public disclosure authorized - world...

Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 81943-NP

PROJECT PAPER

ON A

PROPOSED ADDITIONAL CREDITIN THE AMOUNT OF SDR 19.6 MILLION

(US$30 MILLION EQUIVALENT)

AND A

PROPOSED ADDITIONAL GRANTIN THE AMOUNT OF SDR 13.1 MILLION

(US$20 MILLION EQUIVALENT)

TO

NEPAL

FOR THE

IRRIGATION AND WATER RESOURCES MANAGEMENT PROJECT

NOVEMBER 26, 2013

Sustainable Development DepartmentAgriculture Irrigation and Natural Resources UnitNepal Country Management UnitSouth Asia Region

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective October 9, 2013)

Currency Unit = NPRUS$ = NPR 88

SDR1 = US$ 0.65018 (As of October 31, 2013)

FISCAL YEARJuly 16 - July 15

ABBREVIATIONS AND ACRONYMS

ADS Agriculture Development Strategy M&E Monitoring and EvaluationAF Additional Financing MoAD Ministry of AgricultureAMIS Agency Managed Irrigation Schemes DevelopmentCIAA Commission for the Investigation of Abuse of MTR Mid Term Review

AuthorityDADOs District Agriculture Development Offices Mol Ministry of IrrigationDG Director General OPD Office of the ProjectDoA Department of Agriculture O&M DirectorDol Department of Irrigation ORAF Operational RiskDPs Development Partners Assessment FrameworkDTW Deep Tube Wells PDO Project DevelopmentFFS Farmer Field School ObjectiveFMIS Farmer Managed Irrigation Schemes R&R Resettlement andGoN Government of Nepal RehabilitationGPAP Governance and Peace Action Plan SEMF Social and EnvironmentalIBRD International Bank for Reconstruction and Management Framework

DevelopmentIDA International Development Association SEMP Social and EnvironmentICWMP Integrated Crop Water Management Program Management PlanIMD Irrigation Management Division VDC Village DevelopmentIMT Irrigation Management Transfer CommitteeIPRs Implementation Progress Reports WECS Water and EnergyO&M Operation and Maintenance Commission Secretariat

WoA Water Users Association

Vice President: Philippe H. Le HouerouCountry Director Johannes ZuttSector Director: John Henry SteinSector Manager: Simeon K. Ehui

Task Team Leader: Puma B Chhetri

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NEPAL

ADDITIONAL FINANCING TO THEIRRIGATION AND WATER RESOURCES MANAGEMENT PROJECT

CONTENTS

Project Paper Data Sheet

Project Paper

I. Introduction

II. Background and Rationale

III. Proposed Changes

IV. Appraisal Summary

- Economic Analysis

- Social Safeguards

- Environmental Safeguards

- Governance and Accountability

- Financial Management and Disbursement

- Implementation Arrangement

- Procurement

- Credit/Grant Effectiveness

- IDA terms

V. Key Achievements

VI Revisions to the Results Framework

Annexes

1. Revised Results Framework and Monitoring Indicators

2. Operational Risk Assessment Framework

3. Governance and Peace Action Plan

4. Project Costs

3

NEPAL

ADDITIONAL FINANCING TO THEIRRIGATION AND WATER RESOURCES MANAGEMENT PROJECT

ADDITIONAL FINANCING DATA SHEET

Basic Information - Additional Financing (AF)Country Director: Johannes Zutt Sectors: Irrigation and drainage (76%);Sector Director: John Henry Stein Agricultural extension and research (12%);Manager: Simeon K Ehui Central government administration (8%);Team Leader: Puma B Chhetri General agriculture, fishing and forestryProject ID: P144474 sector (2%); Sub-national governmentExpected Effectiveness Date: March 31, 2014 administration (2%).Expected Implementation Period: 03/31/2013 to Themes: Water resource management;06/30/2018 Rural services and infrastructure; RuralLending Instrument: Specific Investment Loan policies and institutionsAdditional Financing Type: Scale-up/ FinancingGap Environmental category: Partial

Assessment.

Expected Closing Date: June 30, 2018

Basic Information - Original ProjectProject ID: P099296 Environmental category: Category BProject Name: Irrigation and Water Resources Expected Closing Date: 06/30/2014Management ProjectLending Instrument: Specific Investment Loan

AF Project Financing Data] Loan [X] Credit [X] Grant [ ] Guarantee []Other

Proposed terms: StandardAF Financing Plan (US$ m)

Source Total Amount (US $m)

Total Project Cost: 58.1Co-financing (WUAs): 3.1Borrower (GON): 5.0Total Bank Financing:

IDANew 50.0

Recommitted

4

Client InformationRecipient:Government of NepalMinistry of FinanceSingha DurbarKathmandu, NepalTel: 977-1-4211332 Fax : 977-1-4211164

Responsible Agency: Department of Irrigation, Jawalakhel, Lalitpur, NepalContact Person: Mr. Shiv Kumar Sharma, Director GeneralTelephone No.: 977-1-5537136Email: [email protected]

AF Estimated Disbursements (Bank FY/US$M)FY 14 15 16 17 18Annual 3 12 15 15 5Cumulative 3 15 30 45 50

5

Project Development Objective and Description

Original project development objective: The original Project Development Objective (PDO) is"to improve irrigated agriculture productivity and management of selected irrigation schemes,and enhance institutional capacity for integrated water resource management".

Revised project development objective: The PDO will remain the same for the AdditionalFinancing (AF).

Project Description

Similar to the original project, the AF will have four components: (a) Irrigation InfrastructureDevelopment and Improvement; (b) Irrigation Management Transfer; (c) Institutional andPolicy Support for Improved Water Management; and (d) Integrated Crop and WaterManagement.

Component A: Irrigation Infrastructure Development and Improvement (US$ 31.0million). The component will improve irrigation service delivery through rehabilitation andmodernization of an estimated 80 Farmer-Managed Irrigation Schemes (FMIS) in up to 40districts in the three western regions of the country and through development of new andrehabilitation of existing groundwater irrigation schemes in the Terai. The total command areaof these schemes is estimated at 13,360 ha. In addition, the project will support capacitydevelopment of water users associations (WUA) to manage, operate, and maintain the new orimproved schemes.

Component B: Irrigation Management Transfer (US$ 12.84 million). Under the originalproject, four WUAs received project support for the improvement of irrigation infrastructurewith a total command area of about 23,000 ha. The capacity of WUAs will be developed totake charge of the management, operation, and maintenance of the improved systems. Asirrigation management transfer is a long-term process, the support to these four WUAs will becontinued under the AF. In addition, under the AF three new WUAs will be established and,supported and irrigation infrastructure will be rehabilitated before transfer to respective WUAs.The total command area for these three schemes is about 16,500 ha.

Component C: Institutional and Policy Support for Improved Water Management (US$3.48 million). The component will continue the support to the Water and Energy CommissionSecretariat (WECS). This will include the preparation of river basin plans for four riversystems in the country namely: West Rapti, Babai, Karnali and Gandaki.

Component D: Integrated Crop and Water Management (US$ 8.28 million). Thecomponent will support agricultural production activities in the schemes supported undercomponents A and B. The additional financing will put greater emphasis to on-farm crop watermanagement, improved cropping pattern, crop diversification and intensification, seedproduction (rice, wheat and maize) at the community level, and organized marketing. FarmerField School (FFS) curricula will include water management aspects besides soil fertility andintegrated pest management. Promotion and introduction of farm equipment will continue to besupported but made more strategic to align with agro-ecological variations and land-holdings.Technical capacity of extension staff will be enhanced through the provision of appropriatehands-on practical training courses and cross learning visits.

Safeguard and Exception to PoliciesSafeguard policies triggered:Environmental Assessment (OP/BP 4.01) [x]Yes [ ] NoNatural Habitats (OP/BP 4.04) [ ]Yes [x] NoForests (OP/BP 4.36) [ ]Yes [x] NoPest Management (OP 4.09) [x]Yes [ ] NoPhysical Cultural Resources (OP/BP 4.11) [x]Yes [x] NoIndigenous Peoples (OP/BP 4.10) [x]Yes [ ] NoInvoluntary Resettlement (OP/BP 4.12) [x]Yes [ ] NoSafety of Dams (OP/BP 4.37) [ ]Yes [x] NoProjects on International Waters (OP/BP 7.50) [x]Yes [ ] NoProjects in Disputed Areas (OP/BP 7.60) [ ]Yes [x] No

Does the project require any waivers of Bank policies? [ ]Yes [x] NoHave these been endorsed or approved by Bank management? N/A

Conditions and Legal Covenants:

Financing Agreement Reference Description of Covenant Date DueNone

7

I. Introduction

1. This Project Paper seeks the approval of the Executive Directors to provide a credit andgrant in an amount of US$50 million to Nepal for Additional Financing (AF) to the Irrigationand Water Resources Management Project (IWRMP).

2. In December 2012, the Government of Nepal (GoN) requested the World Bank (WB) toprovide an Additional Financing (AF) of US$50 million in order to: i) complete the originalcommitment of rehabilitating 193 schemes; and ii) internalize, institutionalize and replicate thegains made so far in both irrigation water management and agricultural practices.

3. Following the request of the GoN for AF, an independent assessment was carried out to(i) assess if the original project was meeting the project development objectives; (ii) review andassess the efficiency, relevance, impact, and sustainability of key project interventions; and (iii)assess the need and modality for the Bank to continue its support to the irrigation and agriculturesector. The assessment concluded that the Bank's involvement in the irrigation and agriculturesectors is relevant and aligns well with government priorities. The assessment alsorecommended retention of all the four project components with suggestions to (i) improve thequality of work, (ii) increase the engagement of Irrigation Management Division (IMD) inmanagement transfer, (iii) foster better coordination between the four components and (iv)aligning agricultural activities to support on-farm crop-water management.

4. The proposed AF will: i) help scaling up of best practices achieved by the project inFMIS to rehabilitate about 80 additional schemes, ii) support management transfer in the fourAgency Managed Irrigation Schemes (AMIS), iii) develop four river basin plans, and iv) provideagricultural extension services in the schemes under farmer and agency managed schemessupported by the project.

5. The project will continue to be executed by the Ministry of Irrigation (Mol) withDepartment of Irrigation (Dol) (Component A and B); Water and Energy CommissionSecretariat (WECS) (Component C) and Department of Agriculture (DoA) (Component D) askey implementing partners.

II Background and Rationale

Background

6. The proposed AF is consistent with the Interim Strategy Note' and the new Country

Partnership Strategy, currently under preparation, and the newly formulated GoN Agriculture

Development Strategy (ADS).

7. Approved on December 6, 2007 IWRMP is financed by an IDA grant (Gr. H902, US$50million). The first AF credit (Cr. 5344, US$14.3 million) was approved on September 29, 2008in response to the food security crisis. The closing date of both grant and credit is June 30, 2014.

Report number 63381-NP discussed and approved by the World Bank's Board on September 15, 2012.

8

Oriinal Scope

8. The original scope of IWRMP was to support, under Component A, 198 FMIS covering28,500 ha with rehabilitation and modernization of infrastructure and strengthening theorganization and management capacity of Water Users' Associations (WUA). Increases in theprice of construction materials and labor necessitated a downward revision of the target from 198to 103 schemes during the Mid-Term Review (MTR) in October 2010. However, savings fromthe physical contingencies embedded in original cost estimates provided for an additional 31schemes, giving a new revised target of 134 schemes covering about 20,000 ha. Component Bwas designed to address the issues related to overall service delivery and service performance offour AMIS in Sunsari-Morang, Block 8 in Narayani, and Mahakali I - all in the Terai districts.The plan was to handover functions of maintenance of order canals to respective users covering acommand area of 61,000 ha. The MTR revised it to a more manageable 23,000 ha. ComponentC aimed at establishment of Water Resource Information Center and River Basin Offices inKarnali and Narayani river basins and installing telemetry systems in Babai and West RaptiRiver Basins while Component D is to provide support to target beneficiaries to enhance theiroverall productivity of crops through extension services, organized inputs supply and marketing,capacity development, strengthening of agricultural value chain in the schemes served underComponents A and B. The project will continue to cover 40 districts spanning across themountains, hills and the Terai. In the mountain and hills, the project covers surface irrigationschemes.

Progress

9. Out of 134 schemes, 80 FMIS are already complete, and the remaining 54 have madesubstantial progress, expected to be completed by June 2014. Infrastructure development work,enhancing water management and institutional strengthening of WIJAs are progressing atdifferent pace in the four AMIS. Implementation and pilot testing of desktop GeographicInformation System based Management Information System (GMIS) and web-based GMIS inregional cost centres have been completed. Data entry of individual sub-projects into desktopGMIS and verification and uploading such data into web-GMIS are progressing. Activities underregular Integrated Crop and Water Management Program (ICWMP), under Component D, haveprogressed well with increase in productivity of rice, wheat, maize and potato by 25, 53, 50 and75 percent respectively. A detailed progress of each of the indicators is reported in the resultsframework attached as Annex 1.

10. In terms of financial progress the project as at September 2013 had disbursed US$ 47.26million (74 percent) out of USS 64.05 million leaving a balance of US$16.79 million. With allthe funds committed and activities on-going, the project is well placed to disburse 90 percent byJune 2014.

III Proposed changes

11. No changes have been proposed for this AF both in terms of project developmentobjective and components. The project objective is to contribute to "improving the productivityof agriculture in the selected irrigation schemes and enhance the institutional capacity forintegrated water resource management" and will maintain the original four components

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namely: (a) irrigation infrastructure development and improvement; (b) irrigation managementtransfer; (c) institutional policy support for improved water management, and (d) integrated cropand water management. However, as recommended by the independent assessment the projectwill enhance its efficiency and impact by adopting the following actions:

i. Component A. Improve construction supervision and assurance of quality of works.Additional supervisory engineering staff is to be hired through the Technical Assistance(TA) consultants. Important deficiencies in the irrigation systems are to be addressed sothat the water abstraction, conveyance, and distribution can be as per requirements.Attention will be paid to support WUAs to enable them to properly manage the improvedsystems. This may be done through project-hired facilitators who will work closely withmaster farmers within each scheme, with the latter taking the lead in organizing thecommunities and managing the water.

ii. Component B. Similar to component A, improve construction supervision and assuranceof quality of works. The AF will put greater emphasis on building the capacity within Dolfor irrigation Management Transfer (IMT). The AF will expand and enhance the role ofthe Irrigation Management Division which is principally responsible for managementtransfer and strengthening of WUAs, as well as the monitoring of their performance.

iii. Component C. WECS will need to further enhance coordination with other linedepartments such as the Department of Hydrology and Meteorology and the Agri-businessPromotion and Statistics Division of Ministry of Agriculture Development (MoAD) forensuring synergy and avoiding duplication of work.

iv. Component D. Accord greater emphasis to on-farm crop-water management and cropdiversification. Additional technical support is to be procured either from the country orthe region in order to expand on-farm water management activities. Curriculum for FFS isto include water management aspects. In tail ends where water availability is generallylower, conservation farming will be promoted to: i) conserve soil moisture, ii) maintain soilfertility, and iii) reduce soil erosion. Marketing and post-harvest activities (value addition,processing, storage) will be strengthened. Finally, the activities will be aligned to supportGoN's ADS.

12. Key activities to be supported by the AF are summarized below by components:

Component A: Irrigation infrastructure development improvement

13. Under this component the AF will support the rehabilitation and modernization of 80FMIS with estimated total command area of 6899 ha and training the WIJAs in organizationaland management aspects related to efficient and equitable water use. The Regional Appraisaland Approval Committee has already approved 28 schemes, selected on the basis of technicalfeasibility, poverty/food security index, and geographic location among others. Besides FMIS,the AF will also construct 34 deep tubewells (DTW) covering 1,160 ha and support therehabilitation of 89 tubewells (5300 ha) (possibly including 25 from the Bhairahawa-LumbiniGround Water Project; covering a total command area of over 6460 ha. Altogether, componentA will support the construction and rehabilitation of schemes (FMIS and GW) covering a total

10

area of 13,360 ha. Besides, irrigation infrastructure, the component will also supportrenovation/extension of office buildings of WUA and Dol.

Component B: Irrigation management transfer

14. While the AF will continue to support institutional support to the four AMIS namely: 1)Kankai, 2) Sitagunj in Sunsari -Morang, 3) Block 8 in Narayani, and 4) Mahakali stage 1, it willalso support three additional systems with an estimated command area of 16,500 ha. Theyinclude: 1) Ramgunj (7,800 ha) in Sunsari Morang; 2) Block 2 in Narayani (3,000ha); and 3)Mahakali stage 2 (5,700 ha). To ensure successful management transfer, the project will (i)rehabilitate critical sections of the irrigation systems so that the conveyance and distribution isadequate for the entire command area, (ii) support development of memoranda of agreementbetween the Dol and respective WUAs with clear articulation of the rights, financial, technical,and management responsibilities of both parties, (iii) provide training and support to WUAs, andDol, and (iv) support construction, expansion and renovation of office buildings of WUAs andDOI. As recommended in the assessment report Component B will increase the engagement ofIMD in irrigation management transfer. To pursue this, capacity building, training and WUAstrengthening will be channeled through System Management and Training Program of IMD as acost center. IMD has good expertise with long experience in working with the WUAs andmanagement transfer, but the project will support IMD with training and goods to be fully able toexecute its functions as per mandate.

Component C: Institutional policy support for improved water management

15. Component C will support the preparation of four river basin plans for: West Rapti,Babai, Karnali and Gandaki Rivers. The purpose is to prepare the basin plan to assess the supplyand demand of water for various uses such as drinking water, irrigation, hydropower, etc. Theoutput of these plans will provide the vision for the further structural and non-structuraldevelopment of the river basin and the allocation of water to various competing sectors.

Component D: Integrated crop and water management

16. Major impediments in agricultural productivity in Nepal include: i) lack of irrigation(only 29 percent of the total agricultural land of 2.64 million ha is irrigated), ii) unavailability ofquality seeds and fertilizers on time, iii) pest complex, iv) inadequate access to advisory services,and v) lack of organized marketing. Cropping pattern will include legumes and vegetables forboth soil fertility improvement, nutrition and cash income. Through coordinated communitybased seed production program with the Nepal Agriculture Research Council and other Bank-funded agricultural projects, certified/truthful seeds of rice, wheat and maize, will be madeavailable at the grassroots level. Post-harvest losses, estimated at 20 to 30 percent, will beaddressed. Field days and cross learning visits will be organized where private sector and agro-vet dealers will be invited. District Agriculture Development Office (DADO) and AgricultureService Centers (ASCs) will be equipped with facilities such as Internet services to takeinformation and knowledge products closer to farmers. The skills of agricultural technicians, aswell as leader farmers and FFS facilitators, will be improved, particularly on crop watermanagement. In areas with good access to market and services, the project will promote the useof hybrid/improved seeds, supported with intensive extension services. To address the problemof labor shortage and to enhance efficiency, farm equipment such as mini power tillers,

11

winnowing machine, and tractors will be provided to farmer groups on cost-sharing basis.Establishment of collection centers will be supported to collect and sell agricultural produce,particularly vegetables. Services of experienced technical expert will be arranged in order toprovide the project with required expertise on on-farm water management, crop diversificationand post-harvest technologies.

IV Appraisal Summary

Economic analysis

17. The financial and economic analysis carried out in the course of the assessment by Foodand Agriculture Organization showed positive rates of return for all the project types supportedby the project, even for the quite distant surface irrigation schemes in the mountains (Table 1).The low rate of return in the mountains is due mainly to difficult access to project sites and highcosts of transportation.

Table 1. Economic rate of return and net present valueType of scheme NPV EIRRSurface - Mountains 765,083 13%Surface - Hills 12,380,681 30%Surface - Terai 58,813,571 26%Ground water - DTW 38,444,417 22%Ground water - STW 57,688,658 29%

Source: Draft Project Assessment Report (FAO), October 2013.

Social safeguards

18. Since there is no change in components and project area, the social safeguard issuesunder the additional financing will be governed by the existing Social and EnvironmentalManagement Framework's (SEMF) provisions, processes and procedures for screening,assessment, and monitoring. This includes a Resettlement and Rehabilitation (R&R) policyframework, and strategies for vulnerable community and gender development and forcommunication with stakeholders. An R&R policy framework was prepared for the originalproject consistent with the Bank's OP 4.12 on Involuntary Resettlement. Measures have beenundertaken through Social and Environment Management Plans (SEMP) at the scheme level toensure that social and environmental aspects are systematically identified, addressed andintegrated with the overall project cycle. There are well-established principles, based on existingframeworks and guidelines that have been applied well under the original project and will nowalso apply to the AF. Since all of the interventions are on existing schemes, land acquisitionand/or physical displacement are not envisaged. In the existing project, in case of additional landrequirement, land is either voluntarily donated or alternative designs are considered to avoid landacquisition. This has also been confirmed by an independent evaluation of SEMPimplementation conducted by the borrower. In case land acquisition and related R&R issues arisein any sub-project, a SEMP will be implemented in accordance with the R&R policy framework.To ensure that vulnerable communities access project benefits at par with others, a VulnerableCommunity Development Plan as part of SEMP will be prepared that includes specific measuresto enhance their accessibility to project benefits.

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19. During the preparation of the Integrated Social and Environment Assessment (ISEA) forthe original project in 2007, various consultations were held in the field and with thestakeholders. The gender development strategy prepared for the original project includesmeasures to help women WIJA members to access project benefits at par with men. A GenderAction Plan as part of SEMP is prepared and implemented at the scheme level. Detailedconsultations are carried out with the community during the preparation of SEMPs that informthe stakeholders about the proposed project activities, and likely impacts, both positive andnegative. Consultations included one-on-one contacts with beneficiaries and potential projectaffected families, focus group discussions, meetings in the villages and district levelconsultations with WUAs and Village Development Committee. Stakeholder consultations havealso taken place at systems to be transferred under Component B. The detailed outcome of theconsultations is reflected in the ISEA report of 2007. All the safeguard related documents werereceived by the Bank on May 23, 2007. There has been no change to these documents for AF,however these documents were re-disclosed in-country and to infoshop on October 30, 2013.

Environmental safeguards

20. The additional financing activities will also be subject to the existing provisions,processes and procedures for environmental screening, assessment and monitoring. Activitiessupported under the ongoing IWRMP, including rehabilitation of FMISs, have been relativelysmall scale and have low environmental risks. None of the activities required detailedenvironmental assessment beyond screening and preparation of simple SEMPs. The ongoingoperation has not encountered any significant environmental issue. The type and size ofinvestments/activities for rehabilitation and modernization of systems under the proposedadditional financing will be very similar to the ongoing activities and are likely to have low tomoderate environmental risks that can be addressed through SEMPs. Each scheme would besubjected to the environmental screening and necessary assessment as required under the originalproject. The provisions of the parent project are adequate to provide environmental guidance tothe type of subprojects being considered. With the availability of reliable irrigation water andeffective extension services, there is potential for increased use of agro-chemicals. Though theproject will neither purchase nor promote the use of chemicals and any activity that involves theuse of World Health Organization class la, I b and II chemicals is banned by Government ofNepal, intensification of agricultural is likely to entice induced use of pesticides therebytriggering of OP 4.09. The project will therefore, prepare guidelines for safe use of chemicals inFFS curriculum for farmers at the very onset of the project. Awareness and training coursesrelated to pesticides use and implications will be included in the subproject SEMP. Hence,project level pesticide management plan is not necessary. Considering the issue of frequent stafftransfer, the newly posted staff needs to be oriented on the SEMF early on and trained inmonitoring and reporting of environmental compliance and mitigations as described in theSEMF.

21. The newly established Social, Environment and Climate Change unit of Dol underSurface Irrigation, Environment and Mechanical Division will be made responsible for reviewingSEMPs and monitoring of the social and environmental activities carried out at the sub projectlevels. To conduct these activities, the unit will be established as a cost center.

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Governance and Accountability

22. IWRMP has paid good attention to maintaining transparency in processes and decisionmaking and ensuring people's access to information. The project currently maintains a website(www.DoL.gov.np), which will be enhanced during the implementation of the AF for things suchas reporting on procurement and monitoring of program activities. Going forward with the AF, arobust communication strategy will be adopted to guide all project units in improving publicaccess to information. The project will be pro-active in informing the public about projectactivities (e.g. plan, program, and achievements) using local media and other means ofcommunication.

23. There is a grievance handling mechanism in place under the original project but its lowuse may be due to the unfamiliarity among people, which can be improved as part of thecommunication strategy.

24. Community-based WUAs play a critical role in management of IWRMP activities. Theproject will continue to put significant efforts at building capacity of WUAs. These will, amongothers, promote social and economic inclusion in the functioning of WUAs (e.g., stronger rolefor women and excluded groups), including decision-making processes. Also, during the AFphase, the project envisages carrying out a Social Audit of project activities. A separateGovernance and Peace Action Plan (GPAP) has been annexed to this paper (Annex 3). IWRMPhas had GPAPs in the past but reporting on them has not always been very detailed. Therefore,all future implementation reviews will follow up and report on GPAP actions, which will beupdated regularly.

Financial Management and Disbursement

25. Financial management arrangements remain unchanged. The current financialmanagement rating is "Moderately Satisfactory". Both the implementing agencies Dol and DoAare maintaining financial management system as per the government requirements and nochanges are suggested to current Financial Management systems and processes. Field levelmonitoring confirms that financial management procedures as required by the FinancialAdministration Regulations are being followed, with requisite levels of documentation andtransparency. The ongoing review of the financial records reveals that the procedures in place areconsidered adequate to ensure that fiduciary risk is minimized. Regular reviews have beenproposed to strengthen the monitoring of expenditures on a regular basis and also recruit afinancial management consultant at Dol for increased oversight and support to financialmanagement function. Both Dol and DoA will intensify their monitoring of field levelexpenditures, and ensure that all records are reconciled with field expenses and maintained at thecenter. There are no overdue Implementation Progress Reports (IPRs) and Audit Reports.Reporting will continue through trimester IPRs. Disbursement will continue to be report-basedusing the reporting formats that are currently under use. The intended funds flow and DAarrangements will remain the same as in the original project. Funds for WECS component willbe channeled through Dol as in the current arrangement. Two new DAs will be established atDol and DoA, exclusively for the AF.

Audit Report14

26. There are no outstanding audit reports. Some control deficiencies have been noted inprevious audit reports and implementing agencies have committed to strengthen their monitoringand oversight over district level expenditures.

Implementation Arrangement

27. No major changes are suggested to the current implementation arrangements. Overallresponsibility for management of the project would continue to rest with the Dol. Projectmanagement would be undertaken by a Project Director whose office will be located in Dol.Support staff for Office of the Project Director (OPD) will be provided by Dol. The OPD will beresponsible for overall coordination of the project and arranging technical support for projectimplementation at the central level and also for coordinating various implementing agencies andtheir activities. The ICWMP will be implemented by the Dol and DoA. At the central level anICWMP Program Coordinator would liaise with the OPD's office for coordination,implementation and Monitoring and Evaluation (M&E) while at the district level agriculturalactivities will be implemented through respective DADOs. This will be a coordinated activitywith Irrigation Divisional or Sub-divisional Offices and WUAs.

28. In order to enhance efficiency and in keeping with the recommendation of independentassessment the OPD will procure services of consultant(s) to provide backstopping in finance,procurement in addition to third party monitoring of works and contract management.

Procurement

29. Procurement for the proposed operation will be carried out in accordance with the WorldBank's "Guidelines: Procurement of Goods, Works and Non-consulting Services under IBRDLoans and IDA Credits and Grants by World Bank Borrowers" published by the World Bank inJanuary 2011 ("Procurement Guidelines"), in the case of goods, works and non-consultingservices; and "Guidelines: Selection and Employment of Consultants under International bankfor Reconstruction and Development (IBRD) Loans and International Development Association(IDA) Credits and Grants by World Bank Borrowers" published by the WB in January 2011("Consultant Guidelines") in the case of consultants' services, and the provisions stipulated inthe Legal Agreement. For each contract to be financed under the Credit/Grant, procurementmethods or consultant selection methods, the estimated costs, prior review requirements, andtime frame will be agreed between the Borrower and the Bank in the Procurement Plan whichhas been prepared by the borrower and reviewed by the Bank. The Planwill be updated at leastannually or as required to reflect the actual project implementation needs and improvements ininstitutional capacity.

30. IWRMP has been assessed as one of the better performing projects in the Bank portfoliowith regard to procurement. Based on the project performance review and this assessment, someperceived procurement risks are chances of delay in making procurement decisions, timelyinitiation of procurement as per procurement plan, and inadequate capacity of some staff,especially at district level, in contract management and administration. On the basis ofprocurement assessment of Dol, the overall procurement risk for the project has been rated"Moderate".

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31. In order to expedite the decision making process under the AF, it is recommended toprepare a checklist of procurement processes fully covering the decision making steps in it. Thechecklist should also mention the backup staff so that decisions can be made without any delayin absence of primary staff. Considering the chances of transfer of experienced staff and joiningby new staff with inadequate procurement experience, it is recommended to plan and implementtraining programs on a regular basis for all the staff involved in preparing and reviewingprocurement documents and decision making. Capacity of staff for contract management andadministration needs also be improved through appropriate training and/or engaging a contractmanagement expert to support the project team. Engaging maximum number of in-house staffinvolved in ongoing and previous Bank financed projects is encouraged.

Credit/Grant Effectiveness

32. There are no effectiveness conditions and no exceptions to Bank policies.

IDA terms

33. The AF will be fully funded through an IDA credit of US$30 million and grant of US$20million. The GoN and WUAs will contribute US$5 million and US$3.1 million respectively.

V. Key Achievements

Project Outcome Baseline data Mid-term Status by October rarget Set for end ofdataIndicators (2008/09) (012 2013 Project (June 2014)(2011/12)

Paddy 2.9 3.2 3.5 3.5ImprovedWhairrigation 1.7 2.6 2.6 2.8agricultural Maize 1.7 2.6 2.6 3.2productivity(ironesctar) Potato 8.0 13.8 14.0 14.0(in tones/hectares)

1 Veg. 8.0 14.3 14.5 NACropping Intensity % 176 187 210 210

Intermediate Outcome Indicators

% of Tail Enders reporting to 30.6 30.7 72.7 60improved water availability.

% of WUAs formallyconstituted and holding 30.0 67.4 84.0 90regular meetings.

% of WUAs collecting watercharges required for adequate 21.0 31.2 41.0 80operation and maintenance(O&M)% of WUAs maintainingappropriate account and cash 26.0 54.6 79.5 80register

VI. Revisions to the Result Framework16

34. During the preparation of the AF, the project management team raised difficulties incollecting data related to subjective variables such as "satisfaction level", and "strengthening ofWUA". This will be resolved by designing a tool through services of consultant(s). Outcomeindicator related to establishment of integrated national water resources has been dropped as thisactivity has already been accomplished. The revised results indicators are appended below.Revised results framework with updated target values is attached in this paper as Annex 1.

Revisions to the Results Framework Comments/Rationale for Change

PDO

Current (PAD) Proposed

To improve irrigated No change. N/Aagriculture productivity andmanagement of selectedirrigation schemes andenhance institutional capacityfor integrated water resourcesmanagement.

Project Outcome Indicators

Increase in productivity of No change N/Aselected crops (rice, wheat,maize and potato).Percent increase in cropping No change N/AintensityPercent of WUAs in No change N/Atransferred irrigation schemeswhose Operation &Maintenance (O&M)expenditures is as per agreedAsset Management PlansPercent of water users in the No change Will hire services of externalrehabilitated schemes satisfied consultant in order to carry outwith WUAs. the assessment.Integrated national water Dropped Accomplished already.resources database establishedCore indicatorsArea provided with irrigation No change N/Aand drainage services (ha)Operational water user No change N/Aassociations created and/orstrengthened (number)Water users provided with No change N/Anew/improved irrigation anddrainage services (number)Water users provided with No change N/Airrigation and drainageservices - female (number)

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Intermediate Outcome IndicatorsComponent A: Irrigation infrastructure development and ImprovementPercent of tail-enders No change N/Areporting improved wateravailability.Percent of WUAs formally No change N/Aconstituted 2 and holdingregular meetingsPercent of WUAs collecting No change N/Awater charges (in cash, kindand labor) required foradequate O&MPercent of WUAs maintaining No change N/Aappropriate accounts and cashregistersArea irrigated by groundwater No change N/Afrom Deep Tube Wells (DTW)

Coi onentB: Irrigation management TransferPercent of tail-enders No change N/Areporting improved wateravailability.Percent of WUAs holding Number of WUAs holding regular Since only a total of 7 WUAsregular meetings meetings planned to be intervened,

specified the number of schemesrather than the percent value

Percent of WUAs collecting Number of WUAs collecting Since only a total of 7 WUAswater charges required for water charges required for planned to be intervened,adequate O&M adequate O&M specified the number of schemes

rather than the percent valuePercent of WUAs maintaining Number of WUAs maintaining Since only a total of 7 WUAsappropriate accounts and cash appropriate accounts and cash planned to be intervened,registers registers specified the number of schemes

rather than the percent valuePercent of delivery points No change N/Areceiving proportionate shareof waterAdequate O&M expenditures Adequate O&M expenditures by Since only a total of 7 WUAsby Dol and WUA according to Dol and WUA according to agreed planned to be intervened,agreed Asset Management Asset Management Plan in 5 out specified the number of schemesPlan of 7 schemes rather than the percent valueComponent C: Institutional and Policy support for Improved Water ManagementTelemetric Systems No change N/Aestablished in targeted basinsIntegrated river basin water Integrated river basin plans AF supports a total of 4 riveruse plans developed for two developed for four river basins basins.river basins by relevant RiverBasin Offices.

2 In line with existing Water Resources Act and Irrigation Regulations18


Component D: Integrated Crop and Water ManagementPercent of targeted farmers in No change N/Athe selected schemes adoptingdemonstrated techniquesRelevant community and Dropped Output too complex to measureproductive assets formedthrough investment supportprovided.Increase in seed replacement No change N/Arate

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Annex 1

NEPAL: Additional Financing to the Irrigation and Water Resources Management Project

Results Framework

Design summary Indicators Baseline3 TargetDevelopment First Year Second Year Third Year Fourth Year

Objective (June 2015) (June 2016) (June 2017) (June 2018)Increase in

To improve irrigated productivity of Rice 2.9MT/ha; Rice: 3.57 MT/ha Rice: 3.8 MT/ha Rice: 3.8 MT/ha Rice: 3.8 MT/haagriculture selected (main) Wheat 2.OMT/ha; Wheat: 2.9 MT/ha Wheat: 3.07 MT/ha Wheat: 3.2 MT/ha Wheat: 3.2 MT/haproductivity and crops. Maize 2.1MT/ha; Maize: 3.2 MT/ha Maize: 3.38 MT/ha Maize: 3.6 MT/ha Maize: 3.6 MT/hamanagement of Potato 10.OMT/ha Potato: 14.43 MT/ha Potato: 15.11 MT/ha Potato:16.0 MT/ha Potato:16.0 MT/haselected irrigationschemes and enhance Percent increase in Average 168 210 percent 215 percent 218 percent 220 percent

institutional capacity cropping intensity Percent

for integrated waterresources Percent of WUAs inmanagement. transferred irrigation

schemes whoseO&M expenditures is 0 30% 50% 75% 85%as per agreed AssetManagement Plans

Percent of waterusers in therehabilitated schemes 0 30% 50% 60% 70%satisfied with WUAs.

Core indicators

Area provided withirrigation and 33106 50615 53396 67304 72867drainage services (ha)

Operational wateruser associationscreated and/or 0 134 150 182 221strengthened(number)

Baseline as per the original project ( May 1, 2008)


Objective (June 2015) (June 2016) (June 2017) (June 2018)Water users (Numberof beneficiaries)provided withnew/improved 0 207,600 311,400 400,000 415,200irrigation anddrainage services

Water users (numberof female 0 107,950 161,928 208,000 215,904beneficiaries)provided withirrigation anddrainage services

Component A: Percent of tail-endersIrrigation reporting improved N/A 25 40 50 60infrastructure water availability.development and Percent of WUAsImprovement formally constituted4 0 60 67 80 100

and holding regularmeetingsPercent of WUAscollecting watercharges (in cash, kind 0 60 67 80 100and labor) requiredfor adequate O&MPercent of WUAsmaintaining 0 60 67 80 100appropriate accountsand cash registersArea irrigated bygroundwater from 464 3,927 4,526 7,518 8,725Deep Tube Wells(DTW)

Component B: Percent of tail-endersIrrigation reporting improved 0 30 40 50 60management water availability.

Transfer Number of WUAs 0 4holding regular

4 In line with existing Water Resources Act and Irrigation Regulations

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Objective (June 2015) (June 2016) (June 2017) (June 2018)meetings.Number of WUAscollecting water 0 1 3 4charges required foradequate O&M.Number of WUAsmaintaining 0 4 5 6appropriate accountsand cash registersPercent of deliverypoints receiving NA 40 50 80 100proportionate shareof waterAdequate O&Mexpenditures by Doland WUA accordingto agreed AssetManagement Plan in5 out of 7 schemes

Component C: Integrated river basinInstitutional and plans developed for 0 0 Interim plans for four river Draft plans for four 4 integrated riverPolicy support for four rivers basins developed river basins prepared basin plans preparedImproved Water and finalized.Management

Telemetric Systemsestablished in TBD TBD TBD TBDtargeted basins

Component D: Percent of farmers in 0 30 40 50 60Integrated Crop the selected schemesand Water adoptingManagement demonstrated

techniquesIncrease in seed Rice: 10.2% Rice: 10.2% Rice: 11.6% Rice: 13.01% Rice: 13.01%replacement rate Wheat: 10.3% Wheat: 10.3% Wheat: 10.6% Wheat: 10.90% Wheat: 10.90%

Maize: 11.3% Maize: 11.3% Maize: 13.0% Maize: 16.01% Maize: 16.01%

TBD = To be determined.

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Annex 2

Operational Risk Assessment Framework (ORAF)

Additional Financing for Irrigation and Water Resources Management

Appraisal Stage

1.1 Stakeholder Risk Rating Substantial

Description: Risk Management:

(i)Project concept and approach comes out of a consensual, government-led process which is explicitly supported by all majormi) H emand fort infastctuonproce suor petsr an donors and involved local, regional and national consultations with civil society stakeholders. Also, periodic consultations havemat eanthatfselectivelocation poe cmy sier man been held in project locations and with a wide range of stakeholders, including civil society representatives to identify the need.cosltat efftie loa nftios nd so cmunitiestmy Also the project includes a well-defined selection criteria based on technical, social and institutional feasibilities s to support

should. should.projects within the current government capacity. This is further supported by adequate provisions for training, capacity buildingand M&E system that shall ensure better management of irrigation schemes by WUAs and beneficiaries.

Resp: Bank Stage Preparati Recurrent: O Due Date: Frequency Status: Inon Progress

3.1 Capacity Rating Substantial


q c(i)Project has provisioned various training workshops and procurement clinics to boost the capacity of the PMT (within Dol) toprocnadeuate caact ithncil acth Dof toje carry our financial and procurement activities efficiently. The project has hired consultants in order to ensure quality of work.p ementan fn aspct and implementation transparent procurement and financial management processes. This approach will be continued.implementation on time.

(ii) Inadequate capacity of Dol and WUA to manage (ii)The mandate for IMT and strengthening of WUA is one of the core activities of Irrigation Management Division. Throughand/or implement irrigation management transfer AF, the project will increase the engagement of and support to Irrigation Management Division to enhance their capacity on IMT

(IMT). and building institutional capacity of WUAs.

Resp: Bank/clie Stage Impleme Recurrent: Due Date: Frequency Status: Innt : ntation : Progress

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3.2 Governance Rating Substantial


(i) Although the implementing agencies have well- (i) As a part of AF, A robust grievance redressal mechanism, as part of the peace filter-related govemance and accountability

established rules and oversight procedures, effective plan, has already been e designed in the project to improve quality and responsiveness of decision making. A manual tostreamline the Monitoring and evaluation system between the implementing agencies (DoA and Dol) has been developed. While

resonstog gevaluainceoand feqenyhand. alitGrievance handling system s has been initiated the need to enhance monitoring and supervision of project supported activitiesneeds further scrutiny and emphasis. This will be done by ensuring that M&E system, already established by the project, isutilized and a dedicated M&E person is allocated for this task.

Resp: Client Stage Impleme Recurrent: x Due Date: Frequency Status:ntation:

4.1 Design Rating Moderate


(i)The project design may be perceived to have a "top- (i) AF will ensure that project selection is proportionately representative to include the schemes from the hills and mountains asdown" approach, given remoteness of project area and well. A fairly robust and inclusive selection criterion will be adopted to ensure this. AF will also high priority to ensurebeneficiaries. inclusion water user groups/members in the designing rehabilitation and modemization work. They will be encouraged to

monitor implementation of projects at the field level(ii)Key project staff being frequently transferred

(ii) In terms of the Agriculture component, farmers (beneficiaries) are involved in the process of selecting crop varieties and(iii)Coordination between Dol and DoA with regard other technologies to be promoted under the project. This ensures acceptance of project activities by farmersto ICWM (Component D) is weak or ineffective, (ii) Through various forums such as portfolio reviews and special meetings, the Country Management Unit Nepal willadversely impacting project implementation proactively stress the need for retention of core staff. The project management team will take extra care to retain the current

level of staffing and enhance the capacity of officers through relevant trainings and capacity building initiatives(iv) In view of time constraint and pressure for.diveI, qait of ensraign and orem be f(iii) Also, a clause will need to be included in the IDA Financing Agreement that specifies maintenance of core managementcompried ateam composition, continuity in post requirements, immediate filling of vacant positions and understandings regarding

consultations with IDA prior to changes in core team.

(iv) At the scheme level, District Technical Team, comprising of representatives from Dol and DoA will jointly ImplementIntegrated Crop Water Management (ICWM) activities. At the district level ICWM activities will be planned and supervised bythe District Coordination Committee, comprising members from Dol and DoA.

(v) Ensure that Technical meeting take place on six monthly basis and Steering Committee meetings on annual basis.

(vi) Engage services of extemal consultant at appropriate times to support in preparation of design work, preparing procurement

plans and supervision of work at the field level.

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Resp: Client Stage: Recurrent: X 0 Due Date: Frequency Status: Not YetImplementation Due

4.2 Social and Environmental Rating Moderate


(i) Infrastructure will be associated with negative (i) Dol has developed to mitigate any environmental or social risks. Their implementation will be monitored (ii) Periodicobservation to ensure there is equitable representation of members on water users committee from tail end. The project willcontinue to avoid projects that trigger conflicts, displacement of people or straddling into the national parks or reserves.

(ii) Exclusion of tail enders and women on the Water Resp: Client Stage Preparati Recurrent: O Due Date: Frequency Status: InUser Committee. : on : Progress

(iii) Community seed storage and collection centers be Risk Management:

built on personal lands. (iii) Construction of seed storage or collection centers will continue tobe on public lands, allocated by respective VillageDevelopment Committees. As in the main phase of the project, construction of these facilities will however be preceded byimpact assessment.

Resp: Client Stage Impleme Recurrent: Due Date: Frequency Status: Not Yetntation 0 Due

4.3 Program and Donor Rating Low


(i)Duplication of effort and contradictory approaches (i)The reports generated by the Aid Management Platform (AMP), developed and hosted by the International Economicmay arise when the Project is not prepared in close Coordination Cooperation Division of Ministry of Finance indicates that there are a few irrigation and food security relatedcoordination with other partners. projects that are supported by various DPs but none of the projects quite have the similar modality and approach as this Project.

Also, through continuous consultations with the Development Partners (DPs) active in this sector, activities will be aligned withinterventions under this project (in terms of both approach and geographic areas).

Resp: Client Stage Preparati Recurrent: Due Date: Frequency Status: Inon/Imple 0 Progressmentatio0n

4.4 Delivery Monitoring and Sustainability Rating Moderate


(i)Sustainability after the project. Beneficiaries face (i)Projects that are complex and require large technical and financial schemes will not be considered. Technology promoted will

technical problems with operation and maintenance be simpler that are within the capacity of user groups to handle. Consolidation period will be maintained to provide

after the completion of the project leading to sustainability of the project during the initial period of farmers operation after IMT. Provision will be ensure to provide

continued dependence on government assistance and government support for technical backstopping for major repair work in cases of natural disasters.

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subsidies. (ii)The project will have a coherent overall Results Framework, which will pull together targets and outputs supposed to beachieved at various levels. It will be supported by an appropriate M&E strategy and plan (specifying priorities, information

(ii) Inadequate systems and approaches in place for needs, and relative roles and responsibilities of different implementing agencies). This will be augmented by participatoryresults based monitoring and timely feedback. community monitoring and external impact assessments.

(iii) Water User Groups, with whom eventual responsibility of managing water resources and maintenance of canals lie, will beempowered and strengthened sufficiently to be able to 1) distribute water equitably, 2) resolve conflicts, 3) generate fundsthrough collection of irrigation service fee, and 4) equitable distribution of water, 5) ensuring right mix of users on thecommittee from both high, mid and tail ends, and 6) maintenance of records in transparent manner.

Resp: Client Stage: Recurrent: Due Date: Frequency Status:Implementation [

6. Oveal Risk

Preparation Risk Rating: Substantial Implementation Risk Rating: Substantial

Description: Preparation does not involve any significant challenges that cannot beeffectively mitigated.On the other hand, the essential nature of the project - focus on food insecure communitieswith marginal livelihoods in remote locations, and the fact that existing institutions and Dcapacities are limited and stretched in these areas - involves risks that will remainsignificant even after mitigation measures.

Comments:

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Annex 3Governance and Peace Action Plan

Components

1 The proposed Governance and Peace Action Plan (GPAP) covers governance andaccountability risks on both supply and demand sides. Supply-side risks include, for example,weak financial systems, opportunities for corruption, poor delivery mechanisms, and weak inter-and intra-departmental coordination of irrigation and agricultural activities. On the demand side,opportunities for non-government actors (e.g. user groups, CBOs, NGOs) to interact withimplementing agencies in a meaningful way should improve. Both sides will gain from theinvolvement of "third parties" in monitoring project performance. Transparency and access toproject information will also be important. In addition, all project activities need to be conflict-sensitive, which the GPAP takes this into account.

2 Several areas for governance improvement have been identified: organizationalarrangements, project selection and preparation, procurement, contract management, financialmanagement, and monitoring. The GPAP proposes actions for each of these issues, timeline foreach action, and responsible agency for implementation. There are also some 'early warningindicators' which, if monitored properly, enable timely actions for course correction.

Joint responsibility

3 The GPAP will ensure good governance and cost-effectiveness in the management ofIWRMP. This is based on Nepal's existing governance and legal framework. The most relevantlaws in this context are: Commission for Investigation of Abuse of Authority (CIAA) Act 1991,Prevention of Corruption Act 2002, Right to Information Act 2006, Good Governance Act 2008,and Public Procurement Act 2007 and additional procurement rules. It also incorporates lessonsleamt from the on-going IWRMP and other Bank-funded projects in Nepal. The GPAP will be ajoint responsibility of the Dol and its implementing agencies, as well as the Bank. GPAP istreated as a living document and, therefore, will be adjusted and modified to reflect emerginggovernance and anti-corruption issues during the course of project implementation.

Department of Irrigation

4 The mandate of Dol is to develop and manage irrigation systems to provide reliableirrigation water to increase agricultural productivity. Dol has a multi-disciplinary staffing,comprising engineers (civil and agricultural), sociologist, agri-economist, hydro-geologist,agriculturist, and others. It has five regional offices to support IrrigationDevelopment/Management. Dol has already undertaken activities to support good governance,good community relations, and control of corruption (e.g. e-bidding; process simplification;community/people's participation; and technical and social audit).

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Areas of Concern and Actions proposed/adopted/Improvements

5 It has been recognized that all concerned stakeholders - implementing central and localgovernment agencies, contractors, consultants, communities, irrigation users, and the Bank - willhave to be part of monitoring arrangements. While Mol will have the overall responsibility forthis GPAP, the Dol will regularly monitor and take appropriate action on:

* Collusion/cartelling among contractors: In some cases, it was observed that collusion/cartelling occurred during contract bidding in the field offices under Dol. In such cases, the Dolhas cancelled the bids and announced re-invitation.

* Intimidation of contractors during the bidding and execution of works: Based on mediareports and complaints registered in the office, some cases of threats and intimidation duringbidding may have occurred. In such cases, the concerned Dol field office is advised torequest the District Administration Office (DAO) for security.

* Weak capacity of contractors leading to poor quality of works: Public perception ofcontractors is often based on subjective impressions that are usually negative. Negligenceand poor work standards are often attributed to contractors. Dol has provisions foraddressing such issues by selecting contractors based on pre- and post-qualification criteria.

* Unequal payment or delayed payment to unskilled labor hired by contractors: There shouldnot be any discrimination in wages of labor. This issue will be mentioned in the contractagreement and will be monitored effectively.

* Poor institutional capacity of Water Users Associations (WUAs): Capacity development ofWUAs is an essential element of project implementation in almost all cases. Capacity will beenhanced through exposure visits and trainings (pre- and post-construction, quality control,and office and record management trainings) and constantly updating the training curricula toreflect emerging needs.

* Selection process of irrigation schemes: In the selection process of irrigation schemes, thegeneral perception is that the process gets influenced by political actors. The schemes are tobe selected on a demand driven basis, and Dol has adopted objective selection criteriamentioned in the Project Implementation Manual to minimize the risk of any undue influenceand will continue to be guided by the manual.

* Weak accountability systems between Dol and other implementing agencies: Strongcoordination and monitoring systems will be upgraded among Dol and other implementingagencies at all level.

Objectives of GPAP

6 The objective of GPAP is to contribute towards strengthening governance, peace andsocial solidarity to optimize the use of irrigation resource for equitable benefit of thebeneficiaries. It will achieve this objective by:

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* ensuring resources allocated by the World Bank and GoN are spent for the intendedpurposes and directed to the beneficiaries of the project;

* strengthening feedback mechanisms between users and suppliers;

* increasing the participation of communities and irrigation water users in monitoring andevaluation of the project implementation; and

* strengthening the role of WUAs in managing irrigation projects.

Monitoring Arrangements

7 The recent assessment of IWRMP has concluded, among others, that M&E arrangementsare generally weak in the project. This needs to be addressed. The GPAP will be monitoredregularly against agreed actions which will be reflected in the Dol's periodical progress reportsand the aide-memoires prepared after the review of the status of the project. The GPAP matrixwill be used widely for monitoring purposes. If any risk is triggered, enhanced thematic ordistrict supervision will be initiated by Dol through specific third-party audits, reviews by sectorexperts, training workshops, and joint interim missions by the Mol, Dol, and the Bank. If theinvestigation confirms corrupt, fraudulent or collusive practices at any stage of the project,appropriate sanctions will be applied by the relevant agency (e.g. Dol, CIAA, National VigilanceCenter, WB) depending on the nature of the case. In addition, any 'early warning' indicators ofgovernance and accountability risks will be monitored regularly so that corrective measurescould take place in time.

8 Dol will be responsible for implementing program-specific actions included in the GPAPmatrix and will also act as a nodal point to co-ordinate with other agencies for effectiveimplementation of the GPAP. The key person in charge of this GPAP will be the Dol's DirectorGeneral (DG). The overall responsibility for implementation and monitoring of the GPAP willremain with the Project Director who will report to the DG. Dol will produce annual progressreports on the implementation of the GPAP.

9 The attached GPAP matrix covers these components

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Governance and Peace Action Plan

Area of work Issues likely to affect project Actions to address the issues Responsible Timeline Early warning signsSperformance Agency

Coordination, Institutional strengthening and GovernanceEffective Weak coordination between * Project Steering Committee Mol/PSC Two times per Coordination meetingscoordination Dol and DoA. headed by Mol Secretary will year do not take place in timebetween GoN meet at least every six months to or are not represented atagencies at make sure that relevant GoN appropriate level.different levels agencies coordinate all

departmental activities with eachother.

* Dol will organize regular Dol Two times perworkshops to establish and review year, or morecoordination arrangements often as neededbetween Dol, DoA, and otherrelated agencies.

* DDG (Planning) will be DoA Focal persons Lack of exchange ofappointed from DoA to maintain touch base on information andliaison and coordination with Dol regular basis uncoordinatedand others (once a month) implementation of

activities.

Poor coordination between * Dol will institute Dol/DoA/IDD/ID Three months Poor exchange ofGoN agencies and WUAs. coordination mechanism between SD after project information between

the GoN (Dol and DoA) and effectiveness. project entities over aWUAs. long period of time.

Capacity BuildingInadequate capacity at Dol and * Mol/Dol/DoA will ensure that Mol/Dol, By August 2014 Project deadlines startDoA leading to delays in staff no position lies vacant for more MoAD/DoA, and observe on slipping.deployment, than two months. WECS trimester basis.

Frequent transfer of project * Provisions Civil Service Act Mol/Dol, Annually instaff. will be enforced on transfer and MoAD/DoA, August

training of project staff (through WECSannual reviews).

Area of work Issues likely to affect project Actions to address the issues Responsible Timeline Early warning signsperformance AgencyDelays in budget disbursement. * All budget proposals will be Dol/DoA/WECS Every year in

submitted on time. April

Improved performance of WUAs

Poor beneficiary participation * Capacity of WUAs will be Dol/DoA/WUA Every six months Inadequate discussion onin project management. enhanced through external service project activities with

providers. WUAs.

* WUAs will consult with Dol/WUA Regularbeneficiaries at all stages ofscheme development

Poor ownership among users of * Mechanism instituted for Dol/WUA Every four Conflict between theproject services. benefits sharing among months WUAs.

communities will be monitored

Poor operation and * Irrigation service fee will be WUA/Dol Regular Irrigation systems aremaintenance. introduced to finance O&M defunct and increasing

activities. demand for externalassistance.

* WUA members will receivetechnical training for O&M ofirrigation systems* Community participation willbe achieved in project works byencouraging labor intensive workwhere possible.

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ProcurementProcurement and Weak bidding and contracting * Tender notices will be Dol/DoA/WECS Regular Delays in procurementcontract systems. disseminated widely (e.g.management publication in national

newspapers).

* Training will be conducted for Dol/DoA/WECs Within 6 months Reports about poorprocurement staff. after project competition in

effectiveness procurement.

* Pre-bidding conferences will Dol/DoA/WECS Regularbe held to provide informationabout sanctions to be undertakenagainst contractors found to beinvolved in corrupt practices(collusion, bribery, fraud, etc.).

* Approach paper will be issued OPD/Dol Regular withto encourage proper slicing and yearly reviewpackaging to match contractors'capacity.

* Project activities will be OPD/Dol Regularsuspended if competition isrestricted for any reason.

* Transparency will be ensured OPD/Dol Regular within evaluating bids. yearly review

Weak monitoring arrangements * Procurement training will be OPD September 2014 Delays infor procurement. provided to the Dol staff engaged implementation of

in the project. project activities.

* Procurement plan will be OPD September 2014monitored. onwards

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Weak contract management * Contract management training OPD Regular Media reports aboutleading to misuse of resources. will be provided to relevant misuse of project

project staff. resources.

* Users of irrigation systems WUAs Regularwill be encouraged for qualitycontrol of the construction worksthrough orientation programs.

* Quality inspection of works Dol/DoA/WECS Regularwill be carried out.

Corruption * Ex-post review of WB and project March every Poor public perceptionprocurement procedures will be implementing year of project activities.

undertaken, agencies

Monitoring and EvaluationResults Results are inadequately * Project outcomes will be OPD Every six months Media reports about poorframeworks. disseminated. publicized widely with lessons performance of project

learned (annually). activities.

Quality assurance Poor quality of construction * The quality of construction Dol Regular Poor public perceptionsystems. materials and workmanship. materials will be ensured by of the effectiveness of

enforcing the technical third party monitoring.specifications.

* Field visits will be organized Dol Regulato inspect the quality of work inthe field.

* Working procedures of Dol Dol Regularon project implementation will befollowed to involve users ofirrigation system in qualitycontrol.

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Transparency and Accountability

Public access to No pro-active disclosure of * All public information will OPD/Dol Will be updated on Public complaintsinformation information (e.g. project be published on Dol website. six monthly basis about lack of

documents, budgets, outputs starting from July adequate2014. information on

project activities.

Easy-to-read brochures willbe disseminated with relevantinformation in Nepali/locallanguages

Poor public communication on * Local FM radios will be OPD/Dol Public complaintsproject activities and objectives. used for dissemination of about the project

information.Project authorities not used to pro- * The project will be pro- OPD/Dol August 2014active communication active in informing the public

about project activities (eg,plan, program, andachievements) using localmedia and other means ofcommunication* Guidance andmethodologies for informationdisclosure will be captured inproject operation manual

Conflict and peace buildingConflict Inadequate management attention * The existing complaint DoJ/IDD/IDSD/S Within six months of Frequent andmanagement to public complaints. handling mechanism will be MUs and project effectiveness persistent

made more effective with focal DoA/DADO complaints from

points (nodal person) users.designated for taking action oncomplaints.

Unresponsive project management. * Review of the existing IDD/IDSD/WUA/ Annually in October Public criticismarrangement for better SMU/Dol against projectperformance: activities

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* Standards of services Dol("citizens' charters") will bepublished as pre-projectcommitments

* Disclosure boards will be Dolput in place on all project siteswith information on theproject.

* Social audit of project Dolactivities will be carried out.* Audit and other financial Dol/DoAreports will be published insimplified forms (so that thepublic could respond to them).

* WUA will continue to be Doltrained by external serviceproviders in carrying outmonitoring of projectactivities.

Gender and Social Inclusion

Inclusion and Poor inclusion of women and other * Review of the guidelines IDD/IDSD/SMU/ Within six months ofrepresentation marginalized communities in project to promote social and Dol/DoA project effectiveness

decision-making systems. economic inclusion in thefunctioning of1WUAs (i.e.stronger role for women andexcluded groups) in decisionmaking.

* WUAs will beencouraged to implementthe provisions of irrigationregulation

* Capacity support will beprovided to women andother marginalized

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communities throughtraining programs to achievemeaningful participation

* Project will ensure fairrepresentation of projects inthe hills and mountains

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Annex 4Nepal Additional Financing for Irrigation and Water Resources Management Project

Project Cost

Percentage ofCategory Amount of the Credit Amount of the Grant Expenditures to

Allocated (USD) Allocated (USD) be Financed

(1) Civil works under PartsA and B of the Project 80%(incurred by Dol) 26,000,000(2) Goods, services,training and WUAEstablishment Grants underParts A, B, C and D of theProject (incurred by Dol,DoA & WECS) 16,780,000 100%

(3) Incremental OperatingCosts under Parts A, B, Cand D of the Project(incurred by Dol, DoA &WECS) 3,220,000 100%

(4) Investment SupportGrants under Part D of theProject (incurred by Doland DoA) 1,636,000 80%

(5) Unallocated 2,364,000

Grand Total Amount 30,000,000 20,000,000

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public disclosure authorized - world...

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