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Folder Title: Uttar Pradesh Tubewells Project (02) - India - Credit 1332 - P009799 -Correspondence - Volume 8

Folder ID: 5765

Project ID: P009799

Dates: 1/19/1987 - 1/28/1988

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Jttar Pracesh Tubewells Project (02) - India - Credit 1332 - P009799 - Correspondence -

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Uttar Pradesh Tubewells Project (02) - India - Credit 1332 - P009799 - Correspondence - Volume 8

5765Document Date Document Type

January 28, 1988 Memorandum

Correspondents I ParticipantsTo: Ullrich Kiermayr, COFAUFrom: Michael Baxter, Chief, Agriculture Unit

Subject I TitleConsulting Assignment in India from Consultant Trust Funds for National Agricultural Research Project (Credit 1631-IN) and U.P. Tubewell Project(Credit 1332/Loan 124)

Exception(s)Personal Information

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2THE WORLD BANK

FACSIMILE TAANM TT L FORM 1988 JAN 28 Am 7:

CABLE SECTIONDate: January 27, 1988

Number of Pages :

From : michael Baxter, AS4NA

To : ...... af urcad A4AG (Dept, cod) .. .Rm. No.

Fax Number : .... 0. -

CCOMMENTS:

0 A4

ReyrteI 0261, Mr. de s B(o1vtte n iS a 4'd

Are you sure you wen to sig he1ter o U'AP toc?2

as intended in o

MB: g

A thcredby_

7Bx

T4E W4 B 3K/INTERNATIOHA1L F UJRfOFFICE MEMORANDUM

Date: , anuary 27, 1988

To: :, 0. Lafourcade Chief A54A6Through; r. Michael Sdxt- r, Crii AijN

Frnm: C.des Souvrie

Suoject: 1)D!A - eco je(OrCdi6 Lp2 PL I

Wi have revi eie tn Jrat dtr r at'A: ed t: yor 0+

January 12, 1988 and return thei herewth n am Psio, a- wP

consider appripriate. Sel ow a r ahc shudcaiy

thR proposad amendments,

2, E0s i ;ion of$"1:2

The Government q oar ot the

c osing date until arch 3, 19 i o a :nen1year

tensian, we should make ref C t 'j L Para 2

and 3 of the ?Iedrafted I1t ter

The Soer nment has r quoated a' xai s Jon f the :c t

scope, which would iniolve cnangie in u C d0cf the DCA, as follows:

Ui) 3200 10 / Iiprove P a T h r I econnection of about 540 eyist:cg l tinct

and (iii) the upgrading 3i 421 z I , -;( samended on 91//86) were 220, 6' 11 a .1increase, therefore, refers to IF0

4. Rii;location of Loan rvn.

These changes are not likey to maleri y -ng e thanolvidual categoriei of the preoent 4ihd rwal chedul o4 the

Credit (schedule 1 of the DCA) r Rather, textra expenditures linked to thoe ddit orai wor% arc I kely to

cause the Credit to be drawn dor in f'L I r"l :ain, ji any,therefore, may be n order a l ter , ay a y r c noNwhen we have an tpdate on cost tabd ide)t , do see

any reason to change "he lisourseen p <tage ;f :t ol1ac and 28 from 70 to 75Y opos- Oy r. asn

This would be cnt'rary to what wo y zi kro glu.

e 1 02 0I~i d

nr Karm e a Sete 1 1eee U0 '3 Sit Ih etters ofthe fCll,1q two erroes be ccrreGted c:e y t rad

3S070,OO0 ;istead of 4 1, 070 O C rne t

2,000,00f) aid 21 -45,270,V),) te d o 3 ,2 ,0 0 ( ty ' I

presume).

- Section 2lt {h) oI te P ct A WeedSecti:n 3.04 (a) f thI ProjQct r nzt later

t h 4n De m e 3.1 -- 6 rate tha J*ly e1and Weetn oh jplao Iha "dtbwl o

be assumed to pate ft 3 0huspran

Mut~~~ andil only ca'

a few havl rea: ed oyer Z, u r s

is not realiti: to expac' ao I i c nf cr

tnoa inc1uti: of this d b i~

'he reene tus

-e tio 303 i agr;-T

7. In th e pnutae ;ar* rf y4u 1r te4

to be deated: "SU bIect o ca i

3.01 and Section 3 ot of the Q'cjec st

that this particl1ar stiput on e e r:ats ae nt I

I en ds any par t icu Iar tgt h jo th Aan enecwh stae

0411 the provisicns o4 tn P v 't Agr ent,

hereby Shall remTaln in ful oc n fet

8. I trust that ycu arp iP t i t a n D

that we can proceed alon h actro p pr

your January i2, 19- ie

c: Messrs Grms av, n nrjh (A G d (AA p (L7GA3)

bcec: Pat, Sibraiiaan

CDB/s5

t u ,4 y-1 3 1 Ia

Tne Secre'ary tO the OYermen CY :Ministry 4 FinanceDepartmaet of Economic: Afa rsNeN Delhi

Secretary, leri gati on Do'part -, tSoveraert of Uttar PradeshVidhan SoudhaLucknowU p

Geritlimen:

Re. DevelnpIPIt rdi NCL332-IN - ecUnd U raa' bLi

Project)- Aandanrs ,f th e .dt and

iWe refer to tne Uee g o tre a N smn eo Utr

P a d aSh tu b e s Prj"t Iswe sa i ra zarw r ,a a dd nIe "n t errna t r"n al eveomn s c a te a cai ae

31, 1983 and to the Project 1- 4Ac tion ndState of Uttar Pradesh of t s d -l reter tc M

.P Josi 's letter dited >u 2i irs r

the captoned Project, d r -h lt n d ith

Date for the Credit,

,I a I pleased to inFot yu tI r n an

Pursuant to your abave requeets 'e A i'n atrz to ha ex t i

o; the Credit closing date n cIe y %rZh ., 198. An o.i'.alsecond year extensio until 1or7 Z wj t to the

satisfactory completion of the f r f Tro r

3In -articular, we wouc. x t h tifaatr v

progress to have been qad. o' fn

i) thq op e ino l r n an iii ao sru o wcrkrn udeI in tre ip ferjc (2200 PTWE

ii) t ha i P m t at c -e a rl sv , 2 Ttu p r hrea n t e c m a d ar a f t e e 2 0 i

wp 7

(i the dri ag an qu p e t f add ain !70 T E

(v) the elect- 4. 70 r, y u ti a 30 0 -,1

The possible seccr. yir a"'v cIdinvolve ty OarCh 3 , 1990:

ti the dr ill In Iqu4w of ,n a u in l20 P

tji the !ectr.Ecti f Pp adi i 70 ' a r d

(iii) the ull o m s i n g d i . : 4 d t raddi ti-o na I00PT

4. Ac ,:rdirlglyo the Assz' i in gr s to 0 h aa g n fS dul

I and 2 of the Development Crdit AA

t; th m lattar, and zir et

Pr o~l ~gjg

(1) Sectio 2, 1 V - - ,',~

real as 4oll=wi

'not latec t Sept0mb , r to the

recoZe i ati o h

:, Secticn 3.041"0h Po et g - t iz -n 0

read 3S 5olw

S not later thnDc tr0 98 . t hAssociation fO t ci n ir,. e

0f a t Shta n nrV c t ;syst ems cider ttake into Q t vc j tr e yr e Iiability o-' 3h 7,iat o s r c w l a t e

Qua!ity cO a'' d

as foil ofqs,

"Until .he Sae d a g y tm t! f t ed "i n Sec o Cof this S g amn laapid t r ra Eh s halcn

to ampl o t e t b e l iria i n s s e n the

Proj cc, t e aurn Soueti we rca ytem

Settin wat, :h r e vn ih 0a i q r wS of th e

C 4p ta a n Ih ap r ti n ni t en a n e C uS ta :i z C

t ub Ct - Q rr P TIo fvte s 4u r vip q to C t u de r a n

byApi ar c br31 a y "

Thes m g e s : : ' : a o r . . l

-

3

''IA

raner, the AjCi ats the Credit 7

it Agreement. All th pvis*ors V v ent dit A9'* t

a5 dmende* 6ereby, shall r-em Il 'j fc n e4t

sigqrmg anld dating the anclos ?- mr af efrain Q n ,0i kirdl y

return it t0 us.

Country sea t) Ia t

A"'tachMentsi and 2

Autharised Reprnt

ND: A - eodUsP eibwisPra:

?aragraph I o# Sced ep t ed - a"

dated Ma8 3 93 0 1nd sM 0

Tihdaw C a nI ;Adi

out of t0 pIeroceeds f t d ,at r h o e

Credit t each Category a., -o , tr rtas s t

be financed in each C

I1 Civil works:(a) Eccpleted

tub e-el l

systemsu0

W4 Cer Q G d W vunder Part C athe projec: -*

(c) Buildlngs 7 0 "17

(2" Equipsent andMaterials:

(a) 5t 0 and poIy

yipyl c ,Ioride

pipes, Casingsand fittings 37

(b) Equipment andvehiclEs forResearcV andDeyulopentOperation andaintenance,

AgriculturalDevelopmet edMonitorig and

Ealuation 9,0 0 O Ca xa 2- act ry cos ) ;.,I

Uf 2nca exnend tui Kort r v x,. s cpr ocu

Oc-

* __________ j ~~ ~ C I HV'~3 K2I J~

3) Agri ---LturalDive: ;2aen%ActiieB

(4) Resau:f andDevel :3$ntmonit:rilg andEva!uiticn, andTr ainirlq

(5) Part I of thePr n j. at

6) UnalIocate dTotal

Port. C aWd f W n-1-t credit

Agreemtnt be aeded as of F;rA r

(i) Construct , rai n z

of Sbo t 77'1 4,b -o 'ih a m r vid d:sill, rach"

capable - 11SCI yA 150 CP Cmotors pe 1. r of about

Aton watintena9

paeA - Tcapable~~~Z' abou 21' m r aot30 u

nectars;,

(ivi) C0r$trutic l4 hz r2'i i Ai t~inr of buried?

(W ) tC i -1. d

3.P t i a~s4 Nela e e tedc-g auie ocne

irru tion ute rom he o et vlives 11th ure

(HY; CanstrL. ic -was m eds ra y i i n; ea%7a ,yte ' o .h 11 1s ond r 1t A ( l a

Cc t h 1 Vol I

T~ePce e Pe ojdt~ Arat needntu tia oePe;_o.~ ii tme a

this c hr

4. The last sentarce A c d l s rp a:d b the fallading'The Project is expected to je roita b ic - 1 V99

- 5 SWM0 MHARGINN WOMd

The SeCretiry to the (cMinistry &f Finance

Department of Econamit Me i A r

New Delhi

Secretary, Jrrigation De at

Government of Uttar Pradpsn

Vidhan SOudhaLucknowUP

Gentleam;

Re: IFAI Lob r Avrs-n 'T! A O jS'ct Y r POW

T ub , Vxltril 11 Eult l

ie rsfor t: tit lO n- -:,a n '-.7Mli ar P ad s Tubawplki

Project) between India (th Borr d th ternation

Fund for Agricultural Onvelnoien - 41 v ate i a 28 WM e als

refer to Mr, C.P. J ashi's ettn d; - 3 A 2i , :97 r .- ting ()

certain changes to the -t P o -i c n t eo ter and

discussed with superviScV mi i s 1 : Intern'n DY e 1opment

Association; and (ii) e r o a t 7 tDl Qoan.

2. I am pleased to : y a ar due 0nt nd

pursuant to your abover a , the txt s i

of the Credit closing ae ay & t9l An 3

seeond year extension l ti ar ,u ect to the

satisfactory completion of Lr+ i wT

3. In partircular, 4r wvu d v Dh 4; - Z! sat s arf r'

progress to have been mad.n ;r ,

I ) the wplatir' n- 11 Am an iil tructic wc!

included in the n a ;c.pu of the g ct t2200 POP

Iii) the elactrific -c 1nn C, s 1 i 2200 M s;

(iii) the imp1a-:Yn 'w*tura dKOOLflit and

support pr : 11 O rn 20Os

) the dri/ ong r I I

6)i~ the O

n ov r inb1y COd I a tx . s

tnvh v ~o r Avo"eletio a y sert c 3 -'~

tC C4y ar mIln i

i the P, c ri i as a af c td I

th , a Agcremen , a hiudar a t aeda ceua t

Sh edul 4a A eto 5% 0et c6 td 1C 0 nn, 7e

Agre-m, hereby as follnwi

n) Se to n I th)o h a r e e t i w e or

011 OWS

$ rsev z 2.~ ~ 4 r ,r

JhArg ym r tu el orig Iytu ser tpr

in to th e saityaer iiyo h

pro t

f1llos:

appij to thfull ria o ytm ne hProject, th c. n eueee d e ig ytm

ietti'g wae -h g -nteD n rvsso

ty April 3

IhOSO mnmnssa erfetv a of e rr . E

Date of te Loan pursun 0oScin3 M o h cn Altepei n

cf the L v Agreement, s m ddh r hl e

effect.

signing and dat.a h cco e ar fn7r t a te iOreturn it to us,

F IRED-

I NDI A

- . :

A* R n 4

1 -1

1-

- -- 4

;on:e 4s444 4 4a 4n 4

CC

r n r t

4 --

44 4:I 44

4, 443-

* 4 4 .x

~4 t - --- e4

~ ~ 4444 .h 4 -4

~~ ~''r ~ S 64 6 44-

FORM NO. 27 - OCR

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INTBAFRAD

NEW DELHI, INDIA

FOR BAXTER/DES BOUVRIE5

MOST GRATEFUL TO HAVE YOUR EARLY RESPONSE TO MY FAX OF JAN. 126

TRANSMITTING DRAFT LETTERS TO GOUP RELATED TO EXTENSION OF7

CLOSING DATE UP PUBLIC TUBEWELLS II (CR. 1332-IN). REGARDSS

LAFOURCADE

12

13

14

15

16

17

19

20

21 END

OF

22 TEXT

PINK AREA TO BE LEFT BLANK AT ALL TIMES

INFORMATION BE LOW NOT TO BE TRANSMITTE

CLA 0F SEVC TELEX DAEL 1 /22/88

UBJECT lRAFTED 9Y EX TENSION

INDIA - UP Public Tubewells II RSLade:saf 76926CEARANE AND PY DISTRIBUTI N A THORIZED BY Nr no r

Olivier - cAide Chief, AS4AG

Country Depar men IVI SECTION BELO FOR U SE OF C ABLE SECTION

CD

w

&0

CDC)0

CD

THE WORL? iANK iNTF4NATIONAL FINANCE CORPORATION

OFFICE MEMORANDUMDATE: January 19, 1987

TO:. Mr. B. Alisbah, Director, AS4DR A

FROM: Olivier Lafourcade< ief, AS4AG

EXT.: 76921

SUBJECT: INDIA: Mission to India - December 7 - 21, 110Back-to-Office Report /1:

1. In accordance with terms of reference dated December 4, 1987, I

visited India for two weeks, from December 7 to 19, 1987. My mission had

several objectives, but was primarily intended as an opportunity to go to

the field to become familiarized with several operational aspects of ourlending program in agriculture in India. In this connection, I spent three

days in Uttar Pradesh where I had discussions and field visits related to

the Himalaya Watershed Project (Ln. 2295-IN) and the UP Tubewells II Project

(Cr. 1332-IN). I also spent three days in Karnataka including field visits

and discussions on the Pilot Rainfed Project (Cr. 1424-IN) and the KarnatakaTanks Project (Cr. 1116-IN). In both states, I had discussions with keystate officials. In addition, I spent several days in Delhi where I haddiscussions with a number of Government officials on the Bank lendingoperations in agriculture, both ongoing and planned. Finally, I spent sometime with Mr. Baxter, Chief of the Agricultural Unit in Delhi and othermembers of the New Delhi mission in reviewing selected operational andadministrative issues. These various aspects are being briefly reported onbelow.

Uttar Pradesh

2. Himalayan Watershed Project (Ln. 2295-IN). A brief one day visit tothe Secretary of Forestry and the management of the project in Lucknowconfirmed the difficulties which the project is facing and the need for themid-term review as well as for some fundamental revision in the project'sconcept and approach. It appears that the key issue is that of managementwhich is chronically weak and suffers from being physically far removed fromthe project area. In spite of some interesting recent development,especially in the testing of new low cost technology of soil and moistureconservation, in substitution of what had been originally planned and hadturned out to be excessively costly and inadapted, there must be some seriousdoubts as to the longer term viability of this type of project without amajor re-thinking of the whole management concept. This should include theareas of interdepartmental cooperation and clear separation ofresponsibilities and accountability between field and state level managementand administration.

P-1867

-2-

3. UP Tubewells II (Cr. 1332). I spent a one day field visit along with

Messrs. Baxter, des Bouvrie and Bredero of AS4NA. This brief visit

illustrated both some of the positive aspects of the program of public

tubewells assisted by the Bank as well as some of the serious problems which

affect the program. In general, it appears that the technical aspects of the

program are well under control, with physical construction well in hand by

the technicians in the Department of Irrigation. The reliability of power

supply to the dedicated lines is now virtually assured, and the systems of

water distribution in the command areas seem to be operating fairly

efficiently with the participation of the local population (through the water

committees). In general also, the public tubewell approach seems to be a

fairly cost effective way of providing water in areas where other

alternatives of having access to water do not readily exist.

4. There are however a number of problems which were made quite apparent

during the visits:

(a) it is not always clear that there are sound enough criteria to

decide on the location of the cluster of proposed tubewells, or

that existing criteria are being followed; thus, the exact

situation of the groundwater table may not be sufficiently known,

leading to salinization or waterlogging once the tubewells are

installed;

(b) there are clearly areas where the technical, economic and

financial aspects of the complementarity (or lack thereof)

between private deep tubewells, private shallow tubewells and

public tubewells have not been worked out;

(c) the whole issue of cost recovery seems to be very problematic,while one can expect that operation and maintenance should not

cause major technical problems, given the good technical knowhow

which is being used; and

(d) there are obviously some serious doubts that the optimum

agronomic use is being made of the improved water supply;

agricultural extension needs to be made more effective, both at

the time of assisting farmers to switch from rainfed to irrigated

agriculture (or at least to a system of reliable water supply)

and in the maintenance of advice to farmers after the period of

adjustment has been completed.

5. In sum, the visit confirmed that while the ongoing project is

progressing well with lots of good things to show for, the continuation of

the support for the public tubewell program by the Bank should be made

conditional to the satisfactory resolution of a number of problems and to at

least providing some answers to a few questions. In essence, therefore,

consideration of a proposed UP Tubewells III by the Bank, as requested by

A

-3-

GOUP and GOI, should follow the conduct of the proposed groundwater study

which is designed to address some of the key issues affecting the program.

Karnataka

6. Pilot Rainfed Project (Cr. 1424-IN). A brief field visit to the

project areas, with Messrs. Baxter and Grimshaw, confirmed the considerable

progress which was made in the development of low cost technology for soil

and moisture conservation, essentially based on vegetative protection. It is

quite clear that the use of contour planting as well as the use of vetiver

grass as vegetative protection are providing a very attractive way of

conserving moisture in-situ. There is increasing interest on the part of

both farmers and state government officials in the value of the approach

which is now being widely demonstrated and disseminated throughout the state

in the context of watershed development. In fact, some of the demonstration

fields are nothing short of spectacular in the impact of the measures adopted

by farmers on crop yields. As a result, state government authorities (as

explained emphatically by the State Development Commissioner, Mr. Saifullah)

have indicated their strong desire to introduce these conservation measures

in all their development efforts in the state in the context of watershed

development programs.

7. With all the positive developments coming out of the ongoing pilot

project, several aspects still require some attention if the full benefits of

the proposed approach are to be achieved. First, there is obviously a need

for improving and increasing the level of training in the proposed approach

at all levels of government institutions. Field extensionists and their

supervisors are yet a long way from having fully grasped all the technical

aspects already evident from the ongoing experiments and demonstrations to be

fully effective in their efforts of training farmers. Second, there must be

increased efforts to ensure better coordination among agencies, especially

between departments of agriculture and forestry so as to ensure more

effective complementation of activities on private farms (primarily for crop

production) and on publicly owned lands (especially for tree plantation).

Third, probably greater initiative could and should be taken by field

officers, extensionists and DOA agents to adapt and adjust experiments and

demonstrations to local circumstances. This applies particularly to areas

such as spacing, timing of planting, choice of tree species, intercropping,

methods of sowing, shape of contour planting, V-ditching for tree planting,

etc.

8. Karnataka Tanks (Cr.1116-IN). The project is close to being

completed, with current closing date on March 31, 1987. The field visit

largely confirmed that the project has been quite successful. With a target

of about 80 tanks to be achieved by the project's end, it is clear that the

tank approach is well adapted to the local circumstances and offers a

reasonably cost effective way of providing access to water, hence greater

security for crop production, to a large number of small farmers in a large

number of areas scattered around the state. The technology of tank building

-4-

and the physical structures of water distribution are now well under control,

with good cost effectiveness and reasonably competent performance by the

Department of Irrigation and private contractors. A number of areas,

however, still require substantial improvements. First, there is a need for

improving and increasing the level of assistance to farmers by the Department

of Agriculture. While the supply of water is ensured with a fairly high

degree of reliability, and the distribution of water among users is also

becoming more equitable and reliable (through the "warabandi" distribution

mechanism), farmers are still far from taking the best advantage of this

improved water supply situation, from an agronomic and production viewpoint.

Second, there is a need for increased cooperation among agencies, especially

between the Departments of Irrigation, Agriculture and Forestry, to ensure

that appropriate means and technology are being used for better protection of

the catchment areas.

9. There are some 25,000 tanks in Karnataka, most of them quite old and

many in very poor condition with low level of utilization (in many cases due

to siltation, or improper maintenance). With the experience gained with the

Bank financed project, it is clear that there is considerable potential for

rehabilitation of some of these existing tanks and for introduction of

improved practices for more efficient utilization of water. In fact, a

program of tank rehabilitation would be a reasonably cost-effective way of

providing water and increasing agricultural production for some of the least

privileged segments of the rural population in the state. The state

government (through the Development Commissioner) expressed interest in

seeking Bank support in the financing of such a program. As we have already

received a similar request from the neighboring state of Tamil Nadu, there

may be some merit in considering a Bank operation in support of a

comprehensive program of tank rehabilitation (or "modernization" as it is

presented in India) in both states. Subsequent discussions in Delhi (DEA and

Ministry of Water Resources) showed that there is considerable interest for

this idea at the central level.

Orissa Irrigation II Project - Dam Safety Issues

10. The receipt of the report by the panel of dam safety experts

obviously has created quite a stir in a number of government circles,

including in the Union Ministry of Water Resources, the Central Water

Commission (CWC), and DEA. At the state level, the report is also known to

have caused serious reactions. What I could perceive as a general undertone

to the reactions included: (a) why single out Orissa from among the various

states where the Bank is involved in the irrigation sector; (b) after all,

without disputing the professional judgement and integrity of the four

expatriate experts, they may not have had access at the time to all the

necessary information, because of the short time available to them; (c) their

recommendations are excessive, and in fact reinforce the argument that the

Bank is imposing standards for irrigation that the states and GOI cannot

follow, with the result of two sets of standards, those for Bank financed

projects and those for other projects. In several conversations, it appeared

-5-

that many Indian officials simply believe that the recommendations of the

report by the experts are excessive in terms of manpower (700 sw of

consultant expertise) needed to correct the situation in Orissa alone.

11. As it were, it is clear that there is a general feeling of

frustration and irritation in several government agencies having to do with

irrigation. The Bank is viewed as being heavy handed and arrogant in the way

in which it has conducted its dialogue with the Indian Government in this

difficult situation. To all my interlocutors, I confirmed that the Bank has

no intention to be confrontational in its dealing with this situation. It

does have, however, a responsibility to present and explain its views on a

matter of such grave seriousness as dam safety, and to insist on adequate

remedies and corrective actions to be taken.

12. In my view, part of the difficulty at this time is that it is not

all clear whether GOI, its various interested agencies (CWC) and state

governments and institutions recognize the seriousness and importance of the

situation, i.e., the shortcomings of institutions in recognizing and

admitting their own weaknesses and shortcomings.

13. In relation to this issue, however, I discussed the matter of the

organization of a workshop/seminar on dam safety issues. This followed on

the request made by the Secretary of Finance, Mr. Venkitaramanan, at the time

of the Annual Meetings, and the related subsequent letter addressed by the

Bank to Mr. Bajaj in October to which the Bank had received no reply. During

my visit, I sensed some uneasiness about the idea of the seminar, especially

in CWC and in DEA, for understandable reasons (CWC is afraid that it may end

up as the accused in this seminar--and that the seminar may turn out to be

too much of a Bank-India confrontation on this subject). In fact, we have

last week received an official reply from DEA which gives the clearance for

the workshop. We will need to be careful about the way we present and assist

in the organization of the seminar.

National Seeds III

14. During my visits, I met with Mrs. Vohra (Additional Secretary in the

Ministry of Agriculture) to review the status of the National Seeds III

Project. The Project has now been cleared by the Loan Committee and, in

agreement with DEA, it had been decided to hold pre-negotiations in Delhi

with formal negotiations immediately following in Washington.

Pre-negotiations had been planned for early January 1988. However, after a

series of meetings in Delhi with representatives of the Ministry of

Agriculture and representatives of the various states interested in

participating in the project, it was decided that the states should be given

more time to go over the documentation given to them by the Bank (e.g., draft

SAR) before meeting again for the pre-negotiations. The states are expected

to make their positions and comments known by the end of January, which would

leave little chance for getting pre-negotiations underway before

mid-February.

a

-6-

15. In fact, if appears that the change of key personnel in the Ministry

of Agriculture is now the major cause of delays in the processing of the

project. Both Messrs. Shenoi and Arora have left the Ministry; the former

was Additional Secretary and the latter was Joint Secretary and both had been

the key driving force for the project in the Ministry. Mrs. Vohra, who

replaced Mr. Shenoi, is not yet full convinced of the interest of the project

(in spite of the large amount of effort by Bank staff and others to educate

her) and is now putting into question some of the agreements reached earlier,

before, during and after the appraisal. In fact, she is now taking a very

bureaucratic and cautionary approach, instead of being the promoter of the

project as her predecessor had been. In turn, Mr. Arora has been recently

replaced by someone (Mr. Rana Rao) who has very little understanding and

knowledge of the whole project background.

16. At this time, it would be counterproductive to try to force the issue

with Mrs. Vohra (either in going above her in the Ministry to Mr. Sastry,

the Secretary, or in triggering a strong representation from DEA, or both).

This would run the risk of antagonizing her (she may be in her position for

two or three years) and would in anyway lead to problems for the project if

she is not fully in support. It seems that the best approach is to continue

to educate her and the Joint Secretary, and to continue to maintain and

strengthen the support for the project at the state level. It remains,

however, that the processing of the project may suffer yet from further

delays.

cc: Messrs. Wiehen, Golan, Grimshaw, Ritchie, Skolnik, Gould, McCarthy,

Greene, Blinkhorn, Baxter, Gopal, Vick

Ms. DavisAS4AG StaffAS4NA Staff

January 18, 1988

Mr. J.P. GuptaEngineer-in-Chief (I)Irrigation Dept. GOUPCanal ColonyCantt RoadLucknow 226 001

Dear Mr. Gupta:

Re: UP Tubewell Project (Cr.1332-INT)- Monitoring & Eva

I enclose copy of the" Draft Operational Guide to Monitoring

Irrigation-Water Management", which we have prepared for use within the

scope of the Bank funded National Water Management Project.

Since the Second UP Tubewell project also has a significant M&E

component, specifically to determine how and to what extent farmers make

use of the groundwater facilities provided under the project, I suggest

that you review it to determine which part of these guidelines (e.g.

Annex 1 and 2) would be applicable to your particular requirements. I

think the guide is self explanatory but would be happy to discuss its use

with you during my next visit to Lucknow.

With kind regards,

Yours sincerely,

C. des Bouvrie

Senior Irrigation Engineer

bcc : Messrs. Cunningham, Diewald, Pai

Drafted by CdB and despatched in his absence

Cd3:i

THE WORLD BANK/INTERNATIONAL FINANCE CORPORATION ) 6

OFFICE MEMORANDUDATE: January 12, 1988-

TO: Distribution

FROM: John F. Cun gham, ASTAG

EXTENSION: 78116

SUBJECT: INDIA - Drought Relief Assistance

1. To provide drought relief assistance to India, a letter from Mr.Karaosmanoglu dated November 10, 1987 to Secretary, DEA amended the percentageof expenditures to be financed for selected disbursement categories of sevenprojects in the agricultural sector. As yet, these amendments have had littleeffect on disbursements. In particular, there has been no effect on the threeprojects with Special Accounts.1

2. To accelerate transfer of funds to GOI, it may be worth increasingthe amount of the Special Accounts for all Indian Credits2 for one or perhapstwo replenishments with the increased replenishment retroactive to anappropriate date to maximise transfer of funds. This date would be decidedafter establishing when the Special Accounts were last replenished. This onetime arrangement would transfer to the Reserve Bank of India substantial-fundsimmediately without linking the sum transferred to project performance. Ifselected projects continue to disperse slowly, all that would happen would bethat next replenishment of the Special Accounts would be put back in time, butwithout altering project provisions carefully agreed at negotiations. 3

cc: Messrs. Wiehen (ASIVP), Ritchie, Blinkhorn (AS4CO), Golan (ASTDR),Grimshaw, Frederiksen (ASTAG), Lafourcade, Perry (ASTAG).

JFCunningham:hw

1/ Credits 1332, 1737 and 1770.

2/ See letter to Secretary, Ministry of Finance, of March 11, 1986 and allside letters relating to projects with Special Accounts processed afterMarch 11, 1986.

3/ The percentage of expenditures to be financed for each category isdesigned at appraisal so that there are sufficient funds to see thatcategory through to project completion and to reflect the relativepriorities between categories.

THE WORLD BANK/INTERNATIONAL FINANCE CORPORATIONWashington D. C. 20433

U.S.A.FORM NO. 184

FACSIMILE TRANSMITTAL FORM -

CABLE SERVICES USE ONLYMSG. NUMBER:

QATE:

DURATION OF CALL; MINUTES

PAGES: (Including this page)

FRONM? 0# Lafourcada, Chief, AS4AG Extenslon 7921 Dept/Dv., No.. 256/20

TO. COMPANY/ORGANIZATON: 'INTBAnRADCITY AND COUNTRY: NEW DELHI, INDIA

FOR ATTENTION OF mesave. ). Baxter/Ci des ouvria

FAX NUMBER[MACHINE TYPE:

SUBJECT: INDIA - Second UP Public Tubewelli roj (Cr. 1332-N)Extension of Closing Date

At ched are the followingiz

1. Memo on Extension of Closing Date.

2. Draft amendmeAnt letter to GOI/GOUP from IDA.

udment letter to GOI/GOUP from IFAD-

Note: The amendment letters will be sent for formallclearanc@ by the Legal

Departments of IDA and IFAD once we have agreed the details of the amendments.

cc:

Transmission Authorized by: 0. Lafourcade<isf, AS4AG

Hyacinth E-3045Original to be returned to: Room No.. E-3045

If you experience any problem, with this transmission, please call back as soon as possible."tone: (202) 477-2805/202t

-telecopier: RAPICOM 6300 (GR. II, 1I1) (202) 477-845?RAPIFAX 100 (with GR. 1I1) (202) 477-8164PANAFAX PX-100 (GR. I, 11, 1II) (202) 477-6391

TELEX: RCA - 248423 WORLDBK; ITT - 440098 WORLDBANK;FTCC - 82987 WORLDBK; TRT- 197688 WORLDBANK WUI - 64145 WORLDBANK

THE WORLD BANK/INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUMDATE: January 12, 1988

TO: Messrs. M. Baxter/C. des Bouvrie, NDO

FROM: 0. Lafourcade Chief, AS4AG

EXTENSION: 76921

SUBJECT: INDIA - Second UP Public Tubewells Project (Cr. 1332-IN)Extension of Closing Date

1. Extension of Credit Closing Date requires amendments to the legaldocuments. Your draft letter of December 18, 1987 does not follow thestandard format for changes in legal documentation. The attached draftletter to GOI/GOUP details the changes in the DCA and PA. Since this projectis cofinanced by IFAD, the IFAD legal document will also have to be amended,thus a similar formal letter from IFAD is required (draft attached).

2. Schedule 1 and 2 of the DCA will have to be amended in both the IDAand IFAD documents. We are not certain of the amendments in these schedulesas indicated in Cunningham's draft letter to Mr. Das, Secretary Irrigation,GOUP, of November 17, 1987 and detailed in his memo of November 18, 1987.

3. Annex 1 of your memo of October 29, 1987 indicates that the projectscope has already been changed under Parts A (i) and Parts C and D of Schedule2. These changes were relatively small, but it appears that Schedule 2 of theDCA has not been formally amended to reflect these changes. Thus we haveallowed for these changes and they have been incorporated in our revision ofSchedule 2 for the proposed amendment letter.

4. When the amendments to Schedule 2 are agreed, Schedule I of the DCAwill then have to be amended accordingly, taking into account the balance ofundisbursed credit by categories so that the Credit would be fully utilized.This may entail changes to the percentage of expenditures to be financed andthus may further change the amendments detailed in the Bank's letter ofNovember 10, 1987. It will also be worth adjusting the amounts of the Creditallocated to the various categories (as shown in Attachment 1 to the amendmentletter).

5. Para 5 of Mr. Karaosmanoglu's memo to Mr. Qureshi of October 9, 1987stated that a condition of Credit extension would be compliance with the legalagreements, with specific reference to cost recovery. Thus, either GOUPcomplies with the covenants (Para 32 to 41 of your October 27 Memo) beforeMarch 31, 1988 or we should revise covenants under the amendment letter. Toavoid problems or delays, we suggest that the relevant Sections of the PA beamended as given in the draft letter attached. As we see it, four Sections ofthe PA of the IDA credit and IFAD Loan would need amending. The compliancedate should be revised for socio-economic study (Section 2.11(B) of the PA andSchedule 4, Section 7 of IFAD Loan Agreement). Cost recovery/water chargescovenants should be amended as outlined in our draft letter of November 17,1987 to Mr. Das. Thus Sections 3.04 (a) and (c) and Section 3.05 of the PAand Schedules 4, Sections 8 and 10 of the IFAD Loan Agreement would be amendedaccordingly (see attached draft letter).

-2-

6. To summarize, we aggest the following action plan:

(a) You clear the attached draft amendment letter or alternativelysend us soonest your suggested amendments.

(b) Once we agree on the language and Schedules I and 2 of the DCAand Sections of the PA, you informally discuss the changes withGOI/GOUP and obtain their concurrence in principle.

(c) We will then coordinate with IFAD and suggest amendments to theIFAD Loan Agreement (as attached).

(d) The draft amendment letters will then be formally cleared by IDAand IFAD (i.e. respective Legal Departments) prior to release toGOI/GOUP.

7. We would be grateful for your response/suggestions soonest

Attachments

cc: Mr. Slade (AS4AG), Grimshaw, Frederiksen (ASTAG), Gopal (LEGAS).JFCunningham:hw

DRAFTThe World Bank 1818 H Street, N.W. (202) 477-1234INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS

January ..., 1988

The Secretary to the Governmentof India

Ministry of FinanceDepartment of Economic AffairsNew Delhi, India

Secretary, Irrigation DepartmentGovernment of Uttar PradeshVidhan SadhaLucknow, India

Re: Development Credit No. 1332-IN (Second Uttar Pradesh PublicProject) - Amendments of the Development Credit and ProjectAgreements

Gentlemen:

We refer to the Development Credit Agreement (Second Uttar PradeshTubewells Project) between India (the Borrower), as amended, and theInternational Development Association (the Association) dated March 31,1983 and to the Project Agreement between the Association and the State ofUttar Pradesh of the same date, as amended. We also refer to Mr. C. P.Joshi's letter dated June 23, 1987 requesting (i) certain changes to thecaptioned Project, described in the letter and discussed with supervisionmissions of the Association; and (ii) extension of the Closing Date for theCredit.

I am pleased to inform you that, after due consideration, andpursuant to your above requests, the Association agrees to the amendmentsof Schedule 1 and 2 to the Development Credit Agreement as set out in theAttachments to this letter, and of Section 2.11(b), Section 3.04(a) and(c), and Section 3.05 of the Project Agreement, hereby as follows:

Project Agreement

1. Section 2.11(b) of the Project Agreement is amended to read asfollows:

"not later than September 30, 1988, furnish to the Association forits review and comment the results and recommendations of such study."

2. Section 3.04(a) of the Project Agreement is amended to read asfollows:

'not later than July 31, 1988, furnish to the Association for itsreview and comment a proposal for establishing a water charge system fortubewell irrigation systems under the Project; such water charge systemshall take into account, inter alia, the efficiency and reliability of the

irrigation service as well as the quality of water provided;"

iTr 440098 RCA 248423 ' WUI 64145

-2-

3. Section 3.04(c) of the Project Agreement is amended to read asfollows:

"set water charges at levels that shall ensure that by July 31,1988, water charges for a tubewell assumed to operate for 3,500 hours perannum shall cover:

(a) the average cost of operation and maintenance for a tubewellirrigation system under the Project; and

(b) a reasonable portion of the capital cost of such tubewellirrigation system, taking into account farmers' repaymentcapacity.

4. Section 3.05 of the Project Agreement is amended to read asfollows:

"Until the water charge system referred to in Section 3.04 of thisAgreement is applied, Uttar Pradesh shall continue to apply to the tubewellirrigation systems under the Project, the current volumetric water chargesystem, setting water charges on the basis of reviews of the capital and ofthe operation and maintenance costs of such tubewell irrigation systems,such reviews to be undertaken by April 30 and October 31 each year."

These amendments shall be effective as of January 1, 1988.

Further, the Association has established March 31, 1989 as theClosing Date of the Credit pursuant to Section 2.04 of the DevelopmentCredit Agreement, subject to compliance by March 31, 1988 with Section 3.01and Section 3.06 of the Project Agreement. All the provisions of theDevelopment Credit Agreement, as amended hereby, shall remain in full forceand effect.

Please confirm your agreement with the foregoing amendments bysigning and dating the enclosed form of confirmation and then kindly returnit to us.

Sincerely yours,

0. LafourcadeChief, Agriculture Operations Division

Country Department IVAsia Region

Attachments 1 and 2

CONFIRMED:

INDIA

BY

Authorized Representative

DRAFTAttachment 1

INDIA - Second Uttar Pradesh Public TubewellsProject - Credit 1332-IN

Paragraph I of Schedule I to the Development Credit Agreement dated March31, 1983 be amended as of January ......., 1988 as follows:

Withdrawal of the Proceeds of the Credit

1. The table below sets forth the Categories of items to be financed outof the proceeds of the Credit, the allocation of the amounts of the Creditto each Category and the percentage of expenditures for items so to befinanced in each Category:

Credit Allocated Z of(Expressed in Expenditures

Category SDR Equivalent) to be Financed

(1) Civil works:

(a) Completedtubewellsystems 41,070,000 75Z

(b) Completedworks underPart C ofthe Project 1,720,000 75Z

(c) Buildings 2,000,000 75Z

(2) Equipment andmaterials:

(a) Steel and poly 33,270,000 75Zvinyl chloridepipes, casingsand fittings

(b) Equipment and 1,990,000 10O of localvehicles for expendituresResearch and (ex-factoryDevelopment, (cost) andOpertion and 70Z of localMaintenance, expendituresAgricultural for otherDevelopment items procuredand Monitoring locallyand Evaluation

-2-

Amount of theCredit Allocated Z of

(Expressed in ExpendituresCategory SDR Equivalent) to be Financed

(3) Agricultural 3,630,000 60%DevelopmentActivities

(4) Research and 730,000 60%Development,Monitoring andEvaluation, andTraining

(5) Part J of the 9,070,000 100%Project

(6) Unallocated 120,000

TOTAL 91,600,000

DRAFT

Attachment 2

INDIA - Second Uttar Pradesh Public TubewellsProject (Cr. 1332-IN)

Parts A, C and D of Schedule 2 to the Development Credit Agreementbe amended as of January ......, 1988 as follows:

1. Part A is amended as follows:

(i) Construction, installation, operation and maintenance ofabout 3,250 tubewells with an improved design, each capableof automatically discharging about 150 cubic meters perhour to serve a command area of about 100 hectares.

(ii) Construction, installation, operation and maintenance ofabout 70 tubewells with an improved design, each capable ofautomatically discharging about 300 cubic meters per hourto serve a command area of about 200 hectares.

(iii) Construction, operation, and maintenance of buried pipewater distribution systems for each of the tubewells underParts A(i) and (ii) of this Schedule as well as commonfield channels required to convey irrigation water from theoutlet valves of the buried pipe distribution system tofarmers' fields.

(iv) Construction of access roads from the existing feeder roadsystem to the tubewells under Parts A(i) and (ii) of thisSchedule.

2. PART C is amended as follows:

Connection of about 700 existing tubewells in the ProjectArea to independent electrical power transmission linesfrom the feeder lines under Part B of this Schedule.

3. PART D is amended as follows:

Upgrading of about 450 existing tubewell irrigation systemsin the Project Area to the design standards of the tubewellirrigation systems under Part A of this Schedule.

4. The last sentence of Schedule 2 is deleted and replaced by thefollowing: "The Project is expected to be completed by March 31, 1989."

DRAFTThe World Bank 1818 H Street, N.W. (202) 477-1234INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS

January ..., 1988

The Secretary to the Government

of IndiaMinistry of FinanceDepartment of Economic Affairs

New Delhi, India

Secretary, Irrigation Department

Government of Uttar PradeshVidhan SadhaLucknow, India

Re: IFAD Loan Agreement 124-IN (Second Uttar Pradesh PublicProject) - Amendments of the Loan Agreement

Gentlemen:

We refer to the Loan Agreement (Second Uttar Pradesh TubewellsProject) between India (the Borrower), as amended, and the InternationalFund for Agricultural Development (IFAD) dated July 28, 1983. We alsorefer to Mr. C. P. Joshi's letter dated June 23, 1987 requesting (i)certain changes to the captioned Project, described in the letter anddiscussed with supervision missions of the International DevelopmentAssociation; and (ii) extension of the Closing Date for the Loan.

I am pleased to inform you that, after due consideration, andpursuant to your above requests, the Fund agrees to the amendments ofSchedule 1 to the Loan Agreement as set out in the Attachment to thisletter, and of Schedule 4, Section 7(b), Section 8(a) and (c), and Section10 of the Loan Agreement, hereby as follows:

1. Section 7(b) of the Loan Agreement is amended to read as follows:"not later than September 30, 1988, furnish to the Fund for its

review and comment the results and recommendations of such study."

2. Section 8(a) of the Loan Agreement is amended to read as follows:"not later than July 31, 1988, furnish to the Fund for its review

and comment a proposal for establishing a water charge system for tubewellirrigation systems under the Project; such water charge system shall takeinto account, inter alia, the efficiency and reliability of the irrigationservice as well as the quality of water provided;"

3. Section 7(c) of the Loan Agreement is amended to read as follows:"set water charges at levels that shall ensure that by July 31,

1988, water charges for a tubewell assumed to operate for 3,500 hours perannum shall cover:

frT 440098 RCA 248423 WUI 64145

-2-

(a) the average cost of operation and maintenance for a tubewellirrigation system under the Project; and

(b) a reasonable portion of the capital cost of such tubewellirrigation system, taking into account farmers' repaymentcapacity.

4. Section 10 of the Loan Agreement is amended to read as follows:"Until the water charge system referred to in Section 8 of this

Agreement is applied, Uttar Pradesh shall continue to apply to the tubewellirrigation systems under the Project, the current volumetric water chargesystem, setting water charges on the basis of reviews of the capital and ofthe operation and maintenance costs of such tubewell irrigation systems,such reviews to be undertaken by April 30 and October 31 each year."

These amendments shall be effective as of January 1, 1988.

Further, the Fund has established March 31, 1989 as the ClosingDate of the Loan pursuant to Section 3.04 of the Loan Agreement, subject tocompliance by March 31, 1988 with Section 4.08(c) and Section 11 ofSchedule 4 of the Loan Agreement. All the provisions of the LoanAgreement, as amended hereby, shall remain in full force and effect.

Please confirm your agreement with the foregoing amendments bysigning and dating the enclosed form of confirmation and then kindly returnit to us.

Sincerely yours,

0. LafourcadeChief, Agriculture Operations Division

Country Department IVAsia Region

Attachments 1 and 2

CONFIRMED:

INDIA

BY

Authorized Representative

DRAFT

Attachment 2

INDIA - Second Uttar Pradesh Public TubewellsProject (IFAD Loan 124-IN)

Parts A, C and D of Schedule 1 to the Loan Agreement be amended asof January ..... , 1988 as follows:

1. Part A is amended as follows:

(i) Construction, installation, operation and maintenance ofabout 3,250 tubewells with an improved design, each capableof automatically discharging about 150 cubic meters perhour to serve a command area of about 100 hectares.

(ii) Construction, installation, operation and maintenance ofabout 70 tubewells with an improved design, each capable ofautomatically discharging about 300 cubic meters per hourto serve a command area of about 200 hectares.

(iii) Construction, operation, and maintenance of buried pipewater distribution systems for each of the tubewells underParts A(i) and (ii) of this Schedule as well as commonfield channels required to convey irrigation water from theoutlet valves of the buried pipe distribution system tofarmers' fields.

(iv) Construction of access roads from the existing feeder roadsystem to the tubewells under Parts A(i) and (ii) of thisSchedule.

2. PART C is amended as follows:

Connection of about 700 existing tubewells in the ProjectArea to independent electrical power transmission linesfrom the feeder lines under Part B of this Schedule.

3. PART D is amended as follows:

Upgrading of about 450 existing tubewell irrigation systemsin the Project Area to the design standards of the tubewellirrigation systems under Part A of this Schedule.

4. The last sentence of Schedule 1 is deleted and replaced by thefollowing: "The Project is expected to be completed by March 31, 1989."

ZCZC ASIF9899 JWS0606AS4AG AS4CO FIELDREF : TCP1 MET

NEW0125AS4AG..IBRDNEWINTBAFRAD NEWDELHI, IN 6 A, JAN 12, 1988FOR LAFOURCADE COPY BAXT

RE UP-Il TUBEWELL EXTENSION. GOUP NOW VERY ANXIOUS TO LEARNBANK'S RULING ON OUR RECOMMENDATIONS AS DETAILED IN OUR MEMO TO YOU

OF OCT 29, 1987 IN ORDER TO ENABLE TUBEWELL WING TO PROCEED WITHTENDERS FOR DRILLING AND TUBEWELL MATERIALS NEEDED FOR 1988

CONSTRUCTION SEASON. GRATEFUL THEREFORE YOUR URGENT REPLY TO

BAXTER'S TELEX OF DEC 15, 1987, IN PARTICULAR RE CLEARANCE TO BESOUGHT FROM IFAD AND WHETHER ANY IMMEDIATE FOLLOW-UP IS EXPECTEDFROM OUR END.REGARDS

HALL

=01130802

ALT RTD FROM:ASII

NNNN

FHE

<Date: December 23,

John Hall, AS4NA

4r. 0. d AS4AC

P roject

I-:

LUon disburs m th ch ge; i

U

This letter and A

D I would a1so bI a(U - the W LhngtOn. st.

Hal

9 'd t'Z:Gl 28/VZ/ZT IH13CM3N AgG18M NOdd

THE WORLD BANK/INTERNATIoNAL FrNANCE CORPORAT:O01OFFICE MEMORANDUN

Date: December 18, 1987

To: Mr. 0. Lafourcade, Chief, A S4AG

From: C. des Bouvrie ghroahM 2-r

Subject: Credit 1332-IN/Ln.124-IN - Sec jExtension of CGosing Dgte

1. I rcknowledge receipt of Mr. cnniract o to you of'.ieber 16, 1987 commenting on Mr. Bxtor'7 0ctobe r 2?. 1987whic> reach;d moe on Deoember 7, 19&7, B , iy -by-pint rpy

w those cOrn which relate o onplni ii) c st stlmates and d n) opance wi~th

ri<por ;ant cov>nat ind (iv) andouments, I havemeanwhile cisc lnc'orpcirated them 0(writing tco

Mr. Jo hi of !AEA, rathor Then to Gh which I attach f ryour clearanc.

l n d (g) of Mr, Cunnringham'1 - -

2. Concernh.s 'h possible conflizt ofinterest and competitfon o cd r ources, whiltimplementing: (a) 7h f " ~s (b) t'-eD-utch funded 1000 7:- ',imum f 0 N S iorannum, using UP Stat o v to cCur

considering current b the ve.apbe teen (b) and a posi . -egulaIyreviewed this matter 1 eral p7ro!vofficials, and will cQn' p nthe status is as foll1'..Consultants for projectrecruited, not likely ofurthermore, zire (more so p2planning, well ItIn, procuThat's the res( ihy of thIr.

point (e) of Mr. tunntngha' i

reThig naxmumor ~implementatiojnfomT~IOn1 presety at hand, tho e

-2-

Total 19/8 89/90 1990/91

Additional Bank funded PTWs 1,000 350 500 1 150 1 1Dutch-funded PTW's 750 1 l50 I 300 I 300 1

350 650 450 - 300-1

1/ This refers to new FTW's, another _- would bethe rehabilitation of existing StXe W's

3. The Dutch program will also procure anocner six reverserotary rigs and a separate Tubewell Wing will be created headed by aChief Engineer, under the umbrella of the Engineer-in-Chief, small-scale irrigation; so potential double charging i! quite unlikely

4. we 'elieve .ha. the overall rili.g poogram COm.iLnUN U trealistic (at half the Department's aacity of 1,200 PTWs per year).In our letter to Mr. Joshi, I therefore re 'nd that the overallschedule be reviewed from tive to e, rclIr than insisting on adetailed implementation program for "all public -ubewells within theStare"; which changes continuously et any iate,

5. Yes, the Dutch progra iuludws a number of studies (that'stheir prerogative) ad guch support civities as agricultuzalresearch; extension (for and by romn!; monitoring and trainig;. tothe tune of some Rs, 550 MI We are in regular contact with the Dutchteam to ensure, in an 1r$orml maner, that our programs aycompatible and will benefi 1cxpatrate expertise providod bythem. Meanwhile, I Lave s y of a Duch project documents toMr. Cunningham.

Cost Estimates (b) (c) (g)

6 We realise that the co - by l ter -rMr. Joshi of October 9, 1987 er no d cfmagnitude remaIn correct, wthncost of the improved PTW'S stil nnwater point; power supply, and di bof Table 2 in my report). Thisfor The additional 1,000 PT7 5(1 ,'nrno annomaly here. The January 19$ igr

fhes received in October 97 dwthce expe nditures, which in the l tter cas - n

ye The total isten of .~ 2,36 (1ithe saMfl

- 3 -

7. Mr. Subramanian and I have carefully reviewed the cost tablesand disbursement schedule proposed in Hr. Joshi's letter. We will do

so again In the light of the revised disbursement percentage, whichhave now been raised from 55 to 70%, for categories 1(a), 1(b) and2(a), in accordance with Mr. Karasmanoglu's letter to GOT ofNovember 10, 1987. 1 am not qualified to question this decision,which at any rate, is fully in line with past Bank practice. Thequestion rather to be raised here, I presume, is whether thisdisbursement increase (limited by category and time) would verysubstantially exceed the current overall 50% financing percentage ofthe Credit; a matter we will look at when revising cost anddisbursement tables. however, I see, at this stage, no need to reducethe GOUP's requests from 1,000 to 650 additional FTWs as a result ofthis increase,

8. One item in the GOJ's revised schedule of expenditure,however, still needs further scrutiny: the outlays for theAgricultural Development Wing (ADW); a matter which, as you are aware,

5izt which you part . . his weghave to date remained low at a total of some Rs. 3.0 M against a SkRprovision of Rs. 7,7 M. This program has suffered delays due to thelate electrification/commissionrg of the PTW; a backlog which wasremoved during 1987. The ADW proposals to earmark some Rs.5.0 M perannum for an accelerated agricultural development program during1987-1990, although somewhat on the high side, merit our fullsupport. We propose soon to wrre seprately to COIP on the matter,submitting the mission's report. An important de'pment which teedsto be taken note of is the t.it r o G to iraplent a fullfledged agriculturel aIexrio r rjet aT. of AE 1I, n areaswhich overlap with the Tubewell Project's r .

9. As for the funids for The project vp rn facy'undercategory 5, we have by now fully d-sa".se the orra iallocation of SDR$ 9 0 M; as t os

this late stage, particular i \Iow of tMh .ISTF within the NMJP (Credit li70-IN),

10. As for the 9 2 SDR referrod 'o pNverer 16, 1987 memo, we wculd like tr

ojettions on disbursement relate to t un hCredIt as of Auust 3I, 1987, 2slve of ??C & y i: d b

fully disbuxsed.

I1. Finally the sugg.stion. made Tn pera(1 2. chn hocod-fn of dsbursement int re ponsse to the &rog- uno: hazftG <'

Id 92:1 28/V3/2T IH-1BGrIN )IEG76M W06J

the dedicated powerline component is welcome. We are, however, notsure how far. this will speed up disbursements, but we will discuss it

12. On the subject of the major Covenants which GOUP has not yetcomplied with, related to water and electricity charges (system andlevel of charges) and cost recovery, this, as we all know, is asensitive issue, which project staff has found difficult to address,The Government has, however, recommitted itself to this Covenant andwe have a running dialogue on the matter, I have taken note of thecomments by Messrs. Slade and Cunningham in your draft letter to Mr.Das of November 17, 1987; they are very helpful, I propose, however,that we deal with the details of these and the related socio-economicstudies in a separate letter, Meanwhile, since such work takes longerthan usual, in particular if handled by project staff, which is notfully conversant with the subject, I propose that the compliance date

1989, at the end of the first year's extension. I believe thatchanging of the substance of this Covenant as proposed in your draftletter to COUP dated November 17, 1987 would be somewhat premature.

13. Turning now to what needs to be done next, I would like tostress that the purpose of my memo of October 29 was to solicit IDA'searly concurrence, in principle, with the extension of the Credit andthe use of some $ 40 Million unspent funds for the drilling of anadditional 1,000 PTW's. Further detailed cost tables, disbursementschedules and loan document amendments clearly would yet have to beworked out. That still holds.

14. Now that IDA has agreed to a one-year extension, I proposethat the following letters be sent to Gol, (A draft of (I) isattached for your clearance.)

(i) Letter to Mr, Joshi of !DEA copied to Mr. Da of GOIP,submitting the Bank's Missio Reprt of October 2,1987 and agreeing to a onr year (t7iu and use ofcredit savings to dril , in first y'ar, 50additional PTW, while a second year exce'sion and Theconstruction of othe 250 P7 o b subjectsatisfactory tompletion of th istya extensAor,'

activities. I have red2r& te yu Nnm" 17 lcuteto Mr . Das accordr I -.

Iti) 7 eter to Mr. as, Tii G. Onhsubject of studies for warer hcsyalong the lines ven in you d e o him fNovember 17, 1987,

01d IH1BQG13N )lEGldM W6d

-5-

(iii) letter to the GOUP Secretary, DOA commenting on theADW's action program for the next two years andsubmitting our December 1987 expediting mission

report, dealing with agricultural research, extension

and general support.

cr- Messrs. Baxter, Sandhu, SubramanianMessrs. Diewald, Gopal, Slade (AS4AG)Messrs. Grimshaw, Cunningham (ASTAC)

CdB:lg

D RA F-I

Disk: CDB 1Doc: JP-L-DEAVith: Lalita

December 1987

Mr. C.P. Joshi

Deputy SecretaryDepartment of Economic AffairsMinistry of Finance77-B North BlockNew Delhi

Dear Mr. Joshi:

Sacond Utt arPradash. ubewell Proje c(Credit 1332-In/Loan L24-I-NExtension of Closing Date

I would liko to rofr to your Thtterv nf Jina 3. 1987 andOctober 9, 1987 informing the Bank of the Government of Uttar Pradesh'swish to extend the above Credit's closing date by two years, to qarch 31,1990, and to expand its original scope of some 2,300 improved publictubewells by an additional 800 to 1000 units.

2. As you may recall this matter was first subject of discussionsbetween senior GOUP officials and the Bank's annual review mission inJanuary 1987. At that time we agreed, as explained in Mr. Crimshaw'sletter of February 23, 1987, that more convincing supporting documentswoul" have t-cO be pCO'idid by Uh ijl l P and that

the Bank would require a detailed action prograz, revised implementationschedule and cost tables as well as evidence of GOUP's commitment toadequately fund these additional works. We acknowledge receipt of thisinformation transmitted to the Bank in annex to your above letter.

3. These documents, transmitted to the Bank througb Youi aboveletters, were reviewed by two Bank missions which visited the project froazJuly 13 to 17, 1987 and from September 28 to October 3, 1987, when alsothe prospects for a possible Third UP Public Tubowell-s -roject werc

examined.

4. The purpose of this letter is to convey to you 7he MiS7n's

findings and IDA's and IFAD's decision on the Creditt e son. EnCLed-dkindly find our full report on the extensior of h s'coni t? PublicTubewell Project and permit me to call your parti'culr atte icn 2 efollowing salient points. They relate to: () the rfse. >plemenmionschedule; (ii) compliance with covenancs; and (iVthe us ftCredit's undisbursed proceeds,

Cont'd

2d 82:ST L/t'E/31 IHlB3f1BN >16QT7f1 W08J

Mr. G.P. Joshi 2 - December . 1987

Implementation Schedule

4. The revised implementation schedule and cost tables submitted to

the Bank by letter from DEA of October 9, 1987 are more realistic than

those previously suggested. They provide, during a first year extension,

for the completion of all 2,330 tubewells included in the original scope

of the Project, as well as the construction of at least an additional 800

- 1000 units by March 31, 1989. We believe that the Tubewell Wing now has

the capacity to construct all 1,000 tubewells in that first year. Even so

their electrification, on-farm development and their full commissioningwould remain incomplete until the latter half of 1989, and we do therefore

agree that a second-year extension until March 31, 1990 would be in

order. We therefore propose that some 750 tubewells be constructed duringthe first year,leaving the remaining 250 as well as the full comMiissioning

of all 1,000 units to be completed during the second year. Further

details are given in paras 44 & 45 of the mission report.

6. We have been informed that the Government in the years

immediately ahead intends to construct another 750 improved technology

tubewells under a Dutch-Indian bilateral agreement, overlapping with the

IDA extension. Furthermore, parallel to these programs, we understandthat COUP is undertaking a state funded program of about 300 tubewells per

year. Although, at this stage we dn not foresee any problem, in that bothprograms might compete for the GOUP's Irrigation Department's physical and

financial resources, we would be grateful if you could review the matter

from time to time, in order not to jeopardize the early, uninterruptedimplementation and disbursement of the IDA/IFAD funded program.

Compliance with Covenants

7. We are pleased to note that the project is essentially in^ er- Mar. a i-w 1he. ene. however.

to satisfy the requirements of schedule I section 3.04 (a) to (c) of theProject Agreement, a matter related to water charges and closely linked tocost recovery in irrigation. Both are of our particular concern, which, I

am certain, the Government will wish to share with us.

8. Under its provisions the Government's obligation is: (i) to

formuaLe ind u awset water charges at such levels that revenue would cover the average OLMand a reasonable share of investment costs. We appreciate that zmes e are

difficult and'sensitive issues, which may not be readily resolved but we

are pleased that the UP Government has recommitted itsclf !: tnei and

remedial measures are now underway.

Cont'd

Hr. C.P. Joshi 3 December , 1987

9, In this connection, I believe that such studies can best be

undertaken by specialised consultants and to assist project staff we willwrite to GOUP in the near future to suggest an action program and to

highlight those aspects which in our view merit particular emphasis.

Meanwhile, to allow this work to be completed in a fully satisfactorymanner I propose to delay the compliance date of the above Covenants 3.04

a-c, until December 31, 1988.

Undisbursed Funds

10. The revised disbursement schedules sent to IDA by your letter of

October 5, 1987 now will need to be revised and the relevant paragraph 17^f thA Pnclosad mission renort is not fully valid anymore. The reason for

this is that the Association to assist COUP in alleviating the adverseettects of the recent arought, has agreea to increase zhe wiLh1.iwaipercentages under paras 1(a) and 1(b) and 2(a) Schedule 1 of the Agreementfrom 55% to 70%. These amendments would take effect from July 1, 1987,retroactively, and would apply to eligible expenditures incurred during

Pfll ,1S hz 41 ac! 1 1aS.v ltl0 t.

Mr. Karasmanoglu,

11. Also, as you are aware, a Bank mission recently reviewed the

Arrivities undertaken by the Bank-funded third National Extension Project

(NAEP 1 YL), C .di 17#54-kN, OperaLinfg in the LuOCWCll UJ-edU ra.Th

mission's conclusion is that the three-year action program proposed by theProject's Agricultural Development Wing merits the fullest Governmentsupport and I will shortly write to COUP on the subject, giving IDA'sviews on the level of expenditures proposed. The budget provisionproposed by the Tubewell Wing for ADW would subsequently have to beamended, accordingly. As regards the full drawdown of the Credit,preliminary estimates made at our end indicate that, once all worksconnected with the additional 1,000 tubewells will have been accountedfor, including the increased disbursement percentages, a modest positivebalance of funds will still remain undisbursed.

12. Turning now to the GOUP's request for a two-year extension of theCredit closing date, we recommend and IDA and IFAD have agreed to: (I) aninitial one year extension of the Credit Closing Date until March 31,1989. This is in keeping with the Association's policy in such matters;(ii) an optional second year extension until March 31, 1990, subject tosatisfactory completion of the first year's program. 'e propose to againreview progress during the first quarter of 1989.

13. I trust that you concur with the Mission's recomendation ard, ifaffirmative, I propose that the project cost tables, dsbufrsement -cheduIe

Cont'd ...

Mr, C.P. Joshi - 4 . December , 1987

and credit allocation (if any) be revised to reflect the above changes,

and that Project and Credit Agreements also be revised accordingly.

14. In conclusion, we look forward to our continued association with

this technically sound and economically quite viable project, which, once

completed, would allow GOUP to commission some 330,000 ha of highlyproductive irrigated land and has high relevance, even more so during thecurrent drought, as a most effective means to a very substantiallyincreased food production, within the briefest possible time span.

With kind regards,

Yours sincerely

Olivier Lafourca,., Cbief,India Agriculture Dper.ions Dvi-sion

Country Depar x- ent 4

cc Mr. Ranungo, Jt. Secretary, MOWR, Go!Mrs. S. Bhave, Dy. Secretary, MOWR, GOIMr. M.A. Chitale, Chairman, CWCMr. V.A.Prakash, Member P&P, CWC

Mr. A.K. Das, Secretary, ID, GOUPMr, R. Bhargai, Ag.Production Conmissioner, GOUr

bcc Messrs,

C dB:l g

The World Bank Tsident Mission in India Telephone 617241 -- -

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Cable Address INTBAFRAD

INTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Mailing Address: P.O. Box 416New Delhi 3, India

December 17, 1987

Mr. J.L. Bajaj Mr. Naresh Chandra

Joint Secretary I tionlMinistry of Finance Minstry of Water Resources

Department of Economic Affairs Shram Shakti Bhavan

North Block Rafi Marg

New Delhi 110 001 New Delhi 110 001

Mr. J.A. Kalyankrishnan Mr. A.K. Das

Chief Secretary Secretary

Government of Uttar Pradesh Irrigation Department

Secretariat Government of Uttar Pradesh

Lucknow 226 001 Vidhan SabhaLucknow 226 001

Re: Second Uttar Pradesh Tubewells Project (Cr.1332-IN)

Audit of Project Accounts and Statements of Expenditure

Dear Sirs,

We are writing to invite your attention to the required

audits of Statements of Expenditure (SOEs) under the project

mentioned above. Please note that for disbursements in fiscal

year ending March 31, 1987 SOE audits and audited project

accounts for FY 1986/87 will be overdue on January 1, 1988.

The new composite form of audit certification for

- overall annual project accounts and

- SOEs

which has been agreed upon with Department of Economic Affairs

(GOI) and Controller and Auditor General of India is required to

be adopted for 1986-87 certificates. A copy of this format,

which has already been circulated to all projects and Accountants

General, is attached for your ready reference and use. We have

added two amplificatory footnotes to this form to indicate the

specific attachments to be furnished with the certificates.

... 2/

Headquarters. Washington, D.C., US A

- 2 -

Bank's policy with respect to SOE audits is that if suchaudits are overdue beyond a grace period of 90 days after the duedate for their submission, requests for disbursements on SOEswill not be processed until such time as the overdue SOE auditsare submitted. At this time we wish to advise you that the graceperiod of 90 days for this project would commence on January 1,1988. As such, the Association will not accept any furtherapplications for disbursement based on SOEs after March 31, 1988as long as SOE audits remain overdue.

We request you to extend the needed help in completing theaudits of project accounts and of SOEs and furnish copies of thereports thereof to the Association in sufficient time in order toavoid any interruption on SOE disbursements under this project.

With regards,

Yours sincerely,

Michael BaxterChief, Agriculture Unit

Enc1:

bcc: Messrs. Lafourcade, Baxter, des Bouvrie, Bhawanishankar,Diewald

SS(1)/LETTSSOE/zp/12.15A.1.15.6

1.14.2.14

0 FF I E M CFin)UM

DATE: December 16. 1987

TO: Mr. eV ::U0-Uvrie

FROM: 0. Rahman

SUBJECT: U.P. I Public Tubewells Project (Cr. 1332-IN)

As per terms of reference date November 25, 1987, I visited

the above project from December 8-11, 1987to review agricultural

extension aspect.

MV field report is a ied.

Enc.

cc: Messrs. Baxter. Hall & Bredero

OR/rd

tZenobia's Disk Name: SPARE/File Name: RAHMAN)

K

U.P.II Public Tubewells Project(Cr.1332-IN)

(Field Report - Agriculture Extension aspect)

1. The mission made field visits from December 8 to 10, 1987, in

Lucknow. Raibarelly and Sultanpur districts and covered six tubewells

(two of Phase I & four of Phase II) to review agricultural activities

of Agricultural Supervisors (A.Ss) under the A.D.W. and that of

Kishan Sahayak (K.S.) working under NAEP III. Both the A.Ss and-K.Ss.

although at times duplicating their field extension activities,

follow a- fixed regular fortnightly- visit -schedule and selected

contact farmers through whom they reach other farmers. The A.Ss

select all the ten contact- farmers frm each tubewell while- the K.Ss

select their ten contact 'farmers from-a group of 100 to 150 farmers,

depending on the total size of farm families they are required to

cover. The -mission also-reviewed agricultural activities conducted by

K.Ss alone- in two villages (one-in each of Lucknow and Sultanpur-

districts). The agricultural activities both in the tubewell commands

as well as in commands outside the tubewells of the project, i-n

public tubewel.1s and private tubewells commands are conducted

reasonably well. -The impact is visible from increased croppingintensity, significant increase in productivity through adoption of

H.Y.V.,- optimum use of fertilizers, need based plant protection

measures, -water management practices, etc.

2. Aaricultural activities of A.S., in tubewell command-

The agricultural supervisors posted in tubewell clustert' follow a

fixed schedule visit and meet tubewell farmers including

representatives, of Farmers Committees concentrating their efforts on

important 'crop grain- (paddy in kharif , wheat and mustard in rabi and

pulses in zai-d) and the most important aspect of crop production such

as using project irrigation and water management practices, timely

planting of -crops and use of chemical fertilizers on the basis-of

soil testing reports. The A.Ss work closely with the tubewell

operations and, in particular, using operating assistance in the-collection of agricultural performance data. The other

responsibilities of the A.S. include conducting three crop* sequence-

demonstration in 0.2 hect. in each tubewell, popularizing use of

agricultural implements including land levelling, demonstration on

reclamation of alkaline soil, collection of agricultural data,

including agro-economic survey and subsequent crop cutting tests,

assistance to farmers in getting timely supply of inputs or

production loans. All these activities are conducted well. The

mission observed progressive increase of cropping intensity in almost

all the tubewells, e.g. Amethi group tubewell No.133 with 100 hect.

1/ Three agricultural supervisors are normally posted in tubeweil cluster.

command and 151 farmers have raised the cropping intensity fromA06%

to 125% in almost a year. Similarly, tubewell No.123 of Salon group

(Raibarelly District) has recorded a rise of cropping intensity from

129.64 in 1984 to 165.71'4 in 1987. The average productivity of paddy

and wheat in some tubewells has reached 3.2 M.T. and 3.7 M.T./hectare

respectively while some progressive farmers have received more than 5M.T./hectare of either paddy or wheat or both.

3. Aoricultural extension activities of K.Ss in NAEP III

K.Ss working in 16 districts out of 20 covered so far under NAEP III

UP sub-project also follow a fixed schedule of visits and meet

contact and other farmers in their irrigated-as well as rainted areas

to review -cultivation practices followed, suggest improvements with

new proven technology, identify farmers constraints- to adopttechnology field problems, etc. So far as transfer of technology to

irrigated farmers are concerned, including that of public- tubewell

command, same recommendations as made by A.S. are also made by K.Ss.

However, the visit day of K.Ss and that of A.Ss in a tubewell command

has not been syncronized so far to-avoid repitition of some messages

or recommendations. Although K.Ss also visit tubewell command on-different days, they do not collect agricultural performance data

tubewell wise, conduct three crop sequence 0.2'hectare demonstration,demonstration of agricultural implements and reclamation of alkalinesoil and collect agricultural data, assist farmers in gathering-timely supply of inputs and production loans. The impact of extension

service in irrigated area (in private & public tubewell outside the'

project) is also evident as an effort of K.Ss. Farmers in these areashave also raised the productivity of paddy, wheat, mustard -& -other

pulse crops, the cropping intensities in such areas have also shownan increase.

4. Future- job responsibilities for A.Ss & K.Ss in NAEP III

Agriculture development in the project is the responsibility of the

Department of Agriculture. Once the majority of the project- tubewellswithin a cluster have achieved predictated crop production, the A.D.service would -withdraw to another new project cluster and the fullydeveloped cluster would be handed over to regular extension servicein the State. It is in this context that there is need of retainingA.D. service in the NAEP III areas for a temporary period of 2 to 3years. The farmers in the newly constructed tubewell should be-educated more intensively on the benefit of irrigated agriculture,suitable cropping sequences feasible, economy of growing suitable

cropping sequences. water management. land levelling, irrigationsystem to be followed, etc. Apparently, therefore, there is a need toretain A.Ss in newly energised or proposed tubewells to take up some

-3-

specialized activities for a period of 2 to 3 years. The mission

would therefore recommend Agr. supervisors of tubewell command in

NAEP III to limit their activities to:

- complete base line agro-economic survey of each proposed

tubewell.

collection of agricultural performance data with the help of

tubewel 1 operators.

assistance to farmers in getting timely supply-of inputs and

production loan.

advise tubewell farmers on water management and irrigationsystem.

demonstration of three crop sequence to raise overall

productivity and income of farmers.

demonstration on use of simple bullock driven implements for

land levelling irrigation- system, sowing seeds & fertilizers

in rows and creating a regular demand for these implements for

sale.

- demonstration to reclaim alkaline soils and suggestingsuitable cropping.

- raise cropping intensity.

- advise farmers to produce self-pollinated crop seeds,

replacement of seed at regular interval to avoid degeneration.

demonstration in cultivating fields on water management

practices.

the role of tubewell irrigation committess;

The A.Ss should also be familiar with the technology relevant toraise successful irrigated crops. The transfer of technology onirrigated agriculture should be mainly done by the K.Ss on jointfield visit by K.Ss & A.Ss. Both of them should synchronize their

visits to a tubewell and have the same set of contact farmers.

5. The K.5s in NAEP III should be primarily responsible for transfer of

crop technology for both irrigated and rainfed areas. They should

review present farming practices of irrigated farmers and suggest

improvement with technology relevant, review farmer constraints,

problems and discuss these in the regular fortnightly workshops. The

visit day of K.Ss in tubewell project should be synchronized with the

vist of Agr. supervisor and they should not have a separate set of

contact farmers. While making field visits in tubewell areas theyshould also advise on water management practices in other maintubewell command under the project.

-4-

6. Training

The A.Ss and K.Ss should attend fortnightly training sessions

together. The A.D.W. need not organize and select a separate venue

for training of A.Ss. Similarly, all the supervising officers of

A.D.W., such as agricultural officers and additional agriculturalofficers should attend monthly workshops with the S.M.Ss of the

concerned- districts and subdivisions. The A.D.W. should draw up adetailed in-service short training course at suitable institutes for

regular training of agr. supervisors, additional agr. officers and

agr. officers. All the agricultural supervisors should attend two to

three weeks training in water management once every two years.

Further, training of supervisors should also be organized on

irrigated crop production, cropping sequence, different systems of,irrigation at least once a year.

P

OR/rd

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-AU7HORIZED7 BY NAEDA PNP1 SHAMA .CIN CHEF AS40-.

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ZCZC ASIF7259 JWS0327AS4AG A 3S4CO FIELD G.C.L-DREF : TCPI MET

NEW3727AS4AG.IBRDNEWINTBAFRAD NEWDELHI, IND. A DEC 15 1987FOR NARENDRA SHARMA

REYRTEL 7 DEC 1987 UP II TUBEWELL EXTENSION WE HAVE ONLYRECENTLY RECEIVED ASTAG/S4AI COMMENTS DATED 17 NOVEMBER 19'7ON THIS MATTER. LETTERS TO DEA AND GOUP NOW BEING FINALISED. WEPROPOSE THAT THESE LETTERS, ONCE CLEARED BY THE BANK, ENCLOSINGDESBOUVRIE' S FULL OCTOBER 29 REPORT, BE SENT IN DRAFT FORM TO SI4IGALFOR IFAD' S CLEARANCE PRIOR TO THEIR TRANSMISSION TO GOVERNMENT.IF YOU AGREE KINDLY INFORM SAIGAL. ACCORDINGLY.REGARDS

BAXTER

=12 16 114:1

POSSIBLE DUPLICATE--

NNNN

ZCZC ASIF6373 JWS0245AS4AG AS4COREF : TCP D. S.

JWS0245 ZJZ435 IN 07/10:25 OUT 07/10:28611573 IFAD I

AUTOMATIC TRANSMISSION - PLS DO NOT INTERRUPT

INTBAFRADWASHINGTON DC (USA)

IFAD/12184

FOR SHARMA REFYRTLX AS4AG DATED 14/10 ON UTTAR PRADESH TUBEWELLSPROJECT (IFAD LOAN 124-IN), PLEASED TO NOTE THAT PROJECT ISCONSIDERED AS ONE OF THE MOST SUCCESSFUL IN IRRIGATION SECTOR ININDIA. APPRECIATE RECEIVING DETAILED WORK PLAN AND FINANCING OFREVISED PROJECT. GRATEFUL YOUR SENDING RECENT SUPERVISIONMISSION'S REPORT BY DHL AND TRANSMITTING MAIN FINDINGS ANDRECOMMENDATIONS VIA FAX NO. 504333. THIS INFORMATION URGENTLYNEEDED FOR ANNUAL REPORT AS WELL AS TO FORMULATE RECOMMENDATIONSTO MANAGEMENT FOR EXTENSION SCOPE OF PROJECT AND CLOSING DATE BY18 MONTHS, AS RECOMMENDED BY BANK. REGARDS SAIGAL IFAD ROME

COL CKD

=12100757

ALT RTD FROM:ASII

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ZCZC AGIFE6600 S4ASQ324WD I AL (, 2 D

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-SUBJECT: UP TUJEWELLS-DRAFTED BY: R SLADEEX T6-AUTHORI ZED BY, N SHARMA, AG. CiE AC4AG-CC:

IBRDNEW-INTBAFRAD, NEW DELHI I T 14T ~4TTN Das t uvR .13TWASHINGTON, D. C. DA~ E: DECEMBER 7, IELTIFAD TELLE US THEY U N L .- 47Pt~IEUR L(TEsT SU .PERV S, IONREPORT TUBEWE.LLB ii TOGETHER WITH DETAIL.u : U orITo UNEXTENSN i oF CLO I Nti DATE. A kL. RELE-NT DOCUMENTo IN DE-H ISUGGEST YOU RESPOND BY FAX (NO.50,4333) DIRECTLY ~0 E.IG, L :7FD.

REGARDS, SHARMA, INTBAFRAD.

ALT RTD FRMf!1::AcGIO

IN DROPCOPY OF :S4AR

NNNN

THE WORLD BANK/INTERNATIONAL FINANCE CORPORATION

OFFICE UM -ODATE: ,/th December 1987

FROM: 0. Lafourcade. Chief AS4AG. c

SUBJECT: INDIA: Uttar Pradesh Tubewell Inigation JI Project-I -i AJODV I6 /t

1. Attaiia O from a recent mission that examined the GOUP request for anextension of the closing date of the above project.

2. Release of this report was inadvertently delayed.

Distribution:

Messrs. Alisbah, Golan, Grimshaw, Ritchie, Gopal, Frederickson, Cunningham, Diewald,Slade, Baxter, des Bouvrie, Sharma.

cc Asia Information Centre.

THE WORLD BANK/ 04AL FINANCE CORPOR ION

OFFICE MORANDUM

Dat : November 25, 1987

*To: Messrs. C. des Bouv , T, Bredero, 0. Rahman

From: Michae xter, Chief, Agriculture Unit -

Subject: UP-II Public Tubewells Project(Cr. 1332-IN) Expediting Mission

-1. From December 8 to 11, 1987, you should proceed to

Lucknow to carry out an expediting mission to the above project.

-2. The purpose of the mission in general terms would be to

ensure that the agricultural research, extension and other

,support services of the Project are realistic and properly

funded. In doing so, you should also review the ADW's Status

Report dated June 1987 and those NAEP-IlI and NARP-II activities

which overlip with those of the Tubewell Project, to avoid

possible duplication of efforts.

3. You should in particular focus on..

(i) the proposals made by ADW in June 1987 Status

Report;

(ii) the GOUP views on overlapping.of extension

activities between those of NAEP and the Tubewell

project;

(iii) the appropriateness of local irrigation practices

and the availability of irrigated agriculture

extension packages;

(iv) the potential for increased private sector

involvement to supply irrigation materials andsmallholder agricultural mechanization toolsl

4. Mr. des Bouvrie will coordinate the mission activities

and cover the irrigation practices and small holder mechanization

aspects and Mr. Rahman, the agricultural extension aspects. Mr.

Bredero will join the mission on December 10 and 11 and review

the role of the UP State Agricultural Research Institutions and

their linkage with the extension services. You will hold joint

technical discussions with senior staff of both the Project's

Agricultural Development and Tubewell Wings. Prior to your

departure on December 11, you should brief the Secretary

Irrigation and the Director of Agriculture. On return to New

Delhi, Mr. des Bouvrie will prepare a brief back-to-office report

that incorporates the contributions of all team members and a

letter to Government conveying the team's main findings.

cc: Messrs. Lafourcade, Diewald, Hall, Pai

ODB/rb

The World Bank Resident Mission in India Te epnone 617241

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Caie Address. INTBAFRAD

INTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Adoress: P.O. Box 416New Delhi 3, i

Mr. Raj Bhargava November 18, 1987Agricultural Production

CommissionerGovernment of Uttar Pradesh

LucknowUP

Dear Mr. Bhargava:

Second Uttar Pradesh Public TubewellsDevelopment Project - Credit 1332-IN

1. This is to acknowledge receipt of the "Status Paper on

Agriculture Devlopment Work" in the above project dated June 1987

prepared by your Department' Agricultural Development Wing (ADW).

2. The report gives a clear overview of the methodology

adopted to motivate farmers in switching from their former,

rainfed, low technology cropping practices to the high technologyirrigated agriculture offered by the project. It also makes

important recommendation for the extension and expansion of the

Agricultural support program during the next two years, or so.

3. A backlog in developing agriculture in the tubewell

commands clearly still exists, much due to the delay incommissioning of the tubewells, but we are confident that, given

adequate staff and funding, these can largely be removed by

1989-90. Field staff, in particular those below agricultural

officer, however, would, we understand, have to be doubled fromsome 240 to over 500; an indeed rather massive mobilisation ofstaff. The proposed funding increase to R35.0 million per annumappears realistic, and should be well within the Credit's means.

The proposals have our full support. Even so, substantialefforts will have to be made to mobilise these resources, recruit

the needed staff and provide all necessary back-up facilities intimely manner.

4. We therefore believe that it would be useful to jointlyreview the program and its funding, sometime in the near future,with senior officers of both the 'project's Tubewell andAgricultural Development Wings to ensure adequate budgetingduring FY 1987-88 and timely release of funds to avoid any ADNcash flow problems.

5. Another matter which we propose to discuss is theconsistency of approach in agricultural extension within theTutewell Project and other areas within the State and thejudicial deployment of extension staff under the NAEP Cred't andthe UP-II Public Tubewell projectl matters which were subject toMr. Griashaw's letter of May 15, 1987 and of your letter in replyof Iure 19, 1987.

Headonart-es Washington, D.C

-2-

6. Finally, as you are aware, smother Vorld:eBank- Credit,the Second National.Agric-ultiwal Research Project (NARP-Il)

supports, among other, irrigated agriculture research .ithin the

State. We believe, however, that sore can be done in the way ofspecific research to develop appropriate extension packages to be

promoted among farmers in the tubewell command areas.

7. We now propose that a Bank mission visit the-projectto discuss the above issues dur-ing the week of December 7, 1987.

It would consist of Mr. C. des Bouvrie (irrigation engineeringand UP-II Tubewell project officer), :Mr., . Rabman (agriculturalextension) and Mr. Bredero (agricultural research). They propose

to visit selected UP-II tubeivell command areas, and (NAEP)

extension activities within the Project area as well ascontributing agricultural research and field demonstrationfacilities. Upon return from the field, we would welcome

discussions in Lucknow with yourself and your senior staff to

agree ont (i) the ADM program. for FY 1987/881;. (ii) the assignment.of extension staff to the Tubewell project area both within the

scope of ADW and NAEP activities; Iiii) possible strengthening ofthe agricultural research prograo with special emphasis on

irrigation practices and smallholder agricultural mechanization;(iv) the improvement. of the Project's capability to monitor and

evaluate its agricultural development indicators. It is likelythat Mr. 0. Lafourcade (Chief, India Agricultural Division in

Washington) and myself will join the mission for last two days.

8. I trust that the mission as such and its timing is

acceptable to SOUP and, if affirmative, I would appreciate your

suggestions for an appropriate itinerary. Would you kindly

ensure that the ADA (Extension) and the JDA (Agriculture

Development Program - UP Tubewell II Project.) both accompany the

mission in the field.

With kind regards,

Your sincerely

Michael axterChief, Agriculture Unit

cc: Mr. S.N. Saigal, IFAD, Rome

cc: Ms. S. Phave, Dy.Secretary, HOWR

cc: Mr. A.K. Das, Secretary (1), SOUPMr. R.R. Sharma, Director of -Agriculture, 6OUP,Luck"%O

Mr. V.P. Singh, CE, Tubewell Wing, ID, Lucknow

cc: Mr. 6.P. Joshi, Dy. Secretary, DEA

Mr. Sundaram Krishna, Dy. Secretary, DEA

bcc: Messrs. Hall, Bredero, Lafourcade, Diewald, Pai, Rahman

CDB/rb

SECOND -UP TUBEWELLS. IRRIGATION PROJECT

Credit 1332-IN/IFAD Loan 24-IN

Tentative Mission Schedule: December 8-11. 1987.

Dec 8 Tuesday 0700 hrs. Lv. Delhi Ic4650755 hrs. Ar. Lucknow

0900 hrs. Meet with TW and ADW Officers,

Review mission Work Program

1400 hrs. Departure to Field.

Dec 9 Wednesday 0800 hrs. Visit Project area

1700 hrs. Night at GOUP guest house

Dec 10 Thursday 0800 hrs. Return to Lucknow

1000 -1200 hrs. Visit field demonstrations near

Lucknow1400 hrs. Discussion with senior project

Staff.

Dec 11 Friday 0800 hrs-. Visit to individual projectunits in Lucknow

1400 hrs. Meeting with Secretary

Irrigation, Director of

Agriculture and Senior

Officials.1715 hrs. Lv. Lucknow IC415 -

1805 hrs. Ar. Delhi

%0

n011C,

THE WORLD BANK INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUM

DATE: November 18, 1987

TO: 0. Lafourcade, Chief, AS2AG

FROM: Messrs. Cun ngham (ASTAG), Diewald and S&ade (AS2AG)

SUBJECT: INDIA - UP .Tubewells II Project (Cr. 1332-IN/IFAD X&IN)

Back-to-Office Report

1. In accordance with terms of reference dated September 1, 1987, the

mission 1/ visited Lucknow from September 26 to October 5, 1987 when it

returned to New Delhi for round up meetings on October 6 with various GOI

officials. A list of senior officials met is given in attachment 1.

Prior to discussions with GOI/GOUP, the mission liased with

Mr. des Bouvrie (Task Manager).

2. The objective was to follow up on the July 1987 visit to UP which

reviewed COUP's request to extend the closing date of the project. In

addition, the mission initiated study of some aspects of ground water

development in UP which would require special attention under the proposed

UP Tubewells III project, or the proposed groundwater sector review and

are reported under separate cover.

3. A draft letter to GOI/GOUP is attached (to be cleared by

Mr. des Bouvrie, New Delhi Office, prior to clearance at headquarters).

Extension of Closing Date

4. In its discussions with GOI/GOUP, the mission assumed that the

IDA share of financing under the credit would remain at about 50 percent.

This meant that savings would enable the project scope to be increased by

about 1,000 public tubewells (PTWs), or that a longer time slice of GOUP's

on-going program of public tubewell development could be financed. While

the mission was in India, and as a specific response to the 1987 drought,

it was recommended to Bank management 2/ that the share of financing be

increased to 75 percent. This implies that only about 650 PTWs (connected

to dedicated power lines) could be constructed under the proposed exten-

sion of the Credit. The detailed works program has yet to be finalized

but it is clear that more analysis will have to be done to define the

scope of works under the extension.

1/ The mission consisted of Messrs. Cunningham (ASTAG); Diewald and Slade

(AS4AG); and Campbell, Barber and Byrappa (consultants). Mr. des

Bouvrie (New Delhi office) also joined the mission part-time.

2/ Mr. Alisbah's memo to Mr. Moeen Qureshi, SVPOP, dated October 14,

1987.

-2-

5. The implementation capacity of the Tubewell Wing of the UP Irriga-

tion Department is about 1200-1400 new tubewells per year. Of these about

300 are constructed to Bank design standards but not connected to dedi-

cated power lines. The mission also discovered that parallel to the

IDA/IFAD supported program, COI/GOUP has agreed to construct about 750

tubewells (said to be located in eight districts of UP) using Dutch aid.

Clearly this additional work program will affect the rate at which the

IDA/IFAD project can be completed. It may slow down the rate of disburse-

ment for both IDA and IFAD. Thus, by committing itself to the Dutch

program, GOI/GODP may have undermined our action to increase the disburse-

ment rate (by increasing the financing support percentage). To summarize,

we need to know in detail the total public tubewell program in the State,

and agree how to distinguish between improved tubewells which are sup-

ported under the Dutch and IDA/IFAD programs.

6. Given the above circumstances, we recommend that the extension of

the closing date be limited to 12 months (to March 31, 1988). The COUP

should immediately prepare a detailed implementation schedule for the

extension period which gives priority to IDA/IFAD supported works. The

additional program should include new and modernized tubewells and connec-

tion of existing state tubewells to dedicated power lines. The mix

between these components may not be the same as that assumed at appraisal

since the numbers of each well type will depend on tubewell location. It

should also be noted that this work plan/schedule has been requested by

IFAD to allow them to consider the extension.

Cost Recovery

7. Water Charge System. GOUP is essentially in compliance with the

legal agreements, except that an acceptable proposal for a water charge

system is still awaited (Sections 3.04 (a) and (b) of the PA). It was

explained to GOUP that their obligation under this provision was only to

formulate and introduce an appropriate water charge system, the level of

water charges being covered under separate conditionality. This separa-

tion between the water charge system and their level was made at appraisal

so that an efficient system could be formulated without the complication

of deciding on the politically sensitive issue of the level of water

charges.

8. The GOUP's task of complying with the water charge system study is

thus relatively straightforward. We conclude that an acceptable proposal

(based on the work already done) can be prepared by end of February 1988,

since the present water charge system is basically sound. To do so,

however, GOUP has more work to do. They should:

(i) identify all the determinants which should be taken into account

in designing the water charge system (e.g. annual and seasonal

variations, fixed O&M costs, ease of administration); and

-3-

(ii) indicate the factors to be considered in setting the levels, if

a two tier-water charge system is adopted. In particular, the

proposal should'show how the proposed structure of charges

relates to fixed and variable O&M costs.

9. Level of Water Charges. The main cost recovery clause, Section

3.04 (c) of the Project Agreement, was that:

"by July 31, 1988, COUP would set water charges at such levels

that revenue covers the average O&M costs and a reasonable share

of investment costs."

This covenant assumed that the project would be substantially completed by

March 31, 1987, and thus most PTWs would be approaching full. development

status. The project is about two years behind schedule and few PTWs have

reached full development.

10. However, as soon as a PTW is commissioned, the fixed O&M costs

(operation, routine maintenance, and fixed energy costs) must be met, yet

the operating hours (and thus revenue) only builds up as the farmers take

up irrigation. Clearly, it was not the intention under the covenant to

punish the first farmers who take up irrigation. Yet to comply with the

covenant, COUP would have to charge those farmers who take up irrigation a

rate that covers all the O&M costs. Thus if only a few farmers irrigate,

they would have- to cover all O&M costs. Such an arrangement would be

clearly unfair, since an individual farmer has no control over tubewell

utilization.

11. It is therefore recommended that Section 3.04 (c) of the PA be

amended to:

"by July 31, 1988, set water charges at such level that revenue

would cover the average O&M costs and a reasonable share of

investment costs assuming that the tubewell operates as designed,

namely an average of 3,500 hours per annum."

12. Energy Charges. In 1987, the GOUP announced substantial increases

in energy charges for most consumers (excluding private tubewell opera-

tions).1/ World Bank (WB) and other State tubewells on dedicated power

lines were designated 'large and heavy users' because of the quality and

quantity of power supply. Energy charges were fixed at a flat rate of 60

rps/kVA/month with an additional charge of 60 piasa/kVh for energy con-

sumed. This is believed to represent a reasonable charge for energy

following recommendations of the Tariff Rationalization Committee which

reported to UPSEB/COUP late in 1986. The Irrigation Department (ID) has

appealed these new charges and, pending the appeal, is believed to be

paying at the old flat rate of 78 rps/HP/month. At this old rate and with

a project tubewell operating at 3,500 hours/annum, the revenue from cur-

rent charges more than covers Q,&M costs.

1/ UP Gazette Extraordinary of January 28, 1986.

-4-

13. It is therefore recommended that:

(i) the UPSEB charge the ID the recommended (and gazetted) cost

of energy, so that any shortfall in cost recovery appears in

the ID accounts;

(ii) the level of water charges be reviewed immediately and set

to recover average O&M costs taking into account the new

energy charges; and

(iii) GOUP-activates (or sets up) administrative arrangement to

regularly review water charges and cost of providing the

service (Section 3.05 of the PA); and before March 31, 1988,

the administrative review submits recommendations to GOUP on

a water charge level; and, by July 31, 1988, COUP introduces

the new water charges to take affect in the 1988/89 rabi

season.

14. Cost Recovery Administration. A water charge system should be

easy to administer, fair and difficult to corrupt. The present system,

which is basically a volumetric charge, falls short of these objectives.

The present charge is volumetric since it is based on pump operating

hours; because the stream size at tubewell spout outlets is constant,

hours operated equate to volume. The operation principle is to rotate the

full supply to a group of farmers (within about a 7 ha command) on a daily

turn basis. The present procedure is to divide the area irrigated, as

recorded by the operator, by the number of hours of operation during a

turn. The farmers who are recorded as having irrigated, pay for the

operating hours in proportion to their area irrigated. Records indicate

that some farmers may be being charged for substantially more water than-

they could possibly have used on the areas stated. This suggests that

studies should be made to examine the operating procedures and recording

system currently in place.

Attachments

cc: Messrs. Alisbah (AS4DR), Golan (ASTDR), Grimshaw (ASTAG),

Lafourcade (AS4AG), Ritchie (AS4AG), Diewald (AS4AG),

Slade (AS4AG), Frederiksen (ASTAG)

Asia Information Center

ATTACHMENT 1

INDIA

U.P. TUBEWELL PROJECTS

List of Officials Met

Government of India

Ministry of Water Resources

Mr. Kanungo Joint SecretaryMrs. S. Shave Deputy SecretaryV.K. Sadhu Under SecretaryS.C. Sharma Director, CCW8N.K. Bardhyapadhyoy CE, Minor Irrigation

Department of Economic Affairs

G.P. Joshi Deputy SecretaryS. Mitra Under Secretary

Government of Uttar Pradesh

R. Bhargai Agricultural Production Commissioner

A.K. Das. Secretary Irrigation and Power

R.M. Serhi Secretary AgricultureI.P. Areri Secretary Area DevelopmentI.K.. Pawdey Special Secretary, IrrigationG.R. Verunei Special Secretary, Area DevelopmentS.P. Gupta Engineer-in-Chief (Mach), Irrigation Dept.

V.P. Singh Chief Engineer, Tubevell Wing, IDS.M. Zaffar Chief Engineer (Hydel), UPSEB

S.C. Arora Chief Engineer, Minor Irrigation

R.S. Sazema Director, UP Groundwater Directorate

D.C. Jain S.E., P.T. (Investigation and Planning)

R.5. Gupta S.E., P.T. CCV.3. Verna Joint Director, Agriculture

A.Q. Alvi Dy. Director, Agriculture

DRAFT

The World Bank 1818 H Streei, N.W. (202) 477-1234INTERNATiONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Address: INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS

November 17, 1987

Mr. A. K. DasSecretary and Commissioner IrrigationGovernment of Uttar PradeshLucknow, India

Dear Mr. Das,

Second UP Public Tubewells Project(Cr. 1332-IN & IFAD Ln. 124-IN)

Extension of Closing Date of Credit

A Bank mission visited Uttar Pradesh, from September 26 to October5, 1987 to discuss the State's public groundwater development program. The

main objective of the mission was to examine the prospects for a possibleThird UP Public Tubewells Project (which will be reported to you underseparate cover). However, since the ongoing project is a time sliceoperation, we also reviewed the scope of the proposed project in relationto a possible extension of the closing date of the present Credit. We took

into consideration the proposed new closing date and its relationship tothe preparation timetable of a follow up project, and those conditions orelements of the ongoing project which would require special attention underany follow up operation.

Extension of Closing Date. It had been assumed that the IDA shareof financing under the ongoing Credit would remain about 50 percent. Thus

the GOUP estimated that savings would enable the project scope to beincreased by about 1,000 public tubewells (PTWs) over a two year period.As a specific response to the drought, IDA has agreed to increase its

financing to 70 percent. This will change the scope of works under anextension of the Credit.

To proceed further with our consideration of an extension, both

IDA and IFAD require a detailed work plan and schedule which reflects the

proposed increase in our share of financing under the Credit and the

State's implementation capacity. In this respect, the mission reported

that, parallel to the Bank/IFAD supported program, Government is

undertaking a State funded program of about 300 tubewells per year and has

secured Dutch aid to support construction of about 750 additional tubewells

over the next three years. Thus, for us to evaluate the proposed increase

in the IDA/IFAD supported work program, we need to know the total State

Public Tubewell Program. We also need this information in order to further

consider the proposed follow-up project.

TT 4400 ACA 248423 WU 64148

-2-

As you know, the objective of increasing our share of financingwas to increase the rate of disbursement of the Credit. We hope therefore

that this objective will not be prejudiced by the additional construction

planned under the Dutch aided project. Taking this and our response to the

drought into account we intend to recommend that the extension of the

closing date be limited to 12 months (until March 31, 1989) and would

expect that Government would give priority to the IDA/IFAD supported

program to speed up disbursements.

Credit Extension Conditions

Water Charge System Study. The GOUP is essentially in compliance

with the legal agreements, except that a proposal for a water charge system

acceptable to IDA/IFAD is still awaited (Section 3.04(a) and (b) of the

Project Agreement). Under this provision, the Government's obligation is

only to formulate and introduce an appropriate water charge system. The

level of water charges is covered under a separate covenant, (Section

3.04(c) of the PA). This was done so that an efficient water charge systemcould be formulated without the complication of deciding on the sensitive

issue of the level of water charges.

Thus we believe that the task of completing a water charge system

study (based on the work already done) is relatively straightforward, and

conclude that a proposal acceptable to IDA/IFAD could be prepared by end of

February 1988. In completing this study, we suggest that careful attention

be given to:

(i) identifying the determinants (see Annex 9 of theSupplementary Data Volume of the Project Appraisal Report)

which should be taken into account in designing the watercharge system; and

(ii) indicating the main factors to be considered in setting the

water charge level, if a two-tier system is recommended. In

particular, the proposal should show how the proposed

structure of charges relates to fixed and variable O&Mcosts.

Level of Water Charges. Section 3.04(c) of Schedule I of the

Project Agreement states that:

*by July 31, 1988, GOUP would set water charges at suchlevels that revenue covers the average O&M -costs and a

reasonable share of investment costs."

-3-

The Project Agreement assumed that the project would be substantially

completed by March 31, 1987, and thus most PTWs would be approaching full

development status by July 31, 1988. However, the project is about two

years behind schedule and few PTWs have reached full development.

We appreciate that as soon as a PTW is commissioned, the fixed O&M

costs (operation, routine maintenance, and fixed energy costs) must be met,

yet the operating hours (and thus revenue) only build up as the farmers

take up irrigation. To comply with the covenant, GOUP would have to charge

those farmers who take up irrigation a rate that covers all the O&M costs.

Thus, if only a few farmers irrigate, they would have to cover all O&M

costs. Such an arrangement would be unfair since an individual farmer has

no control over tubewell utilization. We are therefore prepared to

consider an amendment to the clause as follows:

"by July '31, 1988, set water charges such that revenue would

cover the' average O&M costs and a reasonable share ofinvestment costs assuming that tubewells operate for 3,500hours per annum."

Electricity Charges. In January 1986, the Government approvedsubstantial increases in electrical energy charges for many SEB consumers.World Bank (WB) and other State tubewells on dedicated power lines were

designated '.. large and heavy power consumers' (rate schedule HV-2)because of the quality and quantity of power supplied through using

independent feeders. The UPSEB fixed energy charges at a flat rate of 60

rps/KVA/month with an additional charge of 60 paisas/kWh for energyconsumed, following recommendations of the Tariff Rationalization Committee

(which reported to the UPSEB late in 1986). We understand that the

Irrigation Department has appealed these new charges. We also note that atthe new tariff, even with a tubewell operating at 3,500 hours per annum,

the revenue at the present level of water charges would not cover O&Mcosts.

We therefore suggest that:

(a) The ID should pay the UPSEB at the new charge for

electricity (so that any shortfall in cost recovery would

appear in the ID accounts), since these new rates have been

approved by Government.

(b) The level of water charges should be reviewed immediately

and set to recover average 0 & M costs taking into account

the new energy charges and assuming that a well operates

3500 hours per annum.

(c) The Government should activate (or set up) administrativearrangements to regularly review water charges and cost. of

providing the service (Section 3.05 of the Project

-4-

Agreement). Then by March 31, 1988, this body should submit

recommendations to Government on a water charge level and,by June 30, 1988, Government should introduce the now water

charges to take affect starting the 1988/89 rabi season.

Cost Recovery Administration. A water charge system should be

easy to administer, fair and difficult to corrupt. The present system,which is basically a volumetric charge, falls short of these objectives.

The present charge is volumetric since it based on pump operating hours;

because the discharge at tubewell spout outlets is constant, hours operated

equate to volume of water supplied. The operation principle is to rotate

the full supply to a group of farmers (within about a 7 ha command) on a

daily turn basis. The present procedure is to divide the area irrigated,

as recorded by the operator, by the number of hours of operation during a

turn. Then farmers who are recorded as having irrigated pay for operatinghours in proportion to their area irrigated. Records indicate that farmers

are being charged for substantially more water than they could possiblyhave used on the areas stated. Hence, it is recommended that the

Government studies the assessment and billing of water charges, and by

March 31, 1988 formulates improved procedures.

Finally, we take this opportunity to thank you and your officers

for the hospitality and support accorded the mission. If you have any

queries or comments on this letter please make contact with Mr. des Bouvrie

in our New Delhi office or myself in Washington.

Sincerely yours,

Olivier Lafourcade, ChiefIndia Agriculture Operations Division

Country Department 4

Attachments:

cc: Mr. G. P. Joshi, Deputy Secretary, Department of Economic Affairs,MOF,

GOIMr. Kanungo, Joint Secretary, Ministry of Water Resources, GOI

Mrs. S. Bhave, Deputy Secretary, Ministry of Water Resources, GOI

Mr. M. A. Chitale, Chairman, Central Water Commission

Mr. V. A. Prakash, Member, P & P, Central Water Commission

Mr. R. Bhargai, Agricultural Production Commissioner, GOUP

-5-

Cleared by: Messrs. Lafourcade, Dievald and Slade (AS4AG)

bcc: Messrs. Ritchie, Temple (AS4CO); Perry (AS4AG); Frederiksen (ASTAG);

Gopal (LEG); Baxter (New Delhi, India)

JFC:hw

THE WORLD BANKIINTERNATIONAL FINANCE CORPORATIONWashington D. C. 20433

FORM NO. 1884 U.S.A.(5-86) FACSIMILE TRANSMITTAL FORM

~~-- CABLE SERVICES USE ONLY

{ MSG. NUMBER: TO ZTTDAT : November 1t ,1987

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FROM: Olivier Lafourcade, Chief, AS4AG Extension 76921 Dept/Div., No. 256/20

TO: COMPANY/ORGANIZATION: THE WORLD BANKCITY AND COUNTRY: NEW DELHI, INDIAFOR ATTENTION OF: MR. MICHAEL BAXTER

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112 02The World Bank 1818 H Strad, N.W. (202) 477-1234

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT Washington, D.C. 20433 Cable Addrea: NIBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION U.S.A. Cable Address: INDEVAS

November 10, 1987

The SecretaryDepartment of Economic AffairsMinistry of FinanceGovernment of IndiaNorth BlockNew Delhi 110001

Dear Sir,

We refer to the following agreements between India (the Borrower) and the Association:

Development Credit Agreement (Credit 1332-IN, Second Uttar Pradesh Public Tubewells Project)

Development Credit Agreement (Credit 1611-IN, National Social Forestry Project)

Development Credit Agreement (Credit 1619-IN, West Bengal Minor Irrigation Project)

Development Credit Agreement (Credit 163 1-IN, Second National Agricultural Research Project)

Development Credit Agreement (Credit 1737-IN, Bihar Public Tubewells Project)

Development Credit Agreement (Credit 1754-IN, Third National Agricultural Extension Project)

Development Credit Agreement (Credit 1770-IN, National Water Management Project)

We also refer to the telex dated September 21, 1987, from Mr. G.P. Joshi of theDepartment of Economic Affairs, Ministry of Finance, as well as recent discussions betweenrepresentatives of the Borrower and the Association regarding possible assistance of theAssociation in alleviating the adverse effects of the recent drought, in which ther Borrower hasrequested certain increases in withdrawal percentages specified in the respective tables underparagraph 1 of Schedule 1 of each of the above agreements.

In accordance with your above request, I am pleased to advise you that the Associationagrees to amend the table in paragraph 1 of Schedule 1 to each of the above agreements, as set outin the Attachment to this letter. The above amendments will take effect from July 1, 1987,retroactively, upon your confirmation as indicated below, and will apply to eligible expendituresincurred during the period of July 1, 1987 through December 31, 1988.

Tr 440098 RCA 248243 WUI 6414

Please confirm your agreement to the foregoing by signing the enclosed confirmation copyof this letter and kindly return it to us.

Sincerely yours,

Vice PresidentAsia Region

CONFIRMED:

INDIA

ByAuthorized Representative

Date

Copy to:

The Secretary, Irrigation DepartmentGovernment of BiharPatna, Bihar

The Secretary, Irrigation DepartmentGovernment of Uttar PradeshLucknow, UP

The Secretary, Irrigation DepartmentGovernment of West BengalWriter's BuildingCalcutta, West Bengal

Secretary, Government of Andhra PradeshIrrigation and Command Area DevelopmentSecretariatHyderabad 500 002Andhra Pradesh

Secretary IIPublic Works, CAD and Electricity Department (Irrigation)Government of KarnatakaBangalore 560 001Karnataka

* U2 04

Commissioner and SecretaryPublic Works DepartmentGovernment of Tamil NaduFort Saint GeorgeMadras 600 001Tamil Nadu, India

Secretary, Forest and Environment DepartmentSachivalaya, Gandhinagar 382 010India

Chief SecretaryHimachel Pradesh GovernmentEllerslieShimla, India

Secretary to GovernmentForest and Environment DepartmentGovernment of RajasthanSecretariatJaipur, Rajasthan

Secretary to GovernmentForest DepartmentSachivalaya, Lucknow 226 001India

ChairmanIndian Council of Agricultural ResearchKrishi BhawanDr. Rajendra Prasad RoadNew Delhi, India 110 001

Agriculture Production CommissionerGovernment of AssamP. 0. Assam SachivalayaGuwahati 781 006Assam, India

SecretaryDepartment of AgricultureGovernment of Himachel PradeshSimla, India

SecretaryDepartment of AgricultureGovernment of Uttar PradeshLucknow, India

bcc and cleared with: Mr. Gopal (LEG)bcc: Messrs. Ritchie, Lafourcade, Baxter, Wiehen (AS), Atayee (LOA)

AttachmentV Pagel1

Credit 1332-IN: Uttar Pradesh Public Tubewells Project

Amendment to Schedule 1, Paragraph (1) of Development Credit Agreement

Amount of theCredit Allocated % of(Expressed in Expenditures

Category SDR Equivalent) to be Financed

(1) Civil works

(a) Completed tubewell systems 40,070,000 70%

(b) Completed works under 1,720,000 70%part C of the Project

(2) Equipment and Materials

(a) Steel and polyvinyl chloride 33,720,000 70%pipes, casings and fittings

Withdrawal percentages for all other items remain unchanged.

I d 9 t~ I 8/I I/ 11 IH 73G3N A a-l 8f WOd i

- r WO(RLD BANK

FACSIMILE TRANSMITTAL FORM

Data NO9

Number of

Ji J atkof f .ating Chief AS4AGFlom B RMNo.

L F ....,,.........--. ... RmNoASTAG ..pt. code)

copy GRIMSF 309

Fsx Number.: -.-

up 11 pULC TUSEWELLS PROJECTSubject CMIT 13 32-IN IFAD LOA 124-IN

COMMENTS:

Ref . ax of 10/30/87 transmttinaS our er condations

Se~f.~ Mr. Bateis credit. (r, Viw projeot' ledin e niear future to

ep enish ntio *t~Of thisilppisad drilling materials and thlogday

.plenish It ofCs% d be grtefu if an' &Ud IFAD rulit$ in ti

involved in such procu.1emontywouA eg.~~ fBn'sadI~~ 8~ ti

matte can be obtained nearest futurs.

SCMatf. The establishment Of a water charte sytm and related soCio-

etu wri d to iPar 38.-1 ct est a better proach to the

near f uture to wite tolowod to date. We would the?5f re apPreciate theproblem th&a has beau r, lad' TOd dG&Ininha inS with thesc

- -1 V n P~art$ of Mir. S3.ade'5 and 14T. Cu n ug a l BT dB& i 'w th a the b.61LS n -ar-'o -r i n trust that You .i I.... nt

issue to ensure our views ~ouu&. ---, tat thea Oub will -- h

letter shoula- 06 ' ~ the futuecu

of partiCular importance to te t1? U-.. -vpntismc

raf errad to in thae Up-IL Tubewell Projec-t's CoverisftU.GENERAL AGRICULTURE DIVISION

Date F:ctivd: ---- -J-J---Dat Acknc-d-------

cc: Cunnia8ham/ Slade/Diewald /Pai/Bkoff Routed to: ----

---/rb ------

g*----------------------

AuthoriZed bY J, *2rk f

(Name)

THE WORLD BANK /INTERNATIONAL FINA, CE C('PCUATION

OFFICE)EMQRANDUMDATE November 4, 1987

TO ' cade C --

FROM Mich axter 3 LEXTENSION

SUBJECT Status of Audit on IFAD Projects

LKF4\X -Pvc'O Lin LUq-Further to my telex of November 4, att hed please find

copies of the following audit certificates.

IFAD Ln. No. Name of the Project Period

81-IN MP Medium Irrigation 1983-84 to 1985-86

124-IN UP Tubewells 1983- 4 to 1985-86

23-IN Bhima CAD - Rtc ;. \+ 1979-80 to 1984-85

The first two projects are cofinanced by IFAD and the auditcertificates furnished for the Bank Credits (1108-IN and 1332-IN)meet the requirements of IFAD Loans as well.

Copies of the following audit certificates relating to projectsoutside AS4NA supervision available on our files are also forwarded.

5/32-IN Rajasthan CAD 199-83 to 1985-86

749-IN Sundarban Development 1983-84 and 1984-85

SS:zpA.l.15.6

P-1866

s*d 3u C,-II I H -13 M 3N >1H1 a L- aM Od -

THF BANK- CS"M1 ANSMITTAL FORM

1387 OCT 30 1: 3-Dte : 4k 1CADLE SECTION

rrom Michael Baxter, Chief, Agriculture Unit

M0, Lafourcade AS4AG (Dptcde -1OMr L fp ...,A ............... (Dept, code) ..... N.

t INDIA - SECOND UTTAR P ZADES PUBLIC TUBEVELLSlCREDIT 1332-IN/LFAD LOAN 124-IN

EXTESION OF CLOSINTG DATE ANDCIANOF _ISCOPE

d. plse fin~ Memcranidur de Oct ober 2,

eport on-entinEd suject.

GE ERAL ATh CULTKIE * UN

Ilt RceivCdA~lW- --------

Control No. ----- -

AMichaozed by(

/ihe atr hif g i Nm

9 'd 90:tI 2LB/OS/OI IH17CP13N >lSGldM WO I

THE WORLD BANKOFFICE MEMORANDUM

Date: October 27, 1987

To: Mr 0. Lafourcade, Chief, AF4AG

From: MichaeV)xter, Chief, Agriculture Unit

Sub: Second Ut rades blic Tubewells Project

Credit 1332-IN/Z;FAD Loan,.124-IN

Extension of Closing Date; gxvansion of Scope

1. Attached kindly find our recommendations in reply to the

GOUP's request for a two year extension of this project's Credit

sing date from March 31, 1988 to March 31, 1990 and the

""sion of its original scope by an additional 1000 PTWs-

As you may recall this proposal was first tabled during theJanr:ry 1988 review, when by Mr Grimshaw's letter of February 26,

s7, the Bank requested a full status report of the -roject as

w s properly updated cost estimates and implereint XOn

scnhdules. These have now been received, the last info~ration

t:nsitted to us by letter of October 9, 1987 fror. DEA. We have

reviewed these proposals during missions to the field of July13-17 and September 28/29, 1987, and a full report is attached.

3. This project continues to be technically sound,ecOnomically very viable (with an ERR of 27%) and, in general

2 terms, is-well run. We are in particular pleased to o that

the backlog in connecting the PTWs to dedicated feeder lines has

now essentially been removed and that -he DOA's AgrioultureDevelopment Wing has prepared (and is implementing) anagricultural development program in the PTW's comnand areas,which ranks among the best we have seen so far.

4. I would like to call your particular attention to the

following issues:

(i) Savings

We estimate that the funds which will remain undisbursed

once all works under the present scope of the project will have

beF-. completed at SDR 38.0 M or $ 42 million. The Credit ill b e

fu -r disbursed to SDP 79.4 M or $ 87.3 M, when the 1,000d snal tubewells are accounted for. This -uld still leave a

ve balance of SDR 12.2 M (or $13. , . .e believe hr we,

that the Credit could be fully drawn dcwn, if, during th Cre,.it

externsn, our share of fin cing as p- -f our retpn' to the

drugh uld be incre sed from the pr55 to

IL-

' d 20:11 B/OE6/0 IH73af13N )IEQldP WO>

(ii) compliance with Covenants

The two covenants which have not satisfactorily been

complied with relate to: a sooio-economic study of farmers

benefitting from the project and the proposal for a water charge

system and a time table for its application. GOUP has, however,

recommitted itself to these important inter-related subjects and

remedial measures are underway, which we will closely monitor

from our end, and, where possible, assist to implement. We

intend to write to Government on the matter in the very nearfuture, and will be looking forward for any contribution, which

can be made in this respect by the recent Diewald/Cunninghammission to UP. l

(iii) Implementation Schedule

The implementation and financing schedules, now proposed by

letter from DEA of October 9 1985, are more realistic and provide

for completion of all 2,330 PTWs under the Credit and the

construction of at least another 800 PTWs by March 31, 1989. We

also agree that if all 1,000 PTWs, over and above the originalscope of the project, are to be constructed and, mostimportantly, such ancillary works as electrification and on--far

development and the full commissioning under irrigated

agriculture of all 3,330 PTWs command areas, are to be conpleted

within the life of the Project, operations will have to be

extended through the latter half of 1989, and the Credit closingdate further postponed until March 31, 1990.

5. We do not believe that the construction of another 750 PTWs

financed under a Dutch-Indian bilateral agreement referred to byMessrs Diewald and Slade in their telex to you of October 8, 1987

will become an issue. This project is not likely to get underwaybefore early next year and would therefore only overlap partly(perhaps 200 PTWs) with the expanded IDA program during the1988/89 drilling season and would not jeopardize its earlyimplementation. We propose, however, to write to the GOUPGovernment, to keep the matter under regular review.

6. Incidentally, we have on October 26 1987 received the

report of the IFAD consultant Mr Ram Saran, who participated in

the July 1987 review and have noted that we are in full agreementTlth _hx ho on n in our own

report, which sugestyou copy to Mr Saigl at IFAD, once it

has been cleared.

7. Concluding, we recommend that a one year extension beyond

March 31, 1988 be gran now, to allow the project to underta e

such advance activities as the procurement of drilling materials

and pipes. A second year extension from March 31, 1989 to March

8 d 0.1f ILB/06/0T IH-13GP3N >GIaaMr W08Jd

31f 1990 would be subject to satisfactory compliance with the

Bank's requirements outlined in Paras 42-45 of the Report. We

also propose to submit the mission's report and recommendations

to DEA and GOUP to enable them to plan ahead, but will not do so

before we have received your comments. We would appreciate an

early ruling by the management on this proposal to allow us to

proceed with the amendment of the Credit's legal documents.

cc: Diewald, Zagni, Berkoff, Pai, Bhattacharya, Subramanian.

CDB:kc

6 d 60:TI 28/06/01 IH17af13N >lEGlfM W08J

INDIA

SECOND UTTAR PRADESH PUBLIC TUBEWELLS PROJECTCREDIT NO. 1332-IN/IFAD LOAN 124-N

EXTENSION OF CLOSING DATE AND CHANGE IN SCOPE

Background

1. The Government of India by letter of June 23, 1987

signed by Mr Joshi, DEA Deputy Secretary, has requested a

two-year extension of the Credit/Loan closing date from March 31,

1988 to March 31, 1990, as well as an expansion of the project's

scope by another 800-1000 tubewells.

2. An informal request from the Government of Uttar Pradesh

to that effect was submitted to the Bank's annual review mission

in January 1987. This request was formally acknowledged by

letter of February 25, 1987 from Mr Grimshaw to Mr Das, UPSecretary and Commissioner for Irrigation. GOUP was thusinformed that more convincing evidence would have to be provided

for the Bank to support this proposal, and a list of the

additional information required, including a fully documentedaction plan, revised implementation schedule and cost tables, eannexed to that letter. These elements have now been received

(last submission dated October 9, 1987) and are here reviewed.

3. The Bank-funded groundwater projects in UP have, throughthe past decades, been part of a Statewide public tubewell (PTW)

program, which has now reached some 24,000 units, and is likelyto be further expanded in the decades ahead. They constitute in

fact, in the truest sense of the word, a very modest time slice

of a much more significant long-term GOUP undertaking. These

projects may also be ranked as among the most successfulBank-funded irrigation projects in India.

4. The present project the Second UP Tubewells Project was

preceded by LwQ nLier UP gircAundwater d valoW t--- -r-J - --

of the first IDA projects (Credit 008-IN of US $ 60 M), financed,

in the early sixties the construction of 800 PTWs, but fell short

of expectations, due to inadequate O&M and power supply. The

FirSt UP Pubc Tubewells proiect (Credit 1004-IN of US $ 18 M)

constructed during 1980-1986 a further 500 PTWs and introduced

technical and operational improvements, through buried pipedistribution systems and automatically controlled field valveoutlets. The Second UP Public Tubewells Project (Credit No.

1332-IN, US $ 101.1 M), co-financed with IFAD, started in 1983,

expanded this improved technology and introduced the PTW's

connection to dedicated (reliable) electric power lines,involving some 2300 new anits. GOUP, furthermore, has now

solicited continuing Bank assistance in groundwater developmentin the form of a Third UP Tubewells Project. This tentative

proposal would consist of some 3,000 improved PTWs, themodernization of 600 existing PTWs and the connection of 4,500

OT*C 01:1T 2e8/06/01 IH13Gf13N )IG1dPM WOdd

PTWs to dedicated feeder lines. It would have a duration of 5

years, a US $ 200 M base-cost and be ready for implementation inthe second half of the calendar year 1989, when the Second UP

Tubewells Project is expected to close. A written request to

that effect, however, has not as yet been received by the Sank.

5, The Second UP Tubewells Project aims at increasing

agricultural production on 235,000 ha directly benefitting440,000 farm families, who are among the most deprived in India,with average landholdings of less than one hectare. This would

be achieved through large-scale groundwater development; theconstruction of some 2,200 improved technology public tubewell

(IPTW) systems; the modernization of GOUP's existing supportservices to farmers in the PTW command areas; training of

irrigation technology, and the monitoring and evaluation of

project benefits. The salient features of this project are:

Date of Credit signature : March 31, 1983Date of Effectiveness : May 25, 1983Amount of Credit IDA : SDR 91.6 M (US$101.0 M)Amount of IFAD Loan : SDR 32.0 M (US$ 35.3 M)

Duration of the Project : 4 yearsPresent Closing Date : March 31, 1988Amount disbursed as of August 31, 1987 : SDR 41.2 M (US$ 45.5 M)Balance as of August 31, 1987 : SDR 50.4 M (US$ 55.5 M)Estimated total Project Expenditure

covering the present scope ofthe Project ; SDR 53.6 M (US$ 59.0 M)

Estimated Credit Balance : SDR 38.0 M (US$ 42.0 M)

6. The 4-year project was scheduled for completion on March31, 1987 and would close on March 31, 1988, but implementation isnow in its fifth year. Progress initially was slow due toprocurement problems, but progress in recent years has beenentirely satisfactory. Drilling and pipe installation haveessentially been completed (98% and 93% of targets). Some 80% of

the IPTWs have been connected to dedicated feeder lines and power

supply is adequate. It is expected that in this respect the

original construction targets can be achieved before the Credit

closing date. Command area development and the fullcommissioning of pumpstations is, however, lagging behind

schedule (68% complete); so is the on-farm agriculturedevelopment and irrigation efficiency.

7. Cumulative disbursements through August 31, 1987 reached$ 45.5 M or 45% of SAR estimates and total projecteddisbursements by the current closin date of March 31, 1988, mayleave a balance of some US $ 42.0 M These "savings" are

Bank statements for August 31, 1987 indicate $56.0 M(51.2 SDR) but expenses have been incurred for only$ 45.5 M, the remainder being advance (see Para 17).

II 'd LBT 3/OC/OI IH-13GM3N >1Eql8M WOd'd

mainly due to the unexpected increase in the rupee/SDR exchangerate (Rs*9.5 at appraisal but recently in excess of Rs. 16.0),and the lower than expected unit cost, (some 10% per installed

well).

8. Turning now to the GOUP's proposal for Credit extension

and the expansion of its scope, and the Bank's request for

detailed convincing evidence to support this proposal, thisinformation was submitted in the form of two GOUP reportsentitled: "Revised Second UP Public Tubewells Project, Appraisal

Report" dated April 1987 and transmitted to the Bank by letter

from DEA of June 23, 1987; and the Agricultural Department's

"Status Paper on Agriculture Development Work in UP PublicTubewells" dated June 1987. Further details to supplement these

reports reached the Bank by letter from DEA of October 9, 1987.

Two Bank missions visited the Project to review the above GOUP

proposals: July 13-17, 1987 and September 28-29, 1987. Their

findings, dealing point by point with the information requested

in Mr Grimshaw's letter of February 25, 1987, are summarisedbelow.

Groundwatei Assessment and Tubewell Siting

9. The project has prepared a revised construction program,including the drilling of an additional 1,000 Improved PTWs andthe modernization of 125 existing PTWs. An overview, in numbers

per district, has been provided of the existing and proposedPTWs, as well as a summary justification for the newly proposedunits. More could and should have been done, however, to listthe criteria applied to set priorities, including an assessmentof the expected increased agricultural production and benefits; a

matter which will be kept under review during future visits tothe project.

10. As regards tubewell siting, detailed recommendationswere given by the January 1987 Bank mission for the cluster andblockwise reporting on hydrogeological conditions includinggroundwater balances, water quality and topographic, soil and

cropping conditions. These have not been followed fullysatisfactorily. The mission therefore proposes that this matter

again be reviewed during the forthcoming review of the project in

January 1988.

Implementation Capacity

11. A detailed implementation plan, including those worksremaining under the present scope of the project and thoserelated to the additional works proposed under its expandedscope, has been submitted and is in Annex 1. Following a review

of the availability and state of repair of the TWs drilling plantand equipment, the mission is confident that the drillingimplementation schedule adopted by the project is realistic and

acceptable.

~Id 1:11 2-810E101 IH-13G.IM A12QdM WO8d

12. It should here be noted that the mission is aware of

GoUP's intentions to construct another 750 IPTWS in eastern UP,

following World Bank standards, under a Dutch Governmentbilateral grant. This three-year project, however, calls for a

series of studies prior to drilling operations and is expected to

only partly (some 200 PTWs during 1988/89) overlap with the

expanded UP-II drilling program.

13. Since it is, at any rate, unlikely that the total number

of,IPTWs to be constructed during FY 1988/89 will exceed 1,200units, which is the Tubewell Wing's present capacity, the GOUP

considers, and the mission agrees, that little or no conflict of

interest will arise between the two operations. The matter

should, however, be jointly reviewed, from time to time, toensure proper coordination and drilling implementation, as now

scheduled.

14. The project has meanwhile taken full inventory of its

drilling materials in stock and of those yet to be procured.Tenders have been issed and procurement is underway to resupplythe stock, when the drilling of the additional 1,000 tubewellscomes on stream. Procurement procedures are being followedaccording to Bank guidelines, and no major problems are expected

in this respect.

15. The position is somewhat different with respect to the

implementation of command area development (pipelines and fieldchannels), energization, and, most importantly, agrkculturcidevelopment. It is evident that if tubewell drillirg would becompleted by March 1989, the equipment of a number of these PTWsand the development of their command areas, would spill over intoFY 1989-90. This has been recognized by project staff and isreflected in the implementation schedule. considering tbe factthat both the UP State Electricity Board and the Department ofAgriculture are now fully prepared to supply the additionalinputs, expected from their end under the expanded program, themission is confident that most of these targets can be met aswell, allowing for the customary "grace period" for submission 5f

withdrawal applications. Even so, a further 6-month extension ofthe Credit closing date may be required, until September 1989.

Revised Cost Tables

16. The project has submitted separate cost estimates (seeTable in Annex 2) for: (i) the completion of works under thepresent scope of the project, and (ii) the construction andcommissioning of an additional 1,000 PTWs. These estimates arebased on recent tender prices. The mission considers themrealistic and fully acceptable, with the exception of 'hose for-agricultural development which have been very largelyunderestimated; an oversight which, however, can be correct'Cwithout major problems considering the relatively modest amountinvolved. Total project cost, including the additional works,would amount to Rs. 2,400 rillion versus Rs. 1,825 millionestimated at appraisal. The cost in US dollar terms, however,

S~d L80E~/01 IH13Qf3N )ISG18M W06-A

would be lower ( $ 182 M versus $ 192.2 M) due to the more

favourable recent US$/Rupee rate of $1 = Rs. 13.0, versus $1

Rs. 9.5 in 1983.

Disbursemerlts

17. Disbursements through August 31, 1987 were SDR 51.2

million leaving a balance of SDR 40.4 million, of the SDR 91.6

million as appraised. It should be noted, however, that these

disbursements included an estimated amount of SDR 10.0 million

advance to the Project's revolving fund, against which no

expenditures had been incurred, as yet. Accounting for this

correction, the balance as of August 31, 1987 rhes beconsidered to have stood at SDR 50.4 million. Iitoaccount the present (October 1987) exchange rate c1 iS. 16.6 per

SDR, this balance would correspond to Rs. 836.0 million. Since,furthermore, these funds represent 55% of the total expenditure

to be incurred, including GOUP contribution, the current balanceon the projects budget stands at Rs. 1,520.0 million.Considering that GOUP estimates a further expenditure ilc ivutng1,000 additional tubewells, of Rs. 1,152.0 million, it appearsthat some Rs. 368.0 M or SDR 12.2 M (see Table 1 below) would

remain unspent. If, however, as is now envisaged in the light of

the "drought relief measures" proposed to be taken by the Bank,the disbursement percentage during the remaining life of the

project would be increased from 55% to 75%, it is expected thatthe credit could be fully drawn down by the end of the Project'slife.

Table 1; Status of Savings at August 31, 1987

Rs x 106

1. Balance of Credit available at August 31, 1987:SDR 50.4 M x 16.6 R per SDR: 1,520.0

2. Likely disbursement under the originalscope of the project during 1987-88 and1988-89: 324.0

3. Likely disbursement for additional 1,000PTWs during period 1988-89 and 1989-90: 827.0

4. Balance by March 31, 1990: Rs. 369.0 mill

or, at exchange rate of 16.6R per SDR: SDR 12.2 miiluln

Acriculturl Develophent Services

18. In response to the Bank's request, a status paper-"

was prepared by the Project's Agricultural Development Wing(ADW), UP Department of Agriculture. The report gives a clear

Tubewells, Agriculture Department, Lucknow, June 1987.

jt'Vd CI:TI LB/O6/OI IH13QGi3M A>18Md WONJ

overview of the methodology adopted to motivate farmers in

switching from their former, rainfed, low input technology

cropping practices to the high input technology of the tubewell

supported irrigated agriculture.

19. The program involves assistance to the future irrigators

in farm layout, landshaping, advice on cropping schedules,

fertilizer use, improved varieties, irrigation practices;

arranges for the timely supply of certified and foundation seed,

appropriate fertilizers and seasonal credit and, through mobile

teams, demonstrates landlevelling, crop diversification and the

use of irrigation tools and equipment. overall, this excellent

set of support measures would, once fully operational, cater in a

very comprehensive way to the needs of the future irrigators. It

merits to receive the fullest possible GOUP support.

20. The Agricultural support program, which started modestlyin 1983, catering first to UP I Tubewells and since 1984 also to

UP II Tubewells, has now been run during four consecutive

seasons. Only about 54% of the UP II Tubewells commands,however, have been reached, to date. Those achievements, thoughmodest area-wise, suggest significant increases in croppingintensity (25-35%); changes in cropping pattern towards grain

crop diversification during Kharif (increase in maize,Bajra/sorghum and other crops) and increase in pulses duringRabi; and a very substantial increase in pulses during the dry,Zaid, season. This preliminary analysis also shows very positive

trends in the use of fertilizer, improved seed and pesticides and

other plant protection measures. Average yield increases of

50%-60% over the past three years, therefore, are not uncommon,although they are still well below levels obtained on the

project's farm demonstration plots.

21. Even so, the full implementation of this program has

been constrained by delays in the commissioning of tubewells; inthe sanctioning, posting and training of agricultural extension

staff; inadequate such support facilities as agriculture servicecentres and transport and, most importantly, a very persistentunder-allocation of funds: of the Rs. 77 M provided for at

appraisal, only Rs. 27 M have been spent to date.

22. The ADW status :1- _rt, therefore, also proposes toredress this most unsatisfactory situation, through a series of

corrective measures. It details the requirements of staff,support facilities and financing quite well, and the overalltargets set for cropping inter ity and productivity appear withinattainable levels. It is, therefore, expected that the presncnt

backlog in mobilizing irrigated agriculture in the Phase I'Tubewell commands, can, very largely, be removed by the 19-season, assuming that staff and funds will be forthcoming, as

required.

23. Field staff, in particular those below agriculturalofficer, however, would have to be doubled from the present 240to 509; upgrading of staff would have to be stepped up and

9Wd t'1:11 LB/OC..01 IH13GM3IN >l~aldr W06J

training camps organized. The funding requirements amounting to

a total of Rs. 35 M/year are, the mission considers, fully

justifiable and should be well within the project's means.

Whether the rather massive staff transfer can be achieved within

this time frame, appears somewhat doubtful. Very substantial

efforts should now therefore be made to mobilize these resources,

recruit the needed staff and provide all necessary back-up

facilities. In this respect, it is essential that the above

program and its funding be jointly reviewed, some time in the

near future, by senior management of the irrigation and

agriculture departments, to ensure proper budgeting and a timelyrelease of funds to avoid the cashflow problems ADW has suffered

in the past.

Re-evaluation of Economic Viability

24. It has, due to the lack of an incomplete data base, not

been possible to undertake a systematic economic re-evaluation of

the Project. Nevertheless, a cursory review of returns to a 150

m /h Improved Standard Tubewell (IST) reveals that the ERR is

almost certainly proving higher or at least as high as projected

in the SAR, It should here be noted that at appraisal no

significant adjustments were made in the cropping intensities and

yield assumptions adopted under the First UP Tubewell project.In reality, intensities in both Kharif and Rabi season have

exceeded those future "with project" estimates by a considerable

margin; so have "zaid" or summer crop areas (16% of the area).

Paddy yields have followed SAR projections closely but wheat

yields have exceeded SAR estimates by 40%-50%.

25. The benefits from increased agricultural output have,however, been offset by a significant decline in projectedeconomic prices for the main commodities. In fact, a comparison

of the prices recently estimated by the Bank with those used in

the SAR, updated by the wholesale Price Index (which rose some30%) between 1982 and 1986), shows a decline of 20%-40%.

26. There has, on the contrary, been little change in "real"

investment costs, which may be seen from Tab e 2, giving a

comparison of the coqy estimates for a 150 m /hr IST derived

from the GOUP report against those used in the SAr. Allowingfor a general inflation at 30%, costs have essentially remained

unchanged in real terms.

_j/ Excerpt from note by Mr D.J.N. Berkoff of July 23, 1987.

2/ "Revised Second UP Public Tubewells Project AppraisalReport".

91'd 911 L81061O1 IH13CM3N Agat~dM W06d

27. The status of tubewell use and O&M costs, however, is

less in line with original expectations. The average runninghours for the Phase I tubewells (operational for up to 5 years)

amounted in 1985/86 to 1,488 hours per year (613 hours in Kharif

and 875 in Rabi season). Comparable appraisal estimates amounted

to 3,300 hours per year. corresponding operating cost now,

therefore, stands at Rs. 3,000/tubewell/year versus SAR estimates

of Rs. 4,000 and Rs. 2,500/tubewell/year, respectively. Clearly

the wells are used less intensively than expected, yet are

supporting an overall cropping intensity, which is substantiallygreater than projected, without adversely affecting crop yields.

2 . Yet, an updated assessment of the returns from a 150

m /hr IST, based on this incomplete base, results in an

economic rate of return of around 27%. Given that costs have

changed little in real terms, this suggests that the increased

agriculture output has more than offset the decline in projected

commodity prices. ERRs are thus higher and fully comparable with

the 24.5% estimated at appraisal.

29. The mission, however, has not received a satisfactoryanswer to the question as to why wells are being used less

intensively (less than half) than assumed at appraisal. The

implication may be that crop water requirements have been lower

than projected and/or efficiency of application much higher, or,alternatively, that yields though acceptable and higher than

appraised, are still below their potential yields. Climaticconditions may explain part of the difference, but a more

detailed analysis clearly is in order; a matter which merits

follow-up attention during the coming year. There seems littledoubt, however, that the project is economically very attractiveand that there is on these grounds a strong argument forextending its closing date and expanding its scope.

Budget Commitment

30. Cost estimates for the expanded drilling program havebeen based on average unit cost per tubewell (see Table in Annex

2). considering a 30% inflation rate over the 1982-86 period,

these estimates are considered realistic. The mission has also

been assured that adequate budgetary provisions have beenprov~*~fnr aillin" r ni c4u works in the GOT7P Budget for the

1986/87 construction season and will be for the expanded program

in 1988/89 and 1989/90; the first two years of the Seventh Plan.

At any rate, the Project's Tubewell Wing has not suffered any

budget shortfalls so far and, considering the priority it hasbeen accorded by GOUP, is not likely to, in the years ahead.

31. The situation is somewhat different for the Agricultural

Development Wing (ADW). Separate budget estimates for

1988/89-1989/90 for agricultural development staff, demonstrationfarms, vehicles, housing and training, prepared by the GOUP

Agriculture Department, amount to an average of Rs. 35.0 M per

year. This constitutes a very substantial increase in financiallayout, considering the fact that expenditures during 1986-87

T 4 Q T 7 T P P nt T TLW 1 - TM 'IKI Aa -1 4 >M i,10 > -1

have not exceeded Rs. 20.0 M; the first year of substantial

mobilization of the Agriculture Development Wing (ADW).Assurances should, therefore, be obtained from ID that adequate

allocations will be made in the 1987/88-1989/90 budgets for these

ADW activities, that funds will be made available in time, and

from DOA that adequate staff will be sanctioned.

Comtliance With Covenants

32. Four important sets of covenants were identified duringthe January/February 1987 review, which had only partly or not at

all been complied with. They relate to: (i) the installation of

dedicated feeder lines and the provision of electric power to the

tubewell clusters; (ii) the auditing of accounts and financial

statements; (iii) the establishment of a water charge system; and

(iv) a socio-economic study of tubewell command farmers. An

update of progress in this respect is given below. All other

covenants have been satisfactorily met or are being compliedwith.

Electric Feeder Linres and Power Supplv(section 210 A, B and C, Article II of the Project Agreement)

33. Satisfactory progress has been made in connectingtubewells to the 11 KV dedicated feeder line network. Some

delays were encountered in the past, mainly due to the untimelynotice of its requirements given by the Irrigation Department

(ID) to the UP State Electricity Board (UPSEB) and the slow flow

of funds from ID to the UPSEB where the latter was compelled tomeet expenditures made, from its own financial resources.

34. This situation has now very substantially improved:coordination and advance planning of electrification activitiesin ncw a regular feature at tho monthlx VA gb a+ I -tf -A th- i ch nt

ID/UPSEB Coordinating Committee. The backlog of completedtubewell units not yet electrified, which in January 1987 stoodat 60%, had by September 30, 1987, been reduced to 90, or 5% ofthe total 2,005 for which the Board had received an application.Funding by ID, as of early September 1987, was adequate in that

Rs. 2,224.5 M had been released to the SEB against an incurredexpenditure at that date of some Rs. 2,000 M.

35. The electric power supply is now generally up to the

standard requirement of 16 hours per day with the exception ofone or two districts. Specific instructions have been issued by

the SEB to its field staff to maintain such supplies, in

particular during crucial periods of the seasons. It is alsoagreed that hour meters be installed at the main's side of eachcluster, to record hours of actual power availability and toprevent potential disputes in this regard. Instances where powersupply is not yet satisfactory are reviewed at the monthlycoordinating meetings and joint inspections are arranged toredress shortcomings.

81'd ~~fl LB0~/OI IH13Gf13N AgaINMf WON

36. As for the UPSEB's capacity to meet the target of an

additional 1,000 PTWs dpring the one year extension, no majorproblems are envisaged on condition that: (i) ID gives SEB timely

advance notice its requirements by properly completing the "B and

L" applications; (ii) tubewell construction be scheduled evenlyover the period; and (iii) ID ensures a regular and advance

supply of funds to alleviate possible SEB cash flow problems.

With respect to the additional 15 MVA power supply required to

service the 1,000 PTWs, SEB sees no major problem, in that this

load can be met from existing substation's spare capacity. Yet,

early consultation between ID and the SEB on this matter would be

in order, to identify areas in which new clusters would beinadvisable at this stage, because of possible power shortage.

Submission of Financial Statements and Auditing of Accounts

(Section 301 and 302, Article III of the Project Agreement)

37. Accounts and financial statements have been submitted to

the association up to 1985/86; the next statement is due endDecember 1987. Audit reports of these accounts and financialstatements, duly prepared by independent auditors acceptable to

the Association have been received through FY 1985/86. TheProject, therefore, is in adequate compliance with this covenant.

The Establishment of a Water Charge System(Section 304, Article II of the Project Agreement)

38. The present system of water charges (established in

1983) are volumetric and collection of assessed charges is closeto one hundred per cent. They do, however, neither fully recoverO&M costs nor a reasonable portion of the tubewell irrigationsystem's capital cost, taking into account farmer's paymentcapacity, as was intended at appraisal. An improved systemadding a fixed charge was submitted to the Bank but rejected inDecember 1985, since it did not satisfactorily meet the aboverequirements, was not based on an exhaustive study of the issue,did not give updated cost assumptions, nor contain a time tablefor implementation. GOUP has now agreed to these requirements,and draft terms of reference (submitted by letter of July 25,

1987) for an agency specialized in the matter, were reviewed bythe mission.

39. Essentially two aspects should be distinguished in

arriving at a more satisfactory solution to the problem: (i) thesytem of water charges; and (ii) the level of charges which can

and should be levied. As to the former, a relatively briefreview of previous or existing systems applied within the Stateor elsewhere in the country would suffice, a task of some 2-3months. The latter, however, is more complex and, as it relatesto the issue of farmers' capacity to pay, and would call for asocio-economic survey (referred to below), also provided forunder the Credit. This survey should, in turn, be linked to the

M&E data on costs and benefits collected during the past years byboth the Tubewell Wing and the Agriculture Development Wing.

8Wd 81:11 IL/O8/O1 IH1B3GiBN A1EGI18M WOad

40. The mission, therefore, proposes that the above terms of

reference be modified accordingly and has undertaken to provide

(under a separate note) more precise suggestions to that effect.

full compliance with part C of this covenant, which requires GOUP

to fix such updated water charges by July 31, 1988. A more

gradual increase in current water charges to levels, which.d.- a . 'thea f~ :,#. -,111, %-+- ^f ALM mAn ;A rpAsonable

portion of the PTWIs capital cost, would be more appropriate. A

modification to that effect of the original covenant may,therefore, be in order.

Soco-economic Study of Farmers Benefitting from the Proect(Section 2.11, Article II of the Project Agreement)

41. No progress has been made with this study and time has

now, therefore, come to engage qualified consultants for the job,under terms of reference referred to in Para 40 above. This

matter will be accorded particular follow-up attention during theforthcoming review.

conclusions

42. Concluding, the project has in general terms made

significant progress since the January 1987 review, in particular

with respect to the provision of agricultural support services

and in reducing the backlog of PTW connections to dedicatedfeeder networks. Likewise, project management has improved in

that ID activities are more frequently coordinated with those of

the SEB and DOA. Overall, this is a well-run operation with

adequate means to expand its capacity from the current 750 to

1000 PTWs constructed per year, if so desired. The Projectcontinues to be both technically sound and economically viable;in fact, may be ranked among the most successful BanX-fundedirrigation projects, in India. Full compliance with one of the

Credit's important covenants, however, still remainsunsatisfactory, although remedial measures are now underway.

43. As regards the Government's request for extension and

expansion of the Credit's scope, the mission considers bothrevised cost estimates and implementation schedules realistic and

acceptable and therefore recommends: (i) an expansion of the

project's scope by an additional 1,000 PTWs; (ii) in keeping withthe Association's policy on Credit extension, an initial one-yearextension of the Credit closing date, until March 31, 1989; and

(iii) an optional second year extension until March 31, 1990subject to satisfactory performance during the first year.

44. More specifically, the mission proposes that during thisfirst Year extension and as a basis for a possible extension

beyond March 31, 1989, the following activities be completedwithin the time-frames indicated: (See also schedule in Annex 1).

(i) the completion of all civil construction workincluded in the original scope of the project (2330

PTWs) by March 31, 1988;

L-d.. 1F I La/0'0/ IH13GMf3N Ag12dr W0'd

(ii) the electrification and commissioning of these2330 PTWs by June 30, 1988;

(iii) the implementation of the agricultural developmentand support program on the 2330 PTWs by March 31, 1989;

(iv) compliance with all outstanding covenants byDecember 31, 1988;

(v) the drilling and equipment of an additional 800

PTWs by March 31, 1989; and

(vi) the electrification of an additional 300 PTWs byMarch 31, 1989.

45. Progress on the above would be jointly reviewed before

March 31, 1989, to decide on a possible second year extension to

March 31, 1990, providing for the following activities:

(i) the drilling and equipment of another 200 PTWs byJune 30, 1989;

(ii) the electrification of an additional 500 PTWs byDecember 31, 1989t and

(iii) the full commissioning under irrigated agricultureof all additional 1000 PTWs by March 1990.

46. The total acreage developed under the 3,330 PTWsconstructed under the project would thus amount to some 330,000ha. It is also expected that most proceeds under the Credit

could be drawn down and that a "seamless" transition of drillingoperations could be achieved, linking those of the Second UPTubewell Project with those of the third such project, now under

preparation; in the process avoiding the de- and recommissioningof the presently well functioning TW's drilling crews and plant.

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Table 2

U TURIEELLS I1Costs of 150 HI/hr Improved Standard Tubewell

SAR Estimates Compared with Actgals

SAR Estimates Revised EstimatesApril 1982 Prices Jan 1987 PrijCs

-------------- R5 '000 -------------

A. Preliminar X& Lnd1. Preliminary 500 5002. Permanent Land 5,700 18,1203. Temp, Gc and Crop Land 500 800

Sub-Total 6,700 19,420

B. Water Point4. Well Cons 85,934 108,6855. Pump Units 34,150 45,0226. PumphousV J.700 12.607

Sub-Total 126,784 166,314

C. Power Transmission & Transo7. Prop. for Switch 4,9708, 11 KV Line 48,3009. 11/0.4 KVA Tran 162k6

Sub-Total 70,030 100,000

D, istribvotit yste10. Distribution Ch 19,350 31,03511. Piped dist. uQt 216,200 236,20012, Field Channels 9,750 14,400

Sub-Total 245,500 281,635

E. 0+ ,ervi Ce 2,100 2,760

4, Levellin 650 _175Sub-Total 2,750 3,735

_. g_ 1 Adin. 26,500 48,660

TOTAL 478,264 619,964

Bui 1dinr 14,608 27,465Misrel 5 6,977 _J3060

GRAND TOTAL 499,S49 660,4F9

TELEX TO DEA (953 3166175) COPY BAXTER

FOR MR. G.P. JOSHI, DEPUTY SEC, DEPT OF ECONOMIC AFFAIRS.

RE UTTAR PRADESH PUBLIC TUBEWELLS I PROJECT, CREDIT 1332-IN.

REFERRING TO YOUR TELEX OF SEP 21,1987, REQUESTING INCREASES INDISBURSEMENT PERCENTAGES FOR CIVIL WORKS UNDER IRRIGATION

PROJECTS IN SEVERAL STATES, WE ARE PLEASED TO INFORM YOU THAT THE

ASSOCIATION HAS AGREED TO YOUR REQUEST WITH REGARD TO CREDIT

1332-IN. SCHEDULE 1 TO THE CREDIT AGREEMENT FOR THIS CREDIT THUS

STANDS AMENDED AS FOLLOWS:

AAA. CATEGORY (1) CIVIL WORKS (A) COMPLETED TUBEWELL SYSTEMS;PERCENT OF EXPENDITURES TO BE FINANCED: SEVENTY PERCENT.

BBB. CATEGORY (1) CIVIL WORKS (B) COMPLETED WORKS UNDER PART C OF

THE PROJECT; PERCENT OF EXPENDITURES TO BE FINANCED:SEVENTY PERCENT.

CCC. CATEGORY (2) (A) , STEEL AND POLYVINYL CHLORIDE PIPES, CASINGSAND FITTINGS; PERCENT OF EXPENDITURES TO BE FINANCED:SEVENTY PERCENT.

THE PERCENTAGES THUS AMENDED ARE IN EFFECT FOR ELIGIBLEEXPENDITURES INCURRED FROM JULY 1, 1987 THROUGH DECEMBER 31, 1988.REGARDS LAFOURCADE, CHIEF, INDIA AGRICULTURE OPERATIONS DIVISION,INDEVAS.

cc and cleared with: Gopal (LEG), Atayee (LOA)cc: Alisbah, Ritchie, Baxter, Black Book

THE WORLD BANK

Dj4 e October 28, 1937

-r ic aelBaxtr, Ch ATcircyture Unit

Fr om C. des Bouvr S r . Engineer

Sub India - Second Uttar Pradesh Public Tubewells

Project - Credit iT.32-IN/IFAI Loan 124-TN

Extension of Closina Date and Change in Sdnpe

tKi ndly find attached my renort and recommendcaons with

respect to the GOUP's request for ex-tension of the Cred t cli cng

date by two years and the expansion of its scope -by ancther 1 000

tLU ewel unita. t i based on the fi ndins of wo F k mi Ssi one

and the revi ew of the Project's implementation and financing

schedul es)the- I atest version of whi ch as recei ved o1 wctober12 -t also incorporates the IFAD consultant's conclucions wh4ch

reached us on October 2

EnCIt: AS bv

Ls 3oSfThe World BankOFFICE MEMORANDUM

Date October [9, 1987

From C. des Bouvrie

Subject UP II Tubewells Project (Cr. 1332-IN/IFAD Ln. 124-INElectrification Issues

The Bank's consultant on electrification, Mr Byrappa,

undertook LtO mission-s~ ttiTs~project during July 13-19 and

September 28-30, 1987. Issues reviewed related to: (i) progress

made in connecting tubewells to dedicated feeder lines; (ii) an

update on the electric power supply situation and electricity

tariffs; (iii) an assessment of the SEB's capacity to electrify

an additional 1000 tubewells under the project's extended scope;

(iv) improvements in the design of electric power facilities,

reducing power losses, enhancing voltage regulation and, to do so

effectively, the proposal for the analysis of PTW existing

electrification works.

The reports of these two missions are attached to this

note.

E As above

cc: Baxter, Zagni, Lafourcade, Diewald, Cunningham, Byrappa

CDB:kc

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INDIA

UP TUBEWELLS II: CREDIT 1332-IN/IFAD LOAN 124-IN

World Bank Review Mission: July 13-19, 1987

Back-to-Office Reportby

Mr V. Byrappa

Review of Progress

1. The progress of energization of VTWs under the project

and connecting them to dedicated lines was reviewed. There has

been good progress in electrification works and the backlog has

been considerably reduced. The main reason for delay in

energization was due to delay in getting the approval of Railways

for railway crossings, where such crossings were involved. Even

here, the State Electricity Board (SEB) has been able to improve

the coordination with the Railways. The other reason for delay

is due to inadequate notice given by the Irrigation Department

(ID) to SEB. In some cases, the cluster report and the Bank's

forms were given together and hence SEB could not finalize their

detailed plans and procurement of materials. However, such

incidents are very few.

2. Annexure 1 gives the progress of energization of pump

sets under UP Tubewells II, as on June 30, 1987. Out of the 1890

pump sets installed by ID, the SEB has energized 1776. Of these,

1774 pump sets have been connected to dedicated feeders and only

two are being fed from existing rural lines. The energization of

some pump sets in Baharaich and Unnao districts was held up as

railway crossings are involved. Approval for railway crossing in

Unnao has been received and the work is in progress; all pending

pumps would be energized in July/August 1987. Approval for

railway crossing in respect of Baharaich District is expected

during July/August and the works are expected to be completed in

September 1987. The works in respect of all other pending B&L

forms have been taken up and are in different stages of

progress. There is no problem for materials. Further, the SEB

has completed the line and sub-station work of 75 TWs, based on

the request of ID, but reviewing is held up as ID has not yet

installed the pumps and submitted B&L forms. These works are to

be taken up by ID on priority basis and completed as early as

possible. The coordination between ID and SEB has considerably

improved.

3. Power supply to the PTWs fed from dedicated feeders is

generally satisfactory. Power supply in Bidaura district was not

satisfactory for the last six months; this was due to the failure

of 220 UV transformer feeding the sub-station from which the

dedicated feeders emanated. The SEB was unable to replace the

tranformer till recently. It is expected that the power supply

position would improve in this area hereafter. The other

district where the power supply is not satisfactory is in

Gorakhpur Circle where the infrastructure transmission and

sub-station network are not satisfactory. The SEB has taken up

construction of sub-stations in the area as a part of its

programme and it is expected that the situation would improve by

next summer. In some of the project wells visited, the pump sets

had worked for 3300 to 3500 hours during the year and some around

2200 to 2500 hours. Special instructions have been issued to the

field staff to maintain power supply of dedicated feeders for

about 15 hours a day.

4. There is still controversy between ID and SEB regarding

the hours of supply for which power supply supply is made

available. The SEB contends that though the power is made

available, ID is not in a position to utilize for the full period

as the total command has not been developed. To avoid any

dispute, ID should take early action to instal hour meters on the

mains side of the first set of each cluster which would record

the number of hours for which power supply was made available.

5. The flow of funds from ID to SEB is not according to the

suggestions made in SAR. As on date the SEB claim to have used

their own funds to the extent of Rs. 10 M in carrying out their

part of the project work. They have written to ID that they

would not be able to progress with further works unless ID

arranges for the release of Rs. 3'0 M. The matter wad discussed

with Engineer-in-Chief, ID, and he has promised to get this

amount released by GOUP in July 1987. It is also necessary that

SEB prepare Completion Reports of such of those clusters whose

works have been completed and all expenditure booked, as early as

possible. This will give a more accurate picture of the

expenditure incurred by SEB.

Revision of Water Rates

6. A reference has been made to GOUP to appoint a

consultant to examine all asepcts of fixation of water rates in

respect of TWs covered under World Bank projects and it is learnt

that this has been agreed to in principle. The justification for

differential tariff is that the PTWs under Bank projects provide

assured water supply to the farmers. The draft 'Terms of

Reference' was reviewed and was fouind to be acceptable. It is

expected that the consultant would be appointed in about a couple

of months' time and the consultant is expected to complete the

studies and submit his recommendations within a period of six

months. The Report may be expected by about March 1988 at the

earliest and it is likely to take quite some time before the

decision of the GOUP is finalized. The 'Terms of Reference' to

the consultant is furnished in Annexure 2.

7. The present electricity tariff for WBTWs is Rs. 66 per

kVA per month plus 70 paise per unit of energy (kilowatt-hour)

plus meter maintenance charge. Excluding the fuel surcharge,

which depends upon the fluctuation in the cost of coal, oil,

lubricants, etc., in accordance to an accepted formula, the cost

of energy per unit works out to 98 paise on the basis of 3000

hours of working per year. The fewer the working hours, the

greater would be the effective cost per unit. ID has taken up

with GOUP to prevail on SEB to reduce the tariff anK it is learnt

that this is being examined.

Increasing the Scops of the Project

8. GOUP has proposed to increase the target of PRWs to be

energized under this project by 1000 PTWs, so as to utilize the

savings under the project, primarily due to the increase in

exchange rate of US $, and have also sought the extension of

these by one year. The SEB would be capable of executing the

additional within the extended period subject to the following

conditions:

(a) ID will make available additional funds well in

advance to SEB to enable it to plan procurement of

materials, fixing of the contract agency, etc.

(b) ID will spread over the program fairly evenly over

the remaining seriod of the project (extended period).

(c) The last cluster report is made available to S B at

least 6 months before the termination of the extended

period and the installation of pump sets are completed

and Bank L forms are submitted at least 2 r:nhs before

this date.

9. The total connected due to the additional 1000 PTWS

would be about 15 MVA- spread over a large area and hence the

loads can be gathered from the existing sub-stations. However,

it is necessary that ID will consult SEB regarding the areas

where they anticipate difficulty in making power supply available

for 15 hours a day on dedicated feeders and these areas avoided

in planning the new clusters (about 40).

Annexure 1

INDIAUP TUBEWELLS II PROJECT

Credit 1332-IN/IFAD Loan 124-IN

Progress of Engergization as on June 30, 1987

District No of Sites Wiring Pumps Bank LL PTWs Connected Remarks

clusters selected done installed forms ener- to D.

submitted gized feeders

Lucknow Circle

Barabanki 1 25 - - - - -

Sitapur 3 75 75 75 75 75 75

Raibareily 2 60 56 56 56 56 56

Sultanpur 4 100 57 57 57 57 57

Hardoi 3 75* 75 75 75 75 75

Allahabad 3 68 68 55 67 62 62

Fa-ehpur 2 50 50 50 50 50 50

Total 18 453 381 368 380 375 375

Aligarh Circle

Mainpuri 2 50 29 25 29 25 25

Aligarh 2 50 50 50 50 50 50

Etah 75 50 50 50 50 50

Badaun 84 83 82 82 71 71

Bulandshahr 2 1.5 25 25 25 25 25

Farukabad L 50 7 -

Ghaziabad 1 25 25 25 25 25 25

Total 15 379 269 259 261 246 246

Faizabad Circle

Barabanki 1 30 21 13 11 9 9

Faizabad 2 55 55 55 55 55 55

Jaunpur 2 45 45 45 45 45 45

Ballia 2 49 48 48 48 48 48

Gazipur 2 56 56 56 56 56 56

Varanasi 2 51 47 47 45 44 44

Gonda 2

Total 14 387 372 365 361 358 358

GorakhDur Circle

Gorakhpur 7 182 155 153 155 124 124

Deoria 3 72 72 72 72 72 72

Basti 3 81 81 74 74 74 74

Baharaich 1 25 25 16 20 20 -

Total 14 381 333 315 321 270 270

KanTur Circle

Kanpur 50 50 50 50 50 50

Jalaun 2 39 50 50 50 47 47

Banda 2 50 47 47 47 45 45

Unnao 49 34 9 33 21

Hamirpur 26 16 16 16 14 14

Etawa 2 53 39 38 36 22 22

Total 11 278 236 230 232 199 199

Moradabad Circle

Bijanoor 2 50 19 4 10 - -

Philibit 1 25 17 17 17 17 17

Moradabad 2 60 47 32 47 23 23

Rampur 1 25 25 25 25 24 24

Muzafarnagar 2 50 43 43 43 42 42

Saharanpur 2 52 38 38 38 36 36

Nainital 4 80 37 37 37 34 32

Bareilly 3 76 76 76 76 76 76

Lakhimpur 2 48 48 48 48 48 48

Shahajanpur 2 50 50 33 50 28 28

Total 21 516 400 353 391 328 326

Grand Total 93 2394 1991 1890 1946 1776 1774

UP Tubewells II Progress of Energization of Tubewells

as on August 31, 1987

Review Mission: September 28-30, 1987

Technical Noteby

Mr Byrappa, World Bank Electrification Consultant

1. The following is the progress of energization of

tubewells in UP Tubewells II as at the end of August 1987.

(i) B and L forms submitted to UPSEB by ID : 2005

(ii) No. of tubewells energized : 1860

Thus, it is seen that the works of 145 tubewells only was pending

with the UPSEB. Of these, 49 have been serviced by September 15,

1987, leaving only 96 TWs yet to be energized. Work is in

progress and most of them will be energized by the middle of

October 1987.

2. UPSEB has completed line work and the erection of

transformer substation in 74 locations in anticipation of

submitting B and L forms. These are pending for quite some

time. ID should expedite these works to avoid keeping the line

idle any further, as they will be prone to theft.

3. In addition to the energization of new TWs, SEB have

also completed the line works, installed transformer centres and

connected to dedicated feeders about 130 old State tubewells and

also have energized 120 modernized existing State tubewells.

4. The ID has released a sum of Rs. 224.5 M to SEB towards

UP Tubewells II works, including the amount of Rs. 20 M released

during the first week of September 1987. The Board has incurred

an expenditure of about Rs. 200 M as at the end of August 1987.

5. The power supply position is generally satisfactory.

However, there appears to be some pockets where power supply is

very much below the desired level. The ID has brought to the

notice of the Board some instances. The SEB appear to be taking

a stand that the power supply is available at the transformer end

in most cases, and it is for the ID to rectify their part of the

equipment. It has been suggested to the Addl. Ce, UPSEB to

discuss this issue at the next monthly Coordination Committee

meeting and plan a joint inspection of the concerned Ex. Engineer

of ID and Ex. Engineer, Operations, of UPSEB.

Design of Clusters

1. On UP Tubewell II, it was proposed that a cluster may

consist of 25 to 30 new tubewells and some of the existing DTWs

near the dedicated line may also be connected to the dedicated

feeder. In all cases, the design of the clusters is to be such

that the voltage regulation at the remotest PTW on the cluster be

within 6 per cent. During the execution, it is found that a

large number of existing DTWs have been connected to the clusters

- in some cases, the total number of pumps in a cluster exceeding

50. In such cases, SEB has designed it as two clusters, both of

them being controlled by a common circuit breaker, maintaining

the voltage regulation within the permissible level.

2. In the proposed UP Tubewels III, the target is expected

to be about 3000. The benefit of modernizing the existing DTWs

and connecting them to the dedicated feeder is highly appreciated

and it appears that there would be greater demand for

modernization in UP Tubewells III and hence the ratio of existing

tubewells to new tubewells in the cluster would be higher.

3. Before finalizing the norms and design for the dedicated

feeder clusters, it would be necessary to review the nature of

the clusters, various components of works actually carried out,

and corresponding expenditure incurred, and compare it with the

provisions made in the SAR. It will also be necessary to work

out the regulation and the losses in the cluster in several of

the clusters. This data would help us to optimize the design of

clusters. In UP Tubewells II, a provision of 0.66 km line using

'rabbit' conductor (copper equivalent 0.05 sq in) and I km line

using 'weasel' conductor (copper equivalent 0.03 sq in) was

provided for each tubewell. To make a proper assessment of the

requirement for UP Tubewells III, it would be necessary to

analyse the electrification works carried out for about 10-20% of

the clusters constructed. The salient data to be collected for

each of these clusters is:

I. Physical Data

(a) Number of PTWs connected to the cluster - (i) new;

(ii) modernized; and (iii) reconditioned.

(b) Total length of lines constructed in kr, using (i)Rabbit; (ii) Weasel.

(c) Length of line (in km) used for old PTWs.

(d) Number of 11/0.4 kv sub-stations newly erected andcommissioned.

(e) Number of 11 kv switchgear at 33 kv sub-station.

(f) Number of service connections.

(g) Nagure of special works (such as railway crossings,etc., carried out).

II. Financial Data

Expenditure incurred on:

(a) 11 kv lines

(b) 11/0.4 kv transformer sub-station

(c) Service Mains for the pump sets

(d) 11 kv switchgear works

(e) System improvements (if any)

III. Technical Data

(i) Voltage regulation at the point furthest from

supply; and (ii) distribution loss in the cluster assuming load

factor of 1 and 0.7 and annual number of hours of working 3200.

4. Preparatory to the discussion of the approach to the

design of the clusters, it would be necessary to have district

maps in which the location of : (i) PTWs connected to the

dedicated feeders under UP Tubewells I and II; (ii) State

Tubewells; and (iii) Tubewells proposed under the Dutch program

(at least the. general area coverage). On these maps, the

location of 33/11 kv sub-stations is also to be marked.

Cost Comprison of Latest UPSEB TariffsSTWs and WB TWs

STW Tariff Rs. 78 per Bhp per month = Rs. 78 per kw0.746

= Rs. 104.5 per KW.

If no. of hours run per year is 1200 per month, units

consumed = 100, then cost per unit=Rs.1.04 .

WB TWs Anticipated hours of working/year=3200 '

.. t " " " /month = 267 hrs

Assuming power factor of 0.85*Power per KVA = 0.85 KW

Demand charge per KW = Demand for KVA = Rs.66 =Rs.77.650.85 0.85

Energy charge = 70 paise per unitcharges per month = 77.65 + 70 x 265

= 77.65 + 185.5 = 263.15

Cost per unit = 263.15 = Rs.0.993265.00

Tariff of STW will prove to be advantageous only if the

pump is run for more than 1200 hours a year.

*The demand charges are based on mVA (product of voltage and

current) , the load on the electric system. The power used by the

pumpset varies by a factor called "Power Factor" which dpends on

the equipment that converts electrical energy to mechanical

energy - in this case the motor. Generally, this class of motors

will have a power factor around 0.85.

CDB:kc

UP Tubewells II Progress of Energisation of

Tubewells as on August 31, 1987

The following is the progress of energisation of tubewells in

UP Tubewells II as at the end of August 1987.

(i) B and L forms submitted to UPSEB by ID 2005

(ii) No. of tubewells energised .S6

Thus, it is seen that the works of 145 tubewells only was pending with the

UPSEB. of these, 49 have been serviced by September 15, 1987, leaving only

96 TU s yet to be energised. Work is in progress and most of the will be

energised by middle of October 1987.

2. UPSEB has completed line work and the erection of trans ormer

subtatonin 74 locations in anticipation of submitting B3 and L forms5.

These ae pending for quite some time. ID should expedite these works to

avoid keP eng the line idle any further, as they will be prone to theft.

In addition to the energisation of new TWs, SEB have also completed

the jine works, installed transformer centres and connected to C'edicated

feeders about 130 old State tubewells and also have en'ergised modernized

existing State tubewells.

The ID has released a sum of Rs 224.5 M to SEB towards U? Tubewells II

works, including the amount of Rs 20 M released during the firzst week of

SepteCbr 1987. The Board has incurred an expenditure of abou: rs 200 M as

at the end of August 1987.

. ne power supply position is generally satisfactory. :F ve shere

appar to be some pockets where power supply is very much nei:s' the desired

level. The ID has brought to the notice of the Board some insncest The.e par to be taking a stand that the power supply i e the

SEB =-r t e t k n ' ni viitea h

ansorer end in most cases, and it is for the ID to rectifY their part

othse epment. It has been suggested to the Addl. CE, Up? 3 to discuss

oths e t the next monthly Coordination Committee meeting and plan ajoint inspection of the concerned Ex. Engineer of ID and Ex. n

0perations, of UPSEB.

Design of Clusters

1. On UP Tubewell II, it was proposed that a cluster may consist

of 25 to 30 new tubewells and some of the existing 'PTWs near the

dedicated line may also be connected to the dedicated feeder. In all

cases, the design of the clusters is to be such that the voltage

regulation at the remotest PTW on the cluster be within 6 percent.

During the execution, if is found that a large(number of existing*DTWs

have been connected to the clusters - in some cases, the total number

of pumps in a cluster exceeding 50. In such cases, SEB has designed it

as two clusters, both of them being controlled by a common circuit breaker,

maintaining the voltage regulation within the permissible level.

2. In the proposed UP TubeWells III, the target is expected to be

about 3000. The benefit of modernising the existing 3TWs and connecting

them to the dedicated feeder is highly appreciated and it appears that

there would be greater demand for modernisation in UP Tubewells III and

hence the ratio of existing tubewells to new tubewells in the cluster

would be higher.

3. Before finalising the norms and design for the dedicated feeder

clusters, it would be necessary to review the nature of the clusters,

various components of works actually carried out, and corresponding

expenditure incurred, and compare it with the provisions made in the SAR.

it will also be necessary to work out the regulation and the losses in

the cluster in several of the clusters. This data would help us to optimise

the design of clusters. In UP Tubewells II, a provision of 0.66 km line

using 'rabbit' conductor (copper equivalent 0.05 sq in) and 1 km line

using 'weasel' conductor (copper equivalent 0.03 sq in) was provided for

each tubewell. To make a proper assessment of the requirement for UP

Tubewells III, it would be necessary to analyse the electrification works

carried out for about 10-20% of the clusters constructed. The salient

data to be collected for each of these clusters is:

I. Physical Data

(a) Number of '.PTWs- connected to-the cluster -- (i) new;

(ii) modernized; and (iii) reconditioned.

(b) Total length of lines constructed in km, using

(i) Rabbit; (ii) Weasel.

(c) Length of line (in km) used for old PT s.

(d) Number of 11/0.4 kv sub-stations newly erected and

commi s sioned.

(e) Number of 11 kv switchgear at 33 kv sub-sTion.

(f) Number of service connections.

(g) Nature special works (such as railway crcss.ngs etc

carried out).

2

ii. Financial Data

Expenditure incurred on

(a) 11kv lines

(b) 11/0.4 kv transformer sub-station

(c) Service Mains for the pump sets

(d) 11 kv switchgear works

(e) System'improvements (if any)

iii. Technical Data

(i) Voltage regulation at the point furthest from supplyand (ii) distribution loss in the cluster assuming load factorof 1 and 0.7 and annual number of hours of working 3200.

4. Preparatory to the discussion of the approach to the design

of the clusters, it would be necessary to have district maps in which

the location of (i) PTWs connected to the dedicated feeders under UPTubewells I and II; (ii) State Tubewells; and (iii) Tubewells nrcposedunder the Dutch program (at least the general area coverage). On these

maps, the location of 33/11 kv sub-stations is also to be marked.

Cost Comparison of Latest UPSEB TariffsSTWs and WB TWs

STW : Tariff Rs 78 per Bhp per month =Rs 78 per kw Rs i04.5

If no of hours run per year is 1200 per month, units

consumed = 100, then cost per unit Rs 1.04

Anticipated hours of working/year = 3200

*B . - i " /month 267 hrs--

Assuming power factor of 0.85Power per KVA = 0.85 KW OM--99per KW - Demand for KVA = Rs 66 Rs 77.65

0 .85 085

Energy charge = 70 paise per unit

- C.harges per month = 77.65 + 70 x 265= 77.65 + 185.5 = 263.15

Cost per unit = 263.15 = Rs 0.993

65h00

Tariff of STW will prove to be advantageous only if the

pump is run for more than 1200 hours a year.

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JWS0057 ZJ0265 IN 09/11:43 OUT 09/11:47611573 IFAD I

AUTOMATIC TRANSMISSION - PLS DO NOT INTERRUPT

IFAD/09912

ATTN: MR. C. DES BOUVRIERE: UTTAR PRADESH TUBEWELLS PROJECT (LOAN NO. 124-IN)

SUPERVISION REPORT OF MR. RAM SARAN IS FINALIZED AND SENT TO YOU.IN ORDER TO SUBMIT PROPOSAL FOR EXPANSION OF SCOPE AND EXTENSIONOF CLOSING DATE WE WOULD APPRECIATE RECOMMENDATION FROM THE RBANKAS OUR COOPERATING INSTITUTION AND ALSO DETAILED WORK PLAN,FINANCIAL COSTS (DISBUSEMENTS AND ESTIMATED SAVINGS) OF THEPROPOSED CHANGES.

SAIGAL IFADROME

COL CKD

=10130759

ALT RTD FROM:ASII

NNNN

THE WORLD BANK/INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUMDATE: October 1, 1987

TO: Gloria Davis, AS -

FROM: Cynthia Coqk, AFTEN

EXTENSION: 34341

SUBJECT: CHINA: Three Gorges and Projects in India

1. I had the privilege of attending the Fourth World WildernessCongress in Colorado last month, and want to pass on to you concernsexpressed there about two Bank initiatives in your region.

Three Gorges

2. The ongress passed a resolution about the Three Gorges project(full text i'tached). Concern about the project was spearheaded by GeorgeArchibald, defender of the Siberian cranes, but was widely shared byparticipants, according to conversations I overheard throughout theconference. This is probably largely due to Sierra Club publicity.) Theofficial sponsor of the resolution represents an NGO network (a spinoff ofFriends of the Earth), based in Malaysia, but extending throughout AsiaRegion. You are probably already aware of this group, but just in case youaren't, their address is: c/o Sahabat Alam Malaysia, 37, Lorong Birch,10250 Penang, West Malaysia.

3. The resolution was modified to its present form in committee, andI think it is now quite manageable for the Bank. The only remainingproblem is the call for full disclosure of all studies, which is clearly anobjective of the environmental activists but poses a major problem for Bankmanagement. You will undoubtedly have to be prepared for such demandscoming from the groups which are most actively monitoring the Bank'senvironmental activities.

India

4. In discussion of an apparently innocuous resolution on desertecosystems which originally focused on California, the Congress delegatesfrom India got- into quite a debate over a proposed amendment, urging theGovernment of India to designate selected areas of the Great Indian Desertas a biosphere reserve. The proponent of this amendment, Mr. KhailoshSankala, feels that the desert ecosystem located in the states of Rajasthanand Gujarat, is threatened by several Bank projects. He specifically cites(1) sheep and wool development, (2) afforestation programs, (3) IndiraGandhi canal and feeder canals, and (4) dairy development.

5. It is worth noting the disagreement of another Indian delegate,whose name I don't have but who was representing an organization callingitself "World Saviours." This gentleman was an advocate of soilrestoration, and he pointed out that the area in question is not a natural

desert but a man-made one (attributable to human occupation some 5000 yearsago). He would be in favor of projects intended to restore the

productivity of desert areas for human use.

-2-

6. In another session, this same gentleman lamented the adverseeffects of unlined canals in a Bank-financed irrigation project in UttarPradesh, which have encouraged waterlogging of soils in an area with anaturally high water table. Apparently the project was designed to includecanal lining but, according to this gentleman, corrupt local officials havediverted the funds and the Bank continues to disburse for unlined canals.You might want to suggest that a supervision mission look into this.

cc: Ms. Jane Pratt, ENVOS

September 23, 1987

Mr. 0.P. JoehiDeputy SecretaryDepartment of laomic Affairs77-5 North SlockNw Delhi

Dear Mr. Joshi.

We have been advised that Mr. C. Dievald (Senior3conomist) of our Washington office is scheduled to visitIndia for irrigation project preparation and supervision.is proposed itinerary is:

Sept. 28/Oct. 6 - Review of UP Tubeells IIProject and discuss thepossibilities with 0OWfor a possible UP TubevelsIII (covered under Mr. Baxter'sletter dated September 1);

Oct. 8/9 - Visit NDA shopal to discussstatus,of preparation forreappraisal of MW *armadaprojects;

Oct. 12/16 - in supervisionof njarat ed- U Projectlad by Mr. Albiason (the missionalready notified to you by Mr. FamsUn hi. letter dated September 17).

We would be most obliged if you would indicate 001'sacceptance of Mr. Diewald's visits at your early convenience.

With kind regards,

Yours sineusely,

A.F.S. ZagniSenior Irrigation Engineer

ec: Mr. Lami Chand, Joint Secretary, MWNRHr. V.A. Parkash, Hamber (P&P), 0CC

Mr. A.K. Das, Secretary Irrigation, 00WMr. J.F. Histry, Secretary Irrigation, COGNr- 2-r. Vawma. naf n .armada all.v Ibw-w. Autnh4t ". Oi'pW

bce: Baxter, Cunningham, Fauss, des Bouvrie, Lafourcade, Janet, NiraOFFICIAL PILE COPY

THE WORLD BANK INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUM SEP 1 19 7DATE: September 18, 1987

TO: Mr. Olivier ourcade'Chief, AS4AG

FROM: Bern a, Procurement Adviser, ASIVP

EXTENSION: 75568

SUBJECT: ND'IA- UP & & Irrigation Proje- Outstanding issues on rocurement Documents

1. During my recent mission in India I looked into theissue of the price adjustment clause which is holding upapproval of bid documents for these two projects.

2. The issue is the percentage of the contract sum whichshould be subject to adjustment under the price adjustmentprovision of the contract. GOI has taken the position that 75percent is an adequate percentage which has been approved bythe Bank for previous contracts. The Bank's position (theRegion, CODPC and LEG) is that the present contracts are muchlarger and are attracting international contractors, thereforein the interest of economy and efficiency an amount of 856percent (representing the estimated labor, materials and POL)should be subject to adjustment. The disagreement hasunfortunately tended to revolve around numbers rather than theunderlying principles. -

3. The GOI figure of 75 percent is based on the argumentthat the price adjustment mechanism should not over compensate 0A,and that the contractor should carry a degree of risk to ensurethat he endeavours to keep down costs. The Bank's position isthat the contractor should not be expected to speculate onthese risks in his bid price. As a matter of interest, on someother Bank financed contracts in India an adjustable element of85 percent has been accepted and is being used successfully.Further a number of government departments and agencies arealso providing for adjustable elements of 85 percent-90 percentin non Bank financed contracts. Equally percentage below 75percent have also been used largely in the Irrigation Sector.

4. As a result of discussions in India I have concludedthat GOI are not prepared to accept the Bank's position of an85 percent adjustable element for these two contracts withoutmore detailed justification of the Bank's position and anagreement with GOI will have to be based on a discussion of theunderlying principles.

P-1867

-2-

5. I would recommend that in order not to hold up thesetwo projects we agree to the proposed adjustment of 75 percentof contract value subject however to GOI agreement that thiswill not be treated as a precedent and that in future ICBcontracts for civil works, the requirements of para 2.31 of theProcurement Guidelines will be fully met. The para inter aliarequires that for civil works contracts which extend overseveral years, price adjustments would be made in the eventchanges occur in major cost components of the contract such aslabor, equipment, materials and fuel. The percentage of thecontract price representing these cost components would beestimated by the design engineers as a part of the costestimates and reviewed by the Bank. For typical categories ofworks, a standard breakdown can be agreed, which would beroutinely applied in contracts for such work categories, e.g.,dams, highways, earthworks, tunnelling, concreting, etc. Thesecost components, once agreed, would be subject to fulladjustment in their entirety for the full contract period.

Cleared with and cc: Mr. Srinivasan

cc: Messrs. 1lisbah, Ritchie

FORM NO, 27 OCRWORLD BANK OUTGOING MESSAGE FORM Cable, Telex

IMPORTANT-PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

TypewrittenCharacterMust FallCompletely in TEST NUMBERBoxA PAGE OFFBCIAL EPT IV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

I OF F1 L_ A S4 A G___START

2 HERE G.P. JOSHI

DEPUTY SECRETARY, DEA

MINISTRY OF FINANCE

ROOM 77-B, NORTH BLOCK

6 NEW DELHI, INDIA 110001

7

RE UP TUBEWELLS II PROJECT, CREDIT 1332-IN. WE HAVE CONSIDERED

YOUR REQUEST TO EXTEND THE CLOSING DATE FOR THE CREDIT. WE EXPRESS

9

OUR WILLINGNESS, IN PRINCIPLE, TO EXTEND THE CLOSING DATE BY ONE

YEAR AND TO MODIFY THE PROJECT DESCRIPTION ACCORDINGLY. WE PREFER,

It

HOWEVER, TO AWAIT THE FINDINGS OF THE UPCOMING MISSION TO UP,

12

PARTICULARLY WITH REGARD TO THE REALISTIC REVISED PROJECT SCOPE

(NUMBER OF ADDITIONAL WELLS) AND TO PROGRESS ON THE COST RECOVERY

14

STUDY, BEFORE WE TAKE FORMAL ACTION. REGARDS LAFOURCADE

15

16

17

'8

19

20

21 END

OF

22 TX

PINK AREA TO BE LEFT BLANK AT ALL TIMES

INFOR A ON BELOW NOT TO BE TRANSMITTED

CLASSOF SERVICE CABLE 7 DATE 9/18/87SUBJECT DRF F ED EXTENSION:

INDIA - Cr. 1331-IN CPer , f .-- ~73 78CLEARANCES AND COPY DISTRIBUTION AUTHORIZED B (N n )gnat

cc: Messrs. Alisbah, Ritchie, OLi rcad , Chief, AS4AGTemple, Diewald, Perry, AR E

Black Book C epa tment IVSE ION BE W FOR USE OF CABLE SECTION

CHEC ISPATC

DISTRIBUTION WHITE -Fe Copy CANARY-Bill Copy BLU

The World Bank/International Finance Corporation

OFFICE MEMORANDUMDATE: September 17, 1987

TO: Mr. Bilsel Alisbah Director, AS4

FROM: Olivier LafourcaChief, AS4AG

EXTN: 7-6921

SUBJECT: INDIA - Uttar Pradesh Tubewells II Project (Cr. 1332-IN)- Extension of Closing Date

1. Following our meeting last week, we had further discussions with the LegalDepartment. As a result we propose to wait with any official extension/change of scopeuntil after the upcoming Bank mission to UP. To determine the new scope, we shall have toawait the mission's assessmentof a feasible implementation plan. Since extension andchange of scope are logically linked, it would not be appropriate to give an extension now.Thus, the memo to SVPOP may not be needed at this moment. If you still prefer to send itnow, we will prepare a final draft for your review.

2. I propose, however, to send GOI/GOUP a telex in the coming days acknowledgingreceipt of their requests, expressing our willingness in principle to extend by one year fornow and to include additional wells, but making it clear that this could only be done afterthe upcoming mission has returned. In this way we may get a more propitious workingatmosphere for the mission, since they will be dealing with the UP Tubewells III projectproposal which GOI does not want to discuss before an extension has been granted.

3. Incidentally, the letter from GOUP we mentioned (promising some new proposal ofa cost recovery study soon) was dated July 25, 1987, just after your visit there...

cc: Ritchie, Baxter, Perry, Grimshaw, Cunningham, Gopal (LEG)

CDiewald

The World Bank/International Finance Corporation

OFFICE MEMORANDUMDATE: September 8, 1987

TO: Mr. Bilsel Alisbah, Director, AS4

FROM: Olivier Lafourcade Chief, AS4AG

EXTN: 7-6921

SUBJECT: INDIA - Uttar Pradesh Tubewells II Project (Cr. 1332-IN)- Extension of Closing Date- Your note to me of July 25, 1987

1. In response to your handwritten note to me of July 25, attached for your approval isa draft memo from you to Mr. Karaosmanoglu as well as a short note from Mr. K. to Mr.Qureshi regarding our intention to extend the closing date of above project.

2. We don't propose to extend the closing date by more than one year at this time. Theproposed follow-up project, UP Tubewells III, is now scheduled to go to the Board inspring 1989, which would lead to a more or less seamless transition from UP II to UP III,if the former is extended by one year, particularly if the customary "grace period" forsubmission of withdrawal applications (6 months) is considered. We hope that GOI willnot hold a request for Bank assistance to UP III hostage to our not giving them the twoyears they have asked for.

3. Before we can go ahead with a change in project scope, however, we shall have toreview a revised implementation plan, which is not yet available. A mission scheduled forend September will look into this. Given GOUP's difficulties in getting 2,200 wellsimplemented in four years, the increase in scope by 1000 wells looks somewhat hefty.Note that IFAD also has requested documentation on a detailed work plan and costs forboth the engineering and agricultural aspects of the project. We cannot make arecommendation to IFAD before we have reviewed such documents.

4. In discussions with the Legal Department, the suggestion was made to extend firstthe closing date first (by a telex from me), and then to look into the revised scope and toamend the project description separately thereafter (by letter from you). This would havethe advantage of satisfying at least part of GOI's request quickly, and thus to pave the wayfor productive discussions with them on UP Tubewells III. Note, however, that extensionof closing date in a sense implies expansion of scope also, since GOUP may havecompleted the original scope by March 88. Please advise.

5. With respect to the procurement matter mentioned in your note, we had to informGOUP in August that ,regretfully, we cannot, at this time, make a commitment regardingthe extension of the closing date. We urged them, however, to seek an extension of bidvalidity dates.

6. It should be possible for GOUP to deal with the default on the covenant referring toa study on a new cost recovery system. Note that they had in fact already submitted a studypreviously, which we had to reject as inadequate. Due to the absence of the officer(s) inNew Delhi Office dealing with the project, we have not been able to get further informationon the present system of water charges. This will be dealt with on the upcoming mission.

cc and cleared with: Ritchiecc: Baxter, Diewald, Perry, Grimshaw, Cunningham, Gopal (LEG)

The World Bank/International Finance Corporation

OFFICE MEMORANDUMDATE: * DRAFT

TO: Mr. Attila Karaosmanglu, ASIVP

FROM: Bilsel Alisbah, Director, AS4

EXTN: 7-3592

SUBJECT: INDIA - Uttar Pradesh Tubewells II Project (Cr. 1332-IN)Extension of Closing Date

1. This is to inform you of our intention to extend the closing date on aboveCredit. A brief draft note to inform SVPOP is attached for your approval. Credit1332-IN (SDR 91.6 M, equivalent to US$101 M, )l is now scheduled to close onMarch 31, 1988, unless extended. Government of India have requested us to extendthe closing date by two years and to increase the number of tubewells to beconstructed under the project . This would be the first extension of the closing date.We propose to extend the closing date by 12 months, and to allow for inclusion ofabout another 1000 tubewells, subject to review of new implementation plans. Therevised scope would still represent a time slice of GOUP's ongoing public ground-water development program, albeit a longer one. No changes to the project conceptare involved, only to the number of units targeted; thus we intend to inform the Boardthrough the 'Monthly Report on Bank and IDA Operations' only.

2. The project started in March 1983. It was to support the construction of some2,200 public tubewells (PTWs), modernization of some 100 existing PTWs, andconnection of some 650 existing PTWs to dedicated feeder lines, in the state of UttarPradesh. It assists in funding a four-year time slice2 of GOUP's ongoing program ofpublic groundwater development. The new PTWs follow an innovative design andbenefit from improved O&M arrangements, which have proven quite successful.

3. After a slow start, which was beset with procurement problems (nowresolved), the project is now making satisfactory progress. While the project was tobe physically completed by March 1987, the original targets will not be achieved untilat least March 1988. The project, while not without some performance problems, isconsidered as one of the most successful in the irrigation sector in India.Disbursements have been slow (59% of US$ appraisal target to date), due in part todelayed implementation, to a higher than estimated share of ineligible items in actualproject expenditures, to variations in the exchange rates (US Dollar vs. Rupee vs.SDR), and to lower unit costs. Projected disbursements by the current closing date,may leave a balance of about $32 M in the Credit. The balance would constitutesavings only in as much as it is not caused by implementation delays.

4. GOUP is essentially in compliance with the legal agreements, except for therequirement that GOUP furnish to IDA, by Dec. 31, 1983, a proposal for establishinga water charge system for tubewell irrigation systems under the project. Suchproposal had in fact been made by GOUP, but had been rejected by the Bank asinadequate. Once such proposal has been reviewed and accepted by the Bank, GOUPis furthermore required to set a timetable for application of such water charge systemand to then to carry out the system in accordance with the timetable. You may recall

1 The project is also financed by IFAD Loan Nr. 124 of $35.3 M (SDR 32.0 M).2 Actually five years, if time until closing date is taken.

-2-

that in recent discussions with you and me, the UP Chief Minister indicated thatGOUP is willing to deal with the issue. In the meantime, GOUP has informed us thatsoon a revised proposal will be sent to us. We believe that this matter can be resolvedby the time of closing date. It is worth noting that GOUP is not violating the maincost recovery covenant, under which it is obliged to cover full cost of O&M only byJuly 31, 1988. Present water charges in UP are said to be higher than in neighboringstates. A mission scheduled for late September will review in detail the present watercharge system and discuss any proposals for a new system available by then.

5. We have a follow-up project to this one in our lending program for FY 89 (UPTubewells III). We have made it clear to GOI that any shortcomings in current projectperformance, including compliance with cost recovery requirements, will have seriousimplications for our processing a follow-up project.

6. In summary, we believe that this project, possibly the most successful in itssector in India, fully deserves to be extended and expanded in scope, inspite of somesavings due to unforeseen movements in exchange rates and unit prices. We shall, ofcourse, require that GOUP submit, apart from a new water charge proposal, also adetailed physical and financial implementation plan well before the current closingdate. IFAD has requested our recommendation.

cc: Ritchie, Lafourcade, Wiehen, Golan, Grimshaw, Baxter, Gopal (LEG)

The World Bank/International Finance Corporation

OFFICE MEMORANDUM

DATE: ******* DRAFT

TO: Mr. Moeen Qureshi, SVPOP

FROM: Mr. Attila Karaosmanglu, ASIVP

EXTN: 7-2283

SUBJECT: INDIA - Uttar Pradesh Tubewells II Project (Cr. 1332-IN)Extension of Closing Date

1. This is to inform you of our intention to extend the closipg date on aboveCredit. Credit 1332-IN (SDR 91.6 M, equivalent to US$101 M, )1' is now scheduledto close on March 31, 1988, unless extended. Government of India have requestedus to extend the closing date by two years and to increase the number of tubewells tobe constructed under the project. This would be the first extension of the closing date.We propose to extend the closing date by 12 months, and to allow for inclusion ofabout another 1000 tubewells, subject to review of new implementation plans. Therevised scope would still represent a time slice of GOUP's ongoing public ground-water development program, albeit a longer one. No changes to the project conceptare involved, only to the number of units targeted; thus we intend to inform the Boardthrough the 'Monthly Report on Bank and IDA Operations' only.

2. Projected disbursements by the current closing date may leave a balance ofabout $32 M in the Credit. The balance would be due to delayed implementation, toa higher than estimated share of ineligible items in actual project expenditures, tovariations in the exchange rates (US Dollar vs. Rupee vs. SDR), and to somewhatlower unit costs. It would constitute savings, however, only in as much as it is causedby factors other than implementation delays.

cc: Alisbah, Ritchie, Lafourcade, Wiehen, Golan, Grimshaw, Baxter, Gopal (LEG)

1 The project is also financed by IFAD Loan Nr. 124 of $35.3 M (SDR 32.0 M).

September 1, 1987

Mr. G.P. JoshiDeputy SecretaryDepartment of Econmic AffairsMinistry of FinanceNorth BlockNew Delhi

Dear Mr. Johi,

We discussed briefly yesterday the prQposedSeptember 28 to October 5 mission to Uttar Fahdesh byMesers. J. Cunningham. C. Dievald, X. Barber, D. Campbelland V. Syrappa. Thank you for your elearance of the missin.

The main purpose of the missin is to assess thestatus of the UP Tubewells II project and to considerGovernment's request for as 4xtecsion of the credit, torenew options and possibilities for further follo-apwork (a possible 'U Tuboevllo III" project), and tocollect data for a groundwater sector review underwayin Washington.

I hope this information is useful. Please lots know if you used fatther clarification.

With kind regards,

Yours sincerely,

Michael SaxterChief , Agriculture Unit

bec: Zagni O/r, des Bouvrie o/r, Cunningham o/a Delhi

Lafoureade/Diewald

)":nC

OPIOIIAL. PILE COPY

FORM NO, 27 -OCR S(7/86) WORLD BANK OUTGOING MESSAGE FORM Cable, Telex

IMPORTANT-PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM 2. - oTypewrittenCharacterMust FallCompletely in TEST NUMBERBOX PAGE OFFICIAL DEPT/DIV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

BFoxi ABBREVIATION F -I OFL-4 AS4AGSTART

2 HERE INTBAFRAD, NEW DELHI, INDIA

FOR BAXTER. AAA. WE HAVE JUST RECEIVED A FAT BUNCH OF TELEXES SENT

4

BY YOU AND ZAGNI ON AUGUST 14 THAT HAVE ONLY BEEN TRANSMITTED TO

US NOW, PROBABLY DUE TO OFFICE MOVE. PLEASE BEAR WITH US AS WE

6WORK DOWN THE STACK.

BBB. RE UP TUBEWELLS II PROCUREMENT, URTEL 2406. BY ALL MEANS

aENCOURAGE GOUP TO OBTAIN EXTENSIONS OF BID VALIDITY DATES, AS

9

CHANCES FOR EXTENSION/CHANGE OF SCOPE APPEAR NOT BAD HERE. VICK

DOES NOT RECALL ANYTHING OBJECTIONABLE IN RECOMMENDATION FOR AWARD11

OF PIPE CONTRACTS.

12

CCC. URTEL 2408. HOLIDAYS IN WEST BENGAL ARE BAD NEWS. WILL TALK

13

TO CUNNINGHAM ON MONDAY. EYE UNDERSTAND THAT WE WERE MORE INTERESTE14

IN SETTING UP DATA REQUIREMENTS FOR GROUNDWATER STUDY AND IN15

TOUCHING BASE WITH THE ONGOING MINOR IRRIGATION PROJECT, RATHER

16

THAN IN ANY FORMAL SUPERVISION, WHICH WOULD BE DEBOUVRIES'17

RESPONSIBILITY. WE MAY BE ABLE TO REARRANGE THINGS, FOR EXAMPLE BY

VISITING WEST BENGAL BEFORE SEPT. 26.19

DDD. REURTEL 2493. BARBER TRAVEL ARRANGEMENTS MADE HERE. HE WOULD20

BE IN DELHI ON SEPT. 7 AND IN BHUBANESHWAR ON SEPT. 8 TO JOIN21 END

OF VIJENDRA SINGH. RE ORISSA TWO TRIP FOR CUNNINGHAM, WILL DISCUSS22 TEXT

WITH HIM ON MONDAY, PARTICULARLY PARTICIPATION OF AICH. ANDPINK AREA TO BE LEFT BLANK AT ALL TIMES

INFORMATION BELOW NOT TO BE TRANSMITTED

CLASS OF SERVICE TELEX NO DATE 8/24/87SUBJECT DRAFTED BY EXTENS ION:

CLEARANCES AND COPY DISTRIBUTION AUTHORIZED -Y (Name and Signalwe

DEPARTMENT

SECTION BELOW FOR USE OF CABLE SECTIONI CHECKED FOR DISPATCH

DISTRIBUTION W~SHIE- Copy CANARY-BA Copy DLUE-Onrnator In Keep

FORM NO. 27 - OCR

(7/86) WORLD BANK OUTGOING MESSAGE FORM Cable, TelexIMPORTANT-PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

iTypewrittenCharacterMust FallCompletely In TEST NUMBER

Bpy n PAGE OFFICIAL DEPT/DIV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

1 OF AB4A

START2 HERE DURATION BEYOND SEPT. 19. HAVE ADVISED FREDERIKSEN OF NEED TO

SCHEDULE TRIPS IN INDIA MORE SPECIFICALLY, SUBERNAREKHA AND MP

4

BEING LIKLEY CANDIDATES.

5EEE. REURTEL 2418, NARMADA SAGAR PREQUAL. THIS IS INDEED HANDLED

6HERE, AND WE SHALL WRITE A LETTER TO NVDA WITH OUR COMMENTS ON

7

THEIR EVALUATION. WE HAD ASSUMED THAT YOU WOULD TRANSMIT THE

CONTENT OF THE SRINIVASAN MEMO TO NVDA. SO HOLD THAT BACK.

9REGARDS, DIEWALD

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PINK AREA TO BE LEFT BLANK AT ALL TIMES

INFORMATION BELOW NOT TO BE TRANSMITTED

CLASSOFSERVICE Te Lex TELEXNO IBRDNEW DATE: 8/24/87

SUBJECT DRAFTEDBY XTENSIONINDIA: General Cli ald bl 73577

CLEARANCES AND COPY DISTRIBUTION UTHORIZ

cc: Messrs. Sharma/Perry/(AS4AG) (For) ivier La oucade, Chief, AS4AGFrederiksen/Cunningham(AS ' RTMENTVick (ASTIN) Country Dept IVTemple (AS4CO) SECTION BELOW FOR USE OF CABLE SECTION

CHECKED FOR DISPATCH

DISTRIBUTION. WHITE-Fle Copy CANARY -Bill Copy BLUE-Origmator to Keep

AS4A AS4CO SIEJ

NEW240(."

. 12RDNEW!NTBAFRAD NEWDELH. 1NDIA. HUG i4, 198zFUR NARENDRA CHURM tOPY LOUVEIA (RODA i 7021) COPY THI

CR. 1332-11y SEC050 UP inibEWELLS PRUjILT PROLUREP00 UP 00 iVfjQ-*,"

AND ER SL PIES04A ill PER YOUR 7Eu.EX DNEW 27/15 UF OUb 10 WE HNV:: kDVIS=D P~udimCl'AU7HORITIES ON PVC PIPES.BBB TRUST bO . S RECOmmLNDA1 I0N %i k D ymU Km v H 1-. HNI) ERw

PIPES ARE OTHERWISE ACCEPTABLE AS DETERMINED BY NOD.ccc 1F GOUP 1S AL= 10 6ELURE EXIENSIONS Uf PkREN~iT bluS FQ-R

ABOVE ITEMS UNTIL i-]Uo ,H , T bfl'DECISION I6 THKEN ON !NCREASINO SCOPrEOF PROjECT EWUuLO 1HEY TRY AHK; fwPORO;CHi UUERY !HIS WOULL bAvE.

P ROCESS I .. N U ANQ BIDDING i M . !NVU. IN R.... N i Ei .NL RIN. AN HELD

TIMELY !MPLE NTATION OF kumnTownA WELL.b 1F PbRELD IV b"MAS POIiTED OCT IN OUPS LETTERS BIDS FOR STEEL PIPES HRE

EXPIRINO ON AuS 14.1RATEFUL %VISE ON BBB AN) CCC.REGARD :

=08211017

ALT RTO FROM:AST!NNNNi

ZCZC ASIF3968 JWS0016AS4AG AS4CO FIELDREF : TCP FCA

NEW2406AS4AG AS4CO. IBRDNEWINTBAFRAD NEWDELHI, INDIA, AUG 14, 19-7FOR NARENDRA SHARMA COPY GOUVEIA (ROOM 17023) COPY RITCHIE

CR. 1332-IN SECOND UP TUBEWELLS PROJECT PROCUREMENT OF PVC PIPES ANDERW STEEL PIPESAAA AS PER YOUR TELEX DNEW E7:L5 OF HUGuST 10 WE HAVE ADVISEDPROJECT AUTHOR IT IES ON PVC PIPES.BBB TRUST GOUP' S RECOMMENDATION FOR AWARDS FOR bOCH PVC PNDERW PIPES ARE OTHERWISE ACCEPTAbLE AS DETERMINED BY NDO.CCC IF GOUP IS ABLE TO SECURE EXTENSIONS OF PRESENT BIDS FORABOVE ITEMS UNTIL SUCH TIME DECISION IS TAKEN ON INCREASINGSCOPE OF PROJECT SHOULD THEY TRY ~lHiS APPROACH GULRY lHisWOULD SAVE PROCESSING AND BIDDINH TIME INVOLVED IN RE"ENDERINGAND HELP TIMELY IMPLEMENTATION OF ADDITIONAL WELLS 1 AGREED bYBANK. AS POINTED OUi IN GOUPS LIE.TERS BIDS F sTEL PI- E ARE'ALSO EXPIRING ON AUGUST 14.GRATEFUL ADVISE ON BBE AND C:,CCREGARDS

BAXTER

=08140926

ALT RTD FROM:ASII

NNNN

Augst 10, 19s7

B. A.K. DAS & R. X.P. UrnSSURlA1X IRUGAOX CHIEF EIGINU (TUIRViLLS)

QM?. OF UTTAR flDUR*D IRRIGATION DEPT.VIDUAN SNA CANAL GOLONLUCKN CANT? ROAD

LUCKNOW 226 001

UP TUWEIILS TW ROJICT. CMIISI? RI VISED

TO SITUIMU 30 TO OMCTORR S. GRATUL YOU COVIIYW

OW? ACCIITAUCI Of R9VIWSE DATES

WARDS

ZAGUI'WORlBAWK/EIMU3a

Not to b. .ewo.

'NX A... eAnt

AFas

T4i~NORLD BANK/ INTERNA TIONAL FINANCE CORPORA 1ION 7

OFFICE MEMORANDUM te k JDATE August 10, 1987 aA.

TO Mr. R shaw, Acting Chief, AS4NA

FROM Nancy LOAAS

EXTENSION 74430

SUBJECT IDA Credit 1332-IN/IFAD Loan 124-IN

UP Tubewells II Irrigation Project

We refer to your Letter No. 262 dated July 27, 1987 submitting

Application No. 5-RF for US$5,895,856.43 under above project. Please note

that we cannot utilize the funds under Category 7 of IDA Credit 1770-IN

for amount overdrawn under Category 5 of 1332-IN firstly because IDA

Credit 1770-IN is not effective yet. Secondly, there is still a balance

of SDR 1,120,000 for unallocated category under 1332-IN ich is

designated mainly for overdrawn categories. Enclose .s a printout of

Status of Funds for IDA Credit 1332-IN for your information.

Kindly explain why funds under Credit 1770-IN are recommended to be

utilized for expenditures incurred under Credit 1332-IN.

File: 1332 IN - L/A

cc: Nancy HwangVirgilio VillapandoYi-Ling LiuContract file-1332 IN/IFAD 124 IN

P-1866

fG

LDB STATUS/MEMO INQUIRYACTIONR ORG02 LOAN/CREDIT13320IN CAT/LOG A/R

(MINICYCLE # 1 FILE) 08/07/87 1:35 PMCATEG. DESCRIPTION BALANCE DISBURSED

LOAN/CREDIT TOTAL SDR 45,081,661.90 46,518,338.1()FUND R/F ALL CATEGORIES 10,015,957.92- 10,015,957.92UNALLOCA UNALLOCATED 1, 120 , 000 00 0 .00I-A CIVIL WORKS-COMPL. TUBEWELL SYS.-55% 22,788,997.03 15,281,002.971-B CIVIL WORKS-COMPL. WORKSPART C-55% 1,720,000.00 0.001--C CIVIL WORKS-BUILDINGS - 55% 1,964,049.65 35,950.352-A STEEL & POLY VINYL CHL PIPES 55% 21,996,298.36 11,273,701.642-B EQUIP & VEH FOR R&D 1,368 165.99 621,834.013 AGRIC DEV ACTIVITIES60% 3,224,313.46 405,686.544 RESEARCH & DEVMONIT& EVAL TRAINI 730,000.00 0.005 PART J OF THE PROJ ECT 100% 185,795.33 8,884,204.67

F Rs1Ol prO2c77

August 10, 1987

Kr. C.?. JeshIDeputy SecretaryDeparent of Sconomic AffairsMaistry of FinaM74-C North BlockNow Delhi

Dear Mr. Joshls

Further to my lattes dated July 24 and July 28, 1987I advise that Mr. CnUMingham has changed the programme for hisproposed visits as below:

Orissa Medium It Project - September 13 to 19

West Bengal Minor Irrigationproject - September 26 to 30

UP Tubevells 11 Project - Septebr 30 to October 5

Re will be accompanied by Messrs. Dievald, Barber (consultant)and Campbell (consultant).

I would be grateful if you Would indicate 001 acceptanceof the revised missions.

With kind regards,

Yours sincerely,

A.F.I. ZagniSenior -Irrigation Engineer

cc: Shavanishankar, des Souvrie o/a, Janet, Nira

AZ:ns

C FiP C1A FIE C0

FORM NO. 27 - OCRM7/8C WORLD BANK OUTGOING MESSAGE FORM Cable, Telex

IMPORTANT-PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

Typewritten - $CharacterMust FallCompletely in TEST NUMBERBoxt PAGE OFFiCIALDETBTDIV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

OF ELAS4AG __________________________________START

2 HEREINTBAFRAD, NEW DELHI, INDIA

3FOR GRIMSHAW. SECOND UP TUBEWELLS CR. 1331-IN, PROCUREMENT

4

PVC PIPE, URLET JULY 22 TO GOUVEIA. SINCE WE ARE UNABLE AT5

THIS TIME TO ADVISE THAT THE BANK CAN INCREASE THE SCOPE OF6

THE PROJECT AND THE PROJECT AUTHORITIES ARE FACING THE TIME7

CIRCUMSTANCES AS OUTLINED IN YOUR PARA FIVE, IT APPEARS THAT8

GOUP HAS NO CHOICE BUT TO ALLOW THE BIDS FOR PVC PIPE TO EXPIRE9

ON AUGUST 13, 1987. REGRET THE UNFORTUNATE SITUATION. TRUST10

YOU WILL ADVISE PROJECT AUTHORITIES ACCORDINGLY. REGARDS,11

SHARMA, ACTING CHIEF, AGRICULTURE OPERATIONS DIVISION, ASIA,12

COUNTRY DEPT. 113

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OF

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PINK AREA TO BE LEFT BLANK AT ALL TIMES

INFORMATION BELOW NOT TO BE TRANSMITTED

CLASS OF SERVICE Telex TELEX NO,: IBRDNEW DATE 8/10/87SUBJECT: DRAFTED BY EXTENSION:

INDIA: UP Tubewells II Cr. 1331 RG ick:Lgr 32820CLEARANCES AND COPY DISTRIBUTION AUTH Sg

cc: Messrs. Gouveia, Srinivasal N. harma, Acting Chief, AS4AGALisbah, Diewald DEPARTMENT

Asia - Country Dept. 4SECTION BELOW FOR USE OF CABLE SECTION

ECKED FOR DISPATCH

DISTRIBUTION: WHITE-Fire Copy CANARY-Bil Copy BLUE-Originator to Keep

ZCZC ASIF3552 JWS0637AS4CO ASIVPREF : TCP D.S.

JWS0637 JGY239 IN 07/13:21 OUT 07/13:26616396 IFADRM I

AUTOMATIC TRANSMISSION - PLS DO NOT INTERRUPT

INTBAFRADNEW DELHI

CC

P V BHIDE., DEP SECRETARYECOFAIRS NEW DELHI

INTBAFRAD WASHINGTON DCFOR LAFOUCARDE

IFAD/'7642

ATTN MR. C. DES BOUVRIE RE UP TUBEWELLS CREDIT 1332-IN/IFAO LOAN124-IN. WE HAVE DISCUSSED PROJECT WITH MR. RAM SARAN AND WILLSEND A COPY OF HIS REPORT AS SOON AS IT IS FINALISED IN ORDER TOSUBMIT PROPOSAL FOR EXPANSION OF SCOPE AND EXTENSION TO OURMANAGEMENT. WE REQUIRE RECOMMENDATION FROM BANK AS OURCOOPERATING INSTITUTION AND ALSO DETAILED WORK PLAN, FINANCIALCOSTS BOTH INCLUDING AGRIC DEVELOPMENT ASPECTS.

TKS AND REGARDSSAIGAL IFAD ROME

COL CKD

=08100932

ALT RTD FROM:ASII

NNNN

THE WORLD BANK/INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUMDATE: August 7, 1987

TO: Mr. Richard G. Grimshaw, Acting Chief, AS4AG, (India)

FROM: R. Srinivasan, Chief, CODPR

EXTENSION: 73331

INDIA - Second UP Tubewell Project, (Cr. 1332-IN)SUBJECT: ICB Procurement of PVC Pipes, Fittings and ERW Steel Pipes

under ICB, IFB # WB G.T. 23/86-87

1. This has reference to your memo on the abovementioned procurementdated July 22, 1987 to Mr. Gouveia. We have reviewed the documents and ourcomments follow:

2. Regarding procurement of PVC pipes, we agree with yourrecommendation of giving no objection to GOUP's proposals for awards to M/SWavin India Ltd., (Consortium) and M/S Jalgaon Pipe Mgf., Co.,(Consortium).

3. Regarding the procurement of ERW steel pipes, the Bank would haveno objection to the selection of M/S Hyundai, who is the lowest bidder,since the bid security for the concerned package seems to be merelyinterposed with the bid security for another package. This could beconstrued as an error. It is also felt that non-quotation of inlandtransport should not be treated as substantial non-responsiveness.

4. The documents are returned herewith.P0/4

Attachments

cc: Mr. B. Gouveia, Procurement Adviser (Asia)

RGopal shnan/RSrinivasan: fdr

P-1866

August 5. 1987

The Hon. Bir Bahadur SinghChief Minister. U. P.Government of Ut tar PradeshCouncil HouseLucknowIndia

Dear Chief Minister;

I would like to thank you and your officers for an outstandingvisit to your great State. I have never before learned so much in such ashort time.

I was deeply touched that despite your extremely busy schedule,you took the time to have breakfast with us.

I also very mich appreciated your interest in dealing with thewater charges issue under the IDA-assisted tubewell project. This willgreatly facilitate our extending the scope of the existing project as weilau preparation of the next project. Having seen the benefits that thefarmers are deriving from these projects, it is easy to see that they canindeed make more of a contribution to operation and maintenance.

I look forward to a longer future visit to Uttar Pradesh.

Sincerely.

A. 1ARAGSKAN06WL

Attila KaraosmnogluVice President

Asia Regioncc: Mr. Kalyanakrishnan, Chief Secretary,

Govt. of U. P.Mr. Bajaj, Joint Seeretary, Ministry of Finance, Govt. of IndiaMessrs. Alisbah, Ritchie, Waide, Lafourcade

BAlisbah:tns

OFFICIAL FILl COPY

August 3, 1987

Mr A.K. DasSecretaryIrrigation DepartmentGOUPVidhan SabhaLucknow

Dear Mr Das,

Re: Second UP Public Tubewells ProjectCredit 1332 IN/IFAD Loan 124 IN

A World Bank mission comprising of Mr des Bouvrie (Irrigation andDrainage Engineer), Messrs Sabberwal and Singhal (Irrigation Engineerconsultants),.Mr Byrappa (Power Engineer consultant) and Mr Ram Saran(IFAD Economist consultant), visited the project during the weekcoaencing July 13, 1987. Regrettably, it was not possible for themission to present its findings to you due to your more pressing engagements.However, I gather the mission had full discussions with Special Secretary (ID)and Mr J.P. Gupta (Engineer-in-Chief) on July 17.

The mission, inter alia, considered GOUP's request for the Bankto extend the credit closing date beyond the current date of March 31, 1988,and to include for financing an additional 1000 tubewells, with savingsarising from the prescribed program. The mission has received fromGOUP the revised Second UP Public Tubeells Project Appraisal Report and isstudying its contents and proposals. It is noted that the 1000 additionaltubewelis to be constructed during the proposed extension period are to belocated in 29 of the 45 districts now included in the project, plus a furtherdistrict (Mirzapur) outside the present area. It is not possible with thetechnical and economic data and analysis to assess the appropiateness ofthe proposed locations. It is thus requested that detailed technical andeconomic support for the location selections be forwarded to the Bank tosupport your proporals, including hydrogeologic maps and water qualityanalysis.

The mission is concerned that with only 1474 tubewells completedby June 1987 out of the target of 2330 in the existing programme, yourprojections to complete a further 1000 by March 1989 might be optimistic.You are thus requested to consider if the project extension request shouldnot be for two years rather than for one year.

OFFCIAL FILE COPY

- 2 -

I would advise that for the Bank to consider your request forcredit/loan extension, a formal request to the Bank through DEA is required.When the information requested has been received, we will then be in aposition to consider your request further. My colleague, Mr des Bouvrie,is at present on leave, but when he returns in early Septowter he will givethis matter his immediate attention. Meanwhile the report of the missionis under preparation, and will be forwarded in due course.

On behalf of the mission, I would like to thank you for thecooperation and hospitality extended to the mission, and for the logisticarrangement.

With kind regards,

Yours sincerely,

A. ZagniActing ChiefAgriculture Unit

cc: Mr Laxmi Chand, Jt Sec, MOWRMr G.P. Joshi, Dep Sec, DEAMr V.A. Parkash, Member (P&P), CWCMr J.P. Gupta, CE, ID, SOUP

bcc: des Bouvrie, Lafourcade

AZ:kc

EXPRESS TELEGRAM JULY 29, 1987

BS SHARMASUPERINTENDING ENGINEERPUBLIC TUBEWELL INVESTIGATIONPLANNING DESIGN & PROCUREMENT CIRCLE42 DIAMOND DAIRY FLATSKABIR MARGLUCKNOWUP

CR 1332-IN SECOND UP TUBEWELLS PROJECT STOP YRLET JULT 26 EXTENDING BID

OPENING DATE OF WBT-47 FOR SUBMERSIBLES TO AUGUST 11 ON SAME TERMS

AND CONDITIONS STOP WE ADVISED YOU ON JULY 20 TO MODIFY QUANTITY ADJUSTMENT

CLAUSE TO 15 INSTEAD OF 25 PERCENT STOP HAVE YOU ISSUED THIS MODIFICATION

QUERY STOP REGARDS

GRIMSHAW WORLDBANK NEWDELHI

NTBT

Mail copy

Richard G. GrimshawActing Chief, Agriculture Unit55 Lodhi EstateNew Delhi

SKB/rb

fQom No. -

I d v :OI 'B/O6/,LO IH-lB3rlBN )1EcIHdI W08:1

THE WORLD BANKFACSIMILE TRANSMTTAi5O" 30

Date: July 29, 1987

Number of Pages: 2

From: A.F.E. Zagni, AS4NA

To : -...... AS4AG...........(Dept, code) ... Rm. No

Fax Number: .... 1Subject: UP Public Tubewells 11 Project

COMMENTS:

I attach a letter on water charges from the project,-'ouldt~ la the 4ub L d reVIeW Oy Jonn Qunningham

Could you please copy this to him, and send a suitable reply to

cc: Cunningham, ASTAG

7F.Authorized by N(Signature) :deBuri

R.G. Grimshaw (Name)AZ: na

2 "d 7iti~ 2~ d OG:O1 L8/OC/LQ IH17Qf13N AgaQ~dfI WONJ

D.O.L*No. 8 /7,-uI.K.PandepSpecial Secretary* Irrigation Section-5

.Govt. Of Uttar Pradesh

Dated i Lucknow s July 25, 1987

Dear Mv-. GDLVY

In accordance with 5ection 3.04 (a) of the Project

Agreement concerning Second Uttar Pradesh Public Tubewell

Project ( IDA credit 1332-IN) a proposal for establishing

a water charge system was submitted to World Bank in July-

1985. World Bank had same reservation in regard to the Propo-

val and felt that the proposal is light weicht and not adequ-

ate to fulfill GOUP's obligation Section 3.04(a) of the Project

Agreement. As advised, an indepth study is being undertaken

and soon a revised proposal will be sent to World Bank.

With best regards,

Yours sincerely

Mr. C.Des BouyrieIrrigation EngineerThe World Bank21- Jor Bagh,NEW DELHI.

D)A"I E 17

FILE (S)

Byi

RECD. AG, 01y.

27 JJL 1987

COPIEb V

ZCZC ASIF2007 JWS0957AS4AG AS4CO FIELDREF a TCP FCA

NEW2186

.IBRDNEWINTBAFRAD NEWDELHI, INDIA, JULY :3, 1987FOR LAFOURCADE COPY KALKAT

YRTLX 2551 DATED 22 JULY 67.AAA,'- WE WILL REQUEST CLEARANCE FOR MISSIONS INDICATED.WE PROPOSE AICH FOR ORISSA MEDIUM TWO. AS HE HAS WIDE bALKORUUNDAND V. SINGH ALREADY COMMITTED BY FREDERIKSEN FOR MAHANADIBARRAGES AT THAT TIME. PLEASE SEND LETTER UF APPOINTMENT FOk AICHIF YOU AGREE, WITH COMMITMENT NUMBER. 'WE WILL ADVISE CWC OFMISSIONS. DES BOUVRIE RETURNS FROM LEAVE 30 AUGUbT.BBBV UPPER GANGA COVENANTS. A SUPERVISION MISSION IS TO VISITPROJECT IN EARLY AUGUST, AND WILL SPECIFICALLY RESOLVE LOVENHN-DATES WITH GOUP. WILL REPLY FULLY ON MISSION RETURN.CCC/ UP IUBEWELLS IWO. C0I HAS UFFICIALLY REGUtSTED EXTENSION9F PROJECT BY TWO YEARS AND TO INCLUDE 1000 TUBEWELLS IN EI LETTERDATED 23 JUNE 87. COPY BEING FAXED SOONEST. DES bOUVRIE 15DEALING WITH THIS BUT IS NOW ON LEAVE TILL 30 AUGUST. SEARCH OFFILES INDICATES NO FORMAL GOUP OR 60i kEUUEST FOR A UP TUBEWELLSTHREE PREPARATION.REGARDS

ZAGNI

=07230943

ALT RTD FROM:ASII

NNNN

0W qt':i i _8/t'3/Lo IH_13Qfl3N >18QIdffl W08.d

WORLC SANK. 0 BOX 4 6

! Ui ' TATE THE WORLD BANK

FACSIMILE TRAN qT&L TQRr 3: 36Z/

Date: July 23 1987 -

r Aas?"' Pease jo ad co~

From: A.F.E. Zagni, AS4NA

Mr, 0. T "urcade AS4AG H-4085...:..................... ......................

Fax Number: .......

Subject UP Tubewells II - Credit 1332-IN

COMMENTS:

I attacha letter from DEA dated 23 June 1987, with the formairequest to extend the above project by two years, and to include1000 additional tubewells. I understand that Mr. des Bouvrie, whois now on leave until August 30, is drawing up a list of conditionswhich GOUP should satisfy before we could recommend the extensionto Bank management.

cc: -tnningham, ASTAGGENERAL AGRICULTURE PvN

Dnt, Received- ---- --

t AcknoI edged -------------t'd to -

C

Authorizedby (Signature)

A.F.E. Zagni (Name)

AZ:ns

rn6 P'THE WORLD BANK/INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUM --DATE July 22, 1987 -

To Mr. Bernard A. Gouvei , Rm. No. D-1005

FROM Richard G. Grimshaw, cting Chief, Agriculture Unit ------ ~

EXTENSION control Ni0 --------------

SUBJECT Second U.P. Tubewells Project (Cr.1332-IN) ICB Procurementof PVC pipes, fittings and ERW Steel pipes under ICB,IFB # W.B.G.T..23/86-87.

1. The estimated value of the above procurement was more than $5Mand as such PPDPC's no objection to the bidding document was obtainedthrough Mr. Strombom's memo of March 3, 1987. Bids were received forPVC pipes and ERW pipes on May 14 and 15, 1987 respectively.

2. GOUP has firmed up the recommendations for awards following itsDepartmental and Empowered committee meetings held on June 4 and 25and July 14, 1987. These recommendations forwarded through letter 998of July 17 were handcarried by the Executive Engineer on July 21 and areattached.

3. Our brief note on each procurement is also attached and werecommend giving no objection to GOUP's proposals. Following Bank'sreorganisation, we are unaware of the successor of PPDPC for the purposesof review of major procurement. As such we are sending this to you forappropriate clearance and advice on current instructions for similarreviews in the future.

4. It may be recalled from our earlier memos of January 19 andFebruary 26, 1987 to Mr. Strombom, that GOUP proposed to include construc-tion of about 800 to 1000 additional tubewells due to credit savings underthe project. GOUP has decided, as per para 4 on page 4 of the minutes ofthe Empowered Committee Meeting, that the above procurement of PVC andsteel pipes may be dropped, under provisions of para 32.1 of the Instructionto Bidders, in case World Bank does not agree to the construction ofadditional tubewells.

5. The project staff informed that in the event of World Bank notagreeing to finance additional wells, and prior to such a decision ifGOUP enters into commitments on the above contracts for pipes, it wouldnot be possible to divert these materials to their own projects simplybecause the contracts cannot be treated as "Deemed export" and supplierscannot claim duty exemption on the raw material (Resin) based on which thepresent prices have been submitted under ICB. As a matter of fact thesecontracts will be bad in law. In the circumstances, if Bank gives noobjection to the award recommendations conditional upon reaching an agree-ment to increasing the scope of the project (which may take some more time),it would not help the project in as much as GOUP will not award thesecontracts unless the approval to the extension of the project scope isalso given. The project staff also informed that due to increase in

.. 2P- 865

2:

international prices of Resin and its current supply situation, biddersmay not extend the validity of their bids beyond the present validity ofAugust 13, 1987. As such Bank was requested to give a clear no-objectionbefore this date.

Keeping the above circumstances in view, please send yourresponse at the earliest.

EnclVcc: Srinivasan/Lafourcade/Alisbah

SKB/rb

SECOND U.P. TUBEWELLS PROJECT

(Cr. 1332-IN)

Procurement

IFB 1 WBGT-23/86-87

PVC Pipes and Fittings (Schedules 1, 2, 3 and 4)

Quantity as per bid invitation:

(a) Total 3520 Km (7600 MTs)

(b) Per schedule 880 Km (1900 MTs)

Total value as per bids obtained:

Rs.105,949,450 (say Rs.106M)

(For 800 Tubewells as called in the bidinvitation).

1. The present proposal of GOUP is to vary the quantity as perpara 31.1 of Instruction to Bidders upto 25% to cover the number of Tubewellsthat are cleared by the Bank. (1000 Tubewells are contemplated). As suchthe value of procurement would go up to Rs.132.5M. Please recall thatPurchaser's right to vary the quantity by 25% was agreed to by PPDPC.

2. Bids were opened on May 14, 1987 as a measure of advance planningfor the materials required to complete the construction of additionaltubewells proposed under the project. Bidding documents were purchasedby 38 prospective bidders, out of which 9 bidders, all domestic, havesubmitted the bids which includes 3 consortium namely:

(i) M/s. Wavin India Limited (7 firms);

(ii) Jalgaon Pipe Mfg. Co. (4 firms);

(iii) Jef PVC Pipes Pvt. Ltd. (2 firms).

3. Out of the participating bidders, M/s. Techno Plastics did notsubmit the bid security. As such it's bid has been rejected as non-responsive and bid prices not announced. The bid of M/s. Accurate Pipesand Plastic has been treated as non-responsive as the firm does not meetthe requirements under the bidding document with respect to:

(i) I.S.I. Licence for 200 mm O.D. pipes;

(ii) experience of successful use of the pipes for aminimum period of six months; and

(iii) capability to perform the contract within thespecified delivery schedule based on its annualproduction capacity shown in the bid.

2

4. Out of the 7 members of M/s, Wavin, (Consortium), one M]s, AshishChemo-Plast did not attach with its bid, a copy of valid ISI Licenceas required under para 13,3 (e) on page 18 of the -Bidding Document.However, this firm was supplying ISI marked pipes to GOUP in, the past,(during January to April 1987) and possessed the ISI Licence (validupto August 15, 1987) at the time of.the bid opening but did not furnishthe same through oversight. The aboxshortcoming has been. regarded asa mistake on the part of the firm and waived by GOUP.

5. Bids have been evaluated as per conditions of the bidding document.There is no Excise Duty at present on PVC pipes. As a result of rejection,of the two bids as noted in para 3, M/s, Wavin India Ltd, (Consortium) isthe lowest evaluated bidder for all the four schedules. GOUP has made adetailed analysis of the experience, installed capacity and past perfor-mance of all the 7 members of this consortium and come to the conclusionthat for timely supply, not more than 3 schedules should be awarded tothis consortium. In determining the maximum quantity that could beawarded to this lowest bidder, GOUP has also taken note of the following:(i) the performance of some of its members has been quite good and someothers not very satisfactory;(ii) consortium members have existing commit-ments; (iii) assurance has been given by the bidder to start supplies withthe available resin; (iv) it has been estimated that about 7280 MTs canonly be supplied by the consortium within specified delivery scheduleas against 7600 MTs advertised; and (v) the bid submitted confirms, thatshould any member/members of the consortium is/are found incapable ofsupplying the quantity ear-marked for them for any reason whatsoever, eitherbefore or after the acceptance, the same quantity shall be supplied by theother members of the consortium in proportion to which they are bound bytheir agreement so as to ensure that the department gets the full quantitywithin the delivery schedule from other members who are considered capable.As such, GOUP has recommended schedules 1, 3 and 4 in favour of M/s. WavinIndia (Consortium) keeping in view that the price difference with the nextevaluated responsive bidder is the minimum for schedule 2. M/s. JalgaonPipe Mfg. Co. (Consortium), the second lowest bidder, has been recommendedfor Schedule 2 in which the total bid amount of this firm is higher thanthat of M/s. Wavin (Consortium) by Rs. 5,99,050 only. The performance ofM/s. Jalgaon Pipes (Consortium) is satisfactory and GOUP envisages noproblems in getting supplies of Schedule 2 ( 1900 MTs + 25%) within therequired delivery schedule.

6. In view of the fact that GOUP would increase the quantity by about25% meaning that the revised quantity o be awarded to M/s. Wavin (Consortium)would now go up to 7125 MTs (5700 + 25%) under all the 3 schedules, weagree that any further increase in quantity to this bidder would be dispro-portionate to its present capabilities and would not ensure timely completion.We recommend giving no objection to GOUP's proposals for awards as followssubject to the condition that it should decide on the agency to be appointedfor inspection at the time of issuing awards. (Ref. para 28 on page 10 ofGOUP's purchase note):.

..3

:3:

(i) M/s. Wavin India Limited (Consortium)

Schedules 1, 3 and 4(Rs.7,86,86,800 plus: 25%)

(ii) M/s. Jalgaon Pipe Mfg. Co. (Consortium)

Schedule 2

(Rs.2,72,62,650 plus 4' 25%)

ERW Steel Pipes (Schedules 5, 6 7 and 8)

Quantity as per bid invitation:

(a) Total 5850 MTs;

(b) Per schedule - Schedule 5 - 850 MTsSchedule 6 - 2200 MTsSchedule 7 - 600 MTsSchedule 8 - 2200 MTs.

Total value as per bids obtained:

Rs. 37,912,580 (say Rs. 38M)

(For 800 Tubewells as called in the bid invitation).

1. GOUP's proposal is to vary the quantity as discussed for PVC pipes.

2. Bids were opened on May 15, 1987. Out of 22 firms who purchasedthe bidding documents, 6 firms including one foreign bidder,(M/s. HyundaiCorporation, South Korea) submitted bids. The bid of M/s. A.V.N. TubesLtd. has been declared non-responsive as the firm has no past experienceand not yet started production. In this context, the firm has submittedno document to enable GOUP to evaluate its technical, financial andproduction capabilities nor any documentary evidence furnished forsuccessful use of materials offered for a minimum period of 6 months asrequired under the bidding conditions. GOUP should however, ensure thatconclusions drawn on capabilities of this firm are correct and are notbased on insufficient information. The bid of M/s. Hyundai Corporationhas been declared non-responsive as the firm has not put up bid securityin the required amount under schedule 8, for which its offer is competitive.[Refer para 9.03 (b) of GOUP's purchase note]. Also this firm submittedbid on terms CIF Calcutta instead of FOR destination, and did not quotecharges for handling and clearance at the port, inland freight fromCalcutta port to final destination and insurance etc. As such this bid hasbeen declared incomplete.

3. For schedules 5 and 6, the lowest bidder, M/s. A.VN. Tube Ltd. hasbeen rejected for reasons explained earlier. The next lowest evaluatedbidder, M/s. B.S.T. Ltd., has been declared responsive and capable of execu-ting the contract. As such, GOUP has recommended the award for both the

4 :

above schedules to M/s. B.S,T. Ltd, (Rs, 94,40,580)

4. For schedules 7, the lowest evaluated bidder M/s, Hindustan PipeUdyog has been, declared responsive and capable and as such recommended foraward (Rs,36,33,000).

5. For schedule 8, the offer of M/s. Hyundai Corporation has beenrejected for reasons explained earlier, The only other bidder, M/s. Hindus-

tan Pipe Udyog has been declared responsive and recommended for award

(Rs.1,48,39,000),

6. Subject to our comments in, para 2 concerning M/s. AV.N. Tube Ltd.we recommend giving Bank's no objection to GOUP's proposals.

7. We have also received GOUP's recommendation for award of contracts

for pump controllers, for additional 1000 wells, under LCB (less than $5M).It's clearance will be held until we receive your approval on PVC and

Steel pipes.

SKB/rb

EXPRESS TELEGRAM JULY 20 1987

JP GUPTACHIEF ENGINEER TWIRRIGATION DEPARTMENTCANAL COLONY CANTT ROADLUCKNOW 226001UTTAR PRADESH

CREDIT 1332-IN SECOND UP TUBEWELLS PROJECT PROCUREMENT STOP REFURLTR

911 OF JULY 1 STOP WE AGREE TO YOUR RECOMMENDATION NOT TO ALTER EXISTING

PROVISIONS OF BIDDING DOCUMENT STOP ALSO SPECIFY QUANTITY ADJUSTMENT UPTO

15 PERCENT INSTEAD OF 25 PERCENT STOP REGARDS

GRIMSHAW WORLDBANK NEWDELHI

NTBT

Mail copy

R.G. Grimshaw Arc)Acting Chief, Agr. Unit tC- MR- 0- LA

World Bank ROOM No. H-43$55 Lodi EstateNew Delhi

SKB/kj

iRFco E

The World Bank Resident Mission in India Telephone: 617241INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Cable Address INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Mailing Address P 0 Box 416

New Delhi 3, India

Mr. B.S. Sharma July 16, 1987Superintending EngineerPublic Tubewells InvestigationPlanning, Design & Procurement Circle42, Diamond Dairy Flats, Kabir MargLucknowUttar Pradesh

Dear Mr. Sharma:

Re: Second U.P. Tubewells Project (Cr.1332-IN) -Procurement under WBT-46

Thank you for your letter 951 of July 8, 1987. We offer our noobjection to the award of the following contract:

Contract Item Supplier Amount inNo. Rs.

A-78/WBT- Pump Controller M/s. Bhartia Cutler 36,90,72746 Hammer Ltd.

With regards,

Yours sincerely,

ohn HallActing ChiefAgriculture Unit

dq rWqAsg C A

ROOM No.H~~

Headquarters; Washington. 0 C U S A

\V~\

5)

; - Tr)The World Bank Resident Mission in India Telephone: 617241INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Cable Address. NTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Mailing Address: P.O. Box 416

New Delhi 3, India

Mr. B.S. Sharma July 1 , 1987 ,Superintending EngineerPublic Tubewell InvestigationPlanning, Design & Procurement Circle42, Diamond Dairy Flats, Kabir MargLucknowUttar Pradesh

Dear Mr. Sharma:

Re: Second U.P. Tubewells Project (Cr.1332-IN) -Procurement (WBT-49/87-88)

Thank you for your letter 918 of July 4, 1987. We will notobject to your bidding document if you incorporate the following modi-fications:

- You should use metric system. However, you mayindicate the sizes in C.G.S. unit in parenthesis(e.g., description of Schedule 2).

- Clause 19 on page 24 should be modified to read15% instead of 25%.

With regards,

Yours sincerely,

ohn HallActing ChiefAgriculture Unit

Head(uarters Washingrcn D C. U 3A.

g)&

The World Bank Resident Mission in India Telephone. 617241INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Cable Address INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Mailing Address: P.O. Box 416

New Delhi 3, India

Mr. B.S. Sharma July 16, 198)Superintending EngineerPublic Tubewell InvestigationPlanning, Design & Procurement Circle42, Diamond Dairy Flats, Kabir MargLucknowUttar Pradesh

Dear Mr. Sharma:

Re: Second U.P. Tubewells Project (Cr.1332-IN) -Procurement - IFB No.WBGT-21/86-87

Thank you for your letter 952 of July 8, 1987. We are returningthe two contracts forwarded with your letter unprocessed. We haveadvised you in the past not to modify quantities or conditions of awardgafter the recomiendair -aTecaa wB such modifica-tions become necessary, the Ban should be consulted before the awardsare issued. Please let us know why this procedure was not followed andrevision in quantity not advised to the Bank while sending your recom-mendations for award. We are also concerned how supply order was issuedon June 2, 1987 when Bank's no objection to your recommendation wasfurnished through our telegram of June 11, 1987. We look forward toreceiving your early clarification.

With regards,

ours sincerely,

John HallActing ChiefAgriculture Unit

Encl-.A

dcs W MRC U A

Headquarters. Washing!on, D C J S. A

9-

4

The World Bank Resident Mission in india Teleptone 617241INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Cable Address: INTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Maiiing Address: P.O Box 416

New Delhi 3, India

Mr. B.S. Sharma July 10, 1987Superintending EngineerPublic Tubewell InvestigationPlanning, Design & Procurement Circle42, Diamond Dairy Flats, Kabir MargLucknowUttar Pradesh

Dear Mr. Sharma:

Re: Second U.P. Tubewells Project (Cr.1332-IN) -Procurement

Thank you for your letter 905 of July 1, 1987. We offer our noobjection to the award of the following contracts:

S.No. Contract Name of Item Supplier Value (Rs.)No.

1. A-80/U-3/ 168-3 mm 0.D. ERW Steel M/s.BST Ltd. 68,04,278WBGT-21/ Pipes86-87

2. A-79/U-3/ 323.85 -do- M/s.Priyanka 22,83,400WBGT-21/ Overseas Pvt.86-87 Ltd.

With regards,

Yours sincerely,

ohn HallActing ChiefAgriculture Unit

ROoM No. j-4Q=>

.5I

TELEX

SAIGALIFADROMEJULY 7 1987

REURTEL PARTICIPATION METCALFE UP-1I TUBEWELLS MISSION WE HAVE

MADE NECESSARY HOTEL BOOKINGS ANDPURCHASED LOCAL TRAVEL TICKETS

DELHI-LUCKNOW-DELHI WHICH WE EXPECT METCALFE TO REIMBURSE.

KINDLY ADVISE METCALFE'S PROFESSION. WE ARE MAILING TO YOU COPY

GOUP'S REPORT AND LETTER FORMALLY REQUESTING EXTENSION LOAN

CLOSING DATE AND USE OF SAVINGS FOR DRILLING OF ONE THOUSAND

ADDITIONAL TUDEWELLS WHICH WILL BE MAIN SUBJECT OF MISSIONS

REVIEW.

REGARDS

HALL

cc: Lafo urcadeZagniMetcalfe O/A-

0 nb-

C00

FORM NO. 27 OCR(7-86) WORLD BANK OUTGOING MESSAGE FORM Cable, Telex

IMPORTANT-PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

Typewritten

Must Fall~3omnpletey In TEST NUMBER

BoxA PAGE OFRCIAL PTDIV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

I ~ OF -2] AS4AGSTART

2 HERE

INTBAFRAD, NEW. DELHI, INDIA

4 FOR HALL/DES BOURVIE/ZAGNI.

5 AAA. RE UP TUBEWELLS II. GRATEFUL FOLLOWUP ON STATUS OF

6 GOUP/GOI REQUEST TO EXTEND CREDIT/LOAN UNTIL MARCH 31, 1989.

REQUEST SHOULD CONTAIN INFORMATION OUTLINED IN YOUR LETTER TO

GOUP OF FEB. 25, 1987.

BBB. RE PROPOSED UP TUBEWELLS III.. FIRST ACTION REQVIRED IS A

10 FORMAL REQUEST FROM GOUP/GOI SEEKING BANK SUPPORT FOR PROPOSED

11 PROJECT. REQVEST SHOULD BE SUPPORTED WITH SUFFICIENT

12 INFORMATION FOR US TO PREPARE FIRST EPS/ISSUES PAPER. ASSUMING

REQUEST IS MADE, WE CAN TENTATIVELY PLAN FIRST PREPARATION

14 MISSION FOR SEPT/OCT. 1987.

15 CCC.. RE GROUNDWATER SECTOR REVIEW. FOR YOUR INFORMATION,.

16 CONCURRENT WITH PREPARATION MISSION FOR PROPOSED UP TUBEWELLS

17 III, WE WOULD UNDERTAKE SOME FIELD WORK FOR GROUNDWATER SECTOR

REVIEW. DES BOUVRIE MAY CONSIDER OUR PLANS IN PREPARING HIS

19 MISSION SCHEDULES BECAUSE WE WOULD LIKE HIS ASSISTANCE.

20 WE WOULD PROBABLY INCLUDE SHORT VISITS TO BIHAR AND WEST BENGAL.

21 END DDD.. RE UPPER GANGA MODERNIZATION. GOI REQJEST FOR REVISION OF

OF

22 TEXT DATED COVENANTS UNDER PA HAS NOT YET BEEN PROCESSED. LEGAL

PINK AREA TO BE LEFT BLANK AT ALL TIMES

INFORMATION BELOW NOT TO BE TRANSMITTED

CLASS OF SERVICE. TELEX NO DATE

SUBJECT DRAFTED BY : EXTENSION:

CLEARANCES AND COPY DISTRIBUTION: AUTHORIZED BY (Name and Signature):

DEPARTMENT:

SECTION BELOW FOR USE OF CABLE SECTIONCHECKED FOR DISPATCH

DISTRIBUTION: WHITE-File Copy CANARY-Bill Copy BLUE-Originator to Keep

FORM NO. 27 -OCR(7/86) WORLD BANK OUTGOING MESSAGE FORM Cable, Telex

IMPORTANT-PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

TypewrittenCharacterMust Fall

"Completely In TEST NUMBER

BoAi PAGE OFRCIAL EPTDIV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

1 W OF AS4AG

START2 HERE CONFIRM THERE IS NO NEED TO REVISE DATES OF COVENANTS ALREADY

COMPLIED WITH,, ALBEIT LATER THAN SPECIFIED IN PA. THUS

COMPLIANCE DATES OF PA CLAUSES 2.02(a) AND (b) AND 2.08 NEED NOT

BE CHANGED. SINCE LATEST INFORMATION WE HAVE ON COMPLIANCE OF

6 OTHER OUTSTANDING COVENANTS IS SUPERVISION REPORT OF AUGUST

7 1986, GRATEFUL IF YOU COULD UPDATE US ON STATUS OF PA CLAUSES

2.09(a) AND (b), 2.10, 2.11 and 3.05(a). IF THESE COVENANTS ARE

NOW IN COMPLIANCE, THERE IS NO NEED FOR REVISION OF DATES. IF

NOT,.GRATEFUL YOUCONFIRM DATES BY WHICH COMPLIANCE CAN BE

EXPECTED SO THAT WE CAN TAKE APPROPRIATE ACTION. REGARDS,,

12 LAFOURCADE, CHIEF, AS4AG,

13

14

15

16

17

19

20

21 ENDOF

22 TEXT

PINK AREA TO BE LEFT BLANK AT ALL TIMES

INFORMATION BE LOW NOT TO BE TRANSMITTED

CLASSOFSERVICE Telex TELEXNO.: IBRDNEW DATE 7/2/87SUBJECT: DRAFTED BY: EXTENSION:

India: UP Tubewells II JCunningham:smd 32817CLEARANCES AND COPY DISTRIBUTION AUTHORIZED BY (Name d re

Cleared by & cc: Ms. Sunde4Land Olivier ade Chief, AS4AGDEPARTM IY

cc: Messrs. Sharma, Diewald, COuntry Depart ent 4Gopa l SECTION BELOW R USE OF CABLE SECTW /

CHECKED FOR DISPATCH

DISTRIBUTION: WHITE-File Copy CANARY-Bill Copy BLUE-Originator to Keep

~d 9~:MLB/tlLO IH13GM13N AI-ldr WNdd

qTyrm Government of India OL-. O. N i. 3//S1 II wf Ministry of Finance

p1w rtT m Depamnent of Economic Affairs

-t-/New DelhiVZ-.A)UQ4 19 87

3,0.Jsh i,Under Secrstary(FB),TeI. No. 301-5936

Dear Mr. Qri mshaw,

Pleas a f ind encloned a copy of Revised

Second Utter Pradesh Public Tubeuells Project Report

(April, 1987) which contains the informati~on requested

by the World Bank in connection with the onstructifn

of additional 1000 tubowells urder th8 SRCOnd UP.

Public Tubewells Prcject (U;rqcit i o

complete these aro the balance acV teneiof ZI

Credit Closing Oats by two years iS

by Covernment of Uttar Pradesh.

We would be grateful if the DCA and P.A. old

be amended to reflect these changes,

With regards,

You a r er.l y,

( . : Jshi)

Mr. R.G. Crimshaw,Chief, Agriculture Uivi ion,The Ur ld sank,21 , 3or Bagh,Now Q, hi. RECD. AC- DIV-

A

T HE WNOHLD bANK IN I LHNA TIONAL INANUL iA UN

OFFICE MEMORANDUM

Date: May 20, 1987

TO: Messrs. R.Gj rimshaw and C. des Bouvrie, ASFNA

FROM: John F. Cuny igham, Acting Chief, ASPAC

SUBJECT: INDIA - Second UP Tubewells Project(Cr. 1332-IN/IFAD Ln. 124-IN)

- Comments on Supervision Report (3/25/87)

1. Progress on this project is encouraging after the slowstart, and there are strong indications that your supervisionefforts are paying off. ASPAC comments are as follows:

2. Extension of Closing Date (Section 5, Form 590). Weagree that before the Bank can consider an extension of theclosing date and use of savings, we need a formal proposal fromGOUP/GOI, with a fully documented action plan, realisticimplementation schedule and revised cost estimates. We note thatASFNA are planning to review progress on such a proposal aboutthe first week of July 1987. In this respect, we recommend thatspecial attention be given to your comment in para 26 of the AideMemoire. Namely, that with the additional work program presentlyproposed by GOUP, there is chance that part of the savings maystill be left unspent. In addition to increasing the number ofnew tubewells, we would recommend that the components tomodernize "old standard" tubewells (OSTs) and also to connectOSTs to dedicated power lines also be expanded.

3. A special case will have to be made to expand the projectscope to utilize savings. Fortunately, the project consists of alarge number of discrete units (i.e. each tubewell is a separatemini-irrigation scheme). Thus it will make sense to expand theproject scope, particularly since the public tubewell program inUP is likely to continue at the present rate into the foreseeablefuture.

4. COUP will have to comply with outstanding covenants as aprerequisite to the granting of an extension. The cost recoverystudy will probably be the most difficult for GOUP to completeand will need close supervision.

5. Funding/Budget Provision. It is an unusual situationwhen an Irrigation Department has a substantial budget provisionleft unspent (para 13, Aide Memoire). You report that actualexpenditures have consistently been less than budgetaryprovisions. If this is the case, why does not the ID provideadequate advances to UPSEB for electrical connections (para 40,Aide Memoire), particularly when slow energization of completedTWs is the main reason for low disbursements? Clearly, theprocedures and management control/review of this criticalactivity needs to be given special attention. Anotherpossibility is that the ID may be diverting budget allocations

P-1 867

-2-

meant for TWs to other activities? Alternatively, perhaps theproblem is simply poor management (para 8, Aide Memoire)?

6. Power Supply. We recommend that the adequacy of thepower supply be more thoroughly analyzed so that we have numbersto support any conclusions and recommendations reached ontubewell performance. Based on information we have here, thereseem to be very large variations in well operating hoursthroughout the state, within districts, and even within clusters.Once extensive data which we know is available has been properlyanalyzed, then an appropriate action program can be formulated.An immediate thought is that we should critically review presentoperational procedures and evaluate the linkage between the IDand UPSEB at the working (cluster) level. For example, theoperational role of the JE (in charge of a cluster) could be re-examined. Perhaps a procedure could be set up so that clusterpower demands can be intimated to the relevant sub-station in amore effective and efficient manner.

7. Quality Control (Para 35, Aide Memoire). To myknowledge, this is the first adverse comment we have had on thedrilling quality under the project. Is the problem widespread,or just isolated cases which can be traced back to a specificdrilling unit? Most of the drilling under the project is nowcompleted. We therefore recommend the general quality of thedrilling program to date be evaluated and adjustment toprocedures/controls be made to ensure acceptable qualitystandards (before we consider constructing more wells under apossible extension).

8. Monitoring & Evaluation (Para 22, Aide Memoire). As youknow a considerable effort (including a special FAO/CP mission)was made last year to improve the M&E. It is disappointing thatthis program is still unsatisfactory. Your recommendation forGOUP to engage a M&E specialist over a period of (at least) twocrop seasons would help. However, we believe that the realproblem is weak staff within the M&E cells who are notparticularly interested in M&E. We suggest that to get M&E uptodate and formulate proper analytical methodology, GOUP shouldretain a consultant firm or institute (funded under the project).Such an M&E contract could be used to get all existinginformation into a computorized data bank where it can beprocessed to give appropriate indicators on performance ofimplementation, irrigation service and agricultural benefits.The TOR of the consultants could be such that they formulatemethodology to analyze data collected so that management had thefacts needed to make decisions and/or identify the cause andeffect of problems. We suggest that you give some priority tothe M&E situation with GOUP during the July visit. This would bemost useful for us since we want to know what is happening withpublic tubewells if GOUP/GOI request a follow up project.

cc: Senner, Temple

The World Bank sesaet 1.1 ss- n -da Tee: :,e 517241INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World BanK Cae -e ress ;NTBAFRADINTERNATIONAL DEVELOPMENT ASSOCIATION 55 Lodi Estate Van Aadoess P 0 Box 416

New Delhi 3. incia

Hav 15, 1;8-7

Hr . Ra ihroavanor i ciiI tLural PrOducti on Fofmmfi ssi oner

Go.vernTient of Littar FradeshLucknow

bear Mr. Bharqava:

Uroinisation CT ;OricLtural Etensionsrvi c e nUtr rad es h

In the course of several viEits to U oever the last year,World Bank staff have raised issues concernino the orcanisation ofagricultural extension services in the state. Projects assisted bythe World Bank which involve extension include i) the NationalAgricultural Extension Project ([HNEP III)' co*vering zl eastern

districts: ii) the UP Public Tubeweils II Proiect 'Jr.1332-'IN/Loan124). spread over most of the state: (iii the Upper G angaIrrigation and Modernization Project 'Cr. 14B3-iN in Sulandshar andA-liarh districts: and (iv) the Himalayan Watershed ianagementPro iect kLn. 225-IN in AIlmora and Pauri districts. Strenotheninoof extension is the central objective of NAE whereas in the otherproiects full development obiectives can be achieVed only with theciose support of an effective exItension service.

As the reformed extension service gets established in the21 districts under NAEP and beoins to Yield results. we hooe thatthe state Qovernment will consider oroposals to strengthenextension along similar lines in the rest of the state. Until thisstage is reached. selective strengthenina of extension, e.g. in thehill areas and the Upper Ganga project area, can be pursued throughNAEP Special Sub-Projects. As this process takes shape, it isimportant to ensure consistency of approach throughout the state inthe design of extension and to develop a coherent overallstructure. I attach for your guidance our own proposal for such astructure and hope that GOUP will give serious consideration to itsmain features, as well as the actions needed to put it in place.

Briefly, the features and actions associated with theproposed structure are as follows:

Mr. Raj Bhargava - 2 May 15, 1987

(a) both existing and future extension services in

the hills would be organised according to the

pattern already established in the NAEP area,with extension staff reporting directly to the

DDA for each district, and through each DDA, to

the ADA (Hills).. Incremental staff and other

requirements could be funded either through aNAEP Special Sub-Project or using funds under the

existing Himalayan Watershed Management Projectafter completion of the mid-term review;

(b) in the NAEP project area, extension

responsibilities would be performed solely byfield staff deployed and funded under NAEP. All

staff deployed and funded under the UP Public

Tubewells II Project should be redeployed toextension duties outside the NAEP area;

(c) in the UP Tubewells Proiect area (outside NAEP),extension staff funded under that project(including those redeployed from the NAEP area)would be orqanised according to the pattern

agreed under the project, with three Agricultural

Supervisor taking responsibility for a cluster of

25 wells. The JDA (Tubewells) funded under the

project would report directly to the ADA

(Extension) in matters relating to extension;

(d) extension field staff according to the normal

pattern should be recruited and deployed forAligarh and Bulandshar districts in the Upper

Ganga Project area. The costs of these staff andother operating needs could be borne under a NAEP

Special Sub-Project if required. In technicalmatters of extension, the JDA (Irrigation) wouldreport directly to the ADA (Extension). Whetherfunded with World Bank assistance or solely byGOUP plan resources, proposals for theestablishment of an adequate field extensionservice in these two districts should besubmitted to the World Bank as soon as possible;

(e) as already indicated, overall responsibility foragricultural extension in the 21 districtscovered by NAEP, in the additional areas coveredby the Public Tubewells Project, and in the Upper

Mr. Raj Bhargava - 3 May 15, 1987

Ganga Project area, in the UP Public TubewellsProject area and in the Upper Ganga project areashould be vested in the ADA (Extension), thusensuring adequate coordination and consistency inthe deployment and performance of all extensionservices in the plains districts of the state.The Director of Agriculture would haveresponsibility for ensuring overall coordinationin the development of extension services in boththe hills and the plains.

In our view, the structure outlined above and in theattached chart provides a consistent framework for existing

extension staff and should permit an orderly expansion of extension

services into new areas over the next few years. I would be happy

to talk about this important issue at further length should youwish and look forward to hearing from you soon.

Yours sincerely,

Richard G. GrimshawChief, Agriculture Division

cc : Mr. Sundaram Krishna, Dy.Secy., DEAMr. J.K. Arora, Jt.Secy.(Extn.), MOAMrs. A. Bagchee, Jt.Commsr.(Extn.), MOAMr. S.L. Ghosal, Director FEU, DOEMr. B.N. Tyagi, Dir Agric UPMr. R.K.S. Chauhan, Adl Dir (Extn) UPMr. Singh, ADA (Hills) UP

Mr. J.L. Bajaj, Jt.Secy., DEA

bcc : Messrs Robless, Lafourcade, Benor, Abbie, Rahman, Hall

LA/hah

Attachment

Proposed Organization of Agricultural Extension in UP

Director of Agriculture

Addl.Director (Hills) Addl.Director Agriculture (Extn.)

(T&Y Eastern UP UP Tubewells Upper Ganaa Irr.Project

DDA Hills)

JDA (Divisional) JDA Ag Component JDA (Irrigation)Tubewells Upper Sanga Irr

DDA (HQ) Asst.Dir.(HQ)

DDAs (Dist) DDAEy Director Dy DirectorAligarh Bulandshar

SMSs (Dist) SMSs (Dist) AO SMSs

GEV~ (Tehsil) SDA~s (Tehsil) Asst.H'O SDAO (Tehsil)SMSs (Tehsil) SMSs (Tehsil)

ADOs AD~s (Field Level) Aq Supervisor ADOs

KSS KSS KSS

ZCZC SASF5453 SAIS1367WDIALREF : AGAINOINFO

-SUBJECT: UTTAR PRADESH PUBLIC TUBEWELLS PROjECT'*-DRAFTED BY: SUMIT bOSE: BR EXT 32267-AUTHORIZED BY: LYNNE M. SUNDERLAND, ASAIN-CC: MRS. SUNDERLAND (ASAIN)

953 3166175 =-ECOFAIRS, NEW DELHI, INDIA-ATTENTION: MR. &, P. jOSHI, UNDER SECRETAYBTWASHINGTON, D.C. DATE turYRE DEVELOPMENT CREDIT NO. 133 -IN ENN UTIAR PRADESH PUBLICTUBEWELLS PROJECT, AMENDMENT TO SCHEDULES I AND E )0 THE LEVELOPME NTCREDIT AGREEMENTS. YOU WILL RECALL THAT WE NEVER RECEIVED THtFINAL AMENDMENT LETTERS FOR THE ABOVE PROjECT SPEED UP HEPROCESS, I CAN SIGN THE LETTERS WHILE 1 Al HERE IN WASHINGTOI'N,PLEASE CONFIRM THE FOLLOWINu &bTED LHQqNtjo: LJULTv Y 1 LP FTHb\&IN SCHEDULE 1 TO DCA BE AMENDEO AS FULLOWS: Q U2

AMOUNT OF !Hh LRED1 PERCE Ni lCATEGORY kLLOCAIED (EXPRESSED EXPE

(1) CIVIL WORKS: IN SOR EQUIVALMN0) TU IE F3NHNED( A) COMPLETED TUBEWELiL.. 3aj070,000 52 ER.N.T

SYSTEMS(B) COMPLETED WORKS UNDER

PART C OF THE PROJECT 1, 720,00q) h5 PERC=N (C) BUILDINGS , 000, 00 i 55 PENCENT

PART E OF SCHEDULE 2 TO THE DEVELOPMENT CRELIf PGNEEMENT 1S AMENDEDTO READ AS cODLLQWE.S oT vART E: PR(VISION OF VEHICLES, EUIPMENTAND BUILDINGS FOR OPERATION MIOF ~1% :::. 1UbEWELL.IRRIGATION SYSTEMS UNDER PARTS A, C, 1ND 0 OF THIS SCHEDULE.U NQUOTE.REGARDS, SUMIT BOSE, INTHFRAD.

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THE WORLD BANK INTERNATIONAL FINANCE CORPORATION

OFFICE MEMORANDUMDate: May 7, 1987

TO: C. Helman, ,Cj1ief, ASPAC

FROM: John F. Culngham, Deputy.Chief, ASPAC

EXTENSION: 32817

SUBJECT: INDIA - Lending Development- Second UP Public Tubewell Project (Supervision)- Back-to-Office Report

1. In accordance with terms of reference dated March 17, 1987, Ivisited Uttar Pradesh during the period March 23 to 28, 1987 toundertake lending development activities prior to joining thehydrology review mission (under separate BTO). Discussions were heldwith various State Government officials and with DEA/GOI in New Delhi.In addition, discussions were held with Messrs. des Bouvries and Zagniin Delhi and Mr. Barber (Groundwater Consultant) to review options fordeveloping groundwater in the Gangetic basin.

Second UP Public Tubewell Project (Credit 1332-IN)

2. On March 23, I proceeded to Varanasi in eastern UP to inspectpublic and private tubewell installations. Tubewells constructedunder the Second UP Public Tubewell Project were of a highconstruction standard; those visited were operating, on average, about4,000 hours per year (well above the performance assumed atappraisal), with irrigated area and crop yields substantially abovethat for other public tubewells outside the IDA supported project.GOUP officials reported that all water charges are collected sincepayment is made prior to receiving irrigation supplies. Foradministrative convenience, the water rate is assessed on volumetricbasis and translated into a unit area rate irrespective of crop grown.

3. After Varanasi, I visited Lucknow with Mr. des Bouvries, NewDelhi Office, for discussions with GOUP officials. The project staffreported that substantial savings under the Second UP Public Tubewellproject were anticipated, primarily due to the favorable rupee/dollarexchange tate. GOUP are likely to propose an increase in projectscope of the main productive components, namely about 1,000 newimproved tubewells in about 40 clusters, modernization of about 125existing tubewells and about 90 additional connections of existingtubewells to dedicated power lines. This change in scope would makesense, since the project represents a time slice of the publicgroundwater development program in UP. The additional work programwould require one year extension of closing date to March 31, 1989 andGOUP stated that a detailed request for extension, to be submittedthrough DEA/GOI, is under preparation. The request would include arevised implementation schedule, an updated cost estimate andfinancing plan. On return to Delhi, I met with Mr. David Randell,IFAD, and briefed him of the UP visit.

P-1867

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4. Future Groundwater Development. GOUP indicated that it wouldlike continuing Bank involvement in groundwater development aftercompletion of the ongoing tubewell project. Their tentative proposalwould be a five year program consisted of about 3,000 new improvedpublic tubewells, modernization of about 600 existing tubewells, andconnection of about 900 exiting tubewells to dedicated powerlines.The estimated base cost (in present prices) would be about US$170million.

5. It was suggested that the proposed project scope be expandedto include other types of groundwater development suitable for full orsemi-privatization at some future date. These installations would bedesigned to reach small or marginal farmers in areas not suitable forstandard deep public tubewells each commanding about 100 hectares.Such a component would strengthen the rationale for a third Banktubewell operation in UP, and could include a range of tubewells, andperhaps open dug wells, with construction and initial operation byGovernment, but designed so that farmers could take over theinstallations later. The works may include: (i) deep tubewells,based on the improved technology successfully demonstrated in UP underthe ongoing project, but designed to serve about half the commandarea; (ii) clusters of shallow tubewells to efficient designstandards; and (iii) open dug wells in hard rock areas as under theWest Bengal Minor Irrigation Project (Credit No. 1619-IN). Theseworks could add about 10-15 percent to the base cost.

6. If the extension of the closing date of the Second UP PublicTubewell project is approved, GOUP would like the next project tofollow the ongoing project and thus become effective about April 1989.To meet this schedule, a possible timetable would be anidentification/preparation mission about September/October 1987,followed by preappraisal about March/April 1988 and appraisal inSeptember 1988. The next action would be a formal approach byGOUP/GOI to seek Bank support for the proposed project. The proposalwas discussed with Mr. Randell, IFAD. He indicated informally thatIFAD may be interested in a further role in UP groundwaterdevelopment, particularly if they could have a separate componentspecifically aimed at small and marginal farmers, or a program withina specific area preferably located in a backward part of the State.

Distribution:

Messrs. Kopp (PPDDR), Escudero (LEG), Hittmair (CTRVP),Hwang (LOAAS), Chopra (OEDOD), Hopper (ASNVP),Shibusawa (ASNVP), Cheetham (ASADR), Lerdau (ASPDR),Senner (ASPDR), Robless (ASAIN), Temple (ASAIN),Lieberman (ASAIN), Yoon (ASPAA), Lafourcade (ASADA),Ms. Gutierrez (ASPAC), South Asia Information Center,Black Book

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* The World Bank Resident Mission in India Telep'one 617241

INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT World Bank Caboe Address INTBAFRAD

INTERNATIONAL DEVEIOPMENT ASSOCIATION 55 Lodi Estate Mailing Address P 0 Box 416

New Delhi 3, India

May 1, 1987

Mr. J.P. GuptaChief EngineerDepartment of IrrigationGovernment of Uttar PradeshCanal ColonyCantt. RoadLucknow 226 001

Dear Mr. Gupta:

U.P. Tubewells ProjectModification of Alfalfa Valves

During the visit of Messrs. Campbell, Plusquellec,

and Cullen to your project in mid-February the problem of

damage to outlet valves, particularly to rubber gaskets,by farmers was discussed. The subject was subsequentlytaken up in Patna, where similar valves will be required.

One possible course is to modify the design of the

seal so that the rubber gasket is inset in the valve plate.

A sketch of such a modification, provided by Mr. Campbell,is attached for your consideration.

Yours sincerely,

. des BouvrieSenior Irrigation andDrainage Engineer

cc: Mr. C.K. Basu, Secretary, ID, GOB, Patna

Headquarters Washington, D.C., U.S.A

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786f WORLD BANK OUTGOING MESSAGE FORM Cable, TelexIMPORTANT -PLEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

Character

Must Fall( Q JCompletely in TEST NUMBER

Box y PAGE OFFICIAL DEPTDIV MESSAGE NUMBER (FOR CASHIER'S USE ONLY)

OOF ABBREVIATION (TSTART

2 HERE INTBAFRAD, NEW DELHI, INDIA _ _

FOR CUNNINGHAM. RE GROUNDWATER DEVELOPMENT IN THE GANGA BASIN,

4

YOURTEL OF MARCH 4.

5

ALPHA WITH RESPECT TO UP III, GIVEN THE SUCCESS OF ITS PREDECESSORS

6

AND THE IMPORTANCE OF GROUNDWATER DEVELOPMENT IN UP WE SUPPORT ITS

7

INCLUSION IN THE LENDING PROGRAM IN SAY, FY89.

BETA ISSUES SUCH AS COST RECOVERY, ROLE OF FARMERS' GROUPS

9

(INCLUDING SYSTEM MANAGEMENT), POSSIBILITY OF FINANCE THROUGH

INSTITUTIONAL CREDIT, ETC. WILL HAVE TO BE DISCUSSED/RESOLVED DURING

11

PREPARATION.12

GAMMA THE RATIONALE FOR EXTENDING SUCH PROJECT TO THE ENTIRE

13

GANGETIC BASIN, IS LESS CLEAR, ESPECIALLY IF IT IS GOING TO BE A

14

PUBLIC SECTOR OPERATION, FOR FOLLOWING REASONS:

15

AAA THIS WILL COMPLICATE PROJECT SINCE IT WILL INVOLVE 3 OR 4

16

INDEPENDENT STATE DEPARTMENTS.17

BBB IN TWO OF THE STATES, NAMELY BIHAR AND WEST BENGAL, WE HAVE

18GROUNDWATER LENDING OPERATIONS WHICH HAVE JUST STARTED AND ARE

19

LIKELY TO FULLY UTILIZE THE RESPECTIVE STATE FINANCIAL RESOURCES.

20

WHY THEN TO BURDEN THEM WITH AN ADDITIONAL PROJECT? IT MAY BE21 END I

OF BETTER TO CHANGE THE LEGAL AGREEMENTS OF THESE PROJECTS TO

ACCOMMODATE ANY OTHER TYPE OF DEVELOPMENT YOU MAY SUGGEST.

TELEX IBRDNEW 04/10/87

CHeLman:cbc 32812

WORLD BAN?, OUTGOING MESSAGE FORM Cable, TelexMPORTANT -"LEASE READ INSTRUCTIONS BELOW BEFORE TYPING FORM

TypewrittenCharacterMust FallCompletely ;n TEST NUMBER

ox y PAGE OFFICIAL DEPT DIV MESSAGE NUMBER {FOR CASHIER'S USE ONLY)Bo!ABBREVIATION I-

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START

2 HEREDELTA WILL CALL YOU TO DISCUSS THIS FURTHER ON YOUR RETURN TO

DELHI.

4

REGARDS, HELMAN5

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TELEX IBRDNEW 04/10/87

INDA - UP. III CHeman:cbc 32812

cc: Messrs. Senner, Temple C. HeLman, C efAS

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INDIA - Uttar Pradesh Tubewellas(02)