Ethiopia- Irrigation and Drainage Project - Project Paper · Web view2016/07/28  · First Project...

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Document of The World Bank FOR OFFICIAL USE ONLY Report No: RES22454 RESTRUCTURING PAPER ON A PROPOSED PROJECT RESTRUCTURING OF THE IRRIGATION AND DRAINAGE PROJECT CREDIT 4333-ET BOARD APPROVAL DATE: JUNE 21, 2007 CREDIT 4976-ET BOARD APPROVAL DATE: JUNE 23, 2011 TO THE FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA July 28, 2016 Water Global Practice Africa Region

Transcript of Ethiopia- Irrigation and Drainage Project - Project Paper · Web view2016/07/28  · First Project...

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Document ofThe World Bank

FOR OFFICIAL USE ONLY

Report No: RES22454

RESTRUCTURING PAPER

ON A

PROPOSED PROJECT RESTRUCTURING

OF THE

IRRIGATION AND DRAINAGE PROJECT

CREDIT 4333-ETBOARD APPROVAL DATE: JUNE 21, 2007

CREDIT 4976-ETBOARD APPROVAL DATE: JUNE 23, 2011

TO THE

FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIA

July 28, 2016

Water Global Practice Africa Region

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

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ABBREVIATIONS AND ACRONYMS

AGP Agricultural Growth Program/ProjectAgroBig Agro-Business Induced Growth ProgrammeAHC Animal Health ClinicAHP Animal Health PostARARI Amhara Region Agricultural Research InstituteAMDe Agribusiness and Market DevelopmentBoA Bureau of AgricultureBoTT Bureau of Trade and TransportBoWRD Bureau of Water Resources DevelopmentCPA Cooperative Promotion AgencyEFA Economic and Financial AnalysisESMP Environmental and Social Management PlanFTC Farmers Training CenterIA Implementing AgenciesIDA International Development AssociationIO Intermediate OutcomeIP Implementation ProgressIWUA Irrigation Water User AssociationLMD Livestock Market DevelopmentLRDPA Livestock Resources Development Promotion AgencyMGF Matching Grant FacilityMIS Management Information SystemMSC Management Services ContractorMoWR Ministry of Water ResourcesMTR Mid-Term ReviewMWIE Ministry of Water, Irrigation and EnergyNPCO National Project Coordination OfficeO&M Operation and MaintenancePDO Project Development ObjectivePOs Producers OrganizationsRAP Resettlement Action PlanRPCO Regional Project Coordination OfficeSME Small and Medium EnterpriseSMI Small and Medium Industry

Regional Vice President: Makhtar DiopCountry Director: Carolyn Turk

Senior Global Practice Director: Jennifer SaraPractice Manager: Alexander Bakalian

Task Team Leader: Xiaokai Li

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FEDERAL DEMOCRATIC REPUBLIC OF ETHIOPIAIRRIGATION AND DRAINAGE PROJECT

Table of Contents

PageDATA SHEET 4A. Summary of Proposed Changes 5B. Project Status 6C. Proposed Changes 7Annex 1: Revised Project Results Framework 16Annex 2: Revised Economic Analysis 19

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DATA SHEETEthiopia

Irrigation and Drainage Project (P092353)AFRICAWater

Report No: RES22454.

Basic InformationProject ID: P092353 Lending

Instrument: Specific Investment Loan

Regional Vice President:

Makhtar Diop Original EA Category:

Full Assessment (A)

Country Director: Carolyn Turk Current EA Category:

Full Assessment (A)

Senior Global Practice Director:

Jennifer J. Sara Original Approval Date:

21-Jun-2007

Practice Manager/Manager:

Alexander E. Bakalian Current Closing Date:

31-Oct-2017

Team Leader(s): Xiaokai Li, Hayalsew Yilma.

Borrower: Federal Democratic Republic of Ethiopia

Responsible Agency: Ministry of Water, Irrigation and Energy.

Restructuring TypeForm Type: Full Restructuring Paper Decision

Authority: Board/AOB Decision

Restructuring Level: Level 1.

Financing Key Dates

Project Ln/Cr/TF Status Approval Date Signing Date Effectiveness

Date

Original Closing Date

Revised Closing Date

P092353 IDA-43330 Effective 21-Jun-2007 13-Jul-2007 24-Jan-2008 31-Oct-2015 31-Oct-2017

P092353 IDA-49760 Effective 23-Jun-2011 15-Sep-2011 14-Dec-2011 31-Oct-2017 31-Oct-2017

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Disbursements (in Millions) Project Ln/Cr/TF Status Currency Original Revised Cancelled Disburs

edUn-disbursed

Disbursed %

P092353 IDA-43330 Effective XDR 65.60 59.23 6.37 38.60 20.63 65P092353 IDA-49760 Effective XDR 37.10 37.10 0.00 4.93 32.17 13.

Policy WaiversDoes the project depart from the CAS/CPF in content or in other significant respects? Yes [ ] No [X]

Does the project require any policy waiver(s)? Yes [ ] No [X].

A. Summary of Proposed ChangesThe proposed restructuring involves changes to: (a) the Project Development Objective (PDO); (b) the results framework; (c) project components and costs;(d) the financing plan;(e) disbursement estimates and relocation between disbursement categories; and (f) the economic analysis, technical analysis and risk assessment.

These changes are necessary primarily due to delays in the implementation, escalation of costs, and exchange rate fluctuation, and other reasons as outlined below. There will be no changes in project institutional arrangements, EA category or safeguards policies triggered. The safeguards arrangements are still appropriate and relevant.

Change in Implementing Agency Yes [ ] No [X]

Change in Project's Development Objectives Yes [X] No [ ]

Change in Results Framework Yes [X] No [ ]

Change in Safeguard Policies Triggered Yes [ ] No [X]

Change of EA category Yes [ ] No [X]

Other Changes to Safeguards Yes [ ] No [ X]

Change in Legal Covenants Yes [ ] No [X]

Change in Loan Closing Date(s) Yes [ ] No [X]

Cancellations Proposed Yes [ ] No [X]

Change to Financing Plan Yes [X] No [ ]

Change in Disbursement Arrangements Yes [ ] No [X]

Reallocation between Disbursement Categories Yes [X] No [ ]

Change in Disbursement Estimates Yes [X] No [ ]

Change to Components and Cost Yes [X] No [ ]

Change in Institutional Arrangements Yes [ ] No [X]

Change in Financial Management Yes [ ] No [X]

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Change in Procurement Yes [ ] No [X]

Change in Implementation Schedule Yes [ ] No [X]

Other Change(s) Yes [ ] No [X]

Appraisal Summary Change in Economic and Financial Analysis Yes [X] No [ ]

Appraisal Summary Change in Technical Analysis Yes [X] No [ ]

Appraisal Summary Change in Social Analysis Yes [ ] No [X]

Appraisal Summary Change in Environmental Analysis Yes [ ] No [X]

Appraisal Summary Change in Risk Assessment Yes [X] No [ ].

B. Project StatusThe original Project was approved by the Board in June 2007 in the amount of SDR 65.6 million, of which SDR 6.37 million was later cancelled due to food crisis emergency response. The Project became effective in January 2008. The original aim of the Project was to support a large scale irrigation development for small holder farming on 20,000 ha. The Project Area includes two schemes located in Amhara Region: Megech-Seraba (Dembia woreda) and Ribb (Libokemkem and Fogera woredas). The irrigation water supply for the Ribb scheme would be relying on a dam on the Ribb River constructed by the Government with its own resources.

First Project Restructuring and Additional Financing. The project faced delays and cost overruns due to the redesign of the irrigation systems and increases in fuel, labor and material costs. Accordingly, to enable the Project to be completed and to meet the cost overrun, it was agreed that the project be restructured with additional financing (SDR 37.1 million) that was approved in June 2011. At the same time, the project closing date was extended by two years to October 31, 2017.

Since the project faced a cost overrun, the Government and the Bank decided in October 2012 to split the construction of the Ribb scheme into two phases and to launch Phase 1 first. The split was done in such a way as to ensure that the available budget would fully cover both Megech-Seraba scheme (4,004 ha) and Ribb Phase 1 (3,041 ha). The Ribb Phase 2 (10,000 ha) would be developed based on fund availability under the Project. For this purpose, the Government committed to carrying out river training works for the Ribb scheme. Letters confirming this commitment was received from the Ministry of Water, Irrigation and Energy in 2011 and subsequently in 2015.

Second Project Restructuring. Further construction cost escalation resulted in an additional funding gap for the construction of the Ribb scheme. The original cost estimates used for the additional financing were based on a detailed design for the Megech-Seraba scheme and a feasibility design for the Ribb scheme, and had increased by about 80 percent by 2014. High inflation, increases in the cost of fuel, materials and daily labor further contributed to the cost escalation. Actual bid prices were much higher than the engineering estimates. As a result, there was not enough funding to complete both schemes in their entirety. Accordingly, the Project was restructured again in July 2014, which involved: (i) reduced scope and revised costs of the three components to focus on Megech-Seraba Scheme (4,004 ha) and Ribb Scheme Phase 1 (3,041 ha), excluding Ribb Scheme Phase 2 (10,000 ha); (ii) reallocation between categories of expenditures; and (iii) revision of the Result Framework with modified indicator targets.

Current Implementation Status. The project is behind schedule due to issues with procurement of construction contracts. This was caused by major delays in completing the designs and in mobilizing construction contractors. However, there have been clear signs of improvement in implementation

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performance over the past months. Both design consultants and construction contractors mobilizing additional resources to speed up the delivery of design drawings and project works construction at each of the schemes. The design drawings are no longer the constraint for Megech Scheme, and construction of critical works is progressing significantly faster than before at both sites.

Under Component 1 – Irrigation Development, the construction of the Megech-Seraga scheme (covering 4,004 ha) is 65 percent completed and full completion is scheduled for December 31, 2016. The primary canals for Ribb Scheme Phase 1 (covering 3,041 ha) is 10 percent complete. Concrete measures such as having parallel design and construction crews and sub-contracting secondary works construction, are being put in place to expedite the implementation and ensure the completion of works for Ribb Scheme Phase 1 by the current closing date.

Many of the project activities under Component 2 – Agricultural and Market Development, including agricultural research and development, training of farming communities on irrigated agriculture, and livestock health services have been undertaken as planned. Nine training and livestock service centers have been established to serve the local communities. However, agricultural value-chain and market development activities including the Matching Grant sub-projects are still in the start-up stage, and may not be completed fully within the remaining period.

Preparatory work for irrigation system operations and maintenance (O&M) has started under Component 3 – Irrigation Management, while establishment of irrigation water user associations (IWUAs) is at an initial stage with three IWUAs established in Megech Scheme.

Under Component 4 – Project Management, a National Project Coordination Office (NPCO) and a Regional Project Coordination Office (RPCO) were established at the national and regional levels to manage project implementation with assistance from consultants. The overall project management capacity is still weak and requires further strengthening.

As of June 30, 2016, the cumulative credit disbursement rate of the project was at 43.4 percent..

C. Proposed Changes.

Development Objectives/ResultsProject Development Objectives

Original PDOThe development objective of the project is to sustainably increase agricultural output and productivity in project areas.

Change in Project's Development Objectives

ExplanationThe PDO is proposed to be changed in order to align it with the results that can realistically be achieved by the closing date. While the longer-term objectives and the underlying rationale of the Project remain to increase agricultural production and productivity, it would be difficult to demonstrate progress on these longer-term outcomes within the remaining Project implementation period, as several agricultural seasons would be required to demonstrate achievements in this domain.

Proposed New PDOThe development objective of the project is to improve access to irrigation and drainage services and build farmers’ capacity in irrigated agriculture in the Project Area.

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Change in Results Framework

Explanation:

The results framework will be rationalized to align the indicators with the revised PDO and ensure that the indicator targets are attainable during the remaining project period.

For PDO outcome indicators, changes in agricultural output and value addition are difficult to verify because the majority of the command area would hardly have one full irrigation season before the Project closure. Therefore, they will be replaced by the following core indicators: area provided with irrigation and drainage services (ha), water users provided with new/improved irrigation and drainage services, of whom female (number), operational water user associations created and/or strengthened (number), and clients who have adopted an improved agricultural technology promoted by the project (number). The Government team will still continue to collect information on yields, etc. so that this information will become available and be used for management purposes following the closure of the project.

For intermediate outcome indicators, the indicators below are either not achievable or difficult to verify because of the major delays in project implementation and limited remaining period: change in yield, real value of marketed products and adoption of new technologies, and irrigation efficiency of main supply system, and others. Those indicators will be replaced by indicators that could be better measured within the project implementation period, such as length of main canals constructed, number of training and service centers operational, and functional O&M system for irrigation schemes and others (see revised Results Frameworks in Annex 1 for details)..

.

FinancingChange to Financing Plan

Explanation:

The total budget is estimated at about US$183.70 million, an increase from the current US$181.10 million. The IDA allocation remains the same in SDR terms but decreases in US$ terms to about US$149.70 million due to exchange rate fluctuations and cancellation of SDR6.36 million on September 30, 2008 for a food crisis emergency response. The Borrower has officially committed to filling the financing gap by providing a total of US$34.00 million through the national government budget.

Source(s) At Approval Current (from AUS) ProposedBORR 15,000,000.00 23,100,000.00 34,000,000.00IDA 100,000,000.00 158,000,000.00 149,700,000.00

Total 115,000,000.00 181,100,000.00 183,700,000.00

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Reallocations

Explanation:

Reallocation is sought in order to align the expenditures by category to the revised budget. Ln/Cr/TF

Currency Current Category of Expenditure

Allocation Disbursement % (Type Total)

Current Proposed Current ProposedIDA-43330

XDR DISB-GOODS/EQUIPMENT

2,180,000.00 1,772,000.00 100% of foreign

expenditures and 90% of

local expenditures

100% of foreign

expenditures and 90% of

local expenditures

DISB - CIVIL WORKS

29,560,000.00 45,218,000.00 95.00 95.00

DISB - CONSULTING/ AUDITS

18,680,000.00 8,771,685.01 90.00 90.00

DISB - TRAINING 2,360,000.00 1,500,000.00 100.00 100.00DISB - GRANTS 3,560,000.00 500,000.00 100% of

goods, works, and

services under Grants

100% of goods,

works, and services

under GrantsDISB - OPERATING COSTS

1,730,000.00 1,080,000.00 70% for expenditures

incurred before June

30, 2015, 50% for

expenditures incurred

before June 30, 2016 and

40% thereafter

40.00

PPF REFINANCING

392,051.10 392,051.10 Amount payable

pursuant to Section 2.07

of the General

Conditions

Amount payable

pursuant to Section 2.07

of the General

ConditionsUNALLOCATED 771,685.01 0.00 0.00 0.00UNALLOCATED AMOUNT CANCELLED (AS OF SEPTEMBER 30, 2008)

6,366,263.89 6,366,263.89 0.00 0.00

Total: 65,600,000.00 65,600,000.00IDA-49760

XDR DISB-GOODS/EQUIPMENT

0.00 0.00 0.00 0.00

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DISB - CIVIL WORKS

28,832,000.00 31,300,000.00 95.00 95.00

DISB - CONSULTING/ AUDITS

0.00 0.00 90.00 90.00

DISB - TRAINING/ WORKSHOPS

0.00 0.00 100.00 100.00

DISB - GRANTS 0.00 0.00 100.00 100.00DISB - OPERATING COSTS

0.00 0.00 0.00 0.00

DISB - OTHER 0.00 0.00 100.00 100.00UNALLOCATED 0.00 0.00 100.00 100.00Management Services

8,268,000.00 5,800,000.00 100% for expenditures

incurred before June

30, 2014; 80% for

expenditures incurred

before June 30, 2015; and 50%

thereafter

100% for expenditures

incurred before June

30, 2014; 80% for

expenditures incurred

before June 30, 2015; and 50%

thereafterTotal: 37,100,000.00 37,100,000.00

Disbursement Estimates

Change in Disbursement Estimates

Explanation:

Given the disbursement lag vis-a-vis current disbursement estimates, they are proposed to be revised as outlined below.

Fiscal Year Current (USD) Proposed (USD)

2007 0.00 0.00

2008 10,269,071.81 10,840,097.91

2009 3,826,701.63 3,859,261.98

2010 3,133,429.9 3,109,979.19

2011 1,976,853.6 1,936,946.90

2012 17,544,150.31 3,974,367.84

2013 26,800,000 8,956,854.50

2014 27,560,000 4,169,501.17

2015 23,360,000 9,540,270.53

2016 19,160,000.00 18,712,021.23

2017 12,680,000.00 72,600,906.00

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2018 540,000.00 12,000,000.00

Total 149,700,207.25 149,700,207.25.

ComponentsChange to Components and Cost

Explanation:

There will be a change in project components because an activity under Schedule 1 Part 1 (c) of the Financing Agreement for Credit 4333 is dropped (see details below). Component costs will also be adjusted taking into account the actual costs of all completed and committed activities, and their respective implementation schedules.

Change in Project Description: The proposed adjustments in activities under Component 1 through this restructuring have no impact on the summary project description for the component in the Project Appraisal Document and Financing Agreement. However, in the Financing Agreement for Credit No. 4333-ET, Schedule 1 Part 1 (c) (ii) “implementing environmental and social impact assessments, and resettlement action plans, for the 80,000 ha of new irrigation development referred to in Part 1(b) above, and for other proposed hydraulic infrastructures in the Lake Tana sub-basin” would need to be dropped from the Project description. This is because there is neither funding nor time available to develop any of the 80,000 ha new irrigation referred to in Part 1(b) before the credit closure in October 2017, and there is no other proposed hydraulic infrastructures planned under this project in the Lake Tana sub-basin.

The revised Project description in the Financing Agreements and their amendments (including the proposed change above) is as follows:

Component 1/Part 1: Irrigation Development

(a) Developing surface water infrastructure and ascertaining future irrigation potential in the Project Area through: (i) conducting technical feasibility and detailed design studies; and (ii) carrying out works and construction supervision for irrigation and appurtenant infrastructure.

(b) Providing for technical assistance through: (i) conducting feasibility and design studies for up to 80,000 hectares of new irrigation development in selected sites in the Project Area as well as in Anger, Upper Beles and Negesso; and (ii) conducting additional studies including studies necessary for: (A) the review of existing irrigation legislation; (B) the preparation of an irrigation strategy and establishment of a national irrigation maintenance fund; (C) improvement of the efficient use of irrigation water; and (D) the preparation of an institutional framework for large and medium scale irrigation development and management.

(c) Providing support for conducting, and implementing the recommendations of, environmental and social impact assessments, and resettlement actions plans, relating to Project investments in hydraulic infrastructure in the Project Area, and for the Ribb Dam.

(d) Providing support for the implementation of the Recipient’s detailed land survey program in the Project Area.

Component 2/Part 2: Agricultural and Market Development

Promoting sustainable intensification and commercialization of agricultural inputs and outputs

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on the irrigation schemes developed under the Project through:

(a) Provision of improved delivery of irrigated agriculture production services including through, inter alia: (i) strengthening the capacity of ARARI to conduct, validate and deliver irrigated agriculture research products including through FREGs; (ii) strengthening the capacity and delivery of the public extension services (crop and livestock production), including farmer training centers; (iii) strengthening the capacity and delivery of the public and private animal health services, including animal health clinics and animal health posts; (iv) supporting breed improvement, including animal feed and forage production; (v) improving access to quality inputs: seeds (irrigated crops), breeds, fertilizers, and phytosanitary products; and (vi) building capacity of farmers in irrigated agricultural production.

(b) Provision of improved markets and value chains including through, inter alia: (i) strengthening the capacity of cooperatives; (ii) expanding post-harvest operations, including processing facilities; (iii) improving marketing operations and facilities; (iv) supporting value chain development, including mobilization of market development specialist to facilitate private sector development, and linkages with the Matching Grant financed Sub-Projects; and (v) providing Matching Grants for the implementation of Sub-Projects.

Component 3/Part 3: Irrigation Management

Enhancing the efficiency and financial sustainability of irrigation infrastructure through:

(a) Establishing legally recognized Water Users Groups (WUGs) and developing and strengthening their capacity including: (a) implementation of an intensive program of stakeholder consultations and dissemination of information on Project implementation and progress to farmers; (ii) implementation of demand-based approaches to system planning and design for the Project Area; and (iii) strengthening the capacities of farmers, WUGs and regional and national irrigation extension staff on issues related to irrigated agriculture;

(b) Strengthening the capacity of the staff of the Recipient’s Ministry of Water Resources and of the Amhara BoWRD in participatory approaches to irrigation, including establishment and mobilization of WUGs, stakeholder involvement in identification, planning and design of irrigation schemes, and sustainable operations and maintenance of irrigation; and

(c) Providing technical assistance to promote the role of public-private partnerships in irrigation infrastructure planning, management and operation as well as providing financing to meet the shortfall in operation and maintenance cost recovery from water users.

Component 4/Part 4: Project Management

Strengthening the management capacity for implementation of the Project including:

(a) providing support for project management, including (i) provision of technical assistance, training, office equipment and vehicles, auditing and evaluation studies, and incremental operating costs; (ii) provision of technical support for project planning, auditing and financial and technical evaluations; (iii) carrying out cross cutting capacity building activities; and (iv) strengthening procurement and financial management capacity at all levels; and

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(b) Supporting the development and implementation of a monitoring and evaluation framework and a management information system for the Project.

Change in Component Costs:

There will be a slight increase in total project costs from the current US$181.10 million to US$183.70 million equivalent that will be covered by the Government of Ethiopia. As a result of cost escalation in construction works, the cost of Component 1 is expected to increase by about 10 percent from US$137.20 million to US$150.10 million, while that of Component 2 will decrease substantially from US$17.10 million to US$6.50 million due to limited time available to implement the market development activities. The changes in costs of Components 3 and 4 on the basis of last restructuring will be minor, from US$20.20 million to US$20.00 million, and from US$5.90 million to US$6.50 million respectively.

For Component 1 (Irrigation Development), the following activities were included without requiring a change to the project description: (a) preparation of detailed design and bidding documents for Ribb Irrigation Scheme Phase 2 (10,000 ha); (b) implementation of Ribb river training works Phase 2 (only a provisional sum of US$4.00 million was provided as the final resign/determination is yet to be made on the basis of the results from an ongoing study); and (c) provision US$1.00 million for O&M equipment for Ribb river training works Phase 2. The final cost of Megech Scheme construction contract is likely to increase because of the unexpected flood emergency works added, a significant number of variation orders issued and the contract prolongation costs. The updated costs for Component 1 will increase by about 10 percent to US$150.10 million. The component cost includes US$0.60 million project preparation fund.

For Component 2 (Agriculture and Market Development), the activities related to market development and the Matching Grant program would be scaled down because there is limited time left to implement them. The implementation of the Matching Grant program for agricultural value-chain and market development will be limited to the selected sub-projects to date. As a result, the costs of Component 2 will be reduced by US$10.60 million to US$6.50 million.

For Component 3 (Irrigation Management), and Component 4 (Project Management), there is a slight adjustments in the cost estimates to reflect the minor changes in capacity building costs, and increase in incremental operating costs. The component cost changes are summarized below.Current Component Name

Proposed Component Name

Current Cost (US$M) Proposed Cost (US$M)

Action

Irrigation Development

137.80 150.70 Revised

Agriculture and Market Development

17.10 6.50 Revised

Irrigation Management

20.20 20.00 Revised

Project Management 5.90 6.50 RevisedTotal: 181.00 183.70

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Appraisal SummaryAppraisal Summary Change in Economic and Financial Analysis

Explanation:

The economic analysis was updated to account for the increased costs and reduction in irrigation command area resulting from the additional financing approved in June 2011, delays in project implementation, as well as considerable revisions to some of the project results targets. The main quantifiable benefits accrue from: (i) increases in yields and expansion of cultivated area on account of better access to irrigation services; and (ii) a shift from subsistence oriented crops to higher value crops with market potential, such as vegetables and spices. Other key project benefits include improved animal husbandry practices promoted by the Project, increase in the quantity and value of products marketed by farmers and cooperatives in the project area, increased demand for seasonal agricultural labor, backward and forward value chain linkages, and local institutional improvements. The costs include scheme construction, supervision, operation and maintenance costs, a share of other project costs for the activities that contribute to the generation of benefits, and project management costs.

The economic analysis demonstrates that the restructured project is economically viable (see more details in Annex 2). The updated analysis shows an Economic Rate of Return (EIRR) of 15 percent, and a Net Present Value (NPV) of 210 million Birr for Megech-Seraba scheme. This represents however a significant drop in comparison with the EIRR of 22 percent expected at the time of appraisal. The updated EIRR for Ribb Scheme Phase 1 is 10 percent comparing with an EIRR of 14 percent for the entire scheme at appraisal, while the recalculated NPV is 71 million Birr.

Appraisal Summary Change in Technical Analysis

Explanation:

The design of the Megech Scheme is completed with construction at an advanced stage, while for the Ribb Scheme, the design review is completed, re-design underway for Phase 1 and the construction started in October 2015. There will be a change in the flood protection design standard for the proposed Ribb river training works, from one-in-five-years to one-in-twenty-five–years floods. This has resulted from a design review, and is in line with international good practice. The final design will need to be based on the results of the ongoing hydrological and hydraulic studies taking into account the changes in the river and dikes since Project appraisal in 2007. The implementation of the river training works is on the critical path and must be managed very carefully to ensure timely completion. The design and construction supervision teams for both schemes should be further strengthened to ensure timely completion with good quality of the two irrigation schemes, which has been included in the agreed action plan.

Appraisal Summary Change in Risk Assessment

Explanation:The risk rating for institutional capacity has been changed recently from “Substantial” to “High” because of the weak implementation capacity, including capacity in implementing the safeguards instruments such as the Environmental and Social Management Plan (ESMP) and the Resettlement Action Plan (RAP). These are the main reasons for the slow project progress, and involve the Government team, consultant team and a construction contractor. Efforts have been made on all fronts to improve the project performance. Further actions including assigning more design engineers to construction sites, enhancing the Government team’s project management capacity, mobilizing more construction equipment, and establishing effective execution, monitoring and reporting mechanisms for safeguards management, have been agreed and included in the Action Plan. There are no changes in other risk ratings. .

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Systematic Operations Risk-Rating Tool (SORT)Risk Category Rating

1. Political and Governance Substantial

2. Macroeconomic Moderate

3. Sector Strategies and Policies Low

4. Technical Design of Project or Program Substantial

5. Institutional Capacity for Implementation and Sustainability High

6. Fiduciary Substantial

7. Environment and Social Substantial

8. Stakeholders Substantial

OVERALL Substantial

ExplanationThe overall risk rating remains substantial given the issues discussed above.

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Annex 1: Revised Project Results Framework

Project Development Objectives

Original Project Development Objective: The development objective of the project is to sustainably increase agricultural output and productivity in project areas.Proposed Project Development Objective (from Restructuring Paper): The development objective of the project is to improve access to irrigation and drainage services and build farmers’ capacity in irrigated agriculture in the Project Area.

PDO Level Results Indicators

Cor

e UOM1

BaselineOriginal ProjectStart

(2007)

Progress To Date(2016)

Cumulative Target Values2

Frequency

Data Source/

Methodology

Responsibility for Data Collection

Comments2016 2017

Area provided with irrigation and drainage services –new or rehabilitated

Ha 0 0 1,000 4,000 Quarterly M&E Report

NPCO

Per core indicators definitionWater users provided with

new/improved irrigation and drainage services, of which female (new indicator)

NoM: 0.00(female 50%)

0M:2,500(female 1,250)

M:10,097(female 5,048

)Quarterly M&E

ReportNPCO

Operational water user associations created and/or strengthened (new indicator)

No. M:0.00R:0.00

M:3R: 0

M:3R: 0

M:23R:12

QuarterlyProject progress report

RPCO Per core indicator definition for IWUA establishment

Clients who have adopted an improved agricultural technology promoted by the project (new indicator)

No. 0 0 1,000 3,000 QuarterlyProject progress report

RPCO Farmers who switch to irrigated crops and use agri. Extension services

Direct project beneficiaries No. 0 0 M:2,500R:0.00

M:10,097R: 9,950

Semi-annually M&E report NPCO

The indicator will be based on the register of water users of the two schemes. of which female % 0 0 50 50 Semi-

annually M&E report NPCO

1 UOM = Unit of Measurement.2 Target values should be entered for the years data will be available, not necessarily annually. Target values are cumulative unless otherwise stated in the “Comments” column.

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Intermediate Results and IndicatorsIntermediate Results

Indicators

Cor

e

Unit of Measure

ment

BaselineOriginal ProjectStart(2007)

Progress To Date(2016)

Target Values Frequency Data Source/

Methodology

Responsibility for Data

Collection

Comments2016 2017

Component 1: Irrigation DevelopmentLength of Main Canals constructed(new indicator)

Km M:0.00 R:0.00

M1: 17.33M2: 20.05R1: 17.9

M1: 17.33M2: 20.05R1: 27.63

Quarterly Management contractor records

Management contractor

Defined per design report

Length of Secondary Canals constructed (new indicator)

Km M:0.00 R:0.00

M1: 11.35M2: 45.08R1:16.4

M1: 11.35M2: 45.08R1: 33.03

Quarterly Management contractor records

Management contractor

Defined per design report

Length of Tertiary Canals constructed (new indicator)

Km M:0.00 R:0.00

M1: 25.60M2: 73.94R1: 24.0

M1: 25.60M2: 73.94R1: 74.30

Quarterly Management contractor records

Management contractor

Defined per design report

Area covered by detailed design for Ribb Scheme Phase 2 (new indicator)

Ha 0 0 0 10,000 Quarterly Management contractor records

Management contractor

Detailed design includes tendering documents

Acreage covered by feasibility studies in Anger, Megech, Upper Beles, and Negesso

Ha 0 - 80,000 80,000 Quarterly Consultant’s reports

NPCO

Component 2: Agricultural and Market Development

Number of farmers trained on irrigated agriculture and livestock development (new indicator)

No. 0 0 1,000 3,480 Quarterly Project progress report

RPCO

Number of Training/Service Centers operational (new indicator)

No. M:0.00R:0.00

M:0.00R:0.00

M:5 R: 4

M:12 R: 10

Quarterly Project progress report

RPCO This indicator will report on the number of centers rehabilitated and/or constructed and made

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Intermediate Results and Indicatorsoperational, i.e. providing regular training to farmers with staff and funding.

Number of competitive grant sub-projects fully operational (Revised)

No. N/A 0 12 18 Quarterly M&E Report RPCO This indicator will report on number of businesses operational, with support from the Matching Grant

Component 3: Irrigation Management

Functional O&M system established for Megech-Seraba Scheme and Ribb Phase 1 Scheme(new indicator)

Y/N N/A N N Y Quarterly M&E report Management contractor

Adequate O&M staff in place, O&M Plan approved and O&M funding mechanism established

Irrigation fee collection rate % N/A 0 0 90 Annually M&E report Management contractor

Not cumulative, for Megech-Seraba Phase 1 only

Percentage project area (for Megech-Seraba Phase 1) under contract with a private operator for O&M

% N/A 100 100 100 Annually Project progress report

NPCO

Component 4: Project ManagementIncidence of financial and project progress reports delivered within one week of due date

% N/A 50 100 100 Quarterly M&E report NPCO Deadline applicable for IFR extended to progress report

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Intermediate Results and IndicatorsNo. of surveys completed according to M&E framework

No. 0 1 2 3 Annually M&E report NPCO

“M” = Megech-Seraba; and “R” = Ribb M1: Megech-Seraba Phase 1 (West of Dirma)M2: Megech-Seraba Phase 2 (East of Dirma)R1: Ribb Phase 1 (East of Asphalted road)R2: Ribb Phase 2 (West of Asphalted road)

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Annex 2: Revised Economic Analysis

Background

The Ethiopia Irrigation and Drainage Project (ENDIP) became effective in January 2008 and has since then been restructured twice. The first restructuring took place in 2011 and included an additional financing of US$60 million equivalent to cope with cost overruns due to a redesign of the irrigation schemes and increases in fuel, labour and material costs. At the same time, the project closing date was extended by two years to October 2017. The project underwent further restructuring in 2014 as a result of sustained costs escalation on account of high inflation and miscalculations in the Ribb initial construction estimate. The original project target of supplying irrigation to a gross area of 20,000 ha (17,300 ha net) had to be then revised to focus on Megech-Seraba (4,040 ha) and Ribb Phase I (3,000 ha), excluding Ribb Phase II (4,000 ha).

A third restructuring is now being proposed to address the challenge of completing the works before the project closes in October 2017, given that the implementation status is still far behind schedule. Savings from revisiting Component 2 activities and from a reduction in management costs under Component 3 will be used to fast-track the construction at both Megech-Seraba and Ribb schemes and include the design and river training works of Ribb Phase II, which the Government has committed to finance using treasury resources.

The project targets have been modified accordingly, and the PDO reformulated, from the original aim of sustainably increasing agricultural output and productivity in project areas to a more realistic and achievable improving access to irrigation and drainage services and build farmers’ capacity in irrigated agriculture in the Project Area.

On account of the substantial delays in implementation and modifications to the original project scope and results targets, the economic viability of ENIDP needs to be reassessed. A new project Economic and Financial Analysis (EFA) has been prepared, building on data from the latest feasibility study carried out in 20143 and taking into account the revised project scope and latest budget re-allocations. The main purpose of the EFA is to determine whether the main cost-benefit indicators (Net Present Value and Internal Rate of Return) remain within acceptable values and to update the largely underestimated costs per hectare and per beneficiary presented in the appraisal and additional financing EFA annexes.

Methodology

The analysis reflects changes in cropping intensities and mix of crops brought about by timely access to controlled irrigation and farmers training in the project area. Crop budgets have been adapted to reflect current output prices, input costs, labor and water requirements for the crop varieties recommended by the extension services, i.e. - higher yielding short-term varieties and crops with better response to irrigated agriculture.

The analysis is based on the study of one representative household in each of the project areas (Dembia Woreda in the Megech-Seraba command area and Libokemkem and Fogera Woredas in Ribb), taking into account the average area under cultivation and typical crop choices (see Tables 2.10 and 2.11). The total net income per household is then calculated by multiplying the relative area under each crop by the net profit per ha in the dry and wet seasons and aggregating for all relevant crops. Incremental benefits have been estimated as the difference between a ‘without project (WoP)’ scenario reflecting typical cropping patterns and intensities of rain fed agriculture and a ‘with project (WP)’ scenario that illustrates how 3 Feasibility Study for an Output-Based Aid Scheme, 2014.

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cropping mixes and intensities are expected to change with irrigated agriculture in each season. Incremental benefits are then adjusted to one hectare basis and aggregated for the overall command area, applying a benefit stabilization factor. Other inflows include fixed and variable irrigation fees, whereas outflows account for scheme construction and supervision costs, scheme management, operations and maintenance costs, and a share of other project costs.

Identification of benefits and beneficiaries

As explained in the above section, main quantifiable benefits accrue from: (i) increases in yields and expansion of cultivated area on account of better access to irrigation services; and (ii) a shift from subsistence oriented crops to higher value crops with market potential, such as vegetables and spices. Agricultural marketing activities originally envisaged at appraisal will not be implemented due to lack of time. However, it has been agreed that the new phase of the Agricultural Growth Project will cover ENDIP areas and facilitate farmers' access to markets. For this reason, benefits of shifting to more commercial crops remain relevant to ENDIP, although further benefits from collective marketing or value addition activities are excluded from this analysis in order to provide conservative estimates.

Average profit per hectare/season and average income per household/season based on present and future cropping patterns are summarized below and detailed in Tables 2.10 and 2.11. About 30 different crops, including cereals, oilseeds, pulses, vegetables and spices have been analysed. Results show that net profits from wet season crops can potentially increase by 283 percent and 312 percent, whereas dry season crops profit may rise by 185 percent and 150 percent in Megech and Ribb, respectively. Megech households’ annual incomes could increase by threefold, from US$515 to US$1,489, whereas Ribb households’ annual increase would be more moderate, from US$823 to US$1,884 a year.

Table 2.1: Megech- average profit per season/crop and household profile (Birr and US$).

Profit per crop/season (Birr/ha)

Wet Season Rainfed Crops

Dry Season Rainfed Crops

Wet Season Supplementary Irrigated Crops

Wet Season Irrigated Crops

Average profit cereals 18,868 0 32,646 13,879

Average profit oilseeds 6,460 10,066 9,280 14,427

Average profit pulses 0 17,773 0 17,562

Average profit vegetables 0 0 37,935 46,318

Average profit spices 0 13,536 18,805 25,862

Total average 5,065 8,275 19,733 23,610

Household summary profile and incomes

Average area under cultivation (ha) 0.96

Cropping intensities per season (%) 67.00% 45.40% 96.00% 90.00%

Overall cropping intensity (%) 112.40% 186.00%Average profit per household per season (Birr) 5,917 5,045 11,635 20,026

Total profit per household per year (Birr) 10,961 31,662Total profit per household per year (US$) 515 1,489

Note: Based on current and future cropping mixSource: Author’s calculations

Table 2.2: Ribb- average profit per season/crop and household profile (Birr and US$).20

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Profit per crop/season (Birr/ha)

Wet Season Rainfed Crops

Dry Season Rainfed Crops

Wet Season Supplementary Irrigated Crops

Wet Season Irrigated Crops

Average profit cereals 17,273 0 28,580 8,829

Average profit oilseeds 5,885 8,125 9,280 7,708

Average profit pulses 0 14,244 0 11,236

Average profit vegetables 0 0 38,588 32,731

Average profit spices 0 8,775 18,965 17,469

Total 23,158 31,143 95,413 77,973

Household summary profile and incomes

Average area under cultivation (ha) 0.85

Cropping intensities per season (%) 74.71% 37.76% 99.76% 73.47%

Overall cropping intensity (%) 112.47% 173.24%Average profit per household per season (Birr) 11,576 5,923 25,660 14,411

Total profit per household per year (Birr) 17,499 40,071

Total profit per household per year (US$) 823 1,884Note: Based on current and future cropping mixSource: Author’s calculations

Note: Based on current and future cropping mixSource: Author’s calculations

Other key project benefits are derived from improved animal husbandry practices promoted by ENIDP through support to nine Animal Health Clinics. Introduction of new breeds, fodder and feed packages and easier access to vaccination services are expected to increase the number of productive animals, the daily milk production per unit and expand the milking period. However, livestock activities are still at a very initial stage. The lack of data on overall cattle population to be potentially covered by the Animal Health Clinics makes it difficult to assess any prospective benefits, which are consequently not accounted for in the EFA.

A Matching Grant Facility, designed with the aim of supporting market-driven supply chains and strengthening Producers Organizations (POs), is expected to increase the quantity and value of products marketed by farmers and cooperatives in the project area. About 12 grant applications have been accepted so far for small and medium investments ranging from 100,000 to 1,000,000 Birr, mainly for grain storage and oil, milk and grain processing plants. However, expected incremental returns for small and micro enterprises (SMEs) and POs benefiting from the Matching Grant Facility cannot be factored in the overall benefit stream due to the fact that these estimations, including the business plans supporting the grant applications, have not been disclosed.

Other non-quantified direct benefits include: (i) increased demand for seasonal agricultural labor; (ii) increased private sector activities in connection with the new irrigation systems management, operations and maintenance; and (iii) backward and forward value chain linkages. A number of benefits of intangible nature are also expected to be generated by ENDIP. These would include: (i) local institutional improvements, such as the formation and training of Water Users Associations (WUAs); and (ii) benefits in terms of food security and nutrition at the households level.

In the absence of more accurate statistics, the number of direct beneficiaries has been calculated by dividing the command area by the average land size per household in each

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scheme. Average household size is assumed at five people per household. Hence, ENIDP will directly benefit over 20,000 individuals through Megech and Ribb Phase I. If Ribb Phase II is implemented fully with treasury funds as anticipated, some 30,000 additional individuals would benefit from access to irrigation services.

Table 2.3: Direct beneficiaries ENIDP and Ribb Phase II

Command area (ha)

Average land owned by

households (ha)

Number of households

Number of people

Megech 4,040 1.07 3,776 18,879

Ribb Phase I 3,000 1.16 2,586 12,931

Total ENIDP 6,362 31,810

Ribb Phase II 10,000 8,621 44,741

Total ENIDP + Ribb Phase II 14,983 76,550 Source: Author’s calculations

Identification of costs

Project costs have been recalculated for this third restructuring proposal taking into account the actual costs of all completed and committed activities and the revised scope of the components and their implementation schedule and introduction of new activities. Major changes include increases in Megech scheme construction contract due to required emergency and ancillary work and additional funding for supervision of the two schemes and re-design of Ribb river training works for Phase II.

The cost of Megech construction contract is now US$52.7 million plus US$4.2 million for design and supervision, whereas Ribb construction is about US$53.5 million, with US$4.2 million for design and supervision of field works. For the purpose of calculating costs per hectare, NPV and EIRR, other works outside the construction contract such as field canals and drain works have been added for Megech, whereas Ribb cost related to Phase II are computed separately. Costs of land certification, WUA training and other studies are attributed proportionally to Megech and Ribb and added to the supervision contract. Provision for contingencies (3 perecent) is deducted from the total amount. The results below show that costs per hectare add up to over US$15,000 for Megech and US$19,500 for Ribb, exceeding by far the US$6,600/ha for Megech and US$5,300/ha anticipated at the time of Additional Financing (2011). The difference is due to: (i) a reallocation of project resources to ensure timely completion of the infrastructure works; (ii) the fact that the Additional Financing costs per hectare were calculated on the basis of the contract amount and excluding supervision, secondary works, WUAs training and other related costs; and (iii) economies of scale assumed for Ribb due to its larger size (13,000 ha at the time of AF) that did not materialize. Costs per beneficiary are estimated at US$3,235 for Megech and US$4,536 for Ribb.

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Table 2.4: Costs per hectare and beneficiary (USD)

Construction works

(Contract + other

related costs )

Supervision works (Contract + other related costs )

Command area

Number of

households

Number of

individuals

Costs per ha (Work

s only)

Costs per Ha

(Works + supervisio

n)

Cost per househol

d

Costs per beneficiar

y

Megech 56,470,078 4,601,710 4,040 3,776 18,879 13,97

8 15,117 16,175 3,235

Ribb 53,470,843 5,187,286 3,000 2,586 12,931 17,824 19,553 22,681 4,536

Source: Author’s calculations

In addition to construction and supervision costs, the costs of managing, operating and maintaining the schemes (MOM) will continue over the productive life of the investment, assumed at 25 years from completion. During the first three years following completion, the Management Service Contractor will cover all MOM costs. Subsequently, MOM responsibilities will rest with the WUAs, who will raise funds for this purpose by establishing a fee system. According to a detailed study carried out by the Management Service Contractor4, the fee system shall be divided into fixed fees, based on the irrigated surface, and a variable fee, based on actual volume of water delivered to the farmer. The fixed fee would cover the scheme O&M costs and is paid regardless of the use or not of irrigation services, which will set an incentive for farmers to use the services. The variable fee is designed to cover operating costs (including pumping costs), and its proportional nature aims at ensuring an efficient use of water. Computations to estimate fixed and variable fees for Megech follows the methodology used in the above mentioned study and Table 2.9 below. Detailed MOM costs for Ribb are not available at the moment. For the purpose of this EFA, a percentage of the Megech management costs have been assumed to calculate Ribb’s fixed irrigation fee, and a variable fee to cover Ribb distribution costs is assumed at 50 percent of the Megech fee.

Results

For each scheme, two different cash flows have been calculated: (i) including scheme construction, supervision and MOM costs; and (ii) including the above costs plus a share of other project costs, i.e. activities under Components 2 and 3 that contribute to the generation of benefits, and project management costs. Ribb Phase II cash flow has been assessed separately and in combination with Ribb Phase I.

Megech shows an Economic Rate of Return (EIRR) of 15 percent with construction, supervision and MOM costs that declines to 12 percent when other project costs are included. The Net Present Value (NPV) is estimated at 210 and 107 million Birr respectively. These values are significantly lower, but very much in line with appraisal and additional financing projections, and altogether higher than the discount rate used for the analysis (10 percent).

Results for Ribb Phase I are not as satisfactory. Although all values remain positive and the NPV of 71 million Birr is consistent with appraisal estimates, EIRRs are equal or just over the discount rate (11 percent and 10 percent for each cash flow option). Furthermore, the NPV when other ENDIP costs are included is close to zero. The main factor contributing to

4 Tariff Assessment of the Megech Irrigation Scheme, PSP Contractor

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these poor results is the fact that the economies of scale anticipated for the fully fledged 13,000 ha scheme have not materialized, resulting in higher costs per hectare than Megech with a smaller command area. However, it is important to note that the alternative to restructuring the project and thereby ensuring an adequate completion of Ribb works would yield even lower results, given the possibility of incomplete works resulting in a reduced command area, and other potential risks associated with poor design and execution of the scheme (such as a shorter productive life of the investment, deficiencies in distribution services that result in crop failure, etc.).

The potential of the infrastructure works undertaken under Ribb I would not be fully utilized unless the additional 10,000 hectares planed for Phase II are executed. Ribb Phase II can be assessed as a stand-alone project, yielding the results shown in Table 2.5. However, these results do not include all the activities executed under Phase I that lay the groundwork for the implementation of Phase II. When both Phases are combined, the NPV increases to about 109 million Birr, consistent with Megech NPV values.

Table 2.5: Summary of Economic Analysis and comparison with Appraisal and Additional Financing indicators (Birr).

With Construction, supervision and MOM costs Megech Ribb Phase I Ribb Phase II

NPV @ 10% 210,302,533 71,101,911 69,902,660

EIRR 15% 11% 10%

With other project costs * Megech Ribb Phase I Ribb Phases I and II

NPV @ 10% 107,289,069 1,733,519 108,987,873

EIRR 12% 10% 11%

Appraisal 2007 Megech Ribb

NPV 127,100,000 80,000,000

EIRR 22% 14%

Additional Financing 2011 Megech Ribb

NPV 294,000,000 692,400,000

EIRR 16% 23%

* With proportional attribution of other project costs besides construction, supervision and MOM

Source: Author’s calculations

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Table 2.6: Economic and financial analysis Megech Scheme. Parameters and assumptions.

Megech total irrigated area ha 4,040

Average water requirement per year m3/ha 8,744

Variable water fees birr/m3 0.041

Fixed water fees birr/ha 1,893

Net income per ha (net profit)

WoP- Wet season rainfed birr/ha 11,276

WoP - Dry season rainfed birr/ha 14,262

WP - Wet season supplementary irrigation birr/ha 23,804

WP - Dry season irrigated birr/ha 42,427

Unit 2009-2009 / 2011-2012

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 to 2039-2040

Surface irrigated (%) * % 40.00% 100.00% 100.00%

Surface irrigated (ha) * ha 1,616 4,040 4,040 4,040 4,040 4,040

With Project Situation

Yield and income stabilization factor % 70.00% 90.00% 100.00% 100.00%

Net income wet season supplementary irrigation

birr 26,926,851 86,550,592 96,167,325 96,167,325 96,167,325 96,167,325

Net income dry season irrigated birr 47,992,927 154,262,978 171,403,309 171,403,309 171,403,309 171,403,309

Total income birr 74,919,777 240,813,570 267,570,634 267,570,634 267,570,634 267,570,634

Without Project Situation

Foregone income wet season rainfed birr 18,222,521 45,556,302 45,556,302 45,556,302 45,556,302 45,556,302

Foregone income dry season rainfed birr 23,046,750 57,616,874 57,616,874 57,616,874 57,616,874 57,616,874

Total foregone income birr 41,269,271 103,173,177 103,173,177 103,173,177 103,173,177 103,173,177

Incremental Net Income 33,650,507 137,640,394 164,397,457 164,397,457 164,397,457 164,397,457

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Total Inflows Unit

Incremental Net Income birr 33,650,507 137,640,394 164,397,457 164,397,457 164,397,457 164,397,457

Variable fees collected birr 582,209 1,455,523 1,455,523 1,455,523 1,455,523 1,455,523

Fized fees collected birr 7,646,108 7,646,108 7,646,108

Total Inflows birr 0 0 0 0 34,232,716 139,095,916 165,852,980 173,499,087 173,499,087 173,499,087

Total Outflows

Construction Costs * birr 0 15,385,898 47,572,626 70,792,012 359,554,014 359,554,014 359,554,014 0 0

Supervision Costs ** birr 0 12,363,718 28,506,733 3,009,153 31,929,856 31,929,856 31,929,856 0 0

Variable Costs Operations birr 0 0 0 0 212,215 424,160 848,050 1,059,995 1,059,996 1,059,997

Fixed Costs MOM birr 0 0 0 0 0 0 0 0 4,826,874 6,665,497

Total Outflows birr 0 0 27,749,615 76,079,359 74,013,381 391,908,030 392,331,920 392,543,865 5,886,870 7,725,494

Share of other project costs (25%) birr 28,182,581 4,466,422 22,063,793 34,445,107 28,343,587 28,343,587

Total Outflows with Project Costs birr 28,182,581 4,466,422 49,813,408 110,524,465 102,356,968 420,251,617 392,331,920 392,543,865 5,886,870 7,725,494

Cash Flow without Project Costs 0 0 -27,749,615 -76,079,359 -39,780,665 -252,812,114 -226,478,940 -219,044,778 167,612,217 165,773,593

NPV @ 10% 210,302,533

IRR 15%

Cash Flow with Project Costs -28,182,581 -4,466,422 -49,813,408 -110,524,465 -68,124,252 -281,155,701 -226,478,940 -219,044,778 167,612,217 165,773,593

NPV 107,289,069

NPV @ 10% 12%

Note: Share of Project Costs other than design, supervision and O&M

Source: Author’s calculations

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Table 2.7: Economic and financial analysis Ribb Scheme Phase I. Parameters and assumptions.

Ribb Phase I total irrigated area ha 3,000

Average water requirement per year m3/ha 8,744

Variable water fees birr/m3 0.021

Fixed water fees birr/ha 1,647

Net income per ha (net profit)

WoP- Wet season rainfed birr/ha 23,396

WoP – Dry season rainfed birr/ha 12,223

WP – Wet season supplementary irrigation birr/ha 54,500

WP – Dry season irrigated birr/ha 33,419

Unit 2009-2009 / 2011-2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 to

2039-2040

Surface irrigated (%) * % 50.00% 90.00% 100.00%

Surface irrigated (ha) * ha 1,500 2,700 3,000 3,000 3,000

With Project Situation

Yield and income stabilization factor % 70.00% 80.00% 100.00% 100.00%

Net income wet season supplementary irrigation birr 57,225,317 117,720,652 163,500,906 163,500,906 163,500,906

Net income dry season irrigated birr 35,089,467 72,184,046 100,255,619 100,255,619 100,255,619

Total income birr 92,314,784 189,904,698 263,756,525 263,756,525 263,756,525

Without Project Situation

Foregone income wet season rainfed birr 35,094,161 63,169,490 70,188,323 70,188,323 70,188,323

Foregone income dry season rainfed birr 18,333,760 33,000,767 36,667,519 36,667,519 36,667,519

Total foregone income birr 53,427,921 96,170,258 106,855,842 106,855,842 106,855,842

Incremental Net Income 38,886,863 93,734,440 156,900,683 156,900,683 156,900,683

Total Inflows Unit

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Incremental Net Income birr 38,886,863 93,734,440 156,900,683 156,900,683 156,900,683

Variable fees collected birr 268,865 483,957 537,730 537,730 537,730

Fized fees collected birr 4,940,103 4,940,103 4,940,103

Total Inflows birr 0 0 0 0 0 39,155,728 94,218,397 162,378,516 162,378,516 162,378,516

Total Outflows

Construction Costs * birr 0 0 0 10,699,242 379,106,588 379,106,588 379,106,588 0 0 0

Supervision Costs ** birr 0 0 0 6,209,206 35,053,942 35,053,942 35,053,942 0 0 0

Fixed Costs MOM birr 0 0 0 0 0 0 0 3,382,004 3,382,004 3,382,004

Total Outflows birr 0 0 0 16,908,448 414,160,530 414,160,530 414,160,530 3,382,004 3,382,004 3,382,004

Share of other project costs (25%) birr 18,788,387 2,977,614 14,709,195 22,963,404 19,480,128 19,480,128

Total Outflows with Project Costs birr 18,788,387 2,977,614 14,709,195 39,871,852 433,640,659 433,640,659 414,160,530 3,382,004 3,382,004 3,382,004

Cash Flow without Project Costs 0 0 0 -16,908,448

-414,160,530

-375,004,803

-319,942,133 158,996,513 158,996,513 158,996,513

NPV @ 10% 71,101,911

IRR 11%

Cash Flow with Project Costs -18,788,387 -2,977,614 -14,709,195

-39,871,852

-433,640,659

-394,484,931

-319,942,133 158,996,513 158,996,513 158,996,513

NPV @ 10% 1,733,519

IRR 10% Note: Share of Project Costs other than design, supervision and O&M

Source: Author’s calculations

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Table 2.8: Derivation of variable and fixed irrigation fees for Megech scheme.

Pumping costs and charges Unit 2008-2009 to 2015-2016 2016-2017 2016-2017 2017-2018 2018-2019 2019-2020

2020-2021 to 2039-

2040

Surface irrigated (%) * % 20.00% 40.00% 80.00% 100.00%Surface irrigated (ha) * ha 808 1,616 3,232 4,040 4,040 4,040Water requirement pump level m3/year birr/m3 7,064,807 14,129,614 28,259,228 35,324,035 35,324,035 35,324,035Pumping cost/m3 (birr/m3) (variable part) birr/m3 211,944 423,888 847,777 1,059,721 1,059,721 1,059,721Electricity Service Charge (fixed) birr/year 271 271 271 271 271 271Total pumping costs birr/year 212,215 424,159 848,048 1,059,992 1,059,992 1,059,992Volume of water sold (includes efficiency of main canal and distribution system) m3 5,722,494 11,444,987 22,889,975 28,612,468 28,612,468 28,612,468

Cost for farmers (variable fee) birr/m3 0.037 0.037 0.037 0.037 0.037 0.037Collection rate @ 90% birr 190,994 381,743 763,243 953,993 953,993 953,993Adjuested variable fee birr/m3 0.041 0.041 0.041 0.041 0.041 0.041Source: Adapted from Tariff Assessment of the Megech Irrigation Scheme, PSP Contractor*Phasing based on PSP Contractor's projections and adjusted to current schedule for finalization of works

Source: Adapted from Tariff Assessment of the Megech Irrigation Scheme, PSP Contractor

29

Fixed costs and fees 2008-2009 to 2015-2016 2016-2017 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 to

2039-2040

Management costs birr/year 0 0 0 0 3,957,600 4,197,600 4,293,600

Miscellaneous operations costs birr/year 0 0 0 0 1,226,834 1,226,834 1,226,834

Maintenance costs birr/year 0 0 0 0 0 0 2,018,767

Total MOM costs birr/year 0 0 0 0 5,184,434 5,424,434 7,539,201

Surface irrigated (%) * % 20% 40% 80% 100%

Surface irrigated (ha) * ha 808 1,616 3,232 4,040 4,040 4,040

Fixed fee birr/ha 0 0 0 0 1,283 1,343 1,866

Total fees with collection rate @ 90% birr/ha 0 0 0 0 4,665,991 4,881,991 6,785,281

Adjusted fee 0 0 0 0 1,426 1,492 2,073

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Table 2.9: Financial and economic prices (Birr).

Financial Economic CF from Fin

to Eco CROPSCereals

* Barley Br/qt 780 843 1.08Finger Millet Br/qt 849 784 0.92

* Maize Br/qt 592 1,072 1.81Rice Br/qt 1,242 2,340 1.88

* Sorghum Br/qt 799 783 0.98* Teff Br/qt 1,236 1,236 1.00* Wheat Br/qt 964 1,321 1.37

PulsesChick pea Br/qt 990 1,419 1.43Faba bean Br/qt 1,034 1,472 1.42Harricot bean Br/qt 1,273 2,308 1.81Field pea Br/qt 1,272 2,521 1.98Grass pea Br/qt 1,307 648 0.50Lentil Br/qt 1,377 2,682 1.95OilseedsNigger seed Br/qt 1,415 3,296 2.33Flax (lineseed) Br/qt 1,386 3,328 2.40Rapeseed Br/qt 1,415 3,306 2.34Safflower Br/qt 1,415 3,205 2.27Soybean Br/qt 1,415 2,849 2.01Sunflower Br/qt 1,415 3,205 2.27VegetablesOnion Br/qt 807 844 1.05Potato Br/qt 543 303 0.56Noug Br/qt 1,071 2,695 2.52Garlic Br/qt 998 1,836 1.84Shallot Br/qt 801 904 1.13Beetroot Br/qt 509 332 0.65Cabbage Br/qt 311 124 0.40Carrot Br/qt 566 410 0.73Pepper (fresh) Br/qt 707 641 0.91Swiss chard Br/qt 424 231 0.54Tomato Br/qt 483 298 0.62SpicesBlack Cumin Br/qt 2,027 5,706 2.81Fenugreek Br/qt 1,153 1,859 1.61Pepper Br/qt 2,950 4,424 1.50White Cumin Br/qt 2,263 6,851 3.03MAJOR INPUTS AND SERVICESSeeds

* Barley Br/kg 12 9 0.70* Millet Br/kg 9 9 1.00* Maize Br/kg 13 9 0.70* Rice Br/kg 10 7 0.70* Sorghum Br/kg 11 11 1.00* Teff Br/kg 13 13 1.00* Wheat Br/kg 12 8 0.70* Ch/pea Br/kg 9 9 1.00* Faba bean Br/kg 9 9 1.00* Harricot bean Br/kg 11 11 1.00* Field pea Br/kg 10 10 1.00* Grass pea Br/kg 12 12 1.00* Lentil Br/kg 13 13 1.00* Nigger seed Br/kg 9 9 1.00* Flax (lineseed) Br/kg 9 9 1.00

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* Rapeseed Br/kg 9 9 1.00* Safflower Br/kg 10 10 1.00* Soybean Br/kg 11 8 0.70* Sunflower Br/kg 10 7 0.70* Onion Br/kg 250 175 0.70* Potato Br/kg 25 18 0.70* Garlic Br/kg 24 17 0.70* Shallot Br/kg 10 7 0.70* Beetroot Br/kg 180 126 0.70* Cabbage Br/kg 190 133 0.70* Carrot Br/kg 190 133 0.70* Pepper (fresh) Br/kg 120 84 0.70* Swiss chard Br/kg 250 175 0.70* Tomato Br/kg 500 350 0.70* Black Cumin Br/kg 18 18 1.00* Fenugreek Br/kg 14 14 1.00* Pepper Br/kg 80 80 1.00* White Cumin Br/kg 19 19 1.00

OTHER INPUTS AND SERVICES* Labor Br/day 60 30 0.50

Oxen power Br/day 60 58 0.96Tractor rent Br/Hour 600 577 0.96Water charges Megech 0.041 0.041 1

Water charges Ribb Br/m3 0.021 0.021 1.00Fertilizers

* D.A.P. Br/kg 15 12 0.83* Urea Br/kg 13 9 0.70

Manure Br/kg 5 5 1.00Chemicals

* Herbicides (Br/ha) Br/ha 150 105 0.70* Fungicides (Br/ha) Br/ha 106 74 0.70* Insecticides Br/ha) Br/ha 106 74 0.70

*

Other plant protection costs (Br/ha)

Br/ha 106 74 0.70

Source: Financial Prices: OBA Study 2014 and other seocndary sourcesConversion factor: OBA Study and EFA Ag.Growth II (*)and author's calculations

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Table 2.10: Changes in land use and cropping patterns in the wet and dry seasons in Megech area

  Without Project Situation With Project SituationAverage size ha 1.07 1.070Average area under cultivation ha 0.61 0.610Average area for livestock grazing ha 0.35 0.350Total productive area ha 0.96 0.960Average area with access to irrigation ha 0 0.488 (80%)

  Without Project Situation With Project Situation

  Wet season - Rainfed Crops

Dry season - Residual Moisture

Wet Season - Supplementary Irrigation

Dry Season - Irrigated

Cereals Ha % Ha % Ha % Ha %Barley 0.031 5.00% - - 0.076 12.50% 0.033 5.40%Finger millet 0.012 2.00% - - 0.018 3.00% - -Maize 0.061 10.00% - - 0.171 28.00% 0.066 10.80%Rice 0.006 1.00% - - 0.015 2.50%   0.00%Sorghum 0.098 16.00% - - - - - -Teff 0.116 19.00% - - - - - -Wheat 0.037 6.00% - - 0.110 18.00% 0.055 9.00%Total 0.360 59.00% 0.000 0.00% 0.390 64.00% 0.154 25.20%Pulses                Chickpeas - - 0.092 15.00% - - 0.092 15.00%Faba beans - - 0.004 0.60% - - 0.006 1.00%Field peas - - 0.003 0.50% - - 0.007 1.20%Grass peas - - 0.015 2.50% - - 0.015 2.50%Lentils - - 0.004 0.70% - - 0.008 1.30%Total 0.000 0.00% 0.118 19.30% 0.000 0.00% 0.128 21.00%Oil seeds                Nough 0.049 8.00% - - 0.061 10.00%    Rapeseed - - 0.012 2.00% - - 0.015 2.43%Safflower - - 0.031 5.00% - - 0.022 3.60%Soybean - - - - - - 0.014 2.25%Sunflower - - 0.004 0.70% - - 0.004 0.63%  0.049 8.00% 0.047 7.70% 0.061 10.00% 0.054 8.91%Vegetables                Beetroot - - - - 0.012 2.00% 0.022 3.60%Cabbage - - - - 0.012 2.00% 0.022 3.60%Carrot - - - - 0.012 2.00% 0.022 3.60%Garlic - - - - 0.012 2.00% 0.022 3.60%Onions - - - - 0.012 2.00% 0.022 3.60%Peppers - - - - 0.012 2.00% 0.022 3.60%Potatoes - - - - 0.024 4.00% 0.022 3.60%Shallots - - - - 0.012 2.00% 0.022 3.60%Swiss Chard - - - - 0.012 2.00% 0.015 2.40%Tomato - - - - 0.012 2.00% 0.022 3.60%Total 0.000 0.00% 0.000 0.00% 0.134 22.00% 0.212 34.80%Spices                Black cumin - - 0.015 2.50% 0.024 4.00% 0.022 3.60%Fenugreek - - 0.073 12.00% 0.006 1.00% 0.005 0.90%Pepper (hot/dry) - - 0.015 2.50% 0.018 3.00% 0.016 2.70%White cumin - - 0.009 1.40% 0.012 2.00% 0.011 1.80%Total     0.112 18.40% 0.061 10.00% 0.055 9.00%Total 0.409 67.00% 0.277 45.40% 0.586 96.00% 0.549 90.00%Cropping intensity per season 67.00% 45.40% 96.00% 90.00%

Total cropping intensity 112.40% 186.00%

Source: Adapted from OBA Study (2014) and Irrigation Technology Package for Ribb and Megech Irrigation Project Areas, Amhara Region (2009-2011).

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Table 2.11: Changes in land use and cropping patterns in the wet and dry seasons in Ribb area.

  Without Project Situation With Project SituationAverage size ha 1.07 1.070

Average area under cultivation ha 0.61 0.610

Average area for livestock grazing ha 0.35 0.350

Total productive area ha 0.96 0.960

Average area with access to irrigation ha 0 0.488 (80%)

Without Project Situation With Project Situation

  Wet season - Rainfed Crops

Dry season - Residual Moisture

Wet Season - Supplementary Irrigation Dry Season - Irrigated

Cereals Ha % Ha % Ha % Ha %Barley 0.040 4.71% - - 0.050 5.88% 0.027 3.20%Finger millet 0.057 6.71% - - 0.060 7.06% - -Maize 0.100 11.76% - - 0.150 17.65% 0.068 8.00%Rice 0.171 20.12% - - 0.350 41.18%    Sorghum 0.114 13.41% - - - - - -Teff 0.080 9.41% - - - - - -Wheat 0.023 2.71% - - 0.050 5.88% 0.068 8.00%Total 0.585 68.82% 0.000 0.00% 0.660 77.65% 0.163 19.20%Pulses                Chickpeas - - 0.050 5.88% - - 0.145 17.00%Faba beans - - 0.030 3.53% - - 0.005 0.60%Field peas - - 0.020 2.35% - - 0.004 0.50%Grass peas - - 0.063 7.41% - - 0.021 2.50%Lentils - - 0.025 2.94% - - 0.006 0.70%Total     0.188 22.12% 0.000 0.00% 0.181 21.30%Oil seeds                Noug 0.050 5.88%     0.085 10.00%    Rapeseed - - - - - - 0.014 1.60%Safflower - - - - - - 0.034 4.00%Soybean - - - - - - 0.017 2.00%Sunflower - - - - - - 0.005 0.56%  0.050 5.88% 0.000 0.00% 0.085 10.00% 0.069 8.16%Vegetables                Beetroot - - - - 0.009 1.06% 0.022 2.58%Cabbage - - - - 0.009 1.06% 0.022 2.58%Carrot - - - - 0.009 1.06% 0.022 2.58%Garlic - - 0.006 0.71% 0.010 1.18% 0.022 2.58%Onions - - 0.020 2.35% 0.012 1.41% 0.022 2.58%Peppers - - - - 0.010 1.18% 0.022 2.58%Potatoes - - 0.005 0.59% 0.012 1.41% 0.022 2.58%Shallots - - - - 0.010 1.18% 0.022 2.58%Swiss Chard - - - - 0.010 1.18% 0.015 1.72%Tomato - - 0.039 4.59% 0.012 1.41% 0.022 2.58%Total     0.070 8.24% 0.103 12.12% 0.212 24.97%Spices                Black cumin - - 0.000 0.00% 0.034 4.00% 0.027 3.20%Fenugreek - - 0.031 3.65% 0.009 1.00% 0.007 0.80%Pepper (hot/dry) - - 0.032 3.76% 0.026 3.00% 0.020 2.40%White cumin - - 0.000 0.00% 0.017 2.00% 0.014 1.60%Total 0.000 0.00% 0.063 7.41% 0.085 10.00% 0.068 8.00%Total 0.635 74.71% 0.321 37.76% 0.848 99.76% 0.625 73.47%Cropping intensity per season 74.71% 37.76% 99.76% 73.47%

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Total cropping intensity 112.47% 173.24%

Source: Adapted from OBA Study (2014) and Irrigation Technology Package for Ribb and Megech Irrigation Project Areas (2011)

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Table 2.12: Megech Scheme - Wet season rainfed crops.

Source: Author’s calculations

Table 2.13: Megech Scheme – Dry season rainfed crops.

Crops UnitPulses

Oilseed Spices

Chick Pea Faba Bean

Field Pea

Grass Pea

Harricot Bean Lentils Rapeseed Safflower Black

Cumin Fenugreek H. Pepper

White Cumin

Product price Birr/qt 990 1,034 1,272 1,307 1,273 1,377 1,415 1,415 2,027 1,153 2,950 2,263Yield qt/ha 19 17 17 17 29 17 20 11 14 14 14 13Production value Birr/ha 18,495 17,832 21,941 22,549 36,600 23,745 27,583 15,560 28,384 16,145 41,295 28,516By products income Birr/ha 2,774 2,675 3,291 3,382 5,490 3,562 0 0 0 0 0 0Total revenues Birr/ha 21,269 20,507 25,232 25,931 42,090 27,307 27,583 15,560 28,384 16,145 41,295 28,516Cost of materials Birr/ha 3,565 3,469 3,613 3,835 3,697 3,802 3,657 3,669 5,542 2,971 2,833 10,553Labour costs Birr/ha 4,800 4,800 4,800 5,400 4,800 4,800 6,300 6,300 7,080 7,080 7,080 7,080Service costs Birr/ha 720 720 720 720 720 720 690 690 480 1,080 1,680 2,280Gross Profit Birr/ha 12,184 11,518 16,099 15,976 32,873 17,985 16,084 4,048 14,234 4,123 28,774 7,011Profitability Profit /Rev. 57% 56% 64% 62% 78% 66% 58% 26% 50% 26% 70% 25%Gross Profit USD/ha 573 542 757 751 1,546 846 756 190 669 194 1,353 330

Source: Author’s calculations

35

Crops

UnitCereals Oilseed

Barley F. Millet Maize Rice Sorghum Teff Wheat Noug

Product price Birr/qt 780 849 592 1,242 799 1,236 964 1,071Yield qt/ha 32 25 38 35 30 16 36 12Production value Birr/ha 24,972 21,213 22,202 43,463 23,961 20,087 34,700 12,852By products income Birr/ha 3,746 3,182 3,330 6,519 3,594 3,013 5,205 1,928Total revenues Birr/ha 28,718 24,395 25,532 49,983 27,555 23,101 39,905 14,780Cost of materials Birr/ha 4,350 3,129 4,235 4,666 3,530 3,345 5,240 2,920Labour costs Birr/ha 6,300 6,420 7,800 11,220 6,300 7,500 6,000 4,800Service costs Birr/ha 960 1,080 960 1,080 960 1,080 960 600Gross Profit Birr/ha 17,108 13,765 12,537 33,017 16,765 11,175 27,705 6,460Profitability Profit /Rev. 60% 56% 49% 66% 61% 48% 69% 44%Gross Profit USD/ha 804 647 589 1,552 788 525 1,303 304

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Table 2.14: Megech Scheme – Wet season crops with supplementary irrigation.

Crops Unit

Cereals Oilsee

d Vegetables Spices

F. Millet Rice Noug Beetroo

tCabbag

e Carro

t Garli

c Onion

Pepper

(Fresh)

Potato

Shallot

Swiss Char

d

Tomato

Black Cumi

n

Fenugreek

H. Peppe

r

White Cumi

n

Product priceBirr/qt 849 1,242 1,071 509 311 566 998 807 707 543 801 424 483 2,027 1,153 2,950 2,263

Yieldqt/ha 33 45 15 133 167 133 67 133 67 152 113 133 160 17 17 17 15

Production value

Birr/ha 28,284 55,881 16,065 67,896 51,865 75,440 66,53

3107,60

0 47,150 82,497 90,513 56,58

0 77,207 33,791 19,220 49,160 33,948

By products income

Birr/ha 4,243 8,382 2,410 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total revenues

Birr/ha 32,526 64,264 18,475 67,896 51,865 75,440 66,53

3107,60

0 47,150 82,497 90,513 56,58

0 77,207 33,791 19,220 49,160 33,948

Cost of materials

Birr/ha 3,129 4,869 2,900 5,903 5,155 6,384 16,228 17,164 7,043 6,291 6,356 6,228 7,568 5,691 3,120 2,982 10,701

Labour costs Birr/ha 7,200 12,00

0 4,980 20,580 20,580 20,580 23,580 23,580 23,580 23,58

0 23,580 23,580 23,580 7,080 7,080 7,080 7,080

Service costs & Miscellaneous

Birr/ha 1,863 2,386 1,278 2,896 2,836 2,935 3,962 4,037 3,227 3,167 3,172 3,162 3,269 1,540 1,982 2,619 3,885

Gross ProfitBirr/ha 20,334 45,00

9 9,316 38,517 23,293 45,541 22,763 62,819 13,300 49,45

9 57,405 23,610 42,790 19,480 7,038 36,479 12,282

ProfitabilityBirr/ha 63% 70% 50% 57% 45% 60% 34% 58% 28% 60% 63% 42% 55% 58% 37% 74% 36%

Water chargesBirr/ha 34 14 34 14 14 14 14 14 14 14 14 14 14 14 14 14 14

Profit after water charges

Birr/ha 20,299 44,994 9,282 38,502 23,279 45,527 22,74

8 62,804 13,286 49,445 57,391 23,59

5 42,776 19,466 7,024 36,465 12,268

Profit after water charges

USD/ha 954 2,115 436 1,810 1,094 2,140 1,070 2,953 625 2,325 2,698 1,109 2,011 915 330 1,714 577

Source: Author’s calculations

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Table 2.15: Megech Scheme – Dry season irrigated crops.

Crops Unit

Cereals Oilseeds Pulses

Barley Maize Wheat Rapeseed Safflower Soybea

n Sunflower Chick Pea Faba Bean

Field Pea

Grass Pea

Harricot Bean Lentils

Product priceBirr/qt 780 592 964 1,415 1,415 1,415 1,415 990 1,034 1,272 1,307 1,273 1,377

Yieldqt/ha 30 60 32 26 14 20 20 26 25 22 20 40 24

Production valueBirr/ha 23,411 35,523 30,845 36,777 19,803 28,290 28,290 25,732 25,844 27,983 26,144 50,922 33,037

By products incomeBirr/ha 3,512 5,328 0 0 0 0 0 0 0 0 0 0 0

Total revenues Birr/ha 26,923 40,851 30,845 36,777 19,803 28,290 28,290 25,732 25,844 27,983 26,144 50,922 33,037

Cost of materialsBirr/ha 5,142 5,206 6,032 3,657 3,669 4,240 3,669 3,782 3,686 3,830 4,052 3,914 4,019

Labour costs Birr/ha 8,400 9,900 8,100 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300

Service costs & Miscellaneous

Birr/ha 4,388 4,578 4,695 3,583 3,584 3,630 3,584 3,723 3,715 3,726 3,744 3,733 3,742

Gross ProfitBirr/ha 8,993 21,167 12,018 23,237 6,250 14,121 14,737 11,927 12,143 14,126 12,048 36,975 18,977

ProfitabilityBirr/ha 33% 52% 39% 63% 32% 50% 52% 46% 47% 50% 46% 73% 57%

Water chargesBirr/ha 162 191 162 160 140 157 149 163 107 125 125 107 156

Profit after water charges Birr/ha 8,831 20,976 11,856 23,077 6,110 13,964 14,589 11,764 12,036 14,002 11,923 36,868 18,821

Profit after water charges USD/ha 415 986 557 1,085 287 657 686 553 566 658 561 1,733 885

Source: Author’s calculations

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Table 2.16: Megech Scheme – Dry season irrigated crops (cont’d).

Crops Unit

Vegetables Spices

Beetroot Cabbage Carrot Garlic Onion

Pepper (Fresh

)Potato Shallot Swiss

ChardTomat

oBlack Cumin

Fenugreek

H. Pepper

White Cumi

n

Product priceBirr/qt 509 311 566 998 807 707 543 801 424 483 2,027 1,153 2,950 2,263

Yieldqt/ha 160 200 160 80 160 80 167 126 160 180 20 20 20 18

Production valueBirr/ha 81,475 62,238 90,528 79,840 129,120 56,580 90,747 100,926 67,896 86,858 40,549 23,064 58,992 40,738

By products incomeBirr/ha 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total revenues Birr/ha 81,475 62,238 90,528 79,840 129,120 56,580 90,747 100,926 67,896 86,858 40,549 23,064 58,992 40,738

Cost of materialsBirr/ha 6,200 5,452 6,949 17,509 13,445 7,966 7,214 7,279 7,151 9,206 3,398 3,327 3,189 3,409

Labour costs Birr/ha 21,900 21,900 21,900 24,900 24,900 18,900 24,900 24,900 24,900 24,900 7,800 7,800 7,800 7,800

Service costs & MiscellaneousBirr/ha 5,553 5,493 5,613 6,698 6,372 5,454 5,874 5,879 5,869 6,033 3,682 3,677 3,666 3,683

Gross ProfitBirr/ha 47,822 29,393 56,066 30,733 84,403 24,260 52,759 62,868 29,976 46,719 25,669 8,260 44,338 25,846

ProfitabilityBirr/ha 59% 47% 62% 38% 65% 43% 58% 62% 44% 54% 63% 36% 75% 63%

Water chargesBirr/ha 185 155 189 175 181 191 186 181 97 196 152 152 177 152

Profit after water charges Birr/ha 47,638 29,238 55,876 30,558 84,222 24,070 52,573 62,687 29,880 46,523 25,517 8,108 44,161 25,694

Profit after water charges USD/

ha 2,240 1,375 2,627 1,437 3,960 1,132 2,472 2,947 1,405 2,187 1,200 381 2,076 1,208

Source: Author’s calculations

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Table 2.17: Ribb Scheme - Wet season rainfed crops.

  Crops   UnitCereals Oilseed

Barley F. Millet Maize Rice Sorghum Teff Wheat Noug

Product price Birr/qt 780 849 592 1,242 799 1,236 964 1,071Yield qt/ha 25 20 38 35 30 16 36 12Production value Birr/ha 19,509 16,970 22,202 43,463 23,961 20,087 34,700 12,852By products income Birr/ha 2,926 2,546 3,330 6,519 3,594 3,013 5,205 1,928Total revenues Birr/ha 22,436 19,516 25,532 49,983 27,555 23,101 39,905 14,780Cost of materials Birr/ha 4,350 3,129 4,235 4,666 3,530 3,345 5,240 3,495Labour costs Birr/ha 6,300 6,420 7,800 11,220 6,300 7,500 6,000 4,800Service costs Birr/ha 960 1,080 960 1,080 960 1,080 960 600Gross Profit Birr/ha 10,826 8,886 12,537 33,017 16,765 11,175 27,705 5,885Profitability Profit /Rev. 48% 46% 49% 66% 61% 48% 69% 40%Gross Profit USD/ha 509 418 589 1,552 788 525 1,303 277

Source: Author’s calculations

Table 2.18: Ribb Scheme - Dry season rainfed crops.

  Crops   UnitPulses

Oilseed Spices

Chick Pea Faba Bean Field Pea Grass Pea Harricot

Bean Lentils Rapeseed Safflower

Black Cumin Fenugreek H.

PepperWhite Cumin

Product price Birr/qt 990 1,034 1,272 1,307 1,273 1,377 1,415 1,415 2,027 1,153 2,950 2,263Yield qt/ha 16 15 15 15 25 15 18 9 11 11 11 10Production value Birr/ha 16,082 15,506 19,079 19,608 31,826 20,648 24,824 12,731 22,708 12,916 33,036 22,179By products income Birr/ha 2,412 2,326 2,862 2,941 4,774 3,097 0 0 0 0 0 0Total revenues Birr/ha 18,495 17,832 21,941 22,549 36,600 23,745 24,824 12,731 22,708 12,916 33,036 22,179Cost of materials Birr/ha 3,565 3,469 3,613 3,835 3,697 3,802 3,657 3,669 5,542 2,971 2,833 10,553Labour costs Birr/ha 4,800 4,800 4,800 5,400 4,800 4,800 6,300 6,300 7,080 7,080 7,080 7,080Service costs Birr/ha 720 720 720 720 720 720 690 690 480 1,080 1,680 2,280Gross Profit Birr/ha 9,410 8,843 12,808 12,594 27,383 14,423 14,177 2,072 9,606 1,785 21,443 2,267

ProfitabilityProfit /Rev. 57% 56% 64% 62% 78% 66% 58% 26% 50% 26% 70% 25%

Gross Profit USD/ha 442 416 602 592 1,287 678 667 97 452 84 1,008 107

Source: Author’s calculations

Table 2.19: Ribb Scheme – Wet season crops with supplementary irrigation

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  Crops   Unit

Cereals Oilseed Vegetables Spices

F. Millet Rice Noug Beetroo

tCabbag

e Carrot Garlic Onion

Pepper

(Fresh)

Potato

Shallot

Swiss Char

d

Tomato

Black Cumi

n

Fenugreek

H. Peppe

r

White Cumi

n

Product priceBirr/qt 849 1,242 1,071 509 311 566 998 807 707 543 801 424 483 2,027 1,153 2,950 2,263

Yieldqt/ha 25 45 15 133 167 133 67 133 67 183 95 133 160 17 17 17 15

Production value

Birr/ha 21,213

55,881 16,065 67,896 51,865 75,440 66,533 107,60

0 47,150 99,634 76,095 56,58

0 77,207 33,791 19,220 49,160 33,948

By products income

Birr/ha 3,182 8,382 2,410 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total revenues

Birr/ha 24,395

64,264 18,475 67,896 51,865 75,440 66,533 107,60

0 47,150 99,634 76,095 56,58

0 77,207 33,791 19,220 49,160 33,948

Cost of materials

Birr/ha 3,129 4,869 2,900 5,728 4,980 6,131 15,765 16,701 6,684 5,932 5,997 5,870 6,999 5,542 2,971 2,833 10,553

Labour costs Birr/ha 7,200 12,00

0 4,980 20,580 20,580 20,580 23,580 23,580 23,580 23,580 23,580 23,58

0 23,580 7,080 7,080 7,080 7,080

Service costs & Miscellaneous

Birr/ha 1,863 2,386 1,278 2,882 2,822 2,914 3,925 4,000 3,199 3,139 3,144 3,134 3,224 1,528 1,971 2,607 3,873

Gross ProfitBirr/ha 12,20

245,00

9 9,316 38,705 23,482 45,815 23,263 63,319 13,687 66,983 43,374 23,99

7 43,404 19,641 7,199 36,640 12,442

ProfitabilityBirr/ha 50% 70% 50% 57% 45% 61% 35% 59% 29% 67% 57% 42% 56% 58% 37% 75% 37%

Water charges

Birr/ha 34 14 34 14 14 14 14 14 14 14 14 14 14 14 14 14 14

Profit after water charges

Birr/ha 12,168

44,994 9,282 38,691 23,468 45,801 23,249 63,305 13,673 66,96

9 43,360 23,982 43,389 19,627 7,184 36,625 12,428

Profit after water charges

USD/ha 572 2,115 436 1,819 1,103 2,153 1,093 2,976 643 3,149 2,039 1,128 2,040 923 338 1,722 584

Source: Author’s calculations

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Cereals Oilseeds Pulses

 

  Barley Maize Wheat Rapeseed Safflower Soybean Sunflower Chick Pea

Faba Bean

Field Pea

Grass Pea

Harricot Bean Lentils

Product price Birr/qt 780 592 964 1,415 1,415 1,415 1,415 990 1,034 1,272 1,307 1,273 1,377

Yieldqt/ha 25 50 28 21 10 15 15 18 20 16 18 35 18

Production valueBirr/ha 19,509 29,602 26,989 29,705 14,145 21,218 21,218 17,814 20,675 20,351 23,529 44,557 24,778

By products incomeBirr/ha 2,926 4,440 0 0 0 0 0 0 0 0 0 0 0

Total revenues Birr/ha 22,436 34,043 26,989 29,705 14,145 21,218 21,218 17,814 20,675 20,351 23,529 44,557 24,778

Cost of materialsBirr/ha 5,142 5,206 6,032 3,657 3,669 4,240 3,669 3,782 3,686 3,830 4,052 3,914 4,019

Labour costs Birr/ha 8,400 9,900 8,100 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300 6,300

Service costs & Miscellaneous

Birr/ha 4,388 4,578 4,695 3,583 3,584 3,630 3,584 3,723 3,715 3,726 3,744 3,733 3,742

Gross ProfitBirr/ha 4,506 14,359 8,162 16,165 592 7,048 7,665 4,010 6,974 6,495 9,433 30,610 10,717

ProfitabilityBirr/ha 20% 42% 30% 54% 4% 33% 36% 23% 34% 32% 40% 69% 43%

Water chargesBirr/ha 170 201 170 168 147 164 156 172 112 131 131 112 164

Profit after water charges Birr/ha 4,336 14,158 7,992 15,996 445 6,884 7,509 3,838 6,862 6,364 9,302 30,498 10,553

Profit after water charges USD/ha 204 666 376 752 21 324 353 180 323 299 437 1,434 496

Table 2.20: Ribb Scheme – Dry season irrigated crops.

Source: Author’s calculations

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Vegetables Spices

 

  Beetroot Cabbage Carrot Garlic Onion Pepper (Fresh) Potato Shallot Swiss

Chard Tomato Black Cumin Fenugreek H.

PepperWhite Cumin

Product price Birr/qt 509 311 566 998 807 707 543 801 424 483 2,027 1,153 2,950 2,263

Yieldqt/ha 130 150 130 70 150 60 145 105 130 150 16 16 16 14

Production valueBirr/ha 66,199 46,679 73,554 69,860 121,050 42,435 78,910 84,105 55,166 72,382 32,439 18,452 47,194 31,685

By products incomeBirr/ha 0 0 0 0 0 0 0 0 0 0 0 0 0 0

Total revenues Birr/ha 66,199 46,679 73,554 69,860 121,050 42,435 78,910 84,105 55,166 72,382 32,439 18,452 47,194 31,685

Cost of materialsBirr/ha 6,200 5,452 6,949 17,509 13,445 7,966 7,214 7,279 7,151 9,206 3,398 3,327 3,189 3,409

Labour costs Birr/ha 21,900 21,900 21,900 24,900 24,900 18,900 24,900 24,900 24,900 24,900 7,800 7,800 7,800 7,800

Service costs & Miscellaneous

Birr/ha 5,553 5,493 5,613 6,698 6,372 5,454 5,874 5,879 5,869 6,033 3,682 3,677 3,666 3,683

Gross ProfitBirr/ha 32,546 13,834 39,092 20,753 76,333 10,115 40,923 46,047 17,246 32,242 17,559 3,648 32,539 16,793

ProfitabilityBirr/ha 49% 30% 53% 30% 63% 24% 52% 55% 31% 45% 54% 20% 69% 53%

Water chargesBirr/ha 194 163 199 184 190 200 195 190 101 206 160 160 186 160

Profit after water charges

Birr/ha 32,352 13,670 38,893 20,569 76,143 9,915 40,727 45,857 17,144 32,037 17,399 3,488 32,353 16,634

Profit after water charges

USD/ha 1,521 643 1,829 967 3,580 466 1,915 2,156 806 1,506 818 164 1,521 782

Table 2.21: Ribb Scheme – Dry season irrigated crops (Cont’d).

Source: Author’s calculations

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