
provincial authorities will provide the
official commitment to the World Bank
prior to the approval of the sub-project.
Risk Management: Counterpart fund from central and provincial has gone through assessment and does
not present an issue.
Resp: Stage: Recurrent: Due Date: Frequency: Status:
Governance Rating Moderate
Description: Coordination between
agencies and within MARD at the central
and provincial levels may be weak.
Governance structure includes a steering
committee at the central and provincial
level.
Risk Management: During implementation the Bank will continue to monitor the level of coordination
effectiveness between agencies. Project implementation arrangements will be clearly defined and
outlined in the project implementation plan to improve coordination between the various implementing
agencies.
Resp: Stage: Recurrent:
Due Date: Frequency
:
Status:
Project Risks
37
Design Rating Moderate
Description: Economic sustainability of
investments could be weak if technical
designs are not optimized in accordance
with demand. Detailed demand analysis
will be used to help customize the technical
designs. Through project preparation,
extensive consultation was carried out to
get the stakeholders’ view on the proposed
investment. Walk through survey at the
sites was conducted to identify the current
stage, readiness and needs of each project
site. Close consultation with stakeholders
was also conducted to ensure congruence
between agriculture support services and
infrastructure improvement needs.
Risk Management: Consultation with stakeholders will continue through preparation to ensure the
demand, needs and readiness is being met.
Resp: Stage: Recurrent:
Due Date: Frequency
:
Status:
Description: The large number of project
activities across seven provinces requires
coordination between agricultural support
services and infrastructure improvement is
also a risk.
Risk Management: The detailed descriptions of the project schemes have been formulated.
The designs and quality of construction will reviewed by project implementation consultants
and third party consultants to ensure quality.
Resp: Stage: Recurrent:
Due Date: Frequency: Status:
Description: Possible low adoption rates/
unsuccessful demonstration of new climate
change adaptation measures at selected
sites and failure of mainstreaming
adaptation into overall MARD program.
Risk Management: Use of appropriate extension and dissemination of information and project status
updates will be employed. Activities to strengthen expand and integrate agricultural extension services
and technical support systems have been included in the project design. Adaptation methods were
selected based on good scientific practice, and farmers’ and local officials’ participation in decision
making. Information dissemination will continue through project implementation. Pilot activities will
be closely monitored and supported.
Resp: Stage: Recurrent:
Due Date: Frequency: Status:
Social and Environmental Rating Moderate
38
Description: Construction activities and
climate smart agriculture are expected to be
simple in nature. There is not a lot of land
acquisition involved. ESMF and SAP have
been developed, and in the past the
implementation agencies have
demonstrated the ability to carry this out.
Risk Management: MARD is experienced with Bank's requirements and procedures on safeguard
policies through previous projects. All ESMF and SAP have been approved by the provinces. MARD
will provide training to the PPMUs social and environmental staff on a annually basis. The Bank and
third party consultant will undergo close monitoring.
Resp: Stage: Recurrent:
Due Date: Frequency: Status:
Description: Land acquisition, both
temporary and permanent, would be a
potential risk during project
implementation. In some sub-project areas,
land acquisition is expected to affect ethnic
minority households.
Risk Management: An SA carried out in early 2013 confirmed that the overall social impact of the
project is positive, given the project aims to strengthen national, provincial, and local capacities for
better irrigation management. However, some negative impacts, primarily related to acquisition of land
to allow for rehabilitation of existing infrastructure, is unavoidable. On the basis of the SA, MARD will
prepare an Indigenous Peoples Plan (IPP) for the sites that have ethnic minorities; an Indigenous
Peoples Policy Framework (IPPF) for areas where ethnic minority people are identified during project
preparation. While the project does not anticipate any major land acquisition or resettlement of project
affected person (PAPs), MARD will also prepare Resettlement Action Plans (RAPs) for all sub-
projects that are identified by appraisal and also a Resettlement Policy framework (RPF) for those sub-
projects that will be identified and prepared during project implementation. MARD is experienced with
Bank's requirements and procedures on safeguard policies through previous projects.
Resp: Stage: Recurrent: Due Date: Frequency: Status:
Program and Donor Rating Moderate
Description: NA Risk Management:
Resp: Stage: Recurrent: Due Date: Frequency: Status:
Delivery Monitoring and Sustainability Rating Moderate
39
Description: Delays in project
implementation particularly civil works
may take place due to engineering or
climatic related factors. The M&E system
will be used and supported by a MIS
system to closely monitor contract
management and other implementation
aspects. A robust baseline survey would
also be established for every monitoring
indicator across the seven participating
provinces to establish parameter
benchmarks against which project progress
will be measured.
Risk Management: Construction will be planned and scheduled carefully for optimal alignment
between design and implementation process. Timing will also be laid out as such to make the best use
of dry season construction periods. During preparation, operational plans and detailed water balance
studies have been prepared. Third party monitoring and remote sensing for monitoring project progress
and delivery will continue through implementation.
Resp: Stage: Recurrent:
Due Date: Frequency
:
Status:
Description: Close engagement with
IDMCs and WUA/WUOs is vital to ensure
participation in system operations. Firm
commitment by the borrower is equally as
important.
Risk Management: Continuing policy discussion between World Bank and government on its
subsidy for irrigation service fees to ensure income of IDMCs and WUAs/WUOs adequately
covers sustainable irrigation O&M costs. The focus on building up the institutional capacity
and developing a policy framework for climate-smart activities ensures that the project goes
beyond one-off investments in the irrigation sector.
Resp: Stage: Recurrent: Due Date: Frequency: Status:
Other (Optional) Rating
Description: NA Risk Management:
Resp: Stage: Recurrent: Due Date: Frequency: Status:
Other (Optional) Rating
Description: NA Risk Management:
Resp: Stage: Recurrent:
Due Date: Frequency: Status:
Overall Risk
Preparation Risk Rating: Moderate Implementation Risk Rating: Moderate
40
Description: The overall preparation risk is rated as Moderate. This
rating is acceptable as the project will be introducing innovative
components that will require the task team to work closely with MARD.
Description: The overall risk rating for this project is Moderate.
Non-disclosable Information for Management Attention (Optional)
Comments:
Note for information: this section is not disclosed at Negotiation and Board presentation stages
Note : Include on average no more than 3 Risk Management Measures per Risk Category
41
Annex 5 Implementation Support Plan
VIETNAM: Irrigated Agriculture Improvement Project
Strategy and Approach for Implementation Support
1. The strategy for Bank implementation support has been developed based on the nature of
the project and its risk profile. The ORAF rates the overall implementation risk to be moderate
and all individual risk categories are rated either low or moderate. Bank supervision will
therefore focus significantly on compliance on Bank procurement, FM and safeguards
requirements.
2. During the first 18 months of the project implementation, Bank implementation support
missions will be fielded every three to four months, including short follow up missions, in order
to proactively provide the implementation agencies with technical guidance both at the central
and provincial levels to facilitate project implementation. Implementation support missions will
also focus on selected technical issues such as dam safety, climate smart agriculture,
development of a baseline for GHG emissions and irrigation modernization.
3. In parallel, a series of refresher training courses will be carried out for all implementing
agency staff covering procurement, financial management and safeguards aspects to enable them
to fully understand the updated guidelines (particularly procurement) and operational policies.
The Bank will also review and confirm that adequate qualified staff and consultants are in place
for project management, detailed engineering, design and construction supervision, and on
environmental and social safeguards. The Bank will maintain regular contact with MARD
management to inform them on the findings of implementation support missions and give
remedial measures, as necessary. This will be particularly important for the sub-projects carried
out at the provincial level.
4. In order to provide timely implementation support through missions and on demand
guidance, the majority of the Bank Task Team (technical, procurement, financial management,
environmental and social safeguards specialists) will continue to be based in the Bank’s Hanoi
Office. The table below indicates the level of effort that will be needed from the Bank to provide
implementation support for the project.
Table: Annual Skills Mix Required
Skills Needed Number of Staff
Weeks per annum Number of Trips
per annum Comments
TTL – co-TTL Irrigation 16 4 Bank staff
Institutional specialist 6 2 International and national
consultants
Agriculture 6 2 International and Country-office
based Bank staff
Water Users Associations
Specialist
6 2 International and national
consultants
Bank Safeguards 2 2 each Country-office based Bank staff
Bank FM 1 2 Country-office based Bank staff
42
Skills Needed Number of Staff
Weeks per annum Number of Trips
per annum Comments
Bank Procurement 2 2 Country-office based Bank staff
M&E specialist 4 2 International
Irrigation Engineer with
modernization experience
6 2 International and national
Dam safety 4 2 International
43
Annex 6: Economic and Financial Analysis
A. Introduction
1. The financial and economic analyses are confined to assessing costs and benefits of
Component 2, Irrigation and Drainage Scheme Level Improvements which accounts for more
than 70% of the total project costs. The analyses examined the impact of the project investments
in the following areas:
Increased agricultural production and revenues from increases in irrigated area and
yields;
Lower production costs due to reduction in private pumping and labor to bring water to
the fields;
Non-quantified benefits: reduced risk of dam and main canal failure; greater reliability
for municipal and industrial water users;
Benefits, not-quantified which are expected from proposed installation of drip technology
for existing and new orchards of citrus, various vegetables and peanuts.
2. The expected diversification into higher value and higher return crops is expected due to
availability of timely and reliable water with a resultant increase in cropping of maize and
vegetables. High returns and diversification to high value crops is also expected due to proposed
drip irrigation for orchards and peanuts in some provinces. The benefits from this technology
have not been quantified for financial and economic analysis at this stage.
3. Both the financial and economic analyses rely on the information available with and
collected by the project study team and consultants at DARD and VAWR offices responsible for
preparing the report on engineering aspects as well as for the feasibility study report. The
information was supplemented during the pilot visits in the field and conducting scoping sessions
with the farmers and staff of the provincial agriculture departments by the project appraisal team.
B. Approach and Methodology
4. Cultivated Area by Crops and by Sub-Projects. For estimating the benefits for each
sub-project/scheme, the average of last five years of the cropped area has been used as the basis
for estimating the cropped area under gravity irrigation, pumped irrigation as well as for
estimating the non-irrigated land. In fact, a large part of the non-irrigated land is being cultivated
as rain-fed, which has also been considered as productive area in the without project situation.
5. Crop Budgets for Estimating Quantifiable Benefits. Although the nine sub-projects
are widely scattered and therefore differ in climatic conditions and soil type, all nine sub-projects
are in predominantly rice growing areas with generally limited areas of non-paddy crops.
Separate crop budgets have been developed under with and without project scenarios for winter
and summer crops of rice, maize, peanuts and sweet potatoes for each sub-project under full
gravity or partial irrigation as well as for rain fed cultivated areas. Data on average yields and
44
inputs have been estimated based on information collected from the field, available reports and
from MARD.
6. Based on the above crop budgets, a one ha farm model has been prepared to show typical
costs and returns for each sub-project of: (a) a full gravity irrigated farm, (b) a partially irrigated
or pumped farm; and (c) non-irrigated farm. These farm models has been utilized for estimating
the quantifiable agriculture benefits at scheme/ subproject level first and then aggregated at
overall project level.
7. Cropping Pattern and Intensities. The cropping pattern for the partial and fully pumped
irrigation farm budget for the areas of non-paddy crops (maize, peanuts, sweet potatoes,
vegetable and other crops) have been established based on the published agricultural statistics for
the last five years by provinces.
8. Incremental Agricultural Benefits. Computation of incremental agricultural benefits is
based on the crop and farm budgets developed for the financial and economic analysis with
prices adjusted to reflect at the farm-gate level. The prices to be used for commodities produced,
production inputs, the main commodities – rice, maize, peanuts – and for fertilizers have been
derived from June 2013 World Bank Commodity Price Forecasts. For all other commodities
produced and inputs used, it is assumed that farm-gate prices adequately reflect economic values
and no conversion factor has been used for converting the financial prices of these commodities
into the economic values.
9. Input Cost for Pumping water. Data on cost of pumping water has been considered as
about VND 200,000 per crop based on discussion on the information provided by the project
staff and supplemented from the discussions with the WUAs in the field.
10. Benefited area; Following Table summarizes the area under with and without project
scenarios, benefits of the project have been estimated in financial as well as in economic terms
based upon the area as below;
Table 1: Area under Each Scheme (ha)
Rain-fed Pumped Gravity Rain-fed Pumped Gravity
Large scale schemes
Ha Tinh Ke Go 6,803 0 14,735 - - 21,538
Quang Nam Phu Ninh 4,899 1,760 10,968 - 1,760 19,427
Thanh Hoa South Ma - 11,525 - - - 11,525
Medum scale schemes
Ha Tinh Rac River 4,341 0 4,182 - - 8,523
Quang Nam Khe Tan 1,395 - 2,105 - - 3,500
Phu Tho Tam Nong - 3,840 - - - 3,840
Pho Tho Thanh Thuy - - 2,122 - - 2,122
Quang Tri 3-Schemes Combined 1,352 399 3,680 - 399 5,400
Sub Total 18,790 17,524 37,792 - 2,159 75,875
Small scale schemes 7,550 7,550
Total 26,340 17,524 37,792 - 2,159 83,425
Without Project Condition With Project ConditionProvince Name of Scheme
45
Financial Analysis
11. Based on the above crop budgets, one ha farm budgets have been prepared to show
typical costs and returns for each sub-project of: (a) a full gravity irrigated farm, and (b) a
partially irrigated or pumped farm.
12. For evaluating impact of the project over beneficiaries, typical farm budgets have been
developed at scheme level. The size of an average typical farm has been computed at each
scheme by dividing the area provided with irrigation and drainage services - improved with the
number of direct beneficiaries households, it ranges between 0.24 ha (Than Hao) and 0.49 ha (Ha
Thinh) with an simple average of 0.34 ha. The Table below shows the average returns at typical
farm of 0.34 ha.
13. It is evident from the above table that net returns per labor day increase by 3.4 times for
the farms irrigating by pumping and by 1.8 times on farms with full gravity irrigation. The high
returns per day to labor on farms with partial irrigation are due to the savings in cost of pumping.
14. The comparison shows that net margins after conversion of the rainfed areas to full
gravity or partial and pumped irrigation would be much higher in the with-project situation.
Average returns in rainfed areas have been estimated as VND 2.1 million (US$100) per ha,
which may increase up to VND 6.8 million (US$324) per annum after conversion to gravity
irrigation. Thus many farmers at the bottom end of the canal system might not be in a very
different situation from the rainfed farmers. The fact that the project through improving water
transfer tends to benefit canal tail-end farmers more than those at the head-end, implies that the
project is to a significant extent self- targeted on poverty.
Table 2: Net Margin at Farm Level
Description
Partial and pumped
irrigation
Full gravity
irrigation Partial
and pumped
VND 000 US$ VND
000
US$
Without-project annual net Margin 947 45 2,193 104
With-project annual net margin 3,202 152 4,033 192
Increase per year 2,255 107 1,841 88
Increase % 238% 84%
Results of the financial analysis
15. Financial Internal Rate of Return: The financial internal rates of return for each sub-
project and for the project as a whole has been estimated considering the approach and
methodology described above. Following is Table showing summary of results:
46
Table 3: Summary of Results of the Financial Analysis
Costs
Increases
by 20%
Benefits
Decreases
by 20%
Costs
Increases
& Benefit
decreases
by 20%
Large scale schemes
Ha Tinh Ke Go 15.7% 1.43 176,410 13.3% 12.0% 10.0%
Quang Nam Phu Ninh 21.1% 1.84 389,121 18.0% 16.6% 14.0%
Thanh Hoa South Ma 10.9% 1.06 38,183 9.0% 7.7% 6.1%
Medum scale schemes
Ha Tinh Rac River 19.5% 1.76 124,302 16.7% 15.4% 13.1%
Quang Nam Khe Tan 14.0% 1.29 23,817 11.7% 10.4% 8.5%
Phu Tho Tam Nong 12.9% 1.18 45,782 10.5% 9.1% 7.2%
Pho Tho Thanh Thuy 12.8% 1.18 24,239 10.4% 9.0% 7.1%
Quang Tri 3-Schemes Combined 13.9% 1.21 104,106 11.0% 9.4% 7.1%
Overall 15.15% 1.36 925,961 12.62% 11.29% 9.18%
SensitivityAnlaysis (IRR %)
Province Name of Scheme
FIRR %
(Base
Case)
BC RatioNPV (VND
000 Million)
Economic Analysis
16. In the economic analysis, the financial prices were converted into economic values by
removing taxes and subsidies from input and output prices and calculating import and export
parity prices of major inputs and outputs (rice and fertilizers). Considering the market
competitive and in equilibrium status, it is considered that no price distortion in price structure is
prevailed in Vietnam economy, hence no conversion factor has been applied to local prices of
agricultural commodities for estimating the project costs and benefits in economic terms.
17. The economic analysis is carried out in a similar manner and using the same
methodology adopted in the financial analysis except using the economic values in place of
financial prices.
18. Data for investment costs by project component has been taken from engineering
estimates, project costs and benefits are estimated at constant prices over a period of 31 years,
including the six-year project implementation period.
19. Prices: For the economic analysis, prices of inputs and outputs have been expressed in
June 2013 constant prices. Data on open market prices was collected through various sources for
determining the farm-gate financial prices. Economic evaluation has been carried out using
economic prices. Parity prices have been derived for rice and fertilizers using commodity price
data issued by World Bank in June 2013.
47
O&M Costs
20. A conservative approach has been adopted and the possible reduction7 in O&M cost after
rehabilitation/modernization has not been credited as a benefit. Considering the requirement for
smooth operation and for maintaining equitable distribution of water through gravity canals, a
provision for O&M has been included equivalent to 4% of the investment costs.
Main Assumptions
Following are the main assumptions used in the analysis:
a. The life of project civil works is 31 years including the six-year investment period;
b. Total project cost, net of taxes is estimated at US$ 152.492 million.
c. No allowance has been made for any possible reduction in operation and maintenance
as a result of project improvements to irrigation infrastructure.
21. Estimation of incremental agricultural benefits. The economic analysis is based on
the crop and farm budgets developed for the financial analysis with prices adjusted to reflect
economic values. The prices used for commodities produced, production inputs, the main
commodities – rice, maize, soybeans – and for fertilizers are derived from June 2013 World
Bank Commodity Price Forecasts. For all other commodities produced and inputs used, it is
assumed that farm-gate prices adequately reflect economic value.
Results of Economic Analysis and Sensitivity Analysis
22. Economic Rate of Return by Sub-Projects: The analysis indicates that irrigation
rehabilitation is economically viable in all the regions, with internal rates of returns (ERRs)
ranging from 13.7-23.9% as summarized in the following table. The overall ERR is calculated at
18.2%.
7 During field visits, mission collected data from farmers and on operation and maintenance costs. It is clear
that the farmers spend considerable resources (time, labor and money) to keep the system functional even at
the low efficiency, before rehabilitation. After rehabilitation, the O&M cost will reduce substantially.
However, the benefit of reduction savings in O&M cost has not been accounted for in the analysis.
48
Table-4: Summary of Results – Economic Analysis
Costs
Increases
by 20%
Benefits
Decrease
s by 20%
Costs
Increases
& Benefit
decreases
by 20%Large scale schemes
Ha Tinh Ke Go 17.4% 1.60 228,501 14.9% 13.7% 11.6%
Quang Nam Phu Ninh 23.9% 2.05 450,056 20.4% 18.9% 16.0%
Thanh Hoa South Ma 13.7% 1.27 148,288 11.5% 10.3% 8.4%
Medum scale schemes
Ha Tinh Rac River 23.3% 2.12 164,141 20.1% 18.8% 16.0%
Quang Nam Khe Tan 17.5% 1.57 42,311 14.8% 13.5% 11.3%
Phu Tho Tam Nong 15.1% 1.33 74,803 12.5% 11.1% 8.9%
Pho Tho Thanh Thuy 14.7% 1.30 37,692 12.1% 10.7% 8.6%
Quang Tri 3-Schemes Combined 19.6% 1.53 241,040 15.8% 14.1% 11.2%
Overall 18.16% 1.58 1,386,833 15.31% 13.92% 11.57%
SensitivityAnlaysis (IRR %)
Province Name of Scheme
EIRR %
(Base
Case)
BC RatioNPV (VND
000 Million)
Sensitivity Analysis A sensitivity analysis was made to determine the impact of a 20% increase
in costs and a 20% decrease in benefits. The results of the analysis, summarized in the above
table demonstrates that even with increased costs and decreased benefits overall EIRR would fall
to around 11.6%, indicating that the project is relatively robust.
49
Annex 7: Environment and Social Safeguards
The safeguard Context
1. Environmental impacts may arise due to certain planned activities, like disposal of silt
during the rehabilitation of irrigation infrastructure, construction and installation of irrigation
control structures and increased used of agro-chemicals for increased crop productivity. To deal
with these impacts, an Environmental Management Plans (EMP) and an Environmental and
Social Management Framework (ESMF) have been prepared, which provide appropriate
mitigation measures to reduce, contain and reverse some of these potential impacts. The system
rehabilitation and modernization is expected to involve a small amount of land acquisition and
resettlement, including resettlement of indigenous people. For this exceptional circumstance, the
Bank OP/BP 4.10 on Indigenous Peoples and OP/BP 4.12 on Involuntary Resettlement shall be
invoked as a precautionary measure. Indigenous Peoples Plan (IPP), Indigenous Peoples Policy
Framework (IPPF), Resettlement Action Plans (RAPs) and Resettlement Policy framework
(RPF) will be prepared. The safeguards policies trigger by the project are Environmental
Assessment (OP/BP 4.01), Physical Cultural Resources (OP/BP 4.11), Pest Management (OP/BP
4.09), Safety of Dams (OP/BP 4.37), International Waterways (OP/BP 7.50), Indigenous Peoples
(OP/BP 4.10), and Involuntary Resettlement (OP/BP 4.12).
Safeguard Instrument for Managing Impacts and Risks
2. To ensure that the planned project activities do not lead to adverse environmental and
social impacts, an elaborated Environment and Social Assessment was undertaken in all the
project areas proposed. The potential negative impacts and mitigation measures are presented for
the Project, and predicted based on the activities of proposed nine sub-projects, in which work on
three sub-projects commence in the 1st year.
3. Based on the findings from the ESA, an ESMP has been developed to provide measures
to avoid, minimize and mitigate adverse environmental and social impacts of planned
investments, as well as to include measures to enhance and replicate positive impacts. EMPs are
developed for construction related work. The final ESA/ESMF/EMP reports were publically
disclosed for inviting stakeholder comments, including a translation of the executive summary in
Vietnamese and meet the Bank’s disclosure policy requirement.
4. Measures to be taken to mitigate, minimize, reduce or offset these negative
environmental impacts, during Project preparation MARD and PPMUs of Thanh Hoa, Quang
Nam and Hoa Binh have prepared environmental safeguards instruments including project
ESMF, two EMPs for Thanh Hoa and Quang Nam Subprojects and ECOP for Hoa Binh
Subproject in accordance with the Bank safeguards policies. During Project implementation,
PPMUs will be responsible for preparing EMPs or ECOPs for identified Subprojects.
Environmental and Social Management Framework (ESMF) – this instrument sets out
principles, guidelines and procedures for environmental and social assessment. It includes
measures and plans to mitigate, minimize, and/or offset negative environmental impacts
and enhance environmental benefits, cost estimates for such measures and information of
50
the responsible agency to address project impacts. An integrated pest management plan
has been prepared and included as part of this ESMF.
Environmental Management Plan (EMP) includes: (a) the mitigation, monitoring and
institutional measures to be taken during the implementation and operation of the project
to eliminate or offset adverse environmental and social impacts or to reduce them to
acceptable levels; (b) measures to enhance positive environmental and social impacts;
and (c) the actions needed to implement these measures.
Environmental Codes of Practice (ECOP) set outs generic mitigation measures for minor
construction impacts. ECOP will be included in bidding documents.
Regarding Dam Safety: The Dam Safety Reports (DSR) have been prepared, not included
in the ESMF, and will be reviewed by an independent Panel of Experts.
5. Monitoring and Supervision Arrangements: CPMU is responsible for environmental
safeguards implementation and will report compliance as part of semi-annual progress reports
submitted to IDA, copied to MONRE. Construction management consultants will supervise
environmental compliance by the construction contractors. An environmental consultant will be
hired to (a) provide monitoring of the overall project impacts; (b) provide guidance to
construction supervision consultants in supervising environmental mitigation measures by
contractors; (c) provide training of PPMU staff; and (d) assist PPMU in implementing the EMP
and ECOP.
Potential Long-Term Environmental and Social Impacts
6. The impacts as a result of the project, if not monitored and mitigated, have the potential
to lead to long term impacts. This is often witnessed as a long-term impact of irrigation
investments (over one or two decades) but it is unlikely, as seepage along canals would decrease
once they start carrying irrigation water per their design discharges and with effective irrigation
control structures in place. The proposed lining in selected stretches, and rehabilitation of
drainage would also improve overall drainage in the command areas and reduce chances of water
logging. The participation of WUOs and WUAs would further ensure improved maintenance of
irrigation infrastructure and thereby reduce seepage and water logging. In general, the project
will likely have very little potential indirect or long-term impacts on the environment as it is
aimed to modernize and rehabilitate existing irrigation structures.
7. Another potential long-term impact could be a result of enhanced agriculture production,
which could indirectly result in increased dependence on groundwater and possibly increased use
of agro-chemical in the future. However, the ‘climate smart’ agriculture component of the
project aims to foster the culture and knowledge of using less chemicals and increase adaptive
planting of crops, as well as improving irrigation water service delivery. If these factors are
implemented correctly, they would reduce agricultural inputs. The awareness building of the
WUAs and the farmers will be disseminated through farmer field-school and farmer-to-farmer
practices.
51
Institutional Capacity for Addressing Safeguards
8. At PPMUs will be responsible for subprojects safeguards implementation and
management. EMP and ECOP implementation: Mitigation measures during construction will be
implemented by contractors with the cost incorporated in the bidding proposal, and be supervised
by the construction management consultants. Operation mitigation measures will be undertaken
by the facility operator. The cost of mitigation measures is included in the construction cost.
9. MARD has significant experience engaging with the World Bank and has sound
knowledge of the World Bank procedures at the sector (institutional) and project
(implementation) levels. At central level, MARD founded a safeguards unit with its qualified
environmental and social safeguards staff to assist in monitoring and evaluation of project
environmental safeguards compliance. Besides, MARD will hire qualified environmental
management consultants to assist in training, monitoring and evaluation. At provincial level,
PPMU will establish a safeguards unit with its environmental and social staff to assist in
monitoring and evaluation of subproject environmental safeguards performance. Given the low
capacity of PPMU on the Bank environmental safeguards, MARD will provide annual training
for PPMU environmental and social safeguards staff. Cost estimate for the training is
US$150,000.
Public Consultations
10. A series of consultations have been carried out during project preparation. The first
consultation was conducted in December, 2012 with government officials in all 7 provinces. The
second consultation was made in February and March, 2013 at the project areas with
participation of key stakeholders such as farmers, representatives of the women unions, affected
people as well as beneficiaries. In addition, a series of consultations with affected households,
who may be relocated, was also conducted as part of the preparation of ESMF. All comments
and suggestions have been incorporated in the ESMF, EMPs and ECOP.
Environmental and Social (including safeguards)
11. Social Assessment (SA): The SA confirmed that the overall social impact of the project is
positive, given the project aims to strengthen national, provincial, and local capacities for better
irrigation management. However, some negative impacts, primarily related to acquisition of land
to allow for rehabilitation of existing infrastructure, is unavoidable. In some sub-project areas,
land acquisition is expected to affect ethnic minority households. The summarized outcome of
the SA are as follows:
Loss of land, assets, and businesses associated to land: The project will acquire
land (both permanently and temporarily) to allow rehabilitation of the existing
infrastructure. It is estimated that 4,500 households would be affected. While the
number of affected household is substantial, the impact at the household level is
expected to be minimal. Most (95%) of the households are expected to lose a small
strip of land due to rehabilitation of existing irrigation channels. The number of
severely affected household is also expected to be low – about 220 households
52
scattered across the nine sub-projects. Only 13 households are anticipated to require
relocation. In total, about 97 hectares of land will be permanently acquired, while 105
hectares would be temporarily affected to allow for construction operations. Most of
the permanently affected land (97.2%) is agricultural land, while the remaining is
residential land.
Impact on ethnic minority peoples: The adverse impact on ethnic minority
households is primarily due to land acquisition to allow for the rehabilitation of the
existing infrastructure. However, various technical design options have been explored
to keep the number of affected households to the minimum. As the impacts from the
project are expected to be primarily positive (e.g. improve and ensure more reliable
access to water), the ethnic minority peoples indicated broad community support for
project implementation. During implementation, the project would ensure that local
people have opportunities to contribute in Participatory Irrigation Management.
i. Involuntary Resettlement (OP 4.12): Resettlement Policy Framework (RPF) was
prepared in accordance with the World Bank’s OP 4.12 to guide how a
Resettlement Action Plan (RAP) for a sub-project (to be identified during project
preparation, including RAPs prepared for first-year subprojects) should be
prepared. The RPF specifies steps to be taken for preparation, review, and
clearance. The RPF specifies how compensation should be assessed for land,
structures, crops, and businesses affected by the sub-project, including how
graves should be relocated and compensation assessed, and how livelihood
restoration of people should be monitored and supported, when needed, to assure
a full and timely restoration of livelihoods on the part of affected households to
the pre-project level.
ii. Indigenous Peoples (OP 4.10): Because ethnic minority peoples (as defined by
the World Bank’s OP 4.10) are present in the project area, and some are affected,
an Ethnic Minority Policy Framework (EMPF) was prepared on the basis of free,
prior, and informed consultation with affected ethnic minority peoples. The
consultation was conducted (as part of the social assessment exercise) to ensure
the potentially affected ethnic minority peoples, including those who are not
adversely affected as a result of land acquisition, are informed of the project
activities and their potential impact and on the basis of that confirm if they
provide broad community support for project implementation. The consultation
indicated that affected ethnic minority households and those not affected both
support the project implementation. The EMPF was developed to ensure ethnic
minorities have an opportunity to receive socio-economic benefits from the
project in a way that is culturally appropriate to them, and to provide guidance on
how an Ethnic Minority Development Plan (EMDP) should be prepared for sub-
projects to be identified during project implementation.
iii. Social safeguards implementation. The implementation of the RAPs and
EMDPs will be the responsibilities of the respective provincial PMUs. The cost
for land acquisition will be financed by the Government whereas the budget for
EMDP implementation will be from the Bank’s fund under this Project. Social
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staff will be appointed at the CPMU (the central level) and at the PPMU
(provincial level) to provide support to RAP and EMDP implementation. The
CPMU will ensure social safeguards implementation and monitoring are in
accordance with the project’s RPF. An independent monitoring agency will also
be hired by the project to carry out periodic monitoring to ensure social
safeguards implementation under the project is in full compliance with the
project’s RPF. Both RPF and EMPF specify a grievance redress mechanism.
iv. Gender mainstreaming. Since the project aims to bring direct benefit to an
estimated 243,000 households who use water for irrigation, a gender analysis
was carried out. The purpose of the gender analysis (GA) was a) to analyze the
current gender-related constraints at household and community level and explore
the opportunities to promote gender mainstreaming under the project through
identifying and proposing appropriate interventions; b) to promote gender
equality in the context of water utilization across the beneficiary irrigated area;
and c) to contribute to the gender equality/mainstreaming goal as set forth in the
CPS.
v. A Gender Action Plan (GAP): was developed on the basis of the gender
analysis (with consultation at the community level), and the consultation with
relevant governmental mass organizations at the central level, in Central
Women’s Unions and Farmers’ Associations. The GAP will be part of the project
plan and will be implemented under project component 4.
Environment (including Safeguards)
vi. Environmental concerns of the project are primarily related to the activities under
Component 2 and 3. However, no potentially large scale, significant and/or
irreversible impact is envisaged as the project is designed to benefit the farming
communities through investments in rehabilitation of irrigation systems and
allied agricultural activities. For these reasons, the project is rated Category B. It
triggers five environmental safeguard policies, namely:
vii. OP/BP 4.01(Environmental Assessment): The project implementation involves
civil works to improve irrigation infrastructure such as existing irrigation canals
and reservoirs, and provides rural water supply schemes for ethnic peoples.
Given the negative environmental impacts associated with civil works this policy
is triggered to help ensure the environmental soundness and sustainability of
investment. An Environmental and Social Management Framework (ESMF) has
been prepared for the project. For subproject impacts identified during project
preparation, respective an Environmental Management Plan (EMP) and an
Environmental Codes of Practices (ECOP) have also been prepared in
accordance with the Bank safeguards policies.
viii. OP/BP 4.11 (Physical Cultural Resources): During preparation, 12 graves were
identified in Thanh Hoa sub-project. These graves will be relocated. The OP/BP
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4.11 is trigged to minimize and manage physical cultural resources and avoiding
their destruction or damage. Mitigation measures have been included in the EMP
for this sub-project. Also, a “chance find procedures” will be included in EMP
and ECOP in case any unexpectedly cultural resource is found during
construction.
ix. OP/BP 4.09 (Pest Management): The project will not finance the purchase of
pesticides. However, after the completion of the project, it is expected that the
irrigated land area will increase to 83,400 ha. The amount of agricultural
chemicals including fertilizers and pesticides are expected to increase. This
policy is triggered to minimize and manage the environmental and health risks
associated with the use of pesticide and to promote and support safe, effective,
and environmentally sound pest management practices. An integrated pest
management plan has been prepared as part of the ESMF.
x. OP/BP 4.37(Safety of Dams): The project will finance minor rehabilitation of
existing dams to improve dam safety aspects. This policy is triggered to ensure
the adequate safety of dams. A Panel of Experts (POE) will be assigned the task
to carry out the review of the dam safety reports. The Department of Water
Resources has recently been upgraded to a Directorate of Water Resources, and
the Dam Safety Unit has been transferred to the Infrastructure and Management
Division, forming one of the three Units in the Division.
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