Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: 25067

IMPLEMENTATION COMPLETION REPORT(SCL-43160)

ONA

LOAN

IN THE AMOUNT OF US$ 5 MILLION

TO THE GOVERNMENT OF

PAPUA NEW GUINEA

FOR AN

EMERGENCY EL NINO DROUGHT RESPONSE PROJECT

1/16/2003

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

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CURRENCY EQUIVALENTS

(Exchange Rate Effective as of October 2002)

Currency Unit = Kina (K)Kl.0 = US$ 0.24

US$ 1.0 = K4.17

FISCAL YEARJanuary to December

ABBREVIATIONS AND ACRONYMS

AusAid Australian Aid for International DevelopmentDAL Department of Agriculture and LivestockDNPRD Department of National Planning and Rural DevelopmentDPLLG Departnent of Provincial and Local Level GovernmentsEASRD East Asia and Rural DevelopmentEU European UnionGoPNG Government of Papua New GuineaNARI National Agriculture Research InstituteNGOs Non-Government OrganizationsNWS National Weather ServiceOAG Office of the Auditor GeneralPCFU Project Coordination and Facilitation UnitPNG Papua New GuineaQCCA Queensland Centre for Climate Applications

Vice President: Jemal-ud-din KassumCountry Manager/Director: Zhu Xian

Sector Manager/Director: Mark D. WilsonTask Teamn Leader/Task Manager: Philippe Boyer

PAPUA NEW GUINEAEMERGENCY EL NINO DROUGHT RESPONSE PROJECT

CONTENTS

Page No.1. Project Data 12. Principal Performance Ratings 13. Assessment of Development Objective and Design, and of Quality at Entry 24. Achievement of Objective and Outputs 65. Major Factors Affecting Implementation and Outcome 146. Sustainability 157. Bank and Borrower Performance 168. Lessons Learned 189. Partner Comments 1910. Additional Information 25Annex 1. Key Performance Indicators/Log Frame Matrix 29Annex 2. Project Costs and Financing 32Annex 3. Economic Costs and Benefits 34Annex 4. Bank Inputs 35Annex 5. Ratings for Achievement of Objectives/Outputs of Components 36Annex 6. Ratings of Bank and Borrower Performance 37Annex 7. List of Supporting Documents 38Annex 8. Project Map 42

Project ID: P055446 Project Name: EMERGENCY EL NINODROUGHT RESPONSE PROJECT

Team Leader: Philippe Femand Boyer TL Unit: EASRD

ICR Type: Core ICR Report Date: Januarv 16, 2003

1. Project Data

Name: EMERGENCY EL NINO DROUGHT RESPONSE L/C/TF Number: SCL-43160PROJECT

Country/Department: PAPUA NEW GUINEA Region: East Asia and PacificRegion

Sector/subsector: General water/sanitation/flood protection sector(50%); General transportation sector (48%);Sub-national government administration (1%);Agricultural extension and research (1%)

KEY DATESOriginal Revised/Actual

PCD: 11/07/1997 E,ffective: 06/22/1998 07/15/1998Appraisal: 12/23/1997 MTR:Approval: 04/21/1998 Closing: 06/30/2000 06/30/2001

Borrower/lmplementing Agency: GOPNG/MINISTRY OF PROVINCIAL & LOCAL AFFAIRSOther Partners:

STAFF Current At AppraisalVice President: Jemal-ud-din Kassum Jean-Michel SeverinoCountry Manager: Zhu Xian Klaus RohlandSector Manager: Mark D. Wilson Geoffrey FoxTeam Leader at ICR: Philippe Boyer Mark D. WilsonICR Primary Author: Dennis Purcell (consultant)

2. Principal Performance Ratings

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HL=Highly Likely, L=Likely, UN=Unlikely, HUN=HighlyUnlikely, HU=Highly Unsatisfactory, H=High, SU=Substantial, M=Modest, N=Negligible)

Outcome: USustainability: L

Institutional Development Impact: MBank Performance: S

Borrower Performance: U

QAG (if available) ICRQuality at Entry: S

Project at Risk at Any Time:

3. Assessment of Development Objective and Design, and of Quality at Entiry

3.1. Original Objective:The objective of the project was to help GoPNG to cope better with future drought and othernatural disasters, following the 1997 El Nino event, and to enhance the capacity of localgovenmments to handle adverse effects of natural disasters. It had two distinct foci. The first wasan innovative, decentralized approach to deliver services and selected investment programs torural communities with the participation of local govenmment and of NGOs (including churchrepresentatives). Permanent rural water supplies would be supported as well as other communityinfrastructure subprojects that would demonstrate how communities could be mobilized tocontribute to solutions in disaster situations. Two provinces were selected for initial participationin the project- Simbu and Manus - with other provinces to be included depending on successfulimplementation in the first two. It was realized that the departures from the mechanisms used forregular government programs would require a very capable central facilitation unit (ProjectCoordination and Facilitation Unit - PCFU) to promote the principles of the project in each of theparticipating provinces, and to ensure that programs were carried out in accordance with theproject concept. The second of the foci was support for agricultural research that was designedto develop strategies that would ameliorate the impact of national disasters on the provision ofstaple foods.

The objectives were clear and obviously relevant to the circumstances in PNG, which wasemerging from the effects of a major El Nino phenomenon. The El Nino had resulted in massivefood and water shortages in large sections of the country, which had generated international aidon a major scale. The idea of quickly preparing a project of this type for implementation while theEl Nino effects were still fresh in people's minds made good sense. This recognition also led tothe restricted time frame for the project (less than three years of implementation) and relativelylow loan amount ($5.0 million). If the participatory concept was to be developed successfillly, itwould be more likely when awareness of the need for action was heightened by the proximity ofthe recent disaster conditions. The decentralized aspects of the project were consistent with the1995 Organic Law on Provincial Governments and Local-level Governments.

Although the operation was not a specific part of the Country Assistance Strategy developed in1995 (before the El Nino event), it was consistent with the Bank's emphasis on restoringeconomic growth, sustainably managing natural resources, and improving the delivery of basicservices.

Implementation of the agricultural research part of the project was mostly consistent with NARI'sregular operational procedures. However, the needs for a multi-disciplinary, problem-focusedapproach, for establishment of linkages with other agencies, and for development of new skills inweather modelling and development of contingency plans, placed some challenges for thisrelatively young institution.

The provincial components did place a heavy demand on provincial and district authorities in theirobligation to adopt a more participatory approach to subproject selection and management.Although the two provinces had not demonstrated any capacity or eagerness to adopt theseprinciples, they were selected because (a) they included districts that were severely affected by El

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Nino, (b) they were not subject to existing major aid projects that would potentially reduce theimpact of this project, and (c) they indicated their keen interest to participate. These werelegitimate selection criteria considering the project objectives. There was obviously a significantrisk in adopting this innovative type of project in the provinces, considering the constraints ofskilled manpower and public sector funding in PNG, and the limited success to date inimplementing the 1995 Organic Law. The Bank appreciated this risk and insisted that thecreation of a small PCFU with especially capable personnel would be essential for the success ofthe project. In practice, it has been seen that the staffing of the PCFU in the Department ofProvincial and Local Level Governments (DPLLG) was unsatisfactory. It was neither able toprovide the leadership and guidance needed for efficient implementation of the concept in theprovinces, nor to manage project administration.

3.2 Revised Objective:The poor performance of the PCFU, and its negative consequences for implementation, causedthe Bank and the GoPNG Department of National Planning and Rural Development (DNPRD) toagree to cessation of funding of the provincial components of the project from mid-2000. Theagricultural research component did not depend on the PCFU for leadership or guidance inimplementing its program. Its implementing agency, the National Agricultural Research Institute- NARI, was making satisfactory progress. Consequently, in view of the importance of theobjective of the research component, its funding was continued despite the relatively small size ofthe loan amount involved. The research component objectives remained intact, except for anexpansion of the climatic investigations into a full-blown drought prediction capacity. Theobjectives of the provincial water supply and rural works components obviously had to be limitedat least in scale if not in implementation concept. Despite its cessation of funding for theprovincial components, the Bank tried to ensure that investments that had been initiated in theprovinces were completed.

3.3 Original Components:The project components included (a) the provision of potable water supplies, (b) other ruralworks involving local communities, and (c) the agricultural research component.Administratively, the two former components were implemented by the provincial and localgovernments, while the research was implemented by NARI.

The water supply program covered development of permanent, rural, potable water supplies inwhich recipient communities would provide labor and local materials and subsequent maintenanceat their own cost. This would directly address a critical water deficit in severe drought situations,and also enhance the capacity of the community to organize to its own assistance. Participationof a community in a program was conditional not only on its willingness to contribute its labor,but also to have members trained in maintenance and acceptance of community responsibility forfuture maintenance, including the establishment of a "maintenance account". Many of theprinciples were modelled on the EU-funded Rural Water Supply Program operating in PNG. Anexception was an insistence under the Bank-supported project on permanence in the water supply;the EU-funded project was not directed specifically at drought conditions, but rather at potablewater supplies in mral areas.

The rural works component included two modes of community support for infrastructure

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development other than water supply. These were divided according to whether the infiastructurewas of exclusive benefit to the concerned community, or was of a wider common-good nature.For the works of exclusive benefit to a community (e.g., school construction or repair, communityhall, erosion control structures or a health post), the community would provide all labor and localmaterials at their own cost. For the wider common-good infrastructure (e.g., road maintenance,footbridge construction or repair), labor contribution by the community would be paid. Theformer mode promoted self reliance and community organization, while the latter establishedorganizational arrangements that could be used in a situation of natural disaster to provide cashincome (and greater self reliance) to families through payment for execution of useful localgovernment works.

Key elements in the water supply and rural infrastructure components were:

(a) A central Provincial Coordination and Facilitation Unit (PCFU) would be the driving forceof the project. It would provide leadership and direction to provincial project coordinationunits, would promote the program community development concepts, would institute systemsthat ensured the program concepts were followed for each subproject, would overseeprocurement, would coordinate and channel budgetary requests, would manage theaccounting and disbursement/reimbursement aspects of the loan through the Department ofTreasury and would monitor progress and provide regular reports (6-monthly) to GoPNG andto the Bank. The PCFU would also ensure that there was appropriate technical capacity ineach participating province, through provision of external assistance, as necessary.

(b) Participation of church groups and other NGOs would be strongly encouraged in thecommunity organization and implementation monitoring aspects of the program.

(c) The project and loan would not provide operational or administrative support to theprovinces and districts, as might occur in a broad rural development project. The project wasdesigned to support the provincial and local authorities in providing the capital items andtechnical design and supervision needed to make their regular staff, facilities and operationsmore effective. It was a relatively small and a focused project.

(d) All external materials would be provided as a grant, and procurement of supplies was tobe by prudent shopping procedures acceptable to the Bank, in view of the very small nature ofindividual subprojects.

(e) Expansion to provinces additional to Simbu and Manus would occur as successfulexperience accumulated in implementation of the project concept.

The research component covered a number of subcomponents that were designed to alleviate theimpact of a future El Nino phenomenon on food production in rural areas. These involved (a)germplasm collection and selection for drought tolerance, and its multiplication and distribution;and (b) identification and demonstration of soil and water management practices that couldalleviate drought effects.

3.4 Revised Components:

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As indicated above in paragraph 3.1, the poor performance of the PCFU had very negativeconsequences for development of the project concepts in the provinces, and funding of the watersupply and rural works components ceased in mid-2000, with obvious consequences for the scaleof these components. This left the agricultural research component. NARI's soil and watermanagement subcomponent included the collection of agroclimatic data to obtain a betterunderstanding of drought effects on crop performance. With full Bank support, NARI expandedthis into the development of a capability in drought prediction, as it was considered this couldmake a major contribution to future drought management, while the contribution that could bemade by NARI in smallholder irrigation demonstration was expected to be limited. NARI alsoagreed to develop drought mitigation strategies based on the results that would emanate from theinvestigations made under the project. This was also strongly supported by the Bank, as it wouldenhance the probability of practical and valuable outcomes.

3.5 Quality at Entry:

The project has to be reviewed in light of its classification as an "emergency assistance loan".This implies that normal time for preparation of a project would have to be reduced in order torespond to the emergency, that the level of acceptable risk would likely be higher, that in view ofthe risks the objectives would have to be clear and limited, and that the scale of the loan wouldhave to be consistent with the level of risk and the limited objectives.

There are no doubts about the project's consistency with the Bank's country strategy (paragraph3.1) or the policies of GoPNG. The Government at the time was very focused on the disasterrelief effort and initially requested Bank assistance in October 1997. The Bank quickly respondedby sending a mission to PNG in November 1997, to identify possible areas of support, taking intoconsideration the Government's program and the assistance provided by donors. The missionworked with National Disaster and Emergency Services, the DPLLG, provincial authorities,NARI, NGOs and local representatives of the donor community. This resulted in the preparationof the project proposal that was negotiated with GoPNG representatives in Port Moresby atend-January 1998.

This could be classified as an appropriate response to a request for assistance under an emergencysituation. A project was prepared very quickly; it has limited objectives, time frame and loanamount; the objectives were rational in view of the emergency and the ability of the Bank to assist(not in providing food, logistical or technical support that was available from donors, but oncapitalizing on the climate of disaster awareness to lay the foundations for better management offuture disaster situations); and the components involved development activities in which the Bankhad experience (infrastructure and agricultural research).

Undoubtedly, there were risks and these were identified, mostly for the provincial components -the possibility of serious inefficiencies in project management; inadequate development of thecommunity participation aspects of the project; lack, or slow release, of counterpart funding; andreduced political commitment to the concept as conditions improved in the post-emergency years.The insistence on a skilled PCFU was designed to reduce the risks of the first two items, and theinvolvement of NGOs particularly for the second item. The provision of a very high proportion ofloan funding ($5.0 million in a $5.5 million project) was intended to reduce the risks of potentialcounterpart funding constraints. The quick processing, limited focus and short duration of the

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project were intended to reduce the possibility of negative influences of waning commitment overtime. However, in hindsight the design can be faulted in its assumption that the provincial anddistrict bodies would be able to fund regular operational cost support for staff in providingservices to communities in the water supply and rural infrastructure components. Fundingscarcity at this level did prove a constraint, which Bank supervision subsequently was able toovercome only to some extent within the limitations imposed by the loan agreement (seeparagraph 4.2).

Although the provincial components concemed infrastructure, no designs were done duringpreparation nor were they required prior to effectiveness. This was related to the assumed smallscale of the water supply subprojects (often borehole/well development) that would normally notbe complicated, and the adoption of commrunity labor arrangements and simple structural aspectsin the rural works. As each scheme was to arise from community demand, individual schemeswere not identified pre-project and, therefore, designs specific to a particular location could notbe prepared in any case. In practice, most of the water supply subprojects were more substantialthan envisaged at appraisal, with engineering design having to be contracted. Engineeringassistance was provided for in the project, but the size of the water subprojects did lead to alonger lead times than foreseen.

Overall, the quality at entry could be considered as marginally satisfactory. The Bank respondedto a request for emergency assistance in an appropriate way, as indicated above. It identified therisks correctly, and the fact that one of the key measures designed to reduce risks was notimplemented satisfactorily (PCFU competence), should not detract unduly from the worth of thedesign. However, it did not realistically assess the capacity of the provinces to provide fundingfor operational support.

4. Achievement of Objective and Outputs

4.1 Outcome/achievement of objective:

The loan was signed on April 22, 1998, but was not made effective until July 15, 1998, whenconditions concerning the Financing Agreement with NARI, the establishment of the PCFU byDPLLG, and legal opinions on the agreements were met. The manager of the PCFU wasappointed in September 1998 and the accountant in February 1999. As will be elaborated below,poor performance by the PCFU led to cancellation of the unused funds allocated to the provincialcomponents on June 30, 2000. This represented $3.5 million of the $5.0 million loan.

The research component underwent major political/administrative problems in December 1998 -February 1999. These interrupted the program, but NARI managed to overcome theseconstraints and substantially met its development objectives with a postponement of loan closingdate by one year.

The provincial components of water supply and rural works did achieve part of their objectives.This was assisted by the willingness of DPLLG to seek, receive and utilize K320,000 in its budgetto complete subprojects when, subsequent to cessation of loan funding, the subproject completionprogram organized with Bank assistance (see paragraph 4.2) was not implemented. The watersupply component demonstrated that if proposals are properly introduced to obtain community

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commitment, these schemes can be successfully implemented and maintained with very beneficialimpact on the communities and rural service institutions affected. Each of the water supplysubprojects that were implemented were very much appreciated by the users. However, althoughthe size of individual water subprojects was much greater than that envisaged at appraisal, thescale of the program was limited due to cessation of funding and limited institutional capacity. Arural works program in Simbu was successfully implemented, but its scale was also limited by thecessation of funding, and its potential benefits were reduced by the lack of appropriate monitoringto allow the definition of best practice for this type of intervention in future crises.

Despite the favorable performance of the research component, and the obvious benefits of thelimited water supply and rural works components, it would be difficult for the Bank not to give arating of Unsatisfactory in view of its cancellation of 70% of the loan funds, largely due to poormanagement of this short-term project. Nevertheless, the GoPNG did realize some significantbenefits - technology relevant for the alleviation of future drought effects was developed;experience in mobilizing rural communities for civil works in future disaster situations wasobtained, and a number of critical permanent rural water supplies in rural areas were provided.These benefits were obtained with a loan indebtedness of $1.44 million.

4.2 Outputs by components:

Provincial components - water supply and rural works.Administration and Partial ClosureThe output of the provincial components was limited, and this was intimately connected withproject management. Difficulties occurred at the level of the PCFU and in the two participatingprovinces, but the primary problem was with the PCFU, which was charged with developingdetailed operational procedures with the provinces, overseeing their implementation, andadministering project finances.

Section 10 elaborates the details of the circumstances that led to cancellation of most of the fundspertaining to the provincial components. However, in essence, these included the selection ofunsuitable candidates for the key positions of PCFU manager and accountant; poor leadership anddirection by the PCFU; non-adoption of subproject procedural forms that would have ensuredadherence to the project development principles and allowed efficient monitoring and reporting;lack of recurrent cost budgetary support for staff in the provinces and districts; pooraccountability in the provinces; serious failings in the procurement process; completely inadequateproject accounting and management of the Special Account reimbursement process; and noproject reporting.

In view of the continued poor performance of the PCFU that was seriously inhibiting thesuccessful implementation and administration of this short-duration project, the Bank, followingthe Country Portfolio Performance Review held in Port Moresby, informed the Secretary ofDPLLG on December 2, 1999 that "recent progress has not improved and we have reluctantlyreached the conclusion that the present management team of the PCFU is unable to handle thetask and should be replaced." The DPLLG from Port Moresby then undertook a comprehensivereview of the subprojects in the provinces in January 2000 in conjunction with a representative ofthe DNPRD. It concluded that although there were very serious problems in the project, thesewere not all associated with the incompetence of the PCPU, some difficulties being due to the

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provincial units. The Secretary of DPLLG answered the Bank in February 2000, saying that itwould not change the PCFU staff but would take a much more active role in monitoring progressand intervening where necessary. As the Bank considered that effective performance of thePCFU was essential for successful implementation of this type of project, and did not considerthat the incumbent staff could perform adequately based on experience in the project, regardlessof any overseeing role by the department, it instmcted the next Bank supervision mission due inthe same month of February to inform the authorities that it would not continue loan support forthe provincial component. This course of action had already been agreed in a meeting betweenthe Bank's country program representative and the Secretary of DNPRD in the event that thePCFU staffing was not changed as requested. This action was forewamed in a second letter sentfom the Bank to the Secretary of DPLLG on January 24, 2000 when the Bank became concernedthat it had not had a response to its December 2 letter. The Bank supervision mission was alsoinstmcted to work with DPLLG to develop a plan of action that would permit completion of anyincomplete ongoing projects and would maximize the retums to GoPNG on the investment it hasmade on this component to date. It was proposed that funding should cease on April 30, 2000.

The Bank's Febrary 2000 mission helped to prepare a program for the partially developedsubprojects. This program was prepared in conjunction with the PCFU and the provincialcoordinators, and with the cooperation of the Office of Rural Development. It included a divisionof the individual subprojects into three classes: (a) those that could be completed using projectloan funds before a shut-off date of end-April 2000; (b) those that would require further fundingsupport after April but should be able to be absorbed in the nondiscretionary portion of theDistrict Support Grant Program (DSGP); and (c) those that had either detailed designs availableor were in the process of obtaining quotes for procurement, but which were too large for theDGSP consideration and were more suited to the Social and Rural Development Fund (SRDP),for which new and strict accountability regulations were shortly pending. Detailed procedures tointeract with the relevant committees and officials to organize and/or carry this program wereagreed and described. At the beginning of June 2000, the Bank supervisor visited the projectagain to assess progress in i mplementing the plan. Progress had been made in implementing type(a) subprojects, but negligible action had been taken on organization for the subprojects coveredby the other options. The Bank agreed to extend the shut-off date for implementation of thesubprojects to be funded to end-June, rather than the earlier date of April 2000. Later supervisionmissions on the research component of the project revealed that no futher action was taken onoptions (b) and (c), with one exception. However, DPLLG sought and received funds(K320,000) from DNPRD to complete subprojects, and the outcome of this intervention isreflected in the project achievements in Annex 1.

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Outputs in each ProvinceSimbu developed 5 subprojects in water supply and 8 in rural works. By June 2000, all thematerials had been delivered to the water supply sites and construction was well advanced exceptfor Sina-Sina, but most needed some finishing work that had to be completed after loan fundingceased. Subproject records in Simbu were very poor, and the details of post-project expenditureper water supply scheme are unavailable. Annex 1 Table 2 gives available information. All had apermanent spring water source that was dammed and piped by gravity to a steel tank, from wherewater was distributed by gravity through pipes to end users. All of the schemes were relativelylarge compared to that assumed at appraisal (where an average of K20,000 per scheme as ahand-pumped well was assumed), although the absence of adequate records did not allow areliable estimate of individual subproject costs. The Sina-Sina scheme incurred land disputes andthe investment was aborted. This reflected a failure to follow the procedures prescribed for theinitiation of subprojects, which were not monitored adequately by the PCFU. The gravity systemsreduced the cost of operating the schemes, but maintenance is still necessary. The required watersupply maintenance accounts into which users were to contribute were not adopted in Simbu,with the ward level government taking responsibility for this function and cost. The numbers ofbenefiting households were not provided, but the extent of villages affected demonstrates thesubstantial impact of each scheme on the local populations. Sixteen institutions such as schools,health centers, local government administration offices and church facilities were provided withpotable water. Apart from the obvious advantages for both individuals and institutions likeschools of having a permanent water supply in drought situations, there are also the economic andsocial welfare advantages of avoidance of time and energy losses in walking long distances tocarry water to households. In addition, there is the significant health benefit in havinguncontaminated drinking water.

The rural works subprojects in Simbu covered road maintenance, and vehicular bridge repairs.Most were completed or well advanced when loan funding ceased - Annex 1 Table 3. Thecontracting of these works did demonstrate that communities can be mobilized to receive paymentfor works to be undertaken by local government bodies in rural areas, thereby providing theopportunity to introduce cash into economies in disaster situations and reducing dependence ongovernment and donor handouts. Unfortunately, the lack of adoption of the recommendedprocedural forms did not allow monitoring of aspects concerning the organization systems forwork, the participation of women, youth, etc in the schemes, preferred method of payments, andlegitimacy of distribution of payments. More comprehensive information would have been usefulfor future programs. Records at project completion were even inadequate to indicate the numberof person days employed in each subproject. The Bank found that the initial proposals for theself-help social infrastructure (schools and health posts) did not meet the project guidelines forlocal participation (labor contributed without remuneration) and advised that these should berevised to be in accordance with the project concept. None of these subprojects eventuated.This meant that this innovative part of the project was not developed, although the concept ofself-help was adopted in the water supply schemes in Simbu. The intended enhanced role ofNGOs and church groups in community organization and monitoring was not developed.

The province of Manus limited its activities to the provision of potable water supply. Theadministration considered this as their priority and had limited manpower resources to allocate to

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the project. Consequently, no rural works component subprojects were implemented on Manus.Six water supply schemes were included, all of which were large scale, averaging K88,300. ByJune 2000 all equipment had been procured and most deliveries had been made to the sites.Water sources were underground reservoir and permanent springs. However, in contrast to thehighland environment in Simbu, this island landscape necessitated the use of diesel energy and, inone case, solar power, to pump water to a galvanized steel tank before gravity distribution to endusers. This raised the operation costs of the water supplies. Records were much better in Manusthan in Simbu. Annex 1 Table 2 indicates that the cost of operating each scheme was being metby contributions from benefiting households at K2 per household per month, supplemented bycontibutions by ward level govenmments and benefiting institutions. A land dispute caused thesuspension of one scheme (Sili-in) but the provincial administration did resolve this in mid-2002,after threatening to transfer the subproject inputs to another site. This scheme will now becompleted with the cooperation of the provincial administration. A total of 2,883 householdswere provided with a permanent potable water supply and 16 community institutions weresupplied. As for Simbu, the impact of the implemented schemes has been substantial and verymuch appreciated by beneficiaries.

With respect to the accomplishments compared to the appraisal objectives, the amount ofcancelled loan funds obviously means that the intended provincial program was substantiallyreduced. Some tentative number for subprojects were proposed in the Schedule 6 of the LoanAgreement (50 rural works and 20 water supply subprojects per province per yeas), but the waterschemes were obviously of a completely different scale and cannot be compared. For the ruralworks, completion of the proposed number would have required not only a very effective PCFUto promote the program, but also dedicated and efficient provincial project teams with adequatefunding of operational costs, neither of which occurred. The lack of skilled leadership and of acomprehensive monitoring program precluded significant results in getting a better understandingof such issues as equity in employment opportunities under the rural works component.

Research ComponentThe germplasm subcomponent focused on the collection, characterization, testing and selectionof drought tolerant varieties of the major staples in drought-prone highland and lowlandenvironments. The crops receiving most attention were sweet potato and cassava, with morelimited programs on yams and bananas.

For sweet potato, the collection and characterization was completed early in the program and aseries of trials on drought tolerance (for production in-drought) and early maturity (forproduction immediately post-drought) have been virtually completed in both highland and drylowland environments. This has enabled the NARI to select varieties that are suitable forinclusion in drought mitigation strategies. Five varieties were selected for recommendation in thehighlands, with reasonable confidence that they are high yielding, able to yield well in droughtconditions and have good quality tubers. Three of these were collected from farmers at the startof the project and two were already in NARI collections.

However, the lowland trials have shown that sweet potato is unsuitable for the extensive crackingclay soils on the lowlands under drought conditions, largely due to the cracking soils allowing

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access by sweet potato weevils. Alternative crops are needed for growth under dry conditions inthe lowlands. Nevertheless based on trials conducted under this program and previous trials atKeravat, early maturing varieties suitable for post-drought conditions were selected.

An unfavorable characteristic of the trial program that commenced in 1999 was the highcoefficients of variation evident in many of the statistical analyses of the trials. The problemappeared to be related to small plot sizes, especially in the rainout shelter trials, and uneven trialsites (e.g. waterlogged patches in trial plots). In the case of rainout shelter work the smallsub-plot sizes were a result of the impracticality of managing larger rainout shelters and the needto evaluate a large number of varieties under each shelter. These problems need to be addressedin future trials.

For cassava, the post-drought collections were characterized and the series of trials is almostcomplete. Four cassava varieties with high yields and low cyanide content have beenrecommended for lowland conditions. It was only possible to complete one highlands cassavatrial within the duration of the project. The five best performing varieties had low cyanide content(< 30 ppm). Unfortunately waterlogging of part of the trial site resulted in problems with tuberrots. A further trial has been planted to give greater confidence in recommendations for thehighlands..

In the case of banana the project collected 47 accessions with reputed drought tolerance fromfarmers. After characterization only 10 distinct accessions were identified. The project did notattempt to conduct banana variety trials because of the long term nature of the crop. Howeveruse of drought tolerant cooking banana varieties (usually ABB genotype) such as "Kalapua" inthe cropping system contributes to food supply, in drought periods and these are being included inthe strategies to mitigate drought effects.

On-farm sweet potato evaluation are underway at two sites to provide further support for theconclusions of the on-station trial work - Kondiu, Simbu Province and Sogeri, Central Province.A on-farm cassava trial was planted at Barramatta, near Brown River, in December 2001, but hasyet to be harvested.

Multiplication and distribution of planting material has had to await finalization of varietyrecommendations, which was only done in the last six months of the project. Now thatrecommendations are available, multiplication plots are being established in the highlands (atAiyura) and in the dry lowlands (at Laloki). Some planting material of the recommended varietieshas already been distributed in the highlands. It was unfortunate that the delays resulted in themultiplication having to be completed in the year post-project, but this was realized at the time ofthe application for loan closing date extension.

Yams are suitable for above-ground storage and use as food under drought conditions.Therefore, the project took the initiative to multiply and distribute planting material of Africanyam using an innovative, cost-effective, mini-sett method for rapid multiplication. In PNGfarmers traditionally grow greater yam (Dioscorea alata) and lesser yam (D. esculenta). NARIresearchers had earlier established that the introduced African yam (D. rotundata) had moderate

drought tolerance and good storage ability. The project also trained farmers in the use ofmini-setts for rapid multiplication.

The project also aimed to identify frost-tolerant cultivars, as extraordinary frosts at high altitudesare also a phenomenon of El Nino events. However, it soon became apparent that theidentification of a frost-tolerant sweet potato was not an achievable objective. While there was apotential to look at other frost-tolerant crops such as wheat, it was not feasible to consider this inthe time frame and the resources of the project. In addition, wheat investigations were beingpursued under a Chinese-funded project in Enga province, so NARI concentrated on the droughttolerance issue, in agreement with the Bank.

The soil and water management subcomponent covered the role of contour hedgerows inimproving rainfall penetration whilst maintaining valuable surface soil, and the development anddemonstration of simple irrigation systems. Earlier work conducted with support from theInternational Board for Soil Research and Management (IBSRAM) had shown that hedgerowsreduce runoff, but yields in such plots declined substantially over a cycle of three to four crops,indicating the need for practices to maintain soil fertility in successive plantings. The projectinvestigated the combined effect of using hedgerows and mulching on yield and soil moistureretention on sloping ground using vetiver grass (Vetiver zizanoides) and FlemingialLeucaenahedges in sweet potato cultivation at Aiyura. Results confirmed that mulching, especially withleucaena (a legume) clippings, resulted in increased yields, but that hedgerows reduced sweetpotato yields in the rows planted closest to the hedge. Further work is needed and a second trialhas been planted. A farmer survey in Simbu province has also been undertaken to obtain animproved understanding of farmer reactions to this type of intervention.

The work on identification of a suitable systems for simple irrigation or supplementary irrigationof crops was delayed due to the departure of the original leader of this program, but has resultedin the selection of two methods of water distribution - a rope and washer technique that iscommon in South Asia and can lift water about 20 meters, and a simple foot-operated treadlepump to irrigate small plots in situations with a water table accessible within about 8 meters. Therope and washer pump model has been assembled at Aiyura. Difficulties have occurred indelivery of the treadle pump, but when this arrives both systems will be demonstrated in situationswhere they can contribute to increased productivity in normal weather patterns as well ascontribute to production and the preservation of propagation material in major droughts. Bothmodels rely on simple readily available materials for construction and can easily be manufacturedin PNG. The Fresh Produce Development Company has agreed to collaborate with NARI inon-farm demonstration and evaluation of the selected pumps.

To further understand the impact of water deficits, an analysis of daily rainfall data for wet anddry spells was planned under the project. It was difficult to obtain long runs of daily rainfall datafor most PNG weather stations, but Aiyura data have been sorted and is ready for analysis.

With respect to the development of a drought early warning capacity, which was the additionalNARI activity introduced with strong Bank support (paragraph 3.4), a software package knownas International Rainman was developed with assistance from the Queensland Center for Climate

-12 -

Applications (QCCA). A total of 72 stations with data runs from 18 to 93 years have beenincluded. NARI initially had difficulties in obtaining cooperation in data supply from the NationalWeather Service (NWS), but this was overcome. As this activity was an expansion of the originalproject, the NWS was not involved in the project preparation. Droughts were defined as periodsthat are in the driest 5% or 10% of all years Analysis using International Rainman shows thatthere is a strong relationship between droughts and a "Consistently Negative" SOI phase or value.This relationship is stronger for some rainfall stations than others and is less reliable in thehighlands than in the lowlands. It was nevertheless noted that droughts can and occasionally dooccur in the absence of consistently negative SOI values. A report by QCCA consultant DavidMcRae, who trained NARI and NWS staff in the use of International Rainman, is available.

To ensure that the investigations undertaken in the project would lead to useful output, aworkshop was held in June 2002 to develop drought mitigation strategies that could be used inany national or provincial programs. A wide range of stakeholders participated includingextension staff, NGOs, disaster management staff, donor agencies and the national weatherservices. The workshop provided valuable advice and feedback which is being incorporated into athree stage strategy covering pre-, mid- and post-drought conditions. These strategies are aimedat farmers to improve their ability to stand up to future droughts. The means by which thesestrategies will be incorporated into national and provincial drought management plans is describedin paragraph 6.1.

4.3 Net Present Value/Economic rate of return:

Not applicable for this type of project

4.4 Financial rate of return:

Not applicable for this type of project

4.5 Institutional development impact:

The provincial components had an institutional development objective in enhancing the capacityof the local governments to utilize participatory planning and implementation in rural investments.There was some success in developing systems to mobilize communities in contracting forinfrastructure maintenance, and also in instilling communities with some sense of responsibility tolook after their water supplies. However, the objective of increasing the involvement and role ofNGOs in working with communities in interaction with local government did not receive attentionand was not met, nor was the objective to induce communities to contribute their labor withoutcompensation for community projects that were of direct and sole benefit to them (apart from thewater supply schemes). At best, the achievements in this aspect must be classed as marginal.Adoption of a sound subproject processing format and close monitoring of implementation by thePCFU would have provided the opportunity for much greater impact. The accounting andprocurement management capability of the PCFU was extremely poor, but improvement in thisarea was not a project objective; rather, the PCFU function was a temporary mechanism to enableachievement of the limited and focused development objectives under the project.

The research component was essentially using the institutional system already in place in NARI.However, the obligation to develop future drought contingency plans in collaboration withrelevant stakeholders did involve an increased emphasis on the need to ensure that research work

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must have relevance if it is to be worthwhile use of resources. This aspect of the project wasdeveloped satisfactorily and, therefore, the project did have a positive impact in institutionalimprovement in NARI.

For the project overall, a Modest rating is appropriate.

5. Major Factors Affecting Implementation and Outcome

5.1 Factors outside the control of government or implementing agency:There were no influences of this nature that affected the project.

5.2 Factors generally subject to government control:The decision by GoPNG in November 1998 to abolish NARI as the national agricultural researchinstitution and return the research function to the Departnent of Agriculture and Livestock(DAL) was a major setback to the research component. Fortunately, this decision was reversed inearly 1999, but not before project activities had been seriously interrupted by the uncertaintysurrounding employment and the future of research programs.

The project design assumed that the provincial governments would have recurrent budgetssufficient to enable normal operations of staff involved in infiastructure activities (ProvincialHealth and Works). In practice, provincial budgets were grossly inadequate and little would havebeen accomplished if the Bank did not make loan funds available to support the field activities ofprovincial and district staff in these departments.

5.3 Factors generally subject to implementing agency control:Inappropriate staffing of the PCFU was the major factor leading to cancellation of 70% of theloan funds one year before the original closing date.

5.4 Costs andfinancing:Due to the nature of the project described in section 3, appraisal did not specify unit costs, norwas there a firm prediction of the number of units in each component. A loan amount wasallocated that was estimated to be adequate for the scope of subprojects that might beimplemented in the project time frame. This was dependent on an assumption that the PCFUwould be able to quickly ensure the adoption of the project principles and programs in the twoinitial provinces, and then use the experience to move into additional provinces, and that theparticipating provinces would have the recurrent resources to support the project activities. Inview of the cancellation of a major part of the loan, final project costs were only a fraction of thatenvisaged. In Kina terms the costs were 53% of that projected at appraisal, and in US$ termsonly 29% of the appraisal estimate ($1.608 million compared to $5.5 million). See Annex 2. Thelow disbursement was exacerbated by the substantial devaluation of the PNG Kina from K1.5 perUS$ at appraisal to nearly K4.0 in mid-2002. Furthermore, the devaluation led to an exchangeloss of about US$183,000.

As a proportion of total expenditure, the GoPNG contribution to the project costs was slightlyhigher than that projected at appraisal (10% compared to 9%). This was due to the GoPNGcontributing additional funds (K320,000) to complete the provincial subprojects, and to someexpenditures not being allowed by the Bank and having to be carried by the GoPNG.

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The circumstances of the loan management meant that the Bank was unable to recoup the fullKI,13 6,952 advance (US$500,000 equivalent at the time) to the Special Account in the usual wayof making deductions from Special Account replenishment requests. These circumstances were:a) cancellation of 70% of the loan, which implied that the advance was for one third of the loanamount; and b) failure of the PCFU accountant to process reimbursements to the Special account,so that it was empty for a larger part of the project period, and NARI (the only unit operating inthe last two years of the project) was obliged to use its own resources and seek reimbursementfrom the Loan account rather than from the Special Account, thereby limiting the potential forrecovery. As of end-December 2002 (six months after the closing date, there was an outstandingbalance of K27,492.36 (equivalent to about US$7,000 at the current exchange rate) in the SpecialAccount.

The Bank extended the loan for one year past the original closing date to allow NARI tosubstantially complete the research component, even though this involved less than $200,000 ofloan funds. This was justified on the grounds that a) the research program had been hindered bythe announcement of NARI's dissolution, and subsequent restitution, as the PNG agriculturalresearch body, through no fault of its own; b) NARI had demonstrated a capacity to implementthe component, despite this political setback and its cash flow funding problems; c) a detailedprogram of research activities was developed and agreed for the additional year and the yearsubsequent to the expected closure with time-bound milestones; d) the research program underthe project had the potential for a high socio-economic impact and NARI had very limited fundingto carry on the programs involved; and e) supervision by the Bank could be undertaken atreasonable cost by combining with the other agricultural project underway in PNG, and the Bank,in taldng on a project of this size, had already made a conscious decision that the unit costs of itsadministration would be very high in any case.

6. Sustainability

6.1 Rationalefor sustainability rating:

The investments in the water supply component are likely to be sustained as these assets aregreatly appreciated by the recipient communities. In the case of Simbu, the local levelgovernment has taken responsibility for operation and maintenance of the schemes that are lowcost as gravity systems in any case; in Manus users contribute a fixed amount monthly perhousehold and the local level -government covers any balance needed. Even if the self-help natureof responsibility for operation and maintenance of the facilities in Manus should break down, therewould likely be enough pressure to result in the ward local governments covering any deficiency,as they already do in Simbu. The size and importance of the schemes help ensure theirsustainability. For the rural works, the organizational arrangement for community participationare established and can be activated in future disaster situations.

For the research component, the results of the investigation carried out under the project arebeing incorporated into drought mitigation strategies in cooperation with DAL and selectedprovincial Departments of Primary Industries. These strategies will become an important part ofthe provincial drought management plans as drought situation develop, and are being put intoextension literature in pidgin. NARI is working closely with the NWS to produce reliable drought

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warnings for the National Disaster Management Organization. The Provincial DisasterManagement offices and Food Security Committees will be briefed by NARI on the availablestrategies. AusAID has volunteered to support a program with this focus.

With respect to the actual research programs involved in the project, drought considerations arenow an integral consideration in the germplasm selection programs. Very little funding is requiredto continue with the demonstration of the simple irrigation models and the completion of the finaltrials in the series that are under way. Funding of the multiplication and distribution of theselected germplasm material is being included in the 2003 budget.

Overall, the impact of the project is likely to be Sustainable, despite the disappointing scale of theimpact.

6.2 Transition arrangement to regular operations:

For the provincial components, no transitional arrangement were envisaged or are needed. Theobjective was to help the GoPNG establish ways to better handle future disasters, rather than toestablish an ongoing program. For the research component, the programs supported under theproject are incorporated into NARI's ongoing programs.

In the future, the impact of the research component can be observed through the extent to whichthe drought mitigation strategies are incorporated and used in disaster management plans. Itappears that PNG is entering another EL Nino event at the time of writing this report.Unfortunately, multiplication for distribution of the germplasm selected for drought tolerance isonly just beginning (paragraph 4.2). Consequently, most of the impact of the germplasmcomponent will have to wait until the next drought event. The conclusions of the workshop ondrought strategy should, however, make useful contributions to drought mitigation programs inthe provinces that are affected (such as particular attention to control of fires, and preservation ofgermplasm for planting immediately post-drought, assisted by techniques such as mulching or thesimple irrigation techniques). For the rural works component, the extent of use of the communitycontracting principle in future disasters can be observed. For the water supply component, thepersistence and successful operation of the fimded schemes will indicate the long-term impact ofthese investments.

7. Bank and Borrower PerlTormance

Bank7.1 Lending:

The Project was classified as an "emergency assistance loan". The preparation and appraisalprocesses, which are described in paragraph 3.5 were largely appropriate for the circumstances atthe time, except for the unrealistic assessment of provincial capacity. Bank performance in thelending phase can therefore only be considered as marginally satisfactory.

7.2 Supervision:

Appreciating the need for quick initiation and efficient implementation in this short-durationproject, the Bank allocated supervision resources that allowed visits to the project at 3-monthlyintervals. Intensive assistance was provided (paragraph 4.2), but the staff in the key PCFU werenot of the calibre that could respond to this assistance and lead and administer the project. When

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the Bank indicated that the only way to get the project back on track was to replace the PCFUmanager and accountant with competent professionals, this was not accepted. The Bank thentook appropriate action in cancelling the funds remaining for the provincial components that wereto be serviced by the PCFU, in agreement with the DNPRD. The Bank attempted to makearrangements for the funding of any subprojects that were partially implemented. Thesearrangements were not adopted, but the DPLLG did provide funds through its budget to allowcompletion in cases where this was necessary.

The Bank continued its loan support for the agricultural research component, even though theloan amount was small, and also extended the closing date by one year to enable NARP tosubstantially complete its programs. This action was appropriate, as elaborated in paragraph 5.4.

The DPLLG complained about the unwillingness of the Bank to be flexible in the use of theSpecial Account to assist in prefinancing expenditures in the provinces. However, in view of thedemonstrated accounting capacity in both the PCFU and the provinces, this attitude wasappropriate (paragraphs 4.2 and 10).

Appropriate supervision ratings were made. The project was rated as Unsatisfactory when underthe management of the PCFU and Satisfactory when NARI was managing the project.

7.3 Overall Bank performance:

In view of the above considerations, the Bank performance was marginally Satisfactory.

Borrower7.4 Preparation:

The Borrower appropriately cooperated with the Bank staff in preparing the project.

7.5 Government implementation performance:

The GoPNG did provide adequate counterpart funding for the project, which was a very smallamount. Although not specified as a part of the project and not included in project costs, it wasunderstood that sufficient recurrent cost funding would be available in the provinces to enableprovincial and district staff to operate effectively in the field. This funding was inadequate andwas a factor that limited the rate of implementation of the provincial components.

7.6 Implementing Agency:The interest in the project by DPLLG shown at identification/appraisal was not carried through inthe critical early period after loan signing. The effectiveness date had to be postponed, theappointments of the manager and accountant in the PCFU were delayed, and the selection ofthese two candidates proved to be completely inadequate (paragraph 10). The failure of thePCFU in DPLLG to perform as expected was the main problem affecting the project and led tocancellation of 70% of the loan funds. The failings of the PCFU and their consequences areelaborated in paragraphs 4.2 and 10. NARI performed satisfactorily in carrying out the agreedprogram. It met its 6-monthly reporting and accounts preparation obligations of the LoanAgreement.

7.7 Overall Borrowerperformance:Although most of the government departments involved in the project met their obligations

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satisfactorily, the gross failure of the critical PCFU unit must weigh heavily on the overallassessment, which is, therefore, Unsatisfactory.

0. Lessons Learned

Lessons from the project experience include:

(a) When successful project implementation relies heavily on the performance of one or twoindividuals (as occurred in this case), there has to be a means to ensure that the appointee(s) dohave the required competence and capacity, and perform to their potential. The normal system ofrequiring Bank approval of the qualifications and experience and functional terms of referencedoes not guarantee appropriate selection, particularly when a requirement is for dynamicleadership, which is difficult to identify from a curriculum vitae. Heavy reliance is placed on theauthority responsible for selection for having a much greater local knowledge of past performanceby candidates so that the most appropriate for the task is selected. This process failed with boththe key appointments of manager and accountant in the PCFU. Action was taken to attempt toreplace them, 14 months after the appointment of the manager and 9 months after theappointment of the accountant. However, for a short-duration "emergency" project of this nature(3 years to closing date), this represents a high proportion of implementation time that waswasted. One option for such short-duration projects could be to include in the legal agreement acovenant that not only obliges appointment satisfactory to the Bank (as included under paras. 1and 4 of Schedule 5 to the Loan Agreement for this Project), but also has an additional clause thatspecifies that the appointee will have a probationary period of, say, four months, at which time theBank would have to be satisfied with performance for it to accept the appointee as beingsatisfactory. This would not only provide the potential to trigger a more timely intervention incritical cases, but also could provide an incentive for appropriate selection by the agency of theBorrower. It would also be much more focused than the general requirement for diligence andefficiency stipulated in the standard Section 3.01 of loan agreements.

(b) The project was prepared and processed in an extraordinarily short time. However,although the project is rated as having an unsatisfactory outcome, its demise was not significantlyrelated to the rapidity of processing. Certainly, if more resources had been allocated to a greaterunderstanding of institutional factors, this could have queried the assumption that the provincialfield staff would have adequate operational budgets. Consequently, the necessary shortpreparation of emergency projects should not be considered as an unsurmountable problem, aslong as the resources allocated for preparation are commensurate with project content andcomplexity.

(c) Regardless of the amount of resources allocated to project preparation, the capacity ofeach existing institution, which is expected to contribute to project implementation, needs to beassessed thoroughly at all levels of intervention.

(d) The rural works provincial component demonstrated that in cultures where there is arelatively strong community identity, the communities can be organized to perform usefullabor-intensive tasks for payment, in circumstances where an injection of cash into the communitycan alleviate the need for welfare dependence.

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(e) The potable water supply program demonstrated that when there is a widely appreciatedneed for a commodity, such a potable water in this case, then communities are willing tocontribute their resources without remuneration to ensure its availability.

(f) The project concept of self-help for infrastructure other than water (schools, health posts,community halls, etc) was not developed. However, the project design intended that this wouldbe possible only with dynamic leadership and the involvement of NGOs in the interface betweengovermment officers and the communities. Neither of these preconditions were met, so theconcept was not tested to reveal any lessons. However, the project outcome suggests that whenthere is a need that is very strongly and very widely appreciated (as for a permanent potable watersupply), then little effort is required to elicit self help practices in a community; whereas for itemsof value but of lesser priority, an approach that is more sensitive to cultural norms andrelationships is required to obtain adoption of the concept.

(g) Small loans of less than $5.0 million are very expensive for the Bank to administer. Whencancellations of the order that occurred in this small project are encountered, the costs are furtherexaggerated. Consequently, when the Bank undertakes such loans, the grounds for the projectmust be very well justified as the unit cost of lending will be much higher than average. The Bankobviously considered the project justified in this case, even to the extent of extending it for oneyear to allow completion of important work by NARI, even though additional disbursement in theperiod was small.

(h) Agricultural research components in agricultural sector projects have a better chance ofsuccess when they are integrated into the regular programs of the research institution. Thegermplasm subcomponent was a good example of this. The climatic prediction capacityintroduced through the project was adopted as a continuing program in NARI. However, thewater management interventions through small scale irrigation was more of a one-off activity andthe program was inactive for a period due to the absence of the responsible person.

9. Partner Comments

(a) Borrower/implementing agency:

19 -

Pzcrhiv o 4P610

DEPARTMENT OF NATIONAL PLNNI Af 6 RURAL DWELOPHEKV

~~~~~ffll_ aq th s o m D y

23" Decmbr 00NB 2.12A2/LOR

4r. XEauw RQhandCountry DietwEaLtAaiPad5c gSWorld BRk OfcLevel 18, CM BWding, i4 MSydney, N8W 2000AnsgtraBa

Dear Mr. Ro2i2d

f i?ak refeerc t~o «e above @Ej mi wthr glvizg PM4 Gm int te wm m t I Nino Drou&t ReW= ?X * tO'

I am pleased to pmvide to te E the aen et on &adraut Report for engdir smd sp M mo Bg A-The GovernmenVe ESvaluation S=w o h b~~~viutr you as won at praldcahe anmt &o docmm ia 0w

Shuld y have any qy w e not hestsie to conta;h eit)c mv? xbs&Yjb 3y,kT1EfD 0 Q

8wety MA C tis .& -t V0 AL@>DL% S1 ADB/WaM >k D O -d 0n &Napmg t Vius,_D of T D w on phone 675) 328 3539/3208529 or tix (67k 5323 3147

-20-

WJ.2/'UZ Ws 2 H.P.SEgRETmR CFFIB 9 UE129NV3 mu 17P

2

In the pk d pananhp and cooperuon, I tak ths opportunity tocovey our nere gratude to the Bank for its continuou uapport iAIWO'. devclopmerzt effiort2.

-21-

~~~~~~~~~~~~~~~~~~S' !fl5

10

o since the Po. ge me 2rs nk k tken ino etcount wbun&SOe0lg P&04 e cmf I=diEt. in Mc

emme'g ot e pcoj^ a dedpe ad at X'which w m g moir t eict ± e rwa an - at r

cadate; wacI% as athe mats cepaciWes of the two mo.Thus, thoe uia level e durlz implm=tat!m d.

Pwa. % lAe , PD * 2 - The -md r z&oud be deleed Ond

o as 2, U4± 7, &g 4 - 'The m QC 'te De =t, Otuwxd beof flw g~ Slnd not_

o ES Z tho f le lom a t

o P&. Anre ~O ff9 I~ Ltter zQ2uPA bo lntevrA tha word

Pam 8 r L - The ~i a= abould be deleted as itprovi1effl mo= kwir fI ther tb Project imp,ct0

sumIV imL-gthe Pgevc 1wca COMPMWete.

Par , Dge. 1-xeL R t icrSate to lia ahe fairea of thePCFU m tbz Emle dctwn*dug frntor wh= raMns the pIoZUnCan=of tqr, Bermww. It d ow nat wlm Mmft when the flit part of the

ce paints a very good pmetxancc pictur of theBorzwer. If the cl.> onta axe not takn inoeacc:mLe ws4en aOt, *e T p te

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4

wd be satsatcuy as r n Km(AR mponent is D.Sine the loan apprcpatosm tr the Provineal Componw tswere cancelled, it Is technically amrmmous and warestic to takeInto sccouunt these cmponents In the Borrowaes uvnrapetlbmance Even tough th Bank ba cnceled the lor fwthe rovincial Componcts, subprojects (though scal dawnunder these Components wer successfuly ime te fburesource constaints. The success stoes o? the Borrw=peflbrmace in inplementing the aubprojects without loan tndshould be captured by the overll performance asssmmt.Hlence, it sJust and fa to mte the permnce ol teBoLrowerfl a "a £ and not only .

u Par. 1, LInes 1-13, Pg. 18 - The oontes of ibis Use clearappears to blame the Oov nmet fDr nt recnuiting theappropriate candides for th e Project Manager and PojectAcuntantth fitlos. Apart rom the Overmment, th Bank walnoh-ed in Cwbole process of selecta and recruitcnt Its noDbecU to the ramitment of the personnel htr t above

poliou ment that the Dank was stisted with the candidates.As such, the Bank should also take responsility for recruting

personnel at t iniil stag ough we scknowedpthat loca lcowld Is important, the lDaks In aOUSI

exptnc s equjy importnt especial hi such a 2 nqausishanee loan projects. Hece, the content of these ines be rephrased to relect our views aM concern.

Patti, Lines 13-21, Pg. 18 - The Govemment do not aree witthis proposed option to be refeted in the Loom Agreement. Weshould not create an envnmt ox unzcerttly and jobinseauziy in the minds of the key Prject personned but ratensati NM commntment to the Project on the part of these keperonnd frovm the sart. As such, this opptio hould nat berecommeded in this lcporL The zormal conventionul prcticeshould be maintained bitt require Impoveent

Par 2, Pg 38 - The imporace of time Ict In Pject desgnshould not be down plaed. When there is more time available,there is evey possity that au important contribultb factowould be tUoroibly assessed and taken into ccount In thedesin. Ji tuis way, the evel of isks and risk imparts would belowerd and xitEted respectively. The shorter the time peaiodgiven for Prjct desig, the higher the level at nisk and the

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5

pmsr the risk impact. would be duzlng Poect lmplentatblLWe threbre suges tat time har shoud be azkmowded inMDhagp.

Below mg three aitonal important Jew= fbr both the Baz andtbe to learn frotn this and otbl projet for fatrcprojects are ea foflom

a The need to keep Prject desigi simple. eatW undnstood bythe ltplanentcr, and techical and pnclcally viab toimplement wthin resource coanlts. Xzp:renesb indicatethait ct more ambitious eL Prject is desired, the more ier itwould foI to octieve the extedoutputs and outcomes (nOt toiunon the suainb aspects of i.

- Equally importt i. the emphasis on the condionu and goposu/sign po4st during Projaert desig and Implemutatkm.EWApences indiate that whe more cnditions are hapsed at

Projwet design or lneacd in number oe time, end whnmjor Sig posts/goal poets are trquently chged duninProject Ipleentation, the implmenttion of the rojectbecomes too ormoncated which thea resuts in the outcomes ofthe project uneinatory. Both te Bank md ft Govenmetneed to seetou rconsider their appro es in designg endImplemeptng prjetsf programs ti WO because the overlPWGOWB Ptbc succesas srta in PXG is poor. I point. a eryboi Image on the ctrdibfihtie of both the Eak and theNvcnwient am souces are not promoig and falflingdodrcd developt objec-tive

a The succssd iipemwUa Of the aubprqject, thoglimited, under the Povinca Compouents indcates the richnesand Imporne of the PNG cuultue tia neuds to be enhacepromote4 and utiied in the ipmetatn of majordeveopmet prqgams In PNG.

(l) Cofinanciers:

to be provided by GoPNG(c) Other partners (NGOs/private sector):

to be provided by GoPNG

-24-

10. Additional Information

Circumstances leading to the cancellation of 70% of the loan funds.

The following paragraphs relate how the administrative and managerial aspects of the provincialcomponents led to their demise.

An initial Bank start-up mission found there was little progress in establishing the PCFU andDPLLG agreed to move quickly on this critical element of the project. A large number of personsapplied for the position of manager, PCFU including some of those who had worked on theidentification/preparation mission with Bank staff and who appeared to have the leadership,technical and administrative capabilities to fill this important role. The DPLLG eventuallyselected an engineer who was not one of those candidates known to the Bank, but whosecurriculum vitae -qualifications appeared sound. The Bank accepted his appointment (requiredunder Schedule 5 to the Loan Agreement) on the basis of the CV and his selection by theDPLLG. He was appointed in September 1998 and an accountant was recruited into the PCFU inFebruary 1999. As shown below, the selection of these two candidates proved to be completelyinadequate.

The second Bank supervision mission in September 1998 visited the two provinces and met withprovincial administrations. Despite the clear expression of procedural aspects in the projectdocuments, the September 1998 mission found that the provinces did not fully appreciate theirfunding and operational responsibilities. These were clarified. Specific staff in the provincialadministrations were allocated project coordinator and project accounting responsibilities inaddition to other duties. To assist the PCFU, the Bank provided draft subproject processingformats during the September 1998 mission, which were to be further developed by the PCFUwith the provincial coordinators. These were designed to ensure that provinces would be awareof their obligations in adopting the project development concepts and allow the PCFU to easilymonitor all the critical aspects of subproject implementation. An outline of the content of the6-monthly reports that would be directly linked to the processing formats was also provided. Therequirements of the prudent shopping obligations and recording for statement of expenditurereimbursement claims under the project were reiterated.

The March 1999 Bank mission revealed that the processing formats had not been developed bythe PCFU as intended. A visit to Simbu with the PCFU manager indicated that provincialcoordinators would need intensive support if the project concepts were to be followed, ratherthan use of project funds as a simple substitute for regular budgetary support for ruralinfrastructure. The design and implementation aspects of a list of subprojects proposals werediscussed and clarified, as well as verifying procurement and accounting aspects of the project inthe provinces. Immediately subsequent to the mission, the Bank provided a complete set ofprocedural forms (as finalization of the drafts provided in September 1998) that should haveensured compliance if properly used. Subsequently in the project, the PCFU did not organizeadoption of the forms. The provincial units adopted their own forms of process recording, whichdid provide some record but did not cover all the requirements to permit efficient monitoring ofprocessing, implementation and outcomes. The PCFU did not prepare any 6-monthly reports asrequired under the loan agreement.

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Other than making regular staff available for project work, neither province provided significantand specific operating funds in their budgets to support the provincial activities associated withthe project. Even when some fumds were appropriated, little was actually disbursed for thepurpose. In the case of Simbu, there was a change in both Provincial Administrator and theProject Coordinator at the end of 1999. This resulted in an enhanced interest in the project, and acomprehensive plan for future subproject work within the project was developed. However, thisoccurred at the same time as the Bank had indicated that it considered the project could not besuccessfully implemented under the leadership of the existing PCFU team (see paragraph 3.1 andbelow), which led to cessation of funding. Consequently, the potential for any positive outcomeof this increased attention could not be realized, except in the completion of the subprojectsalready underway (see below). However, in practice, after cessation of loan funding in June 2000,any funds that were provided to complete subprojects originated from the DPLLG budget ratherthan from the province.

Survey and design work was funded under the project through the PCFU, as intended in theproject design, which removed the necessity for any provincial funding obligation for this aspect.The Bank agreed to the recnutment of an engineer with loan funds under the PCFU umbrella toprovide additional technical resources in Simbu (with a vehicle) under the technical assistanceumbrella.

When it became apparent that the lack of provincial funding was having serious negative effectson the ability of provincial staff to operate in the field on subproject proposals, the Bank agreed tointerpret the work of provincial/district staff who attended to project implementation as "technicalsupervision"; this permitted the reimbursement under the loan of vehicle hire, camping allowancesand overtime pay of these staff engaged in subproject activities as reimbursable "incrementaloperating costs" at 100%.

The loan provided for a $500,000 advance into a Special Account to miniiize the annual fuidsrequired for prefinancing from national financial resources, by enabling rapid reimbursement fromthis account or direct payment from it. In early 1999, at the suggestion of Bank supervision, theproject requested the Bank's Loan Department to approve a 90-day Special Account "advance'system. This was intended to address the problem of the provinces being unable to prefinanceeligible items, and the extreme difficulties in communication between the provinces and PortMoresby. The request was made on the assumption that the PCFU accountant (who had recentlybeen appointed) would guide and closely supervise the staff responsible for project accounting inthe provinces. This request was refused on the grounds that the accounting capacity required toallow this exceptional arrangement had not been demonstrated. Subsequently, after an in-countryinspection at end-1999, the Loan Department insisted that no payments be made from the SpecialAccount unless they were for reimbursement of eligible expenditures already incurred or directpayment to supplier and did not authorize the PCFU to draw an amount sufficient to meetselected eligible expenditures for a limited period, less than 30 days (this practice can beauthorized in exceptional circumstances, under good accounting management). The extraordinarydelays in accounting for the single monthly prefinancing amount that was forwarded by the PCFUto Simbu in August 1999 (before the Loan Department insistence on strict adherence to Special

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Account regulations), and the demonstrated incapacity of the PCFU accountant (see below),confirmed that the action by the Loan Department was appropriate.

The procurement procedures required under the project were very straightforward and simple.Prudent shopping procedures were stipulated for goods procurement rather than national orinternational competitive bidding procedures, due to the very small scale of the individualsubprojects. The Bank required prior review only to the extent that the specifications and draftcontracts for first 5 projects under the water supply and rural works components in eachparticipating province had to be provided to the Bank before applying for reimbursement orbefore making any payments from the Special Account. The assumption was that if a competentPCFU were installed, then a clearance of the initial subproject processing would be sufficient toensure future compliance with procurement guidelines (although random ex-post inspections ofprocurement in subprojects would be carried out as in all Bank projects). Consultancy contractsdid require prior review.

Award of goods supply contracts commenced in mid-1999. The PCFU was very tardy in meetingthe prior review requirements. A focused inspection in October 1999 by the Bank revealed a verypoor state of records on subproject procurement and obvious departures from acceptableprocedures in many instances. The PCFU agreed to attempt to prepare adequate records and tosubmit the documents as required for prior review on the initial 5 projects in both Simbu andManus. This prior, review documentation was not received until February 2000. It was examinedalong with the general subproject and procurement filing system. Assessment of compliance wasonly possible after extensive interaction with the manager and accountant of the PCFU, asrecording was such that the procurement trail was extremely difficult to follow. This, despite thefact that most of the procurement for significant items was done centrally by the PCFU.Procurement (by the PCFU) under one major water supply contract for Manus was inappropriateand funding from the loan was denied. Similarly a road culvert procurement contract had to befunded wholly from GoPNG counterpart sources as procurement was judged to be irregular.These were not declared as misprocurement as at the time -the decision to cease funding for theprovincial component was being made, and this would involve the cancellation of substantialfunds in any case. In view of the extremely poor recording system, the Bank had to makejudgments on a number of other cases on which records were only partial, and gave the PCFU thebenefits of doubt whenever possible. There were also problems with the PCFU administration ofthe PCFU civil works survey and design consultancy contracts.

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Accounting by the PCFU was very poor. This has serious negative implications for thepreparation of project accounts for audit and for processing reimbursement of loan funds to theSpecial Account. As for all Bank loans, audited accounts are required within 6 months of the endof the financial year. The PCFU accountant was extremely delinquent in preparing accounts foraudit. The 1998 accounts covered only small expenditures by the PCFU and did not include anysubproject expenditure; these were prepared and then processed by the Office of the AuditorGeneral (OAG) without much delay after receiving clarification on some aspects. However, the1999 accounts were submitted to the OAG in the latter half of 2000 and the OAG soughtclarification from DPLLG; this clarification is still pending. When funding of the DPLLGprovincial components was cancelled in mid-2000, it was agreed that the PCFU accountant wouldcontinue to be funded under the loan for one month so as to complete the task of providing therequested clarification, preparing DPLLG project accounts to mid-2000, submit the overdue 1999accounts to the OAG, and prepare all outstanding disbursement/reimbursement requests oneligible expenditure. Despite the contract for the accountant being extended for a further 17months at DPLLG expense (rather than the one month that was agreed with the accountant to benecessary for the outstanding tasks), the accounts were not brought to a level suitable forsubmission to the OAG. Simiilarly, the outstanding reimbursement claims for the DPLLGcomponent were not completed by the accountant until November 2001. The Bank was obligedto hire a financial consultant to construct and balance cash book records and accounts from theinception of the project to mid-2000 for the DPLLG component. The NARI financial controllerthen had to assemble accounts, and he sent these to the OAG in September 2002. As ofend-December 2002, the audit reports on the 2000 and 2001 project accounts were still overdue.

The poor accounting contributed to serious delays and discrepancies in the submission ofdisbursement/ reimbursement requests through Loans and Revenue. The delay in the availabilityof the 1999 audit led to a temporary suspension of the Special Account operations. Errors in thePCFU reconciliation statements sent with reimbursement claims on the Special Account led toclaims being rejected and returned in July 2001. The tardiness in processing the reimbursementclaims on the Special Account meant that Special Account fimds soon were exhausted. Aftercancellation of the provincial component, NARI assumed management of the Special Accountfacility in the form of a new Special Account. However, the earlier deficiencies in its operationdid not permit its intended use in the research component. This caused major problems for NARI,as it had to prefinance its eligible expenditures and then be dependent on the longer turn-aroundtime associated with reimbursement from the loan account through Bank headquarters.

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Annex 1. Key Performance Indicators/Log Frame Matrix

Table 1. Drought and Frost Project Indicators and Achievements

Activities Units Target Actual RemarksInputs l l _ r_lPersonnel- Principal Scientist each I I Dr Sergie Bang- Scientist each I I John Demerua- Jr Scientist each 2 2 Debbie Kapal, Kud Sitango- Res Technician each 3 3 Paul Osilis, Timothy Geob, Gend Bagl- Field Support each 5 5 Field labour at Aiyura and Laloki

EquipmentWeather Stations each 8 8 only six operationalMoisture Probes each 2 3 Additional probe (+ 145 tubes) purchased for soil

moisture trialIrrigation pumps each 10 5 Rope and washer pump imported; treadle pump still

I___ _ __ _ __ __ __ _on orderInception tar gets below here! .

Germplasm collectionProvincial trips trip 10 8 Gulf and Westem Provinces not visitedDrought tolerancelearly maturity trialsHighlands-sweet potato trial 6 6 4 x drought tolerance; 2 x time of maturity (2/6 trials

.____ _ _ongoing)

-cassava trial 2 2 One trial still ongoing, to be harvested April 2003Lowlands-sweet potato trial 3 3 Trials 2 & 3 severely damaged by weevils-cassava trial I I Plus one on-farm trial at Brown River

Moisture Conservation Trials-trials established trial 2 2 One trial completed, Trial 2 ongoing

Surveys-Vetiver adoption survey I I Some additional villages yet to be visited

OutputsCharacterisation of collected germplasm crops 3 3 Sweet potato, cassava and bananaVarieties selected for contingency number na 21 Sweet potato: HL -5; LL -7; Cassava: HL -5; LL - 4Varieties/crops distributed- yams districts na 64 All provinces except Southem Highlands

Variety multiplication- sweet potato Multiplicat- 2 in process Laloki and Aiyura

ion plots

-cassava Multiplicat- 2 in process Laloki and Aiyuraion plots

-yams Multiplicat- 2 yes Laloki and Aiyuraion plots

Irrigation pumps demonstrated each 2 1 Treadle pump still on orderUpdated analysis of rainfall records to identify task Completed Completed During Climate Modeling Workshopdrought vulnerability zones

Statistical correlation of rainfall with SOI task Completed Completed During Climate Modeling WorkshopCapacity to use 'Rainman' for prediction workshop Completed Completed 7 NARI and 4 National Weather Service staff trainedPreparation of Drought Contingency Plans task Completed Completed Contingency Plans ready for publication

HL = Highlands; LL - Lowlands

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PROVINCIAL COMPONENTS11 eblle 2f: SIMBU Water Supply

Site Institu- House- Cost K'000 Tions holds Total Projece Post- Operation BankBene Bene project3 and Main- Acct5fiting fiting tenance

Sim 2 2 35+ Unk Unk LLG/ward NoKendene villages councillorGumine 3 3 30+ Unk Unk LLG at ward No

villages and districtlevels

Kerowagi 8 3 300+ 30 270+ LLG at ward Novillages and district

Sina Sina Aborted 134Mindema 2 1 25+ Unk Unk LLG at ward No

village and district

Table 2b: MANUS Water Supply

Site Institu House Cost K'000 _ _tions holds Total Project Post- Operation BankBene- Bene- project and Acctfiting fiting _ _ I Maintenance

Paniselu 4 245 159.1 118.1 41.0 Households/ YesLLG ward

Bundrahei 2 481 99.1 66.1 33.0 Households/ YesHigh School

Pere 2 1032 70.2 68.2 2.0 Households/ YesLLG ward

Powat 2 238 69.9 66.9 3.0 Households/ YesI_____ __ I___ ______ LLG ward

Sili-in 3 379 53.9 48.9 5.0 Households/ YesLLG ward

Budralis 4 508 77.8 75.8 2.0 Households/ YesLLG ward/Church

Includes health centers, schools, police stations, community halls, etc2 Includes the funds provided from the loan and as counterpart funds from DPLLG or province up to theend of June 2000; Unk = unknown due to lack of records.3Includes the funds provided by the DPLLG after cessation of loan funds in June 2000, or by other meanssuch as the MP's RDF in the case of Kerowagi; in the latter instance, this is specified with a footnote.4 This indicates which entity is responsible for the maintenance and operating costs of the water supply,e.g., LLG ward, village user households.5 Indicates Yes or No to whether the users of the water supply have a water supply maintenance account inoperation to which water users pay to provide funds for operation and maintenance6 Kerowagi was a large scheme that was funded mostly by the MP's rural development fund, and wasstarted before the project. The project made a contribution to the scheme.

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Table 3:SIMBU Rural Works

Narnei Activity" Person Cost K'000days Total Project' Post-____________I_Emp loyedv roiect5

Nintul- Road Unk 12.5 12.5 0Laswara naintenance

and upgradeSilkoble- Road Unk 8.0 8.0 0Unil rnintenance

and upgradePari-Nogar Road Unk 20.0 20.0 0

naintenanceand upgrade

Eigun-Goi New road Unk 15.0 15.0 0cutting

Dirima- Road Unk 44.0 44.0 0Boromil maintenance

and upgradeOnule- Road Unk 20.0 20.0 0Genabona maintenance

and upgradeGaima- Road Unk 20.0 20.0 0Genabona nmintenance

and upgradeKengaina Maintenance Unk 5.0 5.0 0vehiclebrid e

XLocation to identify work2 Indicates type of activity, e.g., road maintenance, vehicular bridge repair; data were not available on themeasure of the activity, such as "x"metres or "y" km.3 Was to indicate the nunber of paid labor days, but these data are unavailable.4Includes the funds provided from the loan and as counterpart funds from DPLLG or province during theperiod to June 2000

Includes the funds provided by the DPLLG after cessation of loan funding (June 30,2000); apparentlynone was used in these activities.

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Annex 2. Project Costs and Financing

Project Cost by Component (in USS million equivalent)Project Cost Appraisal Actual/LLtest lPercentage of

By Component Estimate Esdmate ApprgaisalUS $ million US $ million

Community Rural Works 2.50 0.04 16.0Rural Water Supply 2.00 0.45 22.5Agricultural Research 0.60 0.58 96.7Technical Assistance and 0.40 0.35 87.5CoordinationTotal Baseline Cost 5.50 1.42 25.8

Exchange Loss* 0.18Outstanding Balance in S.A."O 0.01

Total Project Costs 5.50 1.61 29.3Total Financing Required 5.50 1.61 29.3

due to cross-exchange rates on disbursement to the Special Accountt K27,492.36 or about $7,000 (see para. 5.4)

Project Costs by Procureme nt Arrangements (Appraisal Estimate) (US$ million equivalent)

Expenditure Category N CB Procurement Method' Y NCB Other'

1. Works 0.00 0.00 2.80 0.00 2.80

(0.00) (0.00) (2.30) (0.00) (2.30)2. Goods 0.00 0.00 1.70 0.00 1.70

(0.00) (0.00) (1.70) (0.00) (1.70)3. Services 0.00 0.00 0.30 0.00 0.30Consultants (0.00) (0.00) (0.30) (0.00) (0.30)4. Miscellaneous 0.00 0.00 0.70 0.00 0.70Operating Costs (0.00) (0.00) (0.70) (0.00) (0.70)

5. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

6. Miscellaneous 0.00 0.00 0.00 0.00 0.00(0.00) (0.00) (0.00) (0.00) (0.00)

Total 0.00 0.00 5.50 0.00 5.50(0.00) (0.00) (5.00) (0.00) (5.00)

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Project Costs by Procurement Arrangements (Actual/Latest Estimate) ('JS$ milRion equivalent)Expenditure Category Procurement Method(l)

ICB NCB Other(2) N.B.F. Total Cost1. Works 0.00 0.00 0.04 0.00 0.04

(0.00) (0.00) (0.03) (0.00) (0.03)2. Goods 0.00 0.00 0.50 0.00 0.50

(0.00) (0.00) (0.40) (0.00) (0.40)3. Consultants 0.00 0.00 0.16 0.00 0.16Services (0.00) (0.00) (0.16) (0.00) (0.16)4. Miscellaneous 0.00 0.00 0.71 0.00 0.71Operating Costs (0.00) (0.00) (0.66) (0.00) (0.66)5. Miscellaneous(3) 0.00 0.00 0.19 0.00 0.19

(0.00) (0.00) (0. 1 9) (0.00) (0.19)6. Miscellaneous 0.00 0.00 0.00 0.00 0.00

(0.00) (0.00) (0.00) (0.00) (0.00)Total 0.00 0.00 1.60 0.00 1.60

_ (0.00) (0.00) (1.44) (0.00) (1.44)

Figures in parenthesis are the amounts to be financed by the Bank Loan. All costs include contingencies.2'Includes civil works and goods to be procured through national shopping, consulting services, services of contracted staff

of the project management office, training, technical assistance services, and incremental operating costs related to (i)managing the project, and (ii) re-lending project funds to local government units.

YIncludes exchange loss (about $183,000) and outstanding balance in Special Account (about $7,000).

Appraisal Estimate Actual/Latest Percentage ofComponent Estimate Appraisal

Bank Govt CoF Bank Govt CoF Bank Govt CoF

Rural Works 2.10 0.40 0.04 0.01 1.9 2.5

Rural Water 1.90 0.10 0.33 0.12 17.4 120.0Supply

Agricultural 0.60 0.00 0.55 0.03 91.7 -Research

Technical 0.40 0.00 0.33 0.01 82.5Assistance andCoordination

Exchange Loss* 0.18

OutstandingBalance in S.A. 0.01

Total 5.0 0.5 1.44 0.17 28.8 34

* due to cross-exchange rates on disbursement to the Special Account

- 33 -

Aunnme 3. Econmouimic costS Rin meTts

Not Applicable

- 34-

Annex 4. Bank Inputs

a) Missions:Stage of Project Cycle No. of Persons and Specialty Performance Rating

(eg Economists, I FMS, etc.) Implementation DevelopmentMonth/Year Count Specialty Progress Objective

Idenffflcatfon/Preparation11/1997 3 TTL (I); AGRICULTURE

PRODUCTION CONSULTANT(1); SMALLHOLDERCROPPING SYSTEMSCONSULTANT (1)

02/1998 1 PMC

Appraisal/Negotfation01/1998 1 TTL

Supervision05/1998 S S09/1998 1 PMC* S U03/1999 I PMC* U U07/1999 2 SECTOR MANAGER; PMC* U U10/1999 2 PMC*; CONSULTANT U U03/2000 1 PMC* U U06/2000 1 PMC* U U11/2000 2 TTL/AGRONOMIST; PMC* S S05/2001 2 TTU/AGRONOMIST; PMC* S S12/2001 3 TTL/AGRONOMIST; RURAL S S

DEVELOPMENT SPEC; PMC*06/2002 2 TrIJAGRONOMIST; PMC* S S

ICR10/2002 2 TTL/AGRONOMIST; S S

PMC*

*PMC (Project Management Consultant)

(b) Staf:

Stage of Project Cycle Actual/Latest EstimateNo. Staff weeks US$ ('000)

Identification/Preparation 11 59,800Appraisal/Negotiation 3 24,600Supervision 46 202,795ICR 7 37,500Total 67 324,695

- 35-

Annnex S. Ratings for Achievement o' Cb,ectives/Outputs of Connjponents

(H=High, SU=Substantial, M=Modest, N=Negligible, NA=Not Applicable)Rating

F Macro policies O H OSUOM O N O NAF Sector Policies O H OSUOM O N ( NAZ Physical O H O SU (3 M O N O NA0 Financial O H OSUOM O N O NA0 Institutional Development 0 H 0 SU O M 0 N 0 NA(9 Environmental O H OSUOM O N 0 NA

SocialE Poverty Reduction O H OSUOM O N O NAZ Gender OH OSUOM ON NAN Other (Please specify) O H OSU M O N O NA

z Private sector development 0 H O SU O M 0 N 0 NAPublic sector management O H OSUOM 0 N 8 NAOther (Please specify) O H OSUOM O N O NA

-36 -

Annex 6. Ratings of Bank and Borrower Performance

(HS=Highly Satisfactory, S=Satisfactory, U=Unsatisfactory, HU=Highly Unsatisfactory)

6.1 Bank performance Rating

• Lending OHS*S OU OHUX Supervision OHS OS O U O HUF Overall OHS OS OU O HU

6.2 Borrowerperformance Rating

F Preparation OHS OS O U O HU• Government implementation performance O HS O S * U 0 HUF Implementation agency performance OHS OS * U O HU0 Overall OHS OS * U O HU

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Annex 7. List of Supporting Documents

A. Bank Documents1. Memorandum and Recommendation of the President to the EDs for an El NinoDrought ResponseProject January 30, 19982. Technical Annex El Nino Drought Response Project January 30, 19983. Loan Agreement El Nino Drought Response Project April 22, 1998

Supervision Reports1. First Supervision Report - Start Up (May 3-7, 1998)2. Second Supervision Mission (September 3-10, 1998)3. Third Supervision Mission (March 1-11, 1999)4. Fourth Supervision Mission (July 19-23, 1999)5. Firth Supervision Mission (October 18-30, 1999)6. Sixth Supervision mission (February 20-March 2, 2000)7. Seventh Supervision Mission (May 28-June 6, 2000)8. Eighth Supervision Mission (November 19-30, 2000)9. Ninth Supervision Mission (May 6-19, 2001)10. Tenth Supervision Mission (November 25-December 8, 2001)11. Eleventh Supervision Mission (May 27-June 8, 2002)12. ICR Mission ( September 22 - October 4, 2002)

B. Project ReportsThere were no reports furnished by the PCFU on the provincial components.

1. DPLLG produced a draft technical report on the water supply projects in February2002.2. DNPRD compiled a short report on the data available on the subprojects in theprovincialcomponent in October 2002.3. Implementation Completion Report on NARI Component, August 2002.4. Set of Procedural Forms for Implementing the El Nino Drought Response.5. List of reports produced by NARI on the research component.

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No. Title Author Date1 Progess Report: January to K.P.C. Rao Sept 1999

September 1999IA Appendix 1: Development and K.P.C. Rao Feb 1999

Adaptation of technologies tomanage impacts of drought andfrosts in PNG (background paperfor Logframe Planning meeting)

lB Appendix 2: Report on the Logical K.P.C. Rao Feb 1999Framework Planning Meeting,NARI, Aiyura, February 24-261999

IC Appendix 3: Project K.P.C. Rao undatedImplementation Plan withindicators of measure (July 98 -December 2001)

ID Appendix 4: Post drought K.P.C. Rao undatedassessment surveys and collectiontrips

IE Appendix 5: Screening of sweet K.P.C. Rao Undatedpotato cultivars for droughttolerance for lowland and highlandagricultural systems of Papua NewGuinea (trial proposal)

IF Appendix 6: Continuous K.P.C. Rao Undatedproduction of yam (trial proposal)

IG Appendix 7: Selection of cassava K.P.C. Rao Undatedvarieties (trial proposal)

IH Appendix 8: Description of K.P.C. Rao Undatedcassava cultivars

1I Appendix 9: Automatic weather K.P.C. Rao Sept 1999stations (training notes)

2 Collection Trip Report (covers Timothy Geob AugustWHP, Simbu, EHP and Madang) 1999

3 Advanced Climatology Workshop, Bill MarchMarch 13-15, Bribie Island, Humphrey 2000Queensland: Back to OfficeReport

4 Report on Irrigation Workshop, 14 Geoff Wiles MarchMarch 2000 2000

S Progress Report to June 30, 2000 Bill Sept 2000Humphrey

5A Attachment 1: World Bank Geoff Wiles April 2000Drought and Frost Project AnnualMeeting, April 19-20, 2000

SB Attachment 2: Preliminary Bill undated

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6 Progress Report to 31 January 2001 Bill Humphrey Feb2001

6A Attachment 1: Consultant Report of K.P.C. Rao Jan 2001Drought Response Project - January2001

6B Attachment 3: Preliminary results of Not stated undatedcollected highlands sweet potato -yield data from multiplication plot 2,harvested 17 October 2000

6C Attachment 4: Bibliography of Bill Humphrey undatedDrought and Frost Literature availableat Aiywa

7 Proposal for extension of the project K.P.C. Rao Feband others 2001

7A Proposal for extension of the project K.P.C. Rao Revisedand others May

20018 Progress Report to June 30, 2001 Sergie Bang Sept

20018A Attachment 1: Screening of sweet Bang, S. and Undated

potato cultivars for drought tolerance Osilis, P.for lowland farming systems.

8B Attachment 2: Aiyura Trial 1 Report: Demerua J, SeptScreening of sweet potato cultivars Rao KPC and 2001for drought tolerance for highland Geob Tfarming systems.

9 Progress Report to December 31, 2001 Sergie Bang Mar2002

9A Attachment 1: Cassava Variety Screening Kud Sitango, UndatedTrial for Yield, Protein and Cyanide at SpencerLaloki in the Dry lowlands of Papua New Poloma andGuinea Sergie Bang

9B Attachment 2: Aiyura Trial I Report: Sergie Bang, Jan 2002Screening of sweet potato cultivars for John Demeruadrought tolerance for highland farming and Timothysystems. Geob

9C Attachment 3: Descriptive List of 46 John Demerua SeptHighlands Collected Varieties for 2001Drought Screening Trials

9D Attachment 4: Highlands Cassava Debbie Kapal undatedGermplasm Collection - Cassava and Timothy(Manihot esculenta) Characterization GeobReport

9E Attachment 5: India Irrigation Trip Sergie Bang OctReport 2001

-40-

10 Progress Report January I to June 30, Sergie Bang Aug 20022002

IOA Attachment 1: Contingency Plans (draft) Project Team Aug 2002lOB Attachment 2: Early Waming and David McRae July 2002

Contingency Workshop, NationalWeather Service, Port Moresby, 27-31May 2002 (Workshop Report)

11 Drought Response Project K.P.C. Rao June 2002Consultant Report 27 May- 15 June2002

12 The World Bank El Nino drought and Bill Publishedfrost impact management project, in Humphrey, 2001Proceedings of the Papua New Guinea James ErnestFood and Nutrition 2000 Conference, and JohnPNG University of Technology, Lae, 26- Demerua30 June 2000, pp 271 - 274

13 Potential impact of global climatic Kasis Inape Publishedchange on smallholder farmers in PNG, and Bill 2001in Proceedings of the Papua New Guinea HumpnhreyFood and Nutriton 2000 Conference,PNG University of Technology, Lae, 26-30 June 2000, pp 73 - 78

Note: #12 and #13 are papers that arose from the project and were presented at amajor food security workshop in 2000. The following project reports are currently indraft stage:

1. Highland Banana Characterization Report2. Lowland Banana Characterization Report3. Assessing the Effectiveness of vetiver and legume hedges, and mulch in

conserving soil moisture on a sloping highlands field

-41 -

Additional Annex 8. Project Map

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