Project Appraisal Document (PAD)

131 Pages·2008·10.73 MB·English

by  World Bank Group

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PP Report No: 43400-ET
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IN THE AMOUNT OF SDR 27.4 MILLION
(US$45 MILLION EQUIVALENT)
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CURRENCY EQUIVALENTS
(Exchange Rate Effective April 18,2008)
Currency Unit = Ethiopian Birr (ETB)
ETB9.58 = US$1
US$1.64 = SDR 1
FISCAL YEAR
July7 - July6
ABBREVIATIONS AND ACRONYMS
ADLI Agricultural Development Led Industrialization
AFD French Development Agency
AfDB African Development Bank
APL Adaptable Program Lending
ARARI Amhara Regional Agricultural Research Institute
ARBA Abbay River Basin Authority
ARB0 Abbay River Basin Organization
ARBT Abbay River Basin Team
BeSBO Beles Sub-Basin Organization
BCM Billion Cubic Meter
BOARD Bureau ofA griculture and Rural Development
BoFED Bureau ofF inance and Economic Development
BoWRD Bureau ofW ater Resources Development
CAS Country Assistance Strategy
CEM Country Economic Memorandum
CFMG Community Flood Management Group
CIDA Canadian International Development Agency
CoSAERAR Commission for Sustainable Agriculture and Environmental Rehabilitation for Amhara Region
CPA Cooperative Promotion Agency
CQS Consultant Qualifications based Selection
CWMS Country Water Resources Assistance Strategy
DA Development Agent
DPPA Disaster Prevention and Preparedness Agency
DSS Decision Support System
EIDP Ethiopia Irrigation and Drainage Project
ENSAP Eastern Nile Subsidiary Action Program
ENTRO Eastern Nile Technical Regional Organization
EPA Environment Protection Authority
EPLAUA Environment Protection Land Administration and Use Agency
FA0 Food and Agriculture Organization
FPEW Flood Preparedness and Early Warning Project
FPEW-I Flood Preparedness and Early Warning Project - Phase I
FPEW-I1 Flood Preparedness and Early Warning Project- Phase I1
FSCDPO Food Security Coordination and Disaster Prevention Office
GEF Global Environmental Facility
GIS Geographic Information Systems
GoE Government ofE thiopia (Federal Democratic Republic ofE thiopia)
GoF Government ofF inland
GTZ German Technical Cooperation
IA Implementing Agency
ICB International Competitive Bidding
..
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FOR OFFICIAL USE ONLY
IDC International Demonstration Center
IFAD International Fund for Agricultural Development
IFR Interim Financial Report
ILRI International Livestock Research Institute
IPA Investment Promoting Agency
IWMI International Water Management Institute
IWRM Integrated Water Resources Management
JICA Japanese International Cooperation Agency
KFMG Kebele Flood Management Group
KWC Kebele Watershed Committee
KIDMO Koga Irrigation Development and Management Organization
LCS Least Cost Selection
MCM Million Cubic Meter
MDG Millennium Development Goals
MoARD Ministry ofA griculture and Rural Development
MoFED Ministry ofF inance and Economic Development
MoWR Ministry ofW ater Resources
MW Mega Watt
NBI Nile Basin Initiative
NCB National Competitive Bidding
NMA National Meteorological Agency
NPCU National Project Coordination Unit
NPSC National Project Steering Committee
PASDEP Plan for Accelerated and Sustained Development to End Poverty
PHRD Japan Policy and Human Resources Development
PIM Project Implementation Manual
PPF Project Preparation Facility
PSD Private Sector Development
QBS Quality Based Selection
QCBS Quality and Cost Based Selection
RBA River Basin Authority
RBO River Basin Organization
RIPA Regional Investment Promotion Agency
RNE Royal Netherlands Embassy
RPCU Regional Project Coordination Unit
RRA Rural Roads Authority
SBO Sub-Basin Organization
SIDA Swedish International Development Agency
SIL Specific Investment Loan
'
SMS Subject Matter Specialist
TA Technical Assistance
TaSBO Tana Sub-Basin Organization
TBIWRDP Tana & Beles Integrated Water Resources Development Project
TBP Technical Background Paper
TOR Terms of Reference
USAID United States Agency for International Development
WB World Bank
WFMG Woreda Flood Management Group
WRIS Water Resources Information System
Vice President: Obiageli Katryn Ezekwesili
Country Director: Kenichi Ohashi
Sector Manager: Ashok Subramanian
Task Team Leaders: E. V. JagannathadN. Harshadeep
This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not be otherwise disclosed without World Bank authorization.

ETHIOPIA
Tana & Beles Integrated Water Resources Development Project
CONTENTS
Page
. .................................................................
A STRATEGIC CONTEXT AND RATIONALE 1
1. Country and sector issues. ................................................................................................... 1
2 . Rationale for Bank involvement ......................................................................................... 6
3 . Higher Level Objectives to Which. the Project Contributes ................................................ 8
. .................................................................................................
B PROJECT DESCRIPTION 8
1. Lending instrument ............................................................................................................. 8
2 . Project development objective and key indicators .............................................................. 8
3 . Project components ............................................................................................................. 9
4 . Lessons learned and reflected in the project design .......................................................... 12
5 . Alternatives considered and reasons for rejection ............................................................ 13
. ........................................................................................................
C IMPLEMENTATION 14
1. Partnership arrangements .................................................................................................. 14
2 . Institutional and implementation arrangements ................................................................ 14
3 . Monitoring and Evaluation ofO utcomesResults ............................................................. 16
. . .
4 . Sustamablhty ..................................................................................................................... 17
5 . Critical risks and possible controversial aspects ............................................................... 18
6 . Loadcredit Conditions and Covenants ............................................................................ 19
. .................................................................................................
D APPRAISAL SUMMARY 20
1. Economic and Financial Analyses .................................................................................... 20
2 . Technical ........................................................................................................................... 23
3 . Fiduciary ........................................................................................................................... 24
4 . Social. ................................................................................................................................ 26
5 . Environment. ..................................................................................................................... 27
6 . Safeguard policies ............................................................................................................. 28
7 . Policy Exceptions and Readiness. ..................................................................................... 30
iv
.........................................................
Annex 1: Country and Sector or Program Background 33
1. Country and Sector Issues: ................................................................................................ 33
2 . Characteristics of Key Spatial Regions ............................................................................. 36
..............
Annex 2: Major Related Projects Financed by the Bank and / or Other Agencies 46
........................................................................
Annex 3: Results Framework and Monitoring 48
......................................................................................
Annex 4: Detailed Project Description 54
...............................................................................................................
Annex 5: Project Costs 68
.................................................................................
Annex 6: ImplementationA rrangements 69
.....................................
Annex 7: Financial Management and Disbursement Arrangements 79
......................................................................................
Annex 8: Procurement Arrangements 91
.............................................................................
Annex 9: Economic and Financial Analysis 99
..........................................................................................
Annex 10: Safeguard Policy Issues 112
...................................................................
Annex 11: Project Preparation and Supervision 117
...............................................................................
Annex 12: Documents in the Project File 119
............................................................................
Annex 13: Statement of Loans and Credits 120
...............................................................................................
Annex 14: Country at a Glance 121
..........................................................................................................................
Annex 15: Map 123
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IBRD Map No 36050
V
ETHIOPIA
TANA & BELES INTEGRATED WATER RESOURCES DEVELOPMENT
PROJECT APPRAISAL DOCUMENT
AFRICA
AFTWR
1
Date: May2, 2008 Team Leader: E. V. Jagannathm. Harshadeep
Sectors: General water, sanitation and flood protection
sector (40%); General agriculture, fishing and forestry
Country Director: Kenichi Ohashi
sector (25%); Irrigation and drainage (20%); Power (10%);
Sector ManagerDirector: Ashok
Roads and highways (5%)
Subramanian/IngAenrd enen
Themes: Water resource management (P);Infi-astructure
services for private sector development (S)
Project ID: PO96323 Environmental screening category: B (Partial Assessment)
Lending Instrument: Suecific Investment Loan
L Y
For Loans/Credits/Others:
Total Bank financing (US$m.): 45.00
Proposed terms: Standard IDA Terms, with a maturity of4 0 years, including a grace period of
21.33 23.67 I 45.00
Bilateral Agencies (Govt. ofF inland) 0.00 8.00 8.00
BorrowerRecipient 5.38 0 5.38
Communitv 11.47 0 11.47
Total: 38.18 3 1.67 69.85
BorrowerLRecipient:F ederal Democratic Republic ofE thiopia
Responsible Agency: Federal Ministry ofW ater Resources, Ethiopia
I
I
Estimated disbursements (Bank FYlUS$m)
I I I I I I
N 2009 2010 2011 2012 2013
Annual 2.75 12.43 13.57 10.78 5.47
Cumulative 2.75 15.18 28.75 39.53 45.00
Expected effectiveness date: September 30,2008
Expected closing date: September 30, 2013
Does the project depart from the CAS in content or other significant respects? [ ]Yes [XINO
Does the project require any exceptions from Bank policies? [ ]Yes [XINO
Have these been approved by Bank management? [ ]Yes [ ]No
vi
Is approval for any policy exception sought from the Board? [ ]Yes [XINO
Does the project include any critical risks rated “substantial” or “high”? Ref: PAD C.5 [ X]Yes [ 3 No
Does the project meet the Regional criteria for readiness for implementation?
[XIYes [ ]No
Re$ PAD D. 7
Project development objective: The Project Development Objective is to develop enabling
institutions and investments for integrated planning, management, and development in the Tana and Beles
Sub-basins to accelerate sustainable m-owth.
Project description:
A. Sub-basin Resources Planning and Management [$17.61m ] : Develop the enabling
institutional infrastructure and capacity necessary for stimulating and managing sustainable
investments in the Tana and Beles sub-basins. Two sub-components will be supported:
AI. Water Resource Information System Development ($11 .66m)
A2. Resource Planning and Management Capacity-building ($5.95m)
B. Natural Resource Management Investments [$40.83m]: Undertake critical investments to
improve the natural resources management in the Tana sub-basin, including:
Bl. Watershed Development ($35.08m): Sustainable watershed development investments for
80,000 ha in hbb, Gumara, and Jamma sub-watersheds in Tana sub-basin.
B2. Flood Management ($5.75m): Community-based flood management and adaptation around
the flood-prone areas around Lake Tana.
C. Growth-Oriented Investment Facilitation [$9.17m]: I nstitutional capacity and investment
facilitation required for sustainable development of the Tana and Beles sub-basins to realize the
growth vision for the region, including:
CI.D evelopment Agency Support ($1.43m)
C2. Growth-oriented Investment Preparation ($7.74m)
D. Project Management [$2.24m]: Overall project planning, coordination, monitoring and
adaptive management.
Which safeguard policies are triggered, if any?
Environmental Assessment (OP/BP 4.0 1); Pest Management (OP 4.09); Involuntary Resettlement (OP/BP
4.12); Safety ofD ams (OP/BP 4.37); Projects on International Waterways (OPBP 7.50)
Significant, non-standard conditions, if any, for:
Board presentation: None.
Credit effectiveness:
(a) The Recipient has established a National Project Coordination Unit (NPCU); a Regional Project
Coordination Unit (RPCU) for the Amhara Region and a Project Steering Committee at both the
national and regional levels, in a manner satisfactory to the Association.
(b) The Recipient has adopted a Project Implementation Manual including a financial management
manual in form and substance satisfactory to the Association.
(c) The Association has received satisfactory evidence that the staff of the NPCU and the RPCU for the
Amhara Region have been duly recruited and trained on financial management and procurement
procedures in a manner satisfactory to the Association.
Covenants applicable to project implementation:
a) Within 180 days from Effective Date, an independent and qualified external auditor to carry out the
annual financial audit oft he Project, with qualifications, experience and terms ofr eference acceptable
to the Association, shall have been recruited,
b) By December 3 1,2008, a RPCU for the Benishangul Gumuz Region shall have been established and
its staff shall have been duly recruited and trained on financial management and procurement
procedures in a manner satisfactory to the Association.
c) (i)B y March 3 1, 2009, TaSBO shall have been established; and (ii)b y December 3 1, 2009 BeSBO
shall have been established.
vii
2, S'iX %' C' C;o
1. Country and sector issues'
1. Ethiopia is one oft he most populous countries in Sub-Saharan Africa with 76.5m people.
It is also one oft he poorest, with a per capita GDP (US$240) that is about a fifth of even
the Sub-Saharan Africa (SSA) average. Although the country has abundant human and
natural resources and good potential for development, poverty is widespread and often
directly linked to environmental and natural resource degradation. Agriculture accounts
for 40-45% of GDP, for most of the exports, and perhaps for about 85% of the
employment, primarily in the form ofs ubsistence small-holder (generally less than half a
hectare) cultivation (accounting for 95% of the agricultural output). This agriculture is
mostly under rain fed conditions (10 mha, often in degraded watersheds), with very little
area currently irrigated (around 0.25 mha). Ethiopia has Africa's largest livestock
population @Om, primarily cattle, sheep and goats). Climate risks are significant, with
frequent droughts and floods taking a toll on the economy, resulting in tragic loss of life
and livelihoods, and inducing risk-averse disincentives to much-needed investment.
2. The Ethiopian economy has done well in recent years, with GDP growing by 11.4% in
2006-07 (buoyed by good agricultural performance recovering from the 2002 drought),
and with the poverty headcount reducing from 44% in 1999/2000 to 39% in the recent
2004/05 survey. There have been important recent gains, especially in human
development indicators, transport, the investment climate, small town development, and
the fight against food insecurity. Pro-poor spending as a share of the budget has risen
from 41% in 1997/98 to 62% in 2005/06. The Country Economic Memorandum 2006
(CEM) on Growth and Governance finds that important progress has been achieved in the
past decade, largely driven by improved institutions, including at the regional and local
levels, which have been able to deliver a scaling-up ofs ervices and infrastructure.
3. However, significant challenges remain to meet the Millennium Development Goals
(MDGs), especially the goal ofh alving poverty by 2015, particularly considering that the
recent progress is from a very low base and that the Ethiopian economy remains highly
vulnerable to climate shocks. While access to basic education and health care has
improved significantly in recent years, access to other basic services remains poor. Only
22% of the population has access to safe water and only 13% have access to adequate
sanitation services. Only about 22% oft he population lives in electrified areas (Le., areas
with some form of electricity supply for residences and businesses) and only 6% of the
population have electricity connections. Per-capita electricity consumption of 36
kWh/year is one of the lowest in the world (the world average is 2,500 kWh/yr). About
10% of the population living in high-risk food-insecure areas, is dependent on food aid
every year. Inflation was high (18% during 2006/07), with associated increases in food
prices. Imports have been growing faster than exports, enlarging the trade deficit.
However, public expenditure has been well managed in recent years and the fiscal deficit
has reduced from 4.6% of GDP in 2005/06 to 3.6% of GDP in 2006/074ts lowest level
since 2003/04.
1 The data in this section is largely sourced from the Ethiopia PASDEP (2005), Ethiopia CAS (2008), CWRAS
(2006), and CEM (2006)
1
4. The Government of Ethiopia (GoE)’s Plan for Accelerated and Sustained Development to
End Poverty (PASDEP) seeks to build on and broaden the previous development
strategy, which had focused on expanding support to smallholder agriculture, to basic
education, to access to water and sanitation, primary health services, access to roads and
electricity and to safety nets for the poorest in all parts of the country. PASDEP
complements this equity-oriented thrust by focusing public investment and policies to
exploit comparative economic growth advantages located in different agro-ecological
zones. PASDEP identifies the Tana and Beles zone as the first of five proposed growth
zones in the country, and envisions complementary investments in infrastructure, and
appropriate levels ofb asic inputs and agricultural technology to increase productivity and
facilitate market systems, particularly for high-value crops destined for local and foreign
markets. PASDEP sets a multi-sector, integrated vision as a conceptual foundation for
this plan, leading to the formation ofg rowth zones to accelerate growth.
5. The growth zones are expected to be fueled by investments in the substantial land and
water resources of the region. The Country Water Resources Assistance Strategy of
Ethiopia (2006) also clearly demonstrates the need for investments in multipurpose water
infrastructure, in combination with the market infrastructure investments needed to fully
leverage their growth potential. The GoE has also recently promulgated a progressive
proclamation (proclamation no. 534/2007) to set up basin management organizations to
improve holistic water resources planning and management. The proclamation derives
substantially from the Ethiopia Water Resources Management Policy (19 99) and serves
as a legal basis for the creation of individual or combined river basin organizations
(RBOs) for all the river basins of Ethiopia - including High Basin Councils as decision
making bodies with River Basin Authorities as their technical arm. A key task of the
RBOs will be to formulate and monitor the implementation of sub-basin plans for
integrated water resources management.
6. Although Ethiopia has substantial water resources, these have neither been developed nor
managed well, leaving populations vulnerable to the destructive impacts of water and
climate variability, while not providing benefits from effectively harnessing the water and
land resources. There are 12 basins in Ethiopia with Abbay (Blue Nile basin) being the
largest with a basin area of about 200,000 sq km. Tana (catchment area 15,054 sq km)
and Beles (14,200 sq km) form important sub-basins of the Abbay basin. Given the
significant economic, environmental and cultural endowments in these sub-basins in
terms ofw ater, land, human resources and current ongoing/planned developments, these
sub-basins offer tremendous opportunities for accelerated economic growth underpinned
by careful sustainable development of these endowments. With significant water, land,
livestock, forest and fishery resources; a rich cultural heritage and natural assets;
relatively developed urban centers and dense settlements; good roads and air
connectivity; the Lake Tana sub-basin has potential for growth. This potential can serve
as a stimulus for growth in multiple sectors with strong multiplier effects, particularly
commercially-oriented smallholder agriculture, ago-industry, tourism, fisheries,
livestock and energy resulting in improved livelihoods for the sub-basin’s 3 million
residents and national economic growth. The Beles sub-basin also has productive land
2