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Report No. 10224-RO Type: (PPR) ROport NO 10224DUANE, P. / X31753 / T9 049/ OEDD1

PROJECT PERFORMANCE AUDIT REPORT

ROMANIA

MOSTISTEA AND CALMATUI IRRIGATION AND DRAINAGE PROJECT (LOAN 1670-RO),COVURLUI IRRIGATION PROJECT (LOAN 1795-RO),

BUCSANI-BUZAU-SIRET-PRUT (BBSP) IRRIGATION PROJECT (LOAN 1938-RO), ANDCARA"AL-TITU IRRIGATION PROJECT (LOAN 1971-RO)

DECEMBER 30, 1991

Operations Evaluation Department

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

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List of Acronyms

BAFI - Bank for Agriculture and Food IndustryCAP - Agricultural Production CooperativeDIFCA - Department of Land Reclamation and Agricultural ConstructionEMENA - Europe, Middle East, North AfricaGDP - Gross Domestic ProductIAS - State Agricultural EnterpriseIC.R - International Competitive BiddingIMF - International Monetary FundISPIF - Institute for Land Reclamation Studies and DesignMAFI - Ministry for Agriculture and Food IndustryOED - Operations Evaluation DepartmentPCR - Project Completion ReportPPAR - Project Performance Audit ReportSAR - Staff Appraisal ReportSMA - Station for Agricultural Machinery

Fiscal Year of Borrower: Jaruary 1 to December 31

Currency Name (abbrev.): lei (lei)

FOR OFFICIAL USE ONLYTHE WORLD BANK

Washington, D.C. 20433U.S.A.

fiae of Director-General)perations Evaluation

December 30, 1991

MEMORANDUM TO THE EXECUTIVE DIRECTORS AND THE PRESIDENT

SUBJECT: Project Performance Audit Report on RomaniaMostistea and Calmatui Irrigation and Drainage Project (Loan 1670-RO),Covurlui Irrigation Project (Loan 1795-RO),Buceani-Buzau-Siret-Prut (BBSP) Irrigation Project (Loan 1938-RO), andCaracal-Titu Irrigation Project (Loan 1971-RO)

Attached, for information, is a copy of a report entitled '"ProjectPerformance Audit Report on Romania: Mostistea and Calmatui Irrigation andDrainage Project (Loan 1670-RO), Covurlui Irrigation Project (Loan 1795-RO),Buceani-Buzau-Siret-Prut (BBSP) Irrigation Project (Loan 1938-RO), andCaracal-Titu Irrigation Project (Loan 1971-RO)" prepared by the OperationsRvaluation Department.

Attachment

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

FOR OFFICIAL USE ONLY


ROMANIA


BUCSANI-BUZAU-SIRET-PRUT (BBSP) IRRIGATION PROJECT (LOAN 1938-RO), andCARACAL-TITU IRRIGATION PROJECT (LOAN 1971-RO)

Table of Contents

Page No.

Preface . . . . . . ...................... . .Basic Data Sheets ........ . . . . . . . . . . . . . . . . . . iiiEvaluation Summary.................. ..... .. . xi

I. Background .......................... . . 1

A. The Economy .................. . . . . 1B. The Agricultural Sector . . . . . . . ...... . . .. 1C. The Irrigation Subsector. . ......... . . . . . . . . 2D. The Projects .. . . . . . 3E. Project Implementation........... ....... . . 4F. New Developments Since Loan Closing . . . . . . 4

II. Project Status at Audit . . . . . . . . . . . . . . . . . . . . . 5

A. Completion of Civil Works . . . . . . . . . . . . . . . . . . 5B. Project Costs . . . . . . . . . . . . . . . . . . . . . . . . 6

III. Performance of the Irrigation and Drainage Systems . . . . . . . . 7

A. Design................... ....... . . 7B. Current Status . . . . . 8C. Irrigation Performance Indicators .. . . 8D. Operation and Maintenance . . . ............ 9E. Cost Recovery . . . . . . . . . . . . . . . . . . . . . . . 9F. Impact on the Environment . . . . . . . . . . . . . . . . . . 10

IV. Agricultural Performance . . . . . . . ............... 10

A. Cropping Pattern and Cropping Intensities . . . . . . . . . . 10B. Yields and Production . . . . . . . . . . . . . . . . . . . . 11C. Effects of the On-going Economic Reforms . . . . . . . . . . . 12

V. Economic Performance . . . . . . . . . . . . . . . . . . . . . . . 13

A. Main Assumptions . . . . . . . . .. . . . . . . . . . . . .. 13B. Economic Rates of Return . . . . . . . . . . . . . . . . . . 14C. Financial Returns . . . . . . . . . . . . . . . . . . . . . . 15

This document has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contents may not otherwise be disclosed without IFC authorization.

Table of Contents (continued)

Page No.

VI. Main Issues . . . . . . . . . .. . . . . . . . . . . . 15

A. The Economic Viability of Irrigation . . . . . . . . . . 15B. The Bank Support to Irrigation in Romania . . . . . . 16C. Accelerated Disbursement of Bank Funds . . . . . . . . . . . . 18D. Future Prospects . ....... . . .. . . . . . . . 18

Annexes

1 Planned and Actual Physical Infrastructure . . . . . ...... . 21

2 Table 1 - Total Annual Costs for O&M in the 9 Sub-Sectors . . . . . 22Table 2 -Water Charge Rates . . . . . . . . .. . . . . . . . . 23Table 3 - Annual O&M Costs and Annual Water Charges in the

9 Sub-Projects . . . . . . . . . . . . . . . . 1 . . . . 24

3 Table 1 - Exchange Rates, Deflators, Inflators . . . . . . . . . . . 25Table 2 - Financial and Economic Prices for the Main Products . . . 26Table 3 - Mostister- Economic Cash Flow . * . . . . . . . .. 27Table 4 - Calmatui -Economic Cash Flow . . . . . . . . . . ... 28Table 5 - Covurlui- Economic Cash Flow . . . . . . ... . . .. 29Table 6 - Bucaani -Economic Cash Flow . . . . . . . . . . . . . . . 30Table 7 - Buzau - Economic Cash Flow . . . . . . . . . . . . . . . . 31Table 8 - Siret - Economic Cash Flow . . . .. . . . . . . . . . . . 32Table 9 - Prut - Economic Cash Flow . . . . . . . . .. .0. . . . . 33Table 10- Caracal - Economic Cash Flow . . . . . . . . . . . . . . . 34Table 11- Titu - Economic Cash Flow . . . . . . . . . . . . . . . . 35

IBRD 13933, 13934, 14577, 15176,15177, 15178, 15407, 15408


ROMANIA



PREFACE

This is the Project Performance Audit Report (PPAR) of four irriga-tion projects in Romania, for which Loans 1670-RO, 1795-RO, 1938-RO and 1971-ROfor a total amount of US$315.0 million were approved respectively in March 1979,January 1980, December 1980 and April 1981. The loans were closed on schedulein June 1986, December 1987, June 1988 and June 1986 respectively. The loanswere fully disbursed, except the BBSP for which an amount of US$1.0 million wascanceled. The projects were designed to provide irrigation and drainage for about600,000 hectares in 14 provinces in the southern and eastern parts of thecountry.

The PPAR is based on the four Staff Appraisal Reports and PresidentReports, the Loan documents, project files, discussions with Bank staff and theProject Completion Report (PCR) issued by the former Europe, Middle East andNorth Africa Region in April 1990.

Following the resumption of relations between the country and theBank, an OED mission visited Romania in June-July 1991, three to five years afterloan closing. The mission discussed the effectiveness of the Bank's assistancewith officials of the Ministry of Agriculture and Food, the Agricultural Bank,and the Department of Land Reclamation at the national and provincial levels.The mission also interviewed a number of farmers, and managers of commercialcompanies, mechanization centers and research stations. Their kind cooperationand valuable assistance in the preparation of this report is gratefullyacknowledged.

The PPAR elaborates on the main reasons for mediocre performance ofthe projects: the sharp decline in world agricultural prices, the underestimationby the Bank of the political and economic constraints inherent in the regimeprevailing at the time of project appraisal and implementation and the pressurefor lending to irrigation on the part of both the Government and the Bank.

The draft PPAR was sent to the Borrower for comments but none were

received.


ROMANIA

MOSTISTEA AND CALMATUI IRRIGATION AND DRAINAGE PROJECT

(LOAN 1670-RO)

BASIC DATA SHEET

KEY PROJECT DATAAPPRAISAL ACTUAL AS 2 OFESTIMATE ACTUAL OR APPRAISAL

ESTIMATED ACTUAL ESTIMATESTotal Project Cost (US$ million) 409.2 397.5 97.0Total Project Cost (lei million) 7,364.5 6,539.0 89.0Loan Amount (US$ million) 70.0 70.0 100.0

Date Board Approval 03/20/79Loan Agreement Date 04/16/79Date Effectiveness 07/31/79 07/16/79 100.0lDate Physical Components Completed 12/31/85 12/31/88 153.0.1Closing Date 06/30/86 06/30/86 100.0lEconomic Rate of Return (2) 15 8.3Institutional Performance good fairTechnical Performance good fair

STAFF INPUTV'FY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 TOTAL

Identification/Prep. 5.5 17.4 -- -- -- -- -- -- -- -- -- 22.9Ap.vraisal -- 20.0 46.6 -- -- -- -- -- -- -- -- 66.6Negotiations -- -- 0.9 -- -- -- -- -- -- -- -- .9Supervision -- 10.7 4.5 3.1 2.7 4.9 1.9 2.0 1.2 31.0

TOTAL 5.5 37.4 47.5 10.7 4.5 3.1 2.7 4.9 1.9 2.0 1.2 121.4

CUMULATIVE DISBURSEMENTSFY80 FY81 FY82 FY83 FY84 FY85 FY86

Appraisal Estimate (US$ million) 17.9 47.3 61.0 68.0 70.0 70.0 70.0Actual (US$ million) 1.3 20.2 59.9 63.6 70.0 --- ---Actual as X of Appraisal Estimate (2) 7 42 98 94 100 100 ---Date of Final Disbursement -- -- -- -- -- Feb. 28, 1984 ---Principal Repaid as of 12/31/89 (US$ million) -- -- -- -- --- 70.0 ---

l1 Calculated in terms of months from date of Board approval.ki Input as staff weeks. Source: World Bank Planning and Budgeting Department.

- iv -

MISSION DATAMISSION STAFF DAYS PERFORMANCE RATING 1

DATES PERSONS IN FIELD SPECIALIZATIONS' STATUS TREND

Identification 04/77 2 4811 a,b ---- ----Preparation 08/77 2 6 a.b ---- ----

Appraisal 06/78 4 84 a,b,c,d ---- ----

Supervision 1 05/80 2 30,i a.,b 1 1Supervision II 04/81 2 3421 a,b 2 2Supervision III 05/82 2 26;i a,b 2 3Supervision IV 11/82 2 28*/ b,b 2 2Supervision V 05/83 2 26' b,b 2 1Supervision VI 10/83 2 12 a,b 2 2Supervision VII 04/84 2 18,1 a,c 1 1Supervision VIII 10/84 2 28;1 b,c 2 1Supervision IX 12/85 3 12;, a,b,b 2 2Supervision X 10/86 2 22 a,b 1 2

OTHER PROJECT DATA

Borrower Bank for Agriculture and Food Industry (BAFI)Guarantor The Socialist Republic of RomaniaExecuting Agency Ministry of Agriculture and Food Industry (MAIA)

Fiscal Year of Borrower January 1 to December 31Currency Name (abbrev.) lei (lei)Currency Exchange Rate (US$ 1 lei)

Appraisal Year Average US$1.00 - lei 18.0Intervening Years Average US$1.00 - lei 16.2Compietion Year Average US$1.00 = lei 14.41990 US$1.00 = lei 22.4

Follow-on Proiect

Name Covurlui Irrigation ProjectLoan Number 1795-ROLoan Amount (US$ million) 90.0Date of Loan Agreement April 08, 1980

it Specialists: a - economist, b - engineer, c - agriculturist, d - drainage specialist.Status: 1 - problem free of minor problems, 2 - moderate problems, 3 - major problemTrend: 1 improving, 2 w stationary, 3 - deteriorating.

5 Includes staff days in field spent concurrently on supervision/preparation of other ongoingprojects.


ROMANIA

COVURLUI IRRIGATION PROJECT

(LOAN 1795-RO)

BASIC DATA SHEET

KEY PROJECT DATAACTUAL AS % OF

APPRAISAL ACTUAL OP APPRAISALESTIMATE ESTIMATED ACTUAL ESTIMATES

Total Project Cost (US$ million) 354.6 317.7 89.0Total Project Cost (lei million) 6,384.1 5,263.0 82.0Loan Amount (US$ million) 90.0 90.0 100.0

Date Board Approval 01/22/80Loan Agreement Date 04/08/80Date Effectiveness 07/08/80 07/08/80 100.0,Date Physical Components Completed 12/31/87 12/31/91 150.0,Closing Date 12/31/87 12/31/87 100.0;Economic Rate of Return (2) 14 5.5Institutional Performance good fairTechnical Performance good fair

STAFF INPUTlFY77 FY78 FY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 TOTAL

Identification/Prep. 0.8 20.3 4.0 -- -- -- -- -- -- -- -- 25.1Appraisal -- 7.0 16.0 -- -- -- -- -- -- -- -- 23.0Negotiations -- -- -- 4.0 -- -- -- -- -- -- -- 4.0Supervision -- -- -- 1.6 8.4 2.8 2.5 4.1 1.0 2.8 3.3 26.5

TOTAL 0.8 27.3 20.0 5.6 8.4 2.8 2.5 4.1 1.0 2.8 3.3 78.6

CUMULATIVE DISBURSEMENTSFY81 FY82 VY83 FY84 FY85 FY86

Appraisal Estimate (US$ million) 12.0 30.0 57.0 70.0 80.0 90.0Actual (US$ million) 4.1 43.8 67.1 84.5 90.0 90.0Actual as % of Appraisal Estimate (%) 34 146 118 121 113 100Date of Final Disbursement -- -- -- -- --- Dec. 20, 1984Principal Repaid as of 12/31/89 (US$ million) -- -- -- -- --- 90.0

t Calculated in terms of months from date of Board approval.kl Input as staff weeks. Source: World Bank Planning and Budgeting Department.

- vi -

MISSIOn DATAMISSION STAFF DAYS PERFORMANCE RATING1 lIDATES PERSONS IN FIELD SPECIALIZATION1' STATUS TREND

Identification 05/77 2 42 a,b ---- ----Preparation 08/78 2 6 a.b ---- ----

Appraisal 06/79 3 63 a,b,c,d ---- ----

Supervision I 07/80 1 06*1 b 1 2Supervision II 05/81 2 12;/ a,b 3 2Supervision III 06/82 2 26;/ b,c 2 2Supervision IV 12/82 2 28.- a,b 2 2Supervision V 05/83 2 26 1 b,b 2 1Supervision VI 10/83 2 24-. a,b 1 2Supervision VII 04/84 2 160/ a,b 2 2Supervision VIII 10/84 2 24-1 a,b 2 1Supervision IX 12/85 3 12;1 a,b,b 3 --Supervision X 11/86 2 18 a,b 1 2

OTHER PROJECT DATA


Fiscal Year of Borrower January 1 to December 31Currency Name (abbrev.) lei (lei)Currency Exchange Rate (US$ 1= lei)

Appraisal Year Average US$1.00 - lei 18.0Intervening Years Average US$1.00 = lei 16.2Completion Year Average US$1.00 = lei 14.41990 US$1.00 - lei 22.4

Follow-on Project

Name BBSP Irrigation ProjectLoan Number 1938-ROLoan Amount (US$ million) 75.0Date of Loan Agreement January 09, 1981

sI Specialists: a - economist, b - engineer, c = agriculturist, d = drainage specialist.Status: I - problem free of minor problems, 2 - moderate problems, 3 - major problems;Trend: 1 improving, 2 = stationary, 3 - deteriorating.

- vii -


ROMANLIA

BUCSANI-BUAU-SIR '-PRUT (BBSP) IRRIGATION PROJECT

A 1938-RO)

BASIC DATA SHEET


APPRAISAL ACTUAL OR APPRAISALESTIMATE ESTIMATED ACTUAL ESTIMATES


Date Board Approval 12/23/80Loan Agreement Date 01/09/81Date Effectiveness 04/30/81 10/14/81 106.8!'Date Physical Components Completed 12/31/87 12/31/88 114.3aVClosing Date 06/30/88 06/30/88 100.0alEconomic Rate of Return (%) 22 6.2Institutional Performance good fairTechnical Performance good fair

STAFF INPUTVFY79 FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 FY88 TOTAL

Identification/Prep. 0.6 13.0 -- -- -- -- -- -- -- -- 13.6Appraisal --- --- 44.7 -- -- -- 44.7Negotiations --- --- 4.9 -- -- -- -- -- -- -- 4.9Supervision -- 3.8 4.7 4.2 6.3 1.4 2.9 2.9 .1 26.3

TOTAL 0.6 13.0 53.4 4.7 4.2 6.3 1.4 2.9 2.9 .1 89.5

CUMULATIVT DISBURSEMENTSFY82 FY83 FY84 FY85 FY86 FY87

AppraisaA Estimate (US$ million) 18.0 38.0 53.0 63.0 69.0 75.0Actual (US$ million) 7.1 41.4 56.5 65.8 73.6 74.0Actual as 2 of Appraisal Estimate (2) 39 109 107 104 107 98Date of Final Disbursement -- -- -- -- --- June 30, 1987Principal Repaid as of 12/31/89 (US$ million) -- -- -- -- --- 74.0

A Calculated in terms of months from date of Board approval.ki Input as staff weeks. Source. World Bank Planning and Budgeting Department.

viii -

MISSION DATAMISSION STAFF DAYS PERFORMANCE RATINGIDATES PERSONS IN FIELD SPECIALIZATIONS' STATUS TREND

Identification 02/79 4 84 a,b,c,d ---- ----

Preparation 10/79 2 6 a.b ---- ----

Appraisal 04/80 4 88 a,b,c,d ---- ----

Supervision I 05/81 2 2411 b,c 1 2

Supervision II 05/82 2 26*/ a,b 2 3Supervision III 11/82 2 28;/ b,b 2 2

Supervision IV 05/83 2 36;i b,b 2 1

Supervision V 10/83 2 24- a,b 1 2

Supervision VI 04/84 2 17 a,b 1 2

Supervision VII 10/84 2 Se b,c 1 2

Supervision VIII 10/85 3 24*. a,b,c 1 2

Suprrvision IX 01/86 2 24*/ b,c 1 2

Supervision X 11/86 2 127 b,c 1 2

OTHER PROJECT DATA

Borrover Bank for Agriculture and Food Industry (BAFI)

Guarantor The Socialist Republic of Romania

Executing Agency Ministry of Agriculture and Food Industry (MAIA)


Appraisal Year Average US$1.00 - lei 15.0

Intervening Years Average US$1.00 = lei 14.7Completion Year Average US$1.00 - lei 14.4

1990 US$1.00 = lei 22.4

Follow-on Project

Name Caracal Titu Irrigation ProjectLoan Number 1971-RO

Loan Amount (US$ million) 80.0Date of Loan Agreement June 24, 1981

1l Specialists: a - economist, b - engineer, c - agriculturist, d - drainage specialist.

Status: I - problem free of minor problems, 2 - moderate problems, 3 - major problems;Trend: 1 i mproving, 2 = stationary, 3 - deteriorating.

Al Includes staff days in field spent concurrently on supervision/preparation of other ongoingprojects.

- ix -

PROJECT PERFORMANCE AUDIT REPORTRONANIA

CARACAL TITU IRRIGATION PROJECT

(LOAN 1971-RO)

BASIC DATA SHEET


APPRAISAL ACTUAL OR APPRAISALE',TIMATE ESTIMATED ACTUAL ESTIMATES


Date Board Approval 04/21/81Loan Agreement Date 06/24/81Date Effectiveness 07/31/81 03/26/82 104.81/Date Physical Components Completed 12/31/85 12/31/88 164.3,1Closing Date 06/30/86 06/30/86 100.0-.Economic Rate of Return (%) 20.0 3.0Institutional Performance good fairTechnical Performance good fair

STAFF INPUTh'FY80 FY81 FY82 FY83 FY84 FY85 FY86 FY87 TOTAL

Identification/Prep. 2.3 16.9 -- -- -- -- -- --- 19.2Appraisal -- 33.1 -- -- -- -- -- --- 33.1Negotiations -- -- 2.6 -- -- -- -- --- 2.6Supervision -- 0.6 5.0 7.3 3.7 1.7 1.7 1.0 21.0

TOTAL 2.3 50.6 7.6 7.3 3.7 1.7 1.7 1.0 75.9

CUMULATIVE DISBURSEMENTSFY82 FY83 FY84 FY85 FY86 FY87

Appraisal Estimate (US$ million) 2.0 24.0 45.0 66.0 76.0 80.0Actual (US$ million) -- 12.6 54.4 72.2 80.0 80.0Actual as Z of Appraisal Estimate (2) -- 52 123 109 105 100Date of Final Disbursement -- -- -- --- Mar. 30, 1986Principal Repaid as of 12/31/89 (US$ million) -- -- - -- -- 80.0

it Calculated in terms of months from date of Board approval.ki Input as staff weeks. Source: World Bank Planning and Budgeting Department.

MISSION DATAMISSION STAFF DAYS PERFORMANCE R&TING1lDATES PERSONS IN FIELD SPECIALIZATIONS' STATUS TREND

Identification 02/80 4 841 a,b,c,d ---- ----Preparation 06/80 2 6 a.b ---- ----

Appraisal 10/80 4 88 a,b,c,d ---- ----

Supervision 1 05/82 2 26,/ a,b 2 3Supervision 11 11/82 2 28; b,b 2 2Supervision III 10/83 2 34,; a,b 1 2Supervision IV 04/84 2 52, a,b 1 2Supervision V 10/84 2 24 b,c 1 1Supervision VI 12/85 2 29 a,b,b 2 2Supervision VII 11/86 2 22,/ a,b 2 1

OTHER PROJECT DATA



Appraisal Year Average US$1.00 - lei 15.0Intervening Years Average US$1.00 = lei 14.7Completion Year Average US$1.00 = lei 14.41990 US$1.00 = lei 22.4

l Specialists: a - economist, b - engineer, c - agriculturist, d = drainage specialist.Status: I :.problem free of minor problems, 2 - moderate problems, 3 = major problems;Trend: 1 improving, 2 = stationary, 3 - deteriorating.

it Includes staff days in field spent concurrently on supervision/preparation of other ongoingprojects.

- xi -


ROMANIA



EVALUATION SUMMARY

Introduction cessed production. The four projects includednine subprojects, spread over fourteen provinces.

1. Bank support to irrigation in Romania has Main components included the construction ofconsisted of eight loans totalling US$545.0 irrigation and drainage infrastructure, valleymillion, made between 1975 and 1981 to develop training, soil erosion control and the procurementabout 1.1 million hectares, or approximately one of maintenance equipment and agriculturalthird of the total irrigated area of the country. The machinery.four projects under review were the fifth, sixth,seventh and eighth in the series. Implementation Experience

2. At the time of project identification and 4. In each case, construction started soonpreparation, investments absorbed about 30% of after loan effectiveness but slowed downthe Romanian national income, which was growing substantially after 1981 when Romania, faced withat an impressive annual rate of about 8%. economic problems, responded with a sharp cut-Although industry was the leading sector of the back in investments, imports and growth. As aeconomy, agriculture still accounted for about result, execution of all four projects was consider-15% of the national income and 31% of the labor ably delayed by budgetary constraints, andforce. However the growth of Romanian agri- shortages of equipment, materials and fuel.culture was constrained by low and erratic rainfalland shortages of equipment and materials. 5. In contrast the Bank funds were disbursedFollowing the collectivization measure introduced ahead of schedule as they were used, as planned,after the second world war, agricultural production for the purchase of equipment and machinery. Atwas dominated by Agricultural Production the time of Loan closing, in 1986-87, only 28% ofCooperatives and State Enterprises with individual irrigation works and 24% of the drainage systemfarmers owning only 9% of the total agricultural were completed. In 1987, Romania broke rela-area. tions with the Bank and paid back in advance all

outstanding loans. In the absence of informationProject Objectives regarding the advancement of works after the loan

closing, the Bank's PCR, issued in 1990, stated3. The main objectives were to increase agri- that based on experience with previous projects,cultural production and raise labor productivity the irrigation and drainage infrastructure of theseover a project area of about 600,000 hectares. four projects had probably been completed.This, in turn was expected to increase bothinternal food consumption and foreign exchange 6. In 1990, a revolution took place inearnings through exports of primary and agropro- Romania. The new government resumed relations

- xii -

with the Bank and introduced sweeping changes in below the appraisal estimates of 15%, 16%, 22%the economy, including the privatization of most and 19.5% respectively. Long construction periodstate entities. In the agricultural sector, the and delayed benefits, lower production than antici-government abolished the collectivist system and pated and high operation costs are partly respon-initiated a land privatization program to be sible for such mediocre performance. The maincompleted by the end of 1991. reason, however, is a sharp decline in the project

commodity prices. With the same prices as thoseProject Results projected at appraisal, ERRs would be close to or

above 10%7. At the time of audit, in July 1991, theplanned irrigation infrastructure was 82% complete Sustainabilitybut the drainage system, valley training anderosion control works were only partly imple- 11. The on-going land redistribution ismented. Project costs were slightly lower than expected to have, in the long run, a positive effectexpected, mostly due to incompleteness of works. on project results because of the much higherThe irrigable area amounted to about 490,000 ha, motivation of farmers than in the previousagainst 600,000 projected at appraisal and con- collective system. In the short run, however, thestruction was still underway on about 40,000 ha. land redistribution will cause difficulties because,

in many cases, it does not take into consideration8. In the nine subprojects, the design of the the layout of the irrigation network. Other shortirrigation and drainage systems has proved term difficulties will emerge from the govern-adequate and the quality of civil works is generally ment's rapid disengagement from a number ofgood. In contrast, electromechanical equipment is agricultural services combined with the farmers'of poor quality, with frequent breakdowns of reluctance to pay for such services, and thepumps and the operation of the irrigation infra- farmers' shortage of working capital. As a result,structure is hampered by shortages of power. In stagnation or slight decline in production may beaddition the portable irrigation equipment is only expected during the two or three coming years.70% complete. The overall operation and main-tenance cost of the irrigation systems is high due Findings and Lessonsto the need to lift water to terraces and plateausresulting in high energy requirements in most 12. Project experience has confirmed OEDsubprojects. findings that irrigation projects, which were

economically justifiable in the late 1970s through9. Agricultural performance has been lower the production of cereals and oilseeds, are muchthan anticipated due to a relatively small less viable in the 1990s after the sharp decline inproportion of high value crops in the cropping agricultural prices unless the cropping system ispattern, shortages of some agricultural inputs, intensified, yields are optimized and operationunder-utilization of irrigation water, frequent costs are considerably reduced. In this regard, thewater-logging and shortages of labor as a large rigidity of the previous governmental system ifraction of the male population is now working in Romania has been partly responsible for the poorfactories. As a result, yields have been about 20% adaptation of the projects to the new economiclower than expected at appraisal. situation.

10. The economic rates of return of the four 13. Although the engineering aspects of theprojects were re-estimated by the audit at 8.3% for projects were correctly appraised, the Bank under-Mostistea-Calmatui, 5.5% for Covurlui, 6.2% for estimated a number of constraints inherent in theBBSP and 3.0% for Caracal-Titu, significantly political and economic system prevailing in

- xiii -

Romania at the time of project appraisal and farming system and low motivation of farmersimplementation. It has become apparent that the were also considerably underestimated by theconsiderable investments in irrigation supported by Bank. Project experience has shown thatthe Bank were actually motivated by political unexpected upstream and downstream factors mayconsiderations rather than economic reasons. The endanger project success in centrally plannedpace of irrigation development quickly exceeded economies.the financial resources of the country and theabsorptive capacity of the Project Authorities. 14. While Romania's departure from the BankDespite the apparent success of Romanian in 1987 curtailed Bank responsibilities at thatindustry, its pumps, motors and electro-mechanical point, the projects' financing arrangements wereequipment proved obsolete and of poor quality already inhibiting certain Bank activities. Thosewith adverse effects on project performance and arrangements, whereby the Bank funds were fullyproductivity. The availability and economic cost disbursed and the Loans were closed ahead ofof energy was not adequately estimated. The physical project completion, deprived the Bank ofdisinformation practices imposed by the previous its full supervision and technical assistance role.regime resulted in unreliable data on yields and Project experience showed the need to link dis-production. Other constraints to agricultural bursements in large infrastructure projects to thedevelopment, including a quasi-permanent shortage physical progress of civil works, even when Bankof equipment, materials and fuel, the distorted funds are expected to be used only for thefarfgate prices, the inefficiency of the collective procurement of equipment and machinery.


ROMANIA


BUCSANI-BUZAU.-SIRET-PRUT (BBSP) IRRIGATION PROJECT (LOAN 1938-RO), ANDCARACAL-TITU IRRIGATION PROJECT (LOAN 1971-RO)

I. BACKGROUND

A. The EconMy

1.01 Romania covers an area of about 237,000 km2 , and has a populationof about 23.3 million, growing at an average rate of 0.5%. At the end of the1970s, when the four projects under review were identified and prepared, GNPper capita was estimated at US$1,900. In 1990, however, the Bank re-estimatedthe Romanian GNP per capita at US$1,600, a significant decline over the lastdecade.

1.02 At the end of 1972, when Romania became a member of the WorldBank, national income was growing at an impressive annual rate of about 9%according to official statistics. Over the past two decades, Romania pursueda development strategy designed to industrialize a primarily agrarian economy.Investments absorbed 35% of the national income. This strategy was carriedout through a system of comprehensive central planning, guided by the Commu-nist Party and government authorities. At the end of the 1970s, industrybecame the leading sector of the economy, accounting for about 50% of GDP and34% of the labor force. Conversely, agriculture's share of national incomedeclined from 28% in 1950 to 15% in 1979 and the proportion of the total laborforce employed in agriculture decreased from 74% to 31%.

1.03 During the 1976-1980 Five-Year-Plan, when the projects wereidentified and prepared, the expansion of the Romanian economy slowed downsignificantly, due to the emergence of internal and external constraints,particularly insufficient productivity and efficiency of investments, in-ability of the economy to bring new capacity into operation as planned, adeterioration in the terms of trade aad a world energy crisis. In November1979, the Twelfth Congress of the Communist Party called for lower growth andinvestment rates and better allocation of resources between consumption andinvestment. These policy changes had important effects on the implementationof the four projects under review.

B. The Apricultural Sector

1.04 Romanian agriculture benefits from relatively good soils andclimatic conditions. The Plains Zone, located in the western, southern andeastern part of the country, is especially well endowed with fertile soils andwater resources; it contains about 53% of total arable lands, and irrigationis concentrated in this major grain belt. At the end of the 1970s, agricul-ture continued to be a key sector in the Romanian economy, providing almostall of the nation's food and significant foreign exchange earnings.

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1.05 At the time of project appraisal and following the collectivi-zation measures introduced after the second world war, agricultural productionwas dominated by Agricultural Production Cooperatives (CAPs) and State Agri-cultural Enterprises (IASs). In 1979, 87% of cereals was produced by thesocialist sector. The total area under CAPs was 9.1 million hectares, or 61%of all agriculture land, LASs farmed 2.0 million hectares equivalent to 14% ofagricultural land. The average size of CAPs was 2,080 ha, with 530 members;that of IASs was 5,100 ha, with a labor force of 550. Other state agricultureunits, including research stations, covered 2.5 million ha, or 16% of agricul-tural land. Individual farmers only owned about 9% of the total agriculturalarea and most of their farms were in the more mountainous regions.Government-owned agricultural mechanization stations (SMAs) played a majorrole in providing machinery services. At the national level, the main stateinstitution was the Ministry of Agriculture and Food Industry (MAFI),responsible for the preparation and implementation of the Five-Year-Plan foragriculture. Marketing was organized nationally under MAFI, with directoratesresponsible for marketing and processing specific commodities. The Statesector also had a total monopoly on foraign trade and agro-processing.

1.06 Although considerable progress had been made to develop agricul-ture in Romania, the sector remained relatively undeveloped in 1979. Crop andlivestock yields were still appreciably lower than those obtained in similarconditions in other countries and labor productivity was notably low. Seriousshortages of machinery and farm inputs were experienced. In addition, govern-ment policy had given greater emphasis to development of IASs rather thanCAPs. For the 1981-85 Plan, during which the projects were to be implemented,the main thrust of agricultural development strategy was to increase crop andlivestock yields through the use of more efficient techniques, increased useof agricultural inputs, and large investments in irrigation. New economicmeasures also involved changes in financial flows between the enterprises andthe state budget. Enterprises were to retain a greater part of their profitsfor distribution between funds for investments, working capital and profit-sharing. The new measures were a conservative attempt to strike a balancebetween extended enterprise autonomy and a firm belief in centralized planningand control.

C. The Irrigation Subsector

1.07 From 1960 to 1979, total irrigated area in Romania was expandedfrom about 0.2 million to 2.2 million ha. Another 700,000 ha were expected tobe brought under irrigation by the end of 1980. Government plans were toirrigate 3.7 million ha (out of a potential of about 5.5 million) by 1985.Investments in irrigation and drainage absorbed respectively 40% and 20% oftotal investments in agriculture in the 1971-75 and 1976-80 Five-Year-Plans.Irrigation has great importance for Romanian agriculture because the summermoisture deficit is the aost serious limiting factor to production over largeareas of the most fertile soils, where annual rainfall (400-600 mm) is oftenerratic and badly distributed.

1.08 Irrigation works have been concentrated in about 100 largeschemes, using water from the Danube and its tributaries. Lhe main irrigation

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system is sprinkler. Most of the water is lifted from the rivers to rela-tively high elevations through a series of pumping stations and a system ofopen canals, pressure pumps and buried pipes. The Land Reclamation Department(DIFCA) of the Ministry of Agriculture is responsible for the design andconstruction of all irrigation and drainage schemes in Romania.

1.09 Bank assistance to the irrigation subsector started in 1975. Fourloans, totalling US$ 230.5 million, supported the construction of the Giurgiu-Razmiresti, Rasova-Vederosa, Ialomita-Calmatui and Viisaora IrrigationProjects. These loans were approved between 1976 and 1978 and closed in theearly eighties. OED Reports, issued in 1981 and 1984 concluded that theprojects had been successfully implemented. Agricultural performance wasconsidered satisfactory. Project ERR was revised upwards to 19% (13% atappraisal) in the case of the Giurgiu-Razmiresti project and slightly lower(14% versus 16%) for the other projects due to a decline in world agriculturalprices during project execution. The four loans under review, approved in the1979-81 period, were the fifth, sixth, seventh and eighth for the irrigationsubsector. They increased the Bank's contribution to the subsector toUS$545.0 million, representing 35% of the Bank's allocation for agriculture inRomania. The area developed by the eight Bank-supported projects covered 1.1million ha, or about a third of the total irrigated area of the country.

D. The Proiects

1.10 The four projects were prepared by DIFCA between 1978 and 1980 andappraised by the Bank in 1979, 1980 and 1981. The projects included nine sub-projects, totalling about 600,000 ha, spread over fourteen Judets (provinces).

1.11 The Mostistea-Calmatui Irrigation and Drainage Project consists oftwo irrigation and drainage schemes: Mostistea with a total command area of158,540 ha, located about 20 km east of Bucharest; and Calmatui, with adrainage system covering 66,930 ha of which approximately 24,000 ha would beirrigated in the Buzau and Braila Judets at about 150 km northeast ofBucharest (see maps).

1.12 The Covurlui Irrigation Proiect includes an irrigation system of141,700 ha by pumping water from the Danube in the Judet of Galati, in theeastern part of the country.

1.13 The BBSP Proiect consists of four irrigation and drainage schemes:Bucsani, 36,800 ha, by pumping water from the Olt River in the southern partof the country; Buzau, 59,700 ha, located in the Buzau and Prahova Judets, anddrawing water from the Buzau River; Siret, 15,700 ha and Prut, 30,000 ha, bothin the Galati Judet and adjacent to the Covurlui Project.

1.14 The Caracal-Titu Irrigation Proiect consists of two schemes:Caracal, 88,000 ha, on the west bank of the Olt River, and Titu, 42,700 ha,located in the Arges river basin at about 50 km northwest of Bucharest.

1.15 The main components (detailed in Chapter III and the audit files)of the four projects included the construction of irrigation and drainage

infrastructure, valley training, erosion control works, and the procurement ofmaintenance equipment and agricultural machinery. The total cost of the fourprojects was estimated at US$1,518.0 million, an average of US$380.0 millionper project. Project works were expected to be completed in 5 to 7 years.Major crops were to be: maize (51%), wheat (17%), alfalfa (5%), sunflower(7%), fruits and vegetables (5%), sugarbeet (6%) and soybeans (6%). DIFCA wasto be responsible for project execution. Because of the low foreign exchangecomponent of the projects, the Bank loans, totalling US$315.0 million, onlyrepresented about 20% of the total project costs. Bank funds were to bedisbursed for the purchase of equipment, materials and spare parts to beprocured through international competitive bidding.

E. Proiect Implementation

1.16 Construction started soon after loan effectiveness, but sloweddown substantially after 1981 due to a combination of factors: budgetary con-straints; shortages of equipment, fuel and materials; technical problems andinsufficient absorptive capacity of the DIFCA. Faced with economic problems,Romania responded with a sharp cutback in imports, investments and growth. Asa result, construction proceeded extremely slowly and some work sites weretemporarily abandoned. In contrast, the Bank funds were quickly disbursed asthey were used, as planned, for the purchase of equipment and machinery. Forall the four projects, the loans were fully disbursed ahead of schedule. Bythe time of the closing date in 1986, only 28% of the irrigation works and 24Zof the drainage systems were completed.

1.17 In 1987, the Romanian government broke relations with the Bank.Between May 1988 and November 1989 the government paid back in advance alloutstanding loans, including those related to the present projects. As aresult, no information was available (until relations were resumed at the endof 1990) as to the advancement of works and the economic impact of the proj-ects. The Project Completion Report, prepared by the Bank in April 1990wi+hout field visit, was not able to assess the results of the projects. Itstated, however, that based on experience with previous irrigation projects inRomania, the projects' irrigation and drainage systems were probably satis-factorily completed. Nevertheless, no project ERR was reestimated by the PCRas actual data on total investment costs, yields and production were notavailable at that time.

F. New Developments Since Loan Closing

1.18 In the mid 1980s, the level of agricultural output declinedslightly in Romania, reflecting structural rigidities in a number of keyareas: no change in the cropping pattern and land use, low level of inpututilization and yields, and no progress in land privatization. The decline inproduction was accompanied by a gradual reduction (and a complete ban in 1990)of agricultural exports and an increase in imports.

1.19 In 1990, a revolution took place in Romania, followed by sweepingchanges in the economic system. For the agricultural sector, the program ofreforms includes: the divestiture from and privatization of most state

entities; the liberalization of rural markets to promote a largely self-financed agricultural sector; and the liberalization of the country's agricul-tural prices and foreign trade. The new government abolished the productioncooperative system and initiated a huge land privatization program, to becarried out in 1991 and completed if possible in October of the same year,before the beginning of the new cropping season. The program consists inredistributing about 15 million ha to approximately six million former land-owners and cooperative members. The maximum size of individual farms has beenset at 10 ha. State farms are also being dismantled into smaller commercialunits of 100 to 300 ha, to be later privatized or rented out to entrepre-neurial farmers. The government services, such as marketing of inputs andoutputs, agricultural machinery and water distribution are sharply curtailed,or privatized.

1.20 After 40 years of socialist agriculture, this process of decollec-tivization, abolition of the central planning system and adoption of freemarkets has, and will continue to have during the coming years, a considerableeffect on the agricultural and economic performance of the four projects underreview. At the time of the audit mission, in July 1991, land redistributionto former landowners and cooperative members was under way in the four projectareas under the supervision of regional committees; farmers were being workingindividually on their plots; state fArms and mechanization centers were beingtransformed into private commercial enterprises; and the government disengage-ment from marketing and processing activities was becoming effective both atthe national and local levels. The Project Authority was split intoautonomous agencies, many of them being privatized.

II. PROJECT STATUS AT AUDIT

A. Completion of Civil Works

2.01 After the loan closing, project construction has continued to beslow due to the economic problems of the country and shortages of equipmentand materials. Since the end of 1990, implementation of the land redistribu-tion program in the four projects and drastic institutional changes in thecountry have contributed to reducing even further the progress of construc-tion. At the time of the audit mission, in July 1991, none of the fourprojects was fully completed. Overall, the planned irrigation infrastructurewas 82% complete and operational, covering about 490,000 ha against 600,000projected at appraisal. In contrast a significant portion of the drainageworks (about 30% of the surface and 80% of the sub-surface systems) was notyet started or left incomplete. Incompleteness of other types of investments(land reclamation and valley training) were also noted. The degree of workcompletion varies, however, from one subproject to another as shown by thefollowing table and detailed in Annex 1.

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Completion of Civil Works (%)

Subproject Irrigation Drainage Land Recl. Valley trainingsystem surf. sub-surf. erosion

Mostistea 95 45 0 26 --

Calmatui 114 111 34 3 --

Covurlui 67 86 0 132 82Buscani 93 69 0 90 47Buzau 72 58 8 0 52Siret 87 53 0 88 0Prut 32 114 76 81 --

Caracal 86 54 1 96 51Titu 102 70 11 -- --

2.02 In most projects, irrigation works covering about 40,000 ha were

still under way in 1991, yet at a very slow pace due to the government finan-cial constraints and policy changes. In the Covurlui Project, an area ofabout 57,000 ha located at a relatively high elevation has not been equippedas irrigation depends on the construction of Suhurlui Dam which is no longerconsidered a priority by the government. Construction of the surface drainagesystem came to a complete standstill partly due to the reluctance of indi-vidual farmers to accept land losses resulting from the construction o4 thedrainage canals. The sub-surface drainage proved more costly than antici-pated; it has not been completed or even started in some subprojects and hasbeen substituted in many instances by the less costly open drainage. Otherproject investments (valley training, land reclamation and erosion controlworks) are no longer considered a priority today by the Project Authority. Insummary, with the exception of the irrigation systems, which are expected tobe 85-90% complete by 1994, other types of investments will probably be leftunfinished or not implemented at all under these projects.

B. Project Costs

2.03 Project costs including the on-going irrigation works mentionedabove but excluding the unfinished drainage and other components are expectedto reach on average about 95% of appraisal estimates with some variation (78to 140%) from one subproject to another as shown in the following table:

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Estimated Project Costs

M.LEI M.US$Appraisal Actual Appraisal Actual

Mostistea-Calmatui 7,365 6,539 409.2 397.5(Mostistea) (5,981) (5,096) (332.3) (312.0)(Calmatui) (1,384) (1,443) (76.9) (85.5)

Covurlui 6,384 5,263 355.0 317.7

BBSP 5,315 6,221 354.5 361.5(Buesani) (1,025) (1,110) (68.5) (63.2)(Buzau) (2,686) (2,844) (179.0) (175.7)(Siret) (683) (582) (45.6) (35.7)(Prut) (921) (1,685) (61.4) (86.9)

Caracul-Titu 5,689 5,408 379.3 315.1(Caracal) (3,522) (3,494) (234.8) (202.1)(Titu) (2,167) (1,914) (144.5) (113.0)

Total Four Projects 24,753 23,431 1,498.0 1,392.0

2.04 The lower costs than anticipated at appraisal are mostly due toincompleteness of project works. Had projects been fully executed, the costoverrun would have been at least 10 or 20% due mostly to considerable delaysin project construction. Of note, however, is the low inflation rate of theLei during project execution (except in 1991) and the relatively low invest-ment cost per equipped hectare (about US$3,100 equivalent) when compared tosimilar projects in other countries.

III. PERFORMANCE OF THE IRRIGATION AND DRAINAGE SYSTEMS

A. Desig

3.01 In the nine subprojects, the design of the irrigation and drainageinfrastructure was about the same: irrigation water is derived from theDanube River or its tributaries through main pumping stations or diversiondams. A conveyance system, consisting of main and secondary canals andrepumping stations, lifts water at gradually higher elevations to terraces andplateaus. Pressure pumping stations along the main and secondary canals feeda buried pipe distribution network equipped with hydrants for sprinklerirrigation of sectors varying from 1,000 to 3,000 ha. One hydrant serves anarea of about 5.76 ha through the rotation of mobile equipment over 6positions of 0.96 ha (24mx400m) each. The mobile equipment consists of 6

meter long aluminum pipes (diameter 100mm) equipped with 18 m. span

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sprinklers. Each sprinkler has a discharge of 0.8 1/, and an operatingpressure of 3.0 kg/cm2 allowing for water applications of 6.6 mm/h. CAPs andIASs are responsible for the purchase, operation and maintenance of theirmobile equipment.

3.02 The drainage system was to be constructed on about 60% of thetotal command area, varying in each subproject according to its topographicconditions, type of soil and water table level. It consists of open drainage(main and secondary open canals) and/or sub-surface drainage (ceramic tilesand collector drains). Saline and sandy land reclamation, erosion control andvalley training were planned in each project according to needs. Annex 1includes a brief description and main features of the major irrigation anddrainage infrastructure of the nine subprojects.

B. Current Status

3.03 As mentioned above, at the end of 1990 or about 10 years afterconstruction started, none of the nine subprojects has been fully completed.Nevertheless, the design of the irrigation and drainage infrastructure hasgenerally proved adequate and the quality of construction has been good withsome notable exceptions.

3.04 The quality of the civil works (dams and canals) is generallysatisfactory. In contrast, electromechanical equipment of the main andsecondary pumping/repumping stations and pressure pumping stations is of poorquality with frequent breakdown of pumps and motors. Electric pumps have beeninstalled in open air, without protection of any kind. Operation conditionsare inadequate, with strong voltage variations in the power network contri-buting to the deterioration of electromechanical equipment. In additionmaintenance has been poor and shortages of spare parts have been experienced.The design and quality of the sprinkler distribution system (isolating valves,hydrants and other accessories) are satisfactory. However, the portable equip-ment is only 70% complete because a number of CAPs have not yet purchasedtheir pipes and sprinklers. In addition shortages of aluminum have beenexperienced by pipe manufacturers. Surface drainage is incomplete but ade-quately designed; the underground tile drainage system is severely lacking insome areas which are adversely affected by water-logging or salinity or both.

C. Irrigation Performance Indicators

3.05 The water allocation and delivery is based on the arranged demandsystem whereby water distribution is scheduled every week according to thecropping pattern, climatic conditions and related water requirements. Allvariations in water demand are easily compensated by the accumulation capacityof the conveyance and secondary canal systems, all equipped with downstreamconstant level automatic control. This water allocation and delivery systemhas proved adequate.

3.06 The conveyance and distribution efficiencies are estimated by theaudit at 75% and 97% respectively, resulting in a conveyance and distributionefficiency of 73%. Fie]' efficiency is estimated at 74% and the overall water

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efficiency at 54% on average for the nine subprojects. Although significantlylower than expected--and largely over-estimated (78%)--at appraisal this waterefficiency remains satisfactory and could be significantly higher if breakdownof pumps and shortages of power were less frequent.

3.07 So far, water distribution has proved flexible, timely andequitable partly due to adequate project design and sound operational system,but also to the small number of water users including only large cooperativesand state farms. The situation may change drastically with the on-going landredistribution and the subsequent increase in water users (Chapter IV). Onthe other hand, water distribution has been quite unreliable due to the abovementioned shortages of power and breakdown of pumps.

D. Operation and Maintenance

3.08 Operation and maintenance (O&M) is the responsibility of the pro-vincial irrigation districts of the Land Reclamation Department. The districtincludes on average three sectors covering 5,000 to 15,000 ha each. The per-manent staffing of the districts involved in the nine subprojects varies from200 to 500 and decreased overtime due to budget constraints and the ongoinginstitutional reforms. Shortage of vehicles and O&M equipment are notable.Operation activities are relatively simple due to the well designed arrangeddemand water distribution system. Maintenance has been relatively light sofar as project works are still in the initial period of their useful life.

3.09 O&M costs have been estimated on the basis of data provided by thedistricts of the nine subprojects. During the last three years, O&M costs inconstant 1990 prices varied form US$38.3 equivalent per hectare in theCalmatui subproject to US$154.8 in the Caracal subproject. Costs per pumpedvolume varied from US$ equivalent 18.7/1,000m3 in the Buzau subproject to138.0/1,000L_3 in Titu. (Table 1 in Annex 2). These wide variations gre dueto different energy utilization from one project to another. On averageenergy consumption is 0.3 Kwh/m 3 representing 30% of O&M costs. With the on-going price adjustment of electric power to reflect its market value, the costof energy is expected to represent up to 40 or 50% of the total O&M costs inthe near future. O&M cost may also vary significantly from one sector to theother within the same subproject according to the nature of the terrain(plain, terrace or plateau). In retrospect, the projects have been designedwith little consideration for the economic cost of energy and irrigation ishardly justifiable in some of the highest parts of the project areas (ChapterV).

E. Cost Recovery

3.10 Until 1989, O&M costs were recovered through water charges ofthree types levied on all CAPs and IASs using irrigation water: (i) a fixedannual charge per ha on the basis of crop grown; (ii) a fixed charge per habased on the type of farm (CAP or IAS); and (iii) a variable charge levied onthe volume of water used. Tables 2 and 3 in Annex 2 show the rates applied in1988 and 1989 and the actual O&M cost/recovery ratio which varied from about10% in Titu to 48% in Calmatui. It is worth noting, however, that substantial

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recovery was made by the Government from the purchase of commodities at lowfarmgate prices and export at higher world prices.

3.11 Water charges were abolished by the new government in 1990 butresumed in 1991 concurrently with an increase in farmgate prices. With theongoing government disengagement water charges are expected to cover 80% ofO&M costs in 1990 and 100% afterwards through water contracts between theproject authority and water users. However, in 1991, only a small proportionof water users accepted signing contracts (Chapter IV) while 0&M funding wassharply curtailed by the government resulting in decreasing maintenanceefforts.

F. Impact on the Environment

3.12 As originally designed, the projects were to have a beneficialimpact on the environment by reducing water-logging, soil salinity, floodingand soil erosion. Unfortunately, the drainage, land reclamation, erosioncontrol and valley training programs have been curtailed by about half, thusreducing substantially the project impact on the environment. Incompletenessof the drainage system in most subprojects may lead to increasing soilsalinity problems in some areas. In addition river pollution has been afrequent problem in Romania during the past years and two subprojects, Bucsaniand Caracal were adversely affected by industrial effluents during twoconsecutive cropping seasons.

IV. AGRICULTURAL PERFORMANCE

4.01 A striking feature of the four project areas is their excellentagricultural potential: flat plains and slightly undulating terraces, deep andfertile chernozem soils, and favorable climatic conditions for a variety ofannual and perennial crops. The main constraint to improved cropping patternand yields was low and erratic rainfall, which was to be overcome by the con-struction of the irrigation systems. Under the projects, the croppingintensities would increase from about 100% to about 118% and the croppingpattern would be changed, with a reduction of winter cereals, which requireonly supplemental irrigation, and a substantial increase in more profitablesummer and high value crops. Yields would increase by 50 to 100% and at fulldevelopment, the gross value of production would more than double as alreadyexperienced in previous irrigation projects. In fact, project outcome hasbeen different from expectations as a number of factors have resulted in alower production than anticipated at appraisal.

A. Cropping Pattern and Cropping Intensities

4.02 Contrary to expectations, the cropping pattern was dictated formany years by the Government and remained about the same as before the con-struction of irrigation facilities; such cropping pattern was not optimal froman economic point of view, with a relatively high proportion of low valuecrops. In all subprojects except one (Buzau), the proportion of vegetables,

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fruits, sugar beet and maize has remained far below (about 50%) appraisalestimates while winter cereals have still been cultivated on about 30% of theland (18-20% anticipated at appraisal). It was only after the Revolution, andthe subsequent liberali7ation, that an increasing proportion of summer crops,mostly maize and vegetables were grown by individual farmers. Croppingintensities also remained slightly below 100% and significantly lower thanplanned.

B. Yields and Production

4.03 Shortages of some agricultural inputs, mostly herbicides andinsecticides as well as spare parts have been a constant problem for thecooperatives (state farms generally received adequate allocations). Moreimportant, only about 50% on average of the irrigable area has been actuallyirrigated during the past years. Such water under-utilization has been due tofrequent breakdown of pumps, shortages of power, lack of mobile equipment forsprinkler irrigation and water pollution in Olt River, a tributary of theDanube. The incompleteness of the drainage system and the land reclamationprogram have also resulted in frequent water-logging with adverse effects onyieldb in some subprojects. In addition, labor shortages have been experi-enced as a large fraction of the male labor force in the cooperativespreferred to work in factories, leaving the agricultural work to women whofaced difficulties handling the irrigation mobile equipment. In 1991, waterunder-utilization was even more pronounced due to exceptionally heavy rains insummer, farmers' reluctance to pay for new and higher irrigation watertariffs, and the problems related to the on-going land redistribution program.

4.04 While state farms have performed relatively well during the pastyears because of a strong government support, the overall performance of thecooperatives seems to have declined over time. Farmgate prices have beendetermined by the government at such a low level that profits were almostimpossible. Under the then prevailing economic system, allowing for alllosses to be compensated from government budget--but providing littleincentive to increase production--the motivation among cooperative members toperform was low. This also partly explains their lack of interest inpurchasing irrigation mobile equipment and using irrigation water.

4.05 As a result of the above shortcoming, yields of the main crops,except sunflower, have been significantly lower than claimed in the late 1980sand about 20% below appraisal projections as shown in the following table:

ESTIMATED YIELDS (T/ha)

At Appraisal Actual

Wheat 4.9-5.0 3.5-4.6Maize 7.8-8.0 5.0-6.0Soybean 2.5-2.7 2.3-2.5Sunflower 2.7-2.9 2.9-3.1Sugarbeet 48.0-55.0 35.0-45.0

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C. Effects of the On-going Economic Reforms

4.06 In the long run, there is no doubt that land privatization willhave a positive effect on farmers' attitude and motivation. Nevertheless, anumber of difficulties, described below, have already been experienced or maybe expected in the near future.

4.07 The way the land distribution is being carried out will affect thefuture performance of the projects. In some subprojects, the individual plotshave been adequately designed and allocated along the irrigation buried pipesin such a way that each farmer got access to an hydrant. In other sub-projects, this orderly land distribution proved impossible as the farmers,without consideration for the layout of the irrigation system, were eager torecover the same pieces of land they (or their fathers) owned prior to exprn-priation. This will make irrigation impossible unless land consolidation islater carried out or the water distribution system is modified. The govern-ment encourages farmers to form small groups to make a better use of irriga-tion and farm equipment. However, after so many years of government control,farmers are now reluctant to accept any form of imposed discipline.

4.08 The sprinkler irrigation equipment designed for large collectivefarms and a 20 hour/day rotation schedule will no longer be suitable for irri-gating small and individual farms. The quantity and perhaps the type ofirrigation equipment will have to be changed and the design of the tertiarysystem may have to be modified in some subprojects.

4.09 In all the subprojects, the government role, personnel and budgethave been sharply curtailed, which means that farmers now have to pay a higherprice for services that were highly subsidized until 1990. In particular, thewater distribution is now ensured by autonomous agencies, which are expectedto recover their costs through water contracts with beneficiaries (ChapterIV). In 1991, only a small fraction (20-30%) of project farmers signed watercontracts, due partly to heavy rains during the cropping season, but also tofarmers' reluctance to pay for water which was heavily subsidized until 1990and free in 1990. Farm mechanization centers are also being privatized andare expected to become self-sufficient through higher service fees. Farmersare likely to resist these changes and reduce water use and farm mechanizationduring the next cropping seasons.

4.10 Despite a series of farmgate price increases in 1991, farmers arevery short of working capital. This may also adversely affect farmers'ability to develop their land unless an efficient agricultural credit systemis quickly established.

4.11 The subdivision of large and collective farms into small (5 ha onaverage) private units will require a complete change in the existing agricul-tural extension system. Such change may be difficult to organize and willtake some time before it becomes fully efficient. In addition, the formercooperative members have not been trained in farm management and may facegreat difficulties handling their business in a free market economy.

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4.12 As a result of the above factors a stagnation or slight decline inproduction may be expected for two or three years. On the other hand, thepositive reaction of farmers towards land privatization has already translateditself into a new dynamism among the rural population, a decreasingabsenteeism on the part of the former cooperative members and an increasingintensification of agricultural and livestock activities as illustrated by anexpansion of high value crops in the 1990-91 season.

V. ECONOMIC PERFORMANCE

5.01 The Audit recalculated the ERRs of the four projects (and ninesubprojects) on the basis of actual and projected investment costs, croppingpatterns, yields, production and operation costs. Data have been provided tothe audit mission by the Department of Land Reclamation in Bucharest and itsregional branches in the 14 Judets involved in project implementation. Thefollowing assumptions have been used by the Audit:

A. Main Assumptions

5.02 All calculations have been made in 1990 constant prices. Existingdata on average exchange rates (1980-86), provided by the IMF have beenapplied. For the 1986-90 period, inflation has been measured by using the G-5M.U.V. index (World Bank-October 1990) combined with average exchange rates(Table 1 in Annex 3).

5.03 Investment Costs. Yearly investments in irrigation and drainageworks, as provided by the regional offices responsible for project imple-mentation, have been computed at 1990 constant prices (taxes and custom dutiesare negligible). It was assumed that on-going irrigation works would becompleted in two or three years. Other remaining works (drainage, valleytraining, land reclamation and erosion control) are not expected to be carriedout or completed under these projects. When identified in the SARs, otherinfrastructure costs have been taken into account (power supply, relocation ofcommunications and allocation of dam cost to irrigation). The cost streamexcludes (i) land compensation, as output forgone is reflected by reducedcropped areas, (ii) farm machinery because agricultural production costsalready include machinery services and (iii) investment costs related toresearch stations and silos which were not made available to the mission.

5.04 Operation and Maintenance Costs. At the time of audit, the priceof energy was expected to be raised to Lei 4/KWh, representing approximatelythe real cost in mid 1991. For 1990, the economic cost was estimated at Lei1.4/KWh, compared with the subsidized price of Lei 0.5 for the same year.

5.05 Input Prices. The audit has used 1990 domestic prices based ondata provided by the Economic Bureau of the Institute for Land Reclamation(ISPIF-Feb. 1991). They are considered to reflect real prices with the excep-tion of fertilizers resulting in a slight underestimation of the productioncosts.

- 14 -

5.06 Output Prices (see Annex 3 Table 2). World Bank price projections(December 1990) have been taken into account for cereals and industrial crops;1990 domestic prices have been applied for other crops.

5.07 Benefits. For each subproject, the net additional value percultivated hectare has been calculated on the basis of the actual and proj-ected cropping pattern, yields (Chapter IV) and incremental value of eachcrop.

B. Economic Rates of Return

5.08 At appraisal, ERRs were high for projects of this nature, varyingfrom 15 to 31% depending on the subproject. In fact, the project economicperformance has been adversely affected by the long construction period andsubsequent delays in benefits, lower yields than anticipated, high operationcosts of the irrigation systems and a sharp decrease in commodity prices sinceproject appraisal. The table below and Tables 3-11 in Annex 3 illustrates themediocre economic performance of the projects compared with appraisalestimates:

ESTIMATED ERR (%)

Proiect/Subproiect Appraisal Actual

Mostistea-Calmatui 15.0 8.3(Mostistea) (15.0) (8.3)(Calmatui) (15.0) (8.5)

Covurlui 16.0 5.5

BBSP 22.0 6.2(Bucsani) (28.0) (7.2)(Buzau) (17.0) (5.7)(Siret) (22.0) (8.7)(Prut) (31.0) (5.5)

Caracal-Titu 19.5 3.0(Caracal) (20.3) (3.0)(Titu) (18.3) (3.0)

5.09 The best performers are the subprojects which are near completionwith a relatively low investment and operation costs. It is worth noting,however, that the fall of world agricultural prices has strongly and nega-tively affected project results. At audit, actual prices of the projectproducts are 30 to 50% lower than projected at appraisal as shown below for asample of subprojects:

- 15 -

1990 Prices (Lei/KR)

Wheat Maize Sugar beet Sova VegetablesMostistea-CalmatuiAudit Estimate 3.5 2.4 0.9 6.8 2.8Appraisal Estimate 4.9 4.1 1.6 11.6 2.6

BBSPAudit Estimate 3.5 2.4 0.9 6.8 2.8Appraisal Estimate 6.6 5.3 1.6 12.0 6.9

5.10 A sensitivity test of three subprojects has shown that with thesame prices as those estimated at appraisal, the following ERRs would havebeen obtained: Mostistea, 12.3%; Calmatui, 12.7%; and Buzau, 12% versus 8.3%,8.5%, and 5.7% respectively.

C. Financial Returns

5.11 At appraisal, it was expected that higher profits of cooperativesand state farms would partly benefit about 360,000 families through highersalaries, and bonuses. In fact, data provided to the audit mission in someJudets have shown that only a handful (about 5%) of CAPs and LAS have beenprofitable during the last three years. In addition, annual salaries havebeen low, US$750 to US$900 equivalent, and remained pretty stable for thepast ten years.

5.12 Low incomes of cooperative members partly explain the pervasiveabsenteeiNm of men and their progressive substitution by women in farmingactivities. Under the collective farming system cooperative members wereallowed to retain a small plot (0.3 ha later extended to 0.6 ha) for familyconsumption. It is well known in Romania that these plots have been verywell cultivated by, and brought substantial profits to their beneficiariesduring the Communist regime, but at the expense of the collective farms, whichwere essentially considered a source of salary rather than profit-sharingenterprises.

VI. MAIN ISSUES

A. The Economic Viability of Irrigation

6.01 The project experience is consistent with OED findings for othercountries that investments in new irrigation are becoming more and more diffi-cult to justify economically, even in the EMENA Region which has been the bestperformer in this regard during the past two decades. In the 1970s, actualand projected agricultural prices were such that most irrigation projectsyielded satisfactory returns despite frequent time and cost overruns, lowerproduction than anticipated and mediocre performance of the irrigation anddrainage systems. Moreover, many irrigation projects were economically

- 16 -

justifiable through the production of cereals, oilseeds and industrial cropswhich only required supplementary water in the dry season. Until 1987, theirrigation subsector was considered one of the most successful by the OEDAnnual Reviews, with a success rate of about 80%.

6.02 In the late 1980s and early 1990s the dramatic fall of agricul-tural prices has resulted in a situation where investments in irrigation areno longer economically justifiable unless measures are taken to intensify anddiversify the traditional cropping patterns, optimize yields and reduceproduction costs drastically. This is turn has required efficient andreliable irrigation systems, able to deliver water in a timely manner with lowoperation cost. While a number of EMENA countries (Cyprus, Greece, Morocco,Tunisia and Turkey) have generally succeeded adapting their agriculturalsystems to this new economic situation, it is clear that Romania, despite goodengineering performance, has failed to change the cropping patterns andmodernize agricultural practices, resulting in a relatively low performance ofall irrigation projects, including those supported by the Bank.

6.03 If the rigidity of the former economic system in Eastern Europeand Romania in particular was the main reason for such shortcomings, the Bankhas also been partly responsible for not anticipating them and for the per-vasive technical obsolescence which has adversely affected the four projectsunder review, and probably the four previous projects as well.

B. The Bank Support to Irrigation in Romania

6.04 The Bank strongly supported the Romanian government's effort toincrease the irrigated area from 200,000 ha in 1962 to 3.2 million in 1990.Eight large irrigation projects, totaling more than one million ha wereexecuted with Bank financial and technical assistance. Staff AppraisalReports mention that the project design was based on least cost alternativesand improved technologies made possible by experience learned from previousprojects. In 1991, however, a Bank sector report questioned the performanceof the sub-sector in Romania and an FAO/CP identification report pointed outthat "the present situation of irrigation gives cause for alarm as only 59Z ofthe total equipped area can be irrigated normally, 20% is under partialirrigation and 21% cannot be irrigated at all". Some Bank staff and Govern-ment officials are also of the opinion that about one third of the existingirrigation infrastructure in Romania is no longer economically viable andshould be rehabilitated or abandoned.

6.05 In retrospect, the Bank underestimated a number of constraintsinherent in the political and economic system prevailing in the country in the1970s and 1980s. First, it is now recognized in Romania that the considerableinvestments in irrigation have been motivated by political considerationsrather than economic reasons. Although a slowdown in investments was expectedduring the 1976-80 Five-Year-Plan, the annual pace of irrigation development(95,000 ha until 1989 with occasional peaks of up to 220,000 ha) exceeded boththe financial resources and the absorptive capacity of implementing agencies,with adverse effects on the completion of works. Second, Romanianmanufactures and hydro-mechanical specialists have been deprived for more than

- 17 -

20 years of any contact with irrigation research, resulting in obsoletetechnologies. While project SARs stated that Romanian suppliers of hydro-mechanical equipment were highly competitive, it is now clear that such equip-ment was outmoded and of poor quality from the outset.

6.06 Third, the economic cost of energy and its effects on projecteconomic viability were not adequately appreciated at appraisal; as a result,the design of a number of irrigation subprojects with high energy requirementsbecame obsolete when Romania was deprived of the low cost fuel and powerimported from USSR. Fourth, it is worth noting that most of the US$315.0million in Bank loans was expected to be used for import of machinery andequipment but only about 10% was actually used for this purpose becauseRomanian firms won most ICBs. Although the Bank was not satisfied aboutprocurement procedures in Romania, no action was ever considered in thisregard. Hence the projects missed the opportunity to import and utilize moreefficient techniques and continued relying on locally made but obsoleteequipment.

6.07 Other exogenous constraints common to centrally-planned economieshave also been underestimated by the Bank: the quasi-permanent shortages ofmaterials, spare parts, fuel, power and agricultural inputs; and the lowmotivation of cooperative members and state farm employees due to the absenceof rewards and penalties inherent in the economic system.

6.08 While Romania was for many years the only Eastern European Bankmember, it is surprising that the results of the Bank-supported irrigationprojects have not been more carefully reviewed during and after project execu-tion. One of the findings of this audit is that for many years agriculturalyields have been grossly exaggerated by official statistics. The recentrecognition that agricultural production stagnated or slightly declined in

Romania during the last decade, when irrigation was considerably developedthroughout the country, is a clear indication that official data were notreliable at the time the projects were approved and implemented. Moreover,since the Revolution, Government officials openly recognize that agriculturaldevelopment in irrigation has been much slower than anticipated but that theywere forced during the Ceaucescu regime to inflate yields and production inthe irrigation subsector for political reasons. Nevertheless, the design ofthe four projects under review was based on the "success" of the four previousBank-supported projects (which by that time had not yet been audited) and theassumption that crop yields actually obtained were significantly aboveappraisal estimates. The Bank should have been more alert. Better super-vision would have helped. Out of 37 supervision missions for the fourprojects, only nine included an agriculturalist. The Covurlui and MostisteaProjects were visited only one or twice by Bank agricultural staff duringproject execution. The projects were typical of many Bank-supported irriga-tion projects were engineering aspects are correctly covered but agriculturaldevelopment is not given sufficient attention.

6.09 In retrospect, it can be concluded that the pressure for lendingin the Bank combined with the over-ambitious government program resulted in anover-extended irrigation infrastructure with doubtful economic viability.

- 18 -

C. Accelerated Disbursement of Bank Funds

6.10 An obvious reason (though not an excuse) for the poor knowledge ofBank staff regarding the projects' agricultural performance was the secrecyand disinformation pursued by the previous regime. In addition, the fact thatgovernment broke its relations with the Bank very soon after the closing dateof the four loans and no field visit by Bank staff could take place after 1986also contributed to lack of Bank understanding. However, an additionalreason, the project financing arrangements, further limited the Bank's super-vision and technical assistance role. Because of the low foreign exchangecomponent of the project investments, the Bank funds only covered about 20% ofthe total project costs and were expected to be used exclusively for theprocurement of construction equipment and farm machinery. In fact, while thephysical construction of the project infrastructure suffered considerabledelays, equipment and machinery were quickly purchased and all Bank funds weredisbursed during the first two or three implementation years. Therefore, allfour Bank loans were closed ahead of completion and, in one case, about fouryears before the then estimated completion date. As a result, the Bank lostcontact with the projects, which at the time of loan closing were less than30% complete. It is worth noting that a similar problem affected the Rasova-Vederoasa project in 1981, but in that case the Bank continued supervising theproject after the closing date and the PCR was prepared only after physicalcompletion of project works.

6.11 As already mentioned by the PCR of the Rasova-Vederoasa andIalomita-Calmatui projects in 1984, and the PCR of the four projects underreview in 1990, project experience showed the need for the Bank to link itsdisbursements to the construction of civil works, even when Bank funds areused exclusively for the procurement of equipment and machinery. The factthat the Bank loans were closed long before the irrigation infrastructure wascompleted partly explains the poor knowledge of the Bank regarding theperformance of its irrigation projects despite long and considerable supportto the subsector.

D. Future Prospects

6.12 Since Romania resumed relations with the Bank in 1990, a consider-able amount of sector work has been carried out. Because of its importance tothe country economy, the ir.%gation subsector is under scrutiny by both theBank and the Government. A comprehensive study of the subsector is underpreparation by consultants to review the needs for maintenance, rehabilitationand modernization of existing schemes and determine a plan of action for theyears to come. One of the major problems of the subsector is that uneconomicdiesel pumps are still in use on about 50% of the irrigated area. Otherconstraints include: inadequate energy supply; worn out and obsolete electricpumps; shortages of maintenance equipment; incompleteness of canal lining anddrainage. Another problem has been the predominantly engineering approach to

irrigation in Romania, with little attention to agronomy and economics.

6.13 In the coming years, the Bank support to the irrigation subsectorwill be essential for the success of the new liberalization and privatization

- 19 -

policy. One of the priorities is to introduce higher value crops with lowerwater requirements and more modern techniques of irrigation than those usedhitherto in existing schemes. In this respect, the subdivision of largecooperatives into smaller and individual plots may be a positive factor asfarmers will be more inclined to intensify agriculture than they were underthe previous collective system. The Bank may have an important role insupporting agricultural credit and extension for the new smallholders.

6.14 While the subsector study will guide future Bank support forirrigation in Romania, there is little doubt that completion of the irrigationand drainage infrastructure in the four projects under review would generate asatisfactory return, at least in the schemes where the main headworks andcanals have already been constructed. However, as long as the current powershortages and water under-utilization persist the completion of civil works iscertainly not a priority. Helping individual farmers to develop their landand assisting public and private enterprises to efficiently provide agricul-tural services to farmers is of more crucial importance during this transitionperiod.

x ~IE AND ACTOAL PESICAL INFRASTUCT~RE m Ta PR~JECTS

Sub-Projecte S.A.K. Actual S.A.A. Actual 8.A.1. Actual S... Actual S.A.R cualFacilties Eatimae aition Ratt* eti~at C Ietion Uatio Estisate Coffletion etto etema Com1stion Ratto Euttnate omlatiom Katigmar 79> (Dec 90) (2) (Okr 79) ( 9) (9) (Dc79) (bic 90) (M (Oov N0) (Dac 90) (m (oo, 40) ( 0) mE1. 1G10ATIO UfS <ha) 1s 340 130 .30 3 3 980 27 240 114 141 700 94 66, ,7 36 800 34 17 93 9 760 43 263 72

1.1 ew 4yst4 (ha) 1383 40 150 130 93 23 980 27 240 114 141 700 90 172 64 36 800 29 141 79 59 760 36 08 601.2 Iwzrov~ t t(he) . - - - - - - 4 493 3 - 5 016 14 - 7 185 12

2. DuM ~ I(m) M 36 43 L ,U381 79 434 98 124_0 9904 L§ 47 10 27841 59 38807 27 744 472.1 Surac Drai~g (ba> 82 683 38 821 47 66 930 74 541 111 11 350 9 804 846 40 110 27 811& 69 46 200 26 694 5t2.2 Sub-ourfac Draag <ba) 4 238 - - 14 433 4 893 34 1 100 - - 7 040 30 - 12 607 1 050 8

3. LAD & ~ TIOR(ha) 13344 3 486 26 9 200 302 3 45 000 59 311 132 10 405 9 383 90 12 607 - -

3.1 Soll Krosion Control (ha) 13 346 3 486 21 - - - 44 300 59 11t 134 10 405 9 383 90 - . -

3.2 ai eoUle Lecamattom <ha) • - 9 200 302 3 700 • - - - • 12 607 -

3.3 Samdy Area Uclmatom (ha> - - - - - - - - -

4. ~ALLETDIP ~ 4 = 267 219 _82 et 38 a7 240 25. r10D ~ET 0M DanS (ha) --

sim1 PM1 C1~OA TinnTOSub-Projectracilltiae a..1 Actual SÅ.1. actual S.A. Actual S.Å.1. actual S.A.a. ActualEatlimat, Canistion Raatio zetiat. Cplöcton utio sttmatt Cmltation Kt te le CpletIon Katio Eatiete Cplötioa atlo<Ut, 80) (Dc 90) (2) (ov 80) ( 90) () (Mar 81) (Dec 90) (M> (Har 81) (Dec 90) (M> (79-81) (Da 90) (2)

1. IR10ATIOUNS 0 13 687 13,717 . 29 930 533 32 8 000 76083 8101 597074 49178 8 al-

1.1 ~w Syne (ha) 15 487 8 981 17 29 930 6 358 21 84 500 73 291 87 37 384 37 800 101 388 281 439 194 781.2 Ipravent ha) - 4 736 30 - 3 173 - 3 500 2 792 80 3 293 5 194 98 8 793 32 591 4

2. 0RAINAG ES (hal 22 442 8300 37 30 374 31 t88 103 46 500 20 805 43 37647 24 430 a5 423 696 269 079 642.1 Surface Dra*ag (ha) 13 687 8 3004 53 23 284 26 3 2 14 134 38 500 20 690° 54 34 347 24 097 70 359 091 257 279 722.2 Sub-surface Dralage(h) 6 773 - - 7 090 5 39 73 8 000 115 1 3 300 333 11 64 605 11800 18

3. ADL zC~ TION såfa} 3773 3322 8 ,U ,83 8 1730 5351 9 . - _ _- - 101 147 82340 813.1 SoLl gronion Cntral (ha) - 3 322 - 890 - 1 730 1 633 96 • - - 70 669 77 133 1093.2 Salie Soil e .claaation (Na) 3 775 • - 196 843 550 - - - - - 26 478 1 185 43.3 Samdy Area Reclamation (Ma) - - - - - 4 000 4 000 100 - - - 4 000 4 000 100

4. AAE IPN NENT (he) 13 , . . - __ . 8 _1 - - _s 643 431 -73. 9~0D DM r0 oANs (.).. 4 . . .

B Imudig Iprowaeet of 9 736 ha.

- Imna~n ~* aapme.t of 8 601 ha.

• xn~ing zeprovcemmt e 6 Gso.

4 Ir ement omly.

* lc&is lagroaet of 3 443 ha.

TOTAL ANNUAL COSTS FOR O&M IN THE 9 SUB-PROJECTS (Average 1988-1990)

SUB-PROJECTS

CovurluiMostistea Calmatui Suret, Prut Buzau Buesani Caracal Titu

1. TOTAL ANNUAL O&M COST

1.1 Constant 1990, (1,000 Lei) 94,695 19,380 131,463 15,574 41,855 103,483 34,723

1.2 Constant 1990, (1,000 US$) 4,227 865 5,869 695 1,868 4,620 1,550

2. Project Area

2.1 Equipped Area (ha) 116,668 27,240 111,357 20,320 27,669 58,117 35,013

2.2 Irrigated Area (ha) 54,300 22,580 99,438 12,398 17,600 29,852 10,570

2.3 Irrigated/Equipped Area (2) 47 83 89 61 64 51 30

3. Total Pumped Volume (M3 ) 111.71 31.82 234.94 37.17 78.71 120.67 11.16

4. Total Electric Power Consumption (HWh) 27,714 8,526 119,484 5,005 20,121 43,967 2,862

5. Average Pumped Water Demand at Bead 2,057 1,409 2,363 2,998 4,472 3,930 1,056Works per Irrigated Area (aj/ha)

6. Averaie Electric Power Consumption per 0.25 0.27 0.51 0.13 0.26 0.36 0.26Pumped Water (KWhfm)

7. ANNUAL O&M COST PER IRRIGATED AREA

7.1 Constant 1990. (Leilha) 1,744 858 1,322 1,256 2,377 3,467 3,285

7.2 Constant 1990. (US$/ha) 77.85 38.31 59.02 56.06 106.08 154.76 146.64

8. ANNUAL 0&M COST PER PUMPED VOLUME

8.1 Constant 1990 (Leill 000 M3) 848 609 560 419 532 858 3.111

8.2 Constant 1990 (US$/1 000 a3) 37.84 27.18 24.98 18.70 23.73 33.29 138.89

ea,

- 23 - Annex 2Table 2

WATER CHARGE RATES

Current Lei 1990 Constant Lei 1990 constant US$

1988 1989 1988 1989

1. Fixed Rate

Per ha of cropalfalfa 183 239.7 234.2 10.70 10.45

fruit 122 159.8 156.1 7.13 6.97

vegetables 195 255,4 249,6 11.40 11.14

others 138 180.8 176.6 8.07 7.88

Per ha of farm 102 133.6 130.6 5.96 5.83cooperative

state farm 294 385.1 376.3 17.19 16.80

2. Variable Rate

Per 1,000m3 of 18 23.6 23.0 1.05 1.03pumped water

ANNUAL O&M COSTS AND ANNUAL WATER CHARGES IN THE 9 SUB-PROJECTS

SUB-PROJECTS

CovurluiMostistea Calmatui Se.j .Prut Buzan Buesani Caracal Titu

1. Annual O&H Cost (Lei/ha)1 2,162 895 1,254 1,365 2,474 3,932 3,563

2. Annual Water Charges (Lei/ha)1 429 428 429 472 478 467 386

3. Annual Water Charges/Annual 0&H 19.8 47.8 34.2 34.6 19.3 11.9 10.8Cost Ratio ()

NOTE: No water charge was collected in 1990

Average 1988-1989; 1990 Constant Lei

EXCHANGE RATES, DEFIATORS, INFLATORS

YEAR 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990

Average Exchange Ratesil 18 15 15 17.2 21.3 17.1 16.2 14.6 14.3 14.9 22.4(Lei/US$, period average)

Price Deflator Indexki 100 102.2 119.5 125.7 127.1 126.7 126.6 128.5 135.5 138.5 177.5(consuer prices)

Price Inflator Index 177.5 174 148 141 140 140 140 138 131 128 100

! Source IMF

Source IMF (80-86) - Mission estimate (86-90)

- 26 - Annex 3Table 2

FINANCIAL AND ECONOMIC PRICES FOR THE MAIN PRODUCTS(Lei/Kg)

Financial Economic

Wheat 2.3 3.5

Maize 3.0 2.4

Barley 2.2 2.6

Soya 6.5 6.8

Sunflower 4.3 5.0

Sugarbeet 0.65 0.9

Fruits-vineyards 6.0 6.0

Vegetables 2.8 2.8

Alfalfa (hay) 1.0 1.0

0 and M costs: 2,300 LAi/haNet additional benefits: 7,379 Let/ha

M 0 S TI STE AEconomic Cash Flow

(1990 constant prices - Million Lei)

YEAR 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 d 2005 2006 2015 20162004 1 1

2014 2024

Investsent costsIrrig. and 282 277 364 282 321 328 306 291 585 620 289 98 20 30 42drain works

Other 62 78 133 103 105 90investmentsil

Replacement costs 120 130 500 500

0 and M costa 20 41 55 59 64 99 133 155 155 207 241 276 345 345 345 345 345 345 345

Sub Total 344 355 497 385 426 438 347 346 654 684 388 231 175 185 249 241 396 475 345 345 845 345 845 345Benef itsNet additional 32 106 170 214 236 284 387 473 505 588 726 837 1003 1107 1107 1107 1107 1107 1107Incremental netBenefits -344 -355 -497 -385 -426 -406 -241 -176 -440 -448 -104 156 298 320 339 485 441 528 762 762 262 762 262 762E.R.R.: 8.32 (45 years)

Irrigated area 8.8 18 24 30 28 43 58 67.5 67.5 90 105 120 150(100 ba)

- -J

I-a0

*i A'Power supply, relocation of eomuanicationsI

0 and M Costs: 2,000 Lei/haNet additional benefits:drainage: 2,334 Lei/hadrainage + irrigation: 4,059 Lei/ha

CALMATUIEconomic Cash Flow


98 200880 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 A 2007 6 2017

12006 2016

- Investment costsIrrig. & drainage worke 2 44 121 269 281 302 200 155 135 69 53 1Replacement coste 73 73 73and H Costs 6 16 24 32 44 50 46 46 50 5 54 54 54 4 54 54 54

kub-Total 12 441 121 1269 287 1318 224 1187 1179 119 99 146 50 54 54 54 54 1127 154 11271 54 1271

- Benefitsfet additional drainage 9 16 28 33 38 50 66 89 89 89 89 89 89 89 89 89 89 89 89

iet additional irrigation 5 16 40 56 76 94 101 101 101 104 108 108 108 108 108 108 108 108

Flood Control 5 9 16 21128 28 28 28 28 28 28 28 28 28 28 28

Sub-Total 9 211 49 82 1 110 1147 1188 1218 1218 218 12211 225 1 225 j 225 1 225 1 225 1225 1225 225

et incremental benefits -21-44T-121 -260 1-266 1-2691 -1421 -771 -32 169 1119 1172 1168 1671 171 11711 171 1 98 1171 198 171 98

.R.R.: 8.52 (41 years)

rained area (000 ha) 4 1 7 12 14 1 16 21 28 38 - -1 -Irrigated area (000 ha) 1 3 8 12 16 122 125 123 23 25 27

mx

0 and H Costs: 3,100 Lei/haNet Additional Benefits: 8,588 Lei/ha

C 0 VUR LUIEconomic Cash Flow


99 2009 2019Year 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 1 2008 A 2018 d2007 2017 2023

- Investment CostsIrrig. drainage works 142 288 346 515 867 846 745 614 741 616 272 113

Replacement Costs IV 300 300 3000 and M Costa 8 11 35 67 110 159 175 175 175 205 232 263 291 291 291 291 291 291 291 291 ]

Sub-Total 1421 2881 3461 515- 8751 857 780 681 851 1.775 4471 17S 175 2051 232 ,2631 2911 2911 5911 2911 59,1 2911 591 1291

-Benefits IMet additional 11 26 64 1421 245 373 463 485 1 485 526 605 687 768 807 807 807 807 807 807 807Incremental net benefite -142 -288 -346 -5151-8641 -831 -716[ -5391-606 -402 16 13101 3101 321 3731424 4771516 216 516 216 516 216 516E.R.R.: 5.52 (45 years)

area (000 ha) 2.6 3.5 11.5 21.5 35.5 51.3 56.4 56.4 56.4 66 75 85 94

0 and M costs: 3,200 Lei/haNet Additional Benefits: 7,99 Lei/ha

B U C S AN IEconomic Cash Flow

(1990 constant prices - Hillion Lei)

2000 2011Year 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 A 2010 a- - - - - ........ 2009 2019

- Investment costsIrrigation & drain works 142 156 365 286 166 120 24 21 15 1 14 7 30 30 26

Replacement Costa 60 61 121

0 and M costs 32 42 51 61 86 61 96 105 115 115 115 115 115 115 115 115 115 115 o

Sub-Total 142 156 365 286 1661 1201 56 1 63 66 62 100 68 126 135 141 115 115 115 115 175 1 115 236 115

- BenefitsNet additional 40 92 116 1401 184 216 228 252 276 288 288 288 288 288 288 2 28288 288Incremental net benefits -142 -156 -365 -286 -166 -120 -16 29 50 78 84 148 102 117 135 173 173 173 173 113 113 173 52 173

I.R.R.: 7.252 (40 years)

Irrigated area (000 ha) 10 13 16 19 271 19 30 33 36

on

0 and M Costa: 1,600 Lei/haNet Additional Benefits: 10,047 Lei/ha

BU ZAUEconomic Cash Flow


2000 2006 2016Year 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 A 2005 A 2015 A2004 2014 2024

- Investment costsIrrigation & dran.vorks 127 162 255 252 1234 483 390 165 40 56

Storage dam 200 200 425 1

Replacement costs 128 128 128

0 and M costs 5 16 19 24 27 30 40 56 75 75 75 75 75 75 75 75 75 75

Sub-Total327 362 680 252 1239 499 409 189 67 186 40 56 1203 175 1751 75 75 75 203 75 203 75- BenefitsNet additional -252 15 65 110 135 160 1180 220 300 410 471 471 471 1471 1471 471 47 1 147 1 4 7 1Incremental net benefits -327 -3621-680 -2521-1224 -434 -299 -54 83 94 180 244 207 396 396 396 396 396 268 396 268 396

I.R.R.: 5.752 (41 years)

Irrigated area (000 ha) 3 10 12 15 17 19 25 35 47

0 and M costs: 2,000 LeilhaNet Additional Benefits:- drainage: 2,334 Leilha- drainage + irrig.: 8,588 Lei/ha

SIRETEconomic Cash Flow


96 2006 2016Year 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 A 2005 A 2015 1

2004 2014 2024

- Investient costsIrrigation and drain.works 33 40 62 55 157 28 113 84 70 31


0 and IN costa 17 17 18 24 27 27 27 27 27 27 27

Sub-Total 3 40 62 55 157 28 113 84 70 48 17 118 24 27 68 27 68 27 68S27-u-Tta Lr3 1 40 1 62 T8 1 27- Benefitset additional 2 2 9 16 16 17 17 17 34 73 79 111 118 118 118 118 118 118 118

Incremental net benefits -33 -38 -60 -46 -141 -12 -96 -67 -53 -14 56 61 87 91 50 91 50 91 50 91

.R.R.: 8.75% (40 years)

rained area (000 ha) 1 1 4 7 7 7.2 7.2

rained + irrigated area(000 ha) -8.3 8.3 9.0 12.21 13.71 1

0 and H Costs: 2,000 Lei/haNet Additional Benefits: 8,588 Lei/ha

PR U TEconomic Cash Flow


96 2006 2015 2016Year 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 1 2005 A &

2004 2014 2024

- Investment costsrrigation I dran.vorks 23 121 78 96 138 122 166 227 247 204 169 75 50 70 120 120


0 and M costa 4 5 6 6 8 8 9 11 17 27 39 44 49 49 49 49 49

Sub-Total 23 11211 781 96 [1381 12611711233 253 212 177 84 61 87 14711591122 49 127 49 127 49

BenefitsNet additional 9 19 23 25 29 35 38 44 60 94 142 177 210 210 210 210 210Flood control 2 3 5 7 10 10 10 10 10 10 110 110 in 10 10 10 10 10

Sub-Total . 2 12 24 30 35 39 45 48 54 70 104 152 187 220 220 220 220 220

ncremental net benefits -23 -121 -78 -96 1-1361-114 -47 -2031-218-173-132 -36 -7 -17 -431 -7 65 11 71 93 1 7 1 93 171

I.R.R.: 5.75% (45 years)

rrigated area (000 ha) 2.1 2.3 2.9 2.9 4 4.1 4.8 5.5 8.5 13.5 19.5 22 24.5

0 and H Costs: 4,100 Lei/haNet Additional Benefits: 7,177 Leilha

CARACALEconomic Cash Flow


2001 2010 2016Year 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 2000 A 2008 2009 A 2015 62007 2014 2018

- Investment CostsIrrig. i drainage 65 222 351 567 665 524 546 385 135 26 50 100 100works

Storage Dam 52 109 110 151 87

Replacement Costs 30 60 60 150 150 205

1 and M Costs 33 70 135 119 143 143 184 225 287 348 348 348 348 348 348 348 348 348 348 348

Sub-Total 52 1174 1332 1502 1654 1665 557 1616 1520 1254 1169 1193 1284 1325 1287 3 481 348 1378 1408 408 348 498 1498 1348 1553 348- BenefitsNet additional

28 89 180 237 245 251 287 359 448 556 611 611 611 611 611 611 611 611 611 6114Flood Control 5 13 1717 1 17 17 1 17 17 17 1 17 17 17 17 17 17 17 17 17 17 7Sub-Total 5 13 145 106 197 25412621268304 376 4651573 6281 6 628 6 _28 628_ 628 628 1628 1628 628Incremental netbenefitk -52-174-332I-502j-6491-6521-5121-510-323 193 175 201 51 1178 1225 280 2501 220 220 280 130 130 2801 75 280E.R.R.: 3 2 (45 years)

Irrigated area (000 ha) 8 17 33 29 35 35 45 55 70 85 7-1

e;

0 and M Costs: 3,600 Lei/haNet Additional Benefits: 7,031 Lei/ha

TIT UEconomic Cash Flow


2000 2010 2020Year 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 1 2009 A 2019 1

2008 2018 2028

- Investment costsIrrigation & drain.vorks 66 164 346 423 307 200 110 48 20 20 31

Storage dam 50 100 1091


3 and H costs 6 14 32 36 42 52 58 89 115 148 148 148 148 148 148 148 148 148 148

Iub-Total 116 264 455 429 321 232 146 90 72 78 120 115 148 148 148 148 13081 148 138911481 308 148- Benefitset additional 6 19 46 67 76 92 107 143 199 255 288 288 288 288 288 288 288 288 288

Incremental net benefits -116 -264 -455 -423 -302 -186 -79 -14 20 29 23 84 107 140 140 140 -20 140 -101 140 -20 140

I.R.R.: 3 2 (45 years)

Irrigated area (000 ha) 1.6 4 9 10 11.8 14.5 16 25 32 41

MAP SECTION

[BIRD 13934

ROMANIA NOVEMINER 1978

Mosfi$tea & Ciblirrlätui Irrigation & Drainoge Project

CALMATLI1

Project area bouroloryWater delivery conals

B AU 1100DP: AlIN 1 1 Distribution cannisUZ Ground pipe network(FuTUPý 10 Renumping and Presme pumping sfotionsOuz u

41 IANCA, Droin channels3S - SeCondory droinogeconels

--------- Tile tubat. M-410 Fihp-ft i Nonsoline landwitthsurfacedrorrageandirrigationfrom Du-be

Soline lands with surfacc and subsurfoce droinoge andreciaýatioýýorksforJeochingandirrýgationfromtheDGnube

Nonsuline land with surface drortoge and without imgotions P' 1. ------p G.1bin.p Soline lands without irrigation ond reclarnation works.B.M.

Areas not part of projectB..d..v.,de ýi sting irrigation schemesV.Fn. JI E

Towns ond villagesRoads

1i,-v Pi RaflwaysRivers

c-' LokesJudet boundory (District boundary)

z RP02VIZIRU TERRASE

Bdi, , .. , .1 ', I C, 11,1 1 , ,

za-m.-01

-414 9x,1

i. 28 q,

spp," GARY st..45p- H-t

R 0 M A N l A ýBerrep, d.J..

1? 200KILOMETERS

Z

IBRD 14577-I---- - -SEPTEMßER 99VAS LUI D ISTRICT

SOCIALIST REPUBLIC OF ROMANIA

COVURLUI IRRIGATION PROJECT

)s M-a pumping station

Repumping stationss i ate.\

i, Pnessure pumping storionsSo iNou Existi,g punping staton~T4ini Ssh.> niSioO 7<......Man conals

Gt'~~ at - Syphonsc p ~Ex-sing cnl( co iTypical pipe networksWI Siretchesofrvrrq rrgran g

aC.rlomaonesh, I DOgusoni Rivers

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- Inland ports-- - Ds[rict boundaies (J,dei boundaries)

\nd'i O ----Iniernational bounda,,es

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BUCSANI -BUZAU-SIRET-PRUTIRRIGATION PROJECT

BUCSANI

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R- DRAINAGED- FORESTS

IRRIGATION CANALS------ OPEN DRAINAGC CANALS

DUAL-PU~ Elä PUMPINGRPOSE CANALSSTATiONS

SIONOFILAR STATIONSCANTON HEADQUARTERS

ILI1,1c IOAD,RAILWAYS 0,- u & s. Rw

ru VILLAGES IJFOV.4 7]VE 5 nJUDET BOUNDARY SYSTEM

R 0 M A N l A

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