pcr: nepal: fourth agricultural credit project2. appraisal 22/7-14/8/80 8 158 specialization of...
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ii
f'L1;1iI[UT;
ASIAN DEVELOPMENT BANK
DIRECTORS
RESTRICTED
IN.2-885 January 1988
PROJECT COMPLETION REPORT
The following Project Completion Report is
attached for information:
Fourth Agricultural Credit Project(Nepal) (Loan No. 489-NEP(SF))
RESTRICTED
ASIAN DEVELOPMENT BANKThis Report has been prepared forthe exclusive use of the Bank.
PROJECT COMPLETION REPORT
OF THE
FOURTH AGRICULTURAL CREDIT PROJECT
(LOAN NO. 489-NEP(SF))
NEPAL
December 1987
ADBNAICAPROSCCDDAODCCADDCD IHMIFADLRSCMFANOCNRBNTCSFDPSFGSPO
(1)
CURRENCY EQUIVALENTS
Currency Unit
Nepalese Rupee (Rs)U.S. Dollar ($)
Appraisal(July/August 1980)
Rsl.0O = $0.0833$ 1.00 = NRs12.O
Project Completion Report(April/May 1987)
Rsl.0O = $0.0455$ 1.00 = NRs22.O
ABBREVIATIONS
- Agricultural Development Bank of Nepal- Agriculture Inputs Corporation- Agricultural Projects Services Centre- Cooperative Department- District Agricultural Officer- District Coordination Committee for Agriculture- Dairy Development Corporation- Department of Irrigation, Hydrology and Meteorology- International Fund For Agricultural Development- Land Reform Savings Corporation- Ministry of Food and Agriculture- Nepal Oil Corporation- Nepal Rastra Bank- Nepal Trading Corporation- Small Farmers' Development Program- Small Farmers' Group- Sub-Project Office
NOTES
The Fiscal Year (FY) of the Government ends on 15 July; forexample, FY1986 begins on 16 July 1985 and ends on 15 July1986.
(ii) In this Report, "$" refers to US dollars.
PROJECT COMPLETION REPORT
OF THE
FOURTH AGRICULTURA1 CREDIT PROJECT(LOAN NO. 489—NEP(SF))
IN
NEPAL
December 1987
Note:- This report was prepared by a Bank Mission comprisingMessrs. Rajat M. Nag (Project Economist/Mission Leader),Mohammed Eusuf Au (Mechanical Engineer/StaffConsultant), Vijay K. Mehta (Financial Analyst/StaffConsultant) and Ms. Criselda Argayoso (Sr. LoanAdministration Clerk). The M1sson carried out thereview of the Project in April/May 1987.
(ii)
(iii)
1
11
3
33
11
111414141516182121212224
25
2525
28
TABLE OF CONTENTS
Page
MAP OF PROJECT AREA
BASIC DATA
I. PROJECT DESCRIPTION
A. Objectives, Rationale and ScopeB. Implementation Arrangements
II. PROJECT HISTORY
A. Preparation and AppraisalB. Implementation
III. EVALUATION OF IMPLEMENTATION
A. Project ComponentsB. Project CostsC. Project Implementation ScheduleD. Procurement of Goods and ServicesE. Conditions and CovenantsF. Disbursement and Loan RecoveryC. Project BenefitsH. Economic Internal Rate of ReturnI. Technical AssistanceJ. Performance of Contractors and SuppliersK. Performance of Borrower and Executing AgencyL. Performance of the Bank
IV. CONCLUSIONS AND RECOMMENDATIONS
A. ConclusionsB. Recommendations
V. APPENDIXES
82° 84°
LUM
MID WESTERN
FAR WESTERN
3O
86
NEPALFOURTH AGRICULTURAL CREDIT PROJECT
PROJECT AREA
________________ -
30°-i
WESTERN 0 40 80 90
5/_.l .1 II
Kilometers
MYAGOS -
(
5AGiSUGS \ LAMJUNG
28°
EASTERN
TA3,$
LEGEND:
Project Areas Targetted atAppraisal and Actually Covered
rn Additional Project AreasCovered
Highway
Under Construction (Road)
District Boundary—.'_J --
IZone Boundary
Development Region Boundary
Lo olternatinnal Boundary
26
(Boundaries not necessarily authoritative)
82°
84°
86°--
-' CENTRALassuwa '5-
(iii)
BASiC DATA
A. Loan Identification
1. Country Nepal2. Loan Number 489-NEP(SF)3. Project Title Fourth Agricultura:I Credit
Proj ect4. Borrower : His Majesty's Government of
Nepal5. Executing Agency : Agricultural Development
Bank of Nepal (ADBN)6. Amount of Loan $15.000 million
B. Loan Data
1. Appraisal- Date Started : 22 July 1980- Date Completed : 14 August 1980
2. Loan Negotiations- Date Started : 13 October 1980- Date Completed 16 October 1980
3. Date of Board Approval 09 December 19804. Date of Loan Agreement : 22 January 19815. Date of Loan Effectiveness
- In Loan Agreement : 22 April 1981- Actual : 18 August 1981- Number of Extensions : 3
6. Closing Date- In Loan Agreement 31 December 1984- Actual 05 February 1987- Number of Extensions : .2
7. Terms of Loan- Interest Rate 1 per cent service charge per annum- Maturity 40 years- Grace Period : 10 years
8. Terms of Relending- Interest Rate : 1 per cent per annum- Maturity 25 years- Grace Period : 5 years
9. Disbursements- Date of Initial
Disbursement : 01 July 1982
15,800
15,968
4,300
4,324
20,100
20,292
4,000
4,024
15,000
15,000
1,100 /
1,268
20, 100
20,292
2,7151,9862,8891,1392,493
2181,410
932360200100
4,5121,639
3,0461,968
3035,2342,503
321313110
(iv)
- Date of FinalDisbursement
- Amount Disbursed- Amount Cancelled
10. Local Costs Financed- Amount- Percentage of Local
Costs- Percentage of Total
Costs
C. Project Data
05 February 1987$15.000 millionnil
nil
AppraisalEstimate Actual
(in $'OOO)
1.
2.
3.
Project Cost
a) Foreign Exchange Costb) Local Costc) Total Cost
Financing Plan
a) Borrower Financedb) Bank Financedc) Other External Financing
(UNDP TA)d) Total
Cost Breakdown byProj ect Components
a) Irrigationb) Water Turbinesc) Farm Mechanizationd) Livestocke) Biogas Plantsf) Office Equipment
and Vehiclesg) Fertilizersh) Diesel Fueli) Consultantsj) Fellowshipsk) Training
a! Of this, UNDP agreed to provide $300,000 to meet localexpenditure of ADBN under the TA.
Cv)
AppraisalEstimate Actual
(in $'OOO)
1) Survey and FeasibilityStudy
100
30m) Research and Development
220
86n) Fabrication Machinery and
Equipment for Biogas Co. 220
227o) Taxes and Duties
350 - a!p) Contingencies
4,768
q) Total
20, 100
20,292
4. Project Schedule
a) Date of Contract withConsultants
September 1981 April 1982b) Equipment and Supplies
- First procurement
September 1981 September 1982- Last procurement
September 1983 July 1986- Completion of
equipmentinstallation
July 1984
December 1987c) Start of Operations
- Completion of testsand commissioning
July 1984
December 1987
D. Data on Bank Missions
Type of No. of No. ofMission Date Persons Man-days
1. Consultation! 17-21/5/80 3 15Fact-finding
2. Appraisal 22/7-14/8/80 8 158
Specializationof Members
EconomistEngineer
CounselCountry OfficerEconomistEngineerConsultants- Financial Analyst- 0&MExpert- Biogas - Livestock
ExpertSecretary
a! Taxes and duties were included in the costs of the components.
(vi)
Type of No. of No. ofMission Date Persons Man-days
3. Review 1 12-24/10/81 2 26
4. Follow-up 3-5/1/82
1
3
5. SLA 1 a! 17-22/3/82
1
6
6. Special
Procurement 5-9/7/82
1
5
7. SLA 2 16-29/1/83
3
33
8. SLA 3 27/11-7/12/83 2
22
9. SLA 4 19-20/3/84 1
2
10. Review 2 2-10/5/84 2
18
11. Review 3 11-24/11/84 7
98
12. SLA 5 20-25/4/85 1
6
Specializationof Members
AgriculturistConsultant -
Rural BankingInstitutionsSpecialist
Agricultural CreditSpecialist
Agriculturist
Procurement Specialist
EconomistAgriculturist
Consultant - Biogas
AgriculturistAgricultural Credit
Specialist
Economist
AgronomistConsultant -
Small FarmCreditSpecialist
EngineerCredit SpecialistProject SpecialistLA ClerkConsultants -
Financial AnalystDevelopment Banking!InstitutionalSpecialist
Mechanical Engineer
Agricultural CreditSpecialist
a! Special Loan Administration.
(vii)
Type ofMiss ion
13. SLA 6
14. Reviews
15. PCR
No. of No. of
SpecializationDate Persons Man-days of Members
7-13/11/85 1 7 Agricultural CreditSpecialist
1986 During 1986, the progress on the Projectwas reviewed by Bank missions processingthe Fifth Agricultural Credit Project (LoanNo. 831-NEP(SF)).
20/04-13/05/87 4 82 EconomistEngineerFinancial AnalystSenior Loan Clerk
I. PROJECT DESCRIPTION
A. Objectives, Rationale and Scope
1. The broad objectives of the Project were to increase thecountry's production of foodgrains, milk and meat and promote theutilization of renewable sources of energy for agro-processing,irrigation and household cooking and lighting. Activities to achievethese objectives would simultaneously raise farmers' incomes, enhanceemployment opportunities on a sustained basis and contribute to thealleviation of the country's energy and environmental problems.
2. The rationale for the Project was derived from the fact thatthe economy of Nepal is predominantly rural and its mainstay isagriculture. The development strategies of the Government of Nepal havefocussed therefore on agriculture, both as an engine of growth for theeconomy as a whole and as a means of improving the welfare of the ruralpopulation. Providing adequate agricultural credit for productioninvestment was recognized as being of crucial importance in the futuresocial and economic development of the country.
3. The Project was designed to provide the critically neededcredit for the agriculture sector through the Agricultural DevelopmentBank of Nepal (ADBN). This was to be achieved by augmenting thefinancial resources of ADBN for medium-term lending for Projectactivities to be undertaken by individual farmers and groups. Thesebeneficiaries were spread over 42 districts in the country (see Map page(ii)). Recognizing the priority the Government had set on includingpreviously neglected hill areas and the poorer population groups in thedevelopment process, half of the chosen districts were to be in thehills, one In the mountains, and the remaining 20 in the teraI belt.
4. The Project components were irrigation facilities at the farmlevel in the form of shallow tubewells and pumpsets; water turbines foragro-processing and lift irrigation; grain storage bins; power tillersfor low level farm mechanization; improved breeds of buffaloes and cows;and biogas plants. In addition, the Project was intended to providefarmers with fertilizers and diesel fuel, and to enable ADBN to acquireoffice equipment and service vehicles to be used in the implementationof the Project. A technical assistance grant funded by UNDP was alsoincluded for Project Implementation, training and institution building.
B. Implementation Arrangements
5. ADBN was designated as the Executing Agency for the Project.In addition to having been the executing agency for the First, Secondand Third Agricultural Credit projects (Loans Nos. 59-NEP(SF),182-NEP(SF) and 295-NEP(SF)), ADBN was also responsible for executingthe credit components of several other Bank-financed projects. ADBN'sperformance as an executing agency was judged satisfactory.
6. It was planned that the Loans Division of ADBN, through itsForeign Loans Section, would carry the primary responsibility forProject implementation. At the operational level, implementation wouldbe carried out through the regional offices and branches of ADBN, Incooperation with related government line agencies. It was expected thatADBN branches in the Project areas would be strengthened to expediteloan processing and supervision.
7. The existing National Coordination Committee for AgriculturalProjects, chaired by the Secretary of the Ministry of Food andAgriculture, was made responsibile for ensuring effective coordinationbetween ADBN and other government agencies. At the district andpanchayat levels, the existing coordination committees for agriculturalprojects were expected to play a similar role.
8. Procurement of all goods, services and material.s was to beundertaken in accordance with the Bank's Guidelines for Procurement andGuidelines on the Use of Consultants. Under the procurementarrangements, Project components which could be locally fabricated wouldbe procured by ADBN from domestic suppliers on the basis of localcompetitive bidding (LCB). However, it was planned that the importedraw material requirements of such fabrications would be procured by ADBNdirectly from international sources and supplied to the localfabricators as needed.
9. As the quantities of fertilizers and diesel oil provided forin the Project were relatively small, it was planned that the requiredquantities would be obtained from the stocks procured by the AgricultureInputs Corporation (AIC) and the Nepal Oil Corporation (NOC)respectively, which in turn would increase their normal internationalpurchases of these items from Bank's eligible member countries bycorresponding amounts. Farmers would obtain fertilizers and diesel oilfrom the local dealers of AIC and NOC.
10. It was planned that contracts for civil works relating to theProject would be awarded on the basis of competitive bidding amongprequalif led local contractors and in accordance with the standardprocurement procedures of ADBN.
11. As far as the responsibility for operation and maintenance ofvarious Project facilities were concerned, it was planned that thisshould rest with the farmers who owned them. It was expected, however,that the various suppliers and fabricators would provide adequateinformation (both oral and written), supplemented by some field trainingof the beneficiary farmers. This training would be organized by ADBN.
12. It was also expected that local suppliers would establishworkshop facilities and/or service centers for the repair andmaintenance of Project facilities supplied by them, at central places inthe Project area. The service centers would supply spare parts fromavailable stocks and provide after sales service and technical guidance.
13. The period of implementation of the Project was expected to beabout three years from the date of loan effectiveness.
3
II. PROJECT HISTORY
A. Preparation and Appraisal
14. In January 1979, the Government proposed a Fourth AgriculturalCredit Project to a visiting Bank Country Programming Mission. A BankReview-cum-Fact-Finding Mission visited Nepal in November 1979 to reviewthe progress of the Bank financed Second and Third Agricultural CreditProjects and to examine the need for a further Agricultural Creditproject. The Mission concluded that there was sufficient evidence tosupport the proposed Fourth Agricultural Credit Project to augment thefinancial resources of ADBN for its lending activities, but that furtherproject preparation was needed. On 27 December 1979, the Bank approveda technical assistance (TA No. 337-NEP) for $95,000 for a detailedpreparation of the Project.
15. Under this technical assistance, a team of consultants fromthe Agricultural Finance Corporation (AFC), India, was engaged toexamine the feasibility of the various components of the Project. Theteam commenced its field work in March 1980. A Multi-ProjectConsultation Mission from the Bank visited Nepal in May 1980 and helddiscussions on the proposed Project, as well as other ongoing Bankfinanced projects, with officials of ADBN, the Government and theconsultants.
16. An Appraisal Mission visited Nepal from 22 July to 14 August1980 to examine the Project. It found that the Project which had beengiven high priority by the Government was technically feasible,economically viable, financially sound and acceptable for Bankfinancing.
17. The total investment cost of the Project as appraised wasestimated to be $20.1 million, with a foreign exchange cost component of$15.8 million and a local currency cost of $4.3 million equivalent(including about $350,000 of local taxes and duties).
18. It was proposed that the Bank provide a loan of $15.0 millionfrom its Special Funds resources to cover the entire foreign exchangecosts of the Project (other than those for consultant services andtraining fellowships which would be financed by UNDP). It was expectedthat UNDP would provide $1.1 million. The Government and ADBN wouldcontribute a total of $4.0 million to partially finance the localcurrency costs. The estimated costs are in Table 1.
B. Implementation
1. Loan Effectiveness
19. The loan was approved on 9 December 1980, and signed on 22January 1981. It was expected that the loan would become effective by
300 60
360160 40
200- 100
100- 100
10090 130
220180 40
220
70 30
100
800 d/ 500 e/ 1,300
r11
Table 1. Estimated Project Costs($'OOO)
Foreign Local TotalComponent Exchange Cost Cost
I. InvestmentA. Irrigation Facilities 2,406 309 2,715B. Water Turbines 1,068 918 1,986C. Farm Mechanization 2,653 236 2,889D. Livestock 951 188 1,139E. Biogas Plants 1,766 727 2,493F. Office Equipment and Vehicles 218 - 218
9,062 2,378 11,440II. Working Capital
A. FertilizersB. Diesel fuel
III. Import Duties and Taxes
IV. ContingenciesA. Physical (15%)B. Price Escalation (10% pa) a!
Total (I-IV)
V. Technical AssistanceA. Foreign ConsultantsB. FellowshipsC. TrainingD. Survey and Feasibility StudiesE. Research and DevelopmentF. Fabrication Machinery and
Equipment for Biogas Co.G. Contingency
Total (V)
1,259 151
1,410
876 56
932
2,135 207
2,342
- 350
350
1,681 388 2,069
2,122 477 2,599
3,803 865 4,668
15,000 b/ 3,800 Cl 18,800
GRAND TOTAL 15,800 4,300 20,100
a! A uniform rate of 10 per cent per annum was used for priceescalation for both foreign exchange and local costs consideringthe rate of inflation in Nepal and its land-locked position.
b/ To be financed by the Bank.C! To be financed by ADBN.d/ To be financed by UNDP.e/ $300,000 to be financed by 1.JNDP and the remaining $200,000 by the
Government.
5
22 April 1981, but in fact this happened only on 18 August 1981,implying a delay of about four months. This elapsed time gap did notcause any credit constraints at ADBN since the Third Agricultural CreditProject (Loan No. 295-NEP(SF)), also financed by the Bank, was stillongoing through this period.
2. Implementation Schedule
20. At effectiveness, the loan closing date was scheduled to be 31December 1984 with all commitments expected to be made by 30 June 1984,reflecting the three-year Implementation period envisaged at appraisal.Progress of the Project was extremely sluggish for quite some time andless than 20 per cent of the loan was disbursed in the first 80 per centof the originally scheduled project implementation period. A majorreason for this slow progress was the unduly long period which it tookthe Bank and ADBN to resolve procurement related issues. Theimplementation of the Project gathered significant momentum frommid-1984 (once the procurement related issues were resolved) and by theend of December 1985, about 75 per cent of the loan had been committed.By 30 June 1986, the entire loan had been committed, some two yearslater than originally scheduled, and the loan was closed on 5 February1987. A comparison of the actual Implementation schedule against thatestimated at appraisal is presented in Appendix 1.
3. Physical Implementation
21. The targetted objectives at appraisal and actual achievementsof the Project are summarized in Appendix 2, Table 1. The objectivesand achievements are expressed in both physical and monetary units. Itis seen that the physical targets at appraisal were exceeded in mostcases. While expenditures on individual components of the Project havebeen considerably different from those expected at appraisal, the totalexpenditures on the Project have been 'very close (within 1 per cent) tothe appraisal estimates, when expressed in dollar equivalent (see paras.61 and 62 for further discussions on Project costs.)
22. As noted in para. 3, the beneficiaries of the Project wereexpected, at appraisal, to be spread over 42 districts (20 in the terai,21 in the hills and 1 in the mountains). The implementation of theProject in fact covered 64 districts to meet greater than anticipateddemands for water turbines. The additional 22 districts were all in thehills and mountains where better and more appropriate water resourcescould be tapped for water turbines. Twenty districts were served in theterai as expected at appraisal. The district distribution of theProject components, at appraisal compared with the actual achievement,is in Appendix 2, Table 2.
23. During implementation of the Project the proceeds of the loanwere reallocated five times as a result of changes In the scope ofvarious components. The sequence of these changes is traced in Appendix2, Table 3. The implementation of each component of the Project isdiscussed individually in the following paras. 24 to 46.
6
(a) Irrigation Facilities
24. A total of 6,500 pumpsets were procured, about 160 per centmore than the 2,500 units estimated at appraisal. The distribution ofthese pumpsets spread over the 14 terai districts as originallyenvisaged is shown in Appendix 2, Table 2. However, reflecting thelarger number of pumpsets distributed in total, each district hasreceived more than what was estimated at appraisal, though notnecessarily in the same proportion.
25. The procurement of the 6,500 pumpsets was undertaken in twobatches under an international competitive bidding (ICB) procedure,taking into consideration end-user (i.e. farmers') preference. Theprocurement procedures followed for the pumpsets (and other componentsof the Project) and a time sequence of these activities is described inAppendix 3, Tables 1 and 2 respectively. In all, seven different modelscomprised the 6,500 pumpsets procured from seven suppliers as shown inAppendix 4.
26. At appraisal, the distribution and installation of the 2,500pumpsets was scheduled to be undertaken over a three year period,starting in 1982, with 500 units (20 per cent) being installed in thefirst year, and 1,000 units (40 per cent) in each of the next two years(Appendix 5). However, the actual installation of the pumpsets startedonly in 1984, some two years later than originally envisaged. The pacequickened dramatically in 1984 and by the end of that year about 85 percent of the original target (2,120 units out of 2,500 units) had beeninstalled. The fact that distribution and installation of the pumpsetscontinued into 1987 is more a reflection of the expanded scope of thiscomponent of the Project than of delays in implementation. The annualprogram of distribution of the pumpsets and other components of theProject is in Appendix 5.
27. As shown In Appendix 2, Table 1, the total expenditures(foreign exchange plus local costs) incurred on this component amountedto $4.512 million, about 66 per cent higher than the $2.715 millionallocated at appraisal. To place this figure in its proper perspective,it needs to be noted however, that the actual scope of the irrigationcomponent achieved, in physical terms, increased by some 160 per cent(6,500 pumpsets vs. 2,500 pumpsets) over the appraisal estimates. Itfollows therefore that the unit cost of a pumpset had actually beenconsiderably less than what was expected at appraisal. The average costof a pumpset may be estimated to have been about $695 ($4.512 millionfor 6,500 units) or about 36 per cent less than the appraisal estimateof about $1,085 per pumpset ($2.715 million for 2,500 units).
(b) Water Turbines
28. A total of 321 water turbines of varying capacities, dependingon site conditions, were installed by the Project, double the 160 unitsplanned at appraisal. All the water turbines installed have been
7
exclusively dedicated to agro-processing (rice and flour milling, oilextraction etc), though at appraisal about 6 per cent of the units werealso intended to provide community lift irrigation. This subcomponentdid not materialize however due to lack of sufficient interest bywould-be entrepreneurs to undertake community irrigation wherearrangements of water and cost sharing would need to be mutually agreedupon and enforced.
29. This component of the Project had also been expected atappraisal to provide low cost grain storage facilities as an adjunct tothe community lift irrigation-cum-agro-processing urits. Thissub-component of the Project was not executed due to lack of sufficientinterest. It was evident that individual farmers preferred toconstruct/provide their own storage rather than share a common,community-wide facility.
30. As shown in Appendix 2, Table 2, the water turbines foragro-processing were expected to be distributed in 16 hill districts inthe Project area. Subsequent site surveys identified the presence ofmany more suitable sites which are economically attractive and wherethere was substantial demand for water turbine driven agro-processingfacilities. Hence, the scope of this component of the Project wassignificantly increased, and ultimately provided for 321 water turbinesin 51 hill and mountain districts.
31. Each of the 321 water turbine plants has semi-permanent waterbearing channels, a mill house, agro-processing machinery (such as apaddy dehusker, a wheat/maize/millet sheller and grinder, and an oilexpeller). Twenty three of these water turbines also have associatedelectric generating facilities which are used to partially meet locallighting needs.
32. Eight local firms were prequalified, through local competitivebidd.ing for the survey, site selection, manufacture and installation ofthe water turbines on a turn-key basis.
33. Due to delays in site surveys, design and procurement of rawmaterials for fabrication, the installation of water turbines began onlyin 1983, some eighteen months later than expected at appraisal. By theend of the originally scheduled loan closing date of the Project in1984, less than half the estimated number of water turbines (72 out of160 units, see Appendix 5) had been installed. To catch up with thisdelay and also deal with the expanded scope of this component (321 unitsrather than 160 units), the installation of the water turbines continuedfor some 30 months longer than envisaged at appraisal.
34. As shown in Appendix 2, Table 1, the total expenditureincurred on this component of the Project amounted to $1.639 million,about 17 per cent less than the appraisal estimate of $1.986 million.This cost reduction Is even more dramatic when considered in the contextthat, in physical terms, the number of units under the component doubled
8
during implementation, resulting in an average actual cost of about $510per unit, or about 60 per cent less than the appraisal estimate of about$1,240 per unit.
Cc) Farm Mechanization
35. Procurement related difficulties with this component of theProject proved to be so onerous that they could not be resolved to themutual satisfaction of ADBN and the Bank, and this ultimately led to thecancellation of the component.
(d) Livestock
36. A total of 8,544 head of livestock (7,369 niilch buffaloes, 149buffalo bulls and 1,026 milch cows) were procured under this componentof the Project and distributed over 10 districts, compared to 2,290heads (2,000 milch buffaloes, 250 cross-bred cows and 40 buffalo bulls)to be distributed over 6 districts as envisaged at appraisal.
37. The farmers procured the animals from sources of their choice- neighboring states of Northern India or nearby local markets - andwere reimbursed by ADBN on satisfactory certification of animal stockand health by local ADBN branch staff who sought the help of districtlivestock and veterinary officials.
38. As shown in Appendixes 1 and 5, the implementation of thiscomponent of the Project was undertaken over fIve-and-a-half yearscompared with three years expected at appraisal, with the firstprocurement having started about a year later than scheduled, mainlybecause of procurement-related difficulties. The pace of implementationquickened considerably thereafter such that not only was the 12-monthinitial delay recovered, but also the physical target of this componentof the Project (2,290 head) was exceeded by the originally scheduled endof the Project in 1984. The continuation of this component for another30 months was a direct consequence of the expansion of the scope of thecomponent.
39. As shown in Appendix 2, Table 1, the total expenditures onthis component of the Project amounted to $3.046 million, about 170 percent higher than the $1.139 million estimated at appraisal. However,since the scope of the component had simultaneously increased by about270 per cent, the average unit cost of the livestock were significantlylower than envisaged at appraisal (about $356 per head vs $497 per headrespectively or about 28 per cent lower).
Ce) Biogas Plants
40. As shown in Appendix 2, Table 2, 1,200 biogas plants have beenInstalled under the Project in 38 districts as against 2,000 biogasplants envisaged at appraisal to be distributed in 41 districts.Reflecting strong end-user preferences on grounds of technical and cost
9
advantages, about 93 per cent (1,112 units) of the biogas plantsinstalled were of the dome type, with the remaining 7 per cent (88units) being of the drum variety. About 75 per cent of te dome typeand 90 per cent of the drum type biogas plants were of 15m or less incapacity.
41. All plants were designed, fabricated, installed andcommissioned on a turn-key basis by Biogas Company Ltd., the majorcompany in this field in Nepal. ADBN is the majorIty (51 per cent)shareholder in this company. The necessary raw materials were procured,under IS procedure, by ADBN and then transferred to Biogas Company forstorage and use as needed.
42. The implementation of this component was undertaken over afive-and-a-half year period starting in 1982, almost a year later thanoriginally scheduled (Appendix 5). The pace of implementation wasconsiderably slower than expected at appraisal when 2,000 units wereenvisaged to be installed in only three years.
43. Reflecting the reduced physical scope of this component, thetotal expenditures incurred was also lower than estimated at appraisal,though not proportionally so. As shown in Appendix 2, Table 1, a totalof $1.968 million was spent on the 1,200 blogas plants installedcompared with $2.493 million allocated for 2,000 units at appraisal,implying that the actual average unit cost (about $1,640) was about 25per cent higher than the average cost estimated at appraisal (about$1,250).
(f) Vehicles and Office Equipment
44. To improve office management and field operations, ADBNprocured vehicles and office equipment as provided for at appraisal,with only some minor modifications (Appendix 6). The procurement wasunder IS procedure. A total of $0.303 million was expended on thiscomponent of the Project compared to an allocated amount of $0.218million at appraisal.
(g) Fertilizer and Diesel Fuel
45. Under this component, 28,015 mt of chemical fertilizer (25,752mt of urea, 1,282 mt TSP and 971 mt MOP) and 6,760 kilo liters of dieselfuel were financed. The procurement and distribution of thesecommodities were undertaken by AIC and NOC as part of their normaloperations. Farmers obtained the fertilizer and diesel fuel from AICand NOC respectively, on presentation of credit coupons issued by ADBN.ADBN confirmed to the Bank that fertilizer and diesel fuel had both beenimported from eligible source countries.
46. The quantities of fertilizer and diesel fuel procured underthe Project were considerably more than the 5,810 mt and 2,816 kiloliters estimated at appraisal. Consequently, the funds actually
10
expended on these two-items were also higher ($5.234 million vs. $1.410million for fertilizer and $2.503 million vs. $0.932 million for dieselfuel). However, these quantities were compatible with the requirementsof the increased number of tubewells and punipsets financed under theirrigation component of the Project.
11
III. EVALUATION OF IMPLEMENTATION
A. Project Components
47. The actual achievements, both in physical and monetary units,of the Project components have been described in Part II of this report.They have also been compared against those estimated at appraisal, aspresented in Appendix 2, Table 1. The implementation of each Projectcomponent is evaluated in paras. 48 to 60.
1. Irrigation Facilities
48. The original allocation of 2,500 pumpsets was intended topartially meet the demand for such units over a three year period,beginning in 1981/82. Delays in the start of the Implementation of theProject by about two years resulted in a large accumulated demand andtherefore the scope of this component of the Project had to be expanded(to 6,500 units) to meet the demand of the farmers. Moreover, thegroundwater studies (undertaken through the UNDP-financed TA grant)Identified new areas in the Project districts which could be broughtunder tubewell irrigation. The same studies also encouraged the designof an appropriate shallow tubewell which could be installed (by theso-called Thokwa method) in rocky soil areas where drilling of wells byconventional means is difficult and costly. The shallow tubewells,installed by the Thokwa method, made possible the Irrigation of largeareas in the Project districts which previously were primarily rainfedor supplied with irrigation water only sporadically through lift pumps.The demand for pumpsets for shallow tubewells therefore increased inabsolute numbers and at the expense of pumpsets for surface liftirrigation. This also explains the shift in the composition of punipsetsdestined for shallow tubewells and lift irrigation; at appraisal, 48 percent of the originally envisaged 2,500 pumpsets were Intended for usewith shallow tubewells with the remaining 52 per cent for liftirrigation. In actual implementation. the relative importance wasreversed, with the percentage composition being 59 per cent for shallowtubewells and 41 per cent for lift Irrigation.
49. The scope of the irrigation component was increased not onlybecause there was a larger demand for the pumpsets than envisaged atappraisal, but also because of their lower cost. At appraisal, anaverage of the international prices in a number of likely sourcecountries which were expected to participate in the ICB procedure wasused as the basis of the cost estimate. In practice, however, about 85per cent of the pumpsets were procured from India and the rest from theRepublic of Korea at unit prices considerably lower than estimated atappraisal. Further, imports from India did not involve any licensefees, which also reduced the local costs to some extent.
50. Not only was the actual unit price of the pumpsets lower thanthat estimated at appraisal, but a greater amount of funds could also beallocated to this component of the Project due to the following factors:
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(I) equipment imported from Indian suppliers was paid for inIndian rupees. The depreciating Indian (as well as theNepalese) currency against the dollar over the period ofimplementation made a larger amount of these currenciesavailable from the loan proceeds (since the loan wasdenominated in SDRs); and
(ii) during the implementation of the Project, the scope of somecomponents (power tillers and biogas) was reduced, resultingin savings which were reallocated to the procurement ofadditional pumpsets to meet the increased demand for these inthe Project area.
51. It is encouraging to note that local well drilling facilitiesand after sales services have expanded and improved significantly duringthe course of the Project. Field observations confirmed the presence ofnumerous local, Indigenous small workshops offering drilling and repairservices of adequate quality. Previously, the well drilling technicianswould usually be drawn from the border states of India and after salesservices were provided by the local agents/distributors of pumpsetsuppliers. Such services were usually rather unsatisfactory in terms ofrepairs and maintenance since the local agents were more keen on salesof spare parts. Though such is still the case for most puinpsetsuppliers/manufacturers, the local network of small scale entrepreneursand individual technicians/repairmen has expanded sufficiently to bereadily available throughout the Project area at reasonable cost.
2. Water Turbines
52. The provision of the water turbines, of the size andconfiguration as specified at appraisal, was the first attempt in Nepalto harness rather low water heads with small discharge, which requiredrelatively small water turbines (about 15 - 20 hp). The technology fordesigning and fabricating these turbines for the rugged Nepali terrainproved viable.
53. The implementation of this component of the Project enhancedconsiderably the locally available skills and technology of fabrication.Initially, only three firms were pre-qualif led as being suitable forfabricating the specified water turbines to an acceptable quality.Subsequently five more firms were added to the list and all the eightmanufacturers satisfactorily produced and installed the water turbines.
54. The cost of fabricating the small scale water turbines waslower than that estimated at appraisal. This was due, in large part, tothe reduced cost of importing raw materials from India directly by themanufacturers. The reduced unit costs, plus a larger number oftechnically suitable sites for water turbine installations resulted in amuch larger demand for the small scale water turbines than had beenexpected at appraisal.
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55. Since all costs (imported raw material costs as well as localcosts of fabrication and installation) were incurred either in Indian orNepalese rupees, the depreciation of these currencies against the dollarresulted in a larger pool of these currencies being available forinvestment in water turbines. Thus, a larger demand (compared toappraisal) matched by a greater supply of rupee funds enabled thephysical scope of this component of the Project to be doubled to 321water turbines (from 160 estimated at appraisal).
3. Livestock
56. The longer period of implementation and greater expenditureson this component as compared with appraisal estimates are primarily areflection of its significantly enlarged scope, in physical terms. Thephysical scope of this component increased by about 270 per cent, whilethe expenditures increased only by about 170 per cent, indicating thatthe average per unit costs were actually significantly lower thanenvisaged at appraisal.
4. Biogas Plants
57. The underachievement (60 per cent) of the targeted objectivesin this component Project is more a reflection of demand rather thansupply constraints. The technology of biogas plants is not new inNepal, and the Biogas Company has considerably improved its skills inall aspects of design, fabrication and implementation in recent yars.The dome type of plants, of capacities in the range of 10-20 m , incemented digester wells, have been found to be the most appropriate forNepalese conditions. Installing such dome type biogas plants mainlyinvolves masonry work rather than any complex steel fabrication, and iswell within the capability of locally available manpower.
58. Demand for biogas plants is restrained mainly because offinancial considerations, with even the smaller capacity plantsrequiring substantial investments (around NRs15,000 - 20,000 per unit).Further, to meet an average family's cooking needs alone, at least twohead of cattle are required to provide the necessary dung to operate thebiogas plants. Such cattle ownership and the demand for biogas plantsis thus restricted to the relatively better-off farmers.
5. Vehicles and Office Equipment
59. This component was satisfactorily implemented. The vehiclesprocured have added considerably to the critically needed logisticssupport resources at ADBN. Simi]arly, the office equipment providedhave been welcome additions and are being fully utilized except for themicro-computers, the use of which needs to he better planned andexecuted. All vehicles and equipment provided are so far performingsatisfactorily.
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6 Fertilizers and Diesel Fuel
60. The rationale for this component of the Project was to providethe farmers with credit for fertilizer and fuel in the first year ofoperation of the irrigation pumpsets. As the size of the irrigationcàlnponent increased during Implementation, so did the requiredquantities of fertilizer and diesel fuel.
B. Project Costs
61. The total estimated Project cost at appraisal was $20.1million (including physical contingencies and price escalation) of which$15.8 million was expected to account for foreign exchange costs and theremaining $4.3 million equivalent for local currency costs. As shown inAppendix 2, Table 1, the actual total cost of the Project was $20.292million, or within 1 per cent of the appraisal estimates. Of thisfigure, the foreign exchange costs were $15.8 million, as estimated atappraisal, and the remaining $4.492 million equivalent accounted forlocal cost.
62.. However, expressing the total costs in dollar equivalent masksthe variations in local currency costs. It is noted that, sinceappraisal, the dollar has appreciated by about 83 per cent against theNepalese Rupee (from $1 = NRs12.O to NRs22.0). Thus, though the totallocal costs were actually about NRs98.8 million (or about 91 per centhigher) than the appraisal estimate of about NRs51.6 million, they wereless than 5 per cent higher when expressed in dollar equivalents (theformer at NRs22.0 = $1 and the latter at NRs12.0 = $1). The foreignexchange costs were limited by the loan and technical assistancefinancing available, both. of which remained unchanged.
C. Project Implementation Schedule
63. At appraisal it was hoped that the loan would become effectivein early 1981 with Project implementation beginning soon thereafter andthen carried out over a three year period. In practice, however, theloan became effective in August 1981, and was implemented over a periodof five and a half years (Appendix 1). Most of the delays inimplementing the Project were procurement-related. In the case of thebiogas component, however, the delay and subsequent reduction in scopeis more appropriately attributed to a lack of sufficient demand tofollow the pace as set out at appraisal. It also needs to be recognizedthat the longer period, of Implementation is also a reflection of theexpanded scope of several components of the Project, and should not beconsidered as "delays" as such.
D. Procurement of Goods and Services
64. Procurement was the most problematic aspect and caused most ofthe delays in Project implementation.
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65. The delays in pumpset procurement occurred because of changesin technical specifications, but more significantly because of a longerthan expected tender evaluation process to accomodate farmers'preferences, a scheme not allowed under the Bank's procurementguidelines at the time of appraisal.
66. Under the procurement procedures envisaged at appraisal, ADENwas expected to procure the raw materials required for the manufactureof water turbines under ICB/IS, and distribute them to the chosenmanufacturer(s). This arrangement might have been feasible had ADBNrestricted itself to procuring only a few key items (such as cement andsteel). However, ADBN attempted to procure a wide variety of rawmaterials and parts. The situation was further exacerbated by the factthat eight potential suppliers were short-listed by ADBN and it becameimpractical to procure the raw materials, mostly from India, for each ofthese eight, particularly since their requirements varied widelydepending on the number of water turbines each was contracted toprovide. The procurement arrangement was subsequently changed to enableeach manufacturer to procure the raw materials from sources of itschoice. Each supplier was, in effect, given a turn-key contract andheld responsible for all activities ranging from design to procurementof materials, fabrication and installation.
67. There were no major procurement problems in the biogascomponent of the Project. The procedure envisaged at appraisalrequiring ADBN to procure the raw materials under ICB/IS was followed.It was possible to do so in this case since only one manufacturer, theBiogas Company Ltd. was involved.
68. It was envisaged at appraisal that livestock would be procuredfor the Project by a process of competitive bidding from animal marketsin India. This was found to be impractical to implement since formally,export of livestock from India is strictly limited. Only about 100 headwhich was negligible compared with the requirements of the Project,could have been formally imported from India. Following consultationswith and subsequent approval of the Bank, the procurement procedure waschanged to allow local farmers to obtain the animals in the local marketand/or markets in the neighboring states of Northern India. Mostprocurement took place In the local markets, though the animals, in alllikelihood, originated from india.
69. Fertilizer and diesel fuel were imported by AIC and NOC aspart of their normal procurement program and made available to thebeneficiaries of the Project. It was ascertained that fertilizer anddiesel fuel were procured from the Bank's eligible source countries.
E. Conditions and Covenants
70. The status of compliance with some of the major loanconditions and covenants are listed in Appendix 7, and summarized below.
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71. It had been covenanted (Project Agreement, Section 3.05) thatADBN should maintain records and accounts adequate to identify the goodsfinanced out of the proceeds of the loan. This has not been done. Theaccounting of sub-loans at ADBN is only purpose based, i.e. the recordsare kept by categories of investment (irrigation, livestock, etc.) andno Information is kept about the source of financing of any particularsub loan,
72. It had been covenanted (Loan Agreement, Schedule 6, para 5)that ADBN would strengthen its loan supervision and debt collectionprocedures to improve loan recovery. This was not done and the loancollection performance continued to be unsatisfactory through the periodof Project implementation.
73. Compliance with reporting requirements as stipulated in theLoan and Project Agreements has generally lagged. ADBN did not submitany of Its required quarterly progress reports, or its semi-annualunaudited and annual audited financial statements on time.
74. Covenants concerning enhancement in the authorized capital ofADBN to Rs400 million and the Government's contribution to ADBN's paidup capital by the equivalent of $262,000 out of the Project Loan and byanother RslO million annually over a period of five years from theeffective date of the loan, have all been complied with. The increasein the Government's contribution to the paid up capital of ADBN over thefive year period ending 15 July 1986 is estimated to have been aboutRs97 million. In general, the Government has complied with allcovenants requiring it to provide adequate financial resources to ADBN.
75. It had been covenanted (Loan Agreement, Schedule 6) that thedebt-to-equity ratio of ADBN would be no more than 6:1, and that ADBN'slong-term debt and/or equity would be accordingly adjusted. Thiscovenant was complied with and ADBN's debt-to-equity ratio during theperiod FY1981/82 to FY1985/86 ranged from 2.32:1 to 5.91:1.
F. Disbursement and Loan Recovery
76. The disbursement of the Loan was extremely sluggish in theearly years of Project implementation with only 20 per cent of the loanhaving been disbursed in the first 80 per cent of the originallyscheduled project implementation period. These delays in disbursementwere primarily related to procurement issues (paras. 64 to 69). Oncethe procurement-related difficulties were resolved, physicalimplementation of the Project and disbursement of the loan gatheredsignificant momentum and proceeded relatively smoothly. The loan wasclosed in early 1987 after full disbursement.
77. ADBN's loan collection record has been poor for the pastseveral years, and the past due loans have increased steadily over theyears, and constituted almost half of ADBN's gross loan portfolio at theend of FY1986 (Appendix 8). ADBN collected only about 34 per cent of
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dues in FY1986, down from about 39 per cent a year earlier. There wasno effective system during the course of the Project to review ardmonitor loan collection performance either at the head office or at thezonal offices. Two divisions/sections at the ADBN head office aresimultaneously involved in keeping information on the loan portfolio, aphenomenon which is symptomatic of the lack of an effective controlsystem. The Evaluation Division at ADBN head office maintains recordsof disbursements, collections, outstanding and overdue positions of theprincipal amounts of the loan. However, records on penalties andrecovery of interest and penal interest charges are maintained by theFinance Division. To complicate matters further, the EvaluationDivision maintains its records by loan categories whereas the FinanceDivision maintains its information on a global loan portfolio and doesnot segregate by loan categories.
78. Efforts to improve loan collections have only recentlyattracted attention at ADBN. Special teams are being sent to the fieldoffices from the Loans Division at the head office for follow up of loancollection. Further, legal assistants have been posted at all the 14zonal offices to advise the zonal managers and branch managers on legalproceedings and to maintain liason with legal advisers. In addition,ADBN has created positions at a few larger branches and assigneddistrict responsibility to staff/officers at head office for follow-upof loan recovery. Under the Fifth Agricultural Credit Project (Loan No.831-NEP(SF) approved on 7 April 1987), the establishment of a separatedivision fully devoted to loan collection was stipulated as a conditionfor loan effectiveness, and this has been accomplished by ADBN.
79. ADBN is increasingly taking recourse to legal treasures forloan recovery. It- has been vested with the requisite judicial authorityto foreclose and sell assets pledged by borrowers as security for loansIn case of default In loan repayments. In the past, such foreclosureactions have helped in the recovery of delinquent loans. Since FY1982,the 35 day reminder notice (a legal pre-requisite to foreclosureaction), was published in respect of 5,805 delinquent borrowers withdues totalling Rs107.6 million. About 22 per cent of the borrowersresponded to the notice, and ADBN realized about 15 per cent (Rs16.5million) of the dues involved. During the same period, security auctionnotices were published against 771 defaulters with overdues totallingRs39.7 million. About 69 per cent of the defaulters responded andrepaid 59 per cent (Rs23.6 million) of the dues Involved. Further,between FY1982 and FY1986, ADBN realized the entire dues (RsS.3 million)Involved in 79 cases In which the security was actually auctioned. Asnoted earlier (para. 78) the drive to improve loan collectionperformance has gathered momentum in recent months. According toinformation submitted by ADBN, foreclosure action has been initiated, asof 30 November 1987, against about 70 per cent of all oveidue accountsaged five years and over. Further, a time bound plan to initiateforeclosure actions against the remaining overdue accounts by 31 March1988 has also been finalized.
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C. Project Benefits
1. General
80. The major benefits of the Project are manifested throughincreased production of foodgrains, more efficient agro-processing,increased production of milk and milk products, and savings in fuelwoodand kerosene consumption. Both financial and economic prices have beenused for the relevant outputs and inputs. The financial prices arebased on April/May 1987 market prices in Nepal and the economic pricesare derived, as appropriate, from border price projections andconversion factors as shown In Appendix 9, Tables 1-4.
2. Irrigation Facilities
81. Based on field visits, discussions with farmers and otherpersonnel involved in irrigated agriculture in the Project area, theMission has concluded that the cropping intensity with the Project'sirrigation facilities in place would improve from 1.3 to 1.8 in the"without" Project situation. At appraisal, the cropping intensity hadbeen expected to improve from 1.3 to 2.0. The crop yields in the "with"Project scenario are also expected to be lower than was envisaged atappraisal. However, the impact of this over-estimation of yields atappraisal will be mitigated somewhat since the appraisal report appearsto have overestimated the "without" situation yields as well, as shownbelow:
Table 2: Estimated Crop Yields(mt/ha)
PCR Mission AppraisalWith Without Incremental With Without Incremental
Paddy 2.5 1.5 1.0 3.5 2.5 1.0Wheat 2.5 2.0 0.5 3.0 3.0 -Maize 2.0 1.5 0.5 2.5 1.5 1.0
82. At appraisal It was judged that each pumpset would Irrigate anet area of 5 ha per crop. This Is now considered to be over-optimisticand It appears more reasonable to estimate that each pump would Irrigateonly 2.5 ha.
83. Based on paras. 81 to 82 above, and as shown in Appendix 9,Table 5 it is expected that the incremental production of foodgraIns dueto irrigation made possible by a pumpset irrigating 2.5 ha would beabout 5.6 mt/year, which is slightly less than half of what wasenvisaged at appraisal (12 rnt/year/pumpset). On a total Project basis,the installation of all the 6,500 pumpsets procured would increase thearea under irrigation to around 16,200 ha and the resultant incremental
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production of foodgrains is expected to be about 36,000 mt/year. Thiscompares with an expected incremental foodgrain production of about30,000 mt/year due to irrigation by the 2,500 pumpsets (irrigating a netarea of 12,500 ha) estimated at appraisal. Thus, though the scope ofthe Project has increased by about 160 per cent (6,500 vs. 2,500pumpsets) the foodgrain production from the Project is expected to beonly about 20 per cent higher (36,000 mt vs. 30,000 mt) reflecting themuch lower production (less than half) per pumpset now being achieved.
84. In monetary terms, each pumpset is expected to yield an annualbenefit of about Rs8,360 (at 1987 financial prices), at fulldevelopment, as shown in Appendix 9, Table 5.
3. Water Turbines
85. It is judged that the water turbines installed under theProject are operating an average of 5 hours daily for 240 days a year.Each water turbine is generally used to drive three agro-processingmachines: paddy processing (huller), maize/wheat grinding and oilextraction. The working time of the turbine is equally shared betweenthe three machines, with two machines operating simultaneously at anygiven time. it is estimated that the annual throughputs of a waterturbine are about 400 mt of paddy, 96 mt of wheat/maize and 32 mt of oilextraction. Of the 321 water turbines installed, 23 also haveassociated electric generating facilities, producing over 2,000 kwh ofelectrical energy each.
86. Based on the above physical throughputs, it is estimatedthat a water turbine with agro-processing machinery alone is expected toyield an annual net benefit of Rs61,800 (at 1987 financial prices),increasing to Rs82,800, if an electricity generator were also to beincluded (Appendix 9, Table 6).
4. Livestock
87. Estimates of benefits from buffaloes and crossbreed cows arepresented in Appendix 9, Tables 7 and 8 respectively. A dairy/muchbuffalo is expected to yield an average of about 1,890 liters of milkannually generating an average net income of Rs3,535 (at 1987 financialprices) in each year of its ten-year productive period; for a much cow,the corresponding figures are expected to be of 2,850 liters and Rs5,400respectively. In total, the animals financed under the Project areexpected to yield an average of about 17 million liters of milkannually, valued at Rs122 million (at 1987 financial prices).
5. Biogas Plants
88. As shown in Appendix 9, Table 9, the biogas plants installedunder the Project are estimated to result in annual savings of 5,000 mtof fuelwood and 100 kilo liters of kerosene, together valued at Rs5.7million (at 1987 financial prices).
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6. Benefits to Farmers and Other Investors
89. About 6,500 farmers will directly benefit from the loansupport for on-farm irrigation; the annual family income (net ofamortization) will rise by over Rs4,000 (Appendix 9, Table 5). Theinvestors in water turbine installations for agro-processing areexpected to earn an increase in annual net income of Rs23,000,increasing to over Rs37,000 if an electrical generating facility werealso included (Appendix 9, Table 6). The rural community will benefitnot only from the agro-processing facilities now available, but alsofrom the newly created access to a viable source of electrical energy.The livestock component of the Project is also expected to increasefarmers' incomes. Additional annual incomes accruing to farm familiesfrom buffaloes and cows, are likely to be between an average of Rs3,000to Rs5,000 per animal (Appendix 9, Tables 7 and 8). The biogascomponent of the Project has benefitted 1,200 families and is expectedto provide additional annual income of up to Rsl,700 per family,depending on the size of the plant (Appendix 9, Table 9).
90. In addition to direct benefits, the Project participants havealso gained from improved nutrition and from an increased supply offoodgrains, milk products and services from the Project components.Installation of a large number of shallow tubewells and pumpsets hassignificantly encouraged the development of local borehole drillingcapacity. It has also encouraged the manufacture of parts for shallowtubewells and the establishment of repair services for pumpsets. Thesepositive developments should facilitate future development of groundwater resources for tuhewell irrigation in Nepal.
7. Other Benefits
(a) Regional Development
91. The Project has channelled sizeable volumes of resources tohitherto neglected hill areas. The agro-processing schemes andelectricity generators made possible through the installation of waterturbines are likely to evolve into potential growth centers stimulatingfurther development in the hill areas.
(b) Social Impact
92. It had been expected at appraisal that users' cooperativeswill be organized to install and operate water turbines. The Projectenvisaged group cooperation and participation in setting up cf waterturbines and ten persons on an average were expected to jointly installa new water turbine. This has not happened and all the water turbinesinstalled under the Project have been set up by individuals.
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(c) Institutional Impact
(1) Biogas Company
93. The Biogas Company (of which ADBN is the majority shareholder)has been considerably strengthened as a result of this Project. Itsfabrication ability has been enhanced by the workshop machines provided,and the foreign and local training extended to its technical andresearch staff.
(ii) Water Turbine Fabricators
94. Initially, only three fabricators were pre-qualif led to
install water turbines. Five more manufacturers were graduallyprequalified as their fabrication capabilities developed. Newfabricators have set up shop due to the increased demand for turbinesand agro-processing machinery generated by the Project.
(iii) ADBN
95. The Project augmented the resources of ADBN and enabled it toexpand its lending activities to cover a wider geographical area and toreach a larger segment of the population in Nepal. The support providedto ADBN as part of the Project technical assistance has also enhancedthe physical and human resources at ADBN.
H. Economic Internal Rate of Return
96. Based on the benefits as presented in paras 80 to 88 above,and investment costs based on April 1987 prices, the PCR Mission hasre-estimated the EIRR of the Project to be about 47 per cent (Appendix9, Table 10), somewhat less than the appraisal estimate of 55 per cent.This is primarily a reflection of the fact that though the costs perunit of all physical investments (except biogas plants) wereconsiderably lower than that expected at appraisal, the unit benefits inall cases (except livestock) have also turned out to be much lower.
I. Technical Assistance
97. A technical assistance grant was provided by UNDP to help inProject implementation and ADBN's institutional strengthening. All sixcomponents financed under this grant -- expatriate consultancy,fellowships, training, survey and feasibility study, research anddevelopment, and providing fabrication machinery and equipment for theBiogas company -- were generally successful.
J. Performance of Contractors and Suppliers
98. Seven pumpset suppliers were involved In the Project. Thesmaller suppliers did not have a sufficiently broad network ofdistributors and agents and, given the relatively small number of
pumpsets ordered from them, did not have much motivation to set up anetwork. Further, as pumpsets were procured based on end-userpreferences, the finalization of the number to be ordered from eachsupplier took considerable time. The pumpsets had to be delivered atfour different zonal stations within Nepal and the large number ofsuppliers involved meant that considerable time and effort had to bespent on pre-shlpment and on-arrival inspection. These comments are,however, more Indicative of the fact that it might have been morejudicious to have had less than seven suppliers involved rather than acriticism of the pumpset suppliers themselves, all of whom perfornedgenerally satisfactorily.
99. The water turbines were constructed and installed under aturn-key contract arrangement with eight contractors. These contractorswere also responsible for site identification, survey and technicaldesign. All these contractors performed satisfactorily. These privatesector entrepreneurs have shown significant initiative and enthusiasmparticularly in reaching remote areas in the hills for water turbineinstallation.
100. All biogas plants for the Project were designed, manufacturedand installed by the Biogas Company, the primary manufacturer in thecountry. This company also undertook applied research and development,an area in which its performance has been satisfactory. The same cannotbe said however of the company's performance in the manufacture andinstallation of the biogas plants, which were not undertaken in anefficient and cost effective manner. The price of its biogas plant hasrisen steadily and is believed to be the major deterrent to increasedacceptance by the farmers. Dome type biogas plants basically involvecivil construction which can be readily undertaken by the plentifulsupply of local civil contractors. Biogas Company need only to supplythe drawings and relevant technical Information rather than beinginvolved in the installation of the plants themselves.
K. Performance of Borrower and Executing Agency
1. The Government (Borrower)
101. The Government's commitments to provide the necessaryfinancial support to ADBN were generally complied with. The Governmentconsiders ADBN an appropriate and effective institution to assistagricultural and rural development of the country and has adequatelysupported the Project.
2. ADBN (Executing Anj
(i) Project Implementation
102. The overall performance of ADBN in implementing the Projecthas been generally satisfactory, except in procurement related issues.Some of the delays in procurement are attributable to the introduction
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of end-user preference for the purchase of pumpsets by ADBN which wasonly formalized by the Bank in the early 1980s. The procurement processin ADBN also needs to be made more efficient and effective. Once theprocurement related issues were resolved the implementation of theProject proceeded smoothly, aided significantly by the keen erthusiasmof ADBN staff.
(ii) Operational Performance
a. Lending Operations
103. Financing of rural and agricultural development is themandated business of ADBN. It provides short, medium and long-termcredit for a wide spectrum of rural and agricultural enterprisessponsored by individuals, small farmer groups, business entities andcooperatives. Crowing at a cumulative annual rate of 38 per cent sincethe Bank appraised the Fourth Agricultural Credit Project, ADBN'saggregate loan disbursements rose to NRs66O million ($31 million) inFY1986, against only NRs134 million in FY1981. Correspondingly,beneficiary coverage of anrLual disbursements expanded from an estimated15,000 borrowers in FY1981 to 60,000 in FY1986, and the portfolio grewfrom NRs555 million in FY1981 to NRs1,768 million in FY1986.
b. Structure and Quality of Assets
104. During the six years that have elapsed since the Bankappraised the Project, ADBN's assets have more than tripled, totallingNRs2.1 billion at the end of FY1986 (Appendix 10). The bulk of theseare represented by the loan portfolio (84 per cent), the remaining 16per cent consisting of cash and bank balances (4 per cent), investmentsin shares and Government securities (2 per cent), fixed assets (2 percent) and miscellaneous receivables (8 per cent). About one-third ofthe loan portfol.io represents short term loans. Short-term assets,including short-term loans, constitute about 40 per cent of the tctalassets.
105. However, the quality of ADEN's loan portfolio carnct beconsidered as satisfactory. At the end of FY1985, about 45 per cent(NRs794 million) of the outstanding loans represented past dues. Ofthis, an estimated 3.5 per cent (NRs27 million) were overdue for morethan ten years, 17 per cent (NRs132 million) were overdue for five toten years, and 25 per cent (NRs199 million) were overdue for two to fiveyears. In absolute terms, past dues aged above 2 years totalled NRs358million of which NRs159 million represented overdues for more than fiveyears. Defaults by the sajhas (cooperatives) accounted for about 28 percent (NRs22O million) of the overdues and dues over 5 years old in thatgroup totalled an estimated NRs75 million. However, data available atthe ADBN head office were not adequate to make a reliable estimate ofthe losses which these past dues would likely lead to.
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106. ADBN's loan collection record has been poor for the pastseveral years, and the past due loans have increased steadily year afteryear. ADBN collected only 34 per cent of dues in FY1986, 37 per centthe year before and 35-36 per cent during the period FY1982-FY1984(Appendix 8). However, efforts at improving collection are nowreceiving priority at ADBN under the Fifth Agricultural Credit Project(Loan No. 831-NEP(SF)).
(iii) Performance as a Development Institution
107. ADBN has performed well as a development institution. It haspromoted viable development activities in all economic segements ofNepal's agro-rural sector through its financial support and technicalservices. Its lending operations cover all geographic regions and focusmainly on the small farmers. It has taken a pioneering and central rolein disseminating new viable technology that is appropriate to the ruralsector. Its achievement in promoting three categories of investmentactivities needs to be highlighted. First, it has made a significantcontribution to the expansion of shallow well installations which areimportant in increasing Nepal's agricultural production. Irrigationthrough such installations is recognized as being highly cost-efficientand the investment involved as being quick-yielding. Second, It hasperformed the pioneering role in promoting viable water turbineinstallations that tap the water resources in the hills for producingmechanical and electrical energy. Third, through its financial support,ADBN has encouraged the manufacture and installation of biogas plants inrural households and communities.
L. Peformance of the Bank
108. The procurement procedure suggested at appraisal for purchaseof pumpsets did not provide for end-user preference as this was notunder the Bank's Guidelines for Procurement at that time. This resultedin a substantial delay. Resolving such procurement-related issuesduring Project implementation took time and resulted in the dropping ofa component (power tillers) altogether. Other than difficulties arisingout of this, the performance of the Bank was generally satisfactory.There should, however, have been closer monitoring of the financialperformance of ADBN by the Bank.
109. The Bank was generally flexible in favorably considering theseveral reallocations of loan proceeds sought by ADBN, and extension ofclosing dates. In assisting the Executing Agency in implementing theProject, the Bank fielded 12 missions between inception and PCRpreparation.
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IV. CONCLUSIONS AND RECOMMENDATIONS
A. Conclusions
110. The broad objectives of the Project in increasing thecountry's foodgrain production and enhancing farmers' incomes andemployment opportunities have been achieved. The utilization ofrenewable sources of energy in agro-processing has been successfullyundertaken, through promotion of water turbines. Installation of biogasplants for household cooking and lighting has been successful but at alesser scope than expected.
111. Targets for production, cropping intensity and area irrigatedper unit of physical investment during appraisal have not materializedalthough this was partly offset by lower unit costs which in turnfacilitated the installation of a larger number of wells. Also, theunit output is expected to improve with time as appropriate social andinstitutional arrangements are developed by farmers to better utilizethe irrigation capacity of available pumpsets.
112. The main focus of ADBN's operations during the Projectimplementation period (as in the decade preceding it) was on expandingits involvement in the country's agricultural and rural development. Inits role as a development institution, ADBN's performance has beenpioneering and impressive. However, this drive subordinated theconcerns and efforts for building a sound financial base, andmaintaining and upgrading the financial and commercial efficiency of itsoperations. As a result, ADBN's performance as a prudent lenderweakened, its loan recovery rate is poor and the past due loans haveincreased steadily year after year.
B. Recommendations
113. Based on the Mission's findings, the following suggestions areoffered. It is noted that many of the financial ills at ADEN havealready been identified in the appraisal of the Fifth AgriculturalCredit Project and appropriate remedial actions recommended. Most ofsuch steps have subsequently been covenanted in the icar (No.831-NEP(SF)) approved by the Bank in April 1987 and are being closelymonitored during the Fifth Project's implementation.
1. Loan Recovery
114. Only a financially strong and commercially prudent andefficient ADBN can be an effective implementing agency of the country'sdevelopment programs. It is recognized that ADBN is also a developmentinstitution and as such is required to consider a broader framework thandictated by commercial considerations alone. However, whilenon-commercial considerations might have been appropriate in the earlyyears of ADBN's existence, a situation has now been reached when the
26
financial integrity of the institution is in doubt. It is importanttherefore that the highest priority be accorded to efforts to make ADBNa financially sound and self reliant development finance institution.In this context, ADBN's loan recovery efforts must be considerablystrengthened and performance improved. A steady and substantialimprovement in loan collection should be the main organizationalpriority of ADBN during the next few years till the loan collectionreaches a respectable level.
2. Consolidation of Operations
115. To improve financial integrity and loan recovery performance,it would be necessary for ADBN to consider consolidation of itsoperations as being of higher priority than growth.
3. Control Over Operating Costs
116. Contrary to expectations of reaping the benefits of economiesof scale, ADBN's operating cost ratio has not improved despite theexpansion of its portfolio and annual loan disbursements. Averageproductivity of staff and field offices remained low, and has evenshown, in recent years, a tendency towards further decline. There isscope for improving ADBN's operating cost efficiency, and it issuggested that ADBN's business operatIons and management systems be moreinfluenced by considerations of commercial efficiency rather than growthin loan portfolio, as was the case in the past.
4. Practicality of Procurement Procedures
117. Some of the procurement procedures agreed to between the Bankand ADBN at appraisal had to be subsequently modified to accommodateend-user preferences and practical conditions in Nepal. Theincorporation of end-user preference in the Bank's Guidelines forProcurement has been a welcome step in this regard. The practicality ofprocurement procedures should be a major consideration at appraisal andreceive adequate attention at that stage of Project preparation.
5. Encouraging Other Biogas Manufacturers
118. The Biogas Company, the major manufacturer of biogas plants inNepal has done commendable work on the applied research and developmentaspects of biogas usage. However, more manufacturers should beencouraged to set up operations since the technology, particularly ofthe most popular fixed dome type biogas plants, is simple and wellwithin the capabilities of local contractors.
6. Extension Services and Trainin
119. There is a iieed for better coordination between ADBN and theMinistry of Agriculture at the national, regional, and district levelsto ensure that farmers are better informed in the efficient use of
27
shallow tubewells through appropriate cropping patterns arid waterresource management. There is also a need to provide additionaltraining to both ADBN staff and the tubewell owners in the operation andmanagement of the tubewells.
7. Future Financing Requirements
120. There is a need to sustain the benefits already derived by thefarmers in the Project area by providing them with access to credit, Ifneeded, to purchase replacements for worn-out engines and pumps, as wellas fertilizer and fuel.
28
V. LIST OF APPENDIXES
No. Page
1
Project Implementation ScheduleAppralsalSchedule and Actual Implementation 30
2
Table 1: Project Scope and Costs - Comparison ofAppraisal Targets with ActualImplementation 31
Table 2: District Distribution of ProjectComponents - Appraisal EstimateCompared with Actual Distribution
32
Table 3: Sequence of Changes in Project Scopeand Loan Reallocation
33
3
Table 1: Contract Awards Under DifferentProcurement Procedures 34
Table 2: Progress of Procurement of ProjectMaterials and Services
35
4
Specification of Equipment - At Appraisaland Actually Procured
36
5
Annual Program of Equipment Installation -Appraisal Estimates and Actual
37
6
Office Equipment and Vehicles Procured
38
7
Compliance With Loan Covenants 39
8
Agricultural Development Bank of NepalPast Dues, Collections and CollectionRates of Entire Loan Portfolio 44
29
No. Page
9 Table 1: Economic and Financial Prices of KeyInputs and Outputs
45
Table 2: Derivation of Economic Prices forInputs (Fertilizer)
46
Table 3: Conversion Factors Used in Economicand Financial Analyses
47
Table 4: DerIvation of Economic Prices ofFoodgrains
48
Table 5: Irrigation Facilities
49
Table 6: Water Turbines
53
Table 7: Livestock - Dairy Buffalo
56
Table 8: Livestock - Much Cow
58
Table 9: Biogas Plants
60
Table 10: Financial and Economic Internal Rateaof Return of the Project
63
10 Table 1: Comparative Balance Sheet(FY 1981 to FY 1986)
64
Table 2: Comparative Income Statements(FY 1981 to FY 1986)
66
CD
CDP-fCD
()
CD
CDx
CD
01
-d
P-f
N-)
PROJECT IMPLEMENTATION SCHEDULE
APPRAISAL SCHEDULE AND ACTUAL IMPLEMENTATION
Original Project Period Extended Project Period
C L ASS I F I C AT I 0 N1981 1982 1983 1984 1985 - 1986 1981
__________ ____________ ________ 1234123412341234123412341234
LOAN PROCESSING
A Irrigation Facilities
1. Preparation of Tender Documents - — — — — -
2. Tenderinii and Evaluation - — — ----3. Shipment and Delivery - -- - - — — — — — — •._ — — -
4. Distribution of Pumpsets and Tuhewells .. - - - - -, - — - — —
B. Water Turbines
1. Site Survey and Design - -. — — — — — — — — —
2. Procurement - - - — = — — — — — — — — — — —
3. Transportation to Site - - . _. — _. -. — — — — — — — — — —4. Construction Erection and Commissioninq - -. - - — — . — — — — — — — — —
C. Farm Mechanization
1. Preparation of Tender Documents —2. Tendering and Evaluation —3. Shipment and Delivery - --
4. Distribution
D. Livestock
1. Collection and Processinq of Applications - - _ - - — — — — — — — —2. Procurement - - — — — — — —
3. Loan Disbursement and Distribution - — — — — — — —
E. Biogas Facilities
1. Collection and Processing of Applications
by AD B N - -. - -, — — — — — — — — —2. Procurement of Raw Materials — - - -
3. Fabrication Facilities -
4, Fabrication -. - — - - - - -. — — — — — — — — — —
5. Installation of Gas Plants - -, .-. — - — — — — — — — —
F. Office Equipment and Vehicles
1. Preparation of Tender Document - — - -
2. Tendering and Evaluation • = — — — - —3. Shipment and Delivery — - — — — -
_ I
LEGEND:
Appraisal Schedule
Actual Implementation
Q
CD
I—'
2,5001,2001,300
850160
2,0002,290
package36 rn/rn
9,0622,4061,496
910
2,6531,0681,766
951218
3,80315,000
800300160
90
18070
15,800
11,4684,5123,2211,291
01,6391,9683,046
303
7,7375,2342,503
19,205
1,0873213131103086
227
2,378309309
0
236918727188
15,000
800233234
70216
176
8,7893,9462,8151,131
01,407
6992,349
298
6,2113,8582,353
2,135 207
5,810 1,259 151
2,816 876 56
15,800 4,492 20,292
350
8653,800
5006040
100100130
4030
4,300
11,440
2,715
6,500
1,805
3,851
910
2,649
2,889
0
1,986
321
2,493
1,200
1,139
8,544218
2,342
1,410
28,015
932
6,760
350
4,66818,800
1,300 package
360 36m/m200100100220
220100
20,100
4,205
287887940
920
51
2,679566406160
0232
1,269607
5
1,5261,376
150
31
Appendix 2Page 1
Table 1: Project Scope and CostsComparison of Appraisal Targets with Actual Implementation
Appraisal Actual -
Cost $'OOO Cost $'OOOCanponents Quantity Ft LC Total Quantity FC LC Total
A. Investment1. IrrIgation
(a) SIW pinpsets(b) Lift pulpsets
2. Farm chanizationEquipnnts (units)
3. Water Thrbines (units)4. Biogas Plants (units)5. Livestock6. Office equiptint/vehicle
B. rking Capital1. Fertilizer (HF)2. Diesel Fuel (KL)
C. Inçort IXities and Taxes(lunpsLnu)
D. ContingenciesSubtotal (A-D)
E. T.A. (Package)1. Foreign consultant2. Fellowships3. TraIning4. Survey and feasibility study5. Research and deve1optnt6. Fabrication machinery and
equirnnt for biogas canpany7. Contingencies
Grand Total (A-E)
(Reference in text: page 5, para. 21)
32
Table 2: District Distribution of Project Components -Appraisal Estimate Compared With
Actual Distribution
Appendix 2
Page 2
Appraisal Estimate Actual Implen.entationIrrigstks Tutbine Liwtocks lrrigaticm Turbine 14vrstock
Agro- Buff sb Agro- Uuffslo
Project Districts SN L. Ptmp Proc irri Buffalo Bulls Ccs 91W L. Puip Proc Irri Buffalo Bulls Co
A. Original Project Districts1. Dadel,hira - - - - - - - 15 - - 3 - - - - -2. Xanchanpir 50 50 - - - - - 20 116 138 3 - - - - -3. ICaijali - 50 50 - - - - - 25 227 197 1 - - - - 184. Banks 150 100 - - - - - 60 168 158 - - - - - 45. llardiya 50 1(1) - - - - - 40 188 186 - - - - - 36.Surlchet - - - - - - 10 - - 10 - - - - 37.Dangdesklurf - - - - - - 30 - - 11 - •- - - 1158.Sallyan - - 5 - - - - 10 - - 10 -. - - - -9.Pyuthsn - - 5 - - - - 10 - - 13 - - - - 4
10. Baglung - - 10 - - - - 20 - - 13 - - - - 4II. Parbat - 10 - - - - 25 - - 10 - - - - 412.Msygdi - - - - - - - - 25 - - 5 - - - - 2013.Oilmi - - 10 - - - - 20 - - 11 - - - - 1114. Ar,a1ranchi - - 10 - - - - 30 - - 11 - - - - 1515. Palpa - - 10 1 - - - 30 - - 16 - - - - 1116. Nnwalpersi 88 80 - - - - - 1(0 160 181 6 - 310 6 - 5217.Bupandrbi 60 60 - - - - - 150 323 279 - - 604 12 - 13018. Kapilavastu 60 60 - - - - - 100 88 114 1 - - - - 3219.1ssjrog - - 10 1 - - - 30 - - 6 - - - - 2420.Tanabu - - 10 1 - - - 50 - - 7 - - - - 2021.Corkhn - - 10 1 - - - 30 - - 10 - - - - 3622. Syangja - - 10 1 - - - 30 - - 13 - - - - 1923.Voski - - 10 1 - - - 60 - - 10 - - - - 7324. Sindbupalcftk - - 6 1 - - - - - - 7 - - - - 125. Knvrepalarchok - - I? I -. - - ID - - 10 - - - - 2526. N,a,akot - - 12 1 - - - 10 - - 10 - - - - 627. Bbaktapur - - - - - - - ID - - - - - - -28.Fsth,endu - - - - - - - 10 - - I - - - - 1329. Laliflsir - - - - - - - 10 - - 3 - - - - 530. Dbading - - 10 1 - - - 10 - - 26 - - - - 1431. thjtnn 40 120 - - 4(8) 5 - 120 157 149 - - 1,018 18 - 9832. Parse 80 100 - - 400 5 - 60 158 163 - - 1,412 29 - 2733. lIar-a 88 100 - - 4(8) 5 - 1133 183 182 - - 1,054 22 - 4336.Makaavçur - - - - 400 20 - 20 - - I - 722 15 - 935. Rautabat 100 80 - - 4(0 5 - 40 217 182 - - 664 14 - 2936.Sarlahi - - - - - - - 1(0 - - - - - - - 6237.Maluthari - - - - - - - 1(8) - - - - - - - 1638.Drarushn - - - - - - - 1(8) - - - - - - -39. Srjrsari 113) 12.5 - - - - - 130 182 176 - - 775 16 - 4240. l'i,rang 150 125 - - - - - 140 229 216 - - 810 Ii - 4741. luau - - - - - - 250 20 - - 10 - - - 1,026 1242. Jhapa 150 150 - - - - - 110 192 218 1 - - - - Its
Subtutni (A)
B. Rapamied Project Districts43. Achhne64. Baited!45. Khotnng46. 1)aile1ha47. 1)otf48. Xajbang49. Jajerkot50. Polpa51. Ruleis52. Darclula53. Taplejung54. Pancbtbar55. tlnanknta56. Tehrathtmi57. Pbajpur58. nkbuwasava59. (8thaldFunga60. Solul'hsrl,,,61. Dolaltha62. Racrecbhap63. SindiLili64. t(alikot
1,200 1,313) 150 10 2,0(X) 60 250 2,0(0 2,588 2,537 236 - 7,369 149 3,026 1,200
34244227523436932
744
Subtotal(8) - - - - - - - - - - 85 - - - - -
Cr-ant Total (A and B) 1,2(0 1,3(0 154) 10 2, 40 250 2,000 7,588 2,537 321 - 7,369 149 3,026 1,2(0
Note: I. Nuther of ançsetu yet to be distributed/fratalled: 1,383 (1,271 for 51W, 112 for L. 3151p).as of April 1987. These weredistributed by December 1987.
(Reference in text: page 5, para 22)
Table 3: Sequence of Changes in Pro lect Scope andLoan Reallocation
evised Allocation as Aorove
:ategory or Coaponents riaDt1tv Lost a/ Luantity Cost quantity Coat uantlt Cost Quantity Cost Quantity -- Cost Quantity oat
($'OOO) ($'OOO) ($'OOO) ($'OOO) ($'OOO) (f'OOO)
eatnents ,062 8,789 9.703 7,047 2A2!.1. Irrigation 2,500 2,404 6,500 3,946 6,500 4,200 5,000 3.310 5,000 3,310 5.000 3,310 6,500 .1100
Water turbines 160 1,068 321 1,407 150 1,068 185 1,068 288 1,228 288 1,328 2207. Far. mechairation 850 2.653 - - 850 1,500 - - - - - - - -
Livestock 2.190 951 8,544 2,439 2,290 951 5,700 1.751 6,300 1,951 6,300 1,951 8,227 2,.391. liogas plants 2,000 1,766 1,200 699 2,000 1,766 1,000 700 1,000 100 1,000 700 1,000 TQ8. Irfice equipuent and vehicles various 218 various 298 various 218 various 218 various 318 various 318 various 718
5. working Capital 2,135 6.211 5,017 .1t 3,843 6,136
Fertilizers 5,810 at 1,259 28,015 at 3,858 15,000 at 2.739 15,568 .4 2.737 15.568 at 2,737 15,568 at 2,737 20,000 at 3,2582. Oiesel fuel 2.818 k.l 876 6,760 k] 2.353 3,722 ki 2,278 3,315 k] 1,106 3,315 kl 1,106 3,315 k] 1,106 4,300 kI 2,278
' C. Contingencies (Unallocated) so 4,110 3,65o 3,550 -
Tcai (A-C) 15.000 15,000 15,00015,000 15,000 15,000 15,000
2. ecical Assistance 800 800
1. Foreign consultant 300 2332. Pellowships 160 2343. Training 70
19 4. Survey and feasibility study 215. Lesrarch and development 90 66
• 6. Tabriestios aechinery endequipment for biogs. company 180 176Contingencies 70
r2A)m TOTAL (A-D) 15,800 15.800
a! 411 costs shown in this table refer to foreign costs only which were financed by the loan and TA.
301Dm
34 Appendix 3Page 1
Table 1: Contract Awards Under Different Procurement Procedures
ActualContract Award Procurement
Components Units ($t000) Procedure Followed
A. Irrigation
1. Pumpsets (1st 2,500 nos. 1,216 ICB on end userbatch) preference.
2. Pumpsets (2nd 4,000 nos. 1,804 ICB on end userbatch) preference.
3. MS Casing 140,000 m 770 ICB.
4. PVC Pipe 35,000 in 142 ICB.
5. Spare partsfor dieselengine 2 lots 14 ICB along with diesel
B. Water Turbines
C. Biogas Plants
1. Materials forBiogas factory
D. Livestock
E. Office Equipmentand Vehicle
F. Working Capital
1. Fertilizer
2. Diesel fuel
321 nos. 1,407
1,200 nos. 578
1 lot 121
8,544 nos. 2,439
various 298
28,015 MT 3,858
6,760 KL 2,353
engines. -
Local purchase onturn-key basis.
Local purchase onturn-key basis.
IS, several bidpackages.
Local purchase by endusers.
IS, several bidpackages.
ICB, AIC procured aspart of their normalprogram.
ICB, AIC procured aspart of their normalprogram.
(Reference in text: page 6, para. 25)
:able 2: Progress of Procurement of Project Materialsand Services
Supply Contract; Parvicanp re-Proctreesot Action; Procurement Actions PtProcM Pre-Selectioa Oev.lop,ent
-. Ci1tiri814 P-A- Tet TaIarie8 Bid PI,b.. 04Jjvv of Stes Tiar t %4xk/Iy 8xlrJ&ipe1y Fields
Project Ccezonts .. to -• ?L1 to Bai* Ba* içprccai.Bid Fotics 314 Ops±% to ! C.(Xltt2Ct Start Caiçilrte t Cllrtt Fn To
First batch of 2,5(X) 2340-81 1902.87 13.09-82 29-1182 08'0l .83 L3.04-83 19-0943 23-1.143 2542-83 30-07-84 160286
2. Ss1 batch of 4, pepests 06-06-86 24-0744 23-08-84 23-11-84 10-06-85 23.06-85 07-08-85 20-12-85 03-04-87
'' 3. .S 10 pipe for tmila 2340-81 18-03-02 23-02-86 1.2-03.84 1.3-06.84 1.3.0744 21-02-85 1.3.0345 21.08-85 0440-85 12-01-86
strai (ijott) 23-02-84 12-03-84 13-04-84 13-07-84 21-02-86 1.3-03-85 12-07-85 Ct ,ce1led
5 23-10-81 18-C3--02 23-02-84 12-03.84 13-04-84 1.3-07-87 21.02-86 T 3ied s to failure of spliat.
B. Pars 11zatli
Psr tij.]ere (first taIer) -!0-81 :923-42 12-03-82 23-03-82 15-06-82 18-08-82 12-1.0-02 8. &* to d1et with 3gt.(B 2. Pr tillers (reter) 21.06-84 23-11-84 23-01-85 fled to lack of ..tc with
C. BicP2a
plant fabricatkt rsterials 274141 27. 0142 050642 14-04-62 15.05-83 30.4246Lii
rt C. Office rr4r. - Vehicle
iicro.Iter5 1.3.04-81. 1.3.06-81 27-12-82 06-0843 30-04-84
2. Vari411 4..w 21-1041 13-03-87 17.0944 1741-81 03-0542 02-0942 10-1242
3. 52 urita antcccycl 23-10-81 18-83-87 31-05-13 07.06-83 3-06-83 30-0943 18-11-83 30.0144 30-07447 twita .sps 18-03-02 29-1141 30-02-82 04-04-82 03-05-87 10-1243 16-12-83
. itar tur _______13-08-81 080842 0640-82
1. T gta.1iati of 8ieg fl l 82 8* 87
. pmczanI!*a1iF1_1mAofLivustc SipSl 8*67
• B. !ertll.bera 1 1985 crop aa c1y
U 3. DIassi Puil 1986 1966 crop , ly
lcmolcgit i4r 82 Sap P2
If --ttba)Jt 83 iii'. 83.an 84 .la 84
2.
and CrBanizstii ert Pep 82 Sap 86
1.8 ,-de)
30'23(B (B
I-I-54
Lii
1.2004-stroke c9esel
water6-7
1,500-2,300centrifugal
105.550
I ,500-2,8W100
1,3004-stroke diesel
water6-7
I .500-2,300
1.25125.550
15c0-2,3Wico 100
ut spcified
rt spd.fied
3,70)A-stroke diesel
water/air4.5-6
1,500-3,0Wcentrifugal
1.08
6.570
I ,500-3,0X3100 x 1(X)
2,8(04-stroke diesel
water/air6.5-8
1 ,500-3,IXO
1.45126.570
1,500-3,003100 x 100
P resinreinforced
1W7.5
wIn. 2,535,0W
wild steel
1Wrnfri. 4.5
112-3
l4cJoco
Pedon
145A-stroke diesel
ccsiderser
2,20)centrifugal
1.5126.570
2.2(01W x 100
Kukjee746
4-stroke diesel
radiatOr6
2,200centrifugal
1.01'
6.570
2,100 x 100
1744-stroke diesel
radiator8
2,2(8)centrifugal L/)
1.45 "126.570
2,001(0 x 100
vajor CaTxxwata
A. Irrirgtiun1. Shalldw tubevell putisets
(0It -(0I-I(I)
2. Lift I rutian puxpsets
PX) pipes for B above
ci)'1ci)
4. MIld steel casing pipe for A above
L/'
SCIIC2IOJ 'P E)1JTTMENT AT APTRAISAL AND ACTUALLY PROCTRED
)ajoripscificatiros ppraisal Teeder Actually Procured or Installed
)ake of 1uIsetQuantity (units)
(i) l,efesglne(ii) Ye. of cyliniers
(iii) Cooling systme(iv) Por outWt (hp)(v) Speed (rpn)
(v-i) T"pe of xmp(vii) Discharge (au.un'ln)
(viii) Total head (in)(ix) Suction head (iii)(x) Efficiy (5)
(xi) Speed (rpet)(xii) Inlet-aitlet dia (nun)
Cklantity (units)(I) lTeof engine
(ii) No. of cyliader(iii) Cooling systen(iv) Pcse.r outuut (bp)(v) Speed (rpei)
(vi) Type of pat(vii) Discharge (ro.mlunln)
(viii) Total head (in)(ix) Suction head (in)(x) El ficiy (B)
(xi) Speed (rn)(di) Inlet-outlet din (nun)
Scovres(I) Material
(ii) Type(iii) Internal din (nat)(iv) Leith (ut)(v) 1.a11 thiclotess
(vi) Unit sieight (kg/ut)(vii) Quantity (in)
(I) Material.(ii) Class
(iii) Internal din (eTa)(iv) l.11 thfr.1ss (tim)(v) 51'I (ruts.)
(vi) Lergth (in), rmudcm(vif) Unit wriØit (kg/rn)
(viii) Quantity (in)
Kirlunkar Usha Eharatsakti Ajeet Wilson1,592 727 210 1W 325
A-stroke diesel 4-stroke diesel A-stroke diesel 4-stroke diesel 4-stroke diesel1 1 1 1 1
run-thrtugh water tun-throo water run-thrtsigh water run-through water nin-thrcugh water5 5 5 5 5
1,500 1,500 1,500 1,5(X) 1,5(0centrifugal centrifugal centrifugal centrifugal centrifugal
1.0 1.25 1.0 1.0 1.08 8 8 8 8
6.5 6.5 6.5 6.5 6.570 71 70 70 70
1,500 1,50) 1,5(X) 1,5(0 1,500lOOxICO lWxlO) 1C8)xlW 100x80 lCOxlW
820 638 783 110 1304-stroke diesel 4-stroke diesel 4-stroke diesel A-stroke diesel 4-stroke diesel
1 1 1 1 1run-tkrughu water nut-through water run-through water nut-thrrxigh water rut-through water
7 6.5 8 6.5 6.51,50) 1,50) 1,500 1,50) 1,50)
fentrifugal centrthl centrifugal centrifugal centrifugal1.62 1.53 1.55 1.45 1.45
12 12 12 12 126.5 6.5 6.5 6.5 6.576 70 72.5 70 70
1,500 1,5(83 1.50) 1,5(0 1,5(831(83 x 10) 100 x 100 100 x 100 1(0 x 1(8) 100 x 100too Ajeet
PIt resin PIt resinreinforced reinforced
100 1007.5 7.58.5 5.5
2.65 2.6515,0W 20,0WJiadal
mild steelusdiun, J
1004.5 -11
2-3 (±) me)52.4
140,000
CD
I-,.x
ANNUAL PROGRAM OF EQUIPMENT INSTALLATION-APPRAISAL ESTIMATES AN]) ACTUAL
t e a r V 1 S C Y r 0 g r a a s 0 I a' p 1 a ID C 0 t a t 1 o Ii
Original Project P eriod ExtendedProject Schedule GrandTargets at Actual 1981-82 a/ 1983 1984 Subtotal 1985 1986 1987 Subtotal Total
Cateaorv of Components Appraisal Achievement b/ c/ - hi c/ b/ c/ b/ c/ c/ c/ c/ c/ cl
A. Investment (No. of Units)
1. Irrigation (Pumpsets) 2,500 6,500 500 - 1,000 - 1,000 2,120 2,500 2,120 2,258 739 1,383 4,380 6,500
(a) Pumpsets for STWS only 1,200 3,851 200 - 500 - 500 1,114 1,200 1,114 1,103 363 1,271 2,737 3,851(b) Pumpsets for lift irrigation 1,300 2,649 300 - 500 - 500 1,006 1,300 1,006 1,155 376 112 1,643 2,649(c) Shallow tubewells only - 5,627 d/ - - - - - 2,319 d/ 1,200 d/ 2,319 2,334 d/ 974 d/ - 3,308 d/ 5,627 d/
CD2. Water Turbines and Grain Storage 160 321 32 - 64 44 64 28 160 72 163 71 15 249 321
(a) Agro-processing 150 321 30 - 60 44 60 28 150 72 163 71 15 249 321CD (b) Lift irrigation and storage 10 - 2 - 4 - 4 - 10 - - - - - -
3. Farm Mechanization 850 - 230 - 260 - 360 - 850 - - - - - -
rf (a) Power tillers 700 - 200 - 200 - 300 - 700 - - - - - -(b) Threshers 100 - 20 - 40 - 40 - 100 - - - - - -c) Pump unit 50 - 10 - 20 - 20 - 50 - - - - - -
4. Lives'ock 2,290 8,544 680 527 780 706 830 1,730 2,290 2,963 1,535 3,808 238 5,581 8,544
1. Buffaloes 2,000 7,369 600 475 700 653 700 1,527 2,000 2,655 1,243 3,279 192 4,714 7,3692. Buffalo bulls 40 149 10 10 10 13 20 31 40 54 25 66 4 95 149
CD 3. Crossbred cows 250 1,026 70 42 70 40 110 172 250 254 267 463 42 772 1,026
5. Biogas Facilities 2,000 1,200 400 198 800 248 800 186 2,000 632 296 240 32 588 1,200
0)
8. Working Capital
p-i0)
1. Fertilizers (sit) 5,810 28,015 1,220 - 2,246 - 2,344 10,514 5,810 10,514 17,501 - - 17,501 28,015
t) (a) Urea 3,557 25,762 744 - 1,380 - 1,433 8,2(1 3,557 8,261 17,501 - - 17,501 25,762
(b) Triple super phosphate 1,282 1,282 271 - 493 - 518 1,282 1,282 1,282 - - - - 1,282(c) Muriate of potash 971 971 205 - 373 - 393 971 971 971 - - - - 971
2. Diesel Fuel (ki) 2,816 6,760 616 - 1,056 1,144 - 2,816 - 2,496 4,264 - 6,760 6,760
a' Period from August 1981 (beginning of loan effectiveness) to December 1982.b/ Appraisal estimate.c/ Actual implementation.df Tubewells without pumpsets.
CD
Ui
62
5
52
7
52
15
8
variou
Jeep
Motorcycle
Computer
Airconditioners
Calculators
Photocopier
Typewriter
Softwares andMiscellaneous
38
Appendix 6
OFFICE EQUIPMENT AND VEHICLES PROCURED
Quantity Qiiantity'Item (units) Item (units)
(Reference in text: page 9, para. 44)
39
Appendix 7Page 1
C01PLIANCE WITH LOAN COVENANTS
Covenant
HMGN shall make available to ADBN$262,000 by way of contribution toADBN's share capital (LoanAgreement, Section 3.01 (b)).
The Loans Division of ADBN shallthrough its Foreign Loans Section,carry the principal responsibilityfor Project implementation. Atthe operational level,implementation shall be donethrough the regional offices ofADBN in cooperation with relatedline agencies. The necessarytechnical services and follow upsupervision for branches shall beprovided by ADBN as the needarises. ADBN branches in theProject areas will be strengthenedto expedite loan processing andsupervision (Loan Agreement,Schedule 6, para 1).
'p The existing AgriculturalDevelopment Coordination Committee(ADCC) at the national level,chaired by the Secretary of theMinistry of Food and Agriculture,shall have overall responsibilityfor coordinating, monitoring andensuring cooperationamong variousdepartments and agencies involvedin carrying out the Project.
Status of Compliance
Complied with. HNGN'scontribution to ADBN's sharecapital has increased fromRs104.53 million on 15 July 1981to Rs201.32 million on 15 July1986. It is understood thatthis increase includesGovernment contributionequivalent to $262,000.
The Foreign Loans Section ofADBN handled only theprocurement ofmaterials/equipment under theProject. The disbursements ofsubloans to the sub-borrowerswere carried out by thebranches, sub-branches and depotoffices of ADBN. Overseers wereassigned to some of thebranches and zoral officesto supervise the shallowtubewells program. Loanofficers and assistant loanofficers with background inlivestock were provided atcertain branches. Effective 16July 1984, the Loans Divisionat the head office of ADBN wasreorganized according tofunctional roles (irrigation,livestock, energy, etc.) intoeight sections.Complied with.
1.
2.
(Reference in text: page 15, para. 70)
40
Appendix 7Page 2
Status of ComplianceCovenant
4. The existing AgriculturalDevelopment Coordination Committeesat the district and the panchayatlevels shall be charged withcoordinating the activities of thedifferent departments and agenciesinvolved in Project executionwithin their respective areas ofresponsibility.
5. HMGN shall, in addition to theequity contribution to ADBN's paidup capital as specified in Section3.01 (b) of this Loan Agreement,provide RslO million annually asfurther equity contributions toADBN over the next five yearsafter the Effective Date (LoanAgreement, Schedule 6, para 3(a)).
6. HMGN shall make suitablearrangements to provide ADBN withadditional financial resources Inthe form of concessionary loans,grant and equity contributions inappropriate amounts required toensure ADBN's financial soundnessand profitability and inaccordance with arrangementssatisfactory to HMGN and the Bank(Loan Agreement, Schedule 6, para3(b)).
Complied with.
Complied with.
Complied with.
7. }IMGN shall increase the authorized Complied with.capital stock of ADBN up to 400million to enable ADBN to absorbadditional equity contributions(Loan Agreement, Schedule 6,para4).
The loan arrears situationcontinues to be unsatisfactory.ADBN has however initiatedseveral steps to improve itsloan collections.
Partially complied with byHNGN's contribution of Rs2.5million in FY1982. ADBN hasbeen authorized to offset theremaining Rs7.38 million againstthe dues it owes to HNGN underthe deposit funds of LRSC.
Re-financing facilities areprovided through NRB in the formof short term loans.Outstanding short-term loanstaken by ADBN from NRB increasedfrom Rs153.30 million on 15 July1981 to Rs310.02 million on 15July 1986.
Complied with.
41
Appendix 7Page 3
Covenant
Status of Compliance
8. ADBN shall strengthen its loanprocessing, supervision and debtcollection procedures in order tointensify loan loan recovery andimprove the present arrearssituation. In this connection,ADBN shall continue to monitor andreview the arrears situation andadopt suitable measures to remedythe same including the provisionof sufficient funds to cover badand doubtful debts. ADBN shallsubmit to the Bank semi-annualreports on the matter and suchreports shall be as of the end ofthe first and third quarters ofthe relevant fiscal year (LoanAgreement, Schedule 6, para 5).
9. HMGN shall contribute toADBN within 36 months after theeffective date Rs9.9 million tocover doubtful or non-recoverableassets of the Land Reform SavingCorporation (LRSC) which wereacquired by ADBN upon LRSC'sconsolidation with ADBN (LoanAgreement, Schedule 6, para 7).
10. HMCN shall ensure necessaryre-financing facilities on termswhich will maintain ADBN'sfinancial soundness and meet itsgrowing needs of loanable funds(Loan Agreement, Schedule 6, para7)
11. ADBN shall undertake, incoordination with HMGN, AIC andNOC suitable arrangements for theprompt supply of adequatequantities of fertilizers, dieselfuel and other essential inputsrequired by beneficiary farmersparticularly after the first yearof Project implementation (LoanAgreement, Schedule 6, para 8).
42
Appendix 7Page 4
Status of ComplianceCovenant
12. ADBN shall have its accounts andfinancial statements (balancesheet, statement of income andexpenses and related statements)including separate accounts forthe Project audited annually, inaccordance with sound andconsistently applied auditingprinciples, by independentauditors appointed pursuant to theAct and satisfactory to the Bank,and shall, promptly after theirpreparation, but in any event notlater than six (6) months afterthe close of the fiscal year towhich they relate, furnish to theBank (a) certified copies of suchaudited financial statements and(b) the report of the auditorsrelating thereto, all in theEnglish language. ADBN shallfurnish to the Bank such furtherinformation concerning suchaccounts and financial statementsand the audit thereof as the Bankshall from time to time reasonablyrequest (Project Agreement,Section 3.08(a)).
Latest available auditedaccounts of ADBN pertain to1984/85.
Compliance with reportingrequirements has generallylagged. ADBN has not submittedthe semi-annual and annualstatements on time due to thedifficulties involved inconsolidating data from itswidely dispersed branch network.
13. ADBN shall submit to the Bankevery six months for the nextthree years after the effectivedate, its unaudited financialstatements relating to theImmediately preceding half-year.The statement shall be accompaniedwith a report setting forth thecurrent financial status of ADBN,identifying existing constraintsand assessing emerging trends soas to facilitate remedial measuresto arrest any decline inprofitability (Project Agreement,Section 3.08(c)).
43 Appendix 7Page 5
Covenant Status of Compliance
14. Except as the Bank may otherwise Complied with.agree, ADBN shall not incur anylong-term debt if, after theincurring of such debt, the totallong-term debt of ADBN thenincurred and outstanding(excluding the portion falling duein one year) would exceed theconsolidated capital and surplusof ADBN in a ratio higher than 6:1(Project Agreement, Section 3.11).
44 Appendix 8
AGRICULTURAL DEVELOPMENT BANK OF NEPALPAST DUES, COLLECTIONS AND COLLECTION RATES
OF ENTIRE LOAN PORTFOLIO(Rs Million)
F? 1982 FY1983 FY1984 FY1985 Ff1986
I. loan disbursennts 256.4 345.8 476.2 583.8 663.8
II. Auounts due for collection 542.0 678.8 832.7 1,081.7 1,323.0A. Current dues 245.0 332.9 395.1 548.5 658.9
Principal 191.0 259.3 300.7 417.5 486.4Interest a/ 54.0 73.6 94.4 131.0 172.5
B. Past dues 297.0 345.9 437.6 533.2 664.1Principal 217.2 244.0 293.1 344.7 412.2Interest 79.8 101.9 144.5 188.5 251.9
III, Aiiount collected 196.1 241.2 299.5 417.6 448.8Principal 164.2 210.2 249.1 350.0 364.8Interest 31.9 31.0 50.4 67.6 84.0
IV. Past dues at the end ofthe year 345.9 437.6 533.2 664.1 874.2Principal 244.0 293.1 344.7 412.2 729.5Interest 101.9 144.5 188.5 251.9 144.7 cl
V. Loan portfolio at the endof the year 655.7 833.9 1,105.0 1,402.2 1,804.2Principal 553.8 689.4 916.5 1,150.3 1,659.5 d/Interest 101.9 144.5 188.5 251.9 144.7
VI. Overafl collecton rate 36.1 35.5 36.0 38.6 33.9
VII. Collection ratePrincipal 40.2 41.8 41.9 45.9 40.6Interest 23.8 17.7 21.1 21.2 19.8
VIII.Proportion of overdueccnponent of portfolio(per cent)Overall 52.8 52.5 48.3 47.4 48.5Principal cnly 44.1 42.5 37.6 35.8 44.0
IX. Overdue interest aspercentage of past dues 29.5 33.0 35.4 37.9 38.9 hI
al Includes penal interest.b/ Includes Rs195.7 million penal interest capitalired during FY1986.Cl Excludes Rs195.7 million penal interest capitalized during FY1986.d/ Includes Rs195.7 million penal interest capitalsed during FY1986
and Rs14.5 million LRSC loans.
(Reference in text: page 16, para. 77)
4.10
0.27 •/
3.60
0.24 £12.00
0.17 _/
400.00
16.36 /
7.40
0.34
45
Appendix 9Page 1
Table 1: Economic and Financial Prices of Key Inputs and Outputs
Price per UnitCommodity Financial a! Economic b/
(Rs) $A. Inputs
1. Seed (kg)PaddyWheatMaize
2. Fertilizer (kg)UreaTSPMuriate of Potash
3. Chemicals (it)
4. Diesel Fuel (it)
5.00
0.23
7.00
0.32
7.50
0.34
5. Draught Animal(animal-pair day)
30.0
1.23
6. Labour (man-days)
20 • 0
0.82 !'
B. Outputs
1. ,Paddy (nit) 3,000 173 f/
2. Wheat (nit) 3,800 250 f/
3. Maize (nit) 3,600 192 f/
a! Based on existing market prices in Nepal (April, 1987).b/ Assumed equal to financial prices, converted at US$1 NRs22.O,
except as otherwise noted.c/ Derived as shown in Appendix 9, Table 2.d/ Since these chemicals are imported, the financial prices are
converted to economic prices by applying a Standard ConversionFactor of 0.9 (see Appendix 9, Table 3), in the absence of anyother readily available information.
a! By applying a conversion factor of 0.9 (see Appendix 9, Table 3).LI Derived as shown in Appendix 9, Table 4.
(Reference in text: page 18, para. 80)
Appendix 9Page 2
Table 2: Derivation of Economic Prices for Inputs (Fertilizer)
Triple Super Murate________________________- Urea Phosphate of Potash
1. IBRD Forecast of 1989Prices: US$/mt (in 1985constant dollars) 143 115 64
2. MUV Conversion Factor1985/87
3. Projected 1989 World MarketPrices
4. International Shipping andHandling Charges to Calcutta
5. CIF Price at Calcutta Port(3 + 4)
6. Transport and Handling toNepal Border
7. Boarder Price (5 + 6)
8. Domestic Transport and Handlingto Wholesale Point.
9, Transport/Handling to FarmGate
2 2 2
10. Farm Gate Economic Price(7+8+9) 27 2 244 172
1.201 1.201 1.201
$/mt (in 1987 constant dollars)
172 138 77
48 54 43
220 192 120
. 43 43 43
263 235 163
7 7 7
(Reference in text: page 18, para. 80)
47 Appendix 9Page 3
Table 3: Conversion Factors Used in Economic and Financial Analyses
Cost Component Conversion Factor
Labor Wages and DraughtAnimals 0.90
Civil Construction 0.80
Power and Fuel
iIo]
Standard Conversion Factor(SCF) 0.90
Source: Apppraisal of the Fifth Agricultural Credit Project, Nepal (AReport No. NEP-Ap48, March 1987)
(Reference in text: page 18, para. 80)
48 Appendix 9Page 4
Table 4: Derivation of Economic Prices of Foodgrains
Paddy Wheat Maize
1. IBRD Forecast of 1989 Prices:$/mt (In 195 constant dollars) 191 a! 127 b/ 79 c/
2. MUV Conversion Factor 1985/1987 1.201 1.201 1.201
3. Projected 1989 World MarketPrice ($/mt, in 1987constant dollars) 229 153 95
4. Quality Adjustment (%) (-) 20 -
5. Projected 1989 Price adjustedfor Quality Difference (s/nit) 183 153 95
6. International Shipping andHandling ($/mt ) 27 32 32
7. CIF Price Calcutta Port
($/mt) (5 + 6) 210 185 127
8. Transport and Handling fromCalcutta Port to Nepal Border
($/mt) 43 43 43
9. Border Price ($/int)(7 + 8) 253 228 170
10. Domestic Transport and Handlingfrom Nepal Border to WholesaleMarket or Mill ($/ mt) 24 24 24
11. Processing Recovery Rate (%) 65 - -
12. Processing Cost ($/mt) 5 -
13. Transport/Handling/from FarmGate to wholesale Market
($/mt) 2 2 2
14. Farm gate Economic Price
($/mt ) 173 / 250 d/ 192 /
a! Rice (Thai), milled, 5 per cent broken, FOB Bangkok.b/ Wheat (Canadian), No. 1 Western Red Spring, FOB St. Lawrence port.Cl Maize (US), No. 2, yellow, FOB Gulf ports.d/ For paddy, ((9+10) 0.65-12-13)); for wheat and maize (9+10-12-13).
(Reference in text: page 18, para. 80)
WithoutProj ect
2.503.252.500.500.25
1.502.001.50
WithProject
2.504.502.501 .001.00
2.502.502.00
11,750
11,750
Increment
1.25
0.500.75
1 .000.500.50
14,500
2,00016,500
49
Appendix 9Page 5
Table 5: Irrigation Facilities(Pumpsets for Shallow Tubewells and Lift Irrigation)
A. Investment CostsFinancial Economic
(Rs) ($)1. Shallow Tubewells with Pumpset
(a) Well drilling costs(b) Casing pipes and strainer for well(c) Pumpset(d) Suction and delivery pipes
2,000 76
2,750 124
10,500 4751,250
16,500 7322. Lift Irrigation
(a) Pumpset 10,500 475(b) Suction and delivery pipes 1,250 57
11,750 532B. Incidence of Investment Costs (Financial) -
Shallow Tubewellswith Pumpsets Lift Irrigation
(Rs) (Rs)1. Farmer
(a) Using proceeds of Loanfrom ADBN
(b) Using own funds a!2. Government (by way of subsidy
for well drilling)
C. Production b/
1. Cultivable Area (ha)2. Cropped Area (ha)
PaddyWheatMaize
3. Yield (mt/ha)PaddyWheatMaize
4. Production per annum (mt)Paddy 3.75 6.25 2.50Wheat 1.00 2.50 1.50Maize 0.40 2.00 1.60
5.15 10.75 5.60
a! ADBN financed 100% of the costs If land was offered as collateral.b/ Applies to both shallow tubewells with pumpsets and lift Irrigation.
(Reference in text: page 18, para. 83)
50 Appendix 9Page6
D. Estimated Quantities of Required Inputs a!Quantity per ha
Without WithItem Project Project
1. Seed (kg)Paddy 45 50Wheat 90 100Maize 15 20
2. Fertilizer for Paddy (kg)Urea 90 110TSP 30 50Muriate of Potash - 15
3. Fertilizer for Wheat (kg)Urea 65 130TSP 40 60Muriate of Potash - 25
4. Fertilizer for Maize (kg)Urea 20 30TSP 20 40Muriate of Potash - 10
5. Chemicals (it)Paddy 1 2Wheat 1 2Maize 1 2
6. Diesel (it)Paddy - 92Wheat - 80Maize - 40
7. Draught Animal Days(pair of bullocks)Paddy 45 55Wheat 40 50Maize 35 45
8. Labor (man-days)Paddy 105 125Wheat 70 75Maize 65 70
a! Applies to both shallow tubewells with pumpsets and lift irrigationfacilities.
51
Appendix 9Page 7
E. Cost of Production a!Withcut With Iucrnt
Financial Econanic Financial EconciuLc Financial EconamicRs $ Es $ Es $
Seeds 906 39.60 1,475 63.30 569 23.70Fertilizers 1,436 94.88 2,739 183.78 1,303 88.90(hamlcals 1,300 53.17 3,600 147.24 2,300 94.07Diesel - - 2,590 119.00 2,590 119.00Repairs and Maintenance bI - - 225 9.23 225 9.23Draught animals (hire) 4,238 173.74 6,975 285.98 2,737 112.24labor 6,275 257.28 9,150 375.15 2,875 117.87
Total 14,155 618.67 26,754 1,183.68 12,599 565.01
648.75250.0076.80
975.55
356.88
F. Revenues fran Production a!
Paddy 11,250Jheat 3,800
Maize 1,4140
Total 16,490
G. Net Fatm Incai a!(F-E) - 2,335
H. Net IncalE fran CustanHireofPtmpc/ -
I. Total Incremantal Net Earnings(F+H)a/
J. Annual Loan AnortizationIncluding Interest thargesat 15% per annun ci!1. Shailcw tubeweLs with piapsets2. Lift irrigation
K. Net Addition to Farm Family Inca(I-J)
18,750 1,081.25 7,500 432.50
9,500 625.00 5,700 375.00
7,200 384.00 5,760 307.20
35,450 2,090.25 18,960 1,114.70
8,6% 906.57 6,361 549.69
2,000 - 2,000 -
8,361 549.69
4,3263,505
1. Shaflc tubewells with punpsets 4,0352. Lift irrigation 4,856
a! Applies to both shallow tubewells with pumpsets and lift irrigationfacilities.
b! Estimated at Rs50 (US$ 2 . 05 ) per cropped ha.c! Puirpsets are assumed to be rented out for 100 hours annually at the
current rental (net of fuel and operator charges) of Rs20!hr.d! Loan amortized over five years.
52 ppendix 9Page 8
L. Rates of Return on Investments
1. ShallcM tube'welis with punpset(a) Econanic Rate of Return (EIRR) 73.51%(b) Financial Rate of Return (FIRR) 47.31%
2. Lift irrigation(a) Fcortcinic rate of return (EIRR) 102,59%(b) Financial rate of return (FIRR) 69.38%
M.Nuther of Installations
1. ShallcM tubeeUs with punpsets 3,851 units2. Lift irrigation 2,649 unite
53
Appendix 9Page 9
Table 6: Water Turbines
A. Investment Costs1. Agro-processing alone
(a) EquipmentWater turbines (20 hp) andaccessoriesRice huller no. 4 (0.5 ton/hour)Oil expeller 6 bolt(0.04 ton/hour)Grinder 16" (0.12 ton/hour)Miscellaneous fittings
(b) Civil Construction(channel, dam, shed, pipes, etc.)
(c) Installation (including transportationand contingencies)
2. Agro-processing pius electricitygeneration(1) above plus 5KW generatcr
Total Investment Costs
B. Incidence of Investment Costs(Financial) on Farmer
Financial EconomicRs US$
40,000 1,810
3,000 136
20,000 905
5,000 226
10,000 452
80,000 3,048
20,0CC 762
30,000 1,357
208,000 8,696
1. Using proceeds of Loanfrom ADBN
2. Using own funds
C. Annual Throughputs
Paddy husking/millingGrinding (wheat, maize, millet)Oil extractionSupply of lighting energy
Agro-processing
alone
160,000
18,000178,000
No. ofHours Used
800800800730
Agro-processing
pluselectricitygeneration
187,000
21,000208,000
QuantityThroughput
Ou tput400 mt96 mt32 mt
2,336 kwh
(Reference in text: page 19, para. 86)
58945
728
14,4001,000
17,8001,000
34,200 1,362
3,000
123
37,200
1,485
48,000 hI
1,964
24,000 c/
982
24,000 _/
982
96,000
3,928
24,000
1,091
120,000
5,019
54
Appendix 9Page 10
D. Annual Cost of OperationsFinancial
EconomicRs
$1. Agro-processing alone
Staff (24 manmonths atRs 600 per manmonth)Lubricants and other materialsRepairs and maintenance a!Royalties
Subtotal
2. Agro-processing pluselectricity generation(1) above plusadditional repairs andmaintenance ofgenerator set
Total
E. Annual Revenues
1. Agro-processing alonePaddy husking/millingGrinding (wheat, maize, millet)Oil extraction
Subtotal
2. Agro-processing pluselectricity gneration(1) above plusrevenues from sale/useof electricity
Total
F. Net Annual EarningsCE-F)1. Agro-processing alone 61,800 2,5662. Agro-processing plus
electricity generation 82,800 3,534
a! Assumed to be 10 per cent of investment costs.b/ At Rs120/mt.C! At Rs250/mt.d/ At Rs750/mt.
55
Appendix 9Page 11
G. Annual Loan AmortizationIncluding Interest Charges at15% per annum a!1. Agro-processing alone2. Agro-processing plus
electricity generation
H. Net Addition to Family Income(F-G)1. Agro-processing alone2. Agro-processing plus
electricity generation
I. Rate of Return on Investments1. Agro-processing alone
(a) Economic Rate of Return(EIRR)
(b) Financial Rate of Return(FIRR)
2. Agro-processing plus electricitygeneration(a) Economic Rate of Return
(EIRR)(b) Financial Rate of Return
(FIRR)
J. Number of Installations1. Agro-processing alone2. Agro-processing plus
electricity generation
a! Loan amortized over five years.
38,458
44,947
23,342
37,853
32. 94%
32.66Z
39. 15%
38.25Z
298 units
23 units
512
25
645558
254
254
254
147
147
147
49
49
49
450
450
450
62
108
195
56
Appendix 9Page 12
Table 7: Livestock - Dairy Buffalo
A. Investment CostsFinancial Economic
(Rs) ($)
Cost of one dairy buffalo 10,000 452
B. Incidence of Investment Costs (Financial) on Farmer
Using proceeds of loan from ADBNUsing own funds _______
C. Production (it)Years Years Years1&10 2&9 3&8
Annual production 1,650 1,800 2,000Annual average: (1,890 lt)
D. RevenueFinancial (Rs) Economic ($)
Years Years Years Years Years Years
8,0002,00010,000
1 & 10 2 & 9 3 to 8
0.31 0.31 0.31
512 558 620
1& 10 2&9 3to8
Price 7.5 7.5 7.5Revenues from
Operation 12,375 13,500 15,000Revenues from sale
of heifers/youngbulls/buffalo- - - - 600
Total Revenue 12,375 13,500 15,600
E. Operating Costs
Feed 6,200 6,200 6,200Labor 3,600 3,600 3,600Medicine 1,200 1,200 1,200
Total 11,000 11,000 11,000
F. Net Benefit (D-E) 1,375 2,500 4,600Annual Average: (Rs3,535)
(Reference in text: page 19, para. 87)
57 Appendix 9Page 13
G. Annual Loan AmortizationIncluding Interest at
- 18% per annum a! 2,099
H. Net Addition to Family Income• (F-c) b/
I. Rates of Return on Investment
1. Economic Rate of Return(EIRR) 28.25%
2. Financial Rate of Return(FIRR) 30.21%
J. Number of Much Buffaloes 7,369 head
a! Loan amortized over seven years.b/ Year 1 (-724)
Year 2 401Year 3 to 7 2,501Year 8 4,600Year 9 2,500Year 10 1,375
58 Appendix 9Page 14
Table 8: Livestock - Much Cow
A. Investment CostsFinancial
Economic(Rs)
($)
Cost of one crossbred cow 15,000
679
B. Incidence of Investment Costs(Financial) on FarmerUsing proceeds of loan from ADBNUsing own funds
C. Production (lt)Years Years
____ 2&9 3&8
Annual production 2,500 2,750 3,000Annual average (2,850 lt)
D. RevenueFinancial (Be) Econcinic ($)
Years Years Years Years Years Years
12,0003,00015,000
Years1 & 10
Price (per lt)Reveiiies franoperation
Revenue fran saleof heifers/ycungbulls/buffallo
Total Revenue
E. Operating Costs
FeedLabor
dicine
Total
F. Net Benefit
Annual Average: (Rs5,400)
1&10 2&9 3to8 1&10 2&9 3to8
6 6 6 0.25 0.25 0.25
15,000 16,500 18,000 625 688 750
- - 1,000 - - 43
15,000 16,500 19,000 625 688 793
7,500 7,500 7,500 307 307 307
3,600 3,600 3,600 147 147 147
1,200 1,200 1,200 49 49 49
12,300 12,300 12,300 503 503 503
2,700 4,200 6,700 122 185 290
(Reference in text: page 19, para. 87)
59 Appendix 9Page 15
G. Annual Loan AmortizationIncluding Interest at 18%Per Annum a! 3,148
H. Net Addition to Family Income b/(F-G)
I. Rates of Return on Investment1. Economic Rate of Return
(EIRR) 30.20%2. Financial Rate of Return
(FIRR) 31.36%
J. Number of Milch Cows 1,026 head
a! Loan amortized over seven years.b/ Year 1 (-448)
Year 2 1,052Year 3 to 7 3,552Year 8 6,700Year 9 4,200Year 10 2,700
60 Appendix 9Page 16
Table 9: Biogas Plants
iQn3 - in3 - 200 cu ft DrunFinancial Ecornic Financial Econanic Financial Econanic
(Rs) ($) (Rs) ($) (Rs) ($)
A. Investnnt Costs
Blogas plant 15,535 592 20,115 766 20,000 833Pipes, accessories 1,000 45 1,000 45 1,000 45
Total 16,535 637 21,115 811 21,000 878
B. Incidence of Investment Costs (Financial) on Farmer
Using proceeds of Loanfran ADBN 15,000
19,000
1.ing n fur1s 1,535
2,115
16,535
21,115
C. Gross Ann.ial Benefits
1. Annual substitution(savings) of non-renewable enerrscxirces(a) Fireod
Qiantity (mt) a/ 3 4.5 5Value at financial
prices (Rs) hI 3,000 4,500 5,000Value at econanlu
prices ($) c/ 136 205 227(b) Kerosene oil
Quantity (mt) a! 70 90 90Value at financial
prices (Es) hI 420 540 540Value at econceiie
prices ($) ci 19 25 25
a!
Source: 'Impact Study of Biogas Installations in Nepal',Evaluation Division, ADBN, June 1986. This study provides separateestimates for plants in the terai and in the hills; averages ofthese estimates have been used in this report.
b/ At current (April 1983) financial prices of Rsl/kg for firewood andRs6/lt for kerosene oil.
ci Economic prices derived from current financial prices at aconversion factor of 1.0 and an exchange rate of US$ 1 .0 = NRs22.O.
(Reference in text: page 19, para. 88)
61
Appendix 9Page 17
iO.n3 - 15n- 200 Cu ft Drum
2. Annual substitution(savings) of fertilizernutrients by use of slurry(a) Nitrogen quantity
(kgs) a!
83
156
156Value at financial
prices (Rs) b/
739
1,388
1,388Value at ecorw*nic
prices ($) a/
49
92
92(b) Phosphorous
(iantity (kgs) a!
39
80Value at financial
prices (Rs) b/
293
600
600Value at econcinfr
prices ($) b/
20
40
40(c) Potash
(.iantity (kgs) a!
13
13Value at financial
prices (Rs) bI
44
44Value at econanic
prices ($) b/
4
43. Total annual benefits cl
At financial prices (Rs)
3,936
6,056
6,556
At econanic prices ($)
190
298
320
D. Operating Costs d/At financial prices (Rs)
300
300
300At econcinic prices ($)
12
12
12
a! Source: 'Impact Study of Biogas Installations in Nepal',Evaluation Division, ADBN, June 1986. This study provides separateestimates for plants in the terai arid in the hills; averages ofthese estimates have been used in this report.
b/ Financial and economic prices of the nutrients are estimated fromthe respective prices of urea, TSP and MOP (Table 9-1), andassuming nutrient contents of:
Nitrogen : 462 in ureaPhosphorous : 482 in TSPPotash 60% in MOP
C! Benefits of firewood plus kerosene oil plus 50 per cent ofnutrients saved. Only 50 per cent of the nutrients' benefits havebeen considered to reflect the fact that wide scale use of slurryas fertilizers has not materialized.
d/ Assumed to be 100 per cent labor.
62 Appendix 9Page 18
lQn3 - DalE in3 - Dci 200 Cu ft Drum
E. Net Am.ial Benefits(III-Iv)At financial prices (Rs) 3,636 5,756 6,256At econcmic prices ($) 178 286 308
F. Anrijal loan alI)rtizaticalincluding Interestof 15%per annum a!At financ:ial prices (Rs) 3,605 4,567 4,567
G. Net additional family incane(V-VI)At financial prices (Rs) 31 1,189 1,689
H. Rates of Return on InvestnEnta. Econanic Rate of Return
(EIRR) 24.74% 33.27% 33.06%b. Financial Rate of Return
(FIRR) 17.65% 24.12% 27.08%Plants installed 260 units 852 units 88 units
a! Loan amortized over seven years.
Table 10: Financial and Economic Internal Rates OfRéturn of the Project
Year 1 2 3 & 5 7 8 9 10 II 12 13 14 15 16
A. Investment Costs1. STW with pumpset
Rs'OOOs aI 18.381 18,199 5,989 20,971$'OOOs b7 815 807 266 930
2. Puapset onlyRs'OOOs 11.820 13.571 4,418 1,316S'OOOs 535 614 200 60
3. Water turbinesRs'OOOs 7,927 5,044 29,364 12,791 2,702$'OOOs 327 208 1,212 528 112
4. Biogas plantsRs'OOOs 3,982 4,988 3,741 5,954 4,827 644
0 $'OOOs 154 193 145 230 187 255. Buffaloes
Rs'OOOs 4.750 6,530 15,270 12,430 32,790 1,920(D $'OOOs 215 295 690 562 1,482 87
6. CowsRs'OOOs 630 600 2,580 4,005 6,945 630$'OOOs 29 27 117 181 314 29
TotalRs'OOOs 9.362 20,045 56,836 83,523 67,760 28,183
rt $'OOOs 398 842 2,510 3,606 2,977 1,243(0 B. Net Incremental Benefits
1. STW with pumpsetRs'OOOs a/ 9.314 18,536 21,571 32,198 32,198 32,198 32,198 22,884 13,662 10,627 - -$'COOs b7 609 1,219 1,418 2,117 2,117 2.117 2.117 1,504 898 699 - -
2. Pumpset onlyRs'OOOs 8,411 18,068 21,212 22,148 22,148 22,148 22,148 13,737 4,080 936 - -$'OOOs 553 1,188 1,394 1,456 1,456 1,456 1,456 903 268 62 - -
3. Water turbinesRs'OOOs 2,785 4,558 14,877 19,371 20,321 20,321 20,321 20,321 20,321 20.321 17.535 15,763 5,444 949$'OOOs 116 190 620 845 846 846 846 846 846 846 730 657 227 40
4. Biogas plantsRs'OOOs 1,056 2,379 3.370 4,949 6,229 6.400 6,400 6,400 6,400 6,400 5,344 4,021 3,029 1,451 171$'OOOs 52 118 167 245 296 317 317 317 317 317 265 199 150 72 8
5. Buffaloestts'OOOs 653 2,085 5,917 10,715 19,829 26,392 33,494 33,897 32,900 30,994 26,400 21,174 10,790 4,989 264$'OOOs 29 91 258 462 835 1,126 1,421 1,437 1,395 1,317 1,124 906 468 224 12
6. CowsRs'OOOs 113 284 914 1,993 4,073 5,549 6,769 6,874 6,769 6,606 6,003 4,969 2,947 1,426 113$'OOOs 5 13 41 89 179 242 293 298 293 286 261 216 131 64 5
TotalRs'OOOs 1,822 7,533 32,484 69,138 92,285 113,008 121,330 121.838 120,736 100,942 75,810 59,262 32.529 13,310 1,497$'OOOs 86 338 1,818 3,823 4,967 6,104 6,450 6,471 6,424 5,173 3,662 2,812 1,406 587 65
NET CASh INFLOW/(01JTFLOI4)Es'OOOs (9.362) (Id,223) (49,303) (51,039) (1,378) 64,102 113,008 121.330 121,838 120,736 100.942 75,810 59,262 32,529 13,310 1,497S'OOOs (398) (756) (2,172) (1,788) 846 3,724 6,104 6,450 6,471 6,424 5,173 3,662 2,812 1,406 587 65
FIRE - 37.40 BIER - 46.80a! Financial costs and benefits are given in Rupees (Es). db/ Economic costs and benefits are given in US dollars ($).
(D(D
I-.o j-'.
Ss1
A. Cash and Bank
B. Investments1. Goverrinent Dev. Bonds2. Fixed Deposits3. Equity4. Less: Provision for
Investment
C. Loan Portfolio1. Loans b/2. Provision for Bad and
Doubtful Debts
B. Other Assets1. Accounts Receivables2. Receivables frciu }I
(LRSC)3. Loans to Eiployees4. Inventories5. Interbranch Accounts
E. Fixed Assets
F. Accurulated Loss
64 Appendix 10Page 1
Table 1. Cosparative Balance Sheet(F? 1981 to F? 1986)
(NBa Million)
FY1981 FY1982
13.41 19.59
19.40 19.91
13.25 13.25
1.20 1.35
4.95 5.31
538.40
643 .13
554.54
659.28
(16.14)
(16.14)
83.12
98.70
33.45
39.27
9.88
7.38
17.37
17.
12.52
26.88
9.90
7.21
22.47
23.19
6.80
7.36
FY1983
28.07
20.6313.251.495.89
808.20824.34
(16.14)
91.0549.71
7.3818.8514.710.41
23.26
2.23
FY1984
25.72
17.498.251.697.85
(0.30)
1,065.121,082.60
(17.48)
107.4955.63
7.3821.4917.635.36
28.52
F?1985 FY1986 a!
52.45
78.99
30.74
45.15
21.25
35.05
1.94
2.20
7.85
8.20
(0.30)
(0.30)
1,354.80
1,695.31
1,373.80
1,725.28
(19.00)
(29.97)
142.32
213.94
66.16
80.69
7.38 -
31.55 40.54
17.58 51.97
19.65 40.74
33.86 43.34
Total Assets 683.60 811.88 973.44 1,244.34 1,614.17 2,076.73
a! Provisionalb/ Arrived at as foflovs:
Gross Loan Portfolio 564.64 670.13 846.62 1,117.14 1,416.80 1,768.11Less: Interest Charges
doubtful of real-ization includedin the portfolio 10.10 10.85 22.28 34.54 43.00 42.83
loan Portfolio 554.54 659.28 824.34 1,082.60 1,373.80 1,725.28
(Reference in text: page 23, para 104)
G. Deposits1. Current2. Fixed3. Savings4. Caipulsory Savings (LRSC)
H. Borrowings1. Short-Tern
a. NRBb. Cctutrcial Banks
2. l4dium/Long-Terma.NRBb. Coverrrntc. ADM4anilad. Debenture
I. Other Liabilities1. Enployees Welfare Fund2. loyees Provident Fund3. Other Funds4. Other Liabilities
J. Total Liabilities
69.2913.291.94
15.9038.16
362.68188.39153.3035.09
174.2945.6115.6373.0540.00
104.570.804.87
12.4086.50
536.54
_____ _____ _____ _____ ______ 246.03
______ ______ ______ ______ ________ 1,241.38
______ ______ ______ ______ ______ 317.76
69.90
69.03
74.53
14.71
15.61
17.89
3.93
3.97
4.73
16.45
13.74
15.28
34.82
35.71
36.63
459.92
571.20
779.69
206.96
217.50
353.40
176.50
168.80
239.60
30.46
48.70
113.80
252.96
353.70
426.29
45.51
67.34
92.59
59.08
116.56
194.30
108.37
129.80
139.40
40.00
40.00
119.30
150.87
182.57
0.41
0.85
1.43
3.91
3.07
2.88
0.50
0.81
1.85
114. 48
146.14
176.41
649.12 791.10 1,036.79______ ______ ______ ________ ________ 1,805.17
145.4029.2739.5435.7640.83
1,000.63368.81269.3599.46
631.82144.94275.70181.1830.00
230.131.562.764.87
220.94
1,376.16
65 ppendix 10Page 2
Ff1981
Ff1982
Ff1983
Ff1984
Ff1985 Ff1986
LIABILITIES AND CAPITAL
44.5480.5390.2730.69 /
402.20310.0292.18
839.18177.84326.57304.77
30.00
1.63(4.52)
3.37317.28
K. Equity 147.06 162.76 USZ.34 Z0i. L3t.01 271.561. Share Capital 141.79 154.34 169.72 191.32 219.10 249.15
a. Goverruent 104.53 116.07 129.74 147.86 173.58 201.32b. NRB 30.00 30.00 30.00 30.00 30.00 30.00c. Others 7.26 8.27 9.98 13.46 15.52 17.83
2. General Reserves 4.17 4.17 4.17 4.20 4.91 4.913. Cooperative. rd
Agri. Dev. Fund ) 1.38 1.38 1.38 1.47 1.964. Capital Reserve )
1.10 2.87 6.87 10.45 11.38 13.225. Fcchange Rate Risk Fund - - 0.20 0.20 1.15 2.32
Total Liabilities andEquity 683.60 811.88 973.44 1,244.34 1,614.17 2,076.73
a! Net of the Goverrinent's obligation to ADBN (NRs7 .38 million) representing ccqiensation againstm're'Jized assets of Land Reform Savings Corporation (LRSC).
66 k'perUx 10Page 3
Table 2: Comparative Income Statement:s(FY1981 to FY1986)
FY1981 FY1982 FY1983 FY1984 Fill985 FY1986 a!
nw
Interest on Loans 46.85 52.43 70.46 87.75 113.12 182.10Interest on Investnrtts 1.13 1.13 1.23 1.21 1.92 1.32Other Ira 3.70 8.81 12.04 15.65 26.43 30.49
Toa1 Incane 51.68 62.37 83.73 104.61 141.47 213.91
E1URFS
Interest Expenses 26.53 28.63 39.17 49.29 70.21 106.881. Borrowings 21.96 24.71 34.62 44.27 64.36 91.872. Deposits 3.94 3.36 3.33 3.64 5.23 14.913. Others 0.63 0.56 1.22 1.38 0.62 0.10
Mndnistrative Expenses 27.65 34.30 38.89 49.30 67.61 94.881. Personnel 17.89 23.39 26.30 31.05 46.66 58.282. Office 6.49 7.52 8.89 11.57 14.10 18.103. Depreciation 1.90 1.92 1.90 2.12 2.47 3.014. Provision for Dcubtful Debts - - - 1.50 1.58 10.975. Others 1.37 1.47 1.80 3.06 2.80 4.52
T9tal Fxpaiitures 54.18 62.93 78.06 98.59 137.82 201.76
Net Profit (Loss Before Tax) (2.50) (0.56) 5.67 6.02 3.65 12.15
Provision for Tax - - - 1.33 1.50 12.15
Net Profit (Loss) After Tax (2.50) (0.56) 5.67 4.69 2.15 0.0
Appropriation of Profit After TaxProvision for Borus - - 0.35 0.45 0.45 -üiloyee Gratuity Fund - - 0.20 1.00 1.00 -Credit to Profit and Loss Acct. - - 5.12 2.23 - -Dividend - - - 0.68 - -Provision for Doubtful Invest. - - - 0.30 - -Contrilxition to General Reserve - - - 0.03 0.70 -
a_i Provisional
(Reference in text: page 23, para 104)