STAFF APPRAISAL REPORT TURKEY PARTICIPATORY PRIVATIZATION...

Document ofThe World Bank

Report No. 16525-TU

STAFF APPRAISAL REPORT

TURKEY

PARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT

AND INVESTMENT PROJECT

September 18, 1997

Rural Development and Enviromnent Sector UnitEurope and Central Asia Region

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CURRENCY EQUIVALENTS

Currency Unit = Turkish Lira (TL)

AVERAGE EXCHANGE RATES(Turkish lira per US$1)

1994 32,0001995 55,0001996 95,000 (as of November)1997 150,000 (as of August)

WEIGHTS AND MEASURES

Metric System

ABBREVIATIONS AND ACRONYMS

CC Consultant CoordinatorDSI Devlet Su Isleri (State Hydraulic Works)GDP Gross Domestic ProductGOT Govermment of TurkeyGDRS General Directorate of Rural ServicesHa HectaresICB International Competitive BiddingIIT Irrigation Investment Transfer (including management of irrigation investment)IMT Irrigation Management (mainly O&M) Transfer to UsersIRR Internal Rate of ReturnIS International ShoppingLTCs Long-term ConsultantsM MillionNCB National Competitive BiddingNS National ShoppingOCC Opportunity Cost of CapitalOECD Organization for Economic Cooperation and DevelopmentO&M Operation and MaintenancePPII Participatory Privatization of Irrigation Investment (including management of

investment)PPIM Participatory Irrigation ManagementRC Regional CoordinatorSCF Standard Conversion FactorTA Technical AssistanceTOR Terms of ReferenceWUA Water Users' AssociationWUO Water Users' Organization

TERMS

Consultants Consultants for project implementation; also called project consultantsIIT and PPII These are used interchangeablyIMT and PPIM These are used interchangeablyIrrigation Ratio Ratio of area irrigated to irrigable areaTransfer PPIM or IMTTransferred Schemes Schemes where irrigation management (mainly O&M) are transferred to WUOs

TURKEY FISCAL YEAR

January I to December 31

This report is based on the findings of a Bank pre-appraisal mission that visited Turkey in February 1997comprising Joma Mohamadi (Mission Leader and Task Manager), Gurhan Ozdora (Projects Officer), andconsultants Suha Satana (Economist) and Helen Shahriari (Sociologist). Herve Plusquellec, RichardReidinger and Ashok Subramanian were peer reviewers.

TURKEY



CONTENTS

LOAN AND PROJECT SUMMARY

1. BACKGROUND .............................................. 1

A. IRRIGATION SECTOR .............................................. IIB. O&M PROBLEMS .............................................. 2C. IRRIGATION INVESTMENT PROBLEMS .............................................. 2D. SOLUTIONS .............................................. 3E. PROGRESS ON IMT AND RESULTS .............................................. 3F. NEED FOR STRENGTHENING IMT .............................................. 5G. PROJECT CONCEPT .............................................. 5

2. THE PROJECT AREA .............................................. 6

A. PROJECT AREA RELATED TO O&M EQUIPMENT .............................................. 6B. PROJECT AREA OF PILOT DRIP IRRIGATION SCHEME .............................................. 7

3. THE PROJECT. 8At. PROEC OBJECTIVES.................................................................................................................................

A. PROJECT OBJECTIVES ....................... 8B. PROJECT DESCRIPTION AND COMPONENTS ............................................. 8C. DESIGN FEATURES OF THE PROJECT ............................................. 12D. PROJECT COSTS .............................................. 13E. PHASED FINANCING OF THE PROJECT ............................................. 14F. THE PROPOSED GRANT ............................................. 15G. ENVIRONMENTAL IMPACTS AND ASPECTS .. ........................................... 16H. PARTICIPATION AND WOMEN'S ROLE ............................................. 16

4. PROJECT IMPLEMENTATION ............................................. 17

A. IMPLEMENTATION RESPONSIBILITY ............................................. 17B. IMPLEMENTATION ARRANGEMENTS ............................................. 1 8C. PROJECT COORDINATION AND IMPLEMENTATION SCHEDULE ......................................... 22D. MONITORING AND REPORTING ............................................. 22E. PROCUREMENT ............................................. 23F. DISBURSEMENTS ............................................. 26

5. BENEF1TS, ECONOMIC ANALYSIS AND RISKS ............................................. 27

A. PROJECT BENEFITS ............................................. 27B. ECONOMIC ANALYSIS ............................................. 29C. JUSTIFICATION FOR THE PROPOSED GRANT ................................ ; 30D. RISKS ............................. ... 31

6. AGREEMENTS ........................ 32

A. CONDITIONS FOR EFFECTIVENESS ........................ 32B. AGREEMENTS REACHED DURING NEGOTIATIONS ................................... 32

CONTENTS (cont'd)

ANNEXES

A. COST TABLESB. PILOT DRIP IRRIGATION SCHEMEC. MONITORABLE INDICATORSD. CONSULTANTS' TERMS OF REFERENCEE. IMPLEMENTATION SCHEDULEF. PROCUREMENTG. ECONOMIC AND FINANCIAL ANALYSISH. LEGAL ASPECTS1. SOCIAL ASSESSMENTJ. DISBURSEMENT SCHEDULEK. COST OF PROJECT WITH INCLUSION OF ENVISAGED FOLLOW-UP LOANL. COST OF O&M EQUIPMENT CONSIDERED TO BE PURCHASED UNDER THE

ENVISAGED FOLLOW-UP LOAN OF US$17.5 MILLION

MAP

IBRD No. 28711

TURKEY



LOAN AND PROJECT SUMMARY

Borrower: Republic of Turkey

Implementing Organizations: Water User Organizations (WUOs), with the supportand supervision of State Hydraulic Works and GeneralDirectorate of Rural Services.

Beneficiaries: WUOs and Participating Farmers

Poverty Category: Not applicable

Amount: US$20 million

Terms: Payable in seventeen years, including five years ofgrace, at the standard interest rate for LIBOR-based, USdollar, single currency loans.

Commitment Fee: 0.75 percent of undisbursed credit balances, beginning60 days after signing, less any waiver.

Onlending Terms: Not applicable

Financing Plan (US$ M):IBRD Total 20.00Government 1.34Subtotal WUOs 37.44Total 58.78

Economic Rate of Return: 72% (excluding Pilot Drip Irrigation Scheme componentfor which ERR = 19%)

Staff Appraisal Report: 16525-TU

Map: IBRD No. 28711

Project ID Number: TR-PA-9072

TURKEY



STAFF APPRAISAL REPORT

1. BACKGROUND

A. IRRIGATION SECTOR

1.1 Role of Agriculture and Irrigation. Agriculture's share of Turkey's GDP isapproximately 14%. It is the largest sector in terms of employment (42% compared withindustry at 16% and services at 38%). Irrigated land accounts for 34% of agriculturalGDP (excluding livestock). There are 28 M ha of arable land, of which 8.5 M ha areclassified as economically irrigable, and 4.2 M ha (private and public combined) areirrigated.

1.2 Organizations Responsible for Irrigation. The State Hydraulic Works (DSI), theGeneral Directorate of Rural Services (GDRS) and Water User Organizations (WUOs)have responsibility for irrigation development and management. All large irrigationsystems in Turkey are developed by DSI, which is under the Ministry of Energy andNatural Resources. GDRS, under the Prime Minister's Office, is responsible for minorirrigation works and on-farm development of irrigation works completed by DSI. DSIhas developed 1.63 M ha of the arable land in Turkey. Over 96% of these areas wereoperated and maintained by DSI until mid-1993, when it began a program of irrigationmanagement (operation and maintenance) transfer (IMT) to users, with the Bank'spersuasion and assistance (paras 1.9-1.11). IMT is actually participatory privatization ofirrigation management (PPIM), involving transfer of this responsibility from governmentto participatory WUOs. The WUOs operate on the principle of participatory irrigationmanagement and provide for a high degree of farmer involvement, both directly andthrough elected representatives. The WUOs consist primarily of farmers and encompasssuch structures as Water User Associations (WUAs), municipalities, village authoritieswith responsibility for irrigation management, cooperatives, and others who haveresponsibility for managing smaller irrigation schemes (see annex I for details). The mostimportant category is the WUA, accounting for 93% of the area managed by WUOs. Dueto various local conditions, the size of WUOs varies between 100 and 3 8,000 ha. Asdiscussed below, WUOs are playing a major role in the Turkish irrigation sector.

1.3 Irrigation Sector Issues. The Bank's study and review of the irrigation sector in1992 and 1993 revealed that the principal problems in the irrigation sector were (a)unsatisfactory operation and maintenance (O&M) services due mainly to inadequategovernment funding, and (b) highly inefficient irrigation investment.

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B. O&M PROBLEMS

1.4 Inadequate and declining public funding for O&M of the DSI managed area, whiehwas particularly affecting irrigation systems maintenance and causing its deterioration,was a major problem and was threatening sustainable use of the multi-billion dollarpublic investment in irrigation. Low and declining recovery of O&M costs from userswas also a problem.

1.5 Billing of O&M Costs. DSI operates on an accruals-based cost accounting system,which forms the basis for calculating water usage charges for O&M. Actual O&M billsare presented to users during the next crop year, with repayments due the following year,causing a two-year delay. There is no inflation correction in the billings, so this two-yeardelay in repayments causes considerable erosion in the real value of funds returned,particularly in Turkey's highly inflationary environment. Cost recovery rates coulddeteriorate further since the Council of Ministers may recommend politically motivatedreductions of up to 50% in the total amounts billed to users.

1.6 Recovery of DSI O&M Costs. DSI's average recovery rate is 40% onaccumulated outstanding repayments. Inflation's effect on the real value of repaymentstranslates to less than 20% of the actual costs incurred by DSI to provide O&M service.If the billing's total is reduced by the government's decision, the value of recovery mayfall well below 15%. For delinquent payments, there is a one-time penalty of 10% of theunpaid balance. This is a significant disincentive for users to pay on time since funds forany outstanding payment can bear substantial interest in excess of 70%. Additionally,water charges are calculated by DSI but are collected by the Ministry of Finance, so DSIhas no incentive to collect payments.

C. IRRIGATION INVESTMENT PROBLEMS

1.7 Turkey's irrigation investment problems consist of: (i) negligible cost recoveryagainst an annual investment cost of several hundred million dollars, as described below;(ii) overextension of irrigation investment by including new schemes without adequatefunding; (iii) inclusion of uneconomic schemes in the program; and (iv) an extendeddelay in the completion of schemes. This has resulted in poor utilization of funds whichare spread over far too many schemes simultaneously under construction by DSI. Theseproblems are exacerbated by lack of user participation in the planning, construction andfinancing of the irrigation schemes. There is also deficiency in the method of design ofirrigation distribution canals.

1.8 Recovery of DSI Investment Costs. DSI charges annually an insignificantamount of TL 3,000-7,500/ha, or US$0.03-0.08/ha, payable over a specified number ofyears against an investment of around US$4,000/ha. Despite chronic inflation, these rateshave remained unchanged.

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D. SOLUTIONS

1.9 In the past, the Bank's emphasis was on urging the government to improverecovery of irrigation O&M and investment costs, which was covenanted in the legalagreements of previous Bank-financed irrigation projects. This approach did not produceany results, so in 1992 and 1993 the Bank explored' the possibility of a more practicaland sustainable solution of promoting IMT or PPIM. The possibility of irrigationinvestment transfer (IIT) to users (WUOs) or participatory privatization of irrigationinvestment (PPII) was also considered, but for the following reasons priority was given tofocusing on IMT, and under the circumstances it was considered premature to pursue IIT:

(a) A Bank review in 1993 revealed that there were some enabling factors in thecountry that could contribute to accelerated IMT to users, including: (i) theavailability of an enabling law; (ii) successful experiences with IMT for afew small schemes to users who had established successful WUOs; (iii) thesupport of some DSI officials for this concept; (iv) the existence of agenerally good working relationship between DSI O&M officials andfarmers (a relatively rare phenomenon); and (v) the well-foundedanticipation that the farmers would support such a transfer.

(b) The highly positive experience of Mexico with large-scale transfer ofirrigation O&M responsibility to WVAOs in the early 1 990s contributed toconfidence-building among those concerned.

E. PROGRESS ON IMT AND RESULTS

1.10 In mid-1993, with the Bank's persuasions and assistance in connection with theexpanded scope of the its Drainage and On-Farm Development Project (Ln. 2663-TU),and with the support of Turkish farmers, DSI started a large-scale, successful program ofIMT. Accordingly, management of about 1.2 M ha (about 75% of the area developed andmanaged by DSI) was transferred to about 590 WlJOs. The Bank's assistance waslimited primarily to: (a) providing advice and encouragement and convening workshopsin connection with project supervision; and (b) financing study tours for key DSI officialsto the USA and Mexico to gain confidence in implementing a large-scale IMT. Annualprogress of the transfer is shown in Table 1.1.

1993 supervision reports, of Drainage and On-Farm Development Project (Ln 2663-TU) andIrrigation Management and Investment Review (Report No. 11 589-TU).

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Table 1.1 Annual Progress on IMT

Year Area Annually Projected Area to beTransferred (ha) Transferred (ha)

1956-1992 63,000 (total)1993 9,0001994 195,0001995 711,0001996 222,0001997 100,0001998 80,0001999 70,0002000-2011 50,000 ha/year

Source: DSI - O&M Department Presentation Report, April 1996, p. 26.

1.11 Main Results of IMT. Based on observations and user response, the followingresults have been obtained:

(a) Better operation of irrigation networks leading to a more timely andequitable distribution of water, particularly in downstream and water-short areas. Successful implementation of nighttime irrigation by WUOs(which the government could not enforce), and keeping operators availableas needed day and night and during holidays are the main contributingfactors. The pumping stations now managed by WUOs, some of which arefairly large and sophisticated, are performing better.

(b) Substantially improved maintenance and protection of the systems (canals,canalets, machinery and equipment). The availability of adequate funds,simple and streamlined administrative procedures, transfer ofresponsibility to users, and users' self-interest are among the maincontributing factors.

(c) Increased efficiency in resource allocation (financial, labor, materials,machinery and equipment, etc.).

(d) A major and speedy shift in responsibility for financing irrigationO&M cost from GOT to WUOs.

(e) Increase in agriculturalproduction as reported by users.

(f) The impressivefinancialperformance by WUOs in gaining recovery ofnearly 100% of member payments, accumulating savings and successfullymanaging their budgets, which exceed US$ 1 M for large WUOs.

(g) An improved understanding of irrigation issues by users (farmers).

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(h) Overall satisfaction of users, reflected by the receipt of about tencomplaints by DSI from users about irrigation problems in 1996, ascompared to about 400 complaints received before IMT.

The rate of success indicated above has brought Turkey to the forefront as a model (alongwith Mexico) for large-scale IMT.

F. NEED FOR STRENGTHENING IMT

1.12 Despite the above success of IMT, the following issues still need to be addressed:(a) the lack of O&M equipment by WUOs; and (b) a need to strengthen DSI so it wouldsuccessfully play a new role in its relationship with WUOs, providing technical support,performance monitoring, and training to WUO staff. A brief description of item (a),which requires more investment and is considered by WUOs to be the most urgentproblem, is given below, and item (b) is discussed in Chapters 3 and 4.

1.13 Urgent Need of WUOs for O&M Equipment. WUOs have, so far, been unableto take over the entire O&M burden from DSI as they still depend on the agency forO&M equipment and use it on an ad hoc basis with little or no charge. Considering thestatus of DSI equipment, which is operating under unfavorable government procedures,continuation of this arrangement is uneconomical for the government and inefficient forWUOs. It also adversely affects the self-reliance and sustainable performance of WUOs.Since the inception of large-scale IMT in 1993, WlOs have expressed demand for suchequipment (see para 3.4), which will enable them to avoid deferring maintenance andcatch up with past deferred maintenance. This would avoid, to a large extent, the need forheavy investment in rehabilitating those parts of irrigation systems that would deteriorateas a result of deferred maintenance. In Mexico, the only other country where large-scaleIMT has taken place, O&M equipment was transferred along with IMT to WUOs free ofcharge. (Mexico's WUOs are now contributing to the financing of equipment.) Throughthe Bank's persuasion Turkey's WUOs have shown preparedness to pay for a largeportion of O&M equipment cost, which should ease the burden on the government, and tointroduce PPII.

G. PROJECT CONCEPT

1.14 Strengthening of IMT and Introducing IIT. The project concept is based onstrengthening IMT and introducing IIT to meet project objectives as stated in para 3.1.Assisting WUOs with the purchase of urgently needed O&M equipment and providingtraining assistance for their staff will enhance their technical, managerial and financialcapability and contribute to the sustainability of IMT and privatized irrigationmanagement. The O&M equipment for WUO managed areas, which requires an ultimateinvestment of about US$110 M, would be about 70% financed by WUOs (see Chapter 3).This would also be a considerable step toward introducing the concept of transferring theresponsibility for financing investment on irrigation-related matters from the governmentto users. Additionally, to introduce the concept of user-financing for irrigation schemes,there is a provision for the inclusion of one primarily user-financed pilot irrigation

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scheme (paras 2.5 and 3.9) to install a drip irrigation (partly micro-sprinkler) system.Another important concept introduced in the proposed project is transferring theresponsibility for implementation of irrigation schemes or projects from the governmentto users. Therefore, the project is aiming at: (i) consolidating IMT or privatizedirrigation management and making it sustainable; and (ii) introducing IIT, which alsoincludes responsibility for implementation (in addition to financing about 70% of thecost, WUOs will have the responsibility of purchasing the equipment).

1.15 Rationale for Bank Involvement. The proposed project is consistent with the CountryAssistance Strategy (CAS) approved on September 4, 1997. The new CAS supports efforts topromote privatization of irrigation. The Bank played an important role in encouraging DSI toinitiate a large-scale irrigation management transfer in 1993, which made major progress. Theproject objectives related to the above concept are more likely to be achieved with Bankinvolvement.

2. THE PROJECT AREA

A. PROJECT AREA RELATED To O&M EQUIPMENT

2.1 Assisting WUOs in the purchase of O&M equipment (paras 3.3-3.4) is the maincomponent of the project. This component is envisaged for all WUOs to whommanagement responsibility for DSI-developed and managed irrigation schemes (para 1.2)has been or will be transferred. These schemes are located in different parts of thecountry and belong to one of the two irrigation zones -- coastal and interior.

2.2 Geographical Distribution of Existing Transferred Schemes. The coastal zoneof the country comprises the four DSI regions of Izmir, Adana, Antalya and Aydin,covering 542,000 ha, or around 45% of about 1.2 M ha of irrigation land alreadytransferred to the WUOs. The interior zone consists of the remaining 21 DSI regionscovering some 660,000 ha, or 55% of the transferred areas.

2.3 Total Project Area. The forecasted cumulative areas of 1.5 M ha of thetransferred schemes to be served by the project are shown in Table 2.1. These figureswere obtained by extrapolating DSI data.

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Table 2.1 Distribution of Area of Transferred Schemes to be CoveredUnder the Project (ha)

Type of Scheme Interior Coastal Total Percent

Gravity, over 1,000 ha 616,000 648,000 1,264,000 84Gravity, less than 1,000 87,000 16,000 103,000 7ha__ _ _ _ _ _

Pumping, with a head 71,000 29,000 100,000 7below 30m m__Pumping, with a head 2,600 21,000 23,600 2between 30-60 m _

Pumping, with a head 7,300 0 7,300 0over 60 m

Total 783,900 714,000 1,497,900 100

2.4 The distribution of WUOs in terms of type and size is given in the table below.

Table 2.2 Distribution of WUOs by Area and Type (ha)

Type of WUO Area Range No. Total Area Covered

WUA below 1,000 41 15,2391,000 - 5,001 110 295,187

5,001 - 10,001 51 375,87610,001 - 23 324,79220,001 3 81,904

above 20,001Village below 1,000 209 30,439

1,000 - 5,001 1 1,165Municipality below 1,000 112 31,725

1,000 - 5,001 12 19,857Cooperative below 1,000 23 8,043

1,000 - 5,001 2 5,150University below 1,000 3 957

Total 590 1,190,334

B. PROJECT AREA OF PILOT DRIP IRRIGATION SCHEME

2.5 Pilot Drip Irrigation Scheme (PDIS). The proposed scheme is located in theUluborlu municipality of Isparta region and was completed in 1984. The dam serves adesigned irrigation area of 1,600 ha via a concrete-lined main canal of 7 km with acapacity of 1.5 m3/s. The source of water for the dam and irrigation of the area is a localstream that is not part of an international river. The right river bank is served by a lowpressure pipeline and the left bank by an open concrete lined canal. Currently about

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1,200 ha are irrigated with inadequate water. A third of the irrigated area is undercherries and two thirds under apples, some of which is intercropped with young cherrytrees. Tomato production is common as a mixed crop together with young cherry treesuntil these trees reach productive age. The trend is to convert the whole scheme to cherryproduction, which has a high return from export to Europe.

2.6 Water Resources at the PDIS. In the PDIS, water shortage is a serious problemand only two-thirds of the potentially irrigable area is irrigated. Installing a dripirrigation system would contribute to significantly more efficient use of the existingscarce water resources, and allow the 1,200 ha area to be converted to the highly lucrativecherry crop.

3. THE PROJECT

A. PROJECT OBJECTIVES

3.1 The main project objectives are to:

(a) strengthen irrigation-related institutions by supporting: (i) DSI and GDRSin providing guidance and technical support to WUOs; and (ii) WUOs infulfilling their responsibility for irrigation management and investment(including the purchase of O&M equipment and improving irrigationsystems) in an efficient and sustainable manner;

(b) relieve the public sector of its traditional responsibility for funding andsubsidizing the cost of irrigation O&M;

(c) initiate a process of reducing public sector responsibility for funding andmanaging irrigation investment; and

(d) promote efficient and sustainable utilization of irrigation systems whichwould contribute to improved agricultural productivity.

B. PROJECT DESCRIPTION AND COMPONENTS

3.2 The project has been appraised for completion of the following three componentsof: O&M equipment; institutional strengthening; and a pilot drip irrigation schemewith estimated total cost of US$122.2 M (requiring a US$37.5 M loan), for which costdetails are given in Annex K. To avoid a large undisbursed balance with respect to thelarge component of purchase of O&M equipment by WUOs (costing US$108 M,including the loan part of US$29.7 M), it was decided to split the funding of thiscomponent into two parts. Accordingly, the proposed loan in the amount of US$20 Mwould cover the institutional strengthening and pilot irrigation scheme components andthe part of the purchase of O&M equipment needed in the first two years of the project,with an allocation of US$12.4 M (out of the above US$20 M). A summary of project

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costs and th'e splitting of the O&M equipment component into two parts is shown in thetable below. The Bank intends to finance the remaining cost of O&M equipment to bepurchased during the last three years of the project, based on this appraisal, with a loanamount of US$17.5 M (see Annex L), subject to disbursement of 70% of the aboveallocation of US$12.4 M.

Summary of Project Costs (US$ M)

With Proposed Loan With Envisaged Loan With Total CombinedComponent of US$20 M of US$17.5 M Loan of US$37.5 M

Total Cost Loan Total Cost Loan Total Cost Loan

O&M Equipment 45.0 12.4 63.6 17.5 108.6 29.9

Institutional Strengthening 6.9 5.6 0.0 0.0 6.9 5.6

Pilot Drip Irrigation Scheme 6.9 2.0 0.0 0.0 6.9 2.0

Total 58.8 20.0 63.6 17.5 122.4 37.5

While the concepts and implementation arrangements stated in this report apply to both,the proposed and the envisaged follow-up loan, figures in the remaining part of Chapter 3and in Chapter 4 apply mainly to the part of the project based on the proposed US$20 Mloan. The project would be implemented in five years. Following is a brief descriptionof components.

Component 1: O&M Equipment (Base Cost US$44.01 M2)

3.3 The project would assist about 750 WVUOs covering about 1.5 M ha to purchaseurgently needed irrigation O&M equipment. This number includes about 160 newWUOs covering about 300,000 ha that will be established as part of the IMT program.The major part of the cost of equipment (tables 3.2-3.3) would be financed by WJUOs,and the balance would be granted by government utilizing the Bank loan. Operationsequipment includes wireless sets, motorcycles, vehicles and computers. The maintenanceequipment includes cranes, winches and small backhoes/loaders (all mainly tractor-mounted), trucks, pickups, gradalls (truck-mounted machines with telescopic boom andwide bucket, primarily used for desilting canals and drains and removing weeds), graders,bulldozers, excavators and draglines.

3.4 The type of equipment and number of units to be purchased during the projectperiod is listed in Annex A. The type and quantity of the above equipment wasdetermined on the basis of WUOs' demand, verified in their written response to aquestionnaire prepared and distributed to many WUOs by the project preparation team.The questionnaire asked them to state their need for O&M equipment and develop apurchase plan based on their priorities and financial ability to pay in cash for the majorpart of its cost. They were informed that the balance of less than 30% on average is

2 As discussed in para 3.2, the remaining part with estimated base cost of $63.6 million (see Annex L)is envisaged to be financed under a follow-up loan of $17.5 million.

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envisaged to be provided as a government grant, financed by the proposed Bank loan. Astreamlined procedure for disbursing the grant to the suppliers, soon after a WUO haspaid its share, is described in Chapter 4.

Component 2: Institutional Strengthening (Base Cost US$6.50 M)

3.5 This component would provide for: (a) consultants who would consist of two maincategories of (i) a small group of long-term consultants, and (ii) short-term individualconsultants or teams of consultants for completing specific tasks; (b) training and studytours; and (c) computers, office and training equipment, and vehicles. The recruitment ofconsultants would be subject to the Bank's approval of terms of reference (TOR) andqualifications. Preliminary TOR for consultants are given in Annex D.

3.6 Project Consultants. The long-term consultants (LTCs), comprising a teamleader, assistant team leader and support staff, would be recruited to facilitate projectimplementation and coordination, particularly with respect to facilitating the procurementof O&M equipment and the drip irrigation system by WUOs. This team will also haveresponsibility for assisting in the recruitment of short-term consultants for specific tasks,and for coordinating and supervising preparation of a possible future project(s). Tomaintain direct and effective contact with participating WUOs and facilitate coordinationbetween WUOs and concerned officials of DSI and GDRS, the team leader and assistantteam leader would be locally recruited, with qualifications and TOR acceptable to theBank. The LTCs would be assisted by short-term foreign and local consultants andsupport staff. Individual consultants or teams of consultants would be recruited tocomplete the tasks shown in the implementation schedule (Annex E). Their duties willinclude:

(a) supervision of PDIS;

(b) training and institutional strengthening concerning DSI, GDRS and WUOsin the project-related areas;

(c) assisting DSI with establishing a Decision Support System concerninggeographical information system, management information system, anddetermination of snow quantities in the mountains to forecast irrigationwater availability and other matters related to irrigation and water;

(d) resuming annual assessment of DSI irrigation schemes and transferringthis capability to DSI staff. (This activity had started in connection withthe Irrigation Master Plan for Turkey under Ln. 2663-TU, but wasabandoned after loan closing.);

(e) proposing arrangements for and promoting appropriate transfer ofresponsibility for the O&M of drains and the remaining O&M of canals toWUOs;

(f) assisting DSI and specifically WUOs with the selection of appropriateequipment for maintenance of drains and large canals;

(g) selecting schemes for subsurface and surface drains installation,rehabilitation, and improvement, based on WMOs' demand and theircommitment to share a reasonable part of the investment cost, andpreparing or finalizing designs for such schemes; and

(h) selecting schemes for irrigation development, rehabilitation, andimprovement, based on WUOs' demand and commitment to pay themajor share of the investment cost, and preparing or finalizing designsfor such schemes.

Consultant payment will be linked to successful completion of specific tasks or subtasks.

3.7 Training and Task-Related Study Tours. The project would provide training toconcerned staff of DSI, GDRS and WUO in:

(a) improving utilization of water in irrigation systems and in the basin;

(b) improving irrigation distribution systems and increasing their efficiency;

(c) enhancing DSI capability in effective and timely monitoring andevaluation of irrigation systems; and

(d) assisting WUOs to enhance their capability in technical and managerialfields, including accounting, and providing training to the DSI and GDRSstaff in related fields, including English language training.

The participants would be trained mainly through workshops, participation in completionof consultant tasks (para 3.6), and attending classes and seminars as appropriate for eachcase. The project would provide for some study tours, which would be closely linked tospecific tasks and achievements. English language training courses for DSI staff will alsobe conducted.

3.8 Computers, Office Equipment, and Vehicles. The project would finance the costof computerizing the O&M department of DSI; training, and office equipment; and onefield vehicle for O&M service in each region. Procurement of some computer hardwareand software is also envisaged in connection with DSI-related Decision Support Systemand for GDRS, and it would be supported by an intensive and timely training program.This program would enhance the knowledge of staff who are already computer-literateand familiarize the remaining staff with computer use.

Component 3: Pilot Drip Irrigation Scheme (Base Cost US$6.05 M)

3.9 The project would assist Uluborlu WUO in purchasing and installing a dripirrigation system for 1,200 ha. The WUO would finance a major part (about 70% ) of thecost. The balance would be paid from a grant financed by the Bank (paras 3.15-17). The

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PDIS was selected from among five schemes on the basis of its WUO's preparedness tofinance the above-mentioned percentage of the cost, and its high economic rate of return.Information on the pilot scheme is summarized in Table 3.1. Additional information iscontained in Annex B.

3.10 The proposed drip irrigation system will receive water from the Uluborlu smalldam (with storage capacity of 21 M cubic meters) through the installation of a pipelinesystem -- 5,200 meters on the left bank and 1,100 meters on the right bank. This systemof pipes will provide enough pressure for drip irrigation and eliminate the need forelectricity for pumps to create pressure. The pipeline will serve hydrants at each farmparcel. Farmers would attach portable drip systems to the hydrants. Service would be ona 24-hour basis involving 12-hour rotations at the tertiary level. Some cost savings maybe possible at the detailed design stage following further dialogue with the WUO.

Table 3.1 Summary of Primarily User-Financed Pilot Irrigation Scheme

Description Amount

Envisaged Change in Crops Expand/shift to cherry productionBase Cost US$M a 6.0Total Cost US$ Ma 6.9ERR 19%FRR 24%Proposed WUO Financing 70%Bank Financing (US$ M) 2.0WUO Response to such Financing Highly positiveNumber of Subscribers About 2,000

Planned Drip Irrigation Area (ha) 1,200 b

a. Including the cost of main pressure pipe, accounting for about 55%.b. Based on average release of 8.5 M cubic meters of water from the dam.

C. DESIGN FEATURES OF THE PROJECT

3.11 Some of the special features in the design of this project that involve innovative andnon-traditional approaches are:

(a) In sharp contrast with the almost completely subsidized public irrigationinvestment and O&M services in the country, WUOs would finance asubstantial part of the costs involved. This would cover about 70% (onaverage) of the cost of O&M equipment and the pilot scheme. WUOswould have complete responsibility for operating and maintaining theequipment and the pilot scheme, and for making replacements.

(b) The balance of the cost of O&M equipment and drip/sprinkler systemswould be granted by the Government using the Bank loan (para 3.18). This

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method of providing transparent grant assistance was found to be the mosteffective as it: (i) encourages the WUOs to bear the major part of the cost ofinvestment (purchasing the O&M equipment and drip irrigation system) andthus promoting privatization of irrigation investment; and (ii) substantiallyreduces the burden on the State for financing such developments, as itinvolves the least amount of subsidy compared to the current alternative ofnearly 100% subsidized irrigation investment by the government (whichtakes place through DSI and GDRS). It also involves less subsidy comparedto financing through the Agricultural Bank, which involves about a 50%subsidy and has an adverse effect on the financial system. The proposedgrant for the O&M equipment involves limited public financing per hectare(about US$20), but with significant impact on meeting users' needs.

(c) Project implementation is proposed on the basis of streamlinedarrangements with minimum bureaucratic involvement. The responsibilityfor procurement of equipment and works would rest with the WUOs becauseof their financing of the major part of the cost and their interest inprocurement with least delay.

(d) This is a demand-driven project, which evolved on the basis of users'demand to respond to their urgent requirements.

(e) The assistance for the purchase of O&M equipment would be available to allWUOs able to finance their share of the cost (there are no other eligibilitycriteria).

(f) The project does not involve any increase in the creation of governmentalposts.

D. PROJECT COSTS

3.12 The estimated project cost is about US$58.78 M and is summarized in thefollowing table:

Table 3.2 Estimated Project Costs (US$ M)

% Foreign % TotalComponent Local Foreign Total Exchange Base Cost

1. O&M Equipment 11.00 33.01 44.01 75 782. Institutional Strengthening 3.43 3.07 6.50 47 113. Pilot Drip Irrigation Scheme 4.88 1.17 6.05 19 11

Base Costs 19.31 37.25 56.56 66 100

Physical Contingencies 0.55 0.19 0.72 26Price Contingencies 0.58 0.90 1.50 72 3

Total Project Costs 20.44 38.34 58.78 65 104

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3.13 These estimates are based on July 1996 prices, with the addition of taxes andphysical and price contingencies. The foreign exchange part is estimated at aboutUS$38.2 M, or about 65% of total project cost. No physical contingencies were includedfor the equipment, while 10% physical contingencies were allowed for the construction ofthe pilot (drip) irrigation scheme. Due to high inflation in Turkey, all costs are expressedin US dollars, on which a 2.2% annual inflation rate was assumed throughout the projectlife. Physical and price contingencies comprise 3.8% of the project base cost. Importduties and value added taxes amount to about 20.4% of the base cost. Project cost detailsare presented in Annex A.

3.14 A list of the O&M equipment showing the type, quantity and unit cost is given inAnnex A. The estimate of the total quantity of equipment (see Annex K) is based on atotal transferred area of 1.8 M ha including some 1.2 M ha already transferred to theWUOs, and an additional 600,000 ha expected to be transferred by the fifth year of theproject. However, actual WU0 participation is expected on around 85% of the area, or1.5 M ha. Investigations during the preparation phase (August 1996) revealed that theWUOs had already procured about a third of their equipment needs. Hence the projectwill target about 85% of the area managed by WUOs with 70% coverage of the totalequipment requirements. Thus the estimate for the cost of outstanding needs isapproximately US$108 M, around US$72 per hectare (based on the full cost of O&Mequipment component). The area-based estimate for equipment assumes the sharing ofequipment between adjacent WUOs, resulting in cost savings.

E. PHASED FINANCING OF THE PROJECT

3.15 The main sources of finance are the WUOs and the government grant financed bythe Bank loan. The proposed loan of US$20 M equivalent would finance 42.3 % of thetotal cost net of taxes. The proposed loan would cover 52.2% of foreign exchange costs.

3.16 No public counterpart contribution (beyond the above US$20 M plus the envisagedloan of US$17.5 M) would be needed for the O&M equipment and pilot irrigationcomponents, and no additional public funding would be needed for component 2, with theexception of funds to pay the necessary taxes amounting to US$1.3 M. The grant portionof the cost of equipment would be directly channeled to suppliers through a designatedlocal bank according to arrangements described in Chapter 4.

3.17 To avoid a large undisbursed balance with respect to the O&M equipmentcomponent, financing of this component was split into two parts as discussed in para 3.2.The proposed Bank financing of US$20 M is planned to be disbursed over the five-yearproject period. The envisaged follow-up loan of US$17.5 M is expected to be disbursedin the third, fourth and fifth years of the project.

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Table 3.3 Project Financing (US$ M)

Item Base Total WUOs From Govt. Bank LoanCost Cost Budget to Govt.

O&M Equipment 44.01 44.99 32.62 0.00 12.37a

Institutional Strengthening 6.50 6.94 1.34 5.60

Pilot Irrigation Scheme 6.05 6.85 4.83 0.00 2.03a

Total 56.56 58.78 37.45 1.34 20.00

Contingencies 2.22

a. Bank loan to Government to be used as grant for financing a smaller part of the cost.

F. THE PROPOSED GRANT

3.18 Various possibilities for assisting WUOs in purchasing O&M equipment wereexamined and the following arrangement was found to be the most practical and efficientunder present conditions. About 70% (on average) of the cost of equipment will be paidby WUOs, using savings from their revenues. The remaining part of the cost (about 30%on average) will be a one-time-only grant for this purpose by the government to serve as acatalyst for promoting such self-financing. The WUOs will have the responsibility foroperating, maintaining and replacing such equipment entirely from their own revenues.The proposed World Bank loan would finance the above grant under the standard termsfor Bank loans. This type of financing, involving the provision of a government grant tostimulate equity contributions to investments, was used successfully in Turkey between1985 and 1995 and was found to be highly expedient and practical in promotingagricultural investments in the country. The grant portion in this specific governmentexperience ranged from 25% to 30% of the investment cost.

3.19 The percentage of grant financing for equipment in the two project zones will bespecified in two standard participation agreements satisfactory to the Bank, one for eachzone, to be signed by DSI and WUOs. Considering the higher productivity and net returnin the coastal zone, the average aggregated grant-financing percentage for the coastalzone is about 20% and for the inland zone about 30%. The basis for proposing thepercentage of grant financing was to use the lowest percentage that will be attractive tousers. In each zone, the percentage varies for each category of equipment (higher forlarger and more specialized equipment and lower for lighter equipment and vehicles),mode of use (higher for shared equipment and lower for sole use), and type of irrigation(higher for pumping scheme and lower for gravity irrigation). Uluborlu WUO has agreedto pay on average 70% of the combined cost of works and drip irrigation pipes.Therefore the grant would cover 30% of the combined costs of the above works and dripirrigation pipes, and 100% of consultant costs exclusive of taxes. However, to assist theWUO during the initial period of heavy investment and no return, the percentage of the

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grant for the works (installation and equipment for the pipeline and main network) will beabout 40% and for drip pipes about 16%.

G. ENVIRONMENTAL IMPACTS AND ASPECTS

3.20 The field-based environmental review of the project indicates that the project wouldhave a positive impact on the environment. The project's main component involvesassistance to WUOs toward obtaining new O&M equipment which would run moreefficiently, and thus consume less fuel and produce less pollution. These machines wouldfacilitate efficient operation and maintenance of irrigation systems, contributing to moreefficient use of irrigation water which is scarce in some areas, and reducing thepossibility of serious problems with waterlogging and salinization. The pilot dripirrigation component would replace the current inefficient irrigation distribution systemwith a drip irrigation network which would alleviate water shortages by substantiallyincreasing efficiency of conveyance and delivery of water to the plant. The drip irrigationsystem would also contribute to reducing the possibility of waterlogging and salinization.To avoid the possible (but limited) adverse impacts of construction of the pilot scheme,preventive measures will be taken that will require contractors to provide sitestabilization, collection of construction wastes, and use procedures to ensureenvironmental protection and the safety and health of workers. The project hasprovisions for drip irrigation training in connection with the above pilot drip irrigationproject. The training program would use or prepare a training manual which would coverrelated environmental considerations, particularly with respect to proper use of fertilizers.The proposed project would not involve involuntary resettlement and is not anticipated tohave an impact on known archaeological or historical sites in any of the sub-project areas.

3.21 It is difficult to evaluate the environmental impacts of the project on a time andmoney basis. Conversion to drip irrigation would contribute to use of correct amounts offertilizers, which would be applied through drip systems, avoiding waste that wouldotherwise pollute downstream drainage systems. Controlled application of water throughdrip irrigation systems is expected to reduce the growth of unwanted plants and thus theneed for chemicals. Because of the scarcity of water in the pilot area, the negative impactof reducing seepage to groundwater would be negligible.

H. PARTICIPATION AND WOMEN'S ROLE

3.22 Participation. The design of the project is based on a participatory approach.From the inception, the main stakeholders, i.e., concerned DSI and GDRS central andregional staff and particularly WUOs, have participated in project preparation. Theywere involved in the field reviews and in a study conducted to assess the needs of usersfor O&M equipment. The study covered 160 representative WUOs out of about 590, andincluded a questionnaire about needed O&M equipment, and their ability and readiness topay for a major part of the cost.

3.23 To promote ownership, enhance the role of WUOs, and contribute to successfulcompletion of the project, the responsibility for purchasing the O&M equipment is

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transferred to users. Thus the main implementing agency is the WUO. Nevertheless,government agencies (DSI and GDRS) would have an important supporting role inproviding required advice and supervision, and in channeling the grant funds to thesuppliers/contractors from whom WUOs would purchase equipment or works (in the caseof the PDIS).

3.24 Women's Role in the Project. The newly developed WUOs have shownencouraging progress on participation of women in managing the WUOs. Women areworking in almost all WUOs in various numbers and their positions in WUOs includemanager (titled General Secretary), accountant, computer specialist, and secretary.Female farmers participate in and are aware of the importance of WUOs. The level ofparticipation is roughly proportional to the size of holding. Some female farmers show akeen interest in having more active participation in the next WUO assembly election.

4. PROJECT IMPLEMENTATION

A. IMPLEMENTATION RESPONSIBILITY

4.1 The following organizations or institutions will have primary responsibility forproject implementation:

(a) WUOs, assisted by consultants and supported by DSI, for the O&Mequipment component;

(b) Uluborlu WUO, assisted by consultants and supported by GDRS, for thePDIS component; and

(c) concerned departments of DSI and GDRS with assistance from the projectcoordination unit and consultants, for the institutional strengtheningcomponent.

4.2 Key Persons with Responsibility for Implementation. The following wouldhave major responsibility for implementing the project: (a) for WUOs, electedchairpersons who are responsible to their assemblies; (b) for DSI, one of the DeputyDirectors General (as DSI Coordinator), Regional Heads of O&M (as DSI RegionalCoordinators -- DSI RCs) on behalf of Regional Directors, and Heads of O&M and otherrelevant departments having technical responsibility for implementing related parts ofinstitutional strengthening; (c) for GDRS, the Head of River Basin Development andEarth Dams Department (GDRS Coordinator), and one GDRS field engineer, withqualifications and TOR acceptable to the Bank (GDRS Regional Coordinator -- GDRSRC); and (d) Consultant Coordinator, discussed below, with responsibility for the PCU.

4.3 Since the project's main components of procurement of O&M equipment andprocurement of works and drip irrigation pipes for the Uluborlu Pilot Scheme will beimplemented by WUOs, it is not necessary to establish a project implementation unit

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(PIU). However, to contribute to the satisfactory implementation of the project, theestablishment of a PCU, discussed below, is envisaged.

B. IMPLEMENTATION ARRANGEMENTS

4.4 Procurement of O&M Equipment. Based on the need and availability of funds topay for their share of the cost, WUOs would purchase the O&M equipment from a pre-approved list. A list of WUOs' requests for O&M equipment to be purchased during theproject would be updated and approved for WUOs by DSI RCs within 30 days of loansigning. This list would form the basis for an agreement, with a standard format, betweenDSI and each WUO, stating the main arrangements for procurement of equipment,payment of grant, and commitment of both sides. The form of agreement would besubject to Bank approval. The standard agreement would contain the list of percentagesof the grant applicable to each type of equipment in inland and coastal zones. To procurethe equipment and pay for the grant portion of the cost, the following actions would betaken:

(a) WUOs would:

(i) obtain quotations (as described in the procurement section below)for required equipment, select the supplier with the lowestresponsive quotation and, before award, obtain RC's endorsementthat the WUO procurement decision is consistent with procurementprocedures;

(ii) procure the equipment, pay their share of the cost to the supplier(about 70% on average, to be specified for various equipment inthe agreement mentioned in para. 4.4), and present certification ofpayment to the supplier, to DSI RC for endorsement that the WUOhas paid its share of the cost;

(iii) send their grant applications to Consultant Coordinator to beendorsed by Consultant Coordinator and DSI coordinator orhis/her alternate to be forwarded by CC to the agent bank(described below) for payment to the suppliers. The abovequotations and receipt, previously endorsed by RC, would beattached to the application; and

(iv) upon certification of payment to the supplier from the agent bank,obtain the equipment and use it for O&M purposes under thegeneral supervision of RC, and not resell it within five years.

(b) The DSI Regional Coordinator would promptly certify the two mattersmentioned under (a) (ii) and (iii) above. If RC finds a deficiency in thisrespect, he would advise the WJUO without delay to correct the matter andreturn it for certification. The DSI RC would monitor the purchased

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equipment to ensure that the equipment is properly used for the intendedO&M purpose and not resold within five years.

(c) The Consultant Coordinator would forward the WUO's application tothe bank within five business days of its receipt. The PCU staffresponsible for procurement and disbursement would file the documents inan orderly manner and enter the required information in a computerizeddatabase to facilitate tracking of grant funds and preparation and handlingof applications for replenishment of the special account and the projectaccount by PCU. Such applications would be signed by DSI Coordinatoror his/her alternate.

(d) The Agent Bank (where a project account is opened by the government)would pay the supplier within four business days, upon receipt of WUO'sapplication endorsed by CC and DSI coordinator or his/her alternate.Signatures of the CC and DSI coordinator or his/her alternate would besupplied to the Agent Bank.

4.5 Considering the current extended delays in procurement by government agenciesand the large quantity of proposed procurement of O&M equipment for several hundredWUOs spread all over the country, there was some concern that this task might not beachieved in a timely manner. To address this concern, the above decentralizedarrangement for procurement of equipment by WUOs, who urgently need it, is envisaged.

4.6 Procurement of Works and Drip Irrigation Pipes for the PDIS Component. Inprinciple, the above arrangements for procurement of O&M equipment would apply, asdescribed below:

(a) For works, the WJUO would:

(i) with the assistance of supervision consultant and generalsupervision of GDRS RC, invite bids and award contractsaccording to procurement procedures discussed in Chapter 4;

(ii) pay contractors their share (60%) of contractors' bills for advancepayments and payments against completion of works in stagesaccording to the terms of contract, and send application(s)endorsed by CC and GDRS Coordinator or his/her alternate to theagent bank through CC for payment to the contractors of thebalance (40%). Such applications prior to being sent to PCU,would be subject to the endorsement of the supervision consultantand GDRS RC.

For drip irrigation pipe, members of WUOs would:

(iii) obtain quotations (as described in the procurement section below),select the supplier with the lowest responsive quotation and, before

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award, obtain GDRS RC's endorsement that the procurementdecision is consistent with the project procurement procedure;

(iv) procure the pipe, pay their share of the cost (84%) to the supplier,and present the supplier's receipt of payment to RC forendorsement that the WUO member has paid its share of the cost;

(v) send their applications to the consultant coordinator and GDRScoordinator or his/her alternate for endorsement and to beforwarded by CC to the Agent Bank, described above, for promptpayment of the balance (16%) to the supplier. The abovequotations and receipt, endorsed by RC, would be attached to theapplication; and

(vi) upon receipt of payment by the supplier from the bank, obtain thedrip irrigation pipe, use it, and not resell it for five years.

(b) The GDRS Regional Coordinator would promptly certify the twomatters mentioned under (a) (ii), (iii) and (iv) above. If RC finds adeficiency in this respect, he/she would advise the WUO without delay tocorrect the matter and return it for certification. DSI RC would monitorthe completion of works and the utilization of drip pipe to ensuresuccessful implementation of the schemes and that the members do notresell the drip pipe within five years.

(c) The Consultant Coordinator would forward the WlUO's and itsmembers' applications to the Agent Bank within a time period as definedin the Participation Agreement. The PCU staff responsible forprocurement and disbursement would file the documents in an orderlymanner and enter the required information in a computerized database tofacilitate tracking of grant funds.

(d) The Agent Bank would pay the contractors and suppliers within fourbusiness days, upon receipt of WUO's application endorsed by CC andGDRS coordinator or his/her alternate. Signatures of CC and GDRSCoordinator would be supplied to the Agent Bank.

4.7 Implementation of Institutional Strengthening Component. The followingactions would be taken for recruiting consultants, completing training tasks, andprocuring computers, office equipment and vehicles.

(a) Employment of Consultants:

(i) DSI and GDRS would recruit consultants following BankGuidelines, "Selection and Employment of Consultants by WorldBank Borrowers" (Jan. 1997), whose TOR and qualificationswould be acceptable to the Bank. The DSI Coordinator, in

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consultation with the GDRS Coordinator, would initiaterecruitment of the CC (whose qualification is critical to the successof the project), and complete it with urgency. With the assistanceof CC, DSI would recruit assistants to CC and support staffexpeditiously, taking into consideration the GDRS Coordinator'sviews.

(ii) With the assistance of CC, GDRS will recruit consultants forsupervision of PDIS in close consultation with the Uluborlu WUO.

(iii) Other consultants, including trainers, would be recruited by thePCU in close cooperation with concemed departments, who willjointly prepare satisfactory TOR for each task. With respect tostudies in connection with schemes to be considered under the nextphase project, they will give attention to the following issues: (1)difficulty in finding consultants with experience in large-scalesuccessful transfer of irrigation management; (2) different levels ofpreparedness of various WUOs to finance their part of theinvestment and engineering costs, and determination of which is animportant part of the selection of schemes for investment; and (3)finding satisfactory arrangement for paying consultants on thebasis of successful completion of specific subtasks (such asschemes that lead to financial participation of individual or groupsof WUOs). In view of these issues, they will consider completingsome initial or pilot study(ies).

(iv) In preparation of TOR for selection of schemes for irrigation,emphasis will be placed on introducing improved designs forirrigation systems, particularly for canals.

(b) Procurement of Computers, Office Equipment and Vehicles. ThePCU, in consultation with concerned departments of DSI and GDRS,would prepare satisfactory and non-restrictive specifications, and the PCUwould procure them in accordance with the procurement arrangementsdiscussed below under the procurement section.

4.8 Familiarizing WUOs and Coordinators with Procurement Procedures. At thebeginning of the project, CC would make WUOs and the coordinators familiar with theproject procurement arrangements. With respect to O&M equipment, the focus would beon advising the WUOs to avoid errors or omissions in obtaining the required quotations,and selecting the lowest responsive offer to ensure prompt payment to the supplier. Tocontribute to timely action on procurement by WUOs for PDIS, CC would familiarize theGDRS Coordinator and RC and the consultants for detailed design3 and supervision, withthe more involved arrangements needed for NCB. The CC would also familiarize

3 Includes preparation of bill of quantities.

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concerned officials of DSI and GDRS with the procedures and actions needed forprocurement of the institutional strengthening component.

C. PROJECT COORDINATION AND IMPLEMENTATION SCHEDULE

4.9 Coordination. Project Coordination would be maintained by the PCU. The PCUwould comprise the DSI Coordinator, GDRS Coordinator and CC. The CC would be theSecretary of the Committee, reporting to the DSI Coordinator on matters related to DSI,and to the GDRS Coordinator on matters related to GDRS. Issues concerning bothagencies would be discussed and handled by all three members, but issues concerningonly DSI or GDRS would be handled between the coordinator concerned and CC.Meetings for discussing and resolving issues could be called by the coordinators or CC.However, the CC will have responsibility for discussing issues without delay forcorrective action with the concerned coordinator or both coordinators. The CC would bethe Secretary of the unit, and support staff would provide the required administrativesupport. The PCU would have responsibility for record keeping and disbursement of allthree components, and for procurement of the institutional strengthening component. Forthe O&M and PDIS components, WUOs will have responsibility for procurement.

4.10 Implementation Schedule. The project implementation schedule is contained inAnnex E, based on implementation of the project in a period of five years, from the fourthquarter of 1997 through the third quarter of 2002. The schedule is based on a reasonablespeed of implementation considering the existing implementation rate of projects inTurkey. With more serious efforts by the members of the PCU, particularly the CC, itwould be possible to advance the start and completion dates of project tasks.

4.11 Implementation and Mid-term Review. Considering the innovative nature of theproject, there is a need for implementing the project under close monitoring andsupervision by the PCU and the Bank to contribute to its successful completion. Thisalso requires that simplicity and flexibility be observed in project implementation to theextent possible. While an attempt has been made during project preparation to usesimplified procedures, if during implementation it is identified that certain stepsenvisaged now are not essential, urgent action should be initiated by the PCU or the Bankto correct the problem. On the other hand, if certain arrangements are found to be lax,prompt action would be initiated by the above for improvement. Such issues should beraised in the monthly statements and quarterly progress reports to be issued by CC (seepara below on reporting) and in the Bank supervision reports. Also, a mid-term reviewwould take place around December 2000.

D. MONITORING AND REPORTING

4.12 Monitoring. The project coordination consultants would monitor progress on theimplementation of the project components and tasks. The results of such monitoringwould be regularly reflected in project coordination consultants' progress reports andmonthly statements. The project would strengthen DSI's capability to carry outmonitoring and evaluation (M&E) of WUOs' performance in a timely and efficient

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manner. Special attention would be given to the monitoring of benefits of transfer,including establishment of baselines. DSI and GDRS would also monitorimplementation progress and ensure project completion.

4.13 Reporting. Project consultants would submit brief monthly statements andquarterly progress reports on progress, status and issues to concerned governmentalagencies and the Bank. The monthly statements would contain a summary of progress onmain activities and quarterly reports will contain details, including: (i) progress onprocurement of O&M equipment and completion of the Pilot Scheme; (ii) paymentsmade to suppliers and contractors; (iii) progress on technical assistance and trainingactivities; (iv) status of performance indicators and progress on M&E; and (v) problemsand proposed measures to overcome them. Project consultants would submit a work planfor the project for the following year, along with an estimate of project-relatedexpenditures by October 31, and submit a Project Completion Report within six monthsof project completion.

E. PROCUREMENT

4.14 The Bank's guidelines on "Procurement under IBRD Loans and IDA Credits"(January 1995) would be followed for project procurement. Since this is an innovativeproject and the major part of the investment will be paid by WUOs, they will haveresponsibility for implementing the investment part of the project (for details seeChapters 3 and 4). The procurement methods considered for each component are:

(a) O&M Equipment Component. The O&M equipment would be procuredby about 750 WUOs, who will pay for about 70% of the cost (on average).Each WUO would buy the equipment according to its need and theavailability of funds, adhering to the arrangements described in Chapter 4.In view of the ownership of individual WUOs, and that each will have adifferent schedule for procurement of equipment, it is not efficient orpractical to combine the procurement for ICB. They will use nationalshopping for equipment costing less than US$100,000 with an aggregatecost of US$14 M, and international shopping for equipment costingUS$100,000 to US$400,000 with an aggregate cost of US$31 M. Thelatter category accounts for about 70% of the total cost of O&Mequipment. It is unlikely that there will be any package for O&Mequipment under ICB.

(b) PDIS. This is also a primarily user financed component. Works would beprocured by the Uluborlu WUO, which would pay 60% of the cost, underNCB. Drip irrigation pipes would be procured by the members of WUO,who would pay about 84% of the cost, using NS procedure for lots costingless than $100,000.

(c) Institutional Strengthening Component. To promote transfer ofirrigation O&M and investment responsibility from the Government to

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WUOs, DSI and GDRS would recruit consultants and procure computers,office equipment and vehicles through the PCU.

(i) Consultants. Consultants as teams or individuals for short termand special assignments would be recruited following BankGuidelines for "Selection and Employment of Consultants byWorld Bank Borrowers" dated January 1997. CoordinatorConsultant (CC) with TOR and qualifications acceptable to theBank will be recruited with urgency to ensure timely start of theproject. Since the project (and preparation of the next phaseproject) is based on WJUOs' investment and full involvement, theCC and Assistant CC should be selected among qualified localconsultants. They would be recruited on the basis of localadvertisement and comparison of qualification and experience forthe job. Other consultants would be recruited on the basis ofarrangements shown in the procurement plan, Annex F.

(ii) Computers, Office Equipment and Vehicles. A package ofcomputers and office equipment with estimated cost of US$1.46 Mwould be procured under ICB. For urgent and emerging needs,packages of computers and office equipment costing less thanUS$100,000 with a total cost of less than US$300,000 would beprocured under NS. The vehicles would be procured under ICB.A summary of procurement arrangements is given in the followingtable. Further details on the procurement methods to be used aregiven in Annex F. Annex E gives the schedule for implementationof procurement actions.

All ICB, NCB and consultants contracts will be subject to Prior Review by the Bank.The Bank will also pre-review the first IS and NS contracts for equipment in each region.During project launch concerned officials and WUOs would be made familiar withprocurement methods and arrangements as described in Chapter 4. A generalprocurement notice is being prepared.

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Table 4.1 Summary of Proposed Procurement Arrangements (US$ M)

Item ICB NCB Other Total

Works* PDIS works to be procured by WUO 3.88 3.88

(1.55) (1.55)Goods* O&M equipment to be procured by WUO 44.99a 44.99

(12.37) (12.37)

* Drip irrigation pipes to be procured by WUO 2.98 b 2.98(0.47) (0.47)

* Vehicles & computers to be procured by PCU 2.30 2.30(1.86) (1.86)

* Urgent computers & office equipment 0.30c 0.30(0.24) (0.24)

Technical Assistance & Training* Coordination consultants 0 .6 7d 0.67

(0.54) (0.54)

* Short-term consultants 0.55e 0.55(0.44) (0.44)

* Studies mainly for future project(s) 1.42f 1.42(1.15) (1.15)

* Irrigation Master Plan Study 0.11 0.11(0.09) (0.09)

* Training and study tours 1.11h 1.11

(0.90) (0.90)

* Operating the PCU 0.48i 0.48(0.39) (0.39)

Total 2.30 3.88 52.61 58.79

Total Bank (1.86) (1.55) (16.59) (20.00)

Note: Figures in parentheses show Bank-financed procurement.

a. About 750 WUOs will individually buy this equipment while paying about 70% of the cost and ICBis not practical for them. For larger equipment (comprising about 3/4 of total O&M equipment)costing US$100,000 to US$400,000, IS will be used, and for smaller equipment costing less thanU$100,000, NS will be used.

b. Drip irrigation pipes will be purchased by individual users in packages less than US$100,000 usingNS. Users will finance 84% of cost.

c. On NS basis.d. Quality-based selection will be used.e. With contracts less than $50,000, single-source selection will be used.f. Quality and cost-based selection will be used.g. To ensure continuation of service, single-source selection will be used.h. Single-source selection will be used.i. PCU will be maintained on the basis of local administrative procedures acceptable to the Bank.

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F. DISBURSEMENTS

4.15 The borrower has requested a LIBOR-based single currency loan denominated inUS dollars. Proceeds of the proposed loan would be disbursed through a Special Accountestablished at the Central Bank and a Project Account [an interim or passthrough accountwhich will be denominated in US dollars; each time a sum of US dollars equivalent toabout 30 days of expenditures which have been clearly identified will be transferred fromthe Special Account at the Central Bank to the "passthrough" account] opened in a localbank (agent bank), subject to the provision that disbursement to suppliers and contractorswill take place within four business days from the receipt of application by the relatedbank. Special Account will be utilized for the Institutional Strengthening Component ofthe project while the Project Account will be utilized for the remaining two components:PDIS and O&M Equipment. The authorized allocation to the Special Account will beUS$2.0 M equal to about four months' average disbursements. Applications forreplenishment of the Special Account will be submitted monthly or when one third of theamount deposited has been withdrawn. Monthly bank statements of the Special Accountthat have been reconciled by the PCU will accompany all replenishment requests.

4.16 Proceeds of the loan would be disbursed according to the percentages given inTable 4.2. The grant portion is planned to cover on average about 30% of the cost ofO&M equipment and PDIS. The disbursement schedule is given in Annex J.

4.17 Disbursements would be made against statements of expenditure (SOEs) for: (a)O&M equipment purchased individually by WUOs with contracts not exceedingUS$400,000; (b) drip irrigation pipes purchased by the PDIS WUO or its members insmall lots costing less than US$ 100,000; (c) computers and office equipment withcontracts not exceeding US$100,000; (d) consultant contracts below US$50,000 forindividual consultants and below US$100,000 for consulting firms and for training andstudy tour costs; and (e) PCU operating expenses. Full documentation would be providedfor all other disbursements against contracts for PDIS works, purchase of vehicles,computers, and payment to other consultants. The SOEs would be prepared by the PCU.

Table 4.2 Disbursement Categories (US$ M)

Category Amount % of Expendituresto be Financed

(1) Works 1.55 40(2) Goods

O&M equipment 12.37 28 (average)Drip pipes 0.48 16Computers & vehicles 2.06 100

(3) Consultants & Training 3.15 100

(4) PCU operating expenses 0.39 95

TOTAL 20.00 34

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4.18 Auditing. The PCU and concerned departments of DSI and GDRS will maintainseparate accounts. All accounts will adequately reflect expenditures made with respect tothe project, in accordance with sound accounting practices acceptable to the Bank. Allannual financial statements of the project will be audited by the Government's Treasuryauditors in accordance with the March 1982 Bank document (Guidelines for FinancialReporting and Auditing of Projects Financed by the World Bank). Audit reports will besubmitted to the Bank within six months of the end of each accounting period and willinclude a separate opinion by the auditor on disbursements against certified SOEs. SOEsand other audit-related material will be made available to Bank supervision missions.

5. BENEFITS, ECONOMIC ANALYSIS 4 AND RISKS

A. PROJECT BENEFITS

5.1 The main benefits of the project are: (i) increased area under irrigation leading tohigher cropping intensity and crop yields; (ii) improved and equitable water delivery; and(iii) reduced pressure on the fiscal budget from transfer of O&M work to WUOs. Theproject would also promote sustainable water user organizations by providing support toimprove their managerial and technical capabilities.

5.2 The project would increase crop yields on about 1.5 M ha. of irrigated land,benefiting about half a million farming families from about 750 WUOs. By the end ofthe project period, the annual value of crop output would increase by US$720 M ineconomic terms, and over US$2 billion in financial terms, including an increase in foodgrain production of 480,000 tons/year (wheat and corn only). The area under irrigationwould be expanded through more efficient water use. Increased intensity will alsopromote double cropping in certain areas where current irrigation ratios are high andclose to 100%. The pilot drip irrigation scheme will have a profound demonstrationeffect on farmers, in turn encouraging them to adopt water saving farming practices.

5.3 The O&M equipment funded by the project will keep the momentum on the O&Mtransfer program that started seriously in Turkey in 1993. WUOs are presently using oldworn-out equipment from DSI and are being charged a nominal user fee. This equipmentis not always effective or efficient, and is often not available when the WUOs need them.The proposed grant, on a one time basis, will enable WUOs to buy their O&M equipmentto perform their tasks in a reliable manner and take over O&M responsibility from DSI.WUOs will bear a major portion of the O&M equipment cost, which is expected to buildgreater ownership and commitment to the O&M task they have undertaken. At present,the average cost of O&M in a scheme managed by WUOs is about US$30 per hectare,which is only half the cost incurred by DSI in the irrigation schemes under its control.

4 Based on completion of the O&M equipment component of the project under the proposed loan of$20 M and the envisaged follow-up loan of $17.5 M (see para 3.2).

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5.4 Cost recovery of O&M expenses has improved since responsibility has beentransferred to the WUOs. Most of the WUOs have 100% cost recovery, against 20%recovery rates in DSI-managed schemes. By strengthening the WUOs, this trend towardincreased cost recovery of O&M costs is expected to continue.

5.5 There will be substantial unquantifiable benefits from the institution strengtheningefforts to make the WUOs sustainable, and the project agencies responsive to the needs offarmers. The project would strengthen the farmers' planning and implementation capacityby providing training and TA on technical, financial and managerial matters. The projecthas envisaged a major role for users in financing and implementing the projectcomponents, thereby ensuring greater user participation.

5.6 Fiscal Benefits of the Project. The project will have significant fiscal benefits. Inthe without-project scenario, the government would have to partially renew the existingDSI machinery inventory (mainly due to old age and obsolescence) to be able to providethem to WUOs to carry out their O&M services. The estimated cost of the incrementalmachinery needs (mainly heavy equipment) amounts to US$107 M, which would need tobe acquired by the government over a period of ten years. In the with-project scenario,WUOs would procure their own equipment needs and contribute close to 70% of theequipment costs, which means that the cost to the government in equipment grants andaccompanying technical assistance and training would be about US$35 M. Totalgovernment savings in net present value (in 1997) would amount to US$301 M for theperiod 1997-2011 at 15% OCC.

5.7 Without the project, it is also likely that WUOs will be forced to return thetransferred areas back to DSI for them to carry out the entire O&M operation of theirrigation schemes, using their staff and equipment. If this happened, DSI responsibilitieswould increase and it would be unable to reduce its overhead costs and staff size. Thiscould result in a fiscal burden of about US$57 M in 1997 increasing to US$82 M in 2011.In the with-project scenario, there would be a reduced role for DSI, leading to significantstaff cuts. WUOs have proven that they can carry out the O&M operations more costeffectively than DSI. As a result, the burden on public finances would gradually decline,from US$24 M in 1997 to around US$15 M in 2011. In aggregate terms, during theperiod corresponding to the project life, 1997 through 2002, the government is expectedto save US$226 M. During the post-project era, 2003 through 2011, savings due to thetransfer, duly reinforced and consolidated by project interventions, would amount toabout US$597 M (Annex G, Part 2, Table 1).

5.8 Savings to the Economy. Partial savings to the economy (partial becauseincreased farmer income is not taken into account in the analysis) by reducing the O&Mcosts of the irrigation schemes through project support to make the transfer processsustainable was computed. This analysis reveals that over the project period, cumulativesavings to the economy would be about US$170 M and could reach US$385 M by theend of the year 2011 (see Annex G, Part 2, Table 2).

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B. ECONOMIC ANALYSIS

5.9 Models. The incremental benefits are derived from modeling the production andcropping patterns for a set of representative WUOs. The overall economic analysis forthe project excluded the pilot drip irrigation program for which the analysis is carried outseparately. Annex G details the sample seven WUO farm models considered, theassumptions, calculations used, area and aggregate country models and their financial andeconomic rates of return. Details on the cropping pattern of WUOs with and withoutproject, expected future yields with and without the project and the economic prices forthe inputs and outputs used are in the Project Files. Major tradable outputs have beenvalued by considering and updating OECD's estimated farmgate prices for Turkey andaveraging them over the last ten years to eliminate intertemporal variations.

5.10 Prices. The prices used in developing the farm models were gathered from June1996 through January 1997. For the financial/economic analysis, averages werecomputed using the past 10 years' farn gate price data for wheat, corn, sugar beet andcotton, expressed in constant February 1997 US dollars. This is due to rather significantprice movements on both the domestic and international markets, particularly for wheatand cotton. Financial and economic prices used are listed in Annex G, Part 2, Table 3.

5.11 Standard conversion factors. In the economic analysis, a SCF of 0.85 wasapplied to non-traded goods. For highly supported crops, such as wheat, cotton and sugarbeet, a lower SCF of 0.75 was assumed. For labor, the SCF used was 0.80, while highlysubsidized inputs were attributed a SCF of 1.4.

5.12 Investment Costs (non-production costs). These costs consist of O&M costs,equipment purchase costs, technical assistance and training costs to WlJOs. Also,investment costs for improving DSI staff planning and managerial capabilities, and theircosts related to supervision, monitoring and evaluation have been included. Since nomajor adverse environmental effects are anticipated, the economic benefits have not beenadjusted for any environmental externalities.

5.13 Economic Rates of Return. The gross economic rate of return for the project bydiscounting all project costs and benefits over 10 years was estimated at over 72% (seeAnnex G, Part 2, Table 4).

5.14 A sensitivity analysis was performed considering increases in project costs anddecreases in expected incremental project benefits. The project is robust with respect tochanges in the benefits and costs. However, significant changes in the benefit/cost ratiosare unlikely. The analysis used conservative crop yield estimates and modestimprovements in the yield figures. Realistic estimates were made on improvements inthe irrigation ratios (from 77% to 80%) and an annual rate of increase in new WUOs of6% over the project period.

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Table 5.1 Sensitivity Analysis for Variation in Costs and Benefits

Benefits and Costs Benefits Down 20% Benefits Down 10% Benefits Unaltered

Costs unaltered 45 59 72

Costs up 10% 34 48 60

Costs up 20% 24 28 49

5.15 Switching Values. Costs can increase by 60% or benefits decrease by 38% beforethe ERR could fall below the assumed 15% OCC.

5.16 Economic Analysis of the Drip Irrigation Pilot. The investment costs for theUluborlu drip irrigation pilot include civil works, drip irrigation pipes needed forinstalling drip irrigation systems, farm inputs, and estimated incremental operation andmaintenance charges. The economic analysis covered a period of 15 years. Theeconomic costs per hectare for drip irrigation works is estimated at US$1,500, exclusiveof construction costs. The economic benefits for the pilot will accrue from changes in thecropping pattern and increases in per unit productivity, resulting in significantincremental production. Of the 1,200 ha. in the pilot scheme, about 1,100 ha. of land willbe allocated to cherry production and 100 ha. will remain under apples. It is expectedthat the current area under irrigation will remain the same at 1,200 ha. About 19,000 tonsof high quality export cherries is estimated. The economic rate of return was 19% andthe financial IRR was computed to be 24%. The net present value of economic earningsfrom the pilot scheme is estimated at about US$10.5 M. The switching values indicatethat the project is robust to changes in costs and benefits -- costs can increase by morethan 1 10% before the ERR will drop to 15% and benefits will have to fall by more than50% for the ERR to drop to 15%.

C. JUSTIFICATION FOR THE PROPOSED GRANT

5.17 Partial Grant Financing. For both components, O&M equipment support and thepilot scheme, the proposed grant represents an up-front one-time payment. An alternativeto partial grant financing would be to subsidize agricultural credit to assist the WUOs inprocuring their equipment needs. The Agricultural Bank's standard equipment loansinvolve a 50% interest rate (at least 35 to 40 points below the rate of inflation in thecountry), a seven year repayment period, and equal annuity payments over the seven yearperiod. The amount of hidden subsidy in this type of financing is between 46% and 54%.The rate of the hidden state subsidy would increase if erosion in the principal amountsdue to bad loans and losses due to delinquency are also included in the analysis. In thisfinancing method, the fiscal burden on the state would be in the order of US$54 M for anoverall machinery investment of US$107 M.

5.18 Besides, there is considerable merit to direct grant financing because such anarrangement will not distort the financial markets, avoids interference with resourceallocation based on market mechanisms and price signals, and limits political favoritism

- 31 -

that is often involved in the allocation of subsidized credit, which may be diverted toother uses.

5.19 WUO Equity Financing Capacity. The transfer of O&M responsibility from DSIto the WUOs has resulted in increased cost recovery and reduced O&M costs because ofthe higher operating efficiencies of WUOs. This has relieved the government of thefunding obligation for O&M and a lower level of overall O&M cost to the economy.WUOs have made considerable savings from the funds normally collected as user fees.On a per hectare basis, an average WUO's budget is about US$33, of which only a littlemore than 50% is used for the current year's O&M expenditure, while the remainingamount is saved to meet future cash flow needs for machinery acquisitions, and to coverminor investments in building, land preparation, and contingency needs. In addition toraising additional funds from the participating farmers, it is expected that this resourcewill be used in financing a major part of their O&M machinery needs in the project.

D. RISKS

5.20 The project risks have been identified and analyzed. Measures have beenincorporated in the project to minimize their effect. The major risks associated with theproject are:

(a) Reversal of Transfer: There is a possible risk of a reversal in the transferprogram, with irrigation schemes going back to DSI. The O&Mequipment component in the project is an effort to support the WUOswhich are in the early stage of assuming responsibility for the O&Mworks. By assisting the WUOs to acquire their much needed O&Mequipment and providing TA and training, the sustainability of WUOswould be enhanced.

(b) WUOs' Commitment: All WUOs interviewed have shown urgent needfor O&M equipment and commitment to financing a major part of thecost. There is the possibility that some of them may not follow through ontheir commitment. There is also a possibility that WUOs may find usedequipment, including some from DSI, at a lower cost, and may not buy allthe envisaged equipment. This would reduce the disbursement, butinvolves no risk for the success of the project. The intended purpose willstill be served.

(c) Delay in Implementation: The risk of excessive delay in implementationof the O&M equipment component has been reduced by entrusting theresponsibility for procurement of O&M equipment to WUOs. Also, theprocedures involved in requesting grant funds for O&M equipment,getting their approval, and the actual procurement process have all beensimplified. While recruitment of consultants according to Bank guidelinesare necessary for transparency and competition, the time needed forprocessing and recruitment may slow down project implementation.

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Difficulty in finding consultants with experience with successful large-scale transfer of irrigation management and investment responsibility isalso of concern.

(d) PDIS: For the pilot scheme, the reliability of water resources is uncertain.Therefore, the design adopted has been conservative. Only 1,200 ha of thefull engineering design area of 1,600 ha were considered in planning theproject interventions, as the water available was assumed to be sufficientto improve irrigation on at least 1,200 ha.

6. AGREEMENTS

A. CONDITIONS FOR EFFECTIVENESS

6.1 An Agent Bank, satisfactory to the Bank, has been selected by the Government, andthe Government has entered into an Agency Agreement with the said Agent Bank forchanneling the grant funds for implementation of the O&M equipment and PDIScomponents of the Project, under terms and conditions satisfactory to the Bank.

6.2 The Consultant Coordinator has been selected under terms of reference satisfactoryto the Bank.

6.3 DSI and GDRS have respectively designated coordinators to serve in the PCU, withqualifications and experience satisfactory to the Bank.

6.4 The Project Account has been opened by the Borrower in the Agent Bank.

B. AGREEMENTS REACHED DURING NEGOTIATIONS

6.5 During loan negotiations the Government agreed to:

(a) ensure that DSI prepare a draft law for WUOs, satisfactory to the Bank,not later than December 31, 1997; and

(b) take the necessary measures through the related line ministries to allow forthe establishment of new WUOs.

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ANNEX A

COST TABLES

TurkeyParticipatory Privatization of Irrigation Management and % % TotalComponents Project Cost Sunrnary (TL Million) (USS) Foreign Base

Local Foreign Total Local Foreign Total Exchange Costs

1. Operation and Maintenance Equipment 1,760,507 5,281,522 7,042,029 11,003,171 33,009,513 44,012,684 75 782. Institutional Strengthening 548,752 490,688 1,039,440 3,429,700 3,066,800 6,496,500 47 113. Pilot Drip Irrigation Scheme 780,113 187,431 967,544 4,875,705 1,171,445 6,047,150 19 11

Total BASELINE COSTS 3,089,372 5,959,641 9,049,013 19,308,576 37,247,758 56,556,334 66 100Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1Price Contingencies 92,887 144,597 237,485 580,547 903,733 1,484,280 61 3

Total PROJECT COSTS 3,270,697 6,135,046 9,405,743 20,441,858 38,344,035 58,785,894 65 104

SUMCOM.XLS SUMCOM Page1 9/4/97 10:11 AM

TurkeyParticipatory Privatization of Irrigation Ma % % TotalExpenditure Accounts Project Cost S (TL Million) (US$) Foreign Base


I. Investnent CostsVehicles for Agencies 33,600 96,000 129,600 210,000 600,000 810,000 74 1Office Equipment 79,680 190,720 270,400 498,000 1,192,000 1,690,000 71 3 1Field Equipment (O&M Equip) 1,760,507 5,281,522 7,042,029 11,003,171 33,009,513 44,012,684 75 78 wTraining 104,240 61,120 165,360 651,500 382,000 1,033,500 37 2 @

Technical Assistance 223,200 38,400 261,600 1,395,000 240,000 1,635,000 15 3 1Special Studies/Designs 108,032 104,448 212,480 675,200 652,800 1,328,000 49 2PDIS Civil Works 491,690 63,822 555,512 3,073,065 398,885 3,471,950 11 6PDIS Materials 288,422 123,610 412,032 1,802,640 772,560 2,575,200 30 5

Total BASELINE COSTS 3,089,372 5,959,641 9,049,013 19,308,576 37,247,758 56,556,334 66 100Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1Price Contingencies 92,887 144,597 237,485 580,547 903,733 1,484,280 61 3

Total PROJECT COSTS 3,270,697 .6,135,046 9,405,743 20,441,858 38,344,035 58,785,894 65 104

SUMCOM.XLS SUMEA Page 2 9/4/97 10:11AM

TurkeyParticipatory Privatization of Irrigation Management andProject Components by Year - Totals Including Co(US$) Totals Including Contingencies

97/98 98)99 99/00 00/01 01102 Total a

1. Operation and Maintenance Equipment 22,008,047 22,983,530 - - - 44,991,5772. Institutional Strengthening 2,629,040 1,353,201 926,247 1,272,113 757,449 6,938,0493. Pilot Drip IrTigation Scheme 2,483,939 2,610,845 1,246,365 254,757 260,362 6,856,268

Total PROJECT COSTS 27,121,025 26,947,576 2,172,612 1,526,870 1,017,811 58,785,894

SUMCOM.XLS COMYRT Page 3 9/4/97 10:11 AM

TurkeyParticipatory Privatization of Irrigation MaExpenditure Accounts by Component Operation and Pilot Drip(US$) Maintenance Institutional Irrigation

Equipment Strengthening Scheme Total

I. Investment CostsVehicles for Agencies - 831,649 - 831,649Office Equipment - 1,747,198 - 1,747,198 ,Field Equipment (O&M Equip) 44,991,577 - - 44,991,577Training - 1,106,764 - 1,106,764Technical Assistance - 1,719,660 - 1,719,660Special Studies/Designs - 1,532,779 - 1,532,779PDIS Civil Works - 3,875,248 3,875,248PDIS Materials - 2,981,020 2,981,020

Total PROJECT COSTS 44,991,577 6,938,049 6,856,268 58,785,894

Taxes 8,998,315 1,337,795 1,252,013 11,588,123Foreign Exchange 33,743,682 3,257,803 1,342,550 38,344,035

SUMCOM.XLS EXCMTF Page 4 9/4/97 10:11 AM

TurkeyParticipatory Privatization of Irrigation MaExpenditure Accounts by Years - Tot(US$) Totals Including Contingencies

97/98 98/99 99/00 00/01 01/02 Total

1. Investrnent CostsVehicles for Agencies 521,676 309,973 - - - 831,649 wOffice Equipment 1,277,586 209,660 126,083 131,663 2,206 1,747,198Field Equipment (O&M Equip) 22,008,047 22,983,530 - - - 44,991,577Training 281,816 288,016 305,968 155,136 75,828 1,106,764Technical Assistance 419,565 346,136 348,471 302,177 303,310 1,719,660Special Studies/Designs 128,397 199,416 145,724 683,137 376,105 1,532,779PDIS Civil Works 2,483,939 1,391,309 - - - 3,875,248PDIS Materials - 1,219,536 1,246,365 254,757 260,362 2,981,020


SUMCOM.XLS EAYRT Page5 9/4197 10:11 AM

Tulrkey

P te P brvawaz6os of hpon t hy

Ex_ooR Accouits UreAdnwn ConIL Pks

(USS Phrvical Conhog lebs Price Contiefnd Price

Bsae Cost Loel Loec Tot hcL Cont B_ se Codst+ Cono on

LocW (ExdL DutrS & (led. Dutis & (Exee) Dutiks & Loeei (Eed. DLtie & Pflee Cost. Physi

For. ExL Texs) Tex" Toed For ExS. Taxs) Tax" TotW Fo. tEe. Tax") Taxes Total For. Excb. Taxu) Twe. Tota os Bae Costs CosnL

L hwvsfetmo CostsVc)sefr Agoeebs 6,0000 41,000 102.000 e610000i - 4,800 1,200 6,000 11,938 581 3,130 15,849 611,038 53,381 . 186,330 831,049 825,583 8,0os

COfie EquEmet 1,192,000 160,000 338,000 1,e60,000 16,000 4,000 20,000 24,080 6,670 7,440 37,198 1,218,0S 181,670 349,440 1,747,198 1.728,554 20,644

Field Eumieret (O&M Equip) 33,009,513 2,200,634 8,802,537 44,012,884 - - - * 734,169 40,945 195,779 078,893 33,743,062 2,249,579 8,888,315 44,991577 44,981,577 -

Tehig 382,000 444,800 208,700 1,033,500 13,000 8,000 5,250 20,250 10,404 21,117 9,403 47,014 411,494 473,917 221,353 1,100,784 1,078,814 27,870

TedrwlAssistame 240,000 1,118,000 270,000 1,635,000 - . . 9 ,075 80,4e8 15,117 84,680 249,075 1,176,460 294,117 1,719,660 1,719,880

Spec*" Stl1.slO es)s 052,s80 409,600 265,600 1,328.000 02,400 20,800 20,800 104,000 54,000 20,015 20,155 100,779 769,208 457,015 306,550 1,532,779 1,420,791 111,987

PDIS Cid Works 398,885 2,378,675 694,390 3,471,950 39,689 225,320 66,302 331,510 9,470 47,960 14,358 71,788 448,244 2,651,805 775,050 3,875,248 3,537,329 337,879

PDIS Matrisals 7256 i300 412,032 2ze752Dw 7.25 13s01 41,203 257.520 44, 4 so.es02 23,728 ,300 894,306 1eos751 n8983 2ssio20 27100ts 2

Toted 37,247,758 9,140,317 11,160,259 66,558,334 192,545 413,980 130,755 745,280 903,733 291,438 289,109 1,404,320 38,344,035 8,853,735 11,588,123 08,785,894 58,010,445 775,449

SUMCOUCM.XLS EABRKF Page1 4W17 10:21 AM

TurkeyParticipatory Privatization of Irrigation Management anComponents by Financiers I(I)S$) World Bank Govemment WUOs Total Local (Excl. Duties & X

Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes O

1. Operation and Maintenance Equipment 12,372,684 27.5 0 - 32,618,893 72.5 44,991,577 76.5 33,743,682 2,249,579 8,998,3152. Institutional Strengthening 5,600,254 80.7 1,337,795 19.3 - - 6,938,049 11.8 3,257,803 2,342,451 1,337,7953. Pilot Drip Irrigation Scheme 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 11.7 1,342,550 4,261,706 1,252,013

Total Disbursement 20,000,001 34.0 1,337,795 2.3 37,448,099 63.7 58,785,894 100.0 38,344,035 8,853,735 11,588,123

FINANCEJXLS COMFIN Page 1 9/4/97 10:02 AM

TurkeyParticipatory Privatization of Irrigation MaExpenditure Accounts by Financiers(US$) World Bank Government WUOs Total Local (Excl. Duties &

Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes

I. Investment CostsVehicles for Agencies 665,319 80.0 166,330 20.0 - - 831,649 1.4 611,938 53,381 166,330 >

Office Equipment 1,397,758 80.0 349,440 20.0 - - 1,747,198 3.0 1,216,088 181,670 349,440

Field Equipment (O&M Equip) 12,372,684 27.5 0 - 32,618,893 72.5 44,991,577 76.5 33,743,682 2,249,579 8,998,315

Training 885,411 80.0 221,353 20.0 - - 1,106,764 1.9 411,494 473,917 221,353

Technical Assistance 1,425,543 82.9 294,117 17.1 - - 1,719,660 2.9 249,075 1,176,468 294,117

Special Studies/Designs 1,226,223 80.0 306,556 20.0 - - 1,532,779 2.6 769,208 457,015 306,556

PDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 6.6 448,244 2,651,955 775,050

PDIS Materials 476,963 16.0 0 - 2,504,057 84.0 2,981,020 5.1 894,306 1,609,751 476,963


FINANCE.XLS EXP_FIN Page 2 914/97 10:02 AM

TurkeyParticipatory Privatization of Irrigation Management and IDisbursement Accounts by Financiers(US$) World Bank Government WUOs Total Local (Excl. Duties &


A. Uluborlu PDISPDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 6.6 448,244 2,651,955 775,050Drip Irrigatlon System 476,963 16.0 0 - 2,504,057 84.0 2,981,020 5.1 894,306 1,609,751 476,963

Subtotal Uluborlu PDIS 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 11.7 1,342,550 4,261,706 1,252,013B. O&M Equipment for WUOs 12,372,684 27.5 0 - 32,618,893 72.5 44,991,577 76.5 33,743,682 2,249,579 8,998,315C. Equipment and Goods

DSI Related Equipment 609,488 80.0 152,372 20.0 - - 761,860 1.3 609,488 - 152,372DSI Related Vehicles 611,938 80,0 152,985 20.0 - - 764,923 1.3 611,938 - 152,985DSI Related DSS 606,600 80.0 151,650 20.0 - - 758,250 1.3 606,600 - 151,650GDRS Related Equipment 181,670 80.0 45,418 20.0 - - 227,088 OA - 181,670 4S,418GDRS Related Vehicles 53,381 80.0 13,345 20.0 - - 66,726 0.1 - 53,381 13,345

Subtotal Equipment and Goods 2,063,077 80.0 515,769 20.0 - 2,578,847 4.4 1,828,026 235,051 515,769D. Technical Assistance

DSI Related Consultants 489,577 89.1 60,126 10.9 - - 549,703 0.9 249,075 240,502 60,126DSI Related Special Studies and Designs 759,960 80.0 189,990 20.0 - - 949,950 1.6 569,970 189,990 189,990GDRS Related Special Studies and Designs 225,528 80.0 56,382 20.0 - - 281,910 0.5 169,146 56,382 56,382GDRS Related PDIS TA 240,735 80.0 60,184 20.0 - - 300,918 0.5 30,092 210,643 60,184Project Coordination Unit 935,966 80.0 233,991 20.0 - - 1,169,957 2.0 - 935,966 233,991

Subtotal Technical Assistance 2,651,766 81.5 600,673 18.5 - - 3,252,439 5.5 1,018,283 1,633,483 600,673E. Training

DSI Related Training 640,152 80.0 160,038 20.0 - - 800,190 1.4 260,418 379,734 160,038GDRS Related Training 245,259 80.0 61,315 20.0 - - 306,574 0.5 151,076 94,183 61,315

Subtotal Training 885,411 80.0 221,353 20.0 - - 1,106,764 1.9 411,494 473,917 221,353Total 20,000,001 34.0 1,337,795 2.3 37,448,099 63.7 58,785,894 100.0 38,344,035 8,853,735 11,588,123

FINANCEXLS DISFIN Page 3 9/4/97 10:02 AM

- 43 -

TurkeyParticipatory Privatizaton of Irrigation Managementand Inveatment ProjectTable 1. Institutional StrengtheningDetailed Costs Quantities Unit Cost Base Cost Overall Cost

Unit 97198 98199 99100 00101 01102 Total (USS) Total TotalI. Investment Costs

A. Support to DSI1. Technical Assistance

a. Short Term (Local)Legal Consultants pm 1 I - - - 2 5,000 10,000 10,221Trainers pm 5 5 5 5 5 25 5,000 125,000 132,059Otherstobespecified pm 5 7 7 6 5 30 5,000 150,000 158,347

Subtotal Short Term (Local) 285,000 300,628b. Short Term (Intemational)

Water Basin Management Specialist pm 1 - 1 - - 2 15,000 30,000 31,005MIE System Design Specialist pm 2 1 1 - - 4 15,000 60,000 61,668O&M Equipment Engineer pm 1 1 1 - - 3 15,000 45,000 46,503Cost Accounting Specialist pm 1 1 - - - 2 15,000 30,000 30,664Unspecified pm 1 1 1 1 1 5 15,000 75,000 79,236

Subtotal Short Term (intemational) 240,000 249,075Subtotal Technical Assistance 525,000 549,7032. Equipment

a. Equipment for Regional OfficesPhotocopier item 6 6 6 6 - 24 5,000 120,000 125,383Computer(desktop) item 11 11 11 11 - 44 2,500 110,000 114,934Computer (laptop) item 6 6 6 6 - 24 4,000 96,000 100,306Video camera item 3 - - - - 3 3,000 9,000 9,099Video player item 3 - - - - 3 2,000 6,000 6,066Slide projector item 3 - - - - 3 5,000 15,000 15,165TV set item 3 - - - - 3 1,000 3,000 3,033UPS item 3 - - - - 3 6,000 18,000 18,198Data show device item 3 - - - - 3 14,000 42,000 42,462Unspecified amount 15,000 15,754

Subtotal Equipment for Regional Offices 434,000 450,400b. Equipment for O&M Head Office-Ankara

Server PC item I - - - - 1 5,500 5,500 5,561PC item 20 20 12 - - 52 2,000 104,000 107,113Laptop PC item 9 - - - - 9 3,000 27,000 27,297Laserprinter item 8 - - - 8 2,250 18,000 18,198DeskJet printer item 9 - - - - 9 540 4,860 4,913Portable deskjet pnnter item - 2 - - - 2 320 640 661Data show devices item 2 - - - - 2 14,000 28,000 28,308Local area network & related equipment amount 54,000 54,594Scanner item 3 - - - - 3 2,000 6,000 6,066Office fumiture and other equipment amount 10,000 10,221Photocopier item 5 - - - 5 6,000 30,000 30,330UPS item 3 - - - - 3 6,000 18,000 18,198

Subtotal Equipment for O&M Head Office -Ankara 306,000 311,460c. Decision Support System Equipment

Server item 10 - - - - 10 2,500 25,000 25,275Computer item 80 - - - - 80 1,250 100,000 101,100Modem item 40 - - - - 40 300 12,000 12,132Structural Cabling item 50,000 50,550Printer item 25 - - - - 25 1,000 25,000 25,275Customized software code for DSS item 1 - - - - 1 80,000 80,000 80,880Standard application packages la item I - - - - 1 80,000 80,000 80,880Networking software item I - - - - 1 75,000 75,000 75,825Plotter item 3 3 10,000 30,000 30,330Digitzer item 15 - - - - 15 200 3,000 3,033Scanner item 3 - - - - 3 5,000 15,000 15,165

COMPO123.XLS INS_STR Page1 914/97 9:54AM

- 44 -

Detailed Costs QuantWes Unit Cost Base Cost Overall CostUnit 97198 98199 99100 00101 01102 Total (US$) Total Total

GIS software item 1 - - - - 1 125,000 125,000 126,375CMI works software packages item 1 - - - - 1 80,000 80,000 80,880Surveying software packages item I - - - - 1 50,000 50,000 50,550

Subtotal Decision Support System Equipment 750,000 758,250Subtotal Equipment .1,490,000 1,520,110a Field Vehicles for O&M Regional Offices vehicle 15 10 - - - 25 30,000 750,000 764,9234. Staff Training (DSI+WUO)

a. Overseasstudytours amount 225,000 232,516b. In-country Training (DSI+WUO) amount 90,000 93,006c. Seminars lb amount 156,000 161,211d. English Language (DSI) amount 300,000 313,457

Subtotal Staff Training (DSI+WUO) 771,000 800,190S. Project Coordination Unit

Agricultural Economist/ Team Leader py I I 1 1 1 5 60,000 300,000 316,942Assistant Team Leader py 1 t 1 1 1 5 40,000 200,000 211,295Support Staff py 2 2 2 2 2 10 15,000 150,000 158,471Olfice Rental and Related Costs amount 150,000 158,471Equipment and Fumishings amount 60,000 60,660Allowances and Travel amount 150,000 158,471Other Operating Costs amount 100,000 105,647

Subtotal Project Coordination Unit 1,110,000 1,169,957Subtotal Support to DSI 4,646,000 4,804,683S. Support to GDRS In Ankara & Field

1. Technical Training in Drp Irrigation amount 50,000 59,6232 Overseas Study Tours amount 162,500 188,8453. Seminars amount 50,000 58,1064. Office Equipment

Computer item 5 5 - - - 10 2,000 20,000 22,487Laser Prnter item 5 5 - - - 10 2,250 22,500 25,297Photocopier item 2 2 - - - 4 5,000 20,000 22,487Laptop computer item - 3 3 - - 6 3,000 18,000 20,683Audio-visuals for training amount 20,000 23,743Specialized software item - - - I - 1 15,000 15,000 17,807

Subtotal Office Equipment 115,500 132,5035. Field Equipment

Field Vehicle item 2 - - 2 30,000 60,000 66,726Infiltrometer item 12 - - - - 12 2,000 24,000 26,690Office equipment for field amount 10,000 11,121Other topographical equipment amount 50,500 56,773

Subtotal idd Equipment 144,500 161,310Subtobl Support to GODRS In Ankara a Field 522,500 600,387C. Special Studies and Designs

1. Irrigaton Rehabilitation/Modemization + Design amount 400,000 478,7682. Drainage Transfer/Drainage Equip. Study & Design amount 300,000 358,7493. Irrigation Master Plan amount 100,000 11Z4334. Selection and Design of Future GDRS Project(s) amount 240,000 281,9105. PDIS Design and Contract Supervision amount 288,000 300,918

Subtotal Special Studies and Designs 1,328,000 1,532,779Total 6,496,500 6,938,049

la Human resource management investment management project management cost accounting, budgeting, etc.\b Including the Water Pricing Seminar of 1998

COMPO123.XLS INS_STR Page 2 914/97 9:54 AM

- 45 -

TurkeyParticipatory Privatization of Irrigation Managementand Investment Project

Table 2. Operation and Maintenance EquipmentDetailed Costs Quanffbes Unit Cost Base Cost Overall Cost

Unit S7198 98/99 99100 00D/0 01102 Total (USS) Total Total

1. Investment CostsA. Field Equipment

1. Small EquipmentComputer item 36 36 - - - 72 2,500 180,000 183,982Relay(radio) item 16 16 - 32 7,500 240,000 245,309Motorcycle item 142 142 X - - 284 2,400 681,600 696,678Hand-held radio item 194 194 - - - 388 600 232,800 237,950Vehicle radio item 23 23 - - - 46 1,000 46,000 47,018Fixed radio item 25 25 - 50 1,000 50,000 51,106Trailer item 15 16 - - - 31 3,500 108,500 110,939Concrete mixer item 7 8 - - - 15 3,000 45,000 46,029Motor pump item 15 15 - 30 3,000 90,000 91,991Other amount 106,084 108,431

Subtotal Small Equipment 1,779,984 1,819,4312. Vehicles

Single cabin pick-up Rem 25 14 - - 39 26,000 1,014,000 1,033,250Double cabin pick-up item 24 25 - - - 49 30,000 1,470,000 1,502,852Other amount 240,200 245,513

Subtotal Vehicles 2,724,200 2,781,6153. LUght Duty Machines

Dumper tnuck item 26 26 - - - 52 50,000 2,600,000 2,657,515Truck iem 2 3 - - - 5 45,000 225,000 230,478Truck for passengers Rem 10 10 - - - 20 50,000 1,000,000 1,022,121Crane item 7 8 - - 15 40,000 600,000 613,717Tractor item 14 15 - - - 29 20,000 580,000 593,053Tractor with implement item 23 24 - - 47 50,000 2,350,000 2,402,540Tractor+crane item 23 24 - - - 47 30,000 1,410,000 1,441,524Sprayers item 9 9 - - - 18 1,750 31,500 32,197Others amount 352,000 359,787

Subtotal Light Duty Machines 9,148,500 9,352,9314. Heavy Duty Machines

Grader item 20 20 - - - 40 190,000 7,600,000 7,768,120Loader(dragline) (tracked) item 3 4 - - - 7 170,000 1,190,000 1,218,215Loader-wheeled item 9 9 - - 18 120,000 2,160,000 2,207,781Dozer D4 item 6 7 - - - 13 200,000 2,600,000 2,659,739Gradall-Bantam excavator item 19 19 - - - 38 300,000 11,400,000 11,652,179Tracked excavator item 5 5 - - - 10 150,000 1,500,000 1,533,182Excavator (wheeled) item 11 12 - 23 170,000 3,910,000 3,998,384

Subtotal Heavy Duty Machines 30,360,000 31,037,599Total 44,012,684 44,991,577

COMPO123.XLS O&M_EQUIP Page 3 9/4/97 9:54AM

TurkeyParticipatory Privatization of IrrigationManagement and Investment ProjectTable 3. Pilot Drip Irrigation Scheme UnitDetailed Costs Quantities Cost Base Cost Overall Cost

Unit 97/98 98199 99/00 00/01 01/02 Total (US$) Total Total

I. Investrnent CostsA. Civil Works

Steel Pipes (100-600mm) m 20,000 8,578 - - - 28,578 71.5 2,043,327 2,287,390Labor (pipe welding) m 348,554 - 348,554 0.45 156,849 158,575Excavations m3 200,000 36,528 - - - 236,528 1.822 430,954 480,892Back Filling Hand m3 45,000 44,195 - - 89,195 4.26 379,971 427,172Machinery Filling m3 100,000 35,333 - - - 135,333 0.24 32,480 36,328Concrete Work m3 30t 46 - - * 348 22.39 7,747 8,641Farm Work m3 2,000 651 - - - 2,651 0.565 1,498 1,675Service Roads m 20,000 4,000 - - - 24,000 0.151 3,624 4,045Hauling of Materials amount 78,625 87,650Valves item - 184 - - - 184 226.9 41,750 47,451Air Vales item - 2,600 - - - 2,600 13.75 35,750 40,632Hydrant item - 377 - - - 377 688 259,376 294,798

Subtotal Civil Works 3,471,950 3,875,248B. Drip Irrigation System

Materials ha - 500 500 100 100 1,200 2,146 2,575,200 2,981,020Total 6,047,150 6,856,268

COMPO123.XLS PDIS Page 4 9/4/97 9:54 AM

- 47 -

ANNEX B

PILOT DRIP IRRIGATIONSCHEME

- 48 - ANNEX B

Page 1

TURKEYPARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT


ULUBORLU IRRIGATION SCHEME (ISPARTA PROVINCE)

1. DSI designed and built the Uluborlu Scheme in 1984. The dam serves a designedirrigation area of 1,800 ha via a concrete lined main canal of 7 km long and capacity 1.5 m 3Y.The right bank is served by a low pressure pipeline system with California outlet valves intosurface irrigation. The left bank continues as an open concrete lined canal system into fieldfurrows or border strips. The general layout is shown in Figure 2.3. The scheme was transferredfrom DSI to the WUA seven years ago. Several years of drought conditions have caused seriouswater shortages and the WUA can only irrigate some 1,200-1,400 ha per year. They also underirrigate with only 3-4 irrigations per season at 30 day intervals.

2. The existing cropping is cherry (60%), apple (20%) with the remainder under vegetablesand other crops. The aim is to have 1,100 ha of cherries and some 100 ha of apples. Theexisting border strip (8 m wide) irrigation on sandy soils is most inefficient (tree spacings 8 m x8 m), the argument being that farmers want as much water as possible during their application inview of long irrigation intervals. The irrigation interval could be shortened considerably byconstructing basins around trees interconnected by furrows. This would improve applicationtimes and efficiency. Under request by the WUA, GDRS have undertaken a feasibility study inOctober 1995 to convert the whole scheme to a closed drip system. The study report had notbeen prepared but the work undertaken so far has been taken over by this project.

Uluborlu WUA (Uluborlu I.S)

3. DSI transferred operation and maintenance to the WUA seven years ago. They are fullyconversant with their responsibilities and control irrigation supplies from the dam outlet. DSI isstill responsible for the dam. The chairman of the Uluborlu WUA is the Mayor of the town whois energetic and gives the WUA much authority, strength and esteem. Operating under the samelaws as the Municipality the WUA is able to secure bank loans without difficulty. The WUAundertakes annual maintenance for which they have adequate machinery consisting of a loader,truck, dozer and two graders.

4. On account of severe water shortages and trying to irrigate as much of the scheme aspossible (1,200-1,400 ha instead of 750 ha as calculated by crop water requirements), WUA isvery keen to convert to a closed pipe drip irrigation system.

5. The production of cherries in the scheme is of high quality and with increasing exportdemand and high prices farmers are converting to cherry at the rate of 100 ha per annum. TheWUA, already in a healthy financial position, will become even stronger. When the scheme has

- 49 - ANNEX BPage 2

been agreed and construction programme determined the Mayor sees few problems with theWUAs ability to pay its share of the investment cost.

Dam Storage Ratios

6. A summary of the important information concerning this scheme is given in the followingtables.

Item

Normal maximum 21.39storage (106/ mI3)

Mean Annual Runoff (MAR) (10 6m3 ) 14.94 (18 yrs)

Storage Ratio 1.43

Recent MAR (106m3) 7.421990-1995

Change in Storage 2.88Ratio

Source: DSI and TR-Engineering estimates.

Existing Irrigation Areas

Item

Existing irrigation 8.56releases (106 m3/yr)

Proposed Existing Irrigation Areas (ha) La 750 LZ

La Actual irrigation areas are greater on account of under-wateringand use of wells.

/b Actually under-irrigating 1,200-1,400 ha.

Source: TR-Engineering estimates.

7. It is proposed to adopt an infield drip irrigation efficiency of 85% and a pipelinetransmission efficiency of 95% to allow for both leakage and management of the system. Hencean overall 80% efficiency is adopted. This is conservative and a well managed drip system canachieve an overall 85% to 90% efficiency.

- 50 - ANNEX BPage 3

Proposed Crop Water Requirements

Crop Req. (mm) Divers. Req. (mm)

January

February

March

April

May 16.7 20.88

June 92.0 115.00July 178.0 222.50

August 160.0 200.00

September 99.8 124.75

October 25.8 32.25

November

December

Year 572.30 715.38

Scheme Peak Design Module (Vs/ha) 0.85Infield Drip Efficiency 85%Pipeline Transmission Efficiency 95%Overall Scheme Efficiency 80%

Source: GDRS and DSI and TR-Engineering Estimates.

8. Based on average irrigation releases and annual diversion requirements the above tableproposed areas which can be conservatively irrigated by closed drip systems are given in thetable below:

Proposed Irrigation Areas Under Drip Systems

Item

Existing irrigation 8.56releases (106 m3/yr)

Potential irrigation 1,200Areas (ha) under drip systems

- 51 -

ANNEX C j

MONITORABLE INDICATORS

- 52 -

ANNEX C

TURKEYPARTICIPATORY PRIVATIZATION OF IRRIGATION MANAGEMENT AND

INVESTMENT PROJECT

MONITORABLE INDICATORS

Component Implementation Indicators Impact Indicators

O&M Equipment Establishing conditions for WUOs to Satisfactory and sustainablebe able to purchase required O&M performance with respect to:equipment when they have funds to operation of systems indicated bypay for their share of cost; delivery of water in a timely anddisbursement of about $1.5 M/quarter equitable manner satisfactory toof the loan for purchase of O&M users; maintenance of systemsequipment. indicated by the condition of

irrigation systems; and reduction ofgovernment spending on O&M.

Pilot Drip Irriga- Timely:' completion of detail design; Efficient use of scarce watertion Scheme award of contract for works; indicated by increased agricultural

completion of works; and production as envisaged in theprocurement and installation of drip economic analysis of the project.irrigation system.

Institutional Timely:' recruitment of consultants; Strengthening DSI and WUOs inStrengthening procurement of computers and fulfilling their responsibilities with

training materials; completing respect to irrigation developmentenvisaged training, including study- indicated by: improved technicaltours; and completion of specific qualification of persons trained andstudies. technically supported; schemes

identified for irrigation developmentthrough participatory privatizationresulting from the studies; and furtherresponsibility for irrigationmanagement and investmenttransferred to users.

1 See Implementation Schedule (Annex E). Quantities of equipment to be purchased and worksand parts of Institutional Strengthening component to be completed are given in Annex A.

- 53 -

ANNEX D

C ONSULTANTSTERMS OF REFERENCE

- 54 - ANNEX DPage I



TERMS OF REFERENCE FOR CONSULTANTS

Following are the initial TOR for the consultants responsible for project coordination. TORfor other TA services would be prepared by CC according to the implementation schedule(Annex E), with the assistance of concerned departments of DSI and GDRS, and approved bythe Bank.

CONSULTANT COORDINATOR (CC)

A. Qualifications

1. Higher level education (at least MS or MBA) in Agricultural Economics, AgriculturalEngineering or Management Science.

2. 15 years experience abroad and in Turkey in implementing, evaluating and/or supervisingagricultural development projects.

3. A high degree of familiarity with the salient features and issues of the irrigation sector in Turkey.

4. Leadership qualities to direct consultants and personnel and management/communication skillsto effectively liaise between GDRS, DSI, other GOT agencies and the Resident Mission.

5. High level of proficiency in English.

6. Turkish speaking.

7. No restrictions on extensive travel.

B. Description of Duties

The main task for the CC would be to contribute to timely implementation of the project and itstasks. The CC would have particular responsibility for ensuring timely payment of grant fund tosuppliers and contractors, from whom WUOs would be procuring equipment or works in accordancewith the arrangements stated in Chapters 3 and 4. The CC would also have responsibility for ensuringthe successful completion of the studies and other consultancy tasks stated in the above chapters.Following are detailed TOR.

1. Liaise between DSI and GDRS coordinators to expedite project implementation, and act assecretary to project coordination committee by calling for periodic meetings and disseminating decisionstaken to interested parties, namely DSI, GDRS, the World Bank and the WUOs.

- 55 - ANNEX DPage 2

2. Assist with procurement with GDRS, DSI and WUOs for technical services and goods in orderto complete the procurement effort in an expedient and speedy manner.

3. Supervise, direct and motivate core staff of project coordination unit (PCU) consisting ofassistant team leader and support staff.

4. Prepare, with the assistance of concerned officials of DSI and GDRS, detailed TOR for studiesand short-term consultants according to the implementation schedule (Annex E).

5. Assist DSI and GDRS to provide timely reports on monitoring and evaluation.

6. Project reporting: prepare and submit all required project reports consisting of monthly progress,statements of expenses, quarterly and annual reports.

7. Ensure satisfactory compliance with project audit requirements by facilitating appropriatemechanisms with the World Bank and the Government.

8. Help recruit Assistant CC and support staff following his/her employment at the projectcoordination unit and complete all other PCU related procurement to render the PCU functional.

9. Actively participate in/or facilitate all project related activities to ensure the timely flow of grantfunds to the suppliers of O&M equipment, other goods and technical services, as stipulated in the loanagreement.

ASSISTANT CONSULTANT COORDINATOR (ASSISTANT CC)

A. Qualifications

1. Higher level education in agriculture, engineering, economics or management science.2. At least five years' experience in development projects in Turkey or abroad.3. Familiarity with DSI and GDRS functions and mandates.4. Knowledge of World Bank procurement methods and procedures.5. Turkish speaking and high level of proficiency in English.6. Capability of setting up and running an internal accounting system to keep track of project

activities and transactions.

B. Description of Duties

Reporting to the CC, the assistant team leader is expected to perform the following:

1. Assist the CC in all types of WUO, DSI and GDRS record keeping and correspondence for theproject.2. Set up and operate a project management information and accounting system to keep track of allproject activities and disbursements.3. Train or arrange for the training of project support staff in procurement, reporting andcomputers.4. Contribute relevant parts to periodic project reports.5. Travel to various DSI regions to follow up on project implementation and problems encountered.6. Perform other tasks and duties assigned by the CC.

- 56 -

ANNEX E

IMPLEMENTATIONSCHEDULE

ANNEXETURKEY

Participatory Privatization of Irrigation Managment and Investment Projcet

1998 1 1999 j 2000 2001 2002ID Task Narne Durati Start Finish 23|41Q 0Q|3|Q 4|1 Q|IQ2 IQ3 1 4 01 IQ2 IQ3 IQ4 IQ1 I|Q2|Q3|IQ4|IQ 10 |Q1Q31IQ4I Effecliv.ness Od 12/15/97 12/15/97 * 1211

2 StartIng the project & coordination 85d 1011197 1/27198

3 Designation of DSI and GDRS Coordcnators Ild 10/113197 10/27/97

4 Selecbon of CC 45d 10/1/97 12/2/97

6 Recruitment of CC by Id 12V22/97 12V22197

6 Agreement with Agent Bank 30d 1011(97 11/11/97

7 Selection & recruitment of PCU staff 30d 12/3/97 1/13/98

8 Opening of Special Account by Id 1V15/97 12V15/97

9 Finalize form of Participation Agreement 30d 10/1/97 11/11/97

10 Project Launch Workshop lOd 1/14/98 1/27/98

11 Start and continue project coordination 1289d 12/23/97 12/1/02

12 O&M Equipment component 1289d 12123197 12/1102

13 Make WUOs & officials familiar with procedure 30d 12/23/97 2/2/98

14 WUOs individually procure equipment 1259d 2/9 12/1/02 i - s-

16 Institutional Strengthening Component 1299d 1V23/97 12113102

16 PCU prepare docs for procurement of computers & vehicles 60d 12(23197 3/16/98

17 Procurement of urgently needed computers 30d 2/2/98 3/13/98

18 Procurement of Computers 150d 3/3/98 9/28/98

19 Procurement of vehicles 210d 4/15/98 2/2/99

20 CC prepare deCd TOR/schele for studies, consulfs & traing 90d 12/23/97 4/27/98

21 Recruitment of Consultants for Review of DSI irrig. schemes 45d 12Q23/97 2/23/98

22 Training in parallel or staggered packages 1299d 12123/97 12/13/02

23 Completion of studies during the period of 1110d 3/2/98 5/31/02

24 Pilot Drip Irrig. Scheme 941d 9/15/97 4/23/01 m i m i

26 WIO recruit consultants for detail design & supervision 45d 9/15/97 11/14/97

26 Detail design & preparation of bid documents 90d 11/17/97 3120/98

27 Bidding and award of construction contract(s) by WUO 120d 3/23/98 9/4/98

9/18/97 12:39 PM Div Disk@EC2AR@WORLDBANKIMOH\REFS\PP19-9.MPP Page 1

ANNEXETURKEY

Participatory Privatization of Irrigation Managment and Investment Projoet

97 1998 1999 2000 2001 ] 200210 Task Name Ourati Start Finish Q39 4j1 0Q2 0Q3 04 Q1Q2 13Q3 7 Q4 01 Q2 0 Q3 2 _4 2001 0 3 Q 228 Consiruction supervision by consultant 558d 9/7/98 10/25/00

29 Implementation of works by contractor(s) 550d 917l98 10/13/00

30 Purchase & installalion of drip irrigation pipes by farmers 500d 5/25/99 4/23101

31 Bank Supervision 1234d 12/23/97 9/13/02 . m -

32 Start-up workshop 10d 12/23/97 1/5/98

33 Superv'n misns around each March & Sep. 1175d 3116/98 9/1 3102

34 Mid-term review 10d 6/17/02 8/28/02

35 Processing of envisaged follow-up loan 90d 7/1/99 11/3/99

Un02

9/18/97 12:39 PM Div Disk@EC2AR@WORLDBANK'MOH\REFS\PPI9-9.MPP Page 2

- 59 -

ANNEX F

PROCUREMENT

- 60 - ANNEX FPage 1



PROCUREMENT PROCEDURES

1. Procurement of O&M Equipment. WUOs will procure O&M equipment inaccordance with World Bank procedures and will use national shopping (NS) forequipment costing less than US$ 100,000 and international shopping (IS) for equipmentcosting US$100,000 to 400,000. For this purpose they will obtain at least threequotations from suppliers and for IS quotations will be obtained from suppliers from atleast two countries (including Turkey). Procurement documents are not needed.

2. Procurement of Works and Equipment for Uluborlu Pilot Irrigation Scheme.The Uluborlu WUO will procure: (a) works on the basis of National CompetitiveBidding (NBC) using the World Bank procurement documents; and (b) drip irrigationpipes on the basis of LS since these pipes would be purchased by the members of theWUO in small lots, as their procurement in bulk is not practical.

3. Recruitment of Consultants. DSI and GDRS will recruit long- and short-termconsultants following Bank's "Guidelines on :Selection and Employment of Consultantsby World Bank Borrowers." Recruitment of consultants will be subject to the Bank'sapproval of their TOR and qualifications (discussed in Annex D).

4. To avoid delay in project implementation, DSI will initiate action for therecruitment of CTL to make sure that the CTL would be available when the loan getsapproved so the project activity could be started quickly. CTL would contribute to therecruitment of the remaining consultants.

5. Procurement of Computers. DSI and GDRS would procure computers on thebasis of ICB.

6. Procurement of Vehicles. DSI would procure vehicles on the basis of ICB,using World Bank documents.

7. Prior Review by the Bank. Bank's prior review would be needed forprocurement actions mentioned in paras 2(a), 3, 5 and 6. To avoid delay, a major part ofsuch review would be carried out by procurement staff in Bank's office in Ankara.

Number Bank-Decitotmsr Total Cost Fance Procurement EstimatedDescription -PType (Items or Fa(US$ (US dM) Method Dates

1. O&M Equipment Dates given inO&M Larger Equip. Purchased by WUOs Goods 150 items 31.00 8.52 IS ImplementationO&M Smaller Equip. Purchased by WUOs Goods 1,270 items 14.00 3.85 NS Schedule

Subtotal 45.00 12.37 (Annex E)

2. Pilot Drip Irrigation Scheme Works & Drip PipeWorks Works 2-4 3.88 1.55 NCBDrip Irrigation Pipes - packages below $100,000 Goods Numerous 2.98 0.47 NS

Subtotal 6.86 2.02

3. Institutional StrengtheningA. Consultants _

Coordination consultants Consultant 2 0.67 0.54 QBShort-term consultants - contracts below $50 000 Consultant Over 30 0.55 0.44 SS a

,__ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _0 .0 0B. Training - Study Tours & Seminars Training Over 40 1.11 0.90 SS

C. Studies, Technical Tasks and Capacity BuildingSupervision for PDIS Consultant 1 0.30 0.24 QCBSDSI lrr. Schemes assessment program, Master Plan Consultant 1 0.11 0.09 SSStudies for Future Projects/Investments & Transfer Consultant 5 1.12 0.91 QCBS

D. Vehicles Goods 27 0.84 0.68 ICB

E. Urgently Needed computers and Office Equipmen Goods 3-6 0.30 0.24 NS

F. Computers and Other Office Equipment Goods 4 1.46 1.18 ICB

Operating cost of PCU (rent, utilities, support staff, etc.) Support service 0.48 0.39 /aSubtotal 6.94 5.61

Total 58.80 20.00

/a According to local administrative practice acceptable to the Bank.

MFItN for fPae cok1m 0.809

FINANCE.XLS PROCPLNJ Page 1 9/15197 7:30 PM

- 62 -

ANNEX G

ECONOMIC ANDFINANCIAL ANALYSIS

ANNEX G- 63 - PART I

Page 1



FINANCIAL AND ECONOMIC ANALYSIS

A. Markets and Prices

Government Policy

1. The Turkish economy has been undergoing significant economic liberalization over thepast decade, particularly in price, trade and financial policies. The intervention of the state hasbeen reduced, allowing market forces to operate more freely. Agriculture has benefited fromthese liberalization policies, although Government still is heavily involved in the agriculturalmarketing process and price formation.

2. Goverment's policy objectives in agriculture include: ensuring adequate food supplies atreasonable prices; increasing production levels; increasing farm income levels and stability;increasing exports; and developing impoverished rural areas.

3. In pursuit of its agricultural policy objectives the government focuses on the support ofproducer prices complemented by fiscal policies, credit subsidies, trade related measures, thesubsidization of farm inputs and transfers related to investment in infrastructure projects,particularly irrigation. In the crops sector, some domestic prices are bolstered through tariffs anddomestic market intervention purchases.

4. A number of large state owned and state directed intervention bodies are in charge ofoperating the price support policies. However, the system of administering price support hasbecome complex, cumbersome and riddled with financial problems, resulting in excessive stockpiling and delayed payments to farmers. These problems are mainly due to administering supportprices policies without due regard to differences in product quality, location or volume of sales,leading to poor quality, an inefficient spread of production, and benefits accruing mainly to thelarger farmers. As a consequence, the government has been taking action to reduce the number ofcommodities for which support purchase schemes operate.

5. The five commodities that have consistently been supported through interventionpurchases (cotton, sugar beet, tobacco, wheat and sunflower seed) account for 90% of the overallshare of support purchases. By the end of 1970s, 30 commodities were benefiting from pricesupports, but in the aftermath of the economic stabilization measures of April 1994, only threecommodities were retained on the list of products to be supported directly by the government.These crops are cereals, sugar beet and tobacco.

6. Generally, in contrast to the interventionist agricultural policies of the 1960s and 1970s,current policy is increasingly market oriented, with the aim of reducing both the financial costs

- 64 - ANNEX GPART IPage 2

of policy operation and the macroeconomic distortions produced as a result. In practice thismeans increasing the role of markets, reducing quantitative restrictions on imports, privatizationof state agricultural enterprises and tighter control on the levels of direct payments and inputsubsidies.

7. Import restrictions and tariffs currently constitute significant barriers to imports, but thefuture trend is likely to be further reductions and simplifications of trade restrictions, with a viewto harmonization of trade policies with EC and EFTA member state, and Turkey's joining of theEC Customs Union which became effective as of January 1, 1996.

Markets

8. For a long period, Turkey has run a trade surplus in agricultural products. Geographicalproximity to Europe, the Middle East and North Africa gives it easy access to large marketsthrough the Black Sea, Aegean Sea and the Mediterranean. Its main markets include theEuropean Community and the USA, mainly for dried fruit, nuts, cotton and tobacco, and theMiddle East for fresh fruits, vegetables and meat. Sugar beet and cereals are primarily consumedwithin the domestic market. Given Turkey's high population growth rate and rapid urbanizationthe internal market for food products is likely to expand.

9. In summary, no major marketing constraints are envisaged since incremental productionas a percentage of current total production is small. Wheat, beans, corn and fruit crops areprimarily grown for the domestic market. There is currently excess demand for most crops inTurkey, with the deficit being made from imports.

Major Crops on Irrigated Areas

10. Wheat. About 18% of the irrigated area is planted to wheat. Irrigated wheat productionaccounts for less than 5% of national production which is estimated to be around 18 million tons.Wheat is irrigated if spring rains are late or inadequate. In years of high precipitation irrigationratios in Turkey decline because farmers choose not to irrigate the crop which was sufficientlyrain-fed. The fact that wheat does not need to be irrigated in years of good rainfall causes erraticfluctuations in national irrigation ratios which vary from 60 to 75%. Wheat is grown usually inthe interior parts of Turkey. It is practically non-existent on the coastal parts. Turkey is both animporter and exporter of wheat depending upon the year. The country is generally considered tobe self sufficient in this basic staple.

11. Sugar beet. Sugar beet is controlled by a state monopoly in Turkey with set productionquotas and prices. Turkey is assumed to be self sufficient in sugar although it may import incertain years of low production. Irrigated sugar beet accounts for less than 10% of the irrigationarea while it contributes about half of the sugar beet production in the country.


12. Corn. Irrigated corn occupies about 8% of the irrigation areas but provides more than afourth of the national production. It is viewed as a good transition crop to replace cotton on thecoastal areas.

13. Cotton. Cotton is the most significant irrigated crop representing 30% of the irrigatedareas and contributing about 60% of the national output. Cotton is grown in the coastal parts ofthe country and the GAP area using irrigation water from the Euphrates river. Gradually, the cropwill be displaced by higher value fruits and vegetables on the coast while increasing levels ofproduction would be shifted over to Southern Anatolia which offers favorable economic andclimatic conditions for the crop.

Prices

14. The prices used in developing the financial farm models were gathered from June 1996through January 1997. For financial analysis averages were computed using the past 10 years'farm gate price data for wheat, corn, sugar beet and cotton expressed in constant February 1997dollars. This was mainly due to rather significant price movements on both the domestic andinternational markets, particularly for wheat and cotton.

15. In the economic analysis, a SCFf 0.85 was applied to non-traded or non-supported goods.For highly supported crops, such as wheat, cotton and sugar beet, a lower SCF of 0.75 wasassumed. For labor, the SCF used was 0.80, while highly subsidized inputs were attributed aSFC of 1.4.

B. Area Models for WUOs

16. Crop production models. Crop production models were developed for 10 importantirrigated crops in the country. These crops consist of wheat, corn, cotton, sugar beet, fruit,tomatoes, dry beans, grapes, peaches and olives and account for about 80% of irrigated land inthe transferred areas.

17. WUA or area models. Using these crop models, WUA area models were constructed fornine sample WUOs which were consolidated to seven WUA groups with adequate representationfor different sizes (varying from a few thousand ha to more than 20,000 ha) and ecologicalconditions in the country. The analysis was restricted to WUAs only which are the predominanttype of WUO in the country and accounting for 92% of the transferred areas. Data provided byWUA were used for determnining the specific crop patterns (both existing and projected) for eachWUJA sampled. The WUAs selected are from Sanliurfa (inland), Bursa (inland), Manisa(coastal), Antalya (coastal), Adana (coastal), Kayseri (inland) and Konya (inland). Theyrepresent various size groups: below 5,000 ha, between 5,000 and 10,000 ha, between 10,000 and20,000 ha and over 20,000 ha.

18. Aggregate Turkey Model. Next, these WUA area models were properly weighted toproduce an aggregation for the entire country for the 1.5 million hectares which the project


targets to achieve. Appropriate downward adjustments on areas were made to account for the factthat only WUAs were being analyzed. The resulting area on which the analysis was basedmeasures about 1,379,000 ha where the cropping intensity (or irrigation ratio) was set at about80% in the final year.

19. Inland and Coastal Zones. Given Turkey's ecological diversity, irrigated areas wereplanned in accordance with two distinct ecological divisions which consisted of inland andcoastal zones. Indicative cropping patterns that might be expected are incorporated in the area orWUO models. The same crop models were used throughout the analysis for both inland andcoastal zones. However, distinctions were made in the crop patterns between the interior andcoastal zones. Sanliurfa (inland) in southeastern Turkey is an exception to crop-basedsegregation of the two ecological zones because it grows significant quantities of cotton, which ismainly grown on the coastal zone. Also, for the sake of simplicity less important crops andbyproducts were excluded in the analysis. Incremental crop areas and yields for the wholecountry are in the Project Files.

20. Irrigation ratios. In 1995, DSI-reported irrigation ratio on untransferred areas was 56%while the same ratio was 70% on transferred areas. Although data are lacking, there areindications that the irrigation ratio on irrigated areas in 1996 has actually improved. Theassumed baseline irrigation ratio for 1997 is around 77% which is expected to improve to 80% inten years for the selected crops.

C. Financial and Economic Analysis

21. The FRRs/ERRS of the seven WUAs or area models were calculated by discounting costsand benefits for ten years. As expected, the financial rates of return and the economic rates ofreturn are quite high, on average above 50%. There are wide variations in the rates of return forthe sample models depending on their cropping intensity, cropping pattern, current level of O&Mequipment investment, and cost of pumping. For instance, in the Iznik and Boyalica WUAs, theeconomic rates of return are about 15% since they use pumping which is much costlier thangravity irrigation. In the Adala Left Bank model, much of the land is expected to remain underlow yielding and low value crops because of the soil conditions, resulting in an ERR of only18%. In Yedek, the ERR is expected to be quite high -- 128% -- since the cropping intensity isexpected to be about 1 10%.

Assumptions

22. The economic analysis of the project was performed with the following assumptions:

(a) Inflation in Turkey has been very high in the last 20 years. Thus all cost tables and farmmodels were prepared in US dollars. Domestic inflation seems to have past its peak in1994 (whole sale price index was 150% against 126% of CPI) and is forecast to graduallyfall and stabilize over the life of the project. CPIs in both 1995 and 1996 were lower than80%.


(b) In addition to the depreciation of the TL, the cost of living and doing business in Turkeyhas risen in dollar terms over the last decade. This was reflected in computations byassuming a 25% dollar denominated inflation between 1989 and 1997 to adjust someproduction cost data which were originally compiled in 1989.

(c) In forecasting the crop patterns, it was assumed that wheat (which is generally a rainfedcrop) in the irrigated coastal areas would be gradually displaced by more lucrative highervalue irrigated crops such as corn except for Southern Anatolia (Sanliurfa and environs)where production is expected to expand.

(d) A standard conversion factor of 0.85 has been applied to the value of non-traded inputs,non-supported crops and non-foreign currency costs. This has been increased from SCFspreviously used in Turkey (0.79), reflecting the government's efforts to reduce duties andlimit the number of goods for which price support policies are administered. The Turkisheconomy is likely to become increasingly open over the life of the project consistent withthe requirements of the Customs Union agreement of 1996.

(e) A SCF of 0.75 was applied on all crops (wheat, sugar beet and cotton) to account for thehigh level of support. SCF assumed on fertilizers is 1.40 due to the high level ofsubsidization of these farm inputs.

(f) Opportunity cost of labor: Wage levels reported during the harvest periods of cotton andgrapes are very similar to those reported for construction work in local towns suggestingthat at these times of the year, market rates are close to the opportunity cost. However, formost of the rest of the year, unemployment and underemployment are also problemsperceived in the villages, reflecting the lack of attractive income generating opportunities.Labor is therefore shadow priced at 80% of the market rate.

(g) In due consideration for capital scarcity in Turkey, OCC was assumed to be 15% in lieuof adopting the traditional level of 12%. Inflation rate on the dollar is assumed to be 2.2%per annum.

(h) Baseline or without project crop yields assumed were derived from DSI's actualmeasurements in 1995. Yield improvements under the project are assumed not to exceed5 to 7% distributed over 10 years.

(i) The most common sources of NPK in Turkey are urea, TSP and potassium sulphatewhich were assumed to have been used on all crops to provide the nutrients needed.

Gj) Due to methodological difficulties involved in their measurement, beneficial effects ofthe project on the environment, employment generation aspect by the WUOs, improvedfarmer education and the phenomenon of grass-roots democratization achieved by thetransfers and the provision of machinery were assumed as non-quantifiable in theanalysis.


(k) A ten year planning horizon was assumed for analysis of returns from agriculture and 15years for quantifying and estimating fiscal returns.

Data Sources

23. The data needed for the analysis come from various sources.

Crop Models: The crop models were based on studies conducted under the previousWorld Bank financed effort ': Drainage and On Farm Development Project (DOFDP),where the reported technical input/output coefficients were used without modification butinput and output prices were updated by first converting them to current TL andexpressing the resulting figures in US$ in constant 1997 dollars.

24. WUO-Related Information. The WUO-related information was collected from twosources. The first one was the Monitoring and Evaluation forms 2 developed and administered bythe O&M Department since 1994. The second source was the O&M Equipment Questionnairespecifically designed for the needs of the project preparation effort. Additional information wasextracted from various DSI O&M Department publications 3.

25. Prices and Other Information. Farm gate crop prices for wheat, corn, cotton and beanswere obtained from the recent OECD study 4 on Turkey (by averaging these prices over theperiod of 1979-93 supplemented with additional price information from the SPO 5. Since, thereexists a close correspondence between support prices and farm gate prices, the former served as aproxy to the latter where direct farm gate price data were not available.

26. Border prices for wheat, corn, cotton and beans were taken from the OECD study whichuses CIF import reference price level for which Turkey is a net importer and FOB prices forcommodities for which Turkey is a net exporter.

I Revised Master Plan, Part I, Investment Strategy, Vol 6 - Supporting Tables, Drainage and On FarmDevelopment Project, prepared for the DSI by DAPTA, Su-Yapi, Temelsu and Nedeco, Ankara,September 1991.

2 Report on Monitoring and Evaluation for Transferred Irrigation Schemes (for schemes greater than 500ha), DSI, O&M Department, Ankara, 1997.

3Evaluation Report on DSI-Operated and Transferred Irrigation Schemes in 1995; and, Crop Counts forDSI-Constructed Irrigation and Land Reclamation Schemes in 1995, DSI O&M Department, Ankara,1996.

4National Policies and Agricultural Trade, Case Study Turkey, OECD, Paris, 1994.

5Program for Year 1997, Seventh Five-Year Development Plan, SPO, 1996 and Special Expert Report onFertilizers, SPO, 1966.

-69- ANNEX G

PART 2Table 1

Analysis for Reduction in the Government Burden_Without Project ('000 USD) With Project (000 USD ('000 USD) ('000 USD) ('000 USD)

Burden on Burden on Machinery Difference Total Net Present ValueState Machinery State Subsidy due to Unadjusted of Public Savings

Budget Replacement Budget and Other Transfer Public SavingsAfter Cost Cost for DSI After Cost Project and Project

Period Years Recovery Recovery Costs I_for the Period1985 37,458 42,100 -4,642

Pre ATP 1986 40,028 44,678 4,649

1987 41,455 39,818 1,638

1988 42,283 30,059 12,2241989 43,979 35,041 8,939 PRE-ATP1990 44,673 36,938 7,736

1991 46,279 42,581 3,699

_________ 1992 47,315 38,763 _ 8,552 33,4971993 48,872 50,345 -1,473

ATP 1994 49,979 37,868 12,111 ATP1995 51,810 28,034 23,777

1996 54,789 26,282 28,507 83,0741997 57,280 10,700 24,177 3,500 40,303

Project 1998 59,200 10,700 23,325 7,000 39,575 PROJECT

1999 61,120 .10,700 22,253 7,000 42,568 IMPLEMENT FROM 19972000 63,040 10,700 19,880 7,000 46,860 PERIOD TO 20112001 64,960 10,700 19,355 7,000 49,305 at 12 % OCC2002 66,880 10,700 18,760 3,500 55,320 226,119 $353,9042003 68,800 10,700 17,875 61,6252004 70,400 10,700 18,330 62,770

2005 72,000 10,700 17,100 65,600

Post- 2006 73,600 10,700 17,280 67,020 POST- at 15 % OCCProject 2007 75,200 17,460 57,740 PROJECT $300,891

2008 76,800 16,170 60,630

2009 78,400 16,335 62,065

2010 80,000 15,000 65,000

2011 81,600 15,150 66,450 596,5601107,000 _ 35,000 939,249

Note 1: ATP stands for Acceleated Transfer Program which covers from 1993 to 1996 inclusive.

Note 2: The figures in the savings column are current unadjusted values.

Note 3: Negative savings result from higher than expected costs against averages (such as salary hikes due to labor unions).

Partial Analysis for Economic Savings Resulting From Transfers of Schemes to WUOsA B C D E F=B-C-D-E G=AxF x |F

Transfered DSI DSI Incremental O&M Total O&MIrrigation O&M Supervision Incremental WUO Cost Related RelatedArea (ha) Cost and M/E WUO Cost for Operating Economic Economic Economic

Saved Costs for O&M Equipment Savings Savings Savings(USD/ha) (USD/ha) (USD/ha) (USD/ha) (USD/ha) (USD) (USD)

1997 1,350,000 40 10 13 2 15 20,250,000 20,250,0001998 1,430,000 40 9 13 3 15 21,450,000 41,700,000

Project 1999 1,500,000 40 8 13 3 16 24,000,000 65,700,000 <

Period 2000 1,550,000 40 7 13 4 16 24,800,000 90,500,000 o2001 1,600,000 40 6 13 4 17 27,200,000 117,700,000

2002 1,650,000 40 6 13 5 16 26,400,000 144,100,0002003 1,700,000 40 6 13 6 15 25,500,000 169,600,0002004 1,750,000 40 6 13 7 14 24,500,000 194,100,0002005 1,800,000 40 6 13 7 14 25,200,000 219,300,000

2006 1,850,000 40 6 13 7 14 25,900,000 245,200,0002007 1,900,000 40 6 13 7 14 26,600,000 271,800,000

Post- 2008 1,950,000 40 6 13 7 14 27,300,000 299,100,000Project 2009 2,000,000 40 6 13 7 14 28,000,000 327,100,000

Period 2010 2,050,000 40 6 13 7 14 28,700,000 355,800,0002011 2,100,000 40 6 13 7 14 29,400,000 385,200,000

Note: The above analysis is partial as it pertains only to the O&M costs and ignores benefits due to increased production and productivity. 3 I

a,0

- 7 1 - ANNEX G

Turkey PART 2Participatory Privatization of Irrigation Management Table 3ECONOMIC AND FINANCIAL PRICES

Economic Financial(In US$) Prices Prices

Unit

OutputsPeaches tons 215.05 253Wheat tons 120.00 160Melons tons 100.30 118Sugarbeet tons 33.75 45Cotton tons 1,377.75 1837Com tons 130.05 153Dry beans tons 340.00 400Tomatoes tons 115.60 136Grape tons 246.50 290Olive tons 620.50 730

InputsMaterials

Olive planting material unit 3.23 3.8Grape planting material unit 0.27 0.322Chemical weed control Lt 79.80 57N Fertilizer Kg 0.22 0.16P Fertilizer Kg 0.38 0.27K Fertilizer Kg 0.53 0.38Farmyard manure ton 3.83 4.51Fungicides Lt 29.81 21.29Insecticides Lt 53.20 38Pest control Lt 17.64 12.6Packing material unit 0.55 0.645Bags unit 0.38 0.451

SeedsWheat seed Kg 0.21 0.251Dry bean seed Kg 1.15 1.354Melon seed Kg 64.60 76Sugarbeet seed Kg 2.14 2.516Cotton seed Kg 0.38 0.451Com seed Kg 1.32 1.548Tomato seed Kg 59.50 70

Farm machinery and transportationFirst ploughing hr. 10.97 12.9Second ploughing hr. 10.97 12.9Disc-harrowing hr. 10.97 12.9Smoothing hr. 10.97 12.9Ridging/furrowing hr. 10.97 12.9Seeding/planting hr. 10.97 12.9Hoeing by machine hr. 10.97 12.9Bordering by machine hr. 10.97 12.9Prune/train/stake hr. 357.85 421Chemical weed control hr. 10.97 12.9Fertilizing hr. 10.97 12.9Picking/harvesting hr. 22.95 27Drying/Grading hr. 10.97 12.9Transport to farm store hr. 8.76 10.3Transport to collect hr. 8.76 10.3Machinery services hr. 10.97 12.9

LaborHighly skilled hr. 1.04 1.302Skilled hr. 0.67 0.838Casual hr. 0.57 0.709Establ/Maint manday 6.70 8.38

Page 1

TurkeyParlicipatory Privatizatlon of Imrgafton Management andTURKEY: Country Level Aggregation Subproject ModelECONOMIC BUDGET (AGGREGATED) April *- March(in US$) Increments

1 2 3 4 5 I 7 8 9 10

Main ProductionMain Produds 23,973,842 49,199,494 108,026,695 205,646,656 354,516,996 557,563,504 798,674,524 1,019,660,237 1,205,804,136 1,338,028,872

Production CostPurchased Inputs

Materials 12,702,193 8,179,422 15,352,678 38,272,099 79,181,539 131,790,162 220,901,795 296,486,756 352,619,335 386,737,707

Seeds 1,216,089 2,566,669 4.047.595 5,690,625 7,495,442 7,878,414 8,262,081 8,644,716 9,028,383 9,411,592Farm machinery and tansportation 11,430,625 20,493,769 30,655,580 42,156,793 56,995,967 57,359,236 63,382,273 69,099,157 74.472,345 76,175,878

Sub-Total Purchased Inputs 25,348,907 31,239,861 50,055,854 86,119,517 143,672,949 197,027,812 292,546,130 374,210,629 436.320,063 472,325,177Labor

All types of labor 20,429,550 33.057,282 50,784,391 72,551,812 96,936,111 95,519,138 110,051,265 118,606,418 123,464,405 127,177,814Sub-Total Production Cost 45,778,458 64,297,142 100,820,244 158,671,330 240,609,060 292,546,949 402,597,394 492,817,048 559,784,468 599,502,991Other Costs

Other Costs 15,818,504 26,399,855 27,215,985 28,543,617 30,476,867 18,572,058 18,609,085 18,646,011 18,683,036 18,719,990OUTFLOWS 61,596,962 90,898,998 128,036,229 187,215,147 271,085,927 311,119,007 421,206,459 511,463,059 578,467,504 618,222,981

Cash Flow -37,623,120 -41,497,504 -20,009,535 18,431,509 83,431,089 246,444,497 377,468,085 508,217,178 627,336,632 719,805,891

IRR 72.3%, NPV 936,984,908.09

t4 C

Page I

- 73 -

ANNEX H

LEGAL ASPECTS

-74 - ANNEX HPage 1



LEGAL ASPECTS

EXECUTIVE SUMMARY

The General Directorate of State Hydraulic Works ( DSI henceforth ), which operates under the Ministryof Energy and Natural Resources, can transfer the operation and maintenance responsibilities of theirrigation schemes to legal entities in accordance with the provisions of the law concerning theorganization and responsibilities of DSI (Law no: 6200).

Thus far, O&M responsibility has been transferred for about 1.2 million hectares with most of thesetransfers occurring after 1993 under the "Accelerated Transfer Program" (ATP).

The transfer procedure/instruments of the schemes to Water Users' Organizations (WUOs), consisting ofWater Users Associations, Cooperatives, Municipalities and Village Authorities, are set forth within theabove mentioned law as transfer agreements and transfer protocols between WUOs and DSI.

Due to differences in the legal status of various entities specified as Water Users Organizations, someproblems occur in the process of both the transfers and the execution of the O&M responsibilities by theWUOs.

This report was prepared in order to outline and emphasise the existing legal framework of the WUOs andthe legal mechanisms which would assist toward the realization of the objectives of the PPIMIP-I.

CONCLUSIONS AND RECOMMENDATIONS

Introduction: This section intends to outline and emphasize the existing legal framework for the WUOsas well as make recommendations regarding further improvements and other possible mechanisms to beconsidered toward the realization of the project objectives. The discussion contained here is extractedfrom the Legal Report (Annex) which is based on studies conducted on existing legislation, interviewsmade with various water user leaders and their senior staff (particularly during Adana field mission), andmeetings held with DSI's O&M officials and Legal Department in Ankara.

The Legal Basis of Transfers by DSI: DSI is legally capable of transferring the operation and main-tenance responsibilities of irrigation schemes developed by the agency itself to other entities (persons ororganizations) in accordance with the provisions of Law number 6200, which is the basic legislationgoverning both the agency's organization and responsibilities. Law no: 6200 allows for the transfer ofintegral (completed and functional) irrigation schemes or those that are either being constructed or

- 75 -

ANNEX HPage 2

planned. The fundamental binding legal documents executed between the WUOs and DSI comprisetransfer agreements and transfer protocols which are duly signed by both parties.

Taxonomy of Water Users Organizations: Until present, irrigation-related O&M responsibilities havebeen transferred to users on schemes measuring about 1.2 million hectares. The bulk of these transfersoccurred after 1993 under the so called "Accelerated Transfer Program" (ATP). Entities that took overO&M responsibility from the DSI are collectively called Water Users' Organizations (WUOs). Presently,the distinct legal forms for these entities comprise Water Users Associations (WUAs), Cooperatives,Municipalities, Village Authorities and Universities. This list is by no means an exhaustive one and furtherlegal forms are possible under Law no: 6200 which lends itself to flexible interpretation. Presently, themost prevalent WUO type is the WUA, which may usually span over a number of villages andmunicipalities. The irrigation-based and joint village-municipal nature of the WUAs requires great effortsto interpret the current laws as such a land-based joint village-municipal structure per se does not exist inthe law.

Creation and Operation of Water Users Organizations: In addition to Law no: 6200 which makestransfers possible, the following laws are applicable for the creation and operation of the Water Users'Organizations:

*. The Turkish Civil Law no: 743*. The Turkish Criminal Law no:765*. Turkish Rural Law no: 442*. Municipality Law no: 1580*. Provincial Law no:5442*. The Law on the Protection of Farmers' Properties no: 4081. The Environmental Law no: 2872

*. Other miscellaneous laws and regulations applicable

Basic Legal Tools for Any WUO: In addition to the applicable laws, each WUO is governed internallyby its statute. Next in importance are the transfer agreements (basic text of rules and regulations) bindingit to the DSI and the transfer protocols, which contain the technical specifications of the O&M work to beexecuted under the transfer agreement.

Possible Areas of Iinprovement: Due to the diversity of applicable laws and differences in the legalstatus of various WUO types referenced above, problems occur in the process of both the transfers and theexecution of the O&M responsibilities by the WUOs. In light of the above mentioned studies,recommendations and conclusions are listed in the Legal Report in order to eliminate the obstacles andresolve difficulties arising from WUOs' present legal frame -- statutes, transfer agreements and protocolswhich regulate their relations with DSI. Below are key recommendations:

New Legislation: Once sufficient experience is accumulated on existing problems and constraints, theremay be a need for the preparation of a new WUA law. The most prevalent type of WUOs in existence inTurkey is the WUA. Existing provisions of the Municipality Law no: 1580 and the Rural Law no: 442,which are applicable for the WUAs, do not clearly address their objectives, responsibilities, rights andlegal status. Other types of WUOs, namely Municipalities, Cooperatives and Village Authorities do notneed new legislation strictly for the purposes of irrigation O&M. The new WUA law maystipulate/consolidate the following:

- 76 -

ANNEX HPage 3

a) Appointment of senior staff and their status to be governed in accordance with theTurkish Labor Law.

b) Advantages provided under Law n: 6183 concerning the collection of PublicRevenues by WUAs.

c) Tax and duty exemptions, at least for a given transition period during which theWUA completes its establishment.

d) Capability of forming higher level structures, such as Unions of WUAs.

To pass a new law, the established procedure is:

a) A draft bill is to be prepared by the Ministry of Interior and then submitted to theCabinet.

b) The Cabinet approves the draft bill and presents it to the National Assembly to berouted through a specialized committee.

c) The draft bill is voted into a bill by the National Assembly.

d) The bill is signed into law by the President of the Republic.

e) The law is published in the Official Gazette prior to enforcement.

The time needed to accomplish each of the above steps cannot be predicted as much depends upon theworking schedule of the Cabinet and the lobbying effort that accompanies the submission of the the draftbill to the Cabinet.

It is useful to remember that the DSI Law no: 6200 remained unchanged over the past 40 years despitemany attempts to introduce to it amendments and improvements.

Improvement of WUA Statutes: The existing text for a WUA statute is a standard one prepared by theMinistry of Interior for various purposes and for all kinds of associations organized under the Ministry'sauspices. The legal framework for the standard statute can be improved either through the introduction ofnew legislation or existing statutes can be reviewed and improved. The latter approach provides a moreviable and realistic alternative to passing new legislation which may be improbable and difficult tomaterialize in the immediate future. The procedure by which existing statutes can be reviewed includes thefollowing steps:

a) The Directorate of Local Administrations of the Ministry of Interior prepares adraft statute in consultation with the DSI and the GDRS through a process ofmutually agreed and self-motivated coordination.

b) The Ministry of Interior approves and publishes the statute.

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ANNEX HPage 4

During the above process neither DSI nor the GDRS can play leadership roles. For instance, the DSIoperates under the Ministry of Energy and Natural Resources and thus cannot prepare a draft statute asthis responsibility legally appertains to the related Directorate of the Ministry of Interior.

The essential elements of a good statute are the following: Part 1 (definitions, legal status, establishmentprocedure, objectives and constituents); Part 2 (WUA rights and responsibilities, election of members,organs, rights and responsibilities for organs); Part 3 ( recruitment of staff, rights of possession, incomes,collection of fees, charges and revenues, tax and duty exemptions, transfer of movables and immovables);Part 4 (cost recovery on commonly used schemes and sharing of equipment and machinery); and Part 5(formation of unions, disposition, liquidation, audit and referenced laws).

There is a necessity to clarify and revise the below mentioned matters in the standard statutes:

a) The election of the WUA council by local administrations causes an obstacletoward a broader participation by users.Therefore, the WUA Council members should be selected in order to provide anefficient operation.

b) Articles concerning the employment of staff in accordance with the Civil ServantsLaw no: 657 causes problems if the WUA does not have any municipalitiesamong its constituent parts.Therefore, the revised statute should exclude all reference to Law no:657.

c) Procurement, sales and accounting practices of WUAs must be independent of theGeneral Accounting Law no: 1050 and Government Procurement Law no: 2886which hinder with the efficient operation of the WUAs.T'herefore, the revised statute should exclude compliance with Law no: 1050.

Improvements of Transfer Agreements: Presently, the transfer agreements signed between DSI andWUOs are prepared by the DSI. According to these agreements only the operation and maintenance(O&M) responsibility is transferred to users. The transfer agreements are vague in regards to the rightsand responsibilities of WUOs on irrigation schemes.

The legal framework for the transfer agreements can be redefined working exclusively with the WUOsand the DSI or through the enactment of a new law which would stipulate in clearer terms the rights,responsibilities and the legal status of the WUOs. In order to improve the existing transfer agreementswithout new legislation, it is expected that DSI will play a lead role in preparing an improved drafttransfer agreement text in negotiation with the WUOs which will be submitted to the Ministry of Energyand Natural Resources for approval.

The WUO rights and responsibilities needing further clarification are the rights on irrigation schemes suchas ownership, easement and usage. Further possibilities for the improvement of transfer agreementsinclude addition of an article on definitions and legal terms, clearly and unequivocally identifying theO&M responsibilities for the users and cancellation of the requirements for DSI's approval of watercharges to be assessed by the users.

- 78 -ANNEX H

Page 5

Revision of Transfer Protocols: Presently, the transfer protocol prepared by DSI is an independentattachment to a transfer agreement that simply details technical specifications on the transferred schemes.The link between the agreement and the protocol is not a very clear one. Transfer protocols need tospecifically make reference to the transfer agreements and serve as a complementary part to the transferagreement. No further improvement in the transfer protocols is needed other than meeting the need forreference and complementarity. Revision of the protocol text involves the same steps as those of theimprovement of transfer agreements.

Transfer of Equipment and Machinery: Existing DSI Law no: 6200 does not allow for the transfer ofnew machinery to users. There are provisions, however, for the transfer of old (scrapped) and surplusmachinery to other entities (article 30/e under Law no: 6200). Although highly unlikely, this probleminvolves the revision and improvement of the DSI Law no: 6200.

- 79 -

ANNEX I jI AS ME

SOCIAL ASSESSMIENT

- 80 - ANNEX IPage 1



SOCIAL ASSESSMENT

1. Methodology: To achieve its objectives, the social assessment focused primarilyon the users themselves, although the management of the WUAs, headmen, mayors, DSIpersonnel were also consulted. In particular, the social assessment team carried outseveral formal and informal interviews and group discussions in Izmir, Manisa, Adana,Mersin, Silifke and Anamur regions. In total, visits were conducted in 16 villages, spokewith 520 villagers in groups of 5-17, talked with managers of 14 WUAs, met with 9village headmen and 5 mayors who were heads of WUAs, and three other heads ofWUAs who were not headmen or mayors. Another mayor (in Menemen) who was amember of the WUA, but not its head was also consulted. DSI staff at headquarters(including the Director general) and Ms. Sen Akman, Acting Deputy DirectorGeneral,Undersecretariat of the Treasury, were also briefed. During the short briefings, itwas emphasized that a) the achievements to date are visible and substantial; b) thecurrent level of participation is impressive; and c) there is sufficient knowledge in thefield of the local needs to move forward and rapidly for the preparation of the project.

Survey Areas

2. The Izmir, Manisa, Adana, Mersin, Silifke and Anamur regions were visited for acloser look at the participation aspects of the proposed irrigation project.

Social Assessment Findings

Main Findings

3. (a) There is a strong commitment among villagers to WUAs even when (i)they complain that they now pay too much and the free ride they got from theState was good; (ii) there are acute shortages of water. When water is short, thereis conflict between villages and villagers; yet (with one exception in Menemenwhere the system itself is 40 years old and extremely deteriorated) the users easilylist advantages of having the systems managed by themselves rather than by DSI.Also, many say "while it was good not to pay anything at all or defer paymentsindefinitely, it is better to pay and get a service than not to get a service at all."

(b) The participatory framework for irrigation management isindigenous;

ANNEX I- 81 - Page 2

(c) Self contained irrigation systems were auto managed for the past 20-30 years;

(d) In all DSI managed systems, "village groups" always existed andmanaged water distribution within the village. The current system is in manyways identical to this at the local community level with WUA rather than DSIorganizing the intra-village coordination (thus, while the previous Bank projectmade an enormous contribution by accelerating that auto management system, itssuccess basically depended on the fact that it was built on existing traditions andsystems);

(e) With exception of associations where the irrigation system taken overfrom DSI is 30-40 years old and badly deteriorated, WUAs have purchasedsome equipment needed for O&M. For the remaining needs, they rely on DSIunder non-universal arrangements.

4. Users' perspectives: There appears to be a mixture of irrigation managementexperience in Turkey previous to the large scale involvement of user associations. Theschemes established by the GDRS were funded by the State and were immediatelytransferred informally to the users with no attempt for cost recovery of the initial schemebut with full responsibility for management and operation. To date, there is nosystematic study of the success of these user managed systems. Since most of thesesystems were based on ground water utilization, there is also little knowledge of theability of the users to maintain these units when energy prices have increasedsubstantially.

5. Some of the small DSI managed systems were also turned over to the usersimmediately after their construction but DSI seems to have maintained some level ofinvolvement and responsibility with regard to the O&M of the main canals.

6. With the exception of these user managed systems, DSI managed schemes werenot only unable to recover capital costs but experienced acute difficulties in collectingfees for O&M expenses. For defaults an unrealistically low and one time penalty of 10%for delayed payment is charged and thus most villagers preferred not to pay. Thus, it ispuzzling that the users would be happier with their own association than having the Stateto manage the irrigation schemes practically free.

7. Discussions with large number of users all point to a general contentment withassociation management "despite significantly higher payments" villagers make forwater. As to why, the users offer several answers:

* "No matter how much more we need to pay, it is better to have ownership of our ownscheme";

- 82 - ANNEX IPage 3

* "No one could know about our problems and needs better than we do.";

* "Nothing can make a salaried person work day and night when the water is mostneeded. The headman and villagers work without sleep to ensure that we all receivewater because they are one of us."

* "Many schemes are located far from the city and it is impossible to induce DSIpersonnel to stay away from their families for months to maintain irrigation schemesfor our communities";

* "Water is much more equitably distributed when we are in charge";

* "Our costs are much lower. We know that DSI can no longer afford to provide freeservices. To pay for theirs is more costly than to pay for local contractors.";

* "When you have a problem, you cannot find a person in the State to address. Whenyou have a problem with your own WUA, you know who is in charge: one of yourneighbors; you can talk to them immediately and without need for a negotiator";

* "When we manage our own scheme, the water can be given on a 24 basis, thusmaking full use of the system. This type of a service cannot be provided by the State;

* "We do not need to be different to get a service: we pay and get what we paid for";

* "The state could not collect fees; among us we have no difficulty. With moneycollected we can meet our own needs and if we have other needs we can discuss,collect more money and meet them.

8. These are many of the benefits users find in their own management. They do notfeel that a new management system has been imposed upon them. As far as they areconcerned, at the village level, the communities always managed the system but did nothave the resources to do the job in a professional way. They elect their own managers,they question the use of funds, they ask for accounting, and they change managementwhen unhappy. There is a firm belief that this is the future of irrigation management inTurkey and this is an irreversible trend.

- 83 -

ANNEX J

DISBURSEMENT SCHEDULE

- 84 -

Loan Disbursement Schedule

Bank Fiscal Year Quarterly FY Cumulative Disbusementsand Quarter Ending Disbursements Subtotals

US$ M US$ M US$ M % of TotalFY 1998

December31, 1997 0.70 0.70 3.5%March 31,1998 1.20 1.90 9.5%June 30, 1998 1.80 3.70 18.5%

3.70FY 1999September 30,1998 1.90 5.60 28.0%December 31, 1998 1.90 7.50 37.5%March 31, 1999 1.90 9.40 47.0%June 30, 1999 1.80 11.20 56.0%

7.50FY 2000September 30, 1999 1.70 12.90 64.5%December 31, 1999 1.60 14.50 72.5%March 31, 2000 1.00 15.50 77.5%June 30, 2000 0.90 16.40 82.0%



1.30FY 2003September 30, 2003 0.30 0.30 20.00 100.0%

20.00-D_ ----------

FINANCE.XLS DisbSch 9/15/97 5:44 PM

- 85 -

ANNEX K

COST OF PROJECTWITH INCLUSION OF

ENVISAGED FOLLOW-UP LOAN

TurkeyParticipatory Privatization of Irrigation Management and % % TotalComponents Project Cost Summary (TL Million) (USS) Foreign Base


1. Operation and Maintenance Equipment 4,119,690 12,359,070 16,478,760 25,748,063 77,244,188 102,992,250 75 89 002. Institutional Strengthening 548,752 490,688 1,039,440 3,429,700 3,066,800 6,496,500 47 63. Pilot Drip Irrigation Scheme 780,113 187,431 967,544 4,875,705 1,171,445 6,047,150 19 5

Total BASELINE COSTS 5,448,555 13,037,189 18,485,744 34,053,468 81,482,433 115,535,900 71 100Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1Price Contingencies 282,480 713,373 995,853 1,765,497 4,458,584 6,224,081 72 5


ANNEX-K. SUMCOM 9/15197 8:12 PM

TurkeyParticipatory Privatization of Irrigation Ma % % Total

Expenditure Accounts Project Cost S (TL Million) (USS) Foreign BaseLocal Foreign Total Local Foreign Total Exchange Costs

1. Investment CostsVehicles for Agencies 33,600 96,000 129,600 210,000 600,000 810,000 74 1

Office Equipment 79,680 190,720 270,400 498,000 1,192,000 1,690,000 71 1

Field Equipment (O&M Equip) 4,119,690 12,359,070 16,478,760 25,748,063 77,244,188 102,992,250 75 89 oo

Training 104,240 61,120 165,360 651,500 382,000 1,033,500 37 1 -

Technical Assistance 223,200 38,400 261,600 1,395,000 240,000 1,635,000 15 1 1

Special Studies/Designs 108,032 104,448 212,480 675,200 652,800 1,328,000 49 1

PDIS Civil Works 491,690 63,822 555,512 3,073,065 398,885 3,471,950 11 3

PDIS Materials 288,422 123,610 412,032 1,802,640 772,560 2,575,200 30 2

Total BASELINE COSTS 5,448,555 13,037,189 18,485,744 34,053,468 81,482,433 115,535,900 71 100

Physical Contingencies 88,438 30,807 119,245 552,736 192,545 745,280 26 1

Price Contingencies 282,480 713,373 995,853 1,765,497 4,458,584 6,224,081 72 5


ANNEX_K SUMEA 9/15/97 8:12 PM

Tti*eyPsWOxIia0y Ploatizatloo of )niptoo U PhysIcal

EepeiSWs Accon ta &wO1ke,n COt Phs

OMS) PCWlcai CerAkWncds Prke Con6eNcle Pike

Becoot Lcal LAce) Tated h,cI Cnt. Bass Costs 4 Cmit, otLca IEXCI Dlies & (EKd. bullet & (ExcL ODst0 & Local (FxcL DCtIes. PrIc ConL on Phymcadl

Fcr. EBh. Thre) Taxes TOW FPe. Each. Taxun) Taxes Total Fec. ExthL Taes) 'axes Tow For. Exch Taes) Txes TOal Boss Costs Cost.

I. hveshwIset CostaVeliclkesfr Aexies 800,000 48,000 162,000 610,000 4,9O 1,200 5,000 11,92S So1 3,130 1i.049 611,030 53.301 18,330 031,849 S25.0583 s,0o6 c

Oft* Eoett 1,102.000 150,000 336,000 1,6600,00 - 1,000 4,000 20,000 24,080 5,070 7,440 37,190 1,216,000 181,670 349,440 1,747,108 1,726,554 20,044

Fd EWOVes (0.M Eq*) 77,244,100 0,149,013 20,000,450 102,602,200 * 4,200,021 200,035 1,143,739 S,71,004 01,033,200 5,435.547 21.742,189 106,710.G44 108,710,944 .

Trath 382,000 444,800 206,700 1,033,000 13,000 8,OD0 5,2w0 26,200 16,494 21,117 9,403 47,014 411,404 473,917 221,323 1,100,784 1,078,04 27,870

Teiw l Ao)axe 240,000 1,110,QQD 279,000 1,620,000 - * - - 0,075 60,406 15,111 04,60 249,075 1,176,468 204,117 1,71,0660 1,710,660

sP0Iest5aesiDeos60 062,800 400,600 285,600 1,320.000 62,400 20,800 20,600 104,000 54,000 20,615 20,106 100,770 760,200 457,015 304,86 1,032,170 1,420,701 111,987

PDISCMWoes 396,085 2,37a,67s 64,390 3,471,0S5 329,06 228,320 60,302 531,510 0,470 47,500 14,356 71,708 448,244 2,651,055 775,050 3,87s,248 3,537,320 337,670

POai Materals 12 . 13908 B 412UM2 2,070,200 77,256 12061 41 .203 257.520 4,490 flo, 2 2312,i 14B, 8e4,306 1,008751 476,963 2,081.020 2.S710018 271,002

TotaO 01,402,433 11i,07,288 22,808,172 115,S30,90o 192,848 413.00D 136,755 745,260 4,450,584 526,438 1,237,000 6,224.091 86,133.561 12,039,704 24.231,55 122.505,261 121,720,012 775,440

AMEX_K E48RKF 9115097 612Pm

TurkeyParticipatory Privatization of Irnigaion Management and IDisbursement Accounts by Financiers(US$) World Bank Govemment WUOs Total Local (Excl. Duties &


A. Uluborlu PDISPDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 3.2 448,244 2,651,955 775,050Drip Irrigation System 476,963 16.0 0 - 2,504,057 84.0 2,981,020 2.4 894,306 1,609,751 476,963

Subtotal Uluborlu PDIS 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 5.6 1,342,550 4,261,706 1.252,013B. O&M EquipmentforWUOs 29,895,510 27.5 0 78,815,434 72.5 108,710,944 88.7 81,533,208 5,435,547 21,742,189C. Equipment and Goods

DSI Related Equipment 609,488 80.0 152,372 20.0 - - 761,860 0.6 609,488 - 152,372DSI Related Vehicles 611,938 80.0 152,985 20.0 - - 764,923 0.6 611,938 - 152,985 1DSI Related DSS 606,600 80.0 151,650 20.0 - - 758,250 0.6 606,600 - 151,650 00GDRS Related Equipment 181,670 80.0 45,418 20.0 - - 227,088 0.2 - 181,670 45,418 sGDRS Related Vehicles 53,381 80.0 13,345 20.0 - - 66,726 0.1 - 53,381 13,345

Subtotal Equipment and Goods 2,063,077 80.0 515,769 20.0 - - 2,578,847 2.1 1,828,026 235,051 515,769D. Technical Assistance

DSI Related Consultants 489,577 89.1 60,126 10.9 - - 549,703 0.4 249,075 240,502 60,126DSI Related Special Studies and Designs 759,960 80.0 189,990 20.0 - - 949,950 0.8 569,970 189,990 189,990GDRS Related Special Studies and Designs 225,528 80.0 56,382 20.0 - - 281,910 0.2 169,146 56,382 56,382GDRS Related PDIS TA 240,735 80.0 60,184 20.0 - - 300,918 0.2 30,092 210,643 60,184Project Coordination Unit 935,966 80.0 233,991 20.0 - - 1,169,957 1.0 - 935,966 233,991

Subtotal Technical Assistance 2,651,766 81.5 600,673 18.5 - - 3,252,439 2.7 1,018,283 1,633,483 600,673E. Training

DSI Related Training 640,152 80.0 160,038 20.0 - - 800,190 0.7 260,418 379,734 160,038GDRS Related Training 245,259 80.0 61,315 20.0 - - 306,574 0.3 151,076 94,183 61,315

Subtotal Training 885,411 80.0 221,353 20.0 - - 1,106,764 0.9 411,494 473,917 221,353Total 37,522,827 30.6 1,337,795 1.1 83,644,640 68.3 122,505,261 100.0 86,133,561 12,039,704 24,331,996

ANNEX_K. DISFIN 9/15i97 8:12 PM

TurkeyParticpatory Prhatization of ffrigation Management anComponents by Financiers(US$) World Bank Government WUOs Total Local (Excl. Duties &

Amount % Amount % Amount % Amount % For. Exch. Taxes) Taxes C)1. Operation and Maintenance Equipment 29,895,510 27.5 0 - 78,815,434 72.5 108,710,944 88.7 81,533,208 5,435,547 21,742,189 12. Institutional Strengthening 5,600,254 80.7 1,337,795 19.3 - - 6,938,049 5.7 3,257,803 2,342,451 1,337,7953. Pilot Drip Irrigaton Scheme 2,027,062 29.6 0 - 4,829,206 70.4 6,856,268 5.6 1,342,550 4,261,706 1,252,013


ANNEX_K. COMFIN 9/15/97 8:12 PM

TurkeyParticipatory Privatization of Inigation MaExpenditure Accounts by Financiers(USS) World Bank Government WUOs Total Local (Excl. Duties &


I. Investment CostsVehicles for Agencies 665,319 80.0 166,330 20.0 - - 831,649 0.7 611,938 53,381 166,330 O

Office Equipment 1,397,758 80.0 349,440 20.0 - - 1,747,198 1.4 1,216,088 181,670 349,440

Field Equipment (O&M Equip) 29,895,510 27.5 0 - 78,815,434 72.5 108,710,944 88.7 81,533,208 5,435,547 21,742,189

Training 885,411 80.0 221,353 20.0 - - 1,106,764 0.9 411,494 473,917 221,353

Technical Assistance 1,425,543 82.9 294,117 17.1 - - 1,719,660 1.4 249,075 1,176,468 294,117

Special Studies/Designs 1,226,223 80.0 306,556 20.0 - - 1,532,779 1.3 769,208 457,015 306,556

PDIS Civil Works 1,550,099 40.0 0 - 2,325,149 60.0 3,875,248 3.2 448,244 2,651,955 775,050

PDIS Materials 476,963 16.0 0 - 2,504,057 84.0 2,981,020 2.4 894,306 1,609,751 476,963


ANNEX_K. EXPFIN 9/15/97 8:12 PM

TurkeyParticipatory Privatization of Irrigation MaExpenditure Accounts by Component Operation and Pilot Drip(US$) Maintenance Institutional Irrigation


I. Investment CostsVehicles for Agencies - 831,649 - 831,649Office Equipment - 1,747,198 - 1,747,198Field Equipment (O&M Equip) 108,710,944 - - 108,710,944Training - 1,106,764 - 1,106,764Technical Assistance - 1,719,660 - 1,719,660Special Studies/Designs - 1,532,779 - 1,532,779PDIS Civil Works - - 3,875,248 3,875,248PDIS Materials - - 2,981,020 2,981,020

Total PROJECT COSTS 108,710,944 6,938,049 6,856,268 122,505,261

Taxes 21,742,189 1,337,795 1,252,013 24,331,996Foreign Exchange 81,533,208 3,257,803 1,342,550 86,133,561

ANNEX_K. EXCMTF 9/15/97 8:12 PM

TurkeyParticipatory Privatization of Irrigation MaExpenditure Accounts by Years - Tot(US$) Totals Including Contingencies

97/98 98/99 99/00 00/01 01/02 Total

I, Investment CostsVehicles for Agencies 521,676 309,973 - - - 831,649Office Equipment 1,277,586 209,660 126,083 131,663 2,206 1,747,198Field Equipment (O&M Equip) 21,176,861 21,642,752 22,298,408 23,004,814 20,588,110 108,710,944Training 281,816 288,016 305,968 155,136 75,828 1,106,764Technical Assistance 419,565 346,136 348,471 302,177 303,310 1,719,660Special Studies/Designs 128,397 199,416 145,724 683,137 376,105 1,532,779PDIS Civil Works 2,483,939 1,391,309 - - - 3,875,248PDIS Materials - 1,219,536 1,246,365 254,757 260,362 2,981,020


ANNEX-K. EAYRT 9/15/97 8:12 PM

TurkeyParticipatory Privatization of Irrigation Management andProject Components by Year - Totals Including Co(US$) Totals Including Contingencies

97/98 98/99 99/00 00/01 01/02 Total '

1. Operation and Maintenance Equipment 21,176,861 21,642,752 22,298,408 23,004,814 20,588,110 108,710,9442. Institutional Strengthening 2,629,040 1,353,201 926,247 1,272,113 757,449 6,938,0493. Pilot Drip Irrigation Scheme 2,483,939 2,610,845 1,246,365 254,757 260,362 6,856,268


ANNEX_K COMYRT 9/15/97 8:12 PM

TurkeyParticipatory Privatization of Irrigation ManagemeTable 2. Operation and Maintenance EquipmentDetailed Costs Quantities Unit Cost Base Cost Overall Cost

Unit 97/98 98/99 99/00 00/01 01/02 Total (US$) Total Total

I. Investrnent CostsA. Field Equipment

1. Small EquipmentComputer item 29 29 29 29 29 145 2,500 362,500 382,972Relay(radio) item 15 15 15 15 15 75 7,500 562,500 594,266Motorcycle item 134 134 134 134 134 670 2,400 1,608,000 1,698,809Hand-held radio item 186 186 186 186 186 930 600 558,000 589,512Vehicleradio item 22 22 22 22 22 110 1,000 110,000 116,212Fixed radio item 22 22 22 22 22 110 1,000 110,000 116,212Trailer item 15 15 15 15 15 75 3,500 262,500 277,324Concrete mixer item 7 7 7 7 7 35 3,000 105,000 110,930Motor pump item 14 14 14 14 14 70 3,000 210,000 221,859Other amount 500,000 528,237

Subtotal Small Equipment 4,388,500 4,636,3342. Vehicles

Single cabin pick-up item 13 13 13 13 13 65 26,000 1,690,000 1,785,440Double cabin pick-up item 24 24 24 24 24 120 30,000 3,600,000 3,803,304Other amount 500,000 528,237 n

Subtotal Vehicles 5,790,000 6,116,9813. Light Duty Machines

Dumper truck item 25 25 25 25 25 125 50,000 6,250,000 6,602,959Truck item 3 3 3 3 3 15 45,000 675,000 713,120Truck for passengers item 10 10 10 10 10 50 50,000 2,500,000 2,641,184Crane item 7 7 7 7 7 35 40,000 1,400,000 1,479,063Tractor item 14 14 14 14 14 70 20,000 1,400,000 1,479,063Tractor with implement item 18 18 18 18 18 90 50,000 4,500,000 4,754,131Tractor + crane item 22 22 22 22 22 110 30,000 3,300,000 3,486,362Sprayers item 9 9 9 9 9 45 1,750 78,750 83,197Others amount 2,000,000 2,112,947

Subtotal Light Duty Machines 22,103,750 23,352,0254. Heavy Duty Machines

Grader item 20 20 20 20 16 96 190,000 18,240,000 19,234,756Loader(dragline) (tracked) item 2 2 3 3 2 12 170,000 2,040,000 2,158,985Loader-wheeled item 8 8 8 8 9 41 120,000 4,920,000 5,203,426Dozer D4 item 6 6 6 7 7 32 200,000 6,400,000 6,775,271Gradall-Bantam excavator item 18 18 18 18 14 86 300,000 25,800,000 27,201,247Tracked excavator item 5 5 5 5 3 23 150,000 3,450,000 3,630,891Excavator (wheeled) item 12 12 12 12 10 58 170,000 9,860,000 10,401,027

Subtotal Heavy Duty Machines 70,710,000 74,605,604Total 102,992,250 108,710,944

ANNEX_K. O&M EQUIP 9/15/97 8:12PM

- 96 -

ANNEX L

COST OF O&M EQUIPMENT CONSIDEREDTO BE PURCHASED UNDER THEENVISAGED FOLLOW-UP LOAN

OF $17.5 MILLION

TurkeyParticipatory Privatization of Irrigation Ma % % TotalExpenditure Accounts Project Cost S (TL Million) (US$) Foreign Base


1. Investment CostsField Equipment (O&M Equip) 2,359,269 7,077,808 9,437,077 14,745,433 44,236,298 58,981,731 75 100

Total BASELINE COSTS 2,359,269 7,077,808 9,437,077 14,745,433 44,236,298 58,981,731 75 100Physical Contingencies - - - - - - - -Price Contingencies 186,185 558,556 744,742 1,163,659 3,490,977 4,654,636 75 8


ANNEX-L. SUMEA 9/15/97 7:55 PM

TurkeyParticipatory Privatization of lrrigatioDisbursements by Financiers(US$) World Bank Government WUOs Total Local (Excl. Duties &


A. PDIS Civil Works - - - - - - -B. O&M Equipment for WUOs 17,500,001 27.5 - - 46,136,366 72.5 63,636,367 100.0 47,727,275 3,181,818 12,727,273C. Equipment and GoodsD. Consultants and TrainingTotal 17,500,001 27.5 - - 46,136,366 72.5 63,636,367 100.0 47,727,275 3,181,818 12,727,273

ANNEX_L. DISFIN 9/15/97 7:55 PM

TurkeyParticipatory Prvatization of Irrigation MaExpenditure Accounts by Component Operation and Pilot Drip(US$) Maintenance Institutional Irrigation


I. Investment CostsField Equipment (O&M Equip) 63,636,367 - - 63,636,367

Total PROJECT COSTS 63,636,367 - - 63,636,367

Taxes 12,727,273 - - 12,727,273Foreign Exchange 47,727,275 - - 47,727,275

ANNEX_L. EXCMTF 9/15/97 7:55PM

TurkeyParticipatory Privization of Irrigation MaExpenditure Accounts by Years - Tot(US$) Totals Including Contingencies

97198 98/99 99/00 00101 01/02 Total

I. Investment CostsField Equipment (O&M Equip) 21,365,378 21,225,126 21,045,862 63,636,367

Total PROJECT COSTS - - 21,365,378 21,225,126 21,045,862 63,636,367

ANNEX_L. EAYRT 9/15/97 7:55PM

TurkeyParticipatory Privatization of Irrigation ManagemTable 2. Operation and Maintenance EquipmentDetailed Costs Quantities Unit Cost Base Cost Including Contingencies (USS) Overall Cost

Unit 97198 98199 99100 00o10 01102 Total (US$) Total 99100 00/01 01102 Total

I. Investment CostsA. Field Equipment

1. Small EqulpmentComputer item - 28 28 27 83 2,500 207,500 73,918 75,544 74,449 223,911Relay(radio) item - - 15 15 15 45 7,500 337,500 118,797 121,411 124,082 364,289Motorcycle item - - 131 131 130 392 2,400 940,800 331,998 339,302 344,120 1,015,420Hand-held radio item - - 181 181 181 543 600 325,800 114,679 117,202 119,780 351,660Vehicle radio item - - 22 22 22 66 1,000 66,000 23,231 23,743 24,265 71,239Fixed radio item - 21 21 20 62 1,000 62,000 22,175 22,663 22,059 66,898Trailer item - - 15 14 14 43 3,500 150,500 55,439 52,881 54,044 162,364Concrete mixer item - 7 7 6 20 3,000 60,000 22,175 22,663 19,853 64,692Motor pump item - - 13 13 14 40 3,000 120,000 41,183 42,089 46,324 129,596Other amount 279,501 98,382 100,546 102,758 301,686

Subtotal Small Equipment 2,549,601 901,978 918,044 931,733 2,751,7552. Vehicles

Single cabin pick-up item - - 6 8 8 24 26,W0 624,00 219,642 224,475 229,413 673,530Double cabin pick-up item - - 26 25 25 76 30,000 2,280,000 823,659 809,404 827,210 2,460,273Other amount 46,000 42,239 3,238 3,309 48,785

Subtotal Vehicles 2,950,W0 1,085,541 1,037,116 1,059,932 3,182,5893. Light Duty Machines

Dumpertruck item - - 26 26 25 77 50,000 3,850,000 1,372,765 1,402,966 1,378,684 4,154,416Truck item - - 3 2 2 7 45,000 315,000 142,556 97,128 99,265 338,950Truck for passengers item - - 10 9 9 28 50,000 1,400,000 527,987 485,642 496,326 1,509,955Crane item - - 7 7 7 21 40,000 840,000 295,673 302,177 308,825 906,675Tractor item - - 14 14 13 41 20,000 820,000 295,673 302,177 286,766 884,616Tractorwith implement item - - 21 20 20 61 50,000 3,050,000 1,108,772 1,079,205 1,102,947 3,290,924Tractor + crane item - 22 22 21 65 30,000 1,950,000 696,942 712,275 694,857 2,104,074Sprayers Rtem - - 8 8 8 24 1,750 42,000 14,784 15,109 15,441 45,334Others amount 185,130 65,164 66,598 68,063 199,825

Subtotal Light Duty Machines 12,452,130 4,520,316 4,463,278 4,451,175 13,434,7694. Heavy Duty Machines

Grader item - - 19 19 18 56 190,000 10,640,000 3,812,064 3,895,929 3,772,080 11,480,072Loader(dragline) (tracked) item - - 3 3 3 9 170,000 1,530,000 538,546 550,394 562,503 1,651,444Loader-wheeled item - - 8 8 7 23 120,000 2,760,000 1,013,734 1,036,037 926,476 2,976,247Dozer D4 item - - 7 6 6 19 200,000 3,800,000 1,478,363 1,295,046 1,323,537 4,096,945Gradall-Bantam excavator item - - 16 16 16 48 300,000 14,400,000 5,068,672 5,180,183 5,294,147 15,543,001Tracked excavator item - - 5 4 4 13 150,000 1,950,000 791,980 647,523 661,768 2,101,271Excavator (wheeled) item - 12 12 11 35 170,000 5,950,000 2,154,186 2,201,578 2,062,511 6,418,275

Subtotal Heavy Duty Machines 41,030,000 14,857,545 14,806,689 14,603,021 44,267,255Total 58,981,731 21,365,378 21,225,126 21,045,862 63,636,367

ANNEX_L. O&M EQUIPM 9/15/97 7:55PM

IBRD 28711

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