PROJECT PERFORMANCE AUDIT REPORT
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PROJECT PERFORMANCE AUDIT REPORT

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ASIAN DEVELOPMENT BANK PPA: SRI 19025 PROJECT PERFORMANCE AUDIT REPORT ON THE KIRINDI OYA IRRIGATION AND SETTLEMENT PROJECT (Loans 324-SRI[SF], 612-SRI[SF], and 794-SRI[SF]) IN SRI LANKA December 2000 CURRENCY EQUIVALENTS Currency Unit - Sri Lankan Rupee/s (SLRe/SLRs) At Appraisal At Appraisal At Appraisal At Project At Operations Supplementary Phase II Completion Evaluation Loan (30 Sep 1977) (30 Sep 1982)(30 Sep 1986) (30 Jun 1995) (31 Mar 1999) SLRe1.00 = $0.116 $0.0478 $0.0357 $0.0200 $0.0150 $1.00 = SLRs8.61 SLRs20.91 SLRs28.05 SLRs49.95 SLRs66.80 ABBREVIATIONS ADB – Asian Development Bank DOA – Department of Agriculture EIRR – economic internal rate of return ha – hectare ID – Irrigation Department IFAD – International Fund for Agricultural Development IWMI – International Water Management Institute KfW – Kreditanstalt für Wiederaufbau km – kilometer OEM – Operations Evaluation Mission OFC – other field crops O&M – operation and maintenance PCR – project completion report t – ton TAtechnical assistance WUG – water user group GLOSSARY Yala – Southwest (dry) monsoon season (approximately April to September) Maha – Northeast (wet) mapproximately October to March) NOTES (i) The fiscal year (FY) of the Government ends on 31 December. (ii) In this report, “$” refers to US dollars. Operations Evaluation Office, PE-564 CONTENTS Page ...

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ASIAN DEVELOPMENT BANK  
PPA: SRI 19025
     PROJECT PERFORMANCE AUDIT REPORT   ON THE   KIRINDI OYA IRRIGATION AND SETTLEMENT PROJECT (Loans 324-SRI[SF], 612-SRI[SF], and 794-SRI[SF])   IN   SRI LANKA        December 2000
 
CURRENCY EQUIVALENTS Currency Unit - Sri Lankan Rupee/s (SLRe/SLRs)   At Appraisal At Appraisal At Appraisal At Project At Operations  Supplementary Phase II Completion Evaluation Loan  (30 Sep 1977) (30 Sep 1982) (30 Sep 1986) (30 Jun 1995) (31 Mar 1999) SLRe1.00 = $0.116 $0.0478 $0.0357 $0.0200 $0.0150  $1.00 = SLRs8.61 SLRs20.91 SLRs28.05 SLRs49.95 SLRs66.80   
     
ABBREVIATIONS ADB – Asian Development Bank DOA – Department of Agriculture EIRR – economic internal rate of return ha – hectare ID – Irrigation Department IFAD – International Fund for Agricultural Development IWMI – International Water Management Institute KfW – Kreditanstalt für Wiederaufbau km – kilometer OEM – Operations Evaluation Mission OFC – other field crops O&M – operation and maintenance PCR – project completion report t – ton TA – technical assistance WUG – water user group
   GLOSSARY  Yala – Southwest (dry) monsoon season (approximately April to September) Maha – Northeast (wet) monsoon season (approximately October to March)    NOTES (i) The fiscal year (FY) of the Government ends on 31 December. (ii) In this report, “$” refers to US dollars.
 Operations Evaluation Office, PE-564   
 CONTENTS 
   BASIC DATA EXECUTIVE SUMMARY MAP I. BACKGROUND A. Rationale B. Formulation C. Purpose and Outputs D. Cost, Financing, and Executing Arrangements E. Completion and Self-Evaluation F. Operations Evaluation II. PLANNING AND IMPLEMENTATION PERFORMANCE A. Formulation and Design B. Achievement of Outputs C. Cost and Scheduling D. Procurement and Construction E. Organization and Management III. ACHIEVEMENT OF PROJECT PURPOSE A. Operational Performance B. Performance of the Operating Entity C. Economic Reevaluation D. Sustainability IV. ACHIEVEMENT OF OTHER DEVELOPMENT IMPACTS A. Socioeconomic Impact B. Environmental Impact C. Impact on Institutions and Policy V. OVERALL ASSESSMENT A. Relevance B. Efficacy C. Efficiency D. Sustainability E. Institutional Development and Other Impacts F. Overall Project Rating G. Assessment of ADB and Borrower Performance VI. ISSUES, LESSONS, AND FOLLOW-UP ACTIONS A. Key Issues for the Future B. Lessons Identified C. Follow-Up Actions  APPENDIXES   
Page ii iv vi 1 1 1 1 2 2 2 3 3 4 4 5 5 7 7 8 9 10 10 10 11 13 13 13 13 14 14 14 15 15 16 16 18 19
 
BASIC DATA Kirindi Oya Irrigation and Settlement Project (Loans 324-SRI[SF], 612-SRI[SF], and 794-SRI[SF]) ProjTeAc t Pre2itarI/noapon BuildnstitutiN manig1 No. e Type Amount Approval ($) Date 168-SRI Lunugamvehera Reservoir (Irrigation and PPTA 49,000 7 Jul 1976 Agriculture Development) 407-SRI Kirindi Oya Irrigation and Settlement PPTA 50,000 23 Jul 1981 730-SRI Kirindi Oya Phase II PPTA 75,000 9 Dec 1985  Key Project Data($ million)  As per ADB Loan Documents  324-SRI 612-SRI 794-SRI Total Actual Total Project Cost 66.803 28.00 33.10 127.90 93.40 Foreign Exchange Cost 24.00 12.00 10.20 46.20 43.10 Local Currency Cost 42.80 16.00 22.90 81.70 50.30 Cancellation 4.004 2.515 17.64 17.64 11.13  Funding  Proposed Actual Source 324-SRI 612-SRI 794-SRI Total 324-SRI 612-SRI 794-SRI Total           Borrower 42.80 4.40 6.50 53.70 6.50 5.86 3.65 16.01 ADB 24.00 10.00 26.60 60.60 20.00 9.47 15.48 44.95 IFAD — 6.00 — 6.00 12.00 4.06 — 16.06 KfW — 7.60 — 7.60 13.30 3.04 — 16.34 Total 66.80 28.00 33.10 127.90 51.806 93.3622.43 19.13  Key Dates  324-SRI 612-SRI 794-SRI Appraisal 12-31 Aug 1977 16 Mar-3 Apr 1982 2-20 Jun 1986 Loan Negotiations 26 Oct-3 Nov 1977 11-15 Oct 1982 22-25 Sep 1986 Board Approval 9 Dec 1977 9 Dec 1982 30 Oct 1986 Loan Agreement - ADB 25 Jan 1978 17 Dec 1982 24 Nov 1986 - IFAD 20 May 1978 8 Dec 1982 — - KfW 19 Sep 1979 7 Apr 1983 — Loan Effectiveness (ADB) 28 Apr 1978 21 Apr 1983 26 Feb 1987 Loan Closing - In Loan Agreement 31 Dec 1985 30 Jun 1986 30 Jun 1991  - Actual 29 Jan 1987 13 Oct 1989 10 Jan 1995 - Number of Extensions 1 4 3 Months (effectiveness to completion) - Original Project 92.0 - Total Project 200.5 (+ 118%)                                                 12 ,t progrAti rounc FT An u7 3d0o fivel opOm elnnl tyuhrte  eDeerhtiw sdrocer sBADn  iedintares .6 1 89 Maye of dat theeD nolev = BaisAleabAD, apt icplanitnola= I tnrenk, IFADpment Ba  — = no  3sa lacinhcet yro t =TA, ceanstsi A =P TPab,uarfuaratprepect projerK atidK= Wf Würdeietans fltechnical assistacn.e nIlcduse  $15.6 million equivalent in foreign exchange entitlement certificates (which have been abolished subsequently) and $1.38 million in customs duty. A major portion of the local cost has subsequently been financed by KfW and I illion, res vely. 4vaiama eb ceFIDAe. lablnaicfonior mgnf counn acen ct whA morf daol sBDs wan ioleelncca $  4imllpectioillna n8$ dm 0.D,FAt  a3.$1mi3 65 Consisting of $0.53 million under IFAD funding and $1.98 million under KfW funding.  Estimated by project cost established at reappraisal for the supplementary loan, less identified financing gap.
 
  Key Performance Indicators  Appraisal  324-SRI 612-SRI 794-SRI PCR7 PPAR Economic Internal Rate of Return (%) 17.6 11.0 13.6 6.3 2.6 Cost New Irrigation Only ($/ha) 5,925 18,528 13,363 18,336 17,245 -- New and Existing Irrigation ($/ha) 3,852 8,919 8,648 9,931 9,340 Irrigation Area - New Irrigation (ha) 8,409 4,200 8,409 5,416 5,416 - New and Existing Irrigation (ha) 12,934 8,725 12,934 10,000 10,000  BorrowerGovernment of the Republic of Sri Lanka  Executing AgencyIrrigation Department (lead agency)  Mission Data (No. of Persons/Person-Days )8 Type of Mission 324-SRI 324/612-SRI 612-SRI Preappraisal 1/9 Appraisal 1/19 Reappraisal 4/44 Inception/Review Fact-finding Project Administration Inception 1/16 Review 8/72 Reformulation Special Loan Administration 6/50 Project Completion Operations Evaluation   
794-SRI PCR/PPAR     1/10 2/18 1/9     10/143 1/17    1/15  1/10
                                                ce audit e ha = hectare. 78n ioetplom cctjeorp = RCP   .P RCmari Sumfromzed p rt,ororejtcp reofmrnareport, PPAR = p
EXECUTIVE SUMMARY   The Kirindi Oya Irrigation and Settlement Project was intended to develop underutilized land in the dry zone of Sri Lanka. Its main objectives were to increase food and fiber crop production and create gainful livelihood for people barely covering their subsistence needs. The Project included the construction of the country’s largest earthfill dam with a gated spillway and canals to irrigate 8,400 hectares (ha) of newly developed command area. Additional water would allow cropping intensity to increase from about 135 to 200 percent on an existing area of about 4,600 ha irrigated from traditional reservoirs (tanks). With reliable irrigation, yields were expected to increase considerably.   The 1977 feasibility study assembled the considerable preparatory work undertaken by the Government, supported by limited technical assistance from the Asian Development Bank (ADB). From the options considered by the Government over time, the one proposed under the feasibility study was driven by political expediency. It was the best prepared option and the Government wished to demonstrate its concern for people’s welfare in an economically depressed area that had recently experienced civil disturbance. The feasibility study terms of reference restricted analysis to the Government’s specific request. Against that background, the study was more detailed than many from that era. It estimated the cost of the Project at $112.2 million of which irrigation development would absorb $75.3 million and the settlement component $14.3 million. The study drew attention to the high development cost ($7,150/ha in 1977 dollars) and to other key factors for successful development. The estimated economic internal rate of return (EIRR) for the option selected was 10.8 percent.   ADB’s original appraisal differed significantly from the feasibility study. Project cost was reduced to 60 percent of feasibility study estimates while the proposed new irrigation area increased by 30 percent. The EIRR consequently rose to 17.6 percent. Both the reduced cost and the expanded area proved optimistic and a supplementary loan was required in 1982 due to cost overruns. Phase II was approved in 1986 without change to the planned irrigation area and was reformulated in 1991. At physical completion in 1994, the area of new irrigation totaled 5,400 ha, about 85 percent of feasibility estimates and 64 percent of the appraisal target. With the reduction in new area development, the feasibility study cost estimate was also close to actual.   The implementation period was more than double the 7.7 years originally envisaged, due to (i) delays in the commencement of major civil works, (ii) the effort required to obtain the additional funding needed to complete the project, and (iii) insufficient contractor capacity due to the demands of the large civil works program under the Accelerated Mahaweli Development Program. Political disturbances also disrupted work progress occasionally. Institutional constraints were increasingly noted and compensated for by provision of additional consultants.   After a difficult period in the late 1980s and early 1990s, the irrigation scheme is performing better. Yields have averaged almost 4 tons/ha despite a number of dry years such as 1999. Cropping intensity has varied between 114 percent and 200 percent over the past 10 years, with an average of 171 percent since 1992 compared with the design target of 189 percent. Farmers have focused on rice production with less development of other field crops than envisaged, though banana areas are expanding. Annual crops are grown on a reasonable scale in drier years, though often without irrigation.   A total of 4,924 families were settled under the Project. These included 1,450 families displaced by the dam and irrigation development with the balance selected from other areas of
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southern Sri Lanka. Appropriate settlement infrastructure, including safe drinking water, was provided. For many farmers resident in the new irrigation area, family income remains low with a survey conducted for the Government’s project completion report indicating an average income of $135 per capita in 1994, just below the $140/capita poverty line (in 1991 prices). However, in absolute terms their income has improved somewhat, particularly in the new irrigation areas. Malnutrition continues to be a severe problem in the project area, particularly for mothers and children.  The environmental record is mixed with some significant disbenefits, notably a reduction in salinity of the ecologically valuable coastal lagoons. However, the human environment within the command area is now aesthetically attractive compared to adjoining slash and burn agricultural areas, while malaria incidence is reported to have fallen significantly.   Project economic performance has been poor due to (i) implementation delays; (ii) high project cost; (iii) below target development of new land; and (iv) reduced cropping intensity, particularly on the new areas due to limited water availability. Both the livestock and forestry components, added in Phase II, performed poorly compared to target. The EIRR is estimated at 2.6 percent.  While irrigation infrastructure is mainly being maintained by the Irrigation Department, water user groups will need to take more responsibility for scheme operation and maintenance. However, the main threat to sustainability comes from irrigation, agriculture, and human settlement development in the catchment above the dam.  With the notable exception of the settlement component, the Project overall has performed below expectation, although it remains relevant to Sri Lanka’s development objectives. However, its relevance is reduced somewhat by the high cost and relatively small number of beneficiaries. Cost-effectiveness and implementation efficiency were low. The Project suffered from institutional problems and had little impact on institutional development. Although the Implementing Agency’s accounting systems improved, project monitoring remains inadequate. Overall, the Project is rated less than successful.   Aspects requiring particular attention in the future include (i) the threat to project sustainability due to upper catchment degradation and increasing use of water for irrigation upstream of the dam, which are reducing reservoir recharge and irrigation water availability; (ii) irrigation management, with improvements in this regard likely to have positive impacts on income, nutrition, and the environment (requiring significant sociocultural change on the part of the irrigation administration as well as the farmers); and (iii) settlement, with a need to allocate land titles to resident farmers and address nutritional problems in the project area and wider region.  
 
I. BACKGROUND
A. Rationale 1. The Kirindi Oya basin lies within Sri Lanka’s dry zone, which includes 70 percent of the country’s land area. At the time of project preparation in the 1970s, the zone included 30 percent of Sri Lanka’s cultivated land and 25 percent of its population. Opportunities were seen for more balanced development and improved land use in the zone, to increase agricultural production, reduce imports, and limit population pressure in higher rainfall areas. B. Formulation 2. Beginning with a reconnaissance report on the area’s natural resources in 1956, the Government undertook a series of studies on the potential for development in the Kirindi Oya basin. Together with topographical surveys in 1973 and 1974, these studies provided the basis for preparation of an Asian Development Bank (ADB) loan1 supported by technical assistance (TA).2 subsequent feasibility study prepared by the Government was completed in June The 1977. The study included substantial information and assessed the technical and economic feasibility of a design proposed by the Irrigation Department (ID). ADB’s limited TA supplemented the considerable preparatory work done by the Government. The original loan was approved by ADB in December 1977, with a supplementary loan approved in December 1982 and an extension, referred to as Phase II, in October 1986. Further small amounts of TA were used for the preparation of the supplementary loan3and the formulation of Phase II.4  C. Purpose and Outputs 3. The Project was intended to increase rice and other field crop (OFC) production, generate employment, save foreign exchange, and use underutilized land resources. The scope of the Project closely followed the design requested by the Government and defined in the feasibility study. The main components were (i) the construction of a 5-kilometer (km) earthfill dam with sluiced spillway and gates, (ii) rehabilitation of the 3,675-hectare (ha) Ellegala irrigation system which was irrigated from a series of small traditional reservoirs (tanks) and improved water supply to the 850 ha Badagiriya system, (iii) development of new irrigation on 8,410 ha, and (iv) settlement of 8,320 families including 333 households from the reservoir area who would be given land for settlement and irrigation together with supporting infrastructure. Agricultural extension services were to be strengthened. The scope of the Project remained essentially unchanged over three appraisals, apart from the deferment of some of the irrigation implementation to a second phase and adding relatively small components for rural credit, social forestry, livestock, and marketing. Reformulation in May 1991 reduced the development of new irrigation by about 3,000 ha due to limited irrigation water availability and irrigation management problems. Details of the original scope and achievement by completion are given in Appendix 1. Cropping intensity on the existing irrigation areas was expected to increase from
                                                1 Loan 324-SRI(SF):Kirindi Oya Irrigation and Land Settlement Project, for $24 million, approved on 9 December 1977. 2 TA 168-SRI:Lunugamvehera Reservoir (Irrigation and Agriculture Development), for $49,000, approved on 7 July 1976. 3 TA 407-SRI:Kirindi Oya Irrigation and Settlement, for $50,000, approved on 23 July 1981. 4 TA 730-SRI:Kirindi Oya Phase II, for $75,000, approved on 9 December 1985.
 
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153 to 200 percent and to reach 177 percent on the new areas, with 4,400 ha planted to cotton. The inclusion of cotton and other subsidiary field crops was intended to support the national policy of promoting crop diversification and limit irrigation water demand on the large areas of permeable soils to be developed under the Project. However, due to problems experienced by other projects in establishing cotton, plans for the crop were dropped under the supplementary loan. D. Cost, Financing, and Executing Arrangements 4. ADB provided $20.0 million and $10.0 million, respectively, for the original and supplementary loans, to finance the direct and indirect foreign exchange costs. Due to ADB’s restriction on financing local currency costs, the Government sought cofinancing with assistance from ADB. The International Fund for Agricultural Development (IFAD) provided loans of $12.0 million and SDR5.5 million ($6.0 million equivalent), administered by ADB.5The German agency Kreditanstalt für Wiederaufbau (KfW) financed $13.3 million and $7.6 million, respectively, under parallel cofinancing. Phase II was funded by ADB alone, which by that time was able to fund local currency costs and provided a loan of $26.6 million. The residual costs were borne by the Government and are estimated at $6.5 million for the original Project, $5.9 million for the supplementary phase, and $3.7 million for Phase II. All funding was provided under preferential terms, in the case of ADB from the Asian Development Fund resources. Appendix 2 gives details of project financing. Project cost estimates varied greatly over the course of design and implementation as discussed in Appendix 3. At the time of Phase II appraisal, total project cost was estimated at $113 million, of which the dam and associated structures accounted for 34 percent and irrigation development 15 percent.  5. Over the life of the Project were four executing agencies: (i) ID was responsible for dam construction and irrigation development; (ii) Land Commissioner’s Department for settlement, livestock and dairy development, and social forestry; (iii) Department of Agriculture (DOA) for agricultural support services; and (iv) Central Bank of Sri Lanka for the credit program through selected participating banks. E. Completion and Self-Evaluation 6. The Project, as reformulated in 1991, was completed in early 1995. The Government engaged the services of the International Water Management Institute (IWMI), based in Colombo, to prepare a project completion report (PCR). IWMI was familiar with the Project and prepared a comprehensive report based on available project data and a sample survey of 479 households. ADB undertook a PCR mission in June 1995, generally accepting the findings of the IWMI report, and adding information from ADB records. The Operations Evaluation Mission (OEM) confirms much of the information in both the Government’s and ADB’s PCRs as correct. However, the economic internal rate of return (EIRR) of 6.3 percent reported in the PCR is considered optimistic due to unrealistic rice yields and expectations of real rice price increases (discussed in Appendix 4). The PCR rated the Project partly successful. F. Operations Evaluation 7. This project performance audit report presents the findings of an OEM that visited Sri Lanka in March 1999 supported by a review of ADB files, records, and reports. These included
                                                5 approved loan of $24 million.$4 million for foreign exchange costs cancelled from ADB’s originally Including
 
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appraisal reports, loan agreements, minutes of loan and TA committee meetings as well as the staff summaries of Board discussions, the PCR, missions’ back-to-office reports, and other reports by consultants and IWMI. Information was sought from ADB staff involved in the Project. Considerable time and effort were spent in obtaining key documents that could not be located within ADB, such as the original feasibility study and the report on the appraisal undertaken by KfW about one year after ADB’s appraisal. Only the last of the three TA reports could be located. Copies of the draft project performance audit report were provided to the Borrower, the Executing Agencies, and ADB staff concerned for review. Their comments assisted in finalizing the report. II. PLANNING AND IMPLEMENTATION PERFORMANCE
A. Formulation and Design 8. At the time of formulation, a number of development options for the Kirindi Oya area had been debated for many years by irrigation engineers and local politicians. Alternatives ranged from small-scale projects with small reservoirs in various locations, to major schemes involving water transfer between river basins. Although much of this analysis was at the reconnaissance or conceptual stage, consideration of alternatives during project preparation might have defined a more cost-effective solution than the design selected by the Government and eventually implemented. For example, according to the Government’s PCR “the much-discussed decision about the dam location was apparently motivated by the need to maximize the new area to be brought under irrigation rather than by consideration of what would be the most cost-effective approach. The Lunugamvehera location required building a much larger dam than sites upstream would have required, thus greatly raising the cost.” In the light of the low water inflows subsequently experienced, this proved to be a costly decision.  9. The terms of reference for the original project preparatory technical assistance study required the consultants to develop the project concept proposed by the Government. This was intended to demonstrate the Government’s concern for an impoverished area that had previously faced serious civil unrest. ID engineers were also attracted by the challenge of building the largest earthfill dam in Sri Lanka. The feasibility study drew attention to aspects that warranted further assessment such as the high permeability of soils in most of the command area, the lack of experience in the production of crops other than rice, and potential problems with continuous flow water management. The option recommended (with new irrigation on 6,500 ha) yielded an EIRR of 10.8 percent. The feasibility study was well prepared within the limits set and generated a high level of ownership by the Government.  10. The appraisal mission adopted the design proposed in the feasibility study. However, the area to be developed for new irrigation was increased by 30 percent, which the feasibility study had deferred pending further study. More significant was a large reduction in project costs. The 1977 feasibility study had estimated investment cost at $90 million excluding transfer payments. The appraisal assessed the project cost at $50 million to fund an increased irrigation area. In practice, project unit costs exceeded feasibility study estimates. The feasibility study and appraisal estimates and actual expenditure are given in Appendix 3. The EIRR of the Project at appraisal improved to 17.6 percent due to the reduced costs and increased benefits.
 
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B. Achievement of Outputs 11. The Project was largely implemented as planned. The earthfill dam and a total of 51 km of main canal (10 km less than initially planned) were constructed. The main divergence from appraisal relates to the reduction in new irrigation development from 8,400 to 5,400 ha. The reduction resulted from overoptimism at appraisal and declining water inflows to the reservoir, due to a reported decline in rainfall, increasing water use in the catchment area, and catchment degradation. Due to the reduced irrigation area, the number of families settled fell from 8,320 to 4,900 and construction of other settlement infrastructure was reduced in proportion (Appendix 1). The quality of infrastructure inspected by the OEM was generally satisfactory. However, because the design did not anticipate the water shortages experienced in the dry season, water regulation structures are not ideal and operation is labor intensive. Tree planting in woodlots and homelots under Phase II was about one third of target. The livestock component also experienced implementation difficulties and did not achieve its targets in relation to livestock distribution or the development of milk collection and marketing facilities. C. Cost and Scheduling 12. The total cost of the Project is estimated at $93.4 million or about 83 percent of the revised budget of $112 million (Appendix 2).6In constant value terms, the project cost increased by about 53 percent over estimates of the original appraisal, reflecting (i) the reduction in project cost at appraisal over feasibility study estimates; (ii) the lack of contractor competition; (iii) increased costs due to inadequate maintenance of construction equipment; (iv) some increases in cost due to inadequate information at appraisal; and (v) the addition of social forestry, agricultural credit support, agricultural support services, and livestock development components valued at about $4.5 million under Phase II. The Government is estimated to have contributed $16.0 million (17 percent of total project costs) while ADB contributed $44.95 million (48 percent), IFAD $16.1 million (17 percent) and KfW $16.3 million (18 percent). Project costs are compared to appraisal estimates in Appendix 3. Joint cofinancing with IFAD functioned smoothly with loan administration delegated to ADB. For the parallel cofinancing with KfW, it was not always easy to keep informed of the status of procurement and disbursement, and difficulties arose in scheduling joint reviews.  13. Implementation took nearly 17 years from loan effectiveness compared with eight years expected at appraisal. The major delay related to construction of the dam, which was completed in 1986, four years behind schedule. The new irrigation area was to be progressively developed with the main canals completed one year after completion of the dam and the distribution system one year after that. The process of selection of settlers and their settlement was to start with the completion of the dam. This sequence of events was logical and could have been followed if more preparatory engineering work and investigation had been undertaken at feasibility study stage and if contractor performance could have been relied on, particularly in the area of construction management. The original schedule assumed a degree of coordination among various agencies that proved unattainable.
                                                6 Costs have been reestimated based on the ADB Controller’s records for ADB and IFAD loans and from information obtained from KfW and ADB records on the government contribution. In the earlier years with the noted deficiencies in the accounting function of ID, advances may not have been fully liquidated or leases for ID equipment not fully deducted from progress payments. This may result in a minor overstatement of project costs. Records on KfW’s parallel disbursements are incomplete. However, information has been received on loan utilization and cancellation. There is less information on government expenditure which includes food assistance from the World Food Program during the early years of settlement and system operation.