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Implementation Completion Report (ICR) Review - Turkey Privatization Of Irrigation Project


  
1. Project Data:   
ES Date Posted:
05/24/2005   
PROJ ID:
P009072
Appraisal
Actual
Project Name:
Turkey Privatization Of Irrigation Project
Project Costs(US $M)
 58.8  44.6
Country:
Turkey
Loan/Credit (US $M)
 20.4  19.7
Sector, Major Sect.:
Irrigation & drainage, Central government administration,
Agriculture fishing and forestry; Law and justice and public administration
Cofinancing (US $M)
   
L/C Number:
L4235      
   
Board Approval (FY)
  98
Partners involved
 
Closing Date
12/31/2002 06/30/2004
         
Prepared by: Reviewed by: Group Manager: Group:  
John R. Heath
George T. K. Pitman Alain A. Barbu OEDSG

2. Project Objectives and Components:

a. Objectives

(i) Strengthen irrigation-related institutions by supporting:

  • The State Hydraulic Works and the General Directorate of Rural Services in providing guidance and technical support to Water User Organizations (WUOs); and
  • WUOs in fulfilling their responsibility for irrigation management and investment.
(ii) Relieve the public sector of its responsibility for funding and subsidizing irrigation operations and maintenance.
(iii) Initiate a process of reducing public sector responsibility for funding and managing irrigation investment.
(iv) Promote efficient and sustainable utilization of irrigation systems which would contribute to improved agricultural productivity.
(Staff Appraisal Report)

b. Components

(i) Operation and Maintenance Equipment (Estimated cost, US$44.0 million; Actual cost, US$40.3 million). Includes motorcycles, computers, cranes, winches, etc. with total equipment cost to be financed mainly by beneficiaries, the balance (less than 30 percent on average) to be provided as a grant.
(ii) Institutional Strengthening (Estimated cost, US$6.5 million; Actual cost, US$4.2 million). Comprises consultants, computers, vehicles and other equipment needed to enhance the capacity of participating government agencies and WUOs.
(iii) Pilot Drip Irrigation Scheme (Estimated cost, US$6.0 million; Actual cost, US$0.1 million). This scheme would be extended to a single WUO (Uluborlu).

The components were modified by two amendments to the loan agreement, resulting in: adjustment of the grant share (up from an average of 28 percent to a maximum of 45 percent of equipment cost); expansion of the use of grants to finance irrigation rehabilitation; redefinition of eligible WUOs (Uluborlu declined to participate); and addition of the option of sprinkler irrigation systems).

c. Comments on Project Cost, Financing and Dates

Beneficiaries contributed US$24.3 million to total project cost, compared to the US$38.3 million projected at appraisal. In November 2002 the Bank agreed to extend loan closing by 18 months having previously declined to do so on grounds that not enough provision was being made to implement the agreed policy and institutional reforms. Uncertainty about whether or not the project would be extended slowed project implementation in the second half of 2002, adding to delays caused by Turkey's 2001 financial crisis.


3. Achievement of Relevant Objectives:

(i) Institutional strengthening (Partly Achieved). Strengthening was achieved at the WUO level, but not at the government level. Of the 350 WUOs already established in Turkey, 280 participated in the project. The WUOs made up for the lack of formal training through "learning by doing". By providing equipment and financing the project gave WUOs an incentive to improve their performance. Compared to WUOs outside the project and in other countries, the project WUOs made considerable progress in terms of: assuming a large share of the cost of rehabilitation works; actively carrying out maintenance; and ensuring a high rate of collection for water tariffs. On the other hand, the training that the Rural Services Directorate gave to WUOs was insufficient, failing to take account of the WUOs' need for practical guidance on management, irrigation technology and water pricing. The government failed to pass a WUO law (a loan effectiveness condition that was ultimately waived).
(ii) Relief of public sector responsibility for operation and maintenance (Achieved). There was a major decline in government spending on operation and maintenance (63 percent), a large fall in the gross area covered by these services (59 percent) and a more modest reduction in government staff and facilities.
(iii) Reduction of public sector responsibility for irrigation investment (Achieved). This is implicit in the large share (50 percent) of irrigation investment costs assumed by water users. The government has expressed interest in a follow-on project to consolidate the trend away from public financing of investment.
(iv) Efficient use of irrigation systems (Partly Achieved). Anecdotal evidence suggests some efficiency gains (e.g. reduced spillage) and an increase in cultivated area; but it is less clear whether WUOs are financially self-sustaining.


4. Significant Outcomes/Impacts:

  • WUOs paid 50 percent of the cost of rehabilitation and minor improvement works, higher than in France (25-30 percent) and Germany (40 percent).
  • On five out of six operations and maintenance activities project WUOs carried out a higher percentage of the agreed annual program than in irrigation areas managed by government.
  • The average tariff collection rate of project WUOs was 82 percent compared to a rate of 50-67 percent for all irrigation systems transferred from government to user management.
  • The economic net present value of the project is re-estimated, in 1998 dollars, at US$28.5 million, compared to the US$10.5 million forecast at appraisal.

5. Significant Shortcomings (include non-compliance with safeguard features):

  • The project did not systematically collect data on the efficiency gains resulting from investments
  • There is insufficient evidence to asess whether WUOs are receiving enough funding from their members to ensure long-run sustainability of their operational responsibilities.
  • The poorer WUOs were less able to mobilize the member contributions needed to participate in the project.
  • Project implementation was delayed by uncertainty about whether the Uluborlu WUO would participate (after two years of deliberation it was not able to raise the necessary counterpart contribution and was dropped).
6. Ratings:ICROED ReviewReason for Disagreement/Comments
Outcome:
SatisfactorySatisfactory
Institutional Dev.:
SubstantialSubstantial
Sustainability:
LikelyLikely
Bank Performance:
SatisfactorySatisfactoryThe ICR rates quality at entry as unsatisfactory owing to unrealistic expectations about the scope for creating a unified legal framework, misjudged setting of grant ceilings and incomplete specification of the institutional support measures needed. However, the Bank more than compensated for these deficiencies in the supervision phase by successfully adjusting the project design and by carefully auditing WUO compliance with guidelines; this in the face of severe problems posed by the 2001 financial crisis.
Borrower Perf.:
SatisfactorySatisfactory
Quality of ICR:
Satisfactory

7. Lessons of Broad Applicablity:

  • Effective training for WUOs is critical. Because they are being given increased responsibility for managing and funding operation and maintenance, WUOs need effective training in management, finance, water distribution and rehabilitation priorities.
  • Strong monitoring and evaluation is essential. This project made little attempt to identify meaningful monitoring indicators, establish benchmarks or collect data systematically. This makes it harder to quantify the returns to participatory management.

8. Audit Recommended?  Yes

          Why?  It would be worth re-visting the project WUOs in 3-5 years time to see if they are financially self-sustaining.

9. Comments on Quality of ICR:

The ICR is generally persuasive. Despite the deficiencies of the monitoring system the author has pulled together an impressive amount of data to support the outcome rating. The ICR might have explained why the Staff Appraisal Report indicates the intention to assist about 750 WUOs when, according to the ICR, there are now only 350 currently established in Turkey.


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