Document of The World Bank Report No: ICR00002966 IMPLEMENTATION COMPLETION AND RESULTS REPORT (IDA-H2120 TF-56324) ON A GRANT IN THE AMOUNT OF SDR 13.2 MILLION (US$ 19.0 MILLION EQUIVALENT) TO THE KYRGYZ REPUBLIC FOR A WATER MANAGEMENT IMPROVEMENT PROJECT May 2014 Sustainable Development Department Central Asia Country Unit Europe and Central AsiaRegion CURRENCY EQUIVALENTS May 1, 2014 Currency Unit = KGS KGS 52 = US$1 BANK FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS ASL Above Sea Level BWA Basin Water Authority BWC Basin Water Council DWRLI Department of Water Resources and Land Improvement EIRR Economic Internal Rate of Return FWUA Federation of Water Users Associations GDP Gross Domestic Product ISF Irrigation Service Fee I&D Irrigation and Drainage KGS Kyrgyz Som MOA Ministry of Agriculture MOAM Minister of Agriculture and Melioration M&E Monitoring and Evaluation MOM Management, Operation and Maintenance NWC National Water Council NWRMP National Water Resources Management Project NWRMP-1 National Water Resources Management Project-Phase 1 OIP On-farm Irrigation Project OIP-1 First On-farm Irrigation Project OIP-2 Second On-farm Irrigation Project O&M Operation and Maintenance PAD Project Appraisal Document PIU Project Implementation Unit RAS Rural Advisory Services RDWR Rayon Department of Water Resources SWA State Water Administration TA Technical Assistance TOR Terms of Reference WB World Bank WMIP Water Management Improvement Project WUA Water Users Association Vice President: Laura Tuck Country Director: Saroj Kumar Jha Sector Manager: Dina Umali-Deininger Project Team Leader: Pieter David Meerbach ICR Lead Author: Walter Klemm KYRGYZ REPUBLIC WATER MANAGEMENT IMPROVEMENT PROJECT CONTENTS Data Sheet A. Basic Information B. Key Dates C. Ratings Summary D. Sector and Theme Codes E. Bank Staff F. Results Framework Analysis G. Ratings of Project Performance in ISRs H. Restructuring I. Disbursement Graph 1. Project Context, Development Objectives and Design ............................................... 1 2. Key Factors Affecting Implementation and Outcomes .............................................. 6 3. Assessment of Outcomes .......................................................................................... 10 4. Assessment of Risk to Development Outcome......................................................... 13 5. Assessment of Bank and Borrower Performance ..................................................... 14 6. Lessons Learned ....................................................................................................... 16 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners .......... 16 Annex 1. Project Costs and Financing .......................................................................... 18 Annex 2. Outputs by Component ................................................................................. 19 Annex 3. Economic and Financial Analysis ................................................................. 25 Annex 4. Bank Lending and Implementation Support/Supervision Processes ............ 33 Annex 5. Beneficiary Survey Results ........................................................................... 35 Annex 6. Summary of Borrower's ICR and/or Comments on Draft ICR ..................... 38 Annex 7. Comments of Borrower on Draft ICR ........................................................... 41 Annex 8. List of Supporting Documents ...................................................................... 43 MAP A. Basic Information Water Management Country: Kyrgyz Republic Project Name: Improvement Project (WMIP) Project ID: P088671 L/C/TF Number(s): IDA-H2120,TF-56324 ICR Date: 05/12/2014 ICR Type: Core ICR GOVT. OF THE Lending Instrument: SIL Borrower: KYRGYZ REPUBLIC Original Total XDR 13.20M Disbursed Amount: XDR 13.19M Commitment: Revised Amount: XDR 13.19M Environmental Category: B Implementing Agencies: Department of Water Resources Cofinanciers and Other External Partners: Japanese PHRD Grant B. Key Dates Revised / Actual Process Date Process Original Date Date(s) Concept Review: 02/22/2005 Effectiveness: 08/18/2006 08/18/2006 02/28/2011 Appraisal: 02/08/2006 Restructuring(s): 11/30/2011 06/30/2013 Approval: 03/29/2006 Mid-term Review: 11/30/2009 Closing: 12/31/2011 11/30/2013 C. Ratings Summary C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: High Bank Performance: Moderately Unsatisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Moderately Moderately Quality at Entry: Government: Unsatisfactory Unsatisfactory Implementing Quality of Supervision: Moderately Satisfactory Moderately Satisfactory Agency/Agencies: Overall Bank Moderately Overall Borrower Moderately Performance: Unsatisfactory Performance: Unsatisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation QAG Assessments Indicators Rating Performance (if any) Potential Problem Project Quality at Entry No None at any time (Yes/No): (QEA): Problem Project at any Quality of Yes None time (Yes/No): Supervision (QSA): DO rating before Moderately Closing/Inactive status: Satisfactory D. Sector and Theme Codes Original Actual Sector Code (as % of total Bank financing) Central government administration 25 25 Irrigation and drainage 75 75 Theme Code (as % of total Bank financing) Administrative and civil service reform 14 14 Participation and civic engagement 14 14 Rural policies and institutions 29 29 Rural services and infrastructure 14 14 Water resource management 29 29 E. Bank Staff Positions At ICR At Approval Vice President: Laura Tuck Philippe H. Le Houerou Country Director: Saroj Kumar Jha Annette Dixon Sector Manager: Dina Umali-Deininger Juergen Voegele Project Team Leader: Pieter David Meerbach Joop Stoutjesdijk ICR Team Leader: Pieter David Meerbach ICR Primary Author: Walter Klemm F. Results Framework Analysis Project Development Objectives (from Project Appraisal Document) The project has a two-pronged development objective: (i) improving irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity; and (ii) improving national water resource governance for the benefit of water users and the nation as a whole. Revised Project Development Objectives (as approved by original approving authority) (a) PDO Indicator(s) Original Target Formally Actual Value Values (from Revised Achieved at Indicator Baseline Value approval Target Completion or documents) Values Target Years Collection rates at least 90 percent of agreed tariff (based on fully costed O&M Indicator 1 : plan) within two years after completion of the project schemes' rehabilitation works Value quantitative or 0 14 19 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments Achieved. Survey results in 2010 show that collection rate has increased from (incl. % 74% to 89%. In the schemes rehabilitated in 2009 and 2010, the collection of ISF achievement) substantially improved within two years following the rehabilitation completion. At least 80 percent of project schemes judged to be properly operated and Indicator 2 : maintained following completion of rehabilitation works Value quantitative or 0 18 15 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 3 schemes were completed only in November 2013. Survey results of 19 Comments schemes show that the rehabilitated schemes were operated properly (e.g, (incl. % increased water supply) but not adequately maintained (e.g., insufficient achievement) maintenance expenditure). Number of WUAs receiving water at the requested level Indicator 3 : in each period of delivery each year Value quantitative or 0 28 24 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 The impact assessment survey results suggest that the assessed 19 rehabilitated Comments WUAs received 10% more water volume than before to irrigate the same (incl. % command area. However, this needs to be still achieved in the 4 schemes that achievement) were completed in Nov 2013. Evidence of high satisfaction rates among water users with the Indicator 4 : performance of the bulk water supply agency (DWRLI) Value High evedience of quantitative or No evidence satisfaction (at 84% Qualitative) least 80% of users) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments Fully achieved. The survey results of 19 WUAs show that prior to rehabilitation, (incl. % 68% were satisfied and following rehabilitation, 84% of water users were achievement) satisfied with bulk water supply (DWRLI). Increase in crop production by at least 10 percent within four years after Indicator 5 : rehabilitation of the project schemes 2.5% in schemes completed in Y6, 5% in schemes Value completed in Y5, 17% in schemes quantitative or 0 7.5% in schemes completed in Y3. Qualitative) completed in Y4, 10% in schemes completed in Y3. Date achieved 08/01/2006 11/30/2013 11/13/2013 Partially achieved. The impact survey results indicated that (for 6 schemes in Comments which off-farm works were completed 2009-2011) the overall yields of major (incl. % crops increased by 9% following rehabilitation, while the overall crop production achievement) increased by 17 %. Institutional structure for IWRM established and functioning Indicator 6 : with approved National Water Strategy and river basin plans Value Mandate for SWA SWA and pilot quantitative or None given to DWRLI, RBCs established Qualitative) two pilot RBCs Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments In consultation with the task team there was consensus that the Roadmap for (incl. % development of the water sector is for the moment preferable over a National achievement) Water Strategy, compiled on the basis of an incomplete database. Indicator 7 : Area provided with irrigation and drainage services (ha) Value quantitative or 0 70200 60300 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments Rehabilitation works in 3 schemes with additional 9,000 ha were completed only (incl. % in November 2013. achievement) Indicator 8 : Area provided with irrigation and drainage services - Improved (ha) Value quantitative or 0 70200 60300 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments The impact assessment survey results suggest that in the rehabilitated 19 WUAs (incl. % areas in the tail ends, where water supply was limited or lacked before the achievement) rehabilitation, decreased after the completion of rehabilitated works. Indicator 9 : Operational water user associations created and/or strengthened (number) Value quantitative or 0 58 50 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Water users provided with new/improved irrigation and drainage services Indicator 10 : (number) Value quantitative or 0 85000 73000 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % Partially achieved. achievement) Indicator 11 : Water users provided with irrigation and drainage services - female (number) Value quantitative or 0 10200 8800 Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % 12% of total number of water users. achievement) (b) Intermediate Outcome Indicator(s) Original Target Actual Value Formally Values (from Achieved at Indicator Baseline Value Revised approval Completion or Target Values documents) Target Years System readiness to supply the requested volumes of water at offtakes of WUAs Indicator 1 : (number of systems) Value (quantitative 0 20 20 or Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % Achieved. achievement) Government resolution on the temporary delegation of SWA Indicator 2 : authority to the DWRLI Delegation of Delegation of SWA Value SWA authority to authority to (quantitative None DWRLI approved DWRLI approved or Qualitative) by gov't by gov't Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Indicator 3 : SWA functions, staffing and budgets prepared and submitted to Ministry of Finance SWA functions, Value SWA functions, staffing and (quantitative 0 staffing and budgets approved or Qualitative) budgets prepared by gov't Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments Approval of SWA staffing and budgets by Government will be addressed under (incl. % the follow-up NWRMP-1. achievement) Indicator 4 : National Water Strategy prepared and submitted to the NWC National Water Value Strategy revised National Water (quantitative None and submitted to Strategy revised or Qualitative) NWC Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % National Water Strategy has been revised and will be submitted to the NWC. achievement) Roadmap for implementation of the Water Code prepared, submitted to NWC Indicator 5 : and approved Roadmap for Roadmap for Value implementation of implementation of (quantitative None the Water Code the Water Code or Qualitative) submitted to NWC submitted to NWC and approved and approved Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Pilot RBCs established and functioning, and basin plans Indicator 6 : prepared Value Second pilot RBC Second pilot RBC (quantitative None formed and basin formed and basin or Qualitative) plan prepared plan prepared Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Indicator 7 : MOM plans prepared and operational Value 14 MOM plans 6 MOM plans (quantitative None prepared and prepared or Qualitative) implemented Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments Implementation of MOM plans for 6 pilot schemes will be supported under the (incl. % NWRMP-1. achievement) Procedures for accounting and assessing performance at scheme level identified, Indicator 8 : tested and accepted by DWRLI Procedures for Procedures for accounting and accounting and Value assessing assessing (quantitative None performance at performance at or Qualitative) scheme level scheme level accepted by accepted by DWRLI DWRLI Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments Procedures are being applied but have not been formally accepted by the (incl. % DWRLI. achievement) Ownership and MOM of minor irrigation schemes transferred to WUAs and Indicator 9 : FWUAs 24 minor irrigation Value schemes 24 schemes (quantitative None transferred to transferred or Qualitative) WUAs Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Number of farmers trained and applying knowledge of improved water Indicator 10 : management techniques Value 600 farmers 30 demo plots (quantitative None applying improved created and 600 or Qualitative) techniques farmers trained Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % No indications yet of farmers applying improved techniques. achievement) Number of WUA Federations which have signed an agreement with the RDWR Indicator 11 : on the transfer of MOM responsibility for off-farm system Value (quantitative 0 10 10 or Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Number of WUA Federations which have prepared business plans, taken Indicator 12 : ownership of maintenance equipment and machinery with effective operation Value (quantitative 0 10 10 or Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) Indicator 13 : Disbursement Rate - percentage of approved budget Value (quantitative 0 100 98 or Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % Project is projected to fully disburse. achievement) Project management capacity in implementing agency enhanced and project Indicator 14 : implementation schedule adhered to Value Satisfactory PIU Moderately (quantitative 0 performance Satisfactory or Qualitative) Date achieved 08/01/2006 11/30/2013 11/13/2013 Comments (incl. % achievement) G. Ratings of Project Performance in ISRs Actual Date ISR No. DO IP Disbursements Archived (USD millions) 1 08/29/2006 Satisfactory Satisfactory 0.00 2 02/07/2007 Satisfactory Satisfactory 0.50 3 09/17/2007 Satisfactory Satisfactory 0.68 4 01/25/2008 Satisfactory Moderately Satisfactory 0.70 5 07/28/2008 Satisfactory Satisfactory 1.25 6 06/09/2009 Satisfactory Moderately Satisfactory 2.93 7 02/20/2010 Moderately Satisfactory Moderately Satisfactory 6.22 8 10/08/2010 Moderately Satisfactory Moderately Satisfactory 8.15 Moderately Moderately 9 06/27/2011 10.22 Unsatisfactory Unsatisfactory Moderately Moderately 10 04/03/2012 13.39 Unsatisfactory Unsatisfactory Moderately 11 12/07/2012 Unsatisfactory 17.22 Unsatisfactory Moderately 12 05/27/2013 Unsatisfactory 18.26 Unsatisfactory 13 06/24/2013 Moderately Satisfactory Moderately Satisfactory 18.59 Moderately 14 11/30/2013 Moderately Satisfactory 20.17 Unsatisfactory H. Restructuring (if any) ISR Ratings at Amount Board Restructuring Disbursed at Restructuring Reason for Restructuring & Approved Restructuring Date(s) Key Changes Made PDO Change DO IP in USD millions Level 2 - extending the closing 02/28/2011 MS MS 9.26 dates from December 31, 2011 to December 31, 2012. Level 2 - extending the closing date of the project from 11/30/2011 MU MU 12.20 December 31, 2012 to November 30, 2013. Level 2 - revising the Results 06/30/2013 MS MS 18.59 Framework. I. Disbursement Profile 1. Project Context, Development Objectives and Design 1.1 Context at Appraisal 1. Country. The Kyrgyz Republic covers 200,000 km² of mostly mountainous land at altitudes ranging from 400 m to 7,400 m ASL out of which less than 8% (1.4 million ha) are arable and just 5% forested. Forty percent of the country’s territory is above 3,000 m and one third of it is under permanent snow cover. With a population of 5.2 million in 2006 at the time of appraisal, the Kyrgyz Republic achieved a Gross Domestic Product (GDP) of US$ 2.4 billion, corresponding to US$ 460 per capita. In 2006, 77% of its population had access to an improved water source, 48% lived below the poverty line, and 64% in rural areas at a poverty level significantly higher than in urban areas. The Kyrgyz Republic is geographically and culturally divided into North and South where the three oblasts of the Fergana Valley have a distinct regional identity vis-à-vis the North. The southern regions are also affected by smaller land holdings, lower per capita incomes, higher unemployment, lower human development indices and more limited access to services. 2. Agriculture. During the past ten years, the agricultural sector consistently contributed around 35% to the GDP and ensured employment for over 50 percent of the working population. Irrigated agriculture is estimated to cover about 1.1 million ha (80% of total arable land), rendering it as one of the most important economic sub-sectors of the country. The most profitable crops were vegetables, cotton, and sugar beet, but wheat was most popular and widespread because of its importance as a subsistence crop, and its use as collateral within the traditional barter system. Crop yields are at a low to moderate level. 3. Water Resources. The Kyrgyz Republic is well endowed with water resources. While there are no inflows from other countries, all river basins except for Issyk-Kul are shared with neighboring states located downstream. Snowfall constitutes a significant part of the total precipitation, and snow storage plays an important role by delaying runoff and thus preserving the water for the agricultural growing season. Total annual runoff is in the order of 47 billion m³ of which the Kyrgyz Republic could use a maximum of 12 billion m³ under international agreements with its neighbors. Up to 90% of these 12 billion m³ was used for agriculture, 7% for industry, and 3% for other needs, including potable water. 4. There were many organizations involved in the water sector, the most important one being the Department of Water Resources and Land Improvement (DWRLI), but also the Environmental Protection Department, Hydrogeology Department, Hydro-meteorological Service, State Water Inspectorate, Bulk Water Suppliers, and Water Users Associations (WUAs). Significant overlap and duplication of water resources management functions contributed to a degree of confusion on the institutional location, roles and responsibilities of the respective organizations. This was a legacy of the Water Code that was adopted in 1994 and at that time did not yet address the fragmented water resources management, and data sharing arrangements that remained at Independence in 1991. 5. In early 2005, a new Water Code was signed into legislation. This Water Code of 2005 is a comprehensive and modern piece of legislation that reflects best practice and international experience. It includes recognized basic principles, such as integrated water resources management; the recognition of the economic value of water; the consolidation of water resources stewardship functions under a new, single apex government water administration, supervised by a high-level council of senior government officials providing 1 policy direction; the organization of water resources management along river basin lines; the polluter pays; and the participation of users in decision-making. However, many parts of this Water Code were not implemented as intended or were not sufficiently considered, such as the provision for a system of transparent, legally grounded relationships between the provider of bulk irrigation water and related services, and an emerging growing body of irrigation water users and service customers. 6. Irrigation. Irrigation has been practiced in the Kyrgyz Republic for generations. The irrigated area comprises a total of 631 irrigation schemes ranging in size from 100 to over 50,000 ha of which approximately 430 schemes totaling 147,000 ha are each less than 1,000 ha in size. The DWRLI of the Ministry of Agriculture and Land Improvement (MOALI) has been mandated with the management, operation and maintenance (MOM) of the diversion structures and the main and inter-farm canals supplying on-farm systems. 7. Due to technical, managerial, and financial constraints since independence, deterioration of irrigation and drainage infrastructure has led to unreliable supply and distribution of irrigation water, as well as drainage and water logging problems. In March 2002, the Resolution of 1997 allowing the formation of WUAs and for the transfer of on- farm irrigation infrastructure to WUAs was upgraded and passed into law, forming a solid base for the transfer of responsibility at the on-farm level. Some of the smaller irrigation schemes with independent diversion structures were since then transferred to WUAs, and already then there was considerable interest to form federations of WUA (FWUAs). 8. Rationale for Bank involvement. During the last eight years preceding the appraisal of the Water Management Improvement Project (WMIP), the World Bank had been the principal donor to assist the Kyrgyz Government in the development of the irrigation sub- sector. The Irrigation Rehabilitation Project (IRP) and the On-Farm Irrigation Project (OIP- 1) contributed significantly to the recovery of the sub-sector, but could not come close to satisfying existing needs. The projects met the immediate needs of Government through a major focus on rehabilitation of irrigation systems and to a lesser extent on the much needed institutional reform. The World Bank-financed projects have been the catalyst for the development of legislation, including the Law on WUAs of 2002 and the Water Code of 2005. The Bank’s involvement in WMIP was considered to be crucial for continued coherent design and implementation of its Ferghana Valley Water Resources Management Program. A principal contribution from the Bank was to bring in considerable world-wide and regional experience in the development of integrated water resources management institutions, including the provision of training programs. Development interventions in the Kyrgyz Republic were guided by the National Poverty Reduction Strategy (NPRS), which emphasized priority objectives to which the objectives of the Country Assistance Strategy (CAS) were closely linked. The WMIP was designed to contribute to the CAS objectives of stemming the deterioration of key infrastructure with local communities having a voice in setting priorities’ and ‘addressing governance constraints including increasing transparency, accountability and capacity building at all levels’. 1.2 Original Project Development Objectives (PDO) and Key Indicators 9. The project had a two-pronged development objective: (i) improving irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity; and (ii) improving national water resource governance for the benefit of water users and the nation as a whole. Key performance indicators included: (i) at least 90% of agreed irrigation services fee (ISF) tariff within two years after completion 2 of the project’s rehabilitation works collected; (ii) at least 80% of the project schemes judged to be properly operated and maintained following completion of rehabilitation works; (iii) number of WUAs receiving water at the requested level in each period of delivery each year; (iv) evidence of high satisfaction rates among water users with the performance of the bulk water supply agency (DWRLI); (v) increase in crop yields by at least 10% within four years after scheme rehabilitation; and (vi) quantities of water used for various purposes as per approved river basin plans. 1.3 Revised PDO and Key Indicators 10. The PDO has not been changed during the project. The results framework was formally revised in a Level-2 restructuring in June 2013 to reflect actual progress and possible achievements. The need for corrective restructuring resulted from poor performance due to significant implementation delays. Revisions regarding the key outcome indicators including the rationale for change are presented in Table 1. All other key outcome indicators remained as established in the Project Appraisal Document (PAD), albeit a number of intermediate outcome indicators were adjusted to an extended project completion date of 30 November 2013 as follows:  18 systems ready to supply the requested water volume at WUA off-take;  2 river basin plans prepared and approved;  Delegation of State Water Administration (SWA) authority to DWRLI approved by Government;  SWA functions, staffing and budget prepared and approved by Government;  National Water Strategy prepared and submitted to National Water Council (NWC);  14 MOM plans prepared and implemented;  30 minor irrigation schemes transferred to WUAs; and  10 WUAF own maintenance equipment and use it effectively. Table 1: Revisions of Key Outcome Indicators Original Indicators Comments and Rationale Revised Indicator (according to PAD) for Revision Number of WUAs receiving water at or Number of WUAs receiving water at Water supply should not exceed the above the requested level in each the requested level in each period of amount of water requested to avoid period of delivery each year. delivery each year. excessive water use. Increases in crop production reflect Increase in crop yields by at least 10 Increase in crop production by at improved crop yields, changes to percent within four years after scheme least 10% within four years after cropping patterns and re-cultivation of the rehabilitation. scheme rehabilitation. original command area. More realistic during the project lifetime Institutional structure for IWRM Quantities of water used for various and more relevant to PDO “Improve established and functioning with purposes as per approved river basin national water resource governance for approved National Water Strategy plans. the benefit of water users and the nation (NWS) and river basin plans. as a whole”. 1.4 Main Beneficiaries 11. The primary target groups identified in the PAD and as captured in the PDO were 40,000 farm families who would have irrigated about 85,000 ha of productive agricultural 3 land. They were expected to benefit from the project through rehabilitation and modernization of their irrigation schemes, through improvement of irrigation service delivery, through support in operation and maintenance (O&M) of their schemes, and through assistance in further improving the performance of WUAs and organizing those in federations where and when appropriate. The second group of beneficiaries included a large number of civil servants from the Government in Bishkek (particularly from the DWRLI) as well as from raions where irrigation schemes are rehabilitated and modernized. Private consulting and construction companies are also expected to benefit from the project through know-how transfer and assistance in carrying out their assignments and contracts. 1.5 Original Project Components 12. The PDO was to be achieved by four project components: (i) rehabilitation and modernization of irrigation infrastructure; (ii) management of water resources; (iii) organization of beneficiaries; and (iv) project management. 13. Component 1: Rehabilitation and Modernization of Irrigation Infrastructure (US$ 19.8 million). Component 1 aimed to contribute to achieving the first part of the PDO, improving irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity. Twenty priority irrigation and drainage (I&D) schemes were selected for rehabilitation, with several potential rehabilitation schemes in reserve. A wide range of rehabilitation works were proposed to overcome the persisting irrigation water supply problems, such as construction or repair of headworks; construction or repair of sediment settling basins and ejectors; repair or replacement of canal lining, and the like. The implementation/completion of these works was expected to result in the provision of a more reliable water supply to irrigators and other water users through reduced leakage of water from canals, better water management, with reduced operational losses, reduced MOM requirements and the prevention of catastrophic failure of structures. For irrigation schemes situated along trans-boundary rivers, the design work included the preparation of river basin management plans to fully understand the water sharing agreements and determine the physical needs to be able to properly measure water flows and abstractions. Services for design and construction supervision by a team of national and international consultants were intended to carry out construction works of good quality in a timely manner. 14. Component 2: Management of Water Resources (US$ 4.85 million). This component was to achieve the second part of the PDO, improving national water resources governance for the benefit of water users and the nation as a whole. The main tasks to be accomplished included: (i) implementing the Water Code; (ii) improving DWRLI’s technical and financial performance, turning it into an efficient and client-orientated bulk water supply and management organization; (iii) supporting further WUA development; and (iv) implementation of information and dissemination programs. A broad range of institutional measures were proposed to strengthen water sector organizations through organizational restructuring, training and capacity building, and improved financial management and costing of actual sectoral financial requirements and derived benefits. Implementation of this component was supported by consulting services, and by the provision of goods, mainly office equipment, civil works, and incremental operating costs for the SWA. The National Water Council (NWC) was to provide policy directions for the water sub-sector, and to establish and support the SWA, the River Basin Councils (RBCs) and the Basin Water Administrations (BWAs). The project was further to support 4 preparation of a National Water Strategy and Basin Water Plans. Key hydro-meteorological measuring stations were to be repaired and modern procedures established for data collection, processing, analysis, and distribution. The project was also to assist the DWR in carrying out a detailed study to establish the required MOM budgets for different types of irrigation systems and to establish the current and future financial requirements of the DWRLI. This was supposed to be facilitated through the improvement of DWRLI’s management information system (MIS). 15. The project further intended to support WUAs through the improvement of on-farm water management by establishment of four demonstration plots in each oblast which were planned to be also used as a focus for other extension services, e.g. by the Rural Advisory Services (RAS) to support improved crop husbandry and crop production. It was also planned to disseminate content and implications of the Water Code to all stakeholders in the water sub-sector and to carry out capacity building in integrated water resources management through study tours as well as in-country exchange visits to successful project activities. 16. Component 3: Organization of Beneficiaries (US$ 2.50 million). Under this component, the project was to support the formation and development of at least five pilot FWUAs with a view to fully understand the processes and ascertain the viability of the envisaged irrigation management transfer. Each of the pilot FWUAs was to be provided with critical maintenance equipment, such as an excavator backhoe, a tractor with blade and trailers, and a truck. For minor irrigation schemes with less than 1,000 ha irrigable area, the project was to provide technical support to establish the desirability and feasibility of transferring the entire system to management by WUAs. While the immediate benefit for the farmers was expected to be improved water supply, the long-term success of the project was to be measured by the impact that it will have on the livelihoods of its beneficiaries, such as better water management and crop husbandry through technical advice, as well as credit, input supply and marketing support. 17. Component 4: Project Management (US$ 0.99 million). Under this component, funding for the staffing and operation of the Project Implementation Unit (PIU), integrated within the DWRLI was provided so that project implementation could be carried out in a timely and effective manner. Additional to new recruitments, some qualified staff from the OIP PIU, was to be transferred to the WMIP PIU to ensure daily project management, including procurement and financial management right from project beginning. This component also provided the means for monitoring and evaluation /M&E) consultants and an independent audit of project accounts 1.6 Revised Components 18. None of the components have been revised throughout project duration. 1.7 Other Significant Changes 19. No change in project design but in scope and scale has taken place. Implementation arrangements and work plans needed to be adjusted to slow project progress1 which led to the two level 2 extensions of the project up to November 30, 2013 and a reduction from 20 1 Due to under-resourced contractors, underestimated construction periods for sites at remote locations, and the events in the South in 2010. 5 to 14 I&D schemes as well as of from 85,000 ha to 70,300 ha irrigated area. Two Level-2 restructurings in February 2011 and November 2012 extended the project closing date from December 31, 2011 to November 30, 2013. 2. Key Factors Affecting Implementation and Outcomes 2.1 Project Preparation, Design and Quality at Entry 20. Lessons learned elsewhere but also and particularly in IDA funded projects (IRP and OIP-1) were well considered: Above all, weak maintenance due to an ever low DWRLI MOM budget and low Irrigation Service Fees (ISFs). Therefore, special attention was given to supporting Water Users Associations (WUAs) through advisory services and the provision of equipment, training to WUAs’ representatives and key staff, convening workshops, and technical backstopping by specialists – always emphasizing the crucial importance of adequate MOM budgets for sustainability purposes. At project preparation, stakeholder workshops were held in Bishkek as well as in the oblasts, benefiting from active participation of rather motivated participants. The objectives and tasks of WMIP were explained and the intended scope of rehabilitation works was discussed and agreed upon. Farmers showed a high level of interest in these meetings and attended them in large numbers. For many years, the DWRLI had been under-funded severely limiting its ability to provide adequate services to WUAs and farmers. The project design recognized that the Government consistently allocated insufficient funds to MOM for off-farm irrigation infrastructure. Together with the very low ISFs paid by water users, these two sources of funding barely reached 50% of the funds needed for adequate and effective MOM. It was acknowledged that a significantly larger budget should be made available for off-farm MOM, and that ISF rates should be increased, instead of being maintained at very low levels by the Parliament. 21. The project design further correctly recognized that to reform DWRLI’s technical and financial performance, turning it into an efficient and client-orientated bulk water supply and management organization, it would be necessary to continue rebuilding and considerably enlarging DWRLI’s capacity to undertake adequate operation and maintenance of higher-order physical infrastructure, such as head works and inter-farm irrigation canals, as well as the timely delivery of irrigation water on demand. 22. The selection and prioritization of irrigation schemes to be rehabilitated took place in close collaboration with WUAs, water users not organized in a WUA, and Government officials form the Raion Department of Water Resources (RDWR). Applying a multi- criteria analysis to the many more irrigation schemes requested for rehabilitation, 20 schemes were eventually ranked for implementation (with an additional 12 schemes as a reserve) but later reduced to 16 schemes due to increased construction costs. 23. At project design, two major risks were rated as being moderate and substantial, respectively, while they proved to be substantial and high. They included:  Certain resistance to be expected from agencies and departments when reforms start affecting their mandate and staffing - considered to be ‘moderate’ but eventually proving ‘substantial’; and  Government does not provide sufficient budget for adequate MOM of higher- order infrastructure on a continuing basis to supplement ISF collected from users considered to be ‘substantial’ but eventually being ‘high’. 6 24. The risk mitigation measures planned, such as implementing the reforms in a gradual manner with full involvement of affected stakeholders, or the maintenance of continuous contact with Government officials and water users, did not achieve the desired impact. 2.2 Implementation 25. A Project Implementation Plan (PIP) was prepared at the beginning of the project aiming at specifying implementation modalities and schedules. However, the many unforeseen events (two revolutions, several national elections and the civil unrest in the Ferghana Valley) soon put the action plan defined in the PIP in jeopardy. The project faced implementation delays due to a number of reasons, including the inability of the DWRLI to adhere to canal schedule closures to enable the contractors to do the work, weaknesses in construction supervision and management, and procurement delays. Eventually, these events contributed to the project not completing the planned activities within the scheduled project period. The most serious handicap for the successful implementation of the project was the postponement in the convening of the NWC and the establishment of the SWA. 26. Component 1. The scheduled works comprised the rehabilitation of 14 off-farm irrigation schemes, the upgrading of an inter-canal transfer, and the rehabilitation of a storage dam. The total command area of the 14 off-farm-irrigation systems was estimated at 70,300 ha which supplied water to about 41,100 households (corresponding to some 352,000 people). Due to the rapid deterioration of some off-farm systems and the poor social situation prevailing in remote districts, the priority list of schemes to be rehabilitated was amended. These amendments were initiated by local authorities. Priority schemes were revised for two Oblasts, namely Batken and Jalalabad. All amendments were agreed with the DWRLI management in Bishkek, governors of Oblasts, Akims, and representatives of the DWRLI oblast offices. 24 minor irrigation schemes, and five hydro-posts on Chu and Talas rivers, respectively, were repaired as planned. Rehabilitation works faced significant cost increases, under-resourced contractors and shortcomings in procurement and supervision, and were further delayed due to the 2010 events in the South. Additionally, long cold winters in 2007/2008 and 2011/2012 as well as the long wet spring in 2009 did not allow civil works to be carried out as planned. Fourteen off-farm irrigation schemes have been rehabilitated and modernized by 30 November 2013. 27. One of the major reason leading to construction delays does not refer to external events not foreseen but rather inadequate contract management practice, both within the PIU and the supervising engineering consultants. There was a lack of adequate formal correspondence among all parties involved to address irregularities and shortcomings in time. There was no proper assessment of delays, extra works, variations, contractor performance, and actions being taken to expedite the works. Although these shortcomings were well recognized during the regular implementation supervision missions, the proposed correcting measures did not significantly improve the situation, regardless of restructuring efforts and additional implementation time of two years. Eventually, the most serious shortcoming is seen in the fact that the main off-farm infrastructure rehabilitated under the project is not being properly maintained and operated by the DWRLI - as evidenced by the reported poor technical conditions of the off-farm structures rehabilitated under the previous IRP. 28. Component 2. Under this component, the project wanted to support “Integrated Water Resources Management (IWRM)” through institutional reform and the establishment 7 of rules and regulations for the implementation of the Water Law, and thus contribute to adequate water resources management at national level. According to stipulations inscribed in the Water Code, recommendations pertaining to the restructuring and/or establishment of government agencies for water resources management, such as the creation of the SWA, the BWAs, and the River Basin Councils (RBCs) could only be implemented following directions of the NWC whose members are representatives of key ministries and state committees. Not convening the NWC was a direct breach of the WMIP Development Grant Agreement (DGA). When in late 2011, the Government had still not convened the NWC as a result of frequent changes in government associated with changes in the senior manage- ment of the DWRLI, the Bank requested the immediate preparation of an NWC meeting. After discussions with the Minister of MOALI, it was agreed that MOALI will take the lead in establishing a Working Group which will prepare the agenda and the documentation for the meeting of the National Water Council. This was eventually done and 11 ministries were informed about the NWC meeting by end of March 2011. In spite of this positive reaction from the Minister, the NWC meeting had still not taken place at the end of 2012. 29. Following yet another government ministerial reshuffle, a second project extension by another year, and the Bank informing the Government of considering the suspension of Component 2 and delaying the preparation of a follow on project, the NWC chaired by the Prime Minister eventually convened in February 2013. Thus, by continuously insisting on the government(s) to convene the NRC meeting, the actual achievement under this component was eventually the late adoption of a comprehensive road map for further development of the water sector and the implementation of the Water Code as well as of resolutions giving the DWRLI the mandate of the State Water Administration (SWA) as a pre-cursor to establishing the SWA as an independent agency. 30. Another contra-productive development was the unauthorized demobilization by the international consulting firm at the beginning of December 2011 with many deliverables still pending. Consequently, three international short-term consultants were recruited to salvage whatever could be salvaged. They adequately assisted the PIU in contributing to water resources management and the establishment of the SWA, carried out maintenance and MOM studies of sample I&D schemes, and economic studies of pump irrigation schemes. 31. With regard to institutional reforms, the same international consulting firm assisted the PIU to establish two pilot Basin Water Councils (BWCs) and two basin development plans, one for the Talas river basin in 2008 and one for the Kugart river basin in 2009, defining their functions, duties and responsibilities, and developing organizational procedures, staffing and budgets for BWAs. Although the two pilot river basin plans were formally approved in a workshop by rather passive participants and local authorities, no follow-up activities took place. A critical shortcoming was that 200 MOM plans were scheduled to be prepared (out of which 175 plans to be implemented) but only four MOM Plans were eventually finalized but not approved, thus not implemented. This was due to the over-optimistic assumptions made at appraisal on the one hand, and additionally a consequence of the firm’s inexperienced specialist on the other hand, who was eventually replaced by another one with little MOM experience as well. The preparation of a draft National Water Strategy (NWS) was also poor. It went through several iterations, but the final draft version was not deemed satisfactory by the international specialist brought in following the firm’s departure. 8 32. One of the recruited three international specialists eventually provided guidance and support to the DWRLI on MOM as required, but there was no time anymore left for imple- mentation, now expected to be realized under the proposed National Water Resources Management Project-Phase 1 (NWRMP-1). Very low ISFs were paid by 80% of water users but they need to be increased significantly to cover some 30% of DWRLI’s O&M expenditures which are estimated to be US$ 18.50/ha. 33. Concerning the planned web-based Water Information System (WIS), hardware and software were purchased and installed in the head offices of DWR and BWA and a contractor identified to develop the network. No further action was completed by end of project on 30 November 2013. A study tour was made to Spain and Portugal for 10 persons in November 2012 to learn about water resources management processes and farmer involvement in irrigation management. 34. Component 3. The project supported the formation and development of 10 pilot FWUAs with the aim of understanding the processes and determining the viability of transferring off-farm irrigation systems to water user organizations. At last in 2012, machinery and equipment was bought and given to the 10 FWUAs as a ‘technical credit’, although credit agreements still remain to be signed, by April 2014. In October 2012, 24 minor irrigation systems were transferred from DWR to WUAs and FWUAs. 35. Following the transfer of the minor irrigation schemes to WUAs and FWUAs, it was evident that there was a significant improvement in water supply as well as an increase in the amount of water fees collected from water users, on top of the Government-set ISF. With an increase in the MOM budget, the FWUAs were able to increase expenditure on the repair and maintenance of off-farm infrastructure. An overall increase in the crop yields within the command area was also noted but could not be quantified on the basis of available (very short) records. It is too early to evaluate the full impact of the WMIP off- farm rehabilitation works on irrigated areas, and consequently the overall impact on crop yields (see also Annex 3). 36. Mid-Term Review. In November 2009, a Mid-Term Review was carried out. It concluded that there was no need to restructure the project, that components were still relevant and that there was a high likelihood that the three project components could be successfully completed, albeit most likely with some delay. The PDO was also still relevant and could be achieved with the successful completion of all activities; but it was unlikely they would be met within the current project duration. However, already at the MTR in 2009, before the civil unrest started in the country, there was a concrete risk of achieving the expected outcomes, and the MTR conclusions were too optimistic. Though this was indicated by downgrading (i) PDO achievement, (ii) project management, and (iii) procurement from ‘satisfactory’ to ‘moderate satisfactory’, stringent correction measures such as, for example, tighter supervision including verification of agreed actions and deadlines at shorter intervals or reducing the 200 MOM plans to a realistic number were not undertaken. 2.3 Monitoring and Evaluation (M&E) Design, Implementation and Utilization 37. Monitoring and evaluation procedures were well designed. But despite the collection of a large amount of relevant M&E data, there was very little monitoring of the project’s outcome and results indicators (as set out in the project’s Results Framework) during the first project years. Thus it was rather difficult if not impossible to assess whether 9 the project would be able to achieve its PDO. To eventually address this shortcoming, an international M&E Consultant was recruited in November 2011 (Project year 5) to provide support to the PIU M&E Specialist, particularly with respect to data processing methods required to monitor the project’s outcome and results indicators. Guidance was also provided on the preparation of survey procedures, questionnaires and data analysis. The PIU M&E Unit evaluated 8 off-farm schemes completed between 2009 and 2012 and 7 off- farm schemes completed in 2013. An impact evaluation study conducted by a local consulting firm covering 6 off-farm schemes and 19 WUAs was also completed in 2013. Results of these studies are presented in Annex 5. 2.4 Safeguard and Fiduciary Compliance 38. Safeguards. An Environmental Management Plan (EMP) was prepared and its implementation and adherence supervised by field staff coordinated by the PIU. No significant problems were reported. The safety of dams concerned only the Papan and Naiman Dam which did not raise any serious concern. Though OP 7.50 was triggered, it was rightly determined (1) that the project will not significantly change abstraction volumes for the irrigation systems, (2) that it will not have any adverse impact on the quality or quantity of river water flows, and (3) that the project-funded works will not change the nature of the original systems, so the obligation to notify downstream riparians was waived. 39. Fiduciary Compliance. Most of the Financial Management (FM) supervision missions of the project confirmed that in general the PIU has established acceptable FM arrangements including accounting, reporting, budgeting and funds flow, internal controls and staffing. All project audit reports except for the last one were submitted in time. The project audit reports and the accompanying project financial statements were considered acceptable to the Bank. Financial Management Reports (FMRs) were satisfactory and submitted in time. As a result of an accounting error, IDA funds in the order of US$ 350,000 were misallocated, and were refunded to the designated accounts. 2.5 Post-completion Operation/Next Phase 40. The Bank’s WMIP provided guidance to the PIU on carrying forward key aspects from WMIP into the NWRMP-1 which has already been prepared and is now before negotiation. Recommendations were made for DWRLI staff training including RDWR staff, and details of areas provided in which training is required and could be taken up under NWRMP-1. Most training subjects consist of basic engineering knowledge. Much care was taken to ensure post-project O&M arrangements which are presented in the Borrower’s Report. 3. Assessment of Outcomes 3.1 Relevance of Objectives, Design and Implementation 41. The preparation of the NWRMP-1, financed by the Swiss Agency for Development and Cooperation, clearly proves that the WMIP has not lost its relevance of objectives, design and implementation. It may be argued that the WMIP preparation team in 2005 was too optimistic regarding the outcomes of the project but at that time nobody could foresee the significant changes in the political landscape of Kyrgyzstan as they eventually unfolded in 2010. The aftershocks of this turbulent period four years ago are still felt today and manifest themselves in political fragility in general (e.g., high staff turnover at all levels), and indecisiveness of Government officials, in particular, concerning important issues of 10 national interest, such as convening the NWC and caring for O&M procedures to sustain the irrigation infrastructure rehabilitated under WMIP. Current development priorities of the country include the irrigated agriculture sub-sector as well as better use of the available land and water resources. These priorities are also reflected in the Bank’s new Country Partnership Strategy (CPS) for the period FY14-17 which includes “better management of natural resources” as one of three pillars to fight poverty, especially in the South. 3.2 Achievement of Project Development Objectives (PDOs) 42. In an environment of political instability and frequent government changes, the implementation of projects – including WRMP - suffered accordingly. Alternating government officers lacked experience and decision power, and the Parliament had to provide its approval of any proposal for institutional change. Notwithstanding the very difficult circumstances the country went through during the last four years, particularly in the Ferghana Valley, the achievements under the project are remarkable but fall considerably short of achieving the PDO in its entirety. Although the project fully disbursed the credit and 14 irrigation schemes were satisfactorily rehabilitated by project closure, the overall rating for achievement of the PDOs can only be rated ‘moderately unsatisfactory’. The main reason for this is that the sustainability of investments in irrigation system rehabilitation is not ensured. The investments should have been enhanced by improvements in management, operation and maintenance which were supposed to be piloted (over the original project period of six years) as part of the project, and which only at the end of the project found the necessary attention. Studies under the project indicate that the overall budget allocated for O&M of the schemes is only around 25-30% of what is required, jeopardizing the sustainability of rehabilitation investments and the long-term reliability of adequate water supply. 43. Component 1 had five result indicators (see Table 2 in Annex 2) to achieve improved irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity: ISF collection rate increased by 18% but remained yet 11% under target and a high satisfaction rate concerning water delivery was observed by 92% of WUAs. Though the volumes of irrigation water supplied improved by 12-16%, the investment in irrigation infrastructure rehabilitation must be considered unsustainable as not a single MOM Plan was implemented; and practiced IFS contribution reaches just a fourth of the required maintenance budget, with actual allocations in the order of US$ 4-5 per ha, whereas sustainable levels are in the order of US$ 18-20 per ha. Especially since Component 2 was not able to introduce substantial improvements on the MOM procedures, the concern with regard to the sustainability of investments made remains, and the Component is thus rated ‘Moderately Unsatisfactory’. 44. Component 2 had six result indicators (see Table 4 in Annex 2) to achieve an improvement of national water resource governance for the benefit of water users and the nation as a whole. This component would have required significant policy interventions in order to achieve its original outcome indicators. Only after the NWC convened in the last project year, some progress was achieved in producing the desired outputs, such as the adoption of a comprehensive roadmap for the development of the water sector as well as resolutions giving the DWRLI the mandate of the State Water Administration as a pre- cursor to establishing the SWA as an independent agency. Eventually, some important activities were accomplished which will contribute to a good start of the succeeding NWRMP-1. These included the preparation of i) a SWC/SCWRLI Charter, ii) guidelines 11 for the establishment and operation of the SWA/SCWRLI, iii) a draft for the establishment of processes, procedures and staff for BWAs and BDWRs, and many more documents supporting the much needed institutional change. However, as none of the six results contributed in a significant manner to the expected outcome in order to achieve the component’s objectives, the results produced under project Component 2 are rated ‘unsatisfactory’. 45. Component 3 had four indicators (see Table 5 in Annex 2) to contribute to the achievement of an improvement of national water resource governance for the benefit of water users and the nation as a whole. All four results contributed to the expected outcome, the most noteworthy among them being the establishment of 10 pilot FWUAs, double the number proposed in the PAD, and the transfer of 24 out of 26 identified minor irrigation systems to WUAs. Hence, the achievements under project Component 3 are rated ‘satisfactory’. 3.3 Efficiency 46. The rehabilitation works on most I&D schemes were only completed during the last two years of project implementation. Therefore, the economic analysis was undertaken based on actual benefits achieved in the six irrigation schemes that were completed in 2009 and 2010. The economic internal rate of return (EIRR) varies from 17% to 57%. In terms of sustainability, the analysis examined the EIRR under the scenario that assumes that the current level of the O&M spending remains resulting in decreased crop productivity at 2%, the EIRR dropped significantly. For two schemes, namely Sarykamysh and Mogol, EIRR reduce to below 12%. Furthermore, to evaluate the likely economic impact of potential increases in the irrigated area by 5% and 10%, a sensitivity analysis was undertaken. It is evident from the analysis that the EIRRs would rise significantly. For a 5% rise in irrigated area, EIRRs of between 17% (Sary Kamysh) and 71% (LB Kugart) would be achieved while, for a 10% increase in irrigated area, the EIRRs would range from 23% to 80%. 3.4 Justification of Overall Outcome Rating 47. The quantification of outputs under the preceding Sub-chapter 3.2 clearly shows the shortcomings under the three project components; those ones under component 2 being the most serious ones and rated ‘unsatisfactory’. Component 2 is the most crucial one for achieving the PDO which stipulates to achieve a sustainable increase in irrigated agricultural productivity and improved national water resources governance. Crop production increased only by 10% and water resources governance did neither improve at central nor significantly at local level. Consequently, in spite of more favorable ratings for component 1 (‘moderately unsatisfactory’) and component 3 (‘satisfactory’), the overall outcome must be rated ‘moderately unsatisfactory’. The available MOM budgets are insufficient and jeopardize the investment made, already in the short-term. 3.5 Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 48. Poverty impact was not explicitly measured. The high EIRRs presented in Sub- chapter 3.3, however, support the assumption that farm families in the rehabilitated irrigation schemes will continue to raise their incomes due to high EIRRs, through crop production that is currently increased by 17% (in schemes where rehabilitation was completed in 2009 and 2010); thus poverty will be reduced. As usual and necessary, the 12 project tried hard to involve women in the decision making process in the WUAs and WUAFs – with modest success. Very few women have the courage and attract sufficient respect from male members to be entrusted to management positions in the WUAs and WUAFs2. It goes without saying, however, that the successful establishment of 10 WUAFs will certainly support more efficient management of the available water resources at local level, providing new opportunities to make irrigated agriculture more profitable and thus contribute to a better living standard. (b) Institutional Change/Strengthening 49. The project did not achieve the desired institutional change due to a number of events and shortcomings described above. There is no impact on longer-term capacity increase at central level in sight. To a lesser extent, this is also true at local level, but here Oblast and Raion staff are directly and daily facing the needs for improvement, and thus more demanded to act upon – but with not much success when recognizing the very high staff turn-over. (c) Other Unintended Outcomes and Impacts 50. No unintended outcomes and impacts were noticed. 3.6 Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops 51. The beneficiary survey was carried out in 2012/2013 by a local public association. The survey focused on four groups of WUAs and water users that have benefitted from irrigation systems rehabilitated under WMIP. Questionnaires were used to collect data from WUA council members and officials, and representatives of the BWA and the RDWR. 20 representative WUAs located in Batken, Jalalabad, and Osh Oblasts were surveyed. 52. Detailed results of the survey are presented in Annex 5. Some major results included i) the positive effect of the project in guaranteeing water supply to WUAs and thus preventing conflicts between water users ii) the WUA representatives’ perception of positive changes in improved water supply, and iii) the lack of elementary water use skill in some WUAs in spite of RDWR inspectors’ and specialists’ organizing workshops and training seminars. 4. Assessment of Risk to Development Outcome 53. The risks are low on the technical and environmental side. The main concerns are of a financial, institutional, and to a lesser extent economic nature. There is much concern: (i) that financial resources will be insufficient already in the short-term to operate and maintain (and further improve) the rehabilitated irrigation infrastructure, (ii) that DWR will not become an integrated water resources management agency and an efficient bulk water supplier, and (iii) that the country’s political and economic situation may not remain stable and thus the agricultural sector would not be able to take full advantage of the rehabilitated and modernized irrigation infrastructure. The long-term O&M of the irrigation infra- structure continues to be an issue. DWRLI maintains that it receives less than half of the budget it requires. Hence, increasing both DWR budget allocation for MOM and the ISF rate are indispensable for the sustainability of irrigation infrastructure. 2 Source: personal communication during irrigation scheme visits in the Ferghana Valley in November 2013; see also the beneficiary survey in Annex 5. 13 54. In spite of the satisfactory organization of the beneficiaries in WUAs and WUAFs, the moderately unsatisfactory achievements in irrigation infrastructure rehabilitation definitely jeopardize the PDO. Consequently, the risk to the overall development outcome can only be considered to be ‘moderately unsatisfactory’. 5. Assessment of Bank and Borrower Performance 5.1 Bank Performance (a) Bank Performance in Ensuring Quality at Entry 55. Following some minor amendments made to the Project Concept Note, a large team of experienced Bank staff and consultants started the preparation of this project, which benefitted from lessons learned from the previous irrigation projects IRP and OIP, such as insufficient MOM budgets and low ISFs. Readiness of the Government to institutional reform was articulated by Government key staff in personal communication with Bank staff preparing the project. In 2005, a stakeholder workshop was convened in Bishkek, the main objectives having been the familiarization of stakeholders with the planned project activities and the selection of irrigation infrastructure to be rehabilitated. Ensuring quality at entry, the meticulous project preparation may have given the impression that project implementation would go smoothly and that the Government would be ready and prepared for institutional reform. This, however, was not the case due to many external as well as internal reasons, both in the rehabilitation of the irrigation schemes as well as in the attempt to successfully support the water sector reform, the latter having certainly been an overam- bitious undertaking as experience from other countries (for example Georgia) clearly show. The target set at preparation for the preparation and implementation of MOM plans (200) clearly underestimated how a complicated endeavor this was, as eventually only 4 plans were prepared, without being implemented yet. These obvious shortcomings in ensuring quality at entry contribute to an only ‘moderately unsatisfactory’ rating. (b) Quality of Supervision 56. Besides regular contact with the DWRLI via the World Bank Office in Bishkek, 14 implementation supervision missions including a mid-term review in October 2009 were carried out. Several specialized consultants took regularly part in these missions, ensuring the best possible support to Government and the PIU of DWRLI. The missions regularly carried out field visits, and initiated lively discussions with beneficiaries and DWRLI staff at national, Oblast and Raion levels. Fiduciary and safeguard policies were continuously observed and regularly supervised by specialists. Also the change of Team Leaders early in 2010 did not cause any delay or friction in the implementation of the project. However, the Mid-Term Review has to be considered rather weak, missing – on the one side - to acknowledge the impossibility of achieving the PDO within the scheduled project period of six years, and on the other side that the Government should have been reminded to the covenant of holding the decisive NWC meeting immediately in 2009. In spite of the significant progress made through tight high quality supervision and backstopping in the last year after the NWC met, the quality of supervision can only be rated to have been ‘moderately satisfactory’. A notable achievement during supervision is the preparation of the follow-up NWRMP-1. 14 (c) Justification of Rating for Overall Bank Performance 57. The WMIP initially seemed to be a straightforward prepared project based on experience and lessons learned from preceding IDA funded projects (IRP and OIP). This, however, was not the case; not only because of the crucial role (and thus its political relevance) the DWRLI was expected to play in the future, but also because of the unexpected civil unrest in the country in 2010. In spite of these unforeseen events, the two team leaders maneuvered the project through difficult times, albeit not without persistent shortcomings regarding the achievement of the expected outcomes. Having gone through an intensive project identification and preparation period setting very ambitious targets, followed by regular implementation supervision missions with Bank staff and consultants of high reputation, but missing the opportunity at Mid-Term Review to adjust the outcome indicators to the special political and economic climate in the country at that time, the overall Bank performance must be considered to have been ‘moderately unsatisfactory’ because ensuring quality at entry is rated in the unsatisfactory range. 5.2 Borrower Performance (a) Government Performance 58. It is well understood that particularly during 2010 and 2011 the Government was fully occupied with more important things than backstopping the WMIP. The Government’s weak performance, however, goes back to the very beginning of the project, and culminated in the Bank’s statement in the 7th ISR of 20 February 2010: “The delays facing this project are worrisome, and while the recent reorganization of government structures has been disruptive, the delays reflect a far deeper issue of institutional weakness. One may also question the authorities' commitment to this project.” This statement in the 7th ISR certainly was the result of the repeated postponement of the decisive NWC meeting, and the frustration that the DWRLI did not follow up the recommended – and agreed actions – brought forward by the Bank’s supervision team. In light of the Government’s rather indifferent attitude towards the project needs (except for the MOF), and its lack of decisiveness at important times during project implementation, the Government’s performance can only be rated ‘moderately unsatisfactory’. (b) Implementing Agency Performance 59. The PIU is located in the DWRLI under the MOA. Throughout project implementation, DWRLI management collaborated well with World Bank supervision staff but less well with World Bank Management, particularly with respect to adhering to the actions agreed after implementation supervision missions. Project Component 2 activities did not only suffer from the weak performance of the international consulting firm, but also from passive DWRLI management3. PIU staff worked hard, albeit not always as focused as needed. In spite of continuous training the PIU’s and RDWRs’ staff capacity hardly in- creased during the project. Deficits in adequate contract management caused unnecessary delays enhanced by the many variation orders not really due to poor design but due to the ambitious construction volumes planned in spite of limited funds. The performance of the implementing agency is therefore considered to have been ‘moderately satisfactory’. 3 E.g., in the 6th ISR of 9 June 2009, it was noted that “T here is concern that the management of the DWRLI has so far not submitted any proposals to Government, and monitoring and evaluation (M&E) re main weak”. 15 (c) Justification of Rating for Overall Borrower Performance 60. In spite of MOF’s positive attitude towards the project and recognizing the efforts undertaken by PIU staff, the Borrower’s overall performance has to be rated ‘moderately unsatisfactory’ because the outcome is rated in the unsatisfactory range. 6. Lessons Learned 61. Instead of requiring organizational change, it may have been more adequate to work with the existing DWRLI divisions in order to establish processes and procedures for improved water resources management. Such a focus on practical and achievable activities would have had more chances to yield results within the originally six year period. A more focused approach on selected ‘model irrigation schemes’ and employing specialized short- term consultants could have provided an opportunity to test and refine the measures chosen, especially for improved MOM, before up-scaling those measures to other irrigation schemes in the country. This approach would have been commensurate with the limited financial and human resources of DWRLI and would have enabled senior DWRLI management to effectively guide changes emanating from the project. 62. Consequently, the proposed NWRMP-1 has carefully set its targets, gradually and stepwise increasing them throughout the project, clearly stating targets to be achieved in the short-term (during project duration) and in the long-term (after project closure). For example, capacity building within DWRLI to take up the role of the SWA is given priority and a short-term objective, whereas the institutional separation of water resources management and irrigation & drainage functions is considered a long-term objective. Or the MOM budget issue is addressed in such a way that only a certain number of priority schemes is expected to function profitably with an adequate MOM budget at the end of the project; all the others should follow in the long-term. WMIP has successfully supported the establishment of 10 FWUAs, whilst Second On-farm Irrigation Project (OIP-2) has worked well with supporting and strengthening WUAs, particularly in relation to water manage- ment, system maintenance and asset management. Any follow-up project like NWRMP-1 should build on this past experience, learning lessons from the relatively new FWUAs and strengthening the irrigation water management and maintenance capability of WUAs initiated under OIP-2. A key factor will be provision of suitable technical expertise in order to build local capability, which is currently weak in the associated disciplines. 63. As experienced elsewhere in Central Asia, it is crucial for the Kyrgyz Republic to modernize its systems of water resources management, particularly regarding the collection, processing, analysis and use of water resources and irrigation data. Assisting the Government of the Kyrgyz Republic in these endeavors, it is compulsory for the Bank to adjust the need and speed of institutional reform not only in the water sector to the sometimes very special political and cultural conditions prevailing in the recipient country. 7. Comments on Issues Raised by Borrower/Implementing Agencies/Partners (a) Borrower/implementing agencies 64. The PIU in its Borrowers Completion Report rates the project moderately satisfactory both for achievement of PDO as well as for the performance of the World Bank and the DWRLI. Also the comments on the draft ICR, provided by the Director General of the DWRLI noted that the indicators set-forth at appraisal of the WMIP were overly ambitious, but that given the revisions of the indicators for evaluation, the project was 16 moderately satisfactory. The Director General also notes the positive impact of the project on improving living standards of the rural population and the improvement of irrigation infrastructure. 65. The ICR task team acknowledges that the project indeed would be rated moderately satisfactory against the revised Results Framework, but refers to the last Aide Memoire and Management Letter which clarify that according to World Bank ICR guidelines the final ICR rating is for the project over the entire project duration, and not only against revised Results Framework. 17 Annex 1. Project Costs and Financing (a) Project Cost by Component (in USD Million equivalent) Actual/Latest Appraisal Estimate Percentage of Components Estimate (USD (USD millions) Appraisal millions) Rehabilitation and modernization 19.80 21.64 110 of irrigation infrastructure Management of water resources 4.85 5.65 117 Organization of beneficiaries 2.50 1.66 67 Project management 0.99 1.20 122 Total Cost 28.14 30.15 108 (b) Financing Appraisal Actual/Latest Type of Co- Estimate Estimate Percentage of Source of Funds financing (USD (USD Appraisal millions) millions) Borrower 4.67 5.11 110 IDA Grant 19.10 20.40 107 JAPAN: Ministry of Finance - PHRD 4.40 4.64 106 Grants 18 Annex 2. Outputs by Component Component 1: Rehabilitation and modernization of irrigation infrastructure 1. Project Component 1 had five result indicators (see Table 2) to achieve improved irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity. Table 2: Results under Project Component 1 # Indicators Results Notes Increased from 67% to 79% (off- ISF collection rate of 90% of agreed farm) and from 74% to 89% (on- tariff (based on annual O&M budget) 90% achieved by those schemes farm) for surveyed schemes that 1 within two years of after completion where rehabilitation works were included schemes where of the project scheme’s rehabilitation completed in 2009 and 2010. rehabilitation works were works completed only in 2012. None The contribution to MOM 2 Number of schemes properly operated Contribution to MOM after represents only 20% of the rehabilitation: 156 KGS/ha MOM amount required Number of WUAS receiving suf- 75% receive over 80% of the 3 82% - 92% of all WUAs ficient irrigation water in time requested water in time Evidence of high satisfaction with Within six rehabilitated 4 68% - 84% satisfied water delivery schemes, 84% were satisfied average yield increases at 9% for all crops4 and 17 % percent Changes to cropping patterns increases in crop production 5 10% increase in crop production occurred leading to significant was recorded for schemes in which increases in crop production. off-farm systems were rehabilitated in 2009 and 2010 2. Twenty priority off-farm schemes (main headwork and canal infrastructure) have been identified at the Project design stage. The actual works comprised the rehabilitation of 14 off-farm irrigation schemes, the upgrading of an inter-canal transfer, and the renovation of a storage dam (see Table 3). The total command area of the 14 off-farm-irrigation systems was estimated to be 70,390 ha (or 82.5% of the original target) which supplied water to about 41,100 households (or 352,000 people). Total expenditure on civil works contracts was US$ 17.79 million. About three quarters of the contracts (by value) were located in the South of the country. Table 3: Rehabilitated I&D Schemes Command Number Remarks Name of I&D Scheme # Area of (as presented in the (or rehabilitated structure) [ha] Beneficiaries Borrower’s Report) Ak-Tatyr/Batken, Properly operated and 1 1,376 2,185 headworks and canal maintained* 4 The noted increase in irrigated area of only 0.5 % is negligible 19 Command Number Remarks Name of I&D Scheme # Area of (as presented in the (or rehabilitated structure) [ha] Beneficiaries Borrower’s Report) Ifairamsai/Batken 2 8,226 6,380 Headworks and canal 3 Too-Hailoo Canal/Batken 1,945 580 Chon/Issyk-Kul Properly operated and 4 6,844 1,973 Headworks and canal maintained* Konur-Oguz/Jalalabad, 5 2,488 1,175 headworks and canal 6 Left Bank Kugart Canal / Jalalabad. 4,317 6,494 Properly operated and 7 Levaya Vetka/Jalalabad 9,688 7,442 maintained* Shakaftar Canal / 8 1,514 742 Jalalabad Kadjyrty/Naryn, 9 3,081 682 headworks and canal Properly operated and 10 Mogol Canal / Osh 2,387 2,936 maintained* Properly operated and 11 Sarykamish Canal / Osh 1,257 3,044 maintained* Properly operated and 12 TMR Canal / Osh 5,921 1,513 maintained* Properly operated and 13 Yuzhnyi Canal / Osh 3,803 2,251 maintained* 14 Big Talas Canal / Talas 17,543 3,648 15 Inter-canal transfer / Chui - - Naiman Dam / Osh 16 - - Tunnel outlet structures *Contrary to the Borrower’s judgment, the main off-farm infrastructure that was rehabilitated under the WMIP is considered not to be properly operated and maintained by the DWRLI as evidenced by the poor technical conditions of the off-farm structures rehabilitated under the previous IDA-financed IRP and the con- tinuous dilapidation of the systems selected for improvement under the WMIP. 20 Component 2: Water Resources Management 3. Component 2 had six result indicators (Table 4) to contribute to the achievement of an improvement of national water resource governance for the benefit of water users and the nation as a whole. As none of the six results contributed in any significant manner to the expected outcome, the achievements under Project Component 2 are rated ‘unsatisfactory’. Table 4: Results under Project Component 2 # Indicators Results Notes Structure proposed but not Institutional structure established and No concrete actions resulted 1 established; NWS + 2 RBPs approved; NWS + RBPs prepared from the proposals proposed but not approved Delegation of SWA authority to DWR is Delegation completed and No concrete actions resulted 2 practiced NWC formed/convened from the delegation SWA function/staffing/budget proposed Proposed and submitted to 3 Not yet approved by MOF and approved by MOF MOF Road map for Water Code implementa- Prepared and approved by No concrete actions resulted 4 tion approved NWC in February 2013 from the approved road map 6 pilot RBCs established and functioning; No RBC is functioning; 2 No further action resulted from 5 RBPs prepared RBPs prepared + approved the 2 RBPs MOM budget is 4-5 US$/ha, 6 MOM plans are prepared and operational Prepared but not operational but the recommended budget is 18-20 US$/ha 4. This component would have required significant policy interventions in order to achieve its original outcome indicators. Only after the NWC convened in the last project year, some progress was achieved in producing the desired outputs, such as the adoption of a comprehensive roadmap for the development of the water sector as well as resolutions giving the DWRLI the mandate of the State Water Administration as a pre-cursor to establishing the SWA as an independent agency. The outputs are summarized as follows: Implementation of the Water Code – Towards Integrated Water Resources Management (IWRM):  Review information on the experience of other developed countries was provided.  A report on the functions, structures and staffing of the SWA was prepared but not used as the SWC was not formed.  A SWC/SCWRLI Charter was prepared but not used as SWA was not formed.  Key work processes and procedures for the SWA/SCWRLI were identified and job descriptions for key positions produced but not applied as SWA was not formed.  Guidelines for the establishment and operation of the SWA/SCWRLI were partially prepared but not fully completed because SWA was not formed.  Training needs assessment of staff performing water related work was carried out but the training only partially realized.  Boundaries of seven river basins were identified but not accepted by the Govern- ment.  Two river basin plans for the Talas and Kugart rivers were prepared following the formation of the respective River Basin Councils. 21  A draft for the establishment of processes, procedures and staff for BWAs and BDWRs was completed but not applied as SWA was not formed.  A budget for IWRM was prepared but not applied as SWA was not formed.  An IWRM road map and a DWRLI restructuring/water resources financing plan were prepared.  Financial analyses for SWA/SCWRLI and BWA/BDWR offices were carried out but it is not known if they are applied.  A national water strategy was partially prepared.  An inventory and analyses of existing hydrometric stations were carried out and improvements proposed including low-cost emergency repair measures for priority stations.  Hydrometric staff requirements and skills were reviewed, with focus on data pro- cessing and integration with the new BWAs, the latter not having been possible because no BWAs were formed. Service Delivery – Reforming the DWRLI  Studies to identify and quantify the costs associated with maintenance of the I&D systems were carried out.  A detailed assessment to establish the required MOM budgets and procedures was carried out and recommendations made.  Needs and justification for ISFs were formulated.  A report about options for turnover of smaller I&D systems to water users was pre- pared and recommendations made.  Advice was provided and recommendations made on how best to set up and operate Water Management Committees (WMCs).  Limited assistance to improve DWRLI’s MIS was given (a study for the needs of an MIS with resulting Action Plan partially implemented; training and installation of computers).  A feasibility study about DWRLI owning I&D maintenance equipment was carried out (with negative result).  A young professionals program was formulated but not followed up.  A report about an investigation on costs and benefits of electrically driven pump irrigation systems was prepared by analyzing 16 out of 107 identified systems resulting in the fact that the electricity costs alone consume around one-third of DWRLI’s annual budget.  An overall plan for the improvement of DWRLI institutional structure, financial management and information system was prepared, training provided and hardware installed but not yet used. Supporting WUAs with Improved Water Management  21 demonstration plots were established (three in each oblast), equipment bought, farmers trained in modern agricultural production technologies, and the plots operated for three seasons. 22  WUA Support Unit Staff was trained in improved water management procedures. Information and Dissemination  Leaflets, brochures, newspaper articles and a video were prepared for on-field water management and agricultural practices, and distributed to water users, interest groups and the general public. Training and Capacity Building  A study tour to learn about water resources management and involving farmers in irrigation management was carried out to Portugal and Spain from November 11-18, 2012 with 10 participants comprising the Deputy Minister of Agriculture and Melioration, project staff, local government administrators and WUA staff.  Relevant university courses were strengthened by providing some technical support such as giving guest lectures. Component 3: Organization of beneficiaries 5. This component had four indicators to contribute to the achievement of an improvement of national water resource governance for the benefit of water users and the nation as a whole. All four results contributed to the expected outcome (see Table 5); hence, the achievements under Project Component 3 are rated ‘satisfactory’. Table 5: Results under Project Component 3 # Indicators Results Notes Ownership + MOM of minor I&D systems 1 24 I&D systems transferred Successfully carried out transferred to WUAs + WUAFs 5,900 famers trained; more than Additionally, 56 Number of farmers trained and applying 2 600 farmers apply improved demonstration plots improved water management techniques techniques established Number of WUAF who signed agreement Double the number of 3 10 WUAF signed the agreement with the RDWRs WUAF expected Business plans for 10 WUAF including draft agreement for Agreement not yet 4 Number of WUAF with business plan repayment of ‘technical credit’ approved by MOF prepared 6. Under this component, the Project has worked successfully with FWUAs to increase their capacity. Its outputs are summarized as follows: Formation and Support for Pilot Federations of WUAs  105 pilot FWUAs, double the number of pilot FWUAs proposed in the PAD. 5 Double the number requested as minimum in the PAD 23  Technical support to propose and assist with the development of the necessary legal instruments to facilitate the process of establishing and operating FWUAs was provided.  Some awareness raising and training in relation to the 10 FWUAs were carried out.  Business plans were prepared to enable the FWUAs to purchase maintenance machinery and equipment through the Project.  Tenders were prepared and machinery bought (mostly excavators, tractors, trailers and ditchers), delivered in late 2012/early 2013.  MOM of infrastructure was transferred from DWRLI to the 10 FWUAs. Transfer of Minor Irrigation Systems to WUAs  24 out of 26 identified minor irrigation systems were transferred to WUAs which is considered to be a rather significant development as - with further TA and capacity building of WUAs - more schemes can be handed over to FWUAs in the future relieving the budgetary pressure on the DWRLI. Monitoring and Evaluation of Results  Technical assistance (TA) over 2 years was provided to the PIU M&W Specialist in o Design and implementation of an M&E system suitable for WMIP; o Development of data analysis, reports and information dissemination on the Water Code implementation; o Creation of relevant tools to monitor the activities of key WUAs with demonstration plots; o Internal monitoring of WUAs; and o Training of PIU staff and key WUAs. Component 4: Project management 7. Overall project management is considered to have been moderately satisfactory. Although construction management and management of Project Component 2 could have been substantially better, the PIU was able to complete construction of most schemes amidst a situation of conflict in the South. Eventually it helped the NWC to prepare the roadmap for future water sector development in an environment of political instability and frequent government changes. Project management often displayed a lack of organization and pro-activeness requiring significant implementation support from the Bank’s task team. 24 Annex 3. Economic and Financial Analysis A. Introduction 1. The current analysis re-estimated the financial and economic analysis for the Water Management Improvement Project (WRMIP) that was completed in 2013. The objectives of the project were to: (i) improve irrigation service delivery and water management for the benefit of a sustainable increase in irrigated agricultural productivity; and (ii) improve national water resource governance for the benefit of water users and the nation as a whole. 2. At appraisal, the analysis estimated the likely financial and economic returns to water users that would largely derive from an increase in crop yields and a limited expansion of irrigated area. The crop yield assumptions were: (i) with project crop yields would increase by 10% over a 4 year period following rehabilitation; and (ii) without project crop yields would decline at a rate of 1% per annum over 25 years due to the deterioration of the off-farm system. Furthermore, the irrigated area was expected to increase by an average of 7% over a three year period. No benefits from changes in cropping pattern were expected. The benefits and costs of 10 sample schemes were determined, and the results of the economic analysis indicated that 9 out of 10 sample sub- projects achieved very high benefits relative to rehabilitation costs, with benefit-cost ratios ranging between 2.0:1 and 6.8:1 (at 12% discount rate) and EIRRs varying from 21% to 73%. 3. The initial project design and objective remained unchanged over the project implementation period. Therefore, the current analysis re-estimated the project benefits using the methodology of the appraisal analysis but by applying (i) actual yield achievements and changes to cropping patterns recorded in six schemes where rehabilitation of irrigation systems were completed in 2009 and 2010; (ii) updating benefit phases; and (iii) project costs. These schemes, namely Tatyr (Batken), Sary Kamysh (Osh), Yujniy (Osh), Mogol (Jalalabad), Left Bank Kugart (Jalalabad), and Chon (Issyk-Kul) represent both Southern and Northern regions that have different agro-climatic zones. In terms of changes to crop yields and cropping patterns, the analysis uses the findings of impact assessment survey that was carried out in 2012-2013 by the independent survey company. B. Agricultural Benefits a. Irrigated Area and Cropping Patterns 4. The irrigated areas for each of the selected schemes, both before and after the implementation of the off-farm rehabilitation works, are presented in Table 1. As data demonstrate there has only been a very minor expansion in irrigated area within one sub- project (Yujniy) following the implementation of rehabilitation works. The full command areas were irrigated prior to rehabilitation but timeliness and volume of supplied irrigation water varied significantly within the scheme command areas with limited or no water supply to tail end sections during the peak of the vegetation seasons. For example, in schemes Levaya Vetka (Jalalabad), TMR (Osh) and Chon (Issyk-Kul) where rehabilitation works were completed only 2012; before rehabilitation only 85%, 88% and 95% of the respective command areas were irrigated. Some expansion in irrigated areas in those schemes, therefore, is expected to take place. 25 5. Table 6 demonstrates the cropping patterns of the six selected schemes before and after rehabilitation. Wheat and maize were the most commonly grown crops in southern schemes and accounted for over 50% of the cropped area. Overall, wheat and maize accounted for 33% and 21% of the cropped area respectively. A further 13% of the cropped area was under oil crops, while vegetables/potatoes accounted for 14% of the cropped area. Other notable crops were perennial fodder (8%) and orchards (5%). 6. The findings of the impact assessment surveys revealed that changes in cropping patterns have occurred since the completion of the off-farm rehabilitation works. The most notable change is the significant decline in the area of winter wheat, while other crop areas increased, e.g. fodder, vegetables, potatoes and orchards. This provides some evidence that an improved supply of irrigation water is contributing to changes in cropping patterns towards production of more profitable cash crops. Table6: Irrigated Area and Cropping Patterns of Selected Schemes Irrigated Area Irrigated Area (ha) At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon (Batken) (Osh) (Osh) (Jalalabad) (Jalalabad) (Issyk-kul) Before Rehab. 1,376 1,257 3,777 2,387 4,317 4,800 After Rehab. 1,376 1,257 3,803 2,387 4,317 4,800 Increment 0 0 26 0 0 0 Cropping Patterns: Before Rehabilitation % of Cultivated Area Crop At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Wheat 28% 28% 40% 20% 26% 33% Maize 30% 24% 26% 30% 13% 0% Oil crops 12% 13% 8% 29% 10% 1% Cotton 0% 0% 17% 0% 19% 0% Vegetables 10% 20% 9% 3% 10% 35% Potato 5% 1% Perennial grass 5% 6% 0% 14% 3% 24% Orchard crops 10% 9% 0% 3% 19% 2% Total 100% 100% 100% 100% 100% 95% Cropping Patterns: After Rehabilitation % of Cultivated Area Crop At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Wheat 19% 28% 40% 21% 22% 33% 26 % of Cultivated Area Crop At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Maize 25% 24% 26% 25.00% 12% 0% Oil crops 11% 13% 8% 29% 15% 1% Cotton 0% 0% 17% 0% 19% 0% Vegetables 15% 20% 9% 3% 13% 35% Potato 10% 5.00% 7% Perennial grass 10% 6% 0% 14% 8% 24% Orchard crops 10% 9% 0% 3% 4.20% 2% Total 100% 100% 100% 100% 100% 95% Source: WMIP PIU Impact Evaluation Study. b. Crop Yields 7. The wheat yields before rehabilitation varied from 1.6 tons/ha in At-Tatyr to 3.0 tons/ha in LB Kugart with the overall average at 2.3 tons/ha. Maize yields were signifi- cantly higher and ranged from 4.1 tons/ha in At-Tatyr to 5.9 tons/ha in Yujniy, with an average of 5.4 tons/ha. The average yields of other crops were estimated at: vegetables (14.5 tons/ha), orchard crops (5.7 tons/ha), fodder (4.4 tons/ha), cotton (2.4 tons/ha) and oilseeds (1.0 tons/ha). Crop yields within each selected scheme before rehabilitation are given in Table 7. 8. The findings of the impact assessment survey suggest that in the selected six schemes the overall yields of major crops increased by about 9% following rehabilitation. There were, however, notable differences between schemes and overall increases crop yields per hectare varied from 1% in Yujniy to 30% in At Tatyr. Similarly, there were also substantial variations between the major crops with yield changes ranging from 0.7% for oil crops in Yujniy to over 100% for orchard crops in At Tatyr. Table 7: Crop Yields of Selected Schemes Before Rehabilitation Crop Yields (ton/ha) Crop At-Tatyr Sar Kamysh Yujniy Mogol LB Kugart Chon Wheat 1.6 2.0 2.5 2.5 3.0 2.0 Maize 4.1 5.6 5.9 5.5 5.7 Oil crops 1.0 0.9 1.4 0.9 1.1 0.7 Cotton 2.3 2.4 Vegetables 13.5 12.5 12.7 12.5 20.5 15.0 Potato 12.6 11.7 Perennial grass 3.4 5.8 3.0 5.3 Orchard crops 5.7 5.5 6.5 5.0 27 After Rehabilitation Crop Yields (ton/ha) Crop At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Wheat 2.5 2.20 2.75 2.8 3.30 2.20 Maize 5.5 6.16 6.49 5.8 6.27 Oil crops 1.30 0.99 1.54 1.0 1.21 0.77 Cotton 2.53 2.64 Vegetables 15.5 13.75 13.97 14.9 23.50 16.50 Potato 14.7 12.2 12.25 13.7 Perennial grass 3.74 6.9 3.30 5.83 Orchard crops 6.27 6.05 6.75 5.50 9. The improved and guaranteed water supply is expected to result in adoption of improved cropping practices and increased investments in production inputs that would lead to further increases in crop productivity. It is therefore highly likely that future crop yields will exceed the levels assumed in the original economic analysis. C. Economic Analysis a. Economic Pricing 10. Economic prices for internationally traded goods (e.g. wheat and maize) were derived from border prices. Non-internationally traded agricultural goods were based on financial farm gate prices within the scheme areas. Unskilled labour costs were based on the wage rates prevailing within the scheme areas. A shadow wage rate conversion factor of 0.60 was used to reflect the opportunity cost of unskilled labour. Taxes (such as VAT and import duties) were omitted from financial prices to convert them into economic values. 11. The economic analysis was undertaken in 2013 constant prices and opportunity cost of capital of 12% was assumed. Discounting was undertaken over a scheme life of 25 years. The Kyrgyz som (KGS) was used as the unit of account and an exchange rate of KGS 54 to US$1.0 (March 2014) was applied when converting to US$. b. Economic Crop Gross Margins 12. Crop gross margins were estimated for all the main crops grown within the scheme command areas. These gross margins were prepared based on 2013 financial outputs and inputs prices that were converted into economic prices by applying appropriate economic conversion factors. Economic crop gross margins for the six selected schemes, both before and after rehabilitation, are presented in Table 8. 28 Table 8: Economic Crop Gross Margins Before Rehabilitation Economic Gross Margin (KGS/ha) Crop At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Wheat 2,450 4,292 8,643 8,643 12,391 4,292 Maize 28,106 33,770 37,677 33,070 35,170 Oil crops 1,105 105 10,875 105 2,605 750 Cotton 29,303 29,303 Vegetables 38,816 35,750 35,750 35,750 47,190 43,405 Perennial grass 6,640 11,328 6,640 11,328 Orchard crops 42,500 42,500 47,650 40,250 After Rehabilitation Economic Gross Margin (KGS/ha) Crop Sary At-Tatyr Yujniy Mogol LB Kugart Chon Kamysh Wheat 4,050 5,792 11,143 11,143 14,641 5,792 Maize 32,206 37,130 41,877 36,920 39,160 Oil crops 2,605 1,355 12,625 1,355 4,255 -2,605 Cotton 32,983 32,983 Vegetables 45,566 42,500 42,500 42,500 56,100 50,140 Perennial grass 7,636 13,028 7,636 13,028 Orchard crops 47,500 47,500 53,250 44,750 c. Incremental Economic Benefits 13. In the without project situation, it was assumed that the before rehabilitation economic benefits would decline by 1% per annum over the life of the scheme. The present values (discounted at 12% per annum) of with and without project benefits, as well as incremental economic benefits, for each scheme are presented in Table 9. Table 9: Present Value of Economic Benefits Present Value of Economic Benefits at 12% (‘000 KGS) At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon With Project 223,517 235,624 684,769 284,804 730,305 830,362 Without Project 179,484 168,817 546,872 227,790 590,391 709,690 Increment 44,034 66,806 137,898 57,015 139,914 120,672 29 D. Economic Costs a. Rehabilitation Costs 14. The capital investments used in the analysis were the actual expenditures incurred during implementation of the off-farm rehabilitation works at each of the schemes. In the derivation of economic rehabilitation costs, taxes and import duties were omitted and the cost of unskilled labour was reduced by applying the shadow wage rate factor of 0.60. The financial cost of foreign goods and services remained unchanged. It was estimated that foreign and local material/machinery costs accounted for 60% and 20% of the expenditure respectively, while 10% was spent on labour, and taxes/import duties account for a further 10%. The specific economic conversion factor for rehabilitation works was estimated at 0.86 and this factor was then applied to the financial costs of each scheme. The economic rehabilitation costs of each scheme are shown in Table 10, and it can be seen that the economic costs ranged from KGS 10.06 million (US$ 209,940) in At-Tatyr to KGS 45.76 million (US$ 953,375) in Mogol, with an average of KGS 31.60 million (US$ 658,300). With respect to the economic rehabilitation costs per hectare, these varied from KGS 5,859/ha (US$ 122/ha) in LB Kugart to KGS 29,999/ha (US$625/ha). Table 10: Rehabilitation Costs At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Total Rehabilitation Cost (‘000 KGS) Financial 11,695 43,847 44,474 53,212 29,361 37,877 Economic 10,058 37,708 38,248 45,762 25,250 32,574 Rehabilitation Costs per hectare (KGS) Financial 8,499 34,882 11,695 22,292 6,801 7,891 Economic 7,309 29,999 10,057 19,172 5,849 6,786 b. Economic Benefit-Cost Analysis 15. The results of the economic analysis are presented in Table 11 and it can be seen that the NPVs range from KGS 20.0 million (Mogol) to KGS 100.7 million (LB Kugart), while the EIRRs vary from 17% (Mogol) to 57% (LB Kugart). This analysis clearly demonstrates that all the schemes are economically viable and that the rehabilitation of most schemes will generate significant economic benefits. For schemes with lower EIRRs, i.e. Sary Kamysh and Mogal, this was mainly due to the higher rehabilitation costs per hectare relative to other schemes. Table 11: Economic Benefit-Cost Analysis Economic Indicator At-Tatyr Sary Kamysh Yujniy Mogol LB Kugart Chon Net Present Value 30,746 34,900 105,952 20,198 100,662 75,954 @ 12% (‘000 KGS) Economic Rate of Return 40% 28% 48% 17% 57% 30% (EIRR) 30 16. The findings of the impact assessment studies show clear evidence that crop yields are likely to increase further and the irrigated area is also expand in some schemes where rehabilitation works were completed just recently. In this regards, the results of the current economic analysis is conservative. Thus, to evaluate the likely economic impact of increases in the irrigated area by 5% and 10%, a sensitivity analysis was undertaken (Table 12) and it is evident from the analysis that the EIRRs of the schemes would rise significantly. For a 5% rise in irrigated area, EIRRs of between 21% (Mogol) and 81% (LB Kugart) would be achieved while, for a 10% increase in irrigated area, the EIRRs ranged from 23% to 80%. Table 12: Sensitivity Analysis Sary Economic Indicator At-Tatyr Yujniy Mogol LB Kugart Chon Kamysh Net Present Value 30,746 34,900 105,952 20,198 100,662 75,954 @ 12% (KGS) Benefit -Cost Ratio 2.7 : 1 1.0 : 1 2.8 : 1 1.1 : 1 2.8 : 1 2.9 : 1 Economic Rate of Return 40% 28% 48% 17% 57% 30% (EIRR) Additional 10% yield increases + 5% Area increase 52% 35% 57% 21% 71% 36% Additional 10% Yield Increases + 10% Area increase 62% 42% 68% 23% 80% 42% c. Operation and Maintenance Costs and Sustainability 17. Before the project, annual O&M costs of off-farm systems were very low; ranging from KGS 29 (US$ 0.60 per ha) in LB Kugart to 243 per ha (US$ 5.35 per ha) in Yujniy, with an average of KGS 155 per ha (US$3.23 per ha). At the project completion, the annual spending on the off-farm systems increased. However, the current O&M level is much below the US$18.5 per ha which was recommended by the Management, Operation and Maintenance Study (2013) as the adequate O&M level required to keep the systems in an efficient operational condition. The current analysis assumed that the future annual O&M spending will be equal to the recommended O&M level (base case). 18. Furthermore, it examined the economic returns under the scenario that assumes that the current level of the O&M spending will remain leading to 2% declines in crop yields after Year 5 (due to deterioration of systems). Under this scenario the EIRRs notable reduced for schemes with higher rehabilitation costs (i.e. Sarykamysh and Mogol). However, the EIRRs for schemes with modest rehabilitation costs, the EIRRs were not significantly affected (see below table). 31 Table 13: EIRR when the annual O&M spending and capital repair works are assumed Economic Indicator At-Tatyr Sarykamysh Yujniy Mogol LB Kugart Chon Net Present Value 20,887 -15,666 63,368 -10,154 72,557 85,533 @ 12% (‘000 KGS) Economic Rate of Return 29% 6% 29% 9% 34% 33% (EIRR) 32 Annex 4. Bank Lending and Implementation Support/Supervision Processes (a) Task Team members Responsibility/ Names Title Unit Specialty Lending Reg. Environment and Safeguard Agnes I. Kiss ECSOQ Safeguards Spec. Ainura Kupueva Operations Officer ECSEN Operations Anarkan Akerova Counsel LEGCF Legal Bekzod Shamsiev Senior Agriculture Economist SASDA Economist Sr Financial Management Financial John Otieno Ogallo ECSO3 Specialist Management Joop Stoutjesdijk Lead Irrigation Engineer SASDA Task team leader Joseph R. Goldberg Consultant SASDA Jyldyz Wood Junior Professional Associate ECSSD Assistance Program Lynette Alemar Senior Program Assistant ECSSD Assistance Norval Stanley Peabody Consultant EASIS Agronomist Nurbek Kurmanaliev Procurement Specialist ECSO2 Procurement Supervision/ICR Ainura Kupueva Operations Officer ECSENOperations Alexei Slenzak Sr. Environmental Specialist ECSENSafeguards Aly Rahim Sr. Social Specialist ECSSOSafeguards Asli Gurkan Social Specialist ECSSOSafeguards Financial Galina Alagardova Financial Management Specialist ECSO3 Management Giovanni Munoz WUA Specialist FAO WUA Irina Goncharova Procurement Specialist ECSO2 Procurement Janna Ryssakova Consultant Social Safeguards Sr Financial Management Financial John Otieno Ogallo ECSO3 Specialist Management Joop Stoutjesdijk Lead Irrigation Engineer SASDA Task team leader Kunduz Masylkanova Program Coordinator ECSAR Economist/M&E Lidia Hvan Program Assistant ECCKG Assistance Lynette Alemar Senior Program Assistant ECSSD Assistance Institutional Martin Burton Institutional Specialist FAO reform Nurbek Kurmanaliev Procurement Specialist ECSO2 Procurement Nurjamal Asanova Team Assistant ECCKG Assistance Pieter David Meerbach Sr Water Resources Specialist ECSAR Task team leader Rahat Mederbekova Program Assistant ECCKG Assistance Sam Johnson Consultant WUA consultant 33 Irrigation Samvel Ghazaryan Irrigation Engineer FAO Engineering Talaibek Koshmatov Sr. Rural Development Specialist ECSAR Operations Officer Irrigation Tim Jackson Consultant Engineering (b) Staff Time and Cost Staff Time and Cost (Bank Budget Only) Stage of Project Cycle USD Thousands (including No. of staff weeks travel and consultant costs) Lending FY05 12.9 110.04 FY06 22 158.48 Total: 268.52 Supervision/ICR FY06 5.7 10.23 FY07 15.9 59.46 FY08 13.6 72.77 FY09 12.2 51.4 FY10 13.1 53.9 FY11 27.8 121.31 FY12 11.8 99.8 FY13 21 146.52 FY14 19.1 15.82 Total: 631.21 34 Annex 5. Beneficiary Survey Results 1. The beneficiary survey was carried out in 2012/2013 by the Institute for Development Evaluation (IDE) Public Association. The survey focused on four groups of WUAs and water users that have benefitted from irrigation systems rehabilitated under WMIP. Questionnaires were used to collect data from (1) WUA council members and officials, and (2) representatives of the BWA and the RDWR. Some 20 representative WUAs located in Batken, Jalalabad, and Osh oblasts) were surveyed during 2012/13. 2. IDE carried out the following tasks to reach their conclusions and recommendations:  Review of all the relevant documents including the project appraisal documents, quarterly and annual project progress reports, and the results framework of the project;  Identification and evaluation of project impacts with respect to beneficiaries of rehabilitated irrigation systems;  Survey of WUA Councils. At least three representatives from each WUA including one WUA council member and two senior WUA officials were interviewed. Key questions for discussion focused on the following:  Command area, source of irrigation water and number of water users;  WUA assembly, number of WUA meetings, and contact with raion representatives;  WUA budget, expenditure and water distribution plan;  Irrigation water supply and area irrigated;  Repair and maintenance of on-farm irrigation and drainage infrastructure;  ISF payments and collection rates;  Training and support services provided by the WUA Support Unit;  Disputes between WUA administration and RDWR;  Water management procedures and seasonal water allocation plans; and  Membership in Water Councils, FWUAs and National Union of WUAs. 3. The results of the beneficiary survey are summarized as follows: a. The comparative analysis performed to measure the Project’s impact on water resources management as well as on operation and maintenance of the rehabilitated irrigation and drainage systems shows that the Project had a positive effect in guaranteeing irrigation water supply to WUAs and thus prevented conflicts between water users. b. The institutional reorganizations stipulated by the WMIP and aimed at water resources management improvement had a positive result on the revival of the NWC’s activities who approved the Road Map for the implementation of the Water Code and water resources management procedures at river basin level. The institutional reorganization of the water sub-sector, however, still requires the finalization of the Water Law and the issuance of by-laws in order to ensure water access by water users country-wide. 35 c. The practicality and significance of the WMIP was highly appraised, but at the same time there are still rehabilitation needs of off-farm canals which were not included in the priority list for rehabilitation. d. Almost all WUA representatives noted positive changes in improved water supply, manifested in timely delivery of increased amounts of water. Some WUA representatives complained that many on-farm and field canals have been left unrepaired, and the amount of water delivered to some problematic zones still remain at low level. WUA representatives are continuing to raise their request for the provision of maintenance equipment including bulldozers, excavators, ditch digger, etc.) to better maintain and repair their irrigation systems. e. A reduction of cropping area of some major crops (such as wheat and tabacco) has been noticed. The reason for this is evident in the very low sale prices of these crops. It was also mentioned that there are good quality fertilizer, seeds and pesticides. f. A high staff turnover and incompetence of specialized staff (accountant, hydraulic engineers and hydro-technicians) working for WUAs was observed. This is due to low salaries causing the specialists to leave the WUA in search of better paid jobs. WUAs are, however, not in a position to pay better salaries due to lack of funds. g. Many WUA Directors could not find previous years’ data referring to staff turnover, saying that former Directors did not hand over any document to them; hence not observing existing transfer procedures stipulating proper Take-over Acts signed by the relevant Committee members in presence of the Ayil Okmotu and RDWR officials. h. Almost all WUAs face problems of individual, unauthorized diversion of irrigation water not abiding to the agreed water supply schedule. Apparently, such malpractice can be stopped by means of enforced administrative penalties, such as happened in the case of Kok-Sai-3 WUA in Talas raion, where the WUA Council has introduced KGS 500 penalties against water users diverting irrigation water without authorization. As a result, there was no unauthorized water taking any more in said WUA. i. In some WUAs, a lack of elementary water use skills was observed. RDWR inspectors and specialists organize workshops and training seminars, but they have a very limited impact on the skills of WUA managers in the light of the high staff turnover. It was suggested to improve WUA managers/members potential by inviting not only one person but 3-4 persons from each WUA to the workshops and training seminars, so that in case of retirement of key staff another staff would be familiar with the respective WUA issues. j. Almost all WUA managers have failed to answer the questionnaire’s questions addressed to them. This is not a good sign of accepting responsibility for WUA members. k. ISF collection level is relatively high (see graph below), representing 80% of the requested payment in 2012 (12% more than in 2011). WUA meetings are mostly held with raion representatives. Male water users are not very active in meetings, female water users not at all. 36 Figure 1. Amount of planned and actual ISF payments collected from water users in 2012 (Source: WMIP PIU Impact Evaluation Study) 37 Annex 6. Summary of Borrower's ICR 1. The Government, through the DWRLI and its PIU, produced a comprehensive “Project Completion Report” dated February 2014. It contains a main report summarizing the achievements of the Project and the problems encountered by the PIU as well as con- clusions and recommendations. In principle, the Borrower’s report follows the structure of this Implementation Completion Report. 2. The Report indicates that the design of the Project was judged consistent with Government priorities and the need of the country. It acknowledges that the project design also correctly identified the weak technical and financial performance of the DWRLI requiring substantial improvement. Furthermore, it was accepted that there should be major changes in the management and operational procedures as well as greater accountability and transparency, in order to transform the DWRLI into an efficient and client-oriented bulk water supply and management organization. The PIU noted that the priority list of schemes prepared at appraisal was amended. These amendments were initiated by local authorities due to the rapid deterioration of some off-farm systems and the poor social situation prevailing in remote raions. The revised priority list was eventually agreed with the Bank. 3. The Report provides a detailed assessment of the implementation of all project components and the outputs achieved. Particular attention is given to the implementation of project component 2: water resources management. Though it is admitted that the Govern- ment should have much earlier convened the NWC, much of the blame is attributed to the international consulting firm’s weak assistance by inexperienced staff and the latter’s demobilization without completing the contractually agreed activities, and without prior approval by the PIU. With regard to lessons learnt from those activities implemented under component 2, the following conclusions and recommendations have been drawn by the PIU:  Involvement of BWCs in basin planning is critically important to formulating well prepared and relevant basin plans and to actively engaging local organisations in water resource planning and management;  Data collection systems have significantly deteriorated over the past 20 years and do not currently constitute an adequate or credible basis for basin water planning and management;  Basin water planning at five-year intervals does not justify the creation of separate basin water planning unit within each basin. A central basin planning unit should therefore be established in the water resources wing of the SWA to assist BWAs in undertaking this periodic task. Routine tasks at the basin level should focus on data collection and analysis, as well as maintaining an up-to-date water balance for the basin, along with water and land cadastres;  A small BWA unit could be created within the primary Obvladkhoz in a basin at minimal cost by drawing on existing personnel resources in the Obvladkhoz. This unit would be linked administratively to the Oblvodkhoz, but accountable to the SWA water resources unit which would be financed by donors; 38  BWAs which identify fundamental infrastructural deficiencies should have access to funds to address those deficiencies. As Government funds are limited, donor resources are critical in this regard and need to be linked with the requirements identified in basin plans; and  The small size of the Kugart Basin suggests that planning and co-ordination in this and similar basins should be organized at the raion level and not at the oblast level. 4. Regarding the low ISF charges covering only 20 to 25% of the required MOM budget, the Report postulates the Government’s willingness to double the national budget for O&M, together with targeted interventions to support the rehabilitation of I&D infrastructure, which are constraining system performance. It recognized the significant improvement in water supply as well as an increase in the amount of ISF collected from water users following the transfer of the minor irrigation schemes to WUAs and FWUAs. It was obvious that with an increase of the MOM budget the FWUAs were able to increase expenditures on repair and maintenance of off-farm infrastructure. An overall increase in the crop yields within the command area was also observed. 5. The Report recognizes shortcomings in M&E during the first project years with were eventually addressed by an international M&E Specialist recruited by the PIU rather late in November 2011. Following his guidance, the PIU M&E Specialist then conducted detailed impact evaluation surveys for 8 schemes completed between 2009 and 2012, and for 7 schemes completed in 2013 comprising a total of 58 WUAs. 6. Project impact was analyzed and ratings attributed to outcomes achieved as follows: 7. Activities undertaken in project component 1 were considered to have been successful, albeit with some minor shortcomings, such as contractors’ performance and delays in implementation. It was emphasized again that the ISF levels for both off-farm and on-farm works were set at levels which were not sufficient for an effective MOM of the I&D systems. This component was rated in the Borrower’s Report as being ‘moderately satisfactory’. 8. Activities undertaken in project component 2 were considered also considered to have been successful, although the late NWC meeting was considered to have significantly delayed the implementation of this component which was also given a rating of ‘moderately satisfactory’. 9. Activities undertaken in component 3 emphasized the successful establishment of FWUAs and the fact that the originally planned target was exceeded. It is stated that the Project had also demonstrated that the establishment of FWUAs is a viable activity, and that the formation and provision of support to FWUAs should therefore continue in the future to ensure that FWUAs become a key element of water resources management in the country. This component was given a ‘satisfactory’ rating. 10. Given that components 1 and 2 were rated as moderately satisfactory and that component 3 achieved a satisfactory rating, the Report considered the overall rating for WMIP as being ‘moderately satisfactory’ which is – it said - “a fair reflection of the 39 project’s achievements with respect to its objectives, efficiency and relevance”. “Although the shortcomings of Component 2 do raise some concerns about the future maintenance of the off-farm systems and consequently the sustainability of the rehabilitation works”, it continues, “further reforms of the DWRLI’s technical and financial procedures under NWRMP will facilitate an improvement in the MOM of off-farm systems throughout the country”. 11. The Report also provides an economic analysis of the rehabilitation works of six surveyed I&D schemes. The results of this analysis show that the net present values (NPVs) range from KGS 20.0 million (Mogol) to KGS 100.0 million (LB Kugart), while the EIRRs varied from 17% (Mogol) to 57% (LB Kugart). The analysis clearly demonstrated that all the schemes are economically viable and that the rehabilitation of most schemes will generate significant economic benefits. For schemes with lower EIRRs, i.e. Sary Kamysh and Mogol, this was mainly due to the higher rehabilitation costs per hectare relative to other schemes. However, when the analysis texted the EIRR assuming that the current spending on the system O&M remains and capital repair every five year will be required, the EIRRs dropped to below acceptable level for Sary Kamysh and Mogol. 12. The performance of the World Bank was judged ‘satisfactory’ in view of the quality and frequency of the implementation supervision missions. It was also well acknowledged that the missions based their advice on field visits and thorough discussions with primary stakeholders such as DWRLI (national, oblast and raion levels), Ministry of Finance, WUAs and water users. The only minor shortcoming was seen in the early missions having been “engineering-biased” with less attention being paid to agricultural and economic aspects. However, this shortcoming was eventually addressed during the supervisory missions carried out in the last three years of project implementation. 13. The performance of the Borrower was also judged ‘satisfactory’ in the light of “the DWRLI remaining fully supportive to the institutional changes required to improve the management of water resources throughout the Kyrgyz Republic, as well as the establishment of FWUAs and the transfer of minor irrigation works to WUAs. “However”, the Report continues, “greater engagement of the DWRLI during the implementation of Component 2 activities would have been beneficial”. 40 Annex 7. Comments of Borrower on Draft ICR 41 Annex 8. List of Supporting Documents The World Bank: Project Appraisal Document, Washington D.C., 05/2006 Joop Stoutjesdijk/TTL ISRs # 1-6 including Aide-Mémoires Bishkek, 2006-2009 Pieter David Meerbach/TTL: ISRs # 7-14 including Aide-Mémoires Bishkek, 2010-2013 DWR/Mark Svendsen – John ROe: Borrower’s Project Completion Report, Bishkek, 01/2014 LDE (Institute for Development Evaluation, Public Association): Implementation Progress Report, Impact on WUAs of Rehabilitated Canals under WMIP, Bishkek, 2003 Martin Burton: Status of Project Component 2: What worked? What didn’t? Bishkek, 11/2013 42