The International Fund for Agricultural Development

For Official Use Only

SRI LANKA

IRANAMADU IRRIGATION DEVELOPMENT PROJECT

DESIGN COMPLETION REPORT

Stage: Design Completion

Asia and the Pacific Division

Programme Management Department

REPORT No. xxxxx

October 2011

This document has a restricted distribution and may be used by recipients only in the performance of
their official duties. Its contents may not otherwise be disclosed without the authorization of the
International Fund for Agricultural Development (IFAD).
 Sri Lanka: Iranamadu Irrigation Development Project
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Table of Contents

Page

Currency Equivalents iii

Weights and Measures iii
Fiscal Year iii
Abbreviations and Acronyms iii
Map of the Project Area iv

Executive Summary vi
Logical Framework viii

I. INTRODUCTION 1
II. STRATEGIC CONTEXT AND RATIONALE 1
A. Country, Rural Development and Poverty Context 1
B. Rationale 4
III. PROJECT DESCRIPTION 5
A. Project Area and Target Group 5
B. Project Development Objective 7
C. Project Components 7
1. Component 1: Infrastructure Development 7
2. Component 2: Production and Marketing 10
3. Component 3: Project Management 11
D. Lessons Learned and IFAD Policies 12
IV. PROJECT IMPLEMENTATION 15
A. Approach 15
B. Organisational Framework 16
C. Planning , Monitoring and Evaluation, Learning, Knowledge Management 17
D. Financial Management, Procurement and Governance 19
E. Supervision 20
F. Risk Identification and Mitigation 20
V. PROJECT COSTS, FINANCING, BENEFITS 22
A. Project costs 22
B. Project Financing 23
C. Summary Benefit and Economic Analysis 24
D. Sustainability 25
I. KEY FILES 26

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ANNEXES

ANNEX 1: COUNTRY AND RURAL CONTEXT BACKGROUND....................................................................................35

ANNEX 2: POVERTY, TARGETING AND GENDER......................................................................................................43
ANNEX 3: COUNTRY PERFORMANCE AND LESSONS LEARNED...............................................................................49
ANNEX 4: DETAILED PROJECT DESCRIPTION ..........................................................................................................51
ANNEX 5: INSTITUTIONAL ASPECTS AND IMPLEMENTATION ARRANGEMENTS ....................................................60
ANNEX 6: PLANING, MONITORING AND EVALUATION, LEARNING AND KNOWLEDGE MANAGEMENT.................77
ANNEX 7: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS......................................................83
ANNEX 8: PROCUREMENT......................................................................................................................................87
ANNEX 9: PROJECT COST AND FINANCING.............................................................................................................93
ANNEX 10: ECONOMIC AND FINANCIAL ANALYSIS...............................................................................................102
ANNEX 11: PROJECT IMPLEMENTATION MANUAL – ANNOTATED OUTLINE........................................................106
ANNEX 12: COMPLIANCE WITH IFAD POLICIES.....................................................................................................123
ANNEX 13: CONTENT OF THE PROJECT LIFE FILES ................................................................................................126
ANNEX 14: DRAFT MEMORANDUM OF UNDERSTANDING ..................................................................................127
ANNEX 15: FACTS AND FIGURES...........................................................................................................................129

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CURRENCY EQUIVALENTS

Currency Unit = Sri Lankan Rupee (LKR)

USD 1.00 = LKR 110
LKR 1000 = USD 9.09

WEIGHTS AND MEASURES

International metric system, unless specifically described in text; except:

1 acre (ac) = 0.4047 hectares (ha)

1 hectare = 2.47 acres

FISCAL YEAR

1 January – 31 December

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank

AFD Agence Française de Développement
AWPB Annual Work Plan and Budget
BWA Bulk Water Allocation
CBO Community Based Organisation
COSOP Country Strategic Opportunity Paper
CPE Country Portfolio Evaluation
CPO Country Programme Officer
DSD Divisional Secretariats Division (Administrative Unit)
DZLiSPP Dry Zone Livelihoods Support and Partnership Programme
FO Farmers Organizations
GDP Gross Domestic Product
GoSL Government of Sri Lanka
GTZ German Development Cooperation
HRD Human Resources Development
IIDP Iranamadu Irrigation Development Project
IRDP Integrated Rural Development Project
MADAS Ministry of Agricultural Development and Agrarian Services
MLGPC Ministry of Local Government and Provincial Council
msl mean sea level
NADeP National Agribusiness Development Programme
NGO Non Governmental Organisation
NSC National Steering Committee
NSC National Steering Committee
PDAP&H Provincial Department of Animal Production and Health
PID Provincial Irrigation Department
PMO Project Management Office
PRS Poverty Reduction Strategy
PT-CRReMP Post Tsunami Rehabilitation and Costal Resource Management Programme
SEEDS Sarvodaya Economic Enterprise Development Services (Guarantee) Ltd
SPeNDP Smallholder Plantation Entrepreneurship Development Programme
UNDP United Nations Development Programme

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MAP

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EXECUTIVE SUMMARY

1. Introduction The Iranamadu Irrigation Development Project (IIDP) is an integral part of the
holistic arrangement for the transfer of water to Jaffna on the one hand and the rehabilitation of the
downstream canal system as demanded by the target group population on the other. It is
complementary to the ADB/ADF-financed Jaffna and Kilinochchi Water Supply and Sanitation Project,
which aims at improving the Iranamadu reservoir bund and head works to increase the reservoir’s
water holding capacity, part of which would be used for Jaffna drinking water supply. The IFAD-
financed IIDP would improve the downstream irrigation infrastructure that is in disrepair due to the lack
of maintenance and destructions over the last three decades.

2. Goal and development objectives Poverty reduction and increase in household incomes
above the poverty line is the goal. Twin objectives are (a) to promote the effective and sustainable
management of the irrigation infrastructure; and (b) to sustainably improve water and land productivity.

3. Project area and target group IIDP is located in Kilinochchi District of the Northern
Province, involving 22 GN Divisions. It covers about 8 455 ha of the Iranamadu command area. The
target group is the total population of farmers with lands in the command area which is about 7 000
households with 22 095 persons. About 18.5% of these families are women-headed households. The
poverty incidence of the population is about 78.5%.
4. Targeting Whenever possible, IIDP would ensure poverty targeting in several manners: a) by
prioritising rehabilitation investments in favour of small farmers; b) by investment support to farmers at
the tail end of distribution and field canals; c) by developing vegetable production with the involvement
of women groups; and d) by support to households in upland agriculture outside the command area.
As infrastructure is a common asset, specific targeting would not be viable. However, 85%-90% of all
farmers operate on 2 ha or less and are considered small farmers.
5. Gender The Project would apply an active gender approach and would promote the
involvement of women in FOs and so take part in decisions on water management, cropping patterns,
and marketing. Women would represent up to 50% of all project participants.
6. Project components IIDP would be financed by IFAD with a loan of about USD 22.2 million
on highly concessional terms. Three Project components are envisaged: a) Infrastructure
development; b) Production and marketing; and c) Project management.
7. Component 1. Infrastructure development The component consists of two sub-
components: a) irrigation rehabilitation; and b) other infrastructure development. The outcome of this
st
component would contribute to the 1 objective and account for 73% of the total baseline cost.
8. Under irrigation rehabilitation, the Project would undertake design, implementation and
supervision of works to render the Iranamadu scheme fully operational. This would require the
rehabilitation of a) the two main canals over their total length of 30 km, b) the drainage canals, and of
c) all distribution (135km) and field canals (123km). Farm roads would also be improved and repaired.
The Project would introduce an innovative system of farmer managed Bulk Water Allocation system.
This would be facilitated by strengthening 21 existing FOs and establishing new FOs and Women and
Youth Groups.
8. Rain water harvesting structures, marketing structures, seedling nurseries, small storage
units, buildings for simple primary processing equipment, an essential stretch of farm roads etc are
included under other infrastructure development.
9. Component 2. Production and marketing The component has three sub-components: a)
social mobilization and training; b) production, extension and marketing; and c) other agricultural and
off farm development. These three will have outcomes that would support livelihood improvements of
the beneficiaries.
10. Social mobilization sub-component would form and strengthen about 425 women groups
including youth for non-paddy crop production in addition to strengthening the FOs who will manage
the irrigation systems. Training programmes for the women and youth in social leadership, accounting
and financing, non-paddy crop cultivation, off-farm income generation activities, agricultural
processing, and organic fertiliser production etc would be supported.
nd
11. Under the 2 sub-component sustainable cropping techniques for diversified crops will be

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promoted. The Bulk Water Allocation system provides the opportunity for diversification. The
Department of Agriculture would also be strengthened to provide extension. Credit linkages would be
created to finance the increased cost of production. To ensure effective market demand for specific
crops, the Project would seek partnership with the private sector to create marketing contracts, which
would be agreed upon before starting each cropping season. A part of the incremental cost of non-
paddy crop cultivation and extension would be financed by the private sector who would agree to
purchase the farm products.
12. Under the third sub-component the Project would support upland agriculture in rain fed fields
and homesteads; training of voluntary community professionals on processing and value addition of
non-paddy crops; providing matching grants to purchase agro-processing equipment for women and
youth groups; and rehabilitate the fruit plant nursery at Paranthan. As off-farm activities, about
150 women and youth groups would be supported for micro enterprise development.
13. Component 3. Project management A Project Management Office (PMO) would be
established in Kilinochchi, under the direction of a Project Director. Implementing line departments
are Provincial Irrigation, Agriculture, and Agrarian Services and they would sign Memoranda of
Understanding with the Project. The partnership with the private sector would be defined in a Project
Agreement. Additional implementation capacities would be tendered from qualified private contractors,
consultant firms and NGOs. A gender action plan would be implemented.
14. Organisation and management The Project would be implemented under the responsibility
of the Ministry of Local Government and Provincial Councils (MLGPC) as the Lead Project Agency.
Its Secretary would chair a National Steering Committee (NSC) which represents the legislative
authority of the Project. A Provincial Steering Committee would coordinate, supervise and oversee the
performance of the Project. District level coordination would be facilitated by the District Coordinating
Committee (DCC), which is an existing body. FOs are an integral part of the project organizational
framework. The Project will finance logistical requirements of only the NSC.
13. Project costs and financing The estimated total project cost is LKR 3.22 billion or
USD 29.32 million. IFAD would provide a highly concessional loan of USD 22.231 million (75.7%). The
Government of Sri Lanka will provide counterpart funds of USD 3.158 million (10.8%) meeting part of
the salaries, operating and maintenance costs and all taxes and duties. The private sector would be
expected to finance about USD 1.23 million (4.2%) for incremental farm inputs, and the beneficiaries’
contribution would be USD 2.7 million (9%).
14. Flow of funds The IFAD financing will be disbursed over five years. IFAD loan funds will flow
to the Designated Account opened with the Central Bank of Sri Lanka and operated by the Ministry of
Finance. Replenishment of the Designated Account from the Loan Account at IFAD will be by way of
withdrawal applications. On request from the MLGPC, MOF will advance the IFAD loan funds
quarterly in advance from the Designated Account in USD to the project account held in LKR by PMO.
GOSL provides an annual government counterpart contribution to the MLGPC LKR account as
required by the Project.
15. Benefits and beneficiaries The financial and economic analysis shows that the programme
investments should provide sound farm level benefits for 7 000 families, while ensuring an overall
economic rate of return of 25%.
16. Major risks The main risks involve disturbance to the target beneficiaries livelihood during
irrigation rehabilitation, which would be mitigated by proper planning and by giving alternative land for
the affected families; crop losses; reluctance to accept novel water management systems; weak
management systems. All the latte ones will be addressed through capacity building programmes.

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LOGICAL FRAMEWORK

Results hierarchy Indicators Means of Verification Assumptions

Goal
Contribution to overall poverty reduction, - Increased hhs assets - Provincial statistics
increases in household incomes - Increased hhs incomes - Household surveys
- Reduced malnutrition of children below 5 years –
weight & height
Development objective
The irrigation infrastructure of the - No. of hhs with secured access to water - Household surveys - Individual and group incentives as
Iranamadu scheme has been - Effectiveness of the O&M arrangements - Poverty analysis well as farmer institutional
rehabilitated, farm productivity improved - No. of hhs reporting production increase - M&E reports development will sustain
and women’s participation in water and - No. of hhs with forwarding contracts with the private infrastructure, cropping, marketing
land management and marketing sector arrangements, and women
enhanced - No. of functioning community infrastructure projects participation in the medium term
st
(all the 1 4 indicators are gender disaggregated)
Outcomes
3
Irrigation infrastructure is rehabilitated, - Water productivity in grain equivalent/m - Reports of the Prov. Irrigation - Severe weather events do not
water in distribution and field canals is - % Reduction in average duty Department (PID) substantially damage rehabilitated
farmer managed and on demand, - Increase in overall irrigation intensity - Project Progress Reports infrastructure
women effectively participate in water - No. of farmers using irrigation, by gender - Project Review Mission - Continued policy support for irrigation
and land management - Average rate of water saving during maha season including annual outcome development
- Proportion women office bearers in FOs study reports
- No. of FOs effectively maintaining D and F canals - M&E & Mid Term Review
Sustainable agricultural productivity of - Crop diversification by area grown by season - Reports of the Prov. - Severe weather events do not
diversified crops is increased and forward - Productivity by crop, decrease in use of chemicals Agriculture Department substantially damage crops
contracting with private corporate buyers - Seasonal turn-over under forward contracts - Project Progress Reports - Climate change effects are mitigated
ensures remunerative markets. - Average contract farm gate price compared to market - Project Review Mission - Continued policy support for
price reports diversification
- % increase in return to labour (female and male) - M&E & Mid Term Review
Sustainable FOs delivering irrigation - No. FOs managing bulk water allocations -Management and financial -heterogeneity of land sizes and
services to farmers - Irrigation – organization performance measured by audit different water volume requirement
financial & management audit (>50% pass after 2 yrs -Annual outcome studies could be a limitation for smooth
& >75% after 4 yrs) -Project review report operations.

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Outputs
Irrigation development - Length of canals rehabilitated (km, by type) - Reports of the PID - System H experience in demand
- No. of structures repaired or rebuilt (by type) - Project Progress Reports led water management
- No. of bulk water supply contract that has been arranged - Project Review Mission reports successfully transferred to project
which include water distribution arrangements, maintenance - M&E reports farmers
arrangements and financing procedures - Mid-Term Review Report
- No. of water meters installed by type of canal
- No. of farmers trained in meter reading
- No. of volunteer jalapalaka (Water Duty Controllers)
appointed by FOs/Project IE per Branch canal system by
cultivation year
- Volumes of water allocated by season
- Area of the command area effectively irrigated (ha, by type)
- No. of women members of FOs who are managing irrigation
Production and marketing - Areas irrigated by crop per season (ha, by type) - Reports of the Prov. Agriculture - Agricultural and other staff
- Diversification of cropping patterns Department supporting adoption of sustainable
- Volumes and proportion of crops sold under forward - Project Progress Reports cropping techniques
contracting - Project Review Mission reports
- No. of women groups for fruits, vegetables and other crops - M&E reports
- No. of hhs covered by extension and marketing services - Annual Report Corporate Buyer
provided by the private sector (by gender) - Mid-Term Review Report
Project management - PMO staff appointments - Project Progress Reports - Timely appointment of key project
- AWPB approvals - Project Review Mission reports staff
- Tender procedures and procurement - Mid-Term Review Report - Government and project incentives
- Flow of funds sufficient to keep qualified staff in
- M&E reporting place
- KM activities - Fiduciary procedures well
- Implementation Gender Action Plan understood by all involved, no
major delays in fund flows
- Transparent procurement

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IRANAMADU IRRIGATION DEVELOPMENT PROJECT

I. INTRODUCTION
1. At the request of the Government of Sri Lanka, the inception of the Iranamadu Irrigation
Development Project (IIDP) took place during an IFAD Inception Mission in October–November 2010,
which resulted in an agreed and signed Aide Memoire outlining the project concept. Following internal
1
review by IFAD, an IFAD Detailed Design mission was carried out from 21 March to 13 April 2011 .
The design was extensively reviewed by the Quality Enhancement Panel of IFAD, the Provincial
Irrigation Department and the Department of National Planning of the Government of Sri Lanka
2 th nd
(GOSL). The Final Design mission , fielded during 27 June to 22 July 2011, addressed all issues of
the QE panel and all concerns of the GOSL to finalise the design. The final design mission held
discussions with staff and representatives from Central and Provincial Ministries, Provincial
Departments, Government Representatives of the Northern Province, and private sector
agribusinesses, farmers and their leaders and Banks both in Colombo and in Kilinochchi.

II. STRATEGIC CONTEXT AND RATIONALE

A. Country, Rural Development and Poverty Context

Economic and social development

3
Economy
2. GDP Sri Lanka’s Gross Domestic Product in 2011 has been estimated at LKR 6 470 billion or
4
USD 58.0 billion . With a 2011 population of 20.5 million persons, GDP per capita in current prices is
about LKR 314 970 or USD 2 824. The GDP annual growth in the period 1995 – 2011 was 5.4% with
a post-crises high of 9.1% in 2010 and an expected 7.0% in 2011. Growth has been projected at 6.5%
per year until 2016. The sector distribution of GDP remained stable since 2007 with agriculture
contributing 12.6% in 2009, industry 29.7% and services, including the public sector, 57.7%.
Agriculture employs about 2.2 million persons or 31% of the total labour force of 7.1 million persons.
3. Budget Total revenue in 2009 amounted to 15.1% of GDP, while total expenditures were
equivalent to 24.8% of GDP, leaving a budget deficit of about 9.8% of GDP, exceeding the planned
7.0%. The deficit was financed mainly by borrowings, which expanded to 9.8% of GDP. In
September 2010, a sovereign bond 10 year issue of USD 1 billion with a coupon rate of 6.25% was
over-subscribed by USD 5.3 billion, reflecting higher global investor confidence in the economy. The
government will use the proceeds from the bond issue to finance its current infrastructure investment
plans and to restructure a part of the existing debt stock to improve overall public debt management.
Sri Lanka’s sovereign credit rating was upgraded by the main international rating agencies.
4. Inflation Falls in global prices coupled with prudent monetary management led to a rapid
5
decline in inflation from a peak of 28.2% in June 2008 to single digit levels by August 2010. Inflation
grew by 5.0% year-on-year in August 2010, from 4.3% in July 2010. As inflation fell, the Central Bank
6
eased monetary policy and reduced policy rates twice during the third quarter of 2010 . These
changes are expected to further ease lending rates of commercial banks. Reflecting the pickup in the
economic activity, credit to the private sector increased in 2010, growing by 6.2% by mid 2010.
5. Balance of payments Exports grew 13.7% to USD 3.6 billion in the first half of 2010, and
imports by 42.1% to USD 6.5 billion, largely because of a revival of domestic demand. As a
1
The mission team included Prof. Anoja Wickrammasingha, gender and poverty specialist; Mr. Mahinda Panapitiya, irrigation
engineer; Dr. Kamal Karunagoda, agricultural specialist; [Link] Mananwatte, project economist; [Link] Dayaratna,
institutions specialist; Dr. Gamini Hitinayake, environmental analyst; and Mr. Jaap Reijmerink, mission leader. Mr. [Link], IFAD
Country Programme Manager (CPM) joined the mission in the first week. Dr. Anura Herath, IFAD Country Programme Officer
(CPO), greatly facilitated the mission.
2
The final design mission included Mr Bodhi Wanniarchchi, marketing specialist, Mr. Mahinda Panapitiya, irrigation engineer;
[Link] Wanigaratna, institutions specialist; Mr. Roshan Cook, environmental analyst; Ms Martina Huonder, Programme
Assistant and Dr. Anura Herath, IFAD Country Programme Officer, as the mission leader. Mr. [Link], IFAD Country
Programme Manager joined the mission from 27th June to 3rd July and attended key meetings and field visits in Kilinochchi.
3
see Annex 1
4
IMF, WEO Database, April 2011
5
as measured by the Colombo consumer price index
6
the repurchase rate declined from 10.5% in 2009 to 7% in early 2011.

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consequence, the trade deficit increased by 108% to USD 2.8 billion. With the end of the war, tourism
experienced a major boost. Tourism-related earnings increased to USD 301 million in the first
7 months of 2010, an increase of 69% over the same period of 2009, while the number of tourist
arrivals increased by 50% to 341,991. Workers’ remittances rose by 13.5% to USD 1.82 billion in the
first half of 2010. With greater inflows of foreign exchange, the country’s foreign reserves are at a very
comfortable level of USD 6.1 billion, equivalent to 5.8 months of imports. This is the highest level of
reserves Sri Lanka has ever had.
6. External debt The external debt as a percentage of Gross National Income shows a
continuous decline from 73.5% in 1990 to 47% in 2010. The debt service to export ratio however rose
7
from 11% in 2005 to 16% in 2010 .

Social situation

7. Population The total population of the country was estimated for 2011 at 20.5 million
8
persons, growing at an annual rate of 1.2%. The sex ratio at birth in 2010 was 104, while life
expectancy at birth in that year is 79.4 years for females and 72.2 years for males. According to the
2001 Census, Sinhalese constituted the largest ethnic group, 74% of the total population, while Tamils
accounted for about 18%. Muslims represent about 8%, while the remaining 1% include Burghers,
descendants from the Portuguese, Dutch or British; and the aboriginal Veddahs. The most important
religions practised are Theravada Buddhism, Hinduism, Islam, and Christianity.
8. Education With primary enrolment of boys and girls well above 90% for two decades, and a
secondary enrolment rate of above 80%, the country has successfully extended educational
opportunities to all segments of its population through a nation-wide network of state-supported
schools. However, the quality of primary and secondary education needs to be raised and become
9
more demand driven .
9. Health The health situation is improving, as witnessed by the relatively high life expectancy
indicators. Infant mortality per 1 000 live births declined from 65 in 1975 to 12 in 2005, while the
average maternal mortality in 1990-2004 was 43 per 100 000 live births. Both allopathic and
Ayurvedic health services are provided. Surveys in 2006 found that the proportions of pre-school
children who are stunted, wasted and underweight stood at 18%, 15%, and 22% respectively.
Malnutrition was worst in the estates with the percentage of underweight children as high as 30%.
10. Human Development The Human Development Index for 2010 was 0.658, ranking the
10 11
country as 91 out of a total of 169 countries , The new HDI is a composite of the health (life
expectancy) indicator of 0.861, the education (expected and mean years of schooling) of 0.632 and
the GNI per person in USD PPP indicator of 0.523. An analysis of the evolution of each indicator
since 1980 shows that they continuously grew at the same annual rate, meaning that the pattern of
12
human development remained the same . This justifies the view that a) Sri Lanka’s development
over these years continued to maintain its focus on health and education and that liberalisation
13
policies in the later 1970s did not negatively affect achievements, as it did in other countries ; and
b) that achievements in these two sectors were already commendable in the 1970’s, most probably as
a result of the centrally planned nature of development, which was favourable for human development
but constrained economic development.
11. Conflict The end of the three decennia long conflict in the North and the East, which had
exacted a high price in terms of human lives, displacement of populations and damaged public and
private assets, constitutes an opportunity for enhanced economic and social development. Resettled
14
populations, who have received emergency start-up support , are gradually resuming their livelihoods
and rebuilding their assets but do need longer term development support. Special attention is
required for households who did not yet succeed in this process and are remaining very vulnerable.

7
IMF, Debt Sustainability Analysis 2009
8
number of females per 100 males
9
Source: Education in Sri Lanka, World Bank Sri Lanka website
10
to make rankings comparable they should be normalised. A HDI rank of 91 out of 169 is equivalent to 54 out of 100. The
2009 World Bank atlas rank in terms of GNI PPP was 136 out of 213 countries, equivalent to 64 out of 100.
11
UNDP, Explanation note on 2010 HDR composite indices, Sri Lanka
12
see Annex 15, Table 1
13
notably in CIS countries
14
9 months of food rations, shelter items and an agricultural start up package including seed, inputs and cash for labour hire.

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Poverty situation

12. National poverty strategies, such as the Poverty Reduction Strategy and the 2006 – 2016 Ten
15
Years Horizon Development Framework have all been based on incomplete data due to the lack of
information from the conflict affected North and the East. While poverty incidence in the rest of Sri
Lanka declined from 26.1% in 1990/91 to 15.2% in 2006/07 and 7.5% in 2010, the poverty situation in
the North was unknown. In the post-conflict situation, the Department of Census and Statistics has
undertaken a Household Survey recently but results will take some time before being published.
13. In the absence of comprehensive poverty data for the Northern and Eastern provinces, ad hoc
estimates provide some indication of the poverty incidence at present. The Asian Development Bank
16
(ADB) document on the Jaffna and Kilinochchi Water Supply and Sanitation Project , quoting
government sources, estimated poverty incidence in Northern Province to be 37% compared with the
national average of 15% in 2006/07.
14. A recent World Food Programme (WFP) survey in the project area found that 78.5% of
households reported incomes per person per month of LKR 2 500 or less. With the March 2011
17
poverty line of LKR 3 318 , it can be assumed that nearly all households are in poverty. This
outcome is in line with the fact that 90% of households operate irrigated farms of less than 2 ha.
15. The conflict and lack of security were the principal cause for poverty and the most binding
constraint on poverty reduction and economic development. Poverty in the area is primarily due to
war-related destruction of property and life, which has set these regions back from where they were
prior to the war, and has limited development since the early 1980s. Restrictions on movement of
people and the taking over of property by parties to the war have interrupted traditional livelihoods
including in agriculture and fisheries.
18
Government and donor response
16. Following the end of hostilities in May 2009, Government and donors have focused on
a) providing shelter to the displaced population; b) removal of land mines and c) early resettlement.
One year after the end of the conflict nearly 350 000 persons from 110 000 households had been
resettled in or near their place of origin. Commitments made by donors up to the end of 2010 for
Northern Province amounted to about USD 2 129 million (LKR 236 361 million) of which about 85% in
loans and 15% in grants. Major donors include Japan, the World Bank, ADB, the Agence Française
de Developpement (AFD), IFAD, Germany, Switzerland, India, China and Australia. The main areas of
assistance include drinking water, housing, irrigation, electricity supply, rehabilitation of roads and
railway, health, etc.
17. The Government, while creating a safe environment for resettlers to return to their places of
origin, is envisaging an extensive development programme and formulated a two-prong approach
targeting resettlement and fast track development of the Northern Province. These components
include (a) humanitarian assistance through series of relief and early recovery measures to facilitate
the resettlement process; (b) rehabilitation of much needed infrastructure, which include provision of
permanent shelter, supply of safe drinking water, rehabilitation of main highways and sub-roads,
19
railway lines, major and minor tanks, irrigation systems and improvement to hospitals and schools .
18. While the situation is evolving fast, major issues remain to be dealt with, such as the
establishment of adequate child protection services which can deal with 35 000 children who were
formerly associated with armed groups and who completed one year rehabilitation. From 2009 to mid-
2
July 2010, a total area of 385.7 km had been cleared from landmines or unexploded ordinances but
2
an additional 484 km of contamination had been identified. Humanitarian demining focuses on
residential areas. Several donors support house building and repair programmes. Hospitals have to
deal with inadequate numbers of health officers and other medical staff.
19. Policies Under present national agricultural policies, the Government aims to promote
agricultural production by implementing technically sound, economically viable, environmental friendly
and socially acceptable programmes to promote sustainable agricultural development with efficient
and effective utilization of resources. The major points of the policy are:

15
Ministry of Finance, DNP, Ten Year Horizon Development Framework, 2006
16
ADB, Jaffna and Kilinochchi Water Supply and Sanitation Project, Project Number: 37378, November 2010, pg.1
17
equivalent to about USD 1 per day in current terms, USD 2.05 per day in PPP terms
18
GOSL, United Nations, NGOs, Joint Plan for Assistance (JPA) for the Northern Province - 2011
19
[Link].

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 Increase local food supply, employment opportunities and agricultural exports by

emphasizing the cultivation of paddy and other field crops, horticultural and floricultural crops,
roots and tuberous crops, export agricultural crops, herbal crops, other underutilized crops
and bee-keeping as well as supplementary food crops such as sugar cane, cashew and
coconut.
 Increase productivity of water and land by enhancing crop production through the application
of sustainable cultivation practices.
 Promote good agricultural practices such as Integrated Pest Management (IPM) and
Integrated Plant Nutrition Management (IPNM), for sustainable agricultural development.
 Promote income generation from integrated agriculture through livestock and aquaculture.
 Formulate production plans that will cater to the market needs and nutritional requirements.
 Promote Cultivation of crops based on agro-climatic conditions and promoting agro-based
industries.
 Introduce improved and modern technologies to the village whenever and wherever possible.

Constraints
20. Since 1962, the government provides a subsidy on chemical fertilizers in an effort to promote
paddy food security and national self-sufficiency. By 2009, the total subsidy amounted to 3% of all
government spending, a 50kg sack with a market value of LKR 6 000 was sold to farmers at LKR 350.
This has several perverse effects such as over-utilisation, groundwater pollution, and nutrient
20
imbalances in the soils . It also does not seem to support government’s own policy of moving
towards sustainable agriculture.
21. Government implementation capacities nationwide are constrained by the lack of resources.
Several sectors have been decentralised to provincial councils and administrations, but financial
decentralisation has not followed, resulting in chronic lack of resources at the province level. In
irrigation, there is a central Ministry of Irrigation and Water Resources Management, responsible for
the larger schemes, while in the Northern province, the provincial Ministry of Agriculture, Irrigation,
Land Administration, Animal Development and Fisheries, takes care of smaller irrigation schemes.
The provincial administration is reporting to the central Ministry of Local Government and Provincial
Councils.
Potential
22. In a post-crisis situation, the potential for development in all sectors is important and the first
objective of local government and the population is to recover as quickly as possible to the situation
before the conflict. However, the fact that much of economic activities have to re-start from practically
zero provides an opportunity to develop a more diversified economic base for the economy as well as
for households, spreading risks and improving productivity. For instance in irrigation, improved water
availability during the yala season provides an opportunity to diversify production towards high(er)
value crops such as fruits, vegetables and others, rather than undertaking a second crop of paddy.
23. Another important potential which needs to be developed is the present interest of corporate
buyers in direct purchasing from farmers and farmer groups. For instance, in Jaffna, the improvement
by Cargills in packaging fresh vegetables in crates has reduced post harvest losses for the farmer by
20%-30%. In addition, the use of a properly calibrated weighing scale adds another 10% to farmer
benefits. Sharing such benefits between farmers and the corporate buyer provides strong incentives
for quality based production to the farmer.
B. Rationale
24. The Government plan for early development of the Northern Province includes the
improvement of the drinking water supply of Jaffna, the population of which is anticipated to grow
considerably. Because of Jaffna's unique topography and morphology, the peninsula depends
primarily on groundwater resources, not only for drinking water but also for many other purposes,
including agriculture, the primary economic activity. The aquifer is fragile and at risk because of
bacteriological contamination resulting from inadequate sanitation and nutrient contamination resulting
from agricultural runoff. Over-extraction of groundwater has also led to salinity intrusion. Improved

20
Manoj Tibbotuwawa, Better Targeting of Transfers: the Fertilizer Subsidy, Institute of Policy Studies of Sri
Lanka, 2010

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drinking water supplies thus have to rely on fresh surface water and the Iranamadu reservoir is the
21
nearest reliable source .
25. Under the ADB, AFD and Government financed Jaffna and Kilinochchi Water Supply and
22
Sanitation Project of USD 134 million , about USD 10.6 million will be used to increase the capacity of
3 3
the Iranamadu tank by 16.3 million m to 148.1 million m by raising the bunds to 31.40m msl (103
3
feet). This will allow an extraction of water for Jaffna of 9.85 million m per year.
26. In the preparation of the ADB/ADF project, the local government and farmer representatives
indicated that they agreed to the extraction of water from Iranamadu for Jaffna on condition that the
downstream irrigation infrastructure would be rehabilitated and would allow a productive use of
irrigation water in the existing command area of 8 455 ha. Although the proposed Project did not
appear in the COSOP, at the request of the government, IFAD agreed to support the downstream
irrigation development project as a complement to the ADB/ADF project. The latter has been
approved by ADB in November 2010 and is presently initiating field work.
27. While a large part of the IFAD project resources would be for investments in infrastructure,
IFAD’s experience in grassroots institutional development would be applied in ensuring that female
and male farmers will have the capacity, institutions and skills to manage the water resources,
maintain the infrastructure, apply sustainable agricultural techniques and are ensured of remunerative
markets. The latter approach will require an active partnership with a private corporate buyer. During
this mission few such buyers including Cargill, John Keels and few exporters have expressed their
interest in creating market linkages with the farmers in the project area.
28. According to recent data of the Provincial Irrigation Department, an estimated 90% of farmers
in the command area are operating on 2 ha or less, while 78.5% of households surveyed recently by
World Food Programme reported incomes less than the present poverty line. Many of the resettled
households have to rebuild their assets and economic activities. In the project area, as a result of the
conflict, the single parent households represent 26% of all households. Female headed households
make up 18.5% of all households. Such an important poor and vulnerable population fully justifies
IFAD’s participation in the Project.

III. PROJECT DESCRIPTION

A. Project Area and Target Group
23
Project Area

29. Physical characteristics The choice of the project area is determined by the nature of the
Project and includes the command area of the Iranamadu irrigation scheme. However, the
development of the irrigation infrastructure has spill over effects in terms of improved groundwater
availability in an area located up to 500m outside the main canal bunds. Usually after 500 meter
distance the charging of ground water is receding making crop cultivation difficult. Therefore, the
project area would include both the command area and the area within 500m outside the main canal
bunds.
30. The Project is located in the Kilinochchi District which covers 127 930 ha of which 49% or
62,650 ha is utilized for agriculture, 40% is under forest and the remaining 11% includes other lands.
Some 44% of the agricultural area is used for irrigated paddy production.
31. The land representing the Iranamadu Tank watershed and the command area is
2
approximately 970 km . The Iranamadu Tank Bund was originally constructed in 1902 and was raised
thrice during successive settlement campaigns: in 1951, in 1954 and in 1975 to hold capacities of
88 million cubic meters (MCM), 101 MCM and of the present 131.8 MCM respectively.
32. The total command area of Iranamadu is 8 455 ha. The area has an important potential for
paddy cultivation and of subsidiary crops such as chillies, onions, groundnuts, green gram etc. In the
uplands, perennial crops include mangoes, jackfruit, coconuts, etc. The Kilinochchi district as a whole
has 21 208 farming households.
21
Considering that the “River for Jaffna Project’’, proposed as far back as 1947 and 1967 by the Irrigation Department with the
aim of converting the two internal lagoons of “Vadamarachchi” and “Upparu” into fresh water lagoons with Elephant Pass lagoon
receiving drainage water of 363 square miles of catchment area from the mainland acting as fresh water lagoon, has suffered
several set backs and would not be able to provide fresh water in the short run.
22
ADB: USD 90 million, AFD: USD 40 million and Government: USD 34 million.
23
See Annex 1 for details.

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 Sri Lanka: Iranamadu Irrigation Development Project
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33. Agro-ecology The area consists of manipulated water bodies with a densely spread channel
systems connected with the lowland paddy tracts, uplands with perennial vegetation of relatively open
home gardens with settlements in the buffer area to the paddy tracts and some vegetation strips
besides the channels. Most of the project area consists of alluvial deposits of clay, silt and sand. The
natural vegetation in the undeveloped areas are monsoon scrub jungle and in the catchment area
mostly monsoon forest.
34. Agro-ecologically the project area has dry zone characteristics, with a main rainy season
during maha (October to March) and smaller rains during yala (April to September). The average
annual rainfall is around 1 200 millimetres, of which 950mm during maha and 250mm in yala.
o o o
Average temperatures range between 27 C and 32 C, peaking at 36 C during the dry period.
35. Climate change The International Water Management Institute (IWMI) carried out a study on
24
the possible impact of climate change on water resources and agriculture which benefits from two
IFAD grants. The review suggests that Sri Lanka’s mean temperature may increase by approximately
o o
0.9 C–4 C, over the baseline (1961-1990), by the year 2100 with accompanying changes in the
quantity and spatial distribution of rainfall. Most studies seem to expect a higher mean annual rainfall
25
level , with important spatial variations, most of the increase in precipitation occurring in the wet
zones. At the same time, the occurrence of severe weather events is expected to increase. In the
26
North, it is anticipated that the maximum potential soil moisture deficit will increase by 5% to 12% by
2050, compared to a 1961-1990 baseline situation. Adaptation measures would include water
conservation, water harvesting, shifting cropping patterns towards less water demanding crops and
the use of drought resistant crop varieties.
36. Administration The area is in two Divisional Secretariat Divisions (DSD), namely Karachchi
DSD and Kandawalai DSD. The project area includes a total of 22 Grama Niladari Divisions (GND)
which handle the lower level administration, 19 GNDs are in the Karachchi DSD, and 3 GND are in the
Kandawalai DSD.
27
37. With the different colonisation campaigns since its origin in 1902, different land titles and
different sizes of holdings were attributed to the settlers. The resulting land distribution is
28
characterised by a very large proportion (90%) of small farms of less than 2 ha and only a small
29
proportion (10%) of larger farms . The latter are often held by descendants or relatives of the earliest
30
settlers who were mobilised from the higher social classes in Jaffna who could afford the high costs
of land development.
38. Population The population figures differ by source. The most recent data of the Kilinochchi
District Secretariat Office of 31 July 2010, indicate that the population of practically exclusively Sri
31
Lankan Tamils in the 22 GN Divisions amount to about 7 000 households with 22 095 persons .
However, continued resettlement since that date might have increased the overall population. The
post-conflict situation is evident in the demographic structure: the sex ratio in the area is
32
90 males/100 females , with several GN Divisions reporting ratios as low as 84 and 85. Single parent
households represent 26% of all households while female headed households make up 18.5% of all
households.
39. Livelihood Agriculture is the most important source of livelihood and in the sector, paddy
cultivation is the dominant activity. Fresh vegetables are mostly produced in upland areas and fruit
trees tend to be planted in the home gardens. Livestock is often integrated in the farming system but
the war has upset herd size and herd composition and it has been reported that numbers of cattle are
still not recovered by their former owners. FAO and the Army are rounding up stray cattle for
33
restocking and vaccination before redistribution to farmers . In the town of Kilinochchi a variety of

24
Eriyagama, N.; Smakhtin, V.; Chandrapala, L.; Fernando, K. 2010. Impacts of climate change on water resources and
agriculture in Sri Lanka: a review and preliminary vulnerability mapping. Colombo, Sri Lanka: International Water Management
Institute. 51p. (IWMI Research Report 135). doi:10.3910/2010.
25
In the absence of national research, rainfall predictions are derived from IPCC global and regional scenarios, hence the high
degree of uncertainty. Only a few studies predict lower mean annual precipitations.
26
depending on the selected climate change scenario
27
the earliest settlers in 1902 received property rights on condition they developed the lands, successive settlers in the 1950s
and 1970’s received long term leases.
28
90% of all farms, holding 68% of the total area
29
covering 32% of the area
30
lawyers, doctors, high officials, etc.
31
this includes 76 Muslim (280 persons) and 2 Singhalese households (3 persons)
32
97/100 in the whole country
33
Joint Humanitarian Update, July 2010

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 Sri Lanka: Iranamadu Irrigation Development Project
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small enterprises provide employment in rice and food processing, tailoring and diary and in services
such as education, health and banking.
40. Poverty About 78.5% of households in the command area reported a monthly income of less
than LKR 2 500 per person, compared to the national consumption poverty line of LKR 3 141 per
person per month for September 2010 (see Annex 2 for details).

Target group

41. The target group of this Project is the total population of farmers having access to the lands in
the command area as well as those living outside the area within a distance of 500 mt (0.5 km) from
the main canal bund. As the irrigation infrastructure is a common asset, specific targeting would not
be viable. However, the large majority of farmers (85%-90% of all farmers in the scheme) operate on
2 ha or less and are considered small farmers. The estimated poverty incidence is in the order of
78%, largely because a large proportion of the population only recently resettled and has to rebuild its
asset base.
42. Whenever possible, specific activities would be targeted in several manners: a) by prioritising
rehabilitation investments in favour of small farmers; b) by supporting farmers at the tail end of
distribution and field canals – this will be facilitated by the 10-steps process of FOs capacity building
activities outlined in detail in Attachment I of WP 6; c) by developing fruit and vegetables production
and marketing with the involvement of women groups; and d) by supporting households in upland
agriculture outside the command area.
43. The Project would apply an active gender approach and would promote the involvement of
women in farmer organisations to take part in decisions on water management, cropping patterns, and
marketing. Women would represent not less than 50% of all project participants.
B. Project Development Objective
44. Goal The Project would contribute to poverty reduction and increase in household incomes
as well as to the increased participation of women in water and land management, and in marketing.
45. Objectives In line with the goal and the project implementation and gender strategy, the
Project would pursue two objectives:
(i) Irrigation infrastructure has been improved and is effectively managed by Local
Government and Farmer Organisations (FOs) including women, the latter applying
water saving management methods. Appropriate environment and climate change
adaptation and mitigation measures are applied.

(ii) Water and land productivity have been sustainably improved and farm production is
meeting effective and premium demand from corporate buyers through forward
contracting and other market agreements. As such household incomes have
increased, exceeding the poverty line.

C. Project Components
46. The Project would include three components: i) Infrastructure development; ii) production and
marketing; and iii) Project management.
1. Component 1: Infrastructure Development
47. The component consists of two sub-components: a) irrigation rehabilitation; and b) other
infrastructure development.
34
1.a Irrigation rehabilitation
48. Due to the poor condition of the head works (bund and associated structures) of the
35
Iranamadu reservoir, water is not being fully stored during monsoon seasons for the past 10 years
(usually 4-5 ft below Full Supply Level, by opening spill gates during heavy rains), and as a result,
availability of water for irrigation purposes is limited. An ADB/AFD funded Headwork improvement

34
See Working Paper 3 for details
35
Because of a localised structural weakness in the bund

7
 Sri Lanka: Iranamadu Irrigation Development Project
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36 3
component has been initiated which will increase the capacity of the tank by 16.3 million m to
3
148.1 million m by strengthening and raising the bunds to 31.40 m msl. Part of the incremental
volume will be diverted to Jaffna for drinking water supply.
49. The proposed IFAD Project would be used for the rehabilitation of the downstream canal
system which provides irrigation water to 8 455 ha. The Irrigation rehabilitation sub-component would
include the following activities.
50. Main Canal The Iranamadu tank has a left bank and a right bank main channel of a total
length of 30 km. Due to the poor or lack of maintenance for a long time, the channel system has badly
deteriorated. The channel bund tops are below the designed level and are full of depressions and
scours. Most of the structures are badly damaged. Many of these need reconstruction and the rest
extensive repairs and improvements. In addition both canals need to be desilted and cleared of trees,
37
debris and weed growths which obstructs the flow. Typical activities to improve the main canal
include secondary growth clearing; compacted earth fill on channel bund to design profile and level;
desilting in the channel bed; strip turfing of newly filled slopes; construction of retaining walls at badly
scoured sections; repairs of regulators; repairs of turn out structures, installation of measurement
devices; and construction of drainages under crossings. The Project will support all of these activities.
51. Currently the Provincial Irrigation Department (PID) is undertaking some repair work on one
regulator which controls the water issue to distribution canals (D3) of the left bank area. There are
five more structures which need rehabilitation in the left bank main canal. In the right bank main canal
there are 11 structures which need rehabilitation for proper control of water. Out of that, two structures
are being constructed at the cost of LKR 10 million. PID is also now in the process of rehabilitating the
right bank canal roads.
52. Branch and Distributory Canals The total length of branch and distribution canals is about
135 km. The condition of the branch and distributory canals is same as that of the main canals. PID is
now in the process of rehabilitating one of the D3 commencing from left bank main canal.
Rehabilitation of three drop structures and three regulators along D3 canals is now in progress.
Rehabilitation works that the Project will support are similar to those for the main canals. Further
measurement devices will be installed at all (repaired) turn out structures.
53. Field Canals The total length of field channels in the scheme is 123 km. Most of the bunds
of the field canals have been washed away. There are not many water control structures and water is
issued to the field by cutting an opening in the canal bund. All the field channels needs to be provided
with pipe outlets for individual farms. There is also a need to introduce canal roads as access to
individual farms. The Project will support such structures.
54. Farm roads Repair and improvement of farm roads in the command area is required. Works
would include gravelling, repairs of causeways, bridges, construction of pedestrian crossing etc and
the Project will finance such work.
55. Drainage Canals Drainage in the scheme above the coastal belt is poor and during heavy
rains the farm lands are flooded causing severe crop damage particularly during harvest time. The
main drainage canals are heavily silted up and overgrown with scrub and trees, and are choked with
tree stumps and weeds. Some of the riverine reservation areas allocated for canal bank protections in
medium and minor drainage are also being gradually encroached by adjoining riparian farmers for
cultivation. Drainage improvement in areas prone to salinity development is therefore required and will
be supported by the Project. Main activities include bush clearance, desilting, compacted earth fill on
Kanagarajan Aru flood bund, and vegetative strengthening of canal slopes for which planting material
will be provided with project funds.
56. Prioritization of rehabilitation work In consultation with PID, the following order of priority of
works was identified: (1) main and distribution canals; (2) drainage canals; (3) field canals mostly
serving smallholders with less than 2 ha; and (4) field canals serving larger landholdings. Except for
the main canals, the detailed rehabilitation needs of all other irrigation infrastructure would be
identified jointly with farmers using tools such as participatory rural appraisals (PRAs) and walkthrough
surveys (see WP 3 for a proposed time schedule).
57. Implementation and institutional support for PID Engineering designs, cost estimation
and preparation of tender documents for rehabilitation contracts for the main canals and the drainage

36
Of the Jaffna and Kilinochchi Water Supply and Sanitation Project
37
Detailed in Appendix 1 of Working Paper 3.

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works would be undertaken by qualified technical staff in PID with technical support of the Project and
on the basis of a Memorandum of Understanding with the Project. PID would also supervise the
contractors carrying out the works on the main canals and the drainage canals. The Project would
provide a basic set of equipment to PID to be used for the initial cleaning work, and maintenance of
the main canals and the drainage canals. The Project also would finance allowances for PID staff
involved in the design and supervision work of the main canals and drainage canals.
58. Water management The Project would introduce an innovative system of farmer managed
water allocation, the Bulk Water Allocation system, along the lines presently practiced in Mahaweli’s
38
System H (see Annex 4 for details). Before the main season, FOs or farmer groups would be
allocated an annual water allocation, depending on the command area of the FO or group. Water
savings during maha would allow a larger area to be irrigated during yala. Cropping patterns would be
decided by group, taking into account the market demand indicated by the private sector and the
corporate buyers. The Project would provide PID staff and farmer training and organise exchange of
experiences with staff and farmers in System H.
59. PID capacity would be insufficient to implementation all rehabilitation works on distributory and
field canals, on farm roads as well as for carrying out PRAs, walkthrough surveys and farmer training
in water management and system operation and maintenance. As such, the Project would tender for
contractors responsible for design and supervision, and for separate contractors (consultants) for
implementation of the works. In cases where the Project considers specific FOs have sufficient
capacities to carry out the work, direct contracts at the Engineer’s estimated price would be awarded
to them for selected works. However, such FOs are not supposed to sub-contract these works to third
parties. An overview of the anticipated contract bundles is presented in Annex 15, Table 2.
60. Social mobilization / inclusion and training for water management The Project will
strengthen 21 existing FOs and establish new FOs and Women and Youth Groups to undertake
management of irrigation infrastructure, the environment and water resources. Social Mobilisers /
Social Inclusion Workers appointed under the Project (3 in the 2nd project year, additional 8 in the 3rd
year totalling 11, further 10 in the 4th year totalling 21, and maintaining a total of 18 in the 5th year)
will undertake FOs strengthening and social mobilization process. During the initial years social
mobilization / inclusion could also draw in the assistance of partner agencies and other public
institutions in the province such as district level Department of Cooperative Services, Agrarian
Services, Agriculture, Education, Health and Nutrition all of which are directly or indirectly involved
with the Project (see WP 6 for details).
61. Through mobilization, wider social inclusion would be ensured by the Project. Social inclusion
is ensured through the equity gained in distribution of water among head-, middle- and tail-enders
through participation of men and women in FOs apex sub-committees and through FO representation
and negotiation in project implementation coordinating mechanism in the Bulk Water Allocation (BWA)
system. Social Mobilization / Inclusion Workers are expected to perform a specialized function of
identifying and restoring those, including women, that are overlooked / missed by a project throughout
its development cycle to gain from the benefit stream. To undertake proper farmer managed water
resources, which is the bulk water allocation method (see WP 3 for the details), the Project will support
forming “distribution and field canal based groups” involving one member from each family, while also
ensuring smaller landowners’ participation. In connection with the 120 field canals, sub groups will be
formed enabling women as well as men to be in steering committees and to be involved in operation
and management. Average size of a group per field canal would be about 20 members. Leadership
training will be given to at least 2 persons (one man and a woman) from each sub group and the
knowledge will be transferred to others. Group formation and training will be outsourced to reputable
and experienced NGOs or private consultancy groups on the basis of a tender. The selection of the
NGOs will be supported by a specialised implementation group, consisting of project core staff and
supporting staff of implementing agencies such as District Irrigation, Agriculture, Agrarian Services,
Health and Nutrition, Cooperatives as well as extension specialists of involved private sector agencies,
vested with the responsibility to conduct functions related to both social inclusion, gender balance and
social mobilization needs of the Project. The regular programme monitoring system will include a set
of criteria to assess the maturity of FOs.
62. Designing of the main canal and preparation of tender documents for major contracts,
preparation of TORs and consultancy contract documents for selecting Consultants for out sourced
design and construction supervision work, O&M training, awareness campaign for communities about

38
the improvement in water and crop productivity has been well documented, see references indicated in Annex 4

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the Bulk Water Allocation system, and technical training for technical staff of PID, will commence in
the last quarter of 2011 (September) in order to facilitate the completion of the rehabilitation work
within three years of the Project. It is proposed that the Provincial Irrigation Department (PID)
advances money to finance these activities during the last quarter of 2011. Once the Project starts,
these advances will be reimbursed with the proposed retroactive financing facility of the loan.
1.b Other infrastructure development
63. Rain water harvesting facilities The Project will support about 2000 families experiencing
water shortages with rain water harvesting tanks for drinking water and other small earth structures to
capture rainwater runoff and ground water recharging.
64. Other infrastructure A limited allocation would be included in the Project to support
marketing infrastructure at the level of FOs and Women and youth groups. This could include small
storage units, buildings for simple primary processing equipments, an essential stretch of farm roads
etc. A precise inventory would be undertaken in a participatory manner during implementation. Costs
would not exceed USD 2000 per FO or Women group. Infrastructure could also include buildings
which are essential for the project implementation including the repair of an office to house the PMO.
2. Component 2: Production and Marketing
65. The second component of the Project has three sub-components: a) social mobilization and
training; b) production, extension and marketing; and c) other agricultural and off farm development.
2.a. Social mobilisation and training
66. Group formation and strengthening In addition to the support provided to strengthen the
existing FOs for water management activities, about 425 women groups including youth for non-paddy
crop production would be formed and strengthen from the second year of the Project and thereafter.
PMO would outsource social mobilisation activities to a reputable and experienced NGO on the basis
of a tender. The NGO would recruit up to 21 social mobillisers as indicated in para 61 above starting
39
from the second year of the Project (see Annex 4 for details). The Project target for women
membership in FOs is 50% while for female office bearers it is 30%. Training activities would be
outsourced to the same private sector consultancy groups or NGOs.
67. An estimated 20%-30% of the command area is suitable for the production of fruits,
vegetables, etc. during the yala season. The strengthen women and youth groups will use about
2100 ha within the project area, including the upland area outside the main canal bunds to produce
non-paddy crops. Where possible, the production would be on the basis of forward contracts with the
private sector buyers. The Project will facilitate such forward contracts.
68. The Project will organise and finance training programmes for the women and youth in social
leadership, accounting and financing, non-paddy crop cultivation, off-farm income generation
activities, agricultural processing, and organic fertiliser production etc. The recruited NGOs will
facilitate the programmes.
40
2.b Production, extension and marketing
69. Production The focus of the Project in agricultural development in the command area and
the surrounding upland project area is on sustainable cropping techniques for diversified crops.
Diversification would be mostly during the yala season. The Bulk Water Allocation system provides
the opportunity for farmer groups to diversify their cropping system away from paddy production to
demand led fruits, vegetables and other higher value crops. This would have an important impact
both on their water requirement (lower) and on their household income potential (higher). The Project
will finance non-rice crop diversification programmes during yala and meda (sandwich crop) seasons
that would be initiated and maintained by the Provincial Agriculture Department. A part of the
incremental cost of non-paddy crop cultivation in the project area during yala and meda would be
financed by the private sector who would agree to purchase these farm products (see Annex 4 and
WP 4 for details). In addition, the Project will discuss and liaise with commercial banks in Kilinochchi to
create credit linkages with farmers to finance the cost of production of such crops.
70. Extension The current extension system is more production oriented. The required extension
services and farmer training to meet market quality standards would therefore be provided both by the
Provincial Department of Agriculture (PDA) and by the private sector such as Cargill. The extension
inputs including farmer training and field demonstrations, and strengthening of the PID be provided by

39
See WP 8, Cost Tables for the financial support for SM and NGOs.
40
See Working Paper 4 for details.

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the Project. The focus would be on sustainable agricultural techniques, including organic farming (see
Annex 4 and WP 4 for details). In addition the Project will also support farm demonstrations on good
agricultural practices (GAP), farmer training on GAP and conducting validation workshops of such
demos. The other practices promoting sustainable agriculture that the Project would support through
demonstrations include crop rotation and diversification; low or zero tillage approaches for soil
conservation; soil and water conservation measures such as cover crops, green mulch, water
harvesting structures etc.; enhance soil organic content; proper drainage systems installed for
avoiding soil salinization; and minimal application of essential chemical inputs and integrated pest
management (see WP 5 for details).
71. Market demand To ensure effective market demand for project farmers for specific crops, the
Project would seek partnership with the private sector such as Cargill and Keels, to create marketing
contracts. The partnerships would include providing their expertise both in sustainable production and
direct marketing through forward contracting with farmer groups. These contracts would be agreed
upon before starting each cropping season (see Annex 4 for details and Appendix III on Mini Market
Survey included in Working Paper 4). It would also indicate the farm gate price, a floor price and the
pricing mechanism to accommodate fluctuating market prices. Groups interested in working with the
private sector would be supported by the Project in their negotiations of forward contracts and contract
fulfilment would be supervised by the Project.
72. Inputs and credit Sustainable agriculture will require the use of organic inputs. Available
biomass in the project area would be used for composting while other organic material would be
applied. Procurement of inputs would be either financed by farmers themselves or advanced by the
private sector such as Cargill and recovered from the farm gate price (see Annex 4 for details). Credit
linkages would be created to finance the increased cost of production of specified crops. The micro-
financing is available under the New Comprehensive Rural Credit Programme (NCRCP) financed by
the Central Bank of Sri Lanka (CBSL) and operated through state and some private banks. NCRCP
covers paddy and non-paddy crops. Currently only about 2% of the loans in value terms have gone
into non-paddy crops in the Kilinochchi district. In addition the JBIC financed Poverty Alleviation Micro-
Finance Project II (PAMP-II) also provides credit for agriculture, but mainly for paddy. Credit linkages
would cover these facilities. Newly created women and youth groups would be given priorities in
creating credit linkages (see Section VII of the WP 4). They will also be advised during training and
mobilization to initiate savings.
41
2.c. Other agricultural development and off-farm activities
73. Other agricultural development For the development of upland agriculture in rain fed fields
and homesteads, the Project would support initiating variety adoptability trials in both maha and yala
rd
seasons. About 1/3 of the households possess an agro-well to trap seepage water from distribution
channels of the command area, but many wells are damaged. The Project would finance
rehabilitation of these wells and new agro-wells too according to demand within the resource
availability.
74. The Project would also support training of voluntary community professionals on processing
and value addition of non-paddy crops; provide matching grants to purchase agro-processing
equipment once the women and youth groups are matured; and rehabilitation of the fruit plant nursery
at Paranthan. The Project would also finance a soil suitability study to identify areas that are suitable
for non-paddy crops.
75. Off-farm Economic Activities The Project would support the formation of about 150 women
and youth groups for micro enterprise development. Potential sectors would include agro-processing,
agro-business, local craft industry, livestock based value addition work, production of organic fertiliser.
The Project would provide training to the members. Linkage with banks and micro-finance institutions
would be promoted. The Project would finance workshops with the farmers and marketing companies
to create market linkage.
42
3. Component 3: Project Management
76. The Ministry of Local Government and Provincial Councils (MLGPC) would be the Lead
Project Agency for the following considerations: a) the Provincial Council is the legal owner of the
43
Iranamadu scheme, including all its infrastructure and most of its land resources ; b) MLGPC has a

41
See Annex 4 for details.
42
See Annex 5 and WP 6 for details
43
with the exception of lands given out through title deeds to the first settlers after establishment of the scheme in 1902

11
 Sri Lanka: Iranamadu Irrigation Development Project
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direct hierarchical relation with the Provincial Council and the devolved technical ministries at Province
level; c) the technical capacities of the Provincial Ministry of Agriculture, Livestock Development,
Lands, Irrigation and Fisheries could in principle be strengthened with support from MIWRM; d) the
Ministry is the Lead Implementing Agency for the ADB/AFD financed Jaffna and Kilinochchi Water
Supply Project, to which the present Project is complementary; and e) the Ministry is familiar with
multilateral fiduciary procedures.
77. Project Management Office (PMO) would be the executive authority of the Project and would
be headed by the Project Director. To overcome the difficulties experienced in other IFAD projects
with extensive dialogues between IFAD and Government about the selection of suitable candidates
and the subsequent high turn-over of incumbents, the Project Director would be appointed from
among the high level permanent government officials at the level of Secretary in the Provincial Ministry
of Agriculture, Livestock and Irrigation. The appointment would need to be acceptable to IFAD. In
addition, a Project Manager would be recruited from the open market with qualifications and
experience acceptable to the Government and IFAD. The Project Director would take the overall
responsibility of project management and answerable to the National Steering Committee of the
Project. The Project Manager will be responsible for project implementation and answerable to the
Project Director. In the absence of the Project Director, his/her responsibilities would be delegated to
the Project Manager. The division of responsibilities between the Project Director and the Project
Manager would be defined in the respective Term of References (see Appendix 3 of Annex 5).
78. The PMO would be located in Kilinochchi and would include the project manager; an irrigation
engineer; a gender and social mobilisation / inclusion specialist, an agricultural economist, a
procurement specialist (for the first 3 project years), a finance manager/accountant, an M&E and
knowledge management specialist, an internal auditor, and support staff (see Annex 5 for their
responsibilities).
79. The Project would provide 3 vehicles, office equipment and furniture and specific budgets for
M&E, Knowledge management, the Gender Action Plan, studies and surveys as well as for recurrent
costs, including salaries and allowances. The Project will pay the full salary of all the project staff
except for the Project Director whose incremental salary will be paid by the project. The GOSL
counterpart funds would finance operation and maintenance costs of vehicles and others machineries.
80. Gender action plan and awareness workshops The Project would provide equal
opportunities for women as well as men for engaging in the sustainable management of project
activities while reducing gender gaps. While gender considerations would be taken into account in the
social mobilisation activities, ensuring active participation of women in water and crop related
management and marketing, a specific Gender Action Plan, implemented by the Gender Specialist in
the PMO would focus on institutional aspects of gender and include funding for gender training of
PMO and implementing agency’s staff, building gender networks with line agencies, NGOs and
donors, etc (see Annex 2 for details). Awareness workshops for policy makers in the Ministries of
Finance, Agriculture and Economic Development would be facilitated by the Project to promote policy
support for organic production including gradual reduction in subsidies, both the amount of money and
the targeted users, provided for chemical fertilizer. This is to promote environmental sustainability of
agriculture production. These workshop would also culminate the technical experience that is available
in the country to support converting solid waste to organic fertilizer and promote their usage. Further
the lessons learnt through project activities such as BWA system would be disseminated.
D. Lessons Learned and IFAD Policies
Country performance

81. Sri Lanka was IFAD’s first borrower in 1978. Since then, a total of 15 projects had been
approved for a total value of USD 389.7 million and a total of IFAD loans of USD 216.7 million. IFAD
44
reports that a precise number of 518 332 households did directly benefit from its investments. At
45
present, 4 projects are ongoing . The last Country Programme Evaluation took place in 2002 and the
most recent COSOP dates from 2003. Although the design of a new COSOP started in August 2008,
the process was not continued in 2009. Sri Lanka’s debt service of the IFAD loans has been timely
and appropriate.

44
[Link]
45
Dry Zone Livelihood Support and Partnership Programme (636-LK), Post-Tsunami Coastal Rehabilitation and Resource
Management Programme (664-LK & 693-LK), Smallholder Plantation Entrepreneurship Development Programme (712-LK), and
National Agribusiness Development Programme (797-LK)

12
 Sri Lanka: Iranamadu Irrigation Development Project
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82. The overall performance of the country programme had been mixed for a long time. With
achieving peace in 2009, performance seems to improve but several constraints and country-level
46
implementation issues remain :
 The continuing tight budget situation for most public services and the large number of unfilled
vacancies limit their implementation capacities;
 High turn-over of project management staff and political interference in the selection and
appointment of candidates;
 Natural disasters like flash floods, droughts and landslides accentuating the vulnerability of the
rural poor;
 Lengthy administrative procedures for Government clearances, partly due to inconsistent
decentralisation of local governance, coupled with weak infrastructure.
83. Efforts being made to improve the performance of the country programme include:
 Undertaking direct supervision of projects, with frequent implementation follow-up and support
provided by the country team;
 Support for capacity building at both the country portfolio and project levels, especially in the
area of project financial management, through specifically organised in-country training
workshops and / or on-the-site support for individual projects by the engagement of subject
matter experts;
 Initiation of an annual country portfolio review jointly with the government, to review trends in
portfolio performance and deal with common implementation issues; and
 Support for mutual learning and knowledge management.

Lessons learned
84. Some important lessons have been drawn in the course of time by Mid-Term Reviews and
Project Completion missions:
 New approaches, such as participatory planning of project activities in a community, need time
to be assimilated by staff and farmers and therefore require flexibility, an initial pilot, training
47
and joint learning period, before being applied on a project-wide scale ;
 Water resources developments in the form of tank rehabilitation and agrowells have formed
major components of past projects, but generally, emphasis in implementation has been on
infrastructure, as opposed to developing capacity and sustainability of operation and
48
maintenance ;
 Involvement of the private sector, directly buying from project farmers has proven to be a
49
successful approach to ensure production is demand led and remunerative ;
 Taking into account both implementation and management capacities, project design needs to
be kept simple and straightforward, while ensuring poverty reduction, overall sustainability and
economic efficiency50;
 Project implementation experience has demonstrated that the selection and retention of
qualified project managers is a continuous issue and an important cause of implementation
51
delays .
 Government regulations on salary scales for all donor financed projects for key management
staff do not provide sufficient incentives for candidates with the required background and
experience. The result has been protracted discussions on the suitability of candidates and a
high turn-over of key management staff. This has caused considerable delays in project start-
up and implementation.

IFAD Polices
85. Schematically, the present project design has two, interrelated focuses: a) development of
irrigation infrastructure, and b) providing support to diversification of production and to marketing in

46
Country Programme Issues Sheet, May 2009
47
PCR, North-Central Province Participatory Rural Development Project, Dec.2004
48
Appraisal Report, Livelihood Support And Partnership Programme In The Dry Zone, Febr.2004
49
Experience in the SPEND and NADEP projects
50
derived from NADEP Final Design Report, June 2009
51
[Link].

13
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partnership with private corporate buyers, for example Cargills, to ensure that the irrigation capacity is
productively and sustainably used.
86. A starkly simplified project design, only including irrigation infrastructure development has
been considered, as it was the expressed preference of some officials in the Ministry of Finance, but
has not been applied for several reasons: a) the present situation, with most of the population returned
to their pre-war homesteads and resuming their land-rights or land entitlements, allows for a re-start of
diversified agricultural development and rendering production techniques more sustainable and more
52
environment friendly, similar to what they had been before the war . There is local knowledge
available to apply sustainable agricultural practices; b) without support for diversification, farmers
would apply paddy cropping in both agricultural seasons. Under present and foreseeable market
conditions, with a de facto government administered ceiling price for quality paddy and in spite of high
53
but unsustainable subsidies for chemical fertilisers , the project impact for a large majority of small
project farmers with less than 2 ha would not be sufficient to allow their incomes to exceed the poverty
line while financial and economic return of the project would not justify the required investments in
54
irrigation system development ; and c) to promote sustainability after project completion, a
partnership with a corporate buyer would ensure effective demand for diversified farm output on the
basis of contract farming. This partnership would be developed in the second component.
87. IFAD policy consideration The Project supports households who have recently returned to
55
their pre-conflict residence to re-build their economic activities and assets. In this, it reflects IFAD’s
Post-Conflict policy which states that “Engagement in post-crisis situations may include: (a) the design
and implementation of a new programme that includes activities specifically aimed at ……
56
reconstructing and reactivating the development capacity of IFAD’s target groups…..” . The Project
would promote sustainable agricultural development on the basis of adopting environmentally friendly
approaches and techniques. It would introduce the Bulk Water Allocation System for enhanced water
use efficiency while promoting the diversification of crop production that is better suited to the water
resource availability in different seasons. The Project is thus in compliance with the IFAD Environment
and Natural Resource Management Policy.
88. Relevant policy considerations are noted under the Project components / sub-components
where applicable.
Infrastructure development
89. Irrigation rehabilitation The design has integrated several IFAD policy considerations. The
rational of the Project is based on consultations with farmer organisations, who agreed to the
improvement of the reservoir and the supply of drinking water to Jaffna, on condition that the
downstream infrastructure was simultaneously rehabilitated. Therefore, they were involved “from the
57
earliest possible stages” . For the design of the rehabilitation of the distribution and field canals,
participatory planning would be undertaken, after having operated the rehabilitated main canal for one
season so that agreed design needs for these canals reflect actual felt needs rather than suggested
solutions from outsiders.
90. The Project would support the introduction of an innovative Bulk Water Allocation system, as
successfully practiced in the Mahaweli System H, promoting irrigation flexibility and the opportunity of
on-demand water supply. To manage the system, female and male farmers would be grouped around
water distribution point and such groups would manage the amount of water allocated to it. This
58
constitutes an instrument for equitable water management . Irrigation Department staff and farmers
will be trained and exchange of experience with System H officials and farmers will be promoted.
91. The Project would support groups in applying their traditional manner of equitable distribution
59
of water rights during the yala season under which farmers with up to 2 acres receive water rights for
2 acres while those with larger lands receive water rights for only one-third of their land. This tradition
favours those having small lands at the tail end who lease the unusable land from larger owners
upstream, bringing their water rights with them.
52
during the conflict period, cropping was focused on paddy monocropping for paddy regional self-sufficiency
53
the subsidy represents 80% of the market value of fertilizers
54
the financial rate of return on irrigation investments, with paddy being the only crop with an irrigation intensity of 1.3, would
be negative
55
or what remained of that
56
EB 2006/87/R.3/Rev.1, pg.6
57
Learning Note 3.2, para 2.
58
[Link]., para 3
59
[Link]., para 4

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Production and marketing

92. Social mobilisation and training To enable female and male target group farmers to
productively use the improved irrigation system, there is a need for group formation, strengthening or
re-structuring and for training, both in water management and in production and marketing. The water
management modalities and the promotion of sustainable agriculture constitute innovations in the local
context but sufficient previous experience (sustainable agriculture) or experience elsewhere (System
H for water management) exists to include these approaches in the design. They meet the three
requirements specified in IFAD’s policy on innovations: (i) new to its context of application, (ii) useful
and cost-effective in relation to a goal, and (iii) able to “stick” after pilot testing. . The emphasis on
60
61
sustainable agriculture is derived directly from the IFAD Strategic Framework 2011-2015.
93. In the institutional support activities, the Project would ensure that women participate, not only
as members of farmer and women groups but also as office bearers, responsible for water
management and decisions on cropping patterns within water distribution groups. An overall target for
the participation of women in the Project of 50% of all beneficiaries has been set. In this, the Project
would support two of the three pillars of IFAD’s Gender Strategy: women involvement in a) economic
empowerment; and b) decision making.
94. Production, extension and marketing With the Bulk Water Allocation system, farmer
groups around a distribution point can decide their own diversified cropping pattern and sustainable
production techniques. The private sector companies such as Cargill would advise on its demand for
quality crops and would provide extension advice in coordination with the Agricultural department. It
would sign forward contracts with interested farmer groups. This replicates its successful experience
in the SPEND project. The approach meets IFAD’s criteria for an innovation and fits in its policy for
62
partnerships with the private sector . A similar approach is applied in the NADEP project.
95. Other agricultural development and off-farm activities Upland agricultural development
inside and outside the command area would be promoted by the provision of agro-wells, support to
fruits and seed production. Off-farm activities would include skill training and linkages with existing
Micro-finance institutions. This strengthening of access to existing sources of micro-finance services
63
is an element of IFAD’s Rural Finance Policy.
Project management
96. The project management function is integrated in the existing provincial government structure,
in line with the considerations in the Learning Note: Designing for Implementation.
97. Lessons from previous IFAD projects indicate that the continuity of project managers is difficult
to ensure under the government regulations for pay and incentive scales for donor financed projects.
This project design has chosen to replicate the management structure of the NADEP project with a
high level part-time project director within the government structure, and a full time project manager to
whom the project director delegates his/her authority during his/her absence.
98. The arrangements for project financial management are based on the relevant IFAD
guidelines, including those on project procurement and audit. To strengthen the accountability for the
use of IFAD funds, and in addition to the regular annual audits, an Internal Auditor will carry out
random spot checks of the accounts and documentation of all implementing agencies. This supports
64
the implementation of IFAD’s zero tolerance policy on the proper use of loan and grant resources .

IV. PROJECT IMPLEMENTATION

A. Approach
99. The overall project approach is based on a) the improvement of irrigation infrastructure; and
b) the use of improved water supply for diversification into demand led and sustainable cropping

60
IFAD, Innovation Strategy, Dec.2007, pg.7
61
EB-2010-101-R-12, pg 79: Principle of Engagement 8: Sustainability
62
IFAD. Private Sector, Development and Partnership Strategy, 2007, pg 33 and Box 5, which informs about the Sao Tome
experience with organic cocoa and the French corporate buyer from KAOKA. Since 2007, this approach has been further
expanded in Sao Tome to also include organic coffee and pepper.
63
IFAD, Rural Finance Policy, 2009, pg.17
64 EB 2005/86/INF.8, IFAD Policy On Preventing Fraud And Corruption In Its Activities And Operations, Dec.2005, pg.3

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patterns having an ensured market with private commercial project partners. It is based on the
following elements:
 participatory design of irrigation improvements at the distribution and field canal level;
 strengthening line department capacities for the implementation of selected activities within
their capacities, outsourcing the other project activities to contractors, consultants, NGOs and
others through competitive procedures;
 innovative water management by farmer groups, allowing for improved water efficiency and
crop diversification;
 promotion of sustainable agriculture to reduce the negative environmental impact and to
access remunerative markets;
 contract farming for quality products according to market led demand from the partner
corporate buyer.

100. The Project would be implemented in a period of five years. All the irrigation infrastructure
st
work would be completed in the 1 three years of the Project, i.e. three yala seasons each having 3-4
nd
months of work. The livelihood activities would start in the end of the 2 year and last for two years.
The last half year would be allocated for handing over activities. Each individual farmer and women
group would be supported for three years. At project completion, the water management approach
would ensure effective farmer maintenance of the distribution and field canals while the value chain
nd
approach, initiated from 2 year onwards, would ensure continued access to remunerative markets for
project farmers (see WP 3 for the irrigation activity work schedule).
B. Organisational Framework
101. The Ministry of Local Government and Provincial Councils (MLGPC) would be the Lead
65
Project Agency . This is based on the following considerations: a) the Provincial Council is the legal
66
owner of the Iranamadu scheme, including all its infrastructure and most of its land resources ;
b) MLGPC has a direct hierarchical relation with the Provincial Council and the devolved technical
ministries at Province level; and c) the Ministry is the lead implementing agency for the ADB/AFD
financed Jaffna and Kilinochchi Water Supply Project, to which the present Project is complementary,
MLGPC would thus be in a position to ensure full coordination between the two projects; and d) the
Ministry is familiar with multilateral fiduciary procedures.
102. The project organisation would include a national steering committee (NSC), provincial
steering committee, and a project management office (PMO). The existing District Coordination
67
Committee would be involved in coordination at the district level . Beneficiary participation would be
through FOs.
103. National Steering Committee (NSC) The NSC is the legislative authority of the project,
ensuring the project is implemented in accordance with the Loan Agreement, the Project Agreements
between the Project and the private sector companies such as Cargill, the respective Memoranda of
Understanding between the Project and line agencies, and the stipulations in the Project Design
Report. It also would monitor that the jointly agreed recommendations of project supervision missions
and of the Mid Term Review would be implemented in an appropriate manner by the PMO. The NSC
would review and approve the AWPB including the procurement plans, as well as the annual progress
report and financial statements.
104. The NSC would be chaired by the Secretary of the Ministry of Local Government and
Provincial Councils and would include the Secretary, Ministry of Irrigation and Water Resource
Management; the Chief Secretary, Northern Provincial Council; the Directors General of the External
Resources Department and the National Planning, Ministry of Finance; the Secretary, Provincial
Ministry of Agriculture, Livestock and Irrigation; a representative of the private sector; and the Project
Director, serving as the NSC secretary.
105. Dedicated Provincial Steering Committee (DPSC) This would be responsible for provincial
level coordination, and project implementation oversight over performance of functions. It will
recommend AWPB and procurement plan and closely monitor the project performance and output.
The Project would not bear any cost of the logistical arrangement of the DPSC. It is chaired by the
Chief Secretary, Northern Provincial Council with the Secretary to the Governor, Northern Province as

65
See Annex 5 for the justification of this selection and the institutional capability assessment.
66
With the exception of lands given out through title deeds to the first settlers after establishment of the scheme in 1902
67
see Organisation Chart in Annex 15, table 3

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a member; Secretary, Ministry of Agriculture, Irrigation, livestock Development, Fisheries and Lands
Northern Province as the Secretary of the DPSC. The members are Secretary, Ministry of Local
Government, Cooperatives, Rural Development, Industries and Social Welfare, Northern Province;
District Secretary, Kilinochchi; Provincial Director of Irrigation; Provincial Director of Agriculture; and
Provincial Director of Livestock Development; Provincial Director of Lands; and Provincial
st
Commissioner of Cooperatives. The DPSC will meet once a month during the 1 two years of the
Project and quarterly thereafter but prior to the NSC so that it can table issues that would discuss in
the NSC.
106. District Coordination Committee (DCC) Project coordination at the district level would be
facilitated by the DCC, which is an existing committee that meets once a month to coordinate and
report on all development projects implemented in the district. The Project Director would be an ex-
officio member of the DCC. The DCC would advise on coordination with other project’s activities and
on issues arising during implementation.
107. Project Management Office The PMO, established in Killinochchi, would be the executive
authority of the Project and would be headed by a Project Director, appointed from among high level
permanent government officials at the level of Secretary in the Provincial Ministry of Agriculture,
Livestock and Irrigation, on a secondment basis. The appointment would need to be acceptable to
IFAD. As the Project Director will maintain his/her permanent position in the Ministry, s/he would
exercise the responsibilities of Project Director on a part-time basis. Therefore, a Project Manager
would be recruited from the open market with qualifications and experience acceptable to the
Government and IFAD, who would be in charge of daily management of the Project and have authority
to commit project resources up to an agreed level. The division of responsibilities between the Project
Director and the Project Manager would be defined in the respective Term of References. In the
absence of the Project Director, his/her responsibilities would be delegated to the Project Manager.
The other staff includes Irrigation Engineer, Agro Economist, Procurement Specialist, Finance
Manager and M&E and KM Specialist, Gender, Social Mobilization / inclusion and Training Specialist,
Internal Audit and the support staff. Some of the staff would be appointed on competitive basis and full
time and others seconded from the government carders, but full time. The latter officers will be paid an
allowance in addition to their government salary (see Annex 5 for details).
108. The PMO would be responsible for planning, coordination, financial management and
accounting, procurement, supervision, policy dialogue, reporting, internal control, M&E and knowledge
management. The implementation strategy of the Project would be to involve line departments
(Irrigation, Agriculture, and Agrarian Services) according to their capacities under Memoranda of
68
Understanding (MOU) with the Project . The Project would partner with the private sector companies
such as Cargills for extension and marketing, and would outsource all other activities to private sector
contractors, NGOs and other agencies. A small proportion of project resources would be committed to
capacity building and institutional support for public services. Apart from investments in physical
69
infrastructure, the Project would need to promote farmer and women group formation for water
management, production and marketing. This social mobilisation and inclusion process need to be
undertaken by an experienced and reputable NGO. The co-financing and partnership modalities with
the private sector would be defined in a Project Agreement acceptable to IFAD between the private
sector to be selected by the government and MLGPC as the Lead Project Agency.
109. As an integral part of the project operational framework, the FOs would have the following
main role and responsibilities during implementation: (i) identification of detailed rehabilitation needs of
all the irrigation infrastructure except the main canal, (ii) management of the bulk water allocation
system, (iii) FOs effectively taking on responsibilities of participating in the physical rehabilitation of the
irrigation system in a sequential way, and (iv) FOs (or Distributory Canal Organizations which is also
the same FOs) taking the O&M responsibility of the irrigation system which is legally ensured under
the Irrigation Ordinance Act No. 13 of 1994.

C. Planning , Monitoring and Evaluation, Learning, Knowledge Management

Planning

68
see Annex 14 for elements of a Memorandum of Understanding
69
or strengthening of existing groups

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110. The AWPB, to be prepared by the PMO, would be structured according to the sub-
components and activities as they appear in the Costab tables. The lead activity in the plan is the
rehabilitation of the irrigation infrastructure (Cost Tables, Annex 9). The other main project activities,
such as group formation and strengthening; farmer training in water management; extension; and
marketing need to be planned in parallel or in sequence with the irrigation planning.
111. All planning work would be supervised by the Project Manager. Planning the irrigation works
would be the responsibility of the Irrigation Engineer. For the design and supervision of the works on
the main canal and the drainage canals, s/he will draft an MOU with PID and ensure the speedy
review and approval by the Project Director, the PID, the NSC and IFAD. The design work would be
st
initiated by PID in 1 project year. The tendering for the works on the main canals and the drainage
canals would be planned and implemented by the Irrigation engineer on the basis of tender
documents prepared by PID and approved by the Project Director, in collaboration with the
procurement specialist in the PMO.
112. The planning of all other irrigation infrastructure works and those for farm roads over three
years would be the responsibility of the Irrigation Engineer, taking into account progress on the main
canals. The priority for works, as suggested above, would be respected. Tenders would be prepared
in collaboration with the procurement specialist for contractors for design and supervision and for other
contractors for the implementation of the works. Contract management would be ensured by the
irrigation engineer in collaboration with the procurement specialist. The irrigation engineer would also
plan the implementation of agro-well construction, both in the lowlands and the uplands.
113. The social mobilisation and inclusion activities, such as strengthening existing FOs, the
formation of new groups as required by the Bulk Water Allocation system, promoting of women
participation, formation of women and youth groups for vegetable production as well as the
establishment of women groups for micro-finance would be undertaken in parallel to works on the
main canal. The FOs with the women members with enhanced capacities through these activities
would be involved in irrigation planning activities which will take place subsequently to the canal
rehabilitation. The responsibility of inclusive planning rests with the gender and social mobilisation
specialist, in collaboration with the irrigation engineer, PID and the Provincial Department for Agrarian
Services. Selection of NGOs, who would assist them, would be on the basis of a national tender.
114. Water management will remain the responsibility of the District Secretary, PID and farmer
representatives in the Cultivation Committee. However, the committee will only decide on the annual
water allocation for each FO or distribution group, according to their respective command area. The
choice of the cropping pattern would be left to each group. In this, the private sector in partnership
with the Project would indicate its demand for quality products, and the terms of possible forward
contracts.
115. Training for water management of PID staff and farmers would be planned by the irrigation
engineer, tendering for an appropriate consultant group or NGO. The required support in inputs
supply, extension and marketing would be planned by the agricultural economist of the PMO, in
collaboration with the Provincial Department of Agriculture and the private sector. The Project would
negotiate with all potential private sector companies (see Appendix III, Mini-Market Study, of WP 4 for
the list of such potential firms) on one-to-one basis during the planning stage to develop market
linkages. Upland agricultural development would be planned by the agricultural economist, in
collaboration with the Department of Agriculture.
116. All activity plans would be reviewed by the Project Manager and if acceptable, integrated in
the Project’s AWPB. This would be submitted by the Project Director to DPCC and NSC for review
and approval. The AWPB is subject to IFAD approval; and the approval of the first AWPB by IFAD is a
condition for disbursement.
70
117. Monitoring and Evaluation, and Knowledge Management The M&E Officer of the PMO
would draw up the M&E Plan, operationalise the Log-frame, train all PMO staff in M&E and KM
functions and develop simple formats for progress reporting. S/he would maintain and report IFAD
RIMS table. Collection of baseline data from a variety of sources, including household surveys in the
project area and the RIMS anchor indicators, would provide the basis for impact assessments.
Household surveys would be undertaken to assess project impact; and an annual outcome surveys
would be carried out preferably from end of PY2. At farmer level, participatory M&E performance
indicators will be set by the community during the planning process; these indicators including FOs’

70
See Annex 6

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membership and leadership performance, their capacity to manage financing etc. would be monitored
by them during implementation and assessed during subsequent planning cycles. Two independent
rd
assessments by an agency, acceptable to IFAD, would assess the project impact in 3 year prior to
th
the Mid-term Review (MTR), and in 5 year at the time of project completion review. Several methods
would be applied for knowledge management, such as the publication of a “Project News Letter” with
contributions from project beneficiaries, production of CD/DVDs showing innovative approaches,
establishing a “Project Website”, annual workshops, seminars and events planned to share local
knowledge including Bulk Water Allocation system specific experiences and information with other
donor assisted projects in the Northern and North East-Provinces and also with all other IFAD projects
locally and abroad, through IFAD Asia Web (see Annex 6 for details). The knowledge products that
will be generated and supported by the Project will be included in the next RB-COSOP development
process.
D. Financial Management, Procurement and Governance
71
Financial management

118. Accounts A Designated Account in USD would be opened by the Ministry of Finance (MOF)
in the Central Bank. In addition, there will be a project account in LKR to be handled by the PMO.
The signatories to the PMO account would be (i) Project Director; (ii) Project Manager and (iii)
Accountant. The Accountant will co-sign with either the Project Director or, in his/her absence, with
the Project Manager. Government financial reporting procedures will be followed.
119. The PMO will maintain appropriate financial records and accounts in accordance with
government systems. These accounts will follow generally accepted accounting practices and will
reflect the progress of the Project and identify its resources, operations and expenditures. The project
accounts will reflect all financial transactions during the project period for the IFAD loan, and
government financing by project component and separately by standard expenditure categories. The
project accounts will be maintained separately. The PMO will consolidate the project accounts and
submit annual financial statements of project expenditures for each fiscal year to IFAD no later than
st
three months after the close of the fiscal year, i.e. to report by 31 March of each year.
120. All implementing agencies (i.e., Provincial Departments responsible for irrigation, agriculture,
and agrarian services) would keep separate accounts for all transactions involving project finance.
These accounts would be available on request by the PMO Internal Auditor, project supervision /
review missions and the annual audit.
121. MOF will be responsible for the foreign exchange risks and repayment of the principal and the
service charge on the loan to IFAD.
122. Flow of funds The IFAD financing will be disbursed over five years. The disbursement
conditions include: (i) approval by IFAD of the first AWPB, including the procurement plan for the initial
18 months of the project implementation period; and (ii) approval of the Project Implementation
Manual by IFAD.
123. Funds from the IFAD loan will flow to the Special Account operated by the Ministry of Finance.
On request from MOF, IFAD will make an initial deposit from the Loan Account at IFAD to the Special
Account equal to approximately six months’ worth of eligible expenditures of IFAD share (up to a
maximum of 10% of the loan amount). Funds from the Special Account can finance all IFAD
disbursement categories. Replenishment of the Special Account from the Loan Account at IFAD will
be by way of withdrawal applications, supported by appropriate documentation or certified statements
of expenditure prepared by the PMO, endorsed by MLGPC and submitted to IFAD for approval.
124. On request from the MLGPC, and in accordance with approved project AWPBs, MOF will
advance the IFAD loan funds quarterly in advance from the Special Account in USD to the project
account held in LKR by PMO.
125. Counterpart Funds: The government will include the project AWPBs in the Provincial and
National Public Investment Programmes and will, from 2012 until the end of the project period in 2016,
provide an annual government counterpart contribution to the MLGPC LKR account as required by the
project implementation to finance the project activities. The total government contribution is
approximately USD 3.2 million. Government counterpart funds will be used for part of the salaries and

71
see Annex 7

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operating costs and will finance all taxes and duties. These funds will flow through the Treasury in
accordance with government procedures.
126. Annual Audit The Sri Lankan Auditor General will audit the project accounts in appropriate
time which is generally during the first quarter of the following year for the previous fiscal year. The
government shall confirm during loan negotiations the appointment of the Auditor General to
undertake the audit of the Project. The audit will be carried out by the appointed auditors in
accordance with the standard terms of reference issued by the Auditor General, supplemented by
additional requirements from IFAD, if found necessary. The audit report on the financial statements,
utilisation of resources, operations and management of the Project shall be delivered to IFAD within
six months of the end of each fiscal year.
Procurement
127. Procurement would be carried out in accordance with the IFAD Procurement Guidelines.
Procurement modalities are specified in Annex 8 and the detail cost tables presented in the Working
Paper 8. Taking into account its capacity, the PID would carry out the design and supervision of works
on the main canals and the drainage canals. Implementation of works would be contracted on the
basis of a tender. All other infrastructure design, implementation and supervision work would be
outsourced through tenders. Technical support for calibration, staff and farmer training in water
management and system operations would also be contracted. Where FOs have proven capacity to
handle works contracts, they would be eligible for direct contracts for specific works. Social
mobilisation and inclusion activities would be contracted to an NGO on the basis of a tender.
128. The Project would sign Memoranda of Understanding with the Provincial Departments of
Irrigation; of Agriculture for extension support; and of Agrarian Services for support in group formation
and training. A Project Agreement would be signed between private sector companies and MLGPC
as the Lead Project Agency.
Governance
129. The PMO professional staff would include an Internal Auditor. The responsibilities of the
internal auditor will be among others, to carry out random spot checks of all financial transactions,
including procurement, stock management, etc. at all agencies involved in project planning and
implementation. S/he will report to the Project Director. Controls by the Internal Auditor will always be
ex-post, s/he would not be involved in the actual financial management in the Project. That is the
responsibility of the Project Director, the Project Manager and the Accountant.
E. Supervision
130. IFAD will directly supervise the Project. It is suggested that two supervision missions are
planned in the year following loan effectiveness. These need to include the CPM, CPO and expertise
in a) irrigation engineering; b) legal and technical aspects (MOUs, Project Agreement, financial
management, etc.); and (c) Gender and Social Inclusion Officer. It is ensured that each mission will
have at least one Tamil speaking mission member. It is also proposed that one mission per year will
be fielded from the second year of the Project.
131. The key features which will require continued attention to allow an early start of the project
are: a) the selection and appointment of the Project Director and the Project Manager; b) the early
establishment of the project management structure, including the NSC and the PMO; c) the drafting
and negotiation of Memoranda of Understanding with the Irrigation Department, the Agriculture
Department and the Agrarian Services Department, and of a Project Agreement with the private
sector; and d) the early start of design work for main and drainage canals by PID. It is recommended
that the preparation of the agreements, except the one with the private sector, under c) would be
undertaken with implementation support before loan effectiveness.
F. Risk Identification and Mitigation
Global risk
132. The expected impact of climate change are higher average temperatures and increasing soil
moisture deficits. The Project would introduce an innovative water management system, involving the
farmers directly, which has a proven effect of increasing water efficiency. A gradual shift from paddy
cultivation towards higher value vegetables during yala season and other crops would reduce overall
water requirements.
Country risk

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 Sri Lanka: Iranamadu Irrigation Development Project
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133. The occurrence of natural disasters, like floods, might have a significant impact on achieving
the project objectives by a) diverting resources for emergency purposes and b) damage caused to
rehabilitated infrastructure. In such cases, the project activities would need to be re-designed to
adjust to the then prevailing situation.
Project risk
134. Project implementation could face some risks, the most important of which are noted in the
Table below. As indicated in the Table, many measures have been incorporated in design to lower
these risks.
Risks Risk Risk reduction approach Residual risk
before
mitigation
Component 1: Irrigation rehabilitation
Social and Management Risks
1. Continuation of Medium a. Accurate planning of rehabilitation time Low
irrigation based livelihood to High coinciding with yala cultivation when there is
activities during canal minimum cultivation. Works on sections of
rehabilitation the main canal and distribution canals need
to proceed in parallel to ensure their
completion before the successive seasons.
b. Allocate farm lands from non-rehabilitated
areas to those who will be affected to
compensate the loss.
c. Include farmers in planning activities
2. Reluctance of the PID High a. Building of awareness by training & Medium to Low
staff to follow new organizing field tours to project areas where Alternatives: a)
innovations introduced these new systems are being practiced demonstrate the
such as BWA and Riverine b. Undertake pilot level activities negative budgetary
effects if BWA is not
Forestry which are new
adopted, & b)
concepts to this region strengthen FOs to
demand such a
system.
3. Overcome the Medium a. Soil survey to demonstrate areas which are Low
traditional belief that suitable for OFC and introduction of markets
Irnamadu tank is meant for OFC
only for paddy cultivation
4. Overstretching of Medium b. Gender sensitive planning Medium to Low
women time as they will c. Proper division of labour will be focused
get involved in bulk water
allocation system which
may affect the domestic
affairs
Component 2: Production and Marketing
Economic Risks
1. Crop failures and yield Medium a. Land and soil suitability assessment before Low
reduction recommending / establishing crops
b. Appropriate on-farm investment to reduce
water risk (agro-wells etc)
c. Training farmers to adopt good agricultural
and management practices (crop demos
etc.)
2. Proposed forward High a. Joint workshops of all business parties and Medium
sales contracts between farmers about the importance of mutual Note: awareness
farmers and agribusiness dependence and honouring negotiated creation about
companies can face prices and volumes. contract honouring &
trust building
contract breaching by
interventions will be
either party important (experience
has shown that
contract breach is
more common from
producers’ side).
3. Getting the women and High to a. Provide programme investments in group Medium to low
youth groups mobilized medium mobilization and training
and initiating access to b. Close monitoring
micro-credit

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Environmental Risks
4. Soil degradation with High a. Farmer training Low
continuous cropping and b. Application of good agricultural and
excessive fertilizer conservation practices – crop demos
application with subsidies
Component 3: Programme Management
1. Deficiencies in the High a. Strict adherence to IFAD Loan conditions Low
recruitment of the key staff and GOSL rules and regulations in the staff
of the PMO from the recruitment
province b. Borrower’s (i.e. the Ministry of Finance and
Planning) close supervision of the staff
recruitment
c. Recruitment of staff prior to programme
effectiveness
2. High staff turnover High a. Appoint government officers on secondment Low
basis where possible
b. Project Director is backed up by the
appointment of a Project Manager for the
daily operations of PMO
c. Provision of a performance based incentives
in addition to the salaries
3. Proper awareness Medium a. Timely interventions with start-up workshop Low
about the IFAD b. Repeated training .
procedures in programme c. Exchange visits to other IFAD projects in the
management and loan country
administration d. Update and complete the Project
Implementation Manuel.
e. Direct IFAD supervision and the involvement
of the Country Officer
f. Borrower’s monitoring and supervising the
programme closely and frequently
4. Ineffective monitoring Medium a. Operationalising of the programme log- Low
and delays in frame soon after effectiveness;
st
implementing the b. Prepare M&E manual in the 1 quarter of the
st
management information 1 year of the programme and conduct the
systems necessary workshops.
c. Conduct the baseline study sufficiently early
5. The weak financial Medium a. Capacity building efforts and implementation Low
management capacity support by IFAD;
b. Inclusion of such issues in the PIM

V. PROJECT COSTS, FINANCING, BENEFITS

A. Project costs
135. The estimated total costs of the Project would amount to LKR 3.22 billion or
72
USD 29.32 million. Costs estimates are based on a local inflation rate of 5.5% per year and a foreign
inflation of 2.0% per year. Contingencies of 10% have been applied to all civil works. The exchange
tare has been maintained stable throughout at 1 USD = LKR 110. About 75% of project base costs
would be for irrigation rehabilitation. Project management costs represent 5% of total base costs.
Contingencies would amount to 25% of base costs.

72
IMF estimate, see Wold Economic Outlook Database, April 2011

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Table 1. Project Costs Summary

% % Total
(LKR '000) (USD '000) Foreign Base
Local Foreign Total Local Foreign Total Exchange Costs
1. INFRASTRUCTURE DEVELOPMENT 1,758,928 122,158 1,881,085 15,990 1,111 17,101 6 73
2. PRODUCTION AND MARKETING 556,265 - 556,265 5,057 - 5,057 - 22
3. PROJECT MANAGEMENT 123,633 20,324 143,957 1,124 185 1,309 14 6
Total BASELINE COSTS 2,438,825 142,481 2,581,307 22,171 1,295 23,466 6 100
Physical Contingencies 162,182 9,294 171,476 1,474 84 1,559 5 7
Price Contingencies 465,465 7,543 473,008 4,231 69 4,300 2 18
Total PROJECT COSTS 3,066,472 159,318 3,225,790 27,877 1,448 29,325 5 125

B. Project Financing
136. Project costs would be financed by Government for USD 3.158 million, representing 10.8% of
total costs, including part of the salary costs and the operating and maintenance costs of the PMO and
all taxes and duties. IFAD would provide a highly concessional loan of USD 22.231 million (75.7%).
The private sector would be expected to finance a part of the costs of extension and inputs for
agricultural production under forward contracts. This would amount to USD 1.23 million or 4.2% of
total costs (see Table 2). According to current practice, farmers not producing for forward contracts
would finance their incremental sustainable input costs through (bank) loans. They would also finance
irrigation maintenance and contribute to matching grants for equipment and agro-wells. Their
contribution would amount to 9% of project cots. Working Paper 8 presents all details of the project
costs.

Table 2. Disbursement accounts by financier (US $ 1000)

The Private
Government IFAD Beneficiaries Sector Total
Amount Amount Amount Amount Amount

1. INFRASTRUCTURE DEVELOPMENT 2,882 18,487 234 - 21,602

2. PRODUCTION AND MARKETING 21 2,453 2,473 1,231 6,177
3. PROJECT MANAGEMENT 255 1,291 - - 1,546
Total PROJECT COSTS 3,158 22,231 2,706 1,231 29,325

The Private
Government IFAD Beneficiaries Sector Total
Amount Amount Amount Amount Amount
I. Investment Costs
A. Civil Work 2,682 16,825 26 - 19,532
B. Vehicle 154 94 - - 248
C. Equipment & Materials 127 810 - - 937
D. Advisory Services & Studies 95 1,995 - - 2,090
E. Training groups in O&M 2 1,195 - - 1,196
F. Inputs, sustainable agriculture - - 2,447 - 2,447
G. Training, inputs, marketing - 400 - 1,231 1,631
Total Investment Costs 3,059 21,319 2,473 1,231 28,082
II. Recurrent Costs
A. Salaries & Allowances 21 911 - - 932
B. O&M Costs 67 - - - 67
C. Beneficiary Contribution in O&M 11 - 234 - 245
Total Recurrent Costs 99 911 234 - 1,244
Total PROJECT COSTS 3,158 22,231 2,706 1,231 29,325

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C. Summary Benefit and Economic Analysis

Agricultural benefits
137. At present, the Iranamadu scheme is working below capacity and in the Without Project
situation that would continue to be the case. During maha, about 40% of the total 8 455 ha, or
3 380 ha would be cultivated with paddy, while in yala not more than 1691 ha would be under paddy.
138. In the With Project situation, during maha the total command area of 8 455 ha would be under
paddy while during yala, 40% or 3 382 ha would be under diversified crops such as vegetables and
about 1700 ha would be under paddy at full development (see WP 7). In between the two main
season, a sandwich crop would be grown on 1 214 ha. Agro-wells would serve an estimated 81 ha.
139. The private sector buyers would provide forward contracts for sustainably grown vegetables
during the yala season. The maha crops would be sold in the market.
140. Sustainable techniques would be based on using as much as possible locally available
biomass resources, such as compost, green manure, etc. It is estimated that input costs would be
20% lower than cropping with inorganic inputs. On the other hand, labour costs would be 25% higher
for sustainable techniques. Crops produced under forward contracts would fetch a premium price of
15% over the bulk market price, due to the sustainable production under forward contracts as well as
the improved quality of products.
Benefits and beneficiaries
141. It is anticipated that the 7 000 households in the project area would benefit from improved
irrigation infrastructure, crop diversification and ensured markets through forward contracts. A typical
household cropping at present 0.8 ha of paddy during maha and 0.4ha of vegetables during yala
would earn a net income of LKR 122 348 or LKR 2 913 per person per month, which is below the
poverty line of LKR 3 318. In the With project situation, the typical household would farm 1.5 ha
during maha with paddy and 0.8 ha with vegetables during yala. This would yield an income of
LKR 257 000 or LKR 6 119 per person per month, 84% above the poverty line.
Other benefits
142. Bulk Water Allocation The introduction of this participatory water management system has a
proven positive impact on water efficiency and crop productivity. In this manner, in addition to
improving farmer’s incomes, it is an appropriate measure to mitigate the impact of climate change.
143. Contract farming Direct purchases by Corporate buyers from farmer groups generates
important benefits as demonstrated in Cargills’ collection centres in Jaffna. Proper transport in crates
rather than in bags reduces post-harvest losses, which were 20%-30% of the harvest. In addition, the
use of a properly calibrated weighing scale adds another 10% to farmer benefits.
144. Women The active participation of women in water management, crop production and
marketing would provide a strong basis for their empowerment.
Rate of return
145. The overall economic rate of return, EIRR of the Project is estimated at 38% as the base case.
The reason why the return is relatively high is that rehabilitation investments usually are more
profitable, and in this case allow a diversification into higher value crops. When the tank rehabilitation
cost of the ADB project is included, the EIRR decreases to 29% making the IIDP Project still
economically justifiable. Results of the possible scenarios are shown in the table below. With the
sensitivity analysis applied to an unlikely event of simultaneous increase in costs of 10% and a one
year delay in getting benefits, the EIRR would come down to 12%, still viable. The Project is sensitive
to benefits reductions too. However the analyses used the conservative production targets and full
production after 3 years. As such the likelihood of 20% benefit decrease is very remote.
Scenario Base case - EIRR 1 year delay in benefits - EIRR
Without ADB Capital cost for Iranamadu Tank Rehabilitation
Base case 38% 17%
10% cost increase 29% 12%
20% cost increase 20% 6%
10% benefit reduction 25% 10%
20% benefit reduction 12% 1%
20-year planning period 39% 19%
With ADB Capital cost for Iranamadu Tank Rehabilitation

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Base case 29% 13%

10% cost increase 21% 8%
20% cost increase 14% 3%
10% benefit reduction 18% 7%
20% benefit reduction 7% -2%
20-year planning period 30% 16%

146. Thus, this analysis indicates the Project is robust, even with tank rehabilitation cost, and would
remain economically viable under foreseeable adverse conditions except drastic benefits reductions.
It is however quite sensitive to delays in getting project benefits. The proper timing of all works and the
simultaneous group formation and training of farmers for improving livelihood activities would reduce
this risk.
D. Sustainability

147. Sustainability of project outputs and impact would be enhanced by the following features:
 From the beginning the degree of ownership of the irrigation infrastructure with farmers and
local government is higher than in an “ordinary” scheme because infrastructure improvement
was a condition for the use of part of the water from the reservoir for Jaffna drinking water
supply.
 The sense of ownership and sustainability would be further strengthened by participatory
design. For the design of the rehabilitation of the distribution and field canals, participatory
planning would be undertaken, after having operated the rehabilitated main canal for one
season so that agreed design needs for these canals reflect actual felt needs rather than
suggested solutions from outsiders.
 The introduction of the innovative Bulk Water Allocation system has a proven effect on
sustainability as it leads to fewer water conflicts, a reduced incidence of crop failures and an
increased irrigation intensity. Also, farmers are actively involved in maintenance and there is a
reduction in broken gates, broken pipe outlets and cases of silted canals (in System H, see
Annex 4).
 The promotion of sustainable agriculture would protect farmers against the financial risk of
possible changes in the generous subsidies for chemical inputs. At the same time, it would
reduce the negative environmental impact of agriculture and this is essential as demonstrated
by the case of Jaffna, where the groundwater is no longer usable for drinking purposes,
requiring fresh water from the same Iranamadu reservoir.
 In order to ensure sustainable agriculture being supported and to minimize hazardous
environmental damages to soil and water the usage of chemical inputs should be minimized.
An effective awareness creation will support these efforts.

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I. KEY FILES

Table 1: Rural Poverty and Agricultural/Rural Sector Issues

Priority Areas Affected Group Major Issues Actions Needed

Rural development in the Rural households  Conflict and war situation has taken lives,  Poverty reduction though rehabilitation of infrastructure
North destroyed public and private assets and  Support to resettlers in asset building and productive use of recovered
dispersed the population. As a result, high assets.
poverty incidence
 Post-conflict situation with need to rebuild social
and public institutions, as well as assets and
infrastructure
 Resettlement
Irrigated agriculture in the Resettling households  High potential for irrigated agriculture, main  Irrigation rehabilitation
North systems not operating due to lack of  Staff and farmer training in demand based water management
maintenance and previous war situation  Support to diversification in production and marketing
 Need to (re-)build asset base  Emergency food aid and starters packages for agriculture have been
 Introduction of demand based water provided to resettling households
management  Access to appropriate grant an loan funding
Agriculture Smallholders  Rainfed agriculture subject to weather risks  Small irrigation development, taking into account groundwater resources
(floods, droughts) and the need of their replenishment
 Lack of access to more productive and  Strengthening of understaffed public extension services, improving
sustainable technologies capacity in sustainable techniques
 Unsustainable subsidies for chemical inputs  Strengthening private extension for sustainable agriculture
 Low incomes from paddy and un-diversified  Promoting quality based direct marketing and contract farming
cropping
 Unorganized marketing, individual bulk selling to
oligopsony middlemen, post-harvest losses.
 Local pollution of groundwater resources by
intensive cropping (ex. Jaffna)
Agriculture Landless  Insufficient off-farm economic opportunities,  Development of off-farm income generating opportunities and
inducing labour migration enterprises
 Homestead farming  Support to homestead farming

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Table 2: ORGANISATION CAPABILITIES M ATRIX

Organisation Strengths Weaknesses Opportunities/Threats Remarks

Central Government  High political patronage for the  Less flexible administrative and  Political priority for developing  Common ground for
Ministries development of Northern Province financial procedures which limits Northern Province development and poverty
 Expansion of poverty alleviation project activity performances  Engineering/infrastructure led reduction that could be
programmes to Northern Province.  Activities are not necessarily pro- development shared with IFAD’s strategic
 Project implementation and poor  Sharpened targeting will have an framework for poverty
coordination experience  Poor targeting and available accelerated impact on poverty alleviation
 Previous and on-going projects in resources are thinly spread amongst alleviation
the country which provides the needy  Streamlined flow of funds between
institutional experiences  Political interference and patronage central and provincial government
 Clearly defined national programmes at all levels and project beneficiaries
for Northern Province Development  Overlapping roles and  Strong and expanding private sector
and providing social security safety responsibilities some time at the responding to commercial
nets expense of the focus opportunities
 Wide ministerial range concerned  Highly bureaucratic procedures
with rural development,  Difficulties in working as an inter
agribusiness, primary industry and ministerial/provincial team
social service delivery
 Well trained staff
Provincial Public Sector  Cadre of well trained staff  Chronic staff shortages  Competition from other line ministry  Conflict in roles between
Services  Willingness to work in participation  Limited development budget staff ministry (project) staff and
with local groups  Limitation and delays in fund flow  Inject new ideas after skill provincial staff
 Potential for service delivery in the from the central government acquisition  Correct identification of
target rural areas  Poor pay / other working conditions  Guide/supervise community responsibilities
 Project management experience at and low level of incentives programmes
the provincial level  Duplication of field activities with  Relatively flexible administrative
 Previous experience with similar central government institutions. systems where by-laws could be
projects used to facilitate project
implementation
 Possibility of coordination with the
central government through a
separate Ministry
Private Sector  Increase in presence  Profitability is legitimate consideration  Source of demand led access to  Involve private sector in
 Locally recruited staff  Growing awareness and resources for markets market orientated
 Keen to establish linkages with social responsibility in larger  Direct purchases moralises markets, interventions as a project
farmers / producers / farming corporations reduces costs and product losses partner
community and CBOs  Knowledge of district resources
 Strong local entrepreneurial capacity  Familiarity with production, quality,
processing and marketing systems
 Some limited previous project
exposure.

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Table 2: ORGANISATION COMPTABILITIES MATRIX (cont’ed)

Organisation Strengths Weaknesses Opportunities/Threats Remarks

Farming Communities,  Presence of many social  Strong traditional community  Positive experience in farmer water  Community sensitisation
CBOs organisations hierarchy and leadership /authority management and maintenance in  Potential to learn from
 High literacy level and agricultural structure which in certain cases System H various CBO experience
knowledge of farmers exclude the marginalised  Potential for better involvement of facilitated by the previous
 Traditional resource management communities women in membership and IFAD projects
 Presence of experience in  Low participation of women in management
community assets management and membership and management
willingness to function as groups for
technology transfer, management of
assets, and developing self-help
initiatives
NGOs  Accumulated knowledge of the  Limited presence in programme area  Flexible administrative rules for  Availability of a range of
functioning of CBOs  Programmes concentrated in investing physical and financial NGOs that could be
 Working in atmosphere of conflict location specific areas resources in the rural sector mobilised to take
resolution  Limited permanent staff resources  Introduce the Sustainable Livelihood partnership with project
 Wide range of organisations operating Approach to rural poverty activities
at field level eradication
 Country representation / presence
 Commercial outlook in interventions

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Table 3: COMPLEMENTARY DONOR INITIATIVE/PARTNERSHIP POTENTIAL

Complementarities
Donor/Agency Nature of Programme Programme Coverage Status
Synergy Potential
A. Multilateral Programs
World Bank  Land titling & related services  National  Commenced  No Potential
 Gamaneguma (poverty alleviation) programme  National  Phase II Commenced  Strong
 Dam safety project  North & East (2010-2014)  High potential
 Commenced
National Agribusiness  Development of Agribusiness  National  Commenced  Strong
Development Programme
(IFAD)
ADB: North East Community  Repairing damaged schools,  North and East  On-going  High potential
Development and hospitals, and roads and providing tractors
Restoration Project to farmers’ cooperatives
(NECORD) II.
Conflict Affected Areas  Road works and installing medium and rural  North and East  On-going  High potential
Rebuilding electrification schemes, inland fisheries
Project (CARRP)
ADB: Jaffna and  Head works of Iranamadu Tank and Water supply and  Jaffna & Killinochichi  Proposed  Strong
Killinochchi water supply Sanitation programme to Jaffna and Killinochchi districts
and Sanitation Project

B. Bilateral Programs
USAID  Connecting Regional Economies (2008 – 2011):  Country-wide  On-going  Strong
Development of livelihood options, development of
agriculture based value chains, promote business
enabling environment  Northern Province  On-going  Strong
 Public Private Alliance Programme: Skill development
training in constriction, garments, etc.
GTZ  Vocational training for women & youth  Country-wide  On-going  Strong
 Micro-finance  Central & Northern  On-going  Strong
 Private sector support (Value chains) Province
 National  On-going  Strong

Poverty alleviation Micro-  Setting up of an effective credit delivery mechanism for  National  On-going (commenced in  Strong
Financing Project II (JBIC) channelling formal credit t income generating activities 2010)
 Poverty eradication of identified borrows through
promotion of income generating activities
UNDP  Disaster risk management through partnership (2009-  North and East  On-going  Strong
2012): Awareness on affordable and sustainable risk
reduction technologies

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Complementarities
Donor/Agency Nature of Programme Programme Coverage Status
Synergy Potential
C. NGOs
1. SARVODAYA  Rural community development / capacity building / women  National  Ongoing  Strong
training and enterprise development training

2. SEWALANKA  Livelihood development activities, mine risk education  National  Ongoing  Strong
programme, micro finance, raising health awareness.
D. Government of Sri Lanka
New Comprehensive Rural  Provision of working capital requirement of small farmers:  National  Ongoing  Strong
Credit Scheme (NCRCS)  Short-term production loan
 Production of seeds and planting material
 Purchase of agricultural commodities under Forward
Sales Contracts
Second Perennial Crop  Commercialization of perennial crop sector, increasing  National  Ongoing  Strong
Development Project: production, nursery development, post harvest handling
Revolving fund 2006-2014. and processing activities and marketing.

Agro-Livestock  Provision of assets  National (PFIs own  Ongoing  Strong

Development Project funds and Government
Subsidy)
Crop specific subsidy  Coconut (Replanting and New Planting)  National  Ongoing  Strong
programmes  Rubber replanting
Northern Spring  To assist IDPs, and others settled in the provinces to re  Northern and  Ongoing  Strong
start their economic activities. Eastern Province
Krushi Navodaya Scheme  Provision of medium term loans for activities in agriculture  National  Ongoing  Strong
and animal husbandry including agro related industry and
micro and drip irrigation PFIs own funds and Government
Interest Subsidy. Total fund delivery during operational
Period expected to be Rs.3,000 million
NCP Canal development  To provide water for irrigation and domestic purposes for  North  Pre-feasibility has been  Strong
the North completed

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Table 4: TARGET GROUP PRIORITY NEEDS AND PROJECT PROPOSALS

Typology Poverty Levels And Causes Coping Actions Priority Needs Project Response
Resettled women and  estimated poverty incidence up to  crop production where possible  rehabilitation of irrigation  rehabilitation of irrigation infrastructure
men in households in 78%  labour in (booming) construction infrastructure  diversification in cropping patterns
Iranamadu  causes: past conflict, loss of assets, sector  diversification in cropping patterns  extension and marketing support
lack of maintenance and support  receiving remittances  extension and marketing support  off-farm income generating activities
services  off-farm income generating
activities

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Table 5: STAKEHOLDER M ATRIX/PROJECT ACTORS AND ROLES

Other Possible
Perennial Institutions Potential Contractors/ Partners in
Component Sub-Component Coverage Involved Periodic Inputs Execution
Infrastructure development Irrigation rehabilitation Iranamadu scheme Provincial Irrigation Private contractors for
Department design, supervision and
implementation of works
Other infrastructure District secretary Private contractors, Farmer
organisations
Production and marketing Social mobilisation and training Department of Agrarian Private consultants, NGOs
services
Department of Agriculture
Production, extension, marketing Department of Agriculture Cargills as project
District secretary and partner
farmers for water
allocation
Other agricultural development and off-farm Department of Agriculture NGOs
activities
Project management Provincial Ministry of
Agriculture, Livestock and
Irrigation

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEXES

ANNEXES

ANNEX 1: COUNTRY AND RURAL CONTEXT BACKGROUND....................................................................................35

ANNEX 2: POVERTY, TARGETING AND GENDER......................................................................................................43
ANNEX 3: COUNTRY PERFORMANCE AND LESSONS LEARNED...............................................................................49
ANNEX 4: DETAILED PROJECT DESCRIPTION ..........................................................................................................51
ANNEX 5: INSTITUTIONAL ASPECTS AND IMPLEMENTATION ARRANGEMENTS ....................................................60
ANNEX 6: PLANING, MONITORING AND EVALUATION, LEARNING AND KNOWLEDGE MANAGEMENT.................77
ANNEX 7: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS......................................................83
ANNEX 8: PROCUREMENT......................................................................................................................................87
ANNEX 9: PROJECT COST AND FINANCING.............................................................................................................93
ANNEX 10: ECONOMIC AND FINANCIAL ANALYSIS...............................................................................................102
ANNEX 11: PROJECT IMPLEMENTATION MANUAL – ANNOTATED OUTLINE........................................................106
ANNEX 12: COMPLIANCE WITH IFAD POLICIES.....................................................................................................123
ANNEX 13: CONTENT OF THE PROJECT LIFE FILES ................................................................................................126
ANNEX 14: DRAFT MEMORANDUM OF UNDERSTANDING ..................................................................................127
ANNEX 15: FACTS AND FIGURES...........................................................................................................................129

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ANNEX 1: COUNTRY AND RURAL CONTEXT BACKGROUND

I. INTRODUCTION

1. The island of Sri Lanka has a land area of 65,610 sq. km. and an estimated population of
20.63 million in 2010. Sri Lanka’s per capita income was USD 2,399 in 2010. The average economic
growth of Sri Lanka has been varying from about 5% - 8% during the past decade, except in 2009
which was recorded 3.5%. The economy of Sri Lanka expected to recover steadily and grow above
the pre-crisis level in the medium term facilitated largely by the positive outlook brought about by the
end of the conflict.
2. The improved macroeconomic environment, increased investor confidence, new investment,
opportunities created with the end of the conflict, together with the commitment of the Government,
speedy implementation of infrastructure development, rehabilitation and reconstruction of activities of
Eastern and Northern provinces and expected recovery of the global economy would provide the
required incentives for high growth of the economy. A higher growth of 8% -10% per cent is expected
in the medium term.
3. Sri Lanka’s social indicators such as life expectancy, literacy and mortality rates are also well
above those in comparable developing countries and are often on par with many developed countries.
nd
The HDI for Sri Lanka is 0.759, which gives the country a rank of 102 out of 182 countries (2007).
At 0.759, Sri Lanka is closed to the middle-income group’s average HDI of 0.770. In terms of the
Millennium Development Goals (MDGs), analyses show that using national aggregate figures, the
country has already met or is in line to achieve most of the MDGs by 2015.
4. The above national aggregate indicators however do not show the regional imbalance of
economic growth, poverty, and inequality. The national poverty level has declined to 7.2% in 2009
from 22.7% in 2002. The prevalence of poverty in geographic regions is still high, which demonstrate
that the poor have not sufficiently benefited from the higher economic growth.
5. A notable achievement in recent years is the deceleration in inflation, a result of the prudent
monetary policy measures adopted over the last few years and the significant decline in global
commodity prices. Inflation, the Consumers’ Price Index, which reached 24.4% in June 2008,
declined sharply to 6.9% by end of 2010. The macroeconomic policies are geared to achieving
sustainable high economic growth with macroeconomic stability as well as greater regional and
income equality. Policies are market-oriented and outward looking with both the public and private
sectors playing key roles in the economy.
II. CLIMATIC CONDITION

6. Sri Lanka has two main rainy spells and, based on the amount of rain receives, the island can
be divided into three main zones: dry, intermediate and wet. The North-East monsoon (October to
February) brings rain to all parts of the island whereas, the South-West monsoon (May to August)
brings rain only to the south west part. The area that receives rain from both monsoons demarcates
the wet zone (rainfall >2500mm per year) while the area that does not get rain from the South-West
monsoon demarcates the dry zone (rainfall <1750mm per year) of the island. The area in between
these two zones, intermediate zone, receives a little rain from the South West monsoon (rainfall >1750
rd
mm but <2500 mm per year). The Dry Zone covers about 2/3 of the land area. The North-East
monsoon is associated with the major agricultural season of the country and called the maha or major
season. The agricultural season associated with the South-West monsoon is called the yala season
(minor season).

III. GROWTH AND COMPOSITION GDP

7. The agricultural sector shows a positive growth ranging from 1.6 to 7.5 during the past
decade, except 2003. The share of agricultural GDP among different sub sectors of agriculture shows
that vegetables (18%), paddy (11%), tea (12%), coconut (9%), livestock (10%), high land crops (8%)
and fishing (13%) contributes to more than 80% of the agricultural GDP. The share of the Industrial
Sector increased to 28.7% in 2010. The factory industry accounts for more than 90 per cent of the
manufacturing sector output. Industrial output is dominated by the textile and garments industry which
is also the major foreign exchange earner, accounting for about 50% of total export earnings in 2010.
The services sector, which consists of the largest share of 59.3% of GDP. Liberalisation, private sector

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participation, modernisation and increased competition have contributed to the expansion of the
service sector. A growth of 8% is projected during the period of 2010 to 2016. It is targeted to
maintain a 6% annual growth in the agriculture sector including fisheries for the medium term and 8%
in the long term. In terms of the development potentials demonstrated in the export crop sector and
the diversified agriculture, livestock sector and revived fisheries sector, the projected annual growth of
8% is an achievable expectation.

IV. LAND USE PATTERN

8. According to the Census of Agriculture of 2002 (the latest available), the total agricultural land
of the country is 1.86 million ha and permanent crops and paddy lands occupy about 49% and 27% of
the agricultural lands respectively. The area under commercial small holding sector (holdings less
than 8 ha), which represent about 90% of total agricultural holding, has increased by 6.7% during the
period of 1982 to 2002. During the same period, the total number of holdings has increased by 82%
while average size of the small holding sector has decreased from 1.97 ac (0.8 ha) in 1982 to 1.2 ac
(0.5 ha) in 2002. This indicates the degree of land fragmentations (demographic pressure) and also
gives an indirect measure of workforce that remains in agriculture.

V. AGRICULTURE AND ECONOMY

9. The regional distribution of GDP indicates the dominance of agriculture in all provinces except
Western Province. The share of agriculture in regional GDP ranges from 60-80%. The regional
imbalance in growth is a prime concern in implementing development programmes. The changes in
net agricultural export index show that Sri Lanka has moved from net exporter to net importer status.
The situation indicate that even though Sri Lanka maintains protective trade regime, the demand for
imported products has not seriously affected and the domestic supply responses are not strong
enough to supply local demand. The economic growth of Sri Lanka has exceeded the growth of
population and with positive income elasticity for agricultural products the domestic demand for
agricultural products should have increased.
10. For the past three decades, Sri Lanka has been undertaken important structural reforms,
which call in most cases for market and trade liberalization. The private-led type of growth strategy
with less government intervention has culminated into a more rapid economic growth and openness.
Empirical results indicate that the in the long-run all economic sectors, including agricultural sector,
tend to co-integrate, but, in the short-run, the agricultural sector seems to have a limited role as a
driving force of trade development and the growth of the other sectors of the economy.
11. The heavy dependence of external inputs such as chemical fertilizers (which is heavily
subsidized), pesticides and weedicides and associated environmental issues have become a serious
concern in terms of maintaining an environmentally friendly sustainable production system. Promotion
of application of organic manure, bio-pesticides, soil conservation is imperative in promotion of
sustainable growth in agriculture.
12. The labour force is growing at a declining rate. During the period of 2000 to 2009, the labour
force grew by 11.4%. Agriculture’s share in employment has declined from 47% in 1990 to 33% in
2009. Increase in adoption of labour saving technological innovations in agricultural productions,
decrease in family size, land fragmentation and rise in labour force participation in off-farm jobs have
contributed to reduction of labour supply on farms. The real wage rate of the Import Competing
Agricultural sector shows a downward trend until 1990 but since early 1990 it shows an increasing
trend until mid 2000 and after that it shows a decline. The Export Agricultural Sector’s wage rate had
been on an upward trend until mid 1990s and after that it shows a clear downward trend until mid
2000 and after that it shows an increasing trend.
13. Industry and commerce, and services sectors recorded higher growth rate during the post-
reform period. Despite this growth, real wage rates of these sectors had been decreasing and since
mid 2005, it shows an upward trend. The rice sector has responded to the changes in the wage rates
by mechanization and retained the competitiveness. The competitiveness many import competing
agricultural sub sectors has decreased due to higher wage rates and this has partially compensated
by the improvement of productivity.

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VI. INCOME

14. The income level of all sectors of the economy shows growth in nominal terms. The
73
distribution of income, measured by the Gini coefficient , shows a trend of broadening disparity in all
sectors of the economy. Although agriculture’s economic importance has declined considerably, a
large percentage of rural households -- higher among the poorer -- remain heavily dependent on
income from agricultural activities.
74
15. The estimates by the World Bank (2003), indicate that agricultural households comprise
about half of the poorest of rural households. A higher share of agricultural households and their
higher dependency on agricultural income and higher prevalence of poverty among agricultural
households indicate the importance of agricultural sector development in rural poverty alleviation.
Given the large proportion of poorer households dependent on agriculture, and the large contribution
farming activities make to their aggregate income, the removal of obstacles to raising agricultural
productivity and income are important contributors to poverty reduction.

16. According to the Household Income and Expenditure Survey of 2009/10, based on poverty
75
line, about 7.5% of rural households are poor. The same for the estate sector is about 9.2% . The
majority of agricultural and non-agricultural households are net buyer of foods and therefore, the
general inflation and food-flation could have high impact on food security and rural poverty.

VII. EXTERNAL TRADE

17. Imports of intermediate textiles represent the largest sub-sector in this category accounting for
about 21% of total. This is followed by petroleum, which accounted for 13% of total imports in 2009.
The competitiveness of agricultural exports has improved for many agricultural products. and the
highest advantage remains still on traditional exports such as tea and spices.

18. The ability of the farmers to respond to the price stimulus of trade policies is limited in many
protected agricultural products due to various other constraints such as climatic conditions, pest and
diseases, higher wage rates and increasing cost of supply of non-tradable inputs such as labour,
transport, credit and other services. This situation highlights the necessity of alternative agricultural
policies to promote better crop mix and trade policies to match the solution for poverty, malnutrition
and agricultural income.

VIII. PUBLIC EXPENDITURE

19. Reducing the public expenditure to a level that is consistent with overall development
objectives, is considered to be a main task in overall macroeconomic management. As a part of the
effort to tame the deficit, in 2003, Parliament passed the Fiscal Management (Responsibility) Act
(FMRA). This act makes it mandatory for the Government to reduce both the budget deficit and the
debt-to-GDP ratio to sustainable levels and to improve accountability and transparency in fiscal
management. Despite these attempts, the fiscal deficit in 2009 increased to 9.8%. The main factors
to overrun were faster than expected aid disbursement of infrastructure projects, higher interest
payments, short fall in revenue due to the global recession and post conflict rehabilitation and
humanitarian expenditure and costly demining of conflict affected areas.

IX. FINANCE AND MONEY

20. The main objectives of monetary policy are to achieve price stability. Between 1997 and 1999
monetary policy was gradually relaxed in a bid to stimulate economic growth. However, monetary
policy was tightened again in 2000-2001, in the face of severe pressure on the exchange rate and a
sharp increase in government spending. Following a decline in inflation and inflationary expectations
and stabilisation of the foreign exchange market, monetary policy was relaxed again in 2002 and
2003. Rising inflation prompted another round of monetary tightening at the beginning of the third
quarter of 2004, and such was the situation when the tsunami struck on 26 December 2004. A
73
Gini coefficient is an aggregate inequality measure and can vary between 0 (perfect equality) and 1 (perfect inequality) It was
0.47 in 2009/10 and 0.46 in 1995. (India: 0.368 in 2004 and 0.378 in 1997)
74
Promoting agricultural and rural non-farm sector growth
75
Department of Census and Statistics, 2010

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considerable decline of inflation in late 2009 and early 2010, increase in the reserve ratio may require
relaxation of monetary policy to reduce the appreciation pressure on exchange rates.

21. The formal financial institutions operated in Sri Lanka include: 22 commercial banks, 11 of
which were branches of foreign banks; 14 licensed specialised banks; 26 registered finance
companies; and 58 registered finance leasing establishments. In 1990, banking density stood at 0.42
commercial bank branches per 100,000 persons; by 2010 the density had increased to 1.08 branches
per 100,000 persons due to the establishment of rural banks, in addition to the number of private
banks and their branches, in many rural areas including the North and Eastern provinces.

X. INFLATION

22. The Colombo Consumers’ Price Index (CCPI) has maintained single digit levels since 1999,
except for 2001 when it rose to 14%. By 2002, it was back to below 10%. It was around 6% in 2003.
Rising world oil prices, drought-related supply side shocks and expanding demand pushed inflation
back above the 10% line in 2004 to 2009. The early 2010 period is characterized with single digit
inflation. It is now estimated that the inflation rate will come down to around 3%-4% for the next five
years.

XI. GOVERNANCE

23. Proper organizational capacity, transparency and effective resources allocation are vital to
complete the enormous task of developing the North and the East. The government have to ensure
that cost effective methods are used to minimize the funds required and increase the quality of funds
for the development process. In addition, the ministries and various public sectors that are involved
with implementation of these development programs have to approach it strategically to achieve the
maximum outcome from limited available funds. Transparency in handling these programs is a key
requirement to reduce corruption and waste and gain acceptance by the communities in these areas.

XII. POVERTY REDUCTION STRATEGIES, GOVERNMENT AND DONORS

24. The 10 Years Development Plan for 2007 – 2016, the Mahinda Chinthana, applies a three-
pronged approach to stimulate economic growth and ensure it trickles down equitably: it promotes
a). higher investments; b). improved competitiveness and c) better external trade policies and
infrastructure

25. The strategy focuses on more equitable growth, which the Government feels was neglected in
earlier growth strategies, and argues for a more prominent role for the state in economic development.
It has ruled out further privatization of SOEs, adopting instead a policy of reforming these institutions
to improve service delivery. At the same time, the new strategy proposes to promote private sector
development, and expand the role of public–private partnerships (PPPs), especially in lagging regions.

26. The Plan focuses on infrastructure development to accelerate growth and narrow regional
disparities. Randora, the Government’s infrastructure investment plan, looks at major power, highway,
and port and airport development projects. Various other programs, such as Maga Neguma, look at
rural infrastructure development. These programs are expected to improve connectivity of rural areas
to urban areas and the global economy, seen as a key factor in revitalizing the rural economy. The
Plan aims to improve international competitiveness by creating a vibrant industry sector and
technological innovation. It plans to facilitate private investment in new industrial zones and to upgrade
public service delivery. The framework emphasizes the development of small and medium-sized
enterprises (SMEs), microenterprises, and the self-employed. It also looks at promoting global
integration by strengthening bilateral and regional trade and investment relationships.

27. It will improve the macroeconomic environment, in part by reducing the fiscal deficit to 5% by
2011, through substantially higher revenue collection. Economic growth will be fueled mainly by
significantly higher public and private investment than in the past. By 2011, the 10YDF aims to
increase investment to 34% of GDP from the current 28%, reduce the fiscal deficit to 4.8% of GDP
from the current 7.7%, and raise annual GDP growth to 8.7%. The Plan sets its ambitious annual
sector growth targets at 4.0%−5.0% in agriculture, 7.5%−10.5% in industry, and 8.0%−11.5% in

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services during 2007−2016. This accelerated growth will raise the country’s per capita GDP to USD
3,960 by 2016, and firm up Sri Lanka’s middle-income status. It would also enable the country to meet
all the MDGs.

28. The investment needs under the Plan are substantial (USD 8 billion) and focus primarily on
infrastructure and livelihood development. More than half approximately will be financed through
government resources, one-third through development assistance, 4%−20% through PPPs (this varies
by sector), and 10% from the private sector. More than 55% of the total investment will go to
infrastructure (including urban development), 25% to livelihood development (of which 15% will go to
pension payments), and 8% to education and health. Thus, the plan seeks to rid the country of its
substantial infrastructure deficit, which holds back economic growth.

29. Sri Lanka has relied on borrowing to finance public investment, an approach that is not
envisaged to change significantly under the Plan. National savings are expected to increase as
incomes rise, but this will not cover the resource requirement. The Government expects the remainder
to be financed through external sources, both official and private. The Plan also envisages a large part
to be financed by PPPs in key sectors such as transport, power, education, and water supply.

30. Sri Lanka’s efforts to mobilize resources are considerably stronger than they have been in the
past 20 years. However, these efforts need to be correlated more directly with the Government’s debt
management strategy. The Government also needs to make full use of available concessional
funding.

Donor coordination

31. The coordination among development partners has been effective. ADB has focused on
infrastructure (transport, water supply, power, and port development), agriculture, and secondary
education. The World Bank has emphasized health, primary education, community development, and
development of information technology. Japan has provided assistance for socio-economic
infrastructure, rural development, human resource development, and poverty reduction, including
micro credit. Other key development partners are the EU (supporting the rehabilitation of tsunami-
affected roads), the United States (technical assistance to improve competitiveness), and Germany
(postconflict and SME development). All development partners coordinated effectively on policy
reforms, which were either jointly implemented (such as in the power sector, where ADB teamed up
with Japan), or carefully coordinated (such as fiscal management reform with the World Bank and the
International Monetary Fund).

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KEY ECONOMIC INDICATORS

Unit 1990 2000 2005 2007 2009 2010
DEMOGRAPHY
Population ‘000 persons 16,267 18,467 19,668 20,010 20,450 20,653
Population growth rate % 1.1 1.4 1.1 1.1 1.1 1.0
Population density Persons per sq 259 295 314 319 326 329
km
Labour force ‘000 persons 6,001 6,827 8,141 7,489 8,074 8108
Labour force participation rate % 51.9 50.3 48.3 49.8 48.7 48.1
Unemployment rate 5 of labour force 15.9 7.6 7.7 6.0 5.8 4.9
OUTPUT
GDP at current market prices Rs. billion 322 1,258 2,366 3,579 4,835 5,602
GDP per capita at market prices Rs. 18,934 68,102 120,282 178,845 235,945 271,259
GDP per capita at market prices US $ 473 899 1,197 1,634 2,014 2,399
Annual growth rate of GDP % 6.4 6.0 6.0 6.8 3.5 8.0
Annual growth rate of sectors 3.4 3.2 7.0
 Agriculture % 8.5 1.8 1.5 7.6 4.2 8.4
 Industry % 7.8 7.5 8.3 7.1 3.3 8.0
 Services % 4.2 7.0 6.4 17.5 0
Colombo Consumer Price Index (1952=100) % 21.5 6.2 11.6
AGGREGATE DEMAND, SAVINGS AND
INVESTMENT
Consumption % of GDP 85.3 82.6 82.8 82.4 82.0 81.3
 Private % of GDP 75.9 72.1 74.6 67.2 64.3 65.8
 Public / Government % of GDP 9.4 10.5 8.2 15.3 17.6 15.6
Investment % of GDP 22.2 28.0 26.5 28.0 24.5 27.8
 Government % of GDP 4.2 3.3 4.2 5.4 6.6 6.2
 Parastatal / Public Corporations % of GDP 4.2 3.3 2.7 0 0
 Private % of GDP 14.8 21.5 19.6 22.6 17.9 21.6
Net imports - goods & non-factor services % of GDP -10.0 -10.6 -9.3 -10.4 -6.5 -10.5
Domestic savings % of GDP 14.3 17.4 17.2 17.6 18.0 18.7

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KEY ECONOMIC INDICATORS (Contd.)

Unit 1990 2000 2005 2007 2009 2010
GOVERNMENT FINANCE
Revenue % of GDP 21.1 16.8 16.5 15.8 14.6 14.6
Total Government Expenditure & net lending % of GDP 31.0 26.7 24.7 23.5 24.9 22.9
 Current Expenditure % of GDP 22.3 20.2 18.7 17.4 18.2 16.7
 Public Investment % of GDP 8.3 6.4 6.3 6.1 6.7
Overall Government budget surplus / deficit % of GDP -9.9 -9.9 -8.7 -7.0 -9.8 -7.9

EXTERNAL FINANCE
Trade Balance US$ million -703 -1,798 -2,516 -3657 -3122 -5,205
 Exports US$ million 1,984 5,522 6,347 7,640 7,085 8,307
 Imports US$ million 2,686 7,320 8,863 11,296 10,207 13,515
Current Account Balance US$ million -377 -1,066 -650 -1,402 -214 -1,418
Current Account Balance % of GDP -4.7 -6.4 -2.8 -4.3 -0.5 -2.1
Overall Balance US$ million 119 -522 501 531 2,725 921
Exchange rate (end-year) Rs. To US $ 42.58 82.65 100.50 110.62 114.94 113.06

MONETARY AGGREGATES
Broad Money (change Dec to Dec) % 20.1 12.9 19.1 16.6 18.6 15.8
Reserve Money (change Dec to Dec) % 17.9 4.7 15.8 10.2 13.1 18.8

INTEREST RATES
Purchase rate (overnight) – year-end % - 17.00 8.75 10.50 7.5 7.25
Reverse repo rate (overnight) – year-end % - 20.00 10.25 12.0 9.0 9.00

CAPITAL MARKET
All Share Index (1985 = 100) Index 384 448 1,922.2 2541.0 3385.6 6636
Market Capitalisation Rs. billion 37.0 88.8 584 820.7 1092.1 2210

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KEY ECONOMIC INDICATORS

Unit Magnitude Unit Magnitude

AREA Literacy rate – overall(2008) % 91.3
Total area Sq. km 65,610  Male % 92.8
Land Area Sq. km 62,705  Female % 90.0
Inland waters Sq. km. 2905 ECONOMIC STATUS
Income distribution
CLIMATE  Gini coefficient(2009/2010) Ratio 0.47
Maximum Temperature Poverty
 Low country Degrees C 31.7  Pop’n below $1 per day(90-2005) % 5.6
 Hill country Degrees C 26.3  Pop’n below $2 per day(90-2005) % 41.6
Minimum Temperature Mean monthly income(2009/2010) Rs 35,495
 Low country Degrees C 24.4 Average calorie intake per day(2006/2007) Calories 2,118
 Hill country Degrees C 17.1 Human Dev’t Index -- 2007 Index 0.759
Mean annual rainfall mm 1,711  Rank (182 countries)
Number of rainy days number 85 Employment – Labour force ‘000 persons 7603
 Agriculture % 32.6
POP’N /VITAL STATISTICS  Industry % 25.1
Population – 2009 ‘000 persons 20,450  Services % 42.1
Age Distribution SOCIAL INFRAST.
 0 – 14 years ‘000 persons 5,378 Access to safe drinking water % 84.8
 15 – 64 years ‘000 persons 13,784 Households with electricity % 86.0
 65 and over years ‘000 persons 1,288 Fixed telephone lines Per 100 people 85.0
Population density Persons / sq. km. 326 Persons per doctor Number 1500
Crude birth rate – 2009 Per ‘000 18.4 Public health expenditure % of GDP 1.5
Crude death rate – 2009 Per ‘000 5.9 Pupil-teacher ratio (gov. sch.) Number 19
Infant mortality rate -- 2006 Per ’000 live births 10.0 Net enrolment in primary sch.(2007) % 89.9
Dependency ratio -- 2006 % 48.3 Enrolment in university % of 20-24 age group 4.1
Average household size 2006/2007 Number 4.1 Commercial bank branches per 100,000 Number 10.8
people
Life expectancy at birth(2007) Source: Central Bank of Sri Lanka – 2009 Annual Report
 Male Years 70.3
 Female Years 77.9

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 Sri Lanka: Iranamadu Irrigation Development Project
DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 2: POVERTY, TARGETING AND GENDER

ANNEX 2: POVERTY, TARGETING AND GENDER

I. INTRODUCTION

1. This annex provides an account of the poverty situation, socio economic aspects pertaining to
targeting and the gender in the project area, the command area of the Iranamadu irrigation scheme.
This paper is prepared using several sources including published and unpublished materials, and
primary data gathered in the field.

II. THE CONTEXT

2. The Iranamadu Irrigation Scheme plays a crucial role in supporting the bio-geographical wealth
and the livelihood systems of its people. The primary source of employment and income of the people
is agriculture, and Irrigation water is a key decisive factor. The resettlement of the IDPs has been
almost completed. Recent records show that nearly 8,518 hectares of land, with 1,261 on the right
bank main channel and 7,257 on the left bank main channel is under paddy cultivation.
3. The households are the lowest level administrative unit. Under the conventional social system
households are patriarchal social organisations either with extended families or the nuclear functional
units. The total number of project beneficiary households is 6,692 and 5,577 are getting irrigation
water from the left bank and 1,115 are from the right bank main channel. 1,243 families (18.5) are
headed by women. The total population comprises 22,095 persons (3.1person per family). The male
female ratio of the population is 100 to 110. The social groups depending on Iranamadu scheme
include the farmer families residing within the command area, farmers live in the fringe area and
engaged in paddy farming, migrant farmers operating from outside during the seasons, casual farm
labourers, unpaid family workers, landless and lessees.

III. POVERTY SITUATION

4. The Context Poverty is visualised from different angles focusing on proxy indicators like
housing, assets etc. and also on measures like per-capita income. The poverty situation in the project
area is contextual simply because it consists of recently settled households and a proper assessment
after settlements has not been carried out. The resettlement assistance given to the families; Rs.
20,000 in cash, free dry food ration, materials for housing, kitchen utensils, and agricultural
implements have enabled the families to establish and initiate land-based production activities. Those
who have small plots of land or no land to initiate production continue to be in acute poverty because
they do not have employment options and they live on unreliable sources for living. In reality the
poverty situation is highly connected with the output/income derived from the land and livestock. In this
situation there is a tendency for widening social and economic gaps between those who have
productive assets and those who do not have assets.

5. Poverty Line According to a recent WFP survey, nearly 78.5 percent of the families reported to
have a monthly income of less than Rs. 2,500 per person. The high incidence of poverty is due to the
fact that a large proportion of the population is recently settled and is in the process of restoring their
livelihood base. The poverty line that had been taken into consideration is lower than the national
consumption poverty line of Rs.3141 per person per month for September 2010. When compared with
the national average situation where around 15 percent of the population live below poverty the
situation in the project area is quite acute.

6. Seasonal Difficulties The current cultivation practices would not enable farmers to increase the
income or the productivity to get an adequate income from farming to have a decent standard of living.
For instance the total lowland areas of around 8,518 hectares are under paddy only during maha
where water is available to provide irrigation. In yala, out of the total of 8,518 hectares only 4,082
hectares (60%) are under paddy. This also tends to vary according to the volume of water available for
irrigation. The seasonal differences in crop production contribute to the differences in income and food
availability. From the perspective of addressing the root causes of poverty, measures for increasing
the land productivity through farming system development, efficient use of land reducing mono crop
paddy cultivation while increasing production of vegetables and other field crops are essential.

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7. Disparities in Land Distribution The rational for such interventions is connected with the
inherent disparities in the distribution lands. Within the left bank, nearly 89 percent of the farmers have
less than 2 hectare plots of paddy lands and on the right bank all the farmers have plots with less than
2 hectares. During maha the disparity in using irrigation water for paddy cultivation is associated with
the differences in land size. On the left bank 11% of the beneficiaries cultivate 2.4 to 40 hectares. The
disparity in the rights over lands leads to a greater disparity in the volume of water used by a farmer
family during the maha season. During yala where water is inadequate to irrigate the total area more
equalitarian system is being followed in deciding water rights. The farmers with lands up to 0.8
hectares are given irrigation to cultivate the total area while the others with large plots only receive
water rights for a portion, usually for one third of their lands. The farmers who have lands at the lower
parts and no irrigation is available are given land to cultivate the lands in the upper areas. They pay
Rs 2,000-3,000 per 0.4 hectares informally to the legal land owner.

8. Meaning of Poverty The meaning of poverty to the people in the project area is also contextual.
The poor condition of living, unreliable sources of income, poor capacity to have a decent living with
satisfactory standards and to improve the conditions with confidence are quite significant. The women
and children of the poor families have a deep feeling of poverty and also a psychological trauma, a
matter leading to a social exclusion and marginalisation. For instance women of the poor families, who
are in temporary shelters, have no proper hearths for cooking and space, sanitary facilities, sleeping
space, and land for producing crops and water for domestic use. They are seen as a social group
available to providing services to the better off land owners.

9. The situation with regard to women headed families and the landless agriculture labourers are
quite crucial. 1,243 families (18.5%) are women headed family units and are in an acute situation due
to their poor capacity for settling with children and lack of land to make a living. It is considered to be
more in fact due to deaths caused during the armed struggle. A noticeable absence of young adult
males was identified during the field visit, reflective of possible age-specific high death rates,and out-
migration to other areas during and immediately following the recent armed struggle to secure a
livelihood. The farmers with small plots of land and the landless who are settled in the lands of the
better off families are with a helpless feeling.

IV. TARGETING

10. In project targeting three aspects would be taken into account. The first is the lands in the
command area, and the people living within the command area; the second is the people using
irrigation water and or providing labour for production operations in the command area, and the third is
those who are benefited through the spill over effects (seepage water/ ground water for agro-wells)
within 500 meters distance from the main channels.

11. The project on ‘Smallholder Irrigation and Livelihood Development in Iranamadu’ deals with a
rather diverse area, but with a common dependency on Iranamadu irrigation scheme. Relative
distance to delivery channels influences the easy access to irrigation and availability of water for two
crops of paddy. The population in the command area includes the farmers engaged in farming in the
command area, migrant farmers, landless and near landless, farm labourers and some service
providers, unpaid family workers and also women headed families. This comprises the marginalised
sectors or vulnerable groups of the society. They have low capacities and less access to services and
control over production assets. The issues affecting these sectors are also diverse.

12. Target Group The target group of the project area is the total population having lands in the
command area and also those living within a distance of 0.5 km from the 2 main canal bunds. They
are to be organised under FOs with the expectation that spread effects of agriculture promoting
activities initiated through Project will benefit the marginalised sectors of the society. Women
organized and encouraged through FO to promote largely highland well-irrigated/lift-pump irrigated
cash crops and livestock rearing in homesteads. The total population comprises the farmer families in
the area including women and women headed families, the geographically disadvantaged groups who
are in the tail end of the command area, casual labourers in agriculture, and the low income groups. A
large majority of farmers (85-90%) operate 2 hectare or less.

13. Women being the free labour providers for family-based farming would undertake the
responsibility over commercial crops. Other field crop production in the project area would enable

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women to engage in remunerative work. There are prospects for organising women to engage in
producing other field crops and entering the markets.

14. Whenever possible, specific activities would be targeted in several manners: a) by prioritising
rehabilitation investments in favour of small farmers; b) by investment support to farmers at the tail
end of distribution and field canals; c) by specific support for informally resettled households without a
title to homestead land; d) by developing other field crops with the involvement of women groups; and
e) by support to households in upland agriculture outside the command area.

V. GENDER SITUATION

15. Influencing Factors The gender situation of the project area is contextual and it is influenced
by three key factors. The first is the conventional social system with its norms, practices and the
ideologies on gender. The socially established differentiations enforce the conditions for men’s and
women’s roles, responsibilities, relations, endowments and the behavioural patterns. The second is
situation specific where men and women have to deal with the destructions occurred over three
decades and restore the situation to a normalcy. The gravity of the physical destructions that women
have to bear is greater due to their low capacity to negotiate and influence the decisions. The third is
the disproportionate share of work shouldered by women in contributing to food production, food
security, resource management, agricultural and upbringing the children without having adequate
capacity. A possible fourth, voiced by community leaders was the direct security to women in working
in paddy areas, involving home –to –fields mobility, and the need to tend to children and household
subsistence, coupled with the absence (due to deaths/ absence of able bodied males in households--
-due possibly to out movement from the area in search of employment and income sources).

16 Household based Disparities The gender situation is associated with the households which
are the units of administration with specific functions. Who does what within the households is decided
in relation to the reproductive and productive needs and resource management requirements. On the
basis of men’s land ownership men are directly consulted and involved in making decisions for
providing agricultural implements, seeds, fertiliser and extension.

17 The disparity in getting access to services is also influenced by the land ownership. 95 percent
of the land of the male headed household is owned by men. The ownership of the land secured
through the state settlements and regularisation of lands is vested on the man, the head of the
household, and at decease the land goes to a male child and in the absence of male children the
spouse or a daughter secure rights. Therefore women in the area have fewer opportunities in
accessing agrarian services, training, information, markets etc.

18 Division of Labour The division of labour between men and women is connected with their
responsibilities over the domestic work and using and managing the production factors; land and
water. Women predominantly undertake the responsibility over reproduction, homesteads and the
uplands. The field PRAs revealed that in the paddy fields labour intensive tasks are performed by
women and assist men in the fields and in homesteads and uplands they undertake most of the
production activities. Labour intensive tasks such as transplanting is only possible in very small plots
(in case of women, also adjacent to their homes, reducing the need to move longer distances). During
the field visit very few transplanted small fields were observed. Most paddy fields appear to be
broadcasted, done by male labour and/or possibly through mechanical transplanters in less heavy
loamy areas.

19 Wage Gap The women of the landless families hire out their labour. There was no visible
evidence of women labour gangs in the scheme areas during the visit, which may also be reflective of
the stage in the paddy crop, growing period, witnessed during the field visit period. During maha
season women form their self-help groups, and also under the reciprocal exchange of labour. The self
help groups undertake collective work such as cleaning cannels, foot paths and areas of the temples.
Reciprocal work takes place in paddy related production work where group engagement speed-up the
process. In the informal sector, the daily wage of a woman is Rs. 400 and Rs 700 is paid for a man.
This shows that in agriculture a woman is paid only 55 percent of the daily wage paid to a man.

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20 Concerns over Integration Meaning of restoration and rehabilitation of irrigation is much

broader for women because it is a means to gain confidence over production, livestock, water supply,
health and sanitation, and food security than that of men. During this process women prefer to have
an integrated approach for satisfying environmental needs, services, entrepreneurial opportunities as
well as energy needs. Restoration of riparian buffers selecting a range of species with multiple
benefits, salt barriers to avoid salt water intrusion, green groves with filtering benefits near water
bodies and for shade for livestock are the areas of their priority for enhancing environmental quality.

VI. GENDER STRATEGY

21 A gender inclusive strategy, from the stage of designing its activities to the monitoring and
evaluation would be followed by the Project. The Project would ensure the involvement of women in
FOs and so take part in decisions on water management, cropping and marketing. Equal participation
of men and women would be targeted through social mobilisation and institutional arrangements.
Equal opportunities would be provided in infrastructure development and environment, production and
marketing; and project management. In this respect gender references to the entire project spectrum
would be established. The Project would aim at achieving a participation rate of women among the
beneficiaries of 50%.

22. Gender as a framework would be used to capitalise men’s and women’s potential
contributions to the project designing and implementation including their knowledge and experiences
on land and water resource management.

23. Gender disaggregated socio- economic data would be gathered and analysed to learn the
prevailing gender specific needs and introduce activities through entry points. The measures for
addressing the reproductive needs and concerns (welfare including subsistence- water and crops),
productive needs for enhancing income through enhanced options and productivity (other field crops –
OFC), and the strategic needs or solutions to resolve the gender gaps (decision making) would be in
place.

24. As part of the Gender Action Plan, gender training programmes would be carried out for all
implementing agencies enhancing their institutional readiness and capacity to follow a gender
inclusive strategy, and undertake gender related activities. Women would be involved in decision
making through FOs. One of the office bearers of the farmer organisations participating at the district
committee (president, secretary or a treasurer) would be a woman.

25. Task/production specific sub-groups would be established enabling women to lead their own
activities and manage enterprises.

VII. GENDER ACTION PLAN

26 Equal Opportunities The Project would provide equal opportunities for women as well as
men for engaging in the sustainable management of the Project. This requires several practical
measures.

27 Institutional Capacity The institutional readiness would be enhanced through training and
awareness raising on gender. Institutional mandate with budgetary allocations, capacity, and also with
a monitoring and evaluation framework would be strengthened. The Project would carry out training
for the implementing agencies, including FOs. The Project would establish linkages with other partners
and secure resources and also create space for women’s representation from grassroots to the district
level decision making. The FOs recognise women as a key stakeholder group and are prepared to see
that women have opportunities to be in office bearing positions so that at least one woman from each
of the 21 FOs could represent women and engaged in the decision making process.

28 Training and awareness raising (through programmes and success cases, posters,
documentary films etc.). Capacity development training would enhance women’s leadership and
women in decision making. The Project would carry out 10 training programmes involving 300 to 320
women. The awareness on financial capacity (through enterprise development, credit and saving
schemes), human capacity (through training and skill development), and social capacity (through
women’s social capital) would be provided.

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29. Project Staff Gender balanced project staff by recruiting of women. 20%-30% of the project
staff would be women. The Project would encourage women to join the project staff at various
capacities as appropriate and encourage women to work with farm women.

30. Women’s network and networking among sub-groups would establish a system for lateral
sharing of information, experiences and learning. A network would be formed comprising the women
producer groups, sub-groups on water management; sub-contractors etc.

31. Matching Grants Enhancement of financial capital through matching grants. This would
enable women to build their financial capacity to introduce micro credit on revolving basis. Women
would widen livelihood options and make use of their time efficiently for engaging in remunerative
work. Gender planning through detailed participatory need assessments would allow the Project to
initiate mobilisation.

VIII. SOCIAL MOBILISATION AND TRAINING

32. Social Mobilisation and Training This would be carried out to strengthen the 21 existing
Farmer Organisations and to establish new FOs and Women Groups for vegetables production. It
aims to involve men and women as stakeholders and change agents in the sustainable management
of irrigation infrastructure, the environment and the resources. It would be outsourced by the PMO to
a reputable and experienced NGO on the basis of a tender.

33. Group Members and Leadership Training Farmer organisations are relatively large
organisations with a female membership of about 20%, mostly from female headed households. In
discussions with farmer leaders it appeared that there is a willingness to improve the representation of
women, also among the office bearers. The Project would support this by providing training to
members and leaders, especially to women, also to men in group management, governance,
accounting and gender. The project target for women membership is 50%, for female office bearers it
is 30%.

34. Women in Channel-based Management Groups For proper farmer managed water
resources, field channel based groups would be formed involving one member from each family. Sub
groups would be formed for the 275 field channels, enabling women as well as men to be in steering
committees and to involve in operation and management. Average size of a group per field channel
would be 16. Leadership training be given to at least 2 persons (one man and a woman) from each
sub group and positions should be rotated to facilitate learning through rotation.

35 Training in Scheme Operation and Maintenance Training of farmers (men and women) for
O&M is a parallel activity which would be initiated with the hardware rehabilitation phase itself. The
activities identified include 1) initial awareness campaign to educate men and women about the
project with the objective of strengthening their organizational capabilities for effective participation
with the subsequent activities of the project; 2) involvement of men and women in Participatory Rural
Appraisals (PRA) to identify the required improvements to the existing system; 3) propose
modifications and restoration where they are required and walkthrough surveys involving men and
women to shortlist the work items to be rehabilitated within the budgetary allocations; 4) introduction of
Water Management System such as Bulk Water Allocation Method and practicing it jointly with PID
technical staff, including staff training and farmer training; 5) training of men and women
representatives for Operation and Maintenance and on managing water distribution system for
optimum use of their individual allocations; and 6) Handing over the system below the two main canals
to the FOs where women are also have memberships.

36 Women in Water Allocation Management The Project would introduce demand based
water allocation and distribution procedures to manage water so that available supplies are allocated
fairly among the farmers. As an alternative to the normally adapted top-down allocation procedures
the Project would introduce a programme based on volumetric water allocation for the FOs below the
Main Canal beginning with each cultivation year commencing from maha season. Whatever the water
savings in maha (wet) would be made available for the next yala (dry) season. The purpose is to
create a feeling of ownership and participation of men and women in water management.

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37 Women Groups in Fruits, Vegetables and Other Crops An estimated 20% - 30% of the
command area is suitable for the production of fruits, vegetables, etc. during the yala season. This is
an opportunity for women and youth to engage in commercial ventures. They would use their
experience in producing vegetables, pulses and root crops for domestic use and the markets. While
targeting production enhancement, women would establish their social capital as ‘producer groups’,
‘contract farmers’, and ‘agro- entrepreneurs’. It is estimated that a total of about 425 groups would be
established in PY2–PY4 with a membership of 8 450 persons, cultivating an area of 2 100 ha. While
the focus is on women groups, male or mixed groups would be promoted if strong demand for this
exists.

38 The overall target for this activity would be a participation of women of not less than 75%.
Group formation and operation would be supported for 3 years per group. Groups would be phased
out in over 3 years and no new groups would be established after PY4. About 20 groups could be
supported by a social mobiliser, and this sequencing would require a maximum of 21 social mobilisers
in PY4.

IX. OFF- FARM ECONOMIC ACTIVITIES

39 Livelihood Activities Women would directly and indirectly contribute to sustain the local
resource based livelihood. Directly women would engage in paddy farming, growing vegetables and
OFCs, and indirectly in providing food, tea and drinking water for the farm workers. Women would
undertake income generating activities (IGAs), micro and small and medium scale enterprises
(MSMEs). The Project would establish around 150 enterprises for women.

X. WOMEN GROUPS FOR MICRO ENTERPRISE DEVELOPMENT

40 Micro enterprises like agro-processing, agro-business, local craft industry, livestock based
value addition, and production of organic fertiliser would provide multiple livelihood options for women.
Sub-groups would be formed in relation to the production enterprise, geographical location and
undertake contract based supply for the private sector.

41 To materialise this micro-finance and training on enterprise development, vocational skills, and
marketing and information access are needed. The experiences of SANASA - Thrift and Credit
Cooperative Societies, Sarvodaya and also the Ministry of Child Development and Women’s Affairs
(MOCDWA) and Women’s Bureau would be used.

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 Sri Lanka: Iranamadu Irrigation Development Project
DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 3: COUNTRY PERFORMANCE AND LESSONS LEARNED

ANNEX 3: COUNTRY PERFORMANCE AND LESSONS LEARNED

I. COUNTRY PERFORMANCE

1. Sri Lanka had the privilege to be IFAD’s first borrower in 1978. Since then, a total of
15 projects had been approved for a total value of USD 389.7 million and a total of IFAD loans of
76
USD 216.7 million. IFAD reports that a precise number of 518 332 households did directly benefit
77 78
from its investments. At present, 3 projects are ongoing , and 1 project will be completed this year.
The last Country Programme Evaluation took place in 2002 and the most recent COSOP dates from
2003.

2. Sri Lanka has been a good borrower, and its debt service of the IFAD loans has been timely
and appropriate. It contributed increasing amounts to the IFAD Replenishments.

3. The overall performance of the country Programme in Sri Lanka had been mixed for a long
time. With achieving peace in 2009, performance seems to improve but several constraints and
79
country-level implementation issues remain :

 The continuing tight budget situation for most public services and the large number of unfilled
vacancies limit their implementation capacities;
 High turn-over of project management staff and political interference in the selection of
candidates;
 Natural disasters like flash floods, droughts and landslides accentuating the vulnerability of the
rural poor;
 Lengthy administrative procedures for Government clearances, partly due to inconsistent
decentralisation of local governance, coupled with weak infrastructure.
4. Efforts being made to improve the quantitative performance of the country programme include:
 Intensifying implementation support to the programmes and continuously trying to improve the
relationship and responsiveness between the projects and the IFAD country presence;
 Close monitoring and proposing strategies to mobilize counterpart funding to the programmes;
 Management training including fiduciary issues for the programme management team
members; and
 Direct supervision of projects

5. In 2008, the Country Programme Management Facilitator had been recruited, providing
effective support to all management teams.

6. The latest COSOP for Sri Lanka was approved by the IFAD Executive Board in April 2003.
Although the design of a new COSOP started in August 2008, the process has not yet been
completed.
II. LESSONS LEARNED

7. Some important lessons have been drawn in the course of time by Mid-Term Reviews and
Project Completion missions:
 New approaches, such as participatory planning of project activities in a community, need time
to be assimilated by staff and farmers and therefore require flexibility, an initial pilot, training
80
and joint learning period, before being applied on a project-wide scale ;
 Water resources developments in the form of tank rehabilitation and agrowells have formed
major components of past projects, but generally, emphasis in implementation has been on

76
[Link]
77
National Agribusiness Development Programme; Smallholder Plantation Entrepreneurship Development
Programme; and Dry Zone Livelihood Support and Partnership Programme
78
Post-Tsunami Coastal Rehabilitation and Resource Management Programme
79
Country Programme Issues Sheet, May 2009
80
PCR, North-Central Province Participatory Rural Development Project, Dec.2004

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infrastructure, as opposed to developing capacity and sustainability of operation and

81
maintenance ;
 Involvement of the private sector, directly buying from project farmers has proven to be a
82
successful approach to ensure production is demand led and remunerative ;
 Taking into account both implementation and management capacities, project design needs to
be kept simple and straightforward, while ensuring poverty reduction, overall sustainability and
economic efficiency83;
 Project implementation experience has demonstrated that the selection and retention of
qualified project managers is a continuous issue and an important cause of implementation
84
delays .

81
Lessons learned, Appraisal Report, Livelihood Support And Partnership Programme In The Dry Zone, Febr.2004
82
Experience in the SPEND and NADEP projects
83
derived from NADEP Final Design Report, June 2009
84
[Link].

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 Sri Lanka: Iranamadu Irrigation Development Project
DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 4: DETAILED PROJECT DESCRIPTION

ANNEX 4: DETAILED PROJECT DESCRIPTION

I. Project Development Objective

Goal

1. The Project would contribute to poverty reduction and increase in household incomes as well
as to the increased participation of women in water and land management and in marketing.
Objectives

2. In line with the goal and the project implementation and gender strategy, the Project would
pursue two objectives:
(i) Irrigation infrastructure has been improved and is effectively managed by Local
Government and Farmer Organisations (FOs) including women, the latter applying
water saving management methods. Appropriate environment and climate change
adaptation and mitigation measures are applied.

(ii) Water and land productivity have been sustainably improved and farm production is
meeting effective and premium demand from corporate buyers through forward
contracting and other market agreements. As such household incomes have
increased, exceeding the poverty line.

II. Project Components

3. The achievement of the objectives would require two main types of activities: a) rehabilitation
of the irrigation infrastructure to ensure proper water supply to farmer fields; and b) support to farmers,
female and male, to improve water, land and crop productivity through sustainable agricultural
techniques and through forward contracting for quality output. In addition, there is a need for an
effective project management capacity to ensure timely and proper implementation. This calls for a
project structure with three corresponding components: a) Infrastructure development; b) Production
and marketing; and c) Project management.
1. Infrastructure development

4. The component consists of two sub-components: a) for irrigation rehabilitation and b) for other
productive infrastructure.
1.1 Irrigation rehabilitation

5. Approach Main objective of an irrigation system is to deliver right quantity of water at the
right time to the right crop. Also the removal of excess water after irrigation and during rains should be
assured. Usually in irrigation rehabilitation, more attention is given only to improve structural quality of
supply canals only. However in the proposed approach, equal importance would be given to hydraulic
quality of the canal network including drainages. The rehabilitation needs should be identified in close
collaboration with the farmers and be based on their perceived needs. Under the proposed approach
FOs would take over the responsibilities for water management and maintenance below the main
canals. Therefore, design should incorporate farmer friendly, easy and flexible water management
capabilities.

6. This approach is translated in a number of guidelines, the most important of which are:

 The rehabilitation design process begins at the downstream and proceeds upstream. This is the
reverse of a new design.
 Ensure the adequacy, reliability and equity of irrigation water distribution in each segment of the
canal system through hydraulic fine-tuning
 Apply participatory approaches to design to accommodate farmer needs for operation and
maintenance
 Assure the safety of the canals and minimise conveyance losses by applying localised measures
 Removal of excess water through drainage facilities is vital for long term sustainability and to allow
for the growing of other crops than paddy, which are less water-demanding
 Allow sufficient provisions for water management after rehabilitation. The Project will introduce an

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innovation by applying the Water Bulk Management system, successfully applied in System H in
85
the Mahaweli system . This requires the installation of simple measuring devices in the turn out
structures in D and F canals.
 Capacity building of farmers for water management
 Allow for local water use other than for irrigation: washing, bathing, transport.

7. ADB and IFAD complementarity. Due to the poor condition of the head works of the
Iranamadu Tank, water is not being fully stored during monsoon seasons for the past 10 years
(usually about 1.5m below Full Supply Level (FSL) by opening spill gates during heavy rains), and as
a result, availability of water for irrigation purposes is limited. When the water level rises water
seepage has been observed at several locations of the downstream end of bund. The main
embankment needs urgent strengthening to increase its stability and to utilize the catchment yield
effectively. In 1983 slip has occurred and has been repaired subsequently. A Pump House located
near the left bank side of the reservoir, designed to irrigate in Thruway Arum 447 ha, is also a part of
the Headwork. The lift irrigation system is not functioning due to suspension of power and
malfunctioning of 6 pumps.
86
8. An ADB/AFD funded Headwork improvement component has been initiated which will
3 3
increase the capacity of the tank by 16.3 million m to 148.1 million m by repairing and raising the
bunds to 31.40m msl, repairing sluices, radial gates, the spillway, and rehabilitating the 447 ha lift
87
irrigation scheme. Part of the incremental water volume will be diverted to Jaffna for drinking water
supply.
9. The proposed IFAD project would undertake the rehabilitation of the downstream canal
system which provides irrigation water to 8 455 ha. The Irrigation rehabilitation sub-component would
include the following activities.
10. Main Canal The Iranamadu tank has a left bank (LB) and a right bank (RB) main channel of
a total length of 30 km. Due to the poor or lack of maintenance for a long time, the channel system are
badly eroded and scoured along almost the full lengths. The channel bund tops are below the
designed level and are full of depressions and scours. Most of the structures are badly damaged.
Many of these need reconstruction and the rest extensive repairs and improvements. In addition both
canals need to be desilted and cleared of trees, debris and weed growths which obstructs the flow.
Typical project activities would include secondary growth clearing; compacted earth fill on channel
bund to design profile and level; desilting in the channel bed; strip turfing of newly filled slopes;
construction of retaining walls at badly scoured sections; repairs of regulators; repairs of turn out
structures, installation of measurement devices; construction of drainages under crossings.
11. Currently rehabilitation of only one Regulator which controls the water issue from the left bank
canal to a major distributary canal (D3) is in progress using government fund. There are 5 more major
structures in the left bank canal which need rehabilitation. In the right bank main canal there are 11
such structures which need rehabilitation for proper control of water. Out of that, 2 structures are now
being constructed. PID is also now in the process of rehabilitating the right bank canal roads
commencing from the head sluice. In addition both canals need to be desilted and cleared of trees,
debris and weed growths which obstructs the flow.
12. Branch and Distributory Canals The total length of branch and distribution canals is about
135 km, including 14 km branch canals and 121 km distribution canals. The condition of the branch
and distributory canals is same as that of the main canals. Compare to other irrigation schemes in Sri
Lanka, in Iranamadu, it is very difficult to identify clearly the hierarchy of Downstream Canal System
such as Main, Branch, Distributory Canals and Field Canals. According to the nomenclature adopted
for canal system in Iranamadu, the left bank main canal has no branch channel but right bank main
canal has two branch canals. Some of the distributory canals such as Distributary Canal No. 3 (D3)
canal which commands around 3016 ha of irrigable area equivalent to 35.67% of total command of the
left bank area is really a branch canal. There are a number of Field Canals taking off even directly
from the main and branch canals. PID is now in the process of rehabilitating one of the (D3)
commencing from LB Main Canal. Rehabilitation of 3 Drop Structures and 3 Regulators along

85
in Mahaweli’s System H, within 4 years after introducing the water quota system in 2000/2001, average duty
3
came down to 0.85 Meters from 1.2 Meters, while water productivity in kg grain equivalent produced/m ,
especially during yala, rose by nearly 50%.
86
of the Jaffna and Kilinochchi Water Supply and Sanitation Project
87 3
9.85 million m

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D3 canals is now in progress. Rehabilitation works supported by the project are similar to those for
the main canals and measurement devices will be installed at all (repaired) turn out structures.
13. Field Canals The total length of field channels in the scheme is 123 km. Most of the bunds
of the Field Canals have been washed away. There are not many water control structures and, in most
areas, water is issued to the field by cutting an opening in the canal bund. As such all the field
channels needs to be provided with pipe outlets for individual farms and also to introduce canal roads
as access to the farms.
14. Farm roads An allocation for the repair and improvement of farm roads has been foreseen.
Works would include gravelling, repairs of causeways, bridges, construction of pedestrian crossings,
etc.
15. Drainage Canal Around 40 ha in the Uriyan area and another 200 ha in Uruthirapuram,
Kilinochchi and Paranthan areas are affected due to poor drainage. Farmers are abandoning most of
these lands due to high salinity and low productivity. Therefore PID has proposed a Salinity Protection
Bund of 12 km long with associated structure and this programme is being considered for funding
under another ADB funded programme. Drainage in the rest of the scheme above the coastal belt is
also poor and during heavy rains the farm lands are flooded causing severe crop damage particularly
during harvest time. The main drainage canals are heavily silted up and overgrown with scrub and
trees and are choked with tree stumps and weeds. Some of reservations of medium and minor
drainage are also being gradually encroached by adjoining riparian farmers for cultivation. Drainage
improvement thus also is as a part of the rehabilitation supported by the Project. Main activities
include bush clearance, desilting, compacted earth fill on Kanagarajan Aru flood bund; and vegetative
strengthening of canal slopes.
16. Prioritization In consultation with PID Staff, the following order of priority for works was
identified: (1) Main and distribution canals (2) Drainage canals; (3) Field canals mostly serving
smallholders with less than 2 ha; and (4) Field canals serving larger landholdings. Except for the main
canals, the detailed rehabilitation needs of all other irrigation infrastructure would be identified jointly
with farmers using tools such as participatory rural appraisals and walkthrough surveys.
17. Implementation and institutional support for PID Engineering designs, cost estimation
and preparation of tender documents for rehabilitation contracts for the main canals and the drainage
works would be undertaken by qualified technical staff in PID with technical support of the Project and
on the basis of a Memorandum of Understanding with the Project. PID would also supervise the
contractors carrying out the works on the main canals and the drainage canals. The Project would
provide a basic set of equipment to PID to be used for the maintenance of the main canals and the
drainage canals and would finance staff allowances for PID staff involved in the design and
supervision work of the main canals and drainage canals.
25. Capacity building of farmers Training of farmers on water management and O&M should
be ideally undertaken parallel to the rehabilitation phase. Usually the rehabilitation program is initiated
with a PRA to identify needs. For Iranamdu PRAs can be conducted in 2 stages. After correcting the
essential rehabilitation needs identified in the first PRA, farmers should be trained on measuring
water, on on-farm water distribution and on estimation of availability of water at any stage of the
cultivation period etc. The system should then be operated by PID at least for one season jointly with
the FOs so that farmers could participate in the second phase of PRAs in more committed manner
because they are better equipped with technical know-how on identifying required rehabilitation needs
related to operation. Study tours can also be arranged for farmers and for PID staff to visit System H
(Anuradhapura District) of the Mahaweli Project where the Bulk Water Allocation system is being
practiced successfully. If the proposed approach of capacity building on water management is
successful, the management function below the main canal would be taken over by the farmers
voluntarily at the end of the rehabilitation phase. One of the main advantages of such a successful
capacity building program is that the PID will be able to tap community labour free of charge for
distributing water which would otherwise needs staff of PID.
26 Contracting For the implementation of all other works on distribution and field canals, as well
as for the carrying out of PRAs, walkthrough surveys and farmer training in water management and
system operation and maintenance, PID capacity would be insufficient and the Project would tender
for contractors responsible for design and supervision and for separate contractors for implementation
of the works. In the preparation of contract documents and the selection of contractors and
consultants, procedures specified by the Institute of Construction, Training & Development (ICTAD)
would be adopted. All the rehabilitation works would be undertaken by qualified ICTAD registered

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contractors. Activities to be covered under each package include: PRAs; walkthrough surveys;
surveying and levelling; preparation of designs and drawings; preparation of Bill of Quantities;
ratification meeting; cost estimates; preparation of contract documents; selection of construction
contractors; contract management and supervision; and final handing over. In case where the Project
considers specific FOs have sufficient capacities to carry out the work, direct contracts at the
Engineer’s Estimated price could be awarded to them for selected works. However, such FOs are not
supposed to sub-contract these works to third parties. An overview of the anticipated contract bundles
is presented in Annex 15, Table 2.
27. Unit cost estimation The total area to be rehabilitated is 8455 ha. It is estimated that the
cost of rehabilitation / ha for canals below the main canal is about LKR 120,600. This could be
considered as an acceptable pro rata cost because the figure is very close to that for similar projects
completed and in progress in the country. However, this Project is slightly different from other projects
because it’s irrigation infrastructure has not been subjected to any kind of systematic maintenance for
the last 30-40 years. In addition to the normal irrigation rehabilitation work, there is also a need to
improve the drainage systems to reclaim salinity developed areas. Therefore there is a possibility that
the pro rata cost could become even more than expected from a normal system.
31. Other infrastructure - Rain water harvesting facilities The Project will support about 2000
families experiencing water shortages with rain water harvesting tanks for drinking water and other
small earth structures to capture rainwater runoff and ground water recharging. A limited allocation
would be included in the Project to support marketing infrastructure at the level of FOs and Women
and youth groups. This could include small storage units, buildings for simple primary processing
equipments, an essential stretch of farm roads etc. A precise inventory would be undertaken in a
participatory manner during implementation. Costs would not exceed USD 2000 per FO or Women
group. Infrastructure could also include buildings which are essential for the project implementation
including the repair of an office to house the PMO
32. As a result of the war situation, several public buildings have been damaged and rendered
unusable. Rehabilitation is presently on-going. If there is still a need for support in this at the time this
Project would start field activities, two years from now, and other limited allocation would be made
available. The actual list of investments would be drawn up by the PMO in coordination with the
District Secretary. The budget would be limited to those services which have a direct role in farmer
support, such as extension and farmer training. Indirect support services such as research as well as
the promotion of state farms and the establishment of new services previously not present, would not
be eligible.

2. PRODUCTION AND MARKETING

2.1. Social mobilisation and training

33. Social mobilisation is required to strengthen the 21 existing Farmer organisations and to
establish new FOs and Women groups for fruits and vegetables production. It aims to involve people
as stakeholders and change agents in the sustainable management of irrigation infrastructure, the
environment and the resources. It would be outsourced by the PMO to a reputable and experienced
NGO on the basis of a tender.

34. Group members and leadership training Farmer organisations are relatively large
organisations with a female membership of about 20%, mostly from female headed households. In
discussions with farmer leaders it appeared that there is a willingness to improve the representation of
women, also among the office bearers. The Project would support this by providing training to
members and leaders, especially to women, but also to men in group management, governance,
accounting and gender. The project target for women membership is 50%, for female office bearers it
is 30%.

35. For proper farmer managed water resources, it would be necessary to form distribution and
field channel based groups involving one member from each family. In connection with the 275 field
channels, sub groups should be formed enabling women as well as men to be in steering committees
and to involve in operation and management. Average size of a group per field channel would be 16.
Leadership training be given to at least 2 persons (one man and a woman) from each sub group and
positions should be rotated to facilitate learning through rotation.

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36. Training in scheme operation and maintenance Training of farmers for O&M is a parallel
activity which would be initiated with the hardware rehabilitation phase itself. The Project would
undertake an initial awareness campaign to inform farmers about the Project with the objective of
strengthening their organizational capabilities for effective participation with the subsequent activities
of the Project. A PRA would identify the required improvements to the existing system and propose
modifications and restoration where they are required. Walkthrough surveys with farmers would allow
the establishment of a shortlist of the work items to be rehabilitated within the budgetary allocations.

37. Water management With the rehabilitation of hardware there is need to initiate a program to
address present issues related to O&M while promoting an effective farmer participation. Basis of the
proposed programme is to introduce demand based water allocation and distribution procedures to
manage water so that available water resource is allocated equally among the FOs while promoting
their active participation in distributing fairly among individual members of the FO. For this purpose, as
an alternative to the normally adapted top-down allocation procedures, a strategy would be introduced
facilitating water allocation system on volumetric basis. Under this system, each FO is allocated a
fixed volume of water decided on the basis of the water availability in the main reservoir at the
beginning of mahaSeason. Allocation will be on annual basis in proportion to the individual command
areas of an FO. Under this system, whatever the water saved by an FO and its members in maha(wet)
season by means of strategies such as effective utilization of rain falls, would be made available to the
same FO for the next yala (dry) season. The purpose is to create incentives for FOs to manage water
efficiently. FOs who save more water during mahawill have the right for the saved volume to use in the
yala. In a conceptual sense, the annual allocation can be thought of as establishing a “virtual” village
tank to be managed by individual FOs. Through this management approach it is also expected to
create a feeling among the farmers for active participation in water management thereby tapping their
labour for canal operation activities which are normally perceived as a responsibility of only of the
technical staff of the PID.

38. As the first step in introducing the proposed demand based water allocation system, interfaces
between the main canal (managed by PID) and the rest of the downstream canal network which would
eventually be managed by FOs, have to be identified and calibrated to measure the water flow from
one segment to the other. FOs should then be trained for requesting the entitled allocations from the
main system, and measure and quantify it, jointly with PID as and when receiving from the main canal.

39. Under Iranamadu main system, there are 21 FOs in operation at various scale. Some of those
FOs are receiving water into their command are through several inlets from the main canal and while
others receive water only from one inlet. All these inlets need to be calibrated for water measurement
so that each FOs would know how much of water they had already received at particular time of the
cultivation season and how much remains in their annual allocation to be available for the rest of the
year. The expected response is that the farmers will manage their limited supply carefully so that the
88 89
annual water allocation is productively used , . Experience has demonstrated that as a result of such
water management modalities, there are fewer water conflicts, a reduced incidence of crop failures
and an increased irrigation intensity. Also, farmers are actively involved in maintenance and there is a
90
reduction in broken gates, broken pipe outlets and cases of silted canals . All FOs are trained to
maintain records on water request and on water actually received. The main system from the reservoir
up to the tail ends of the main canal will be operated as a Water Bank and the FOs are the customers
who can request water from the bank in volume basis. Handling of responsibilities of FOs for
documentation related individual water accounts and monitoring the water measurement at the inlet to
their command areas would also create opportunities for female members of FOs to involve in water
management. The Project would provide extensive training for PID staff and for farmers and organise
farmer exchange programmes with farmers in areas such as Mahaweli System H where this system is
being practiced successfully.

88
Panapitiya D Mahinda, [Link], “Rehabilitation programs of large scale Irrigation projects – an opportunity to alter the
farmers’ role in Water Resource Management”. Published for a competition organized by IWMI/Instituion of Engineeres Sri
Lanka, 2007
89
[Link] de Silva and Francois Mollw Project Officer , Sri Lanka Foundation Institutes, Bulk Water Allocation method:
Lessons from a sustainable water management practice from the Mahaweli System H of Sri Lanka : Sri Lanka a Study
conducted by International Water Management Institute (IWMI)
90
Aheeyar, M. M. M.; Shantha, W. H. A.; Senevirathne, L. P. 2007. Assessment of Bulk Water Allocation Programme in
Mahaweli – H Area.

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40. Following experiences in other donor (JBIC, WB and EU) irrigation projects, the Project would
outsource the activities related to training and water management to private sector consultancy groups
or NGOs as a strategy to accelerate the work. In selecting consultants or NGOs, QCBS method
specified by the ICTAD would be used.

41. The issue of water charges The Irrigation Ordinance of 1946 foresees the levying of water
charges by the State in any major irrigation scheme . It also foresees the establishment of a
Cultivation Committee in which local government and farmer representatives decide on mandatory
water allocations, dates of cultivation and cropping pattern for each season. An amendment in 1994
exempted from the payment of water charges by FOs that have taken over all or part of the operation
and maintenance of a distributory canal system of an inter-provincial irrigation and land development
scheme. Such FOs are empowered to levy charges form their members to cover the costs of
maintenance. Further amendments of the Ordinance will be made in 2011 in respect of safety of the
irrigation systems, protection of catchment areas, removal of squatters from catchment areas, and
prevention of water pollution.

42. The Iranamadu scheme is the property of the Provincial Council, with the exception of the
lands that were given out in full ownership during the initial land development in 1902. Subsequent
land issues were on the basis of leases or user-rights. Within the scheme, after rehabilitation, the
Provincial Irrigation Department will retain the responsibility for the operation of the main canals and
the branch canals. It also will be responsible for the maintenance of these and for that purpose, the
Project would provide it with the required supplement of equipment. The District Secretary, relevant
Line Departments and farmer representatives would continue to decide water allocations, but not
necessarily cropping patterns.

43. With the rehabilitation of the distribution and field canals in the Project, operation and
maintenance will be the responsibility of FO, who would be organised around each of the water
distribution points at branch and distribution canals. However, ownership of the scheme below the
branch canals (canals, bunds, roads, structures, etc.) will remain with the government.

44. In actual practice, water charges have not been paid so far in the Iranamadu scheme. The
Project would create a conducive environment at farmer level for this through two major innovative
measures: a) the introduction of Bulk Water Allocation by farmer groups and b) the promotion of
contract farming for diversified crops. Crop diversification during the yala season is required to enable
farm households to increase their incomes above the poverty line. Diversification however requires a
more flexible water management system than what has been practiced thus far.

45. Bulk Water Allocation has been practiced successfully in Mahaweli’s System H, where the
average water duty came down and water productivity improved while water fee collection by farmer
groups reached 94% of amounts due. It provides for an annual water allocation to each of the farmer
groups around a distribution point, in accordance with its command area. All distribution points are
installed with simple water measuring devices. Water saved during the mahaseason can be used
during the yala season, when shortages are more critical. The cultivation of less water demanding
crops (higher value vegetables instead of low value paddy) and the possible application of solar
powered drip irrigation, if feasible, would improve further the water efficiency.

46. The demonstrated effect of the bulk water allocation system is a strong awareness among
farmers of the need to keep “their system” in an operating state. The stakes would be further raised
by the contract farming approach, ensuring a remunerative and transparent market for diversified
crops.

47. Women groups in fruits, vegetables and other crops An estimated 20% - 30% of the
command area is suitable for the production of fruits, vegetables, etc. during the yala season. This
present an opportunity for women to involve in commercial ventures. They have experience in
producing a wide range of vegetables, pulses and root crops during the off seasons for domestic use
and the local markets. While targeting production enhancement, women should establish their social
capital as ‘producer groups’, ‘contract farmers’, and ‘agro- entrepreneurs’ with skills in producing better
quality products catering for the market demand. The options for this intervention are wider in the tail
ends of the command area and also in the 500 meter wide fringe areas adjoining the main channels.
With sufficient training on technology and credit arrangements, women’s groups would develop

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capacity for diversifying the lowlands and the uplands. It is estimated that a total of about 425 groups
91
would be established in PY2–PY4 with a membership of 8 450 persons , cultivating an area of
2 100 ha. While the focus is on women groups, male or mixed groups would be promoted if strong
demand for this exists. The overall target for this activity would be a participation of women of not less
than 75%. Group formation and operation would be supported for 3 years per group. Groups would
be phased in over 3 years and no new groups would be established after PY4. About 20 groups could
be supported by a social mobilizer, and this sequencing would require a maximum of 21 social
mobillisers in PY4.

2.2 Production, extension and marketing

48. Production The recent re-settlement of farmers in the command area and the upcoming
rehabilitation of the irrigation system create an opportunity to apply from the beginning a more
sustainable approach to both production and marketing. Before the conflict, farmers were mostly
producing paddy under semi-organic conditions and during the conflict, fertilizer use had been
restricted. It is only since 2009 that the government is promoting intensive use of chemicals e.g.
subsidizing the price of fertilisers by 80% and providing free inputs packages to resettling farmers.

49. This development raises several issues, it has a negative impact on the environment and the
quality of the groundwater, the financial attractiveness of paddy for farmers depends wholly on the
extent of subsidy provided by the government which cannot indefinitely be sustained; consumer
awareness of public health risks in food is rapidly increasing, providing new market opportunities for
“clean” products; and alternative, less costly and less polluting cropping methods are available and
known to farmers in the area. Therefore, the focus of the Project in agricultural development in the
command area and the surrounding upland project area is on sustainable cropping techniques for
diversified crops. In the mahaseason, it is anticipated that mostly paddy would be grown as pest- and
disease incidence is higher for other crops, but the latter are not excluded. In yala, fruits, vegetables
and other high value crops would be promoted on the 20% - 30% of land area suitable for such crops.

50. At present, the decision on seasonal water allocation, the area cultivated and the cropping
pattern is taken in the Cultivation Committee chaired by the Government Agent and including
representatives of the Provincial Irrigation Department and of farmer organisations. With the
introduction of the Bulk Water Allocation system, the decision on the cropping pattern would be
decentralised to the farmer groups managing their own distribution point. The committee then only
decides on the annual and seasonal water allocation in terms of volumes. The Bulk Water Allocation
system thus provides the opportunity for farmer groups to diversify their cropping system away from
semi-mandatory paddy production to demand led fruits, vegetables and other crops, including forage
crops production. This would have an important impact both on their water requirement (lower) and
on their household income potential (higher).

51. Market demand To ensure effective market demand for project farmers for specific crops, the
Project would seek partnership with the private sector such as Cargill and Keels, to create marketing
contracts. The partnerships would include providing their expertise both in sustainable production and
direct marketing through forward contracting with farmer groups. Before the start of each season,
private sector buyers would indicate its market demand in terms of type of crops, quality requirements,
quantities demanded, pre-primary processing needs and delivery modalities in workshops with farmer
group and women group representatives. It would also indicate the farm gate price, a floor price and
the pricing mechanism to accommodate fluctuating market prices. Groups interested in working with
private sector such as Cargill would be supported by the Project in their negotiations of forward
contracts and contract fulfilment would be supervised by the Project. It is expected that the private
sector would provide necessary farm inputs on advance to be recovered from the sale income (see
Appendix III on Mini Market Survey included in Working Paper 4).

52. Extension The required extension services and farmer training to meet quality standards
would be provided both by the Agriculture Department and by the private sector including Cargill. The
Department would need to be strengthened to carry out these tasks and the necessary staff training
would be provided by the Project. Additional extension officers if required would be provided with
project funds on contract basis to fill staff shortage. On-demand basis, compost production from cow
91
Assuming 25% of the command area suitable for fruits, vegetables and other high value crops, or 2100 ha,
assuming groups with 20 members each, and 0.5ha per member

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dung and biomass would be promoted while other productivity enhancing techniques such as low or
zero till, green mulch, application of neem (Azadirachtaindica) biocide extracts [Link] be
encouraged through training. Limited number of on-field non-paddy crop demonstrations would be
supported in yala and medha seasons to encourage farmers to cultivate higher value crops. An
emphasis on adoption of an eco- agriculture approach that reduces excessive chemical inputs,
increases soil organic and nitrogen content through crop residue retention and legume crop rotation,
water conservation and organic fertilisers would be included in such demos. Currently there is no
adequate market demand for fully organic paddy or non-paddy crops and as a result organic
certification will not be pursued as a project activity, with the exception however of groups of farm
holdings practicing organic agriculture.

53. Inputs Sustainable agriculture will require the use of organic inputs rather than inorganic
ones. Available biomass in the project area would be used for composting while other fertility
enhancing techniques would be applied, including green manure, application of neem extracts, etc.
The production of such inputs on a larger scale would constitute a basis for micro-enterprise
development. Procurement of inputs would be either financed by farmers themselves or, for farmers
having concluded forward contracts, advanced by the private sector (for example Cargill) and
recovered from the farm gate price. Where feasible, primary processing by farmer groups in terms of
sorting, cutting, packaging, etc. would be promoted. Training would be provided and where small
equipment would be required, matching grants for up to 70% of the costs would be made available to
groups who are adequately matured with savings to match the project grant and capacity to handle
accounts and financing such activities.

2.3. Other agricultural development and off-farm activities

Other agriculture

54. Upland agriculture The area available for upland in the project area outside the command
92
area has been decreasing due to cultivation/growth of perennial crops (fruits, coconut, timber trees,
etc.) in homesteads. In mahaseason, cultivation of OFCs (Chilli, red onion, manioc, groundnut, black
gram, green gram, cow pea) and vegetables is mainly done under rain-fed system in highlands. In yala
season, cultivation is done in highlands with irrigation using agro-wells. Banana and mango are the
most common fruit crops in the area. However, many other fruits types that give high returns, such as
papaya, pineapple, guava, grapes, dragon fruit, citrus and pomegranate thrive well in the region and
would be promoted in the area by the Project with the support of the cooperate buyers/line agencies.

55. Agrowells The effective utilization of the upland depends on the availability of water for
rd
supplementary irrigation during the mahaseason and irrigation during the yala season. About 1/3 of
the households possess an agro-well to trap seepage water from distributory channels of the
command area. Many of these agro wells are damaged and high potential exists for the utilization of
sub surface water release from distributory canals for diversification of uplands as well as low lands
during the yala season with high value crops. The Project support would be provided for development
of agro wells in uplands and at appropriate places of low lands.

56. Fruit production The improvement of connection with the southern districts increase the
marketability of fruits and vegetables and differences in fruiting/harvesting seasons provide
competitive advantage for project farmers. The construction of the proposed fruits and vegetable
processing plant by Cargills near Kilinochchi will further improve demand. However, lack of quality
planting materials and inadequate irrigation practises during the dry season constrain the development
of fruit sector. The Project would intervene to overcome these constraints by capacity building of
farmers, development of extension support, linking the FOs with corporate buyers.

57. Farmers in Iranamadu area face difficulties in obtaining quality seeds for
paddy/OFCs/vegetables. The private sector does not engage in OFC seed production due to low
profit margins as a result of government administered prices. The capacity of FOs would be
developed for self/commercial seed production programmes of paddy/vegetables/OFCs with the
support of the Department of Agriculture.

92
Within 0.5 km from the main canal bunds

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Off-farm Economic Activities

58. Women groups for micro enterprise development Micro enterprise development for
women will provide multiple livelihood options. The areas with multiple prospects include agro-
processing, agro-business, local craft industry, livestock based value addition work, production of
organic fertiliser. Sub-groups should be formed in relation to the production enterprise, geographical
location attracting private sector and undertake contract based supply for the private sector.

59. Three areas of importance in this regard include micro-finance and training on enterprise
development, vocational skills, and market access. The experiences of SANASA- Thrift and Credit
Cooperative Societies, Sarvodaya and also the Ministry of Childcare and Women’s Affairs (MOCWA)
and Women’s Bureau would be used. New Comprehensive Rural Credit Programme (NCRCP)
financed by the Central Bank of Sri Lanka and operated through commercial banks provides
agricultural credit for paddy and non-paddy crops. Currently only about 2% of the NCRCP loans in
value terms have gone into non-paddy crops in the Kilinochchi district. In addition the JBIC financed
Poverty Alleviation Micro-Finance Project II (PAMP-II) also provides credit for agriculture, but mainly
paddy. Currently there is hardly any credit demand for non-paddy crops. The Project would therefore
cooperate / discuss/ liaise with the banks to extend these facilities for the needy for all type of crops
and would create credit linkages.

3. PROJECT MANAGEMENT

60. The Project management structure is kept simple and operational while assigning
responsibilities to the most relevant levels. The structure is basically a 3-tier structure comprising a
national steering committee, a dedicated Provincial Coordinating Committee and a project level
management office. It is presented in detail in Annex 5.

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ANNEX 5: INSTITUTIONAL ASPECTS AND IMPLEMENTATION ARRANGEMENTS

I INSTITUTIONAL ASPECTS
General Background

1. This Annexure will briefly present the institutional aspects and implementation arrangement of
the Project at all operational levels of the Project, which is located in the Divisional Secretary Divisions
of Karachchi (19 GN Divisions) and Kandawalai (3 GN Divisions) in the administrative district of
Killinochchi, which is one of the five districts in the Northern Province of Sri Lanka. The institutional
capacities matrix provided as Appendix 1 of the annex will illustrate the status of all the project-related
national and provincial institutions as well as private sector agencies, including capacity strengthening
requirements. These can be read in conjunction with Appendix 2 on the institutional setting for the
Project.

2. The Project is designed to be implemented as a nationally executed project that would be

coordinated at the provincial level as well as district level and implemented in the project area at
district level. Implementation would involve key relevant government departments, private contractors,
NGOs and grassroots organisations of the farming community (Groups, FOs etc.). The proposed
management and implementation structure comprises three levels of operation: national/provincial;
district and project area. Thus the proposed institutional arrangement would have the following
institutions:
1) National Ministry of Local Government and Provincial Councils (MLG&PS),
2) Provincial Ministry of Agriculture, Livestock and Irrigation (Departments of Irrigation,
Agriculture, Agrarian Services & other relevant district agencies)
3) Project level implementation agencies – Project Management Office, Private Sector, NGO,
and grassroots Organisations (FOs, WRDSs).

Lead Implementing Agency

3. On the basis of the proposal in the Inception report, the Detailed Design Mission discussed
the selection of the Lead Implementation Agency at central level. Potential relevant ministries were
the Ministry of Local Government and Provincial Councils (MLGPC); the Ministry of Irrigation and
Water Resources Management (MIWRM); and the Ministry of Economic Development (MED).

4. While MIWRM would be the most suitable technical choice, and although the Iranamadu
scheme is of a sufficient size to be within the mandate of the Ministry, it does not meet the other
requirement that it should involve two or more provinces. Under constitutional amendments, the
responsibility for single-Province schemes is devolved to Provincial Councils and their Provincial
Ministry of Agriculture and Irrigation. However, MIWRM would be willing to provide technical support
to any other Lead Implementation Agency. MED is implementing large scale reconstruction and
rehabilitation programmes in the North and the East and expressed some reservation to take on a
project of the (modest) size as proposed by the Inception report.

5. As a result, MLGPC was proposed as the Lead Project Agency, for the following
considerations: a) the Provincial Council is the legal owner of the Iranamadu scheme, including all its
93
infrastructure and most of its land resources ; b) MLGPC has a direct hierarchical relation with the
Provincial Council and the devolved technical ministries at Province level; c) the technical capacities
of the Provincial Ministry of Agriculture, Livestock Development, Lands, Irrigation and Fisheries could
in principle be strengthened with support from MIWRM; d) the Ministry is the Lead Implementing
Agency for the ADB/AFD financed Jaffna and Killinochchi Water Supply Project, to which the present
Project is complementary. This would ensure full coordination between the two projects; and e) the
Ministry is familiar with multilateral fiduciary procedures. The coordination meeting in the Ministry of
Finance and Planning, chaired by the Director General for National Planning on 10 May 2011 and
attended by all the concerned central ministries and provincial representatives, approved the
appointment of MLGPC as the Lead Project Agency.

93
with the exception of lands given out through title deeds to the first settlers after establishment of the scheme
in 1902

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II ORGANISATION AND MANAGEMENT

6. The project organisation contains the Lead Implementing Agency at the national level, a
National Steering Committee as the legislative authority of the Project, a District Coordination
Committee in an advisory role and a Project Management Office (PMO) holding the executive
authority. The composition and responsibilities of each are presented below.

7. National Steering Committee (NSC) The NSC is the legislative authority of the Project and
it is responsible for national level decision making, ensuring the Project is implemented in accordance
with the Loan Agreement, the Project Agreement, the respective Memoranda of Understanding
between the Project and line agencies, and the stipulations in the Design Document. It also would
monitor that the jointly agreed recommendations of Project Review missions and of the Mid Term
Review would be implemented in an appropriate manner by the PMO. The NSC would review and
approve the Annual Work Plan and Budget and the Procurement Plans as well as the Annual Report
and the Financial Statements. It would also review the project performance and impact as well as the
performance of the implementing agencies. It would solve policy issues which may arise during
project implementation and it would deliberate on any matter submitted to it by the Project Director. It
would be scheduled to meet quarterly and on the request of the Project Director. Members would be
compensated for their attendance according to the GOSL standards which needs to be acceptable to
IFAD.
8. The Project would entertain a public – private partnership with agri-business companies such
as Cargill which would implement the marketing activities with farmer and women groups in the
project area. For this it would commit private sector own resource in parallel to the Project as
specified in a Project Agreement. As a co-financiers, a representative of the private sector would
participate in the NSC meetings. The composition of the NSC thus, would be as indicated below:

1. Secretary to Ministry of Local Government and Provincial Councils – Chairperson,

2. Secretary, Ministry of Irrigation and Water Resource Management – Member
3. Chief Secretary, Northern Provincial Council -Member
4. Director General of the External Resources Department, Ministry of Finance – Member
5. Director General of the Department of National Planning - Member
6. Secretary, Provincial Ministry of Agriculture, Livestock and Irrigation, NPC – Member
7. Representative of the Private Sector, - Member.
8. Project Director, – Secretary
9. Considering the facts that a) the Project would be implemented in a single District
(Killinochchi) by a single Ministry; and b) that the Chief Secretary of Northern Province and the
Secretary of the Provincial Ministry of Agriculture, Livestock and Irrigation would serve as members of
the NSC, the need for coordination of project implementation would be focused on the District. The
Project Director would participate as ex-officio in the Killinochchi District Coordination Committee.

10. Provincial Steering Committee A Dedicated Provincial Steering Committee (DPSC) for the
Project would be responsible for provincial level coordination, and project implementation oversight
over performance of functions. It will recommend annual work plan and budget (AWPB) and
procurement and closely monitor the project performance and output. The Project would not bear any
cost of the logistical arrangement of the DPSC. It is chaired by the Chief Secretary, Northern
Provincial Council with the Secretary to the Governor, Northern Province as a member, Secretary,
Ministry of Agriculture, Irrigation, livestock Development, Fisheries and Lands Northern Province as
the Secretary of the DPSC, Secretary, Ministry of Local Government, Cooperatives, Rural
Development, Industries and Social Welfare, Northern Province, District Secretary, Kilinochchi,
Provincial Director of Irrigation, Northern Province, Provincial Director of Agriculture, Northern
Province and Provincial Director of Livestock Development, Northern Province, Provincial Director of
Lands, Northern Province and Provincial Commissioner of Cooperatives, Northern Province as
st
members. The DPSC will meet once in every month during the 1 two years of the Project and
quarterly thereafter but prior to the NSC so that it can table issues that would discuss in the NSC.
Considering that a) the Project would be implemented in a single District (Killinochchi) by a single
Ministry; and b) that the Chief Secretary of Northern Province and the Secretary of the Provincial
Ministry of Agriculture, Livestock and Irrigation are members of the NSC, the need for operational
coordination would be focused on the District, while the Provincial Ministry through its DPSC retains a
performance supervisory oversight on behalf of the NSC (see Working Paper 6 for details).

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11. The Iranamadu Irrigation System is a major development project within the Killinochchi
district, and relevant district level line departments of MALDLIF, notably for irrigation, agriculture and
agrarian services would be involved in implementation.

12. District Coordination Committee Project coordination at the District level would be
facilitated at the District Coordinating Committee (DCC), which is an existing committee that meets
once a month to coordinate and report on all development projects implemented in the district. It is
proposed that matters pertaining to the Iranamadu Project would also be reported and discussed at
this committee. The committee would not have legislative authority over the Project but plays an
important advisory and district level coordinating role. The DCC is chaired by the District Secretary
(Killinochchi) and include representatives of all line departments. The Project issues would be
included into its regular agenda of the DCC meeting, making it another monitoring forum. The DCC
would review project progress against the approved AWPB and advise on coordination with other
project’s activities and on issues arising during implementation. In addition to discussing project
related issues, the DCC would coordinate the inputs from all implementing agencies to facilitate
overall project implementation. It would also advise the Project at the district level and ensure that it is
integrated in district development plans.

Project Level Institutions for Project Implementation

13. The Project Management Office (PMO), established in Killinochchi, would be the executive
authority of the Project and would be headed by a Project Director. To overcome the difficulties
experienced in other IFAD projects with extensive dialogues between IFAD and the Government
94
about the selection of suitable candidates and the subsequent high turn-over of incumbents , the
Project Director would be appointed from among high level permanent government officials at the
level of Secretary in the Provincial Ministry of Agriculture, Livestock and Irrigation, on a secondment
basis. The appointment would need to be acceptable to IFAD. As the Project Director will maintain
his/her permanent position in the Ministry, s/he would exercise the responsibilities of Project Director
on a part-time basis. Therefore, a Project Manager would be recruited from the open market, if not
seconded from the provincial departments, with qualifications and experience acceptable to the
Government and IFAD, who would be in charge of daily management of the Project and have
authority to commit project resources up to an agreed level. The division of responsibilities between
the Project Director and the Project Manager would be defined in the respective Term of References.
In the absence of the Project Director, his/her responsibilities would be delegated to the Project
95
Manager .
14. The co-financing and partnership modalities with the private sector such as Cargill would be
defined in a Project Agreement acceptable to IFAD between the private sector and the Ministry of the
Local Government and Provincial Councils, as the Lead Implementing Agency.
15. The PMO would be responsible for (a) Overall project planning, management and
coordination; Monitoring and evaluation; (b) Providing timely, and quality resources and technical
assistance to support implementation agencies (IAs) as well as cooperating private sector bodies; (c)
Overall procurement administration and contract management; (d) Financial management, with
exercising controls over working capital budgets; (e) Planning and management of capacity building
training; (f) Assurance of technical standards and quality of project inputs/outputs; (g) Environment
and social safeguard compliance; (h) Risk mapping and corruption mitigation; (g) Procurement; and
(h) Supervision, policy dialogue, reporting, internal control. The implementation strategy of the Project
would be to involve line departments (Irrigation, Agriculture, and Agrarian Services) according to their
capacities under Memoranda of Understanding (MOU) with the Project. The Project would undertake
a partnership with a private corporate buyer for extension and marketing, and outsource all other
activities to private sector contractors, NGOs and other agencies. A small proportion of project
resources would be committed to capacity building and institutional support for public services. Apart
from investments in physical infrastructure, the Project would need to promote farmer and women
96
group formation for water management, production and marketing. This social mobilisation needs to
be undertaken by an experienced and reputable NGO.

94
partly due to the government regulation of salary levels according to overall project costs
95
this approach is also applied in the NADEP project as well as in the IFAD project in the Maldives
96
or strengthening of existing groups

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16. The PMO that would be located in Killinochchi and would include a total of 15 staff members.
Some of them as listed below would be appointed on competitive basis and full time and others
seconded from the government carders. The latter officer will be paid an allowance in addition to their
government salary. The Irrigation Engineer may be appointed on competitive basis or on secondment.
All the project staff except for the Procurement Specialist would be appointed for total project period
of 5 years. The appointment of the Procurement Specialist would be for the first 3 years only as most
of the project procurement would take place in that period. The proposed staff would comprise the
following:
i. Project Manager: appointed on competitive basis, full-time and responsible for overall Project
implementation and to facilitate coordination among the staff of the Provincial Departments and the
Project
ii. Irrigation Engineer: appointed on secondment of if not available on competitive basis, full-time and
responsible for assisting Project Director in project management, managing outsourced consultancy
contracts, coordination of PID staff, Farmer Organizations and outsourced consultancy groups,
st
reviewing of irrigation designs and coordinating all other work under the 1 Component
iii. Agro Economist: appointed on secondment of if not available on competitive basis, full-time and
responsible for guiding production and crop diversification, all marketing aspects, including initial linkage
building between producers and government/cooperate & private sector buyers, liaison with relevant
institutes for forward sales contracts, buy-back arrangement etc, and advice the project management on
production and marketing aspects of the project. Possibilities to recruit a person from the Jaffna
University would be explored.
iv. Procurement Specialist: appointed on competitive basis, for the first 3-year period and responsible for
all procurement of the project specially selection of qualified service providers for outsource works,
advise the project management on procurement matters of the project as appropriate
v. Finance Manager/Accountant: appointed on secondment of if not available on competitive basis, full-
time and responsible for assisting Project Director in financial management, fund flow management,
submitting withdrawal applications to IFAD and facilitating annual Audits
vi. M&E and Knowledge Management Specialist: appointed on competitive basis, full-time and
responsible for assisting Project Director in M&E and progress reporting; maintaining GIS data base
established through mapping; RIMS reporting; knowledge management and sharing; coordinating
baseline survey, annual outcome surveys, and mid-term and completion impact assessments; and
assisting supervision missions. Maintenance of a computerized, multi-user data base. Operationalise
the log-frame and regularly update the outcome indicators
vii. Gender, Training and Social Mobilization / Inclusion Specialist: appointed on competitive basis, full-
time and responsible for assisting Project Director in all gender aspects, all training, social organization
and mobilization covering social inclusion, FOs organization and mobilization, and to address gender
issues and all other social aspects including grievance and complaint handling
viii. Internal Audit: appointed on competitive basis, full-time and responsible and be in-charge of the
internal auditing of the Project depending on the need and specific focus with a view to improve
governance process.
ix. Supporting Staff: appointed on secondment 2 Secretaries, 3 Drivers, 1 Office Assistant and 1 Security
Guard. (If necessary the supporting staff may be recruited from the existing staff of the Provincial
Council as per the provision under Management Services Circular No: 33 with the approval of Chief
Secretary, NPC)
NGOs and Grassroots Organisations (FOs, WRDS)
17. Apart from government officials, who function as the grassroots level, most active
organizations in the project area are two-fold, NGOs and CBOs. The presently active NGOs include
Sarvodaya and Sewa-Vanitha while few others (World Vision, Plan, ZOA etc) are involved mainly in
relief and recovery.
18. Most active community organizations present in the project area are Farmer Organizations
(FO) and Women Rural Development Societies (WRDS). The establishment of FOs in all the irrigation
schemes is a Government Policy and they are established under the provisions of the Agrarian
Service Act (No.46 of 2000), which permits one or more FOs for any area as determined by the
Commissioner General of Agrarian Development. However, in practice FOs are organized in each
village. The Commissioner General shall register such FO when an application on that behalf is made
to him by a FO and assign a number for such FOs. Once registered, they become formal Farmers
Organizations and they are given legal recognition with a better chance of long term sustainability.
Further when FOs are registered and functioning as Distributory Canal Organizations which are

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legally registered organization, they can be entrusted with power to collect O&M fees from its
members under the Irrigation Ordinance Act No.13 of 1994.
19. As far as Iranamadu Project is concerned, the existence of FOs is of utmost important. Over
the years, FOs have been functioned under Iranamadu system, quite efficiently and effectively,
according to the Agrarian Services Commissioner’s sources. However, there were interruptions to
cultivation during certain periods of armed conflict. As at present there are 21 FOs registered under
the Iranamadu system, and they have been federated as ‘Iranamadu FO Federation’. They are
facilitated play an important role in water management and maintenance of the infrastructure and
improve the role of women in membership and management.

III PRESENT INTUITIONAL STATUS OF THE FOS IN RELATION TO WATER

MANAGEMENT

20. As the first step active and joint participation of the farmers and the technical staff should be
treated as a necessary prerequisite in identifying rehabilitation needs. Identification of the
rehabilitation needs and the awareness building on future operational criteria should be undertaken
concurrently.
21. There is a canal based institutional setup within the Project. There are registered 21 FOs that
are operating at different levels, with an average membership of around 400. Command areas of all
those FOs receive water from the main canal. Some of those FOs are receiving water into their
command area through several inlets from the main canal and while others receive water only from
one inlet. Presently, there is no pre-planned or defined scheduling of irrigation as such and FOs are
operating at the distributory canal level adopt some sort of rotational system of water issues along
distributory canals and within field canals which deliver water to the farm. Though presently, the water
plays a role in strengthening the farmers institutionally as a group to a certain extent, there is no
accountable mechanism to link them with the PID staff. Also at the agriculture production stage the
farmers take decisions individually rather than as a group. As such A step-wise logical functional path
of continuous process of internal management capacity building and structural strengthening of FOs
would be foreseen in the Project (see WP 6 for details). While the capacity being built up, a set of
milestones will be used to measure the level of functional maturity state achieved in Project initiated
capacity building for FOs which will be captured by the M&E system (see WP 6 for details).

Agriculture Related Institutions

23. The main agriculture related institutions of the project area are the community based
organizations (FOs), research and development related public sector organizations (RARDI, SPMDC,
ASCs, and PID), NGOs, financial institutions and private sector organizations.
24. Private sector involvement in supply of seeds and planting materials of OFCs, domestic
vegetables and fruits is limited. Therefore, farmers depend more on the seeds and planting materials
that are supplied by the public sector agencies. In addition, there are several non-governmental
organizations and private sector organizations (Cargills, Hayleys, Prima etc.) that provide own
extension services for cultivation of OFCs, vegetables and fruits. The private sector organizations
offer forward sales contracts to farmers. The firms that are interested in making commercial linkages
with farmer groups usually employ extension officers for farmer training and agents for marketing (see
Appendix III on Mini Market Survey included in Working Paper 4).
25. Five commercial banks (BOC, PB, CB, HNB and SB) and a development bank (Sanasa) have
established branches in Killinochchi town and all banks have provided credit facilities for paddy
cultivation in the previous season. The main agricultural loan products are linked with the Government
sponsored New Comprehensive Rural Credit Program (NCRCP) and Poverty Alleviation Micro
97
Finance Project II (PAMP-II). People’s Bank and Bank of Ceylon have been promoting the formation
of small groups to facilitate micro finance programs among the farming communities.
26. The other institutional sources of agricultural and non-agricultural credit are Killinochchi Rural
Development Bank, Rural Banks of Multipurpose Cooperative Societies (Karachchi North & Karachchi
South), Killinochchi District’s Thrift & Credit Cooperative Society Union (SANASA). Strengthening of
capacity of these institutions to restart their services is required.

97
The implementation period of PAMP-II is 2009 to 2013

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IV IMPLEMENTATION MODALITIES

27. The Project would apply the following implementation modalities to the main activities:

1. INFRASTRUCTURE DEVELOPMENT
Stepwise activities to be undertaken for Infrastructure Rehabilitaion are as follows.

1. Participatory Rural Appraisals (PRAs)

2. Walkthrough Surveys
3. Surveying and Levelling
4. Preparation of Designs &Drawings
5. Preparation of BOQ
6. Ratification Meeting
7. Cost Estimates
8. Preparation of Contract Documents
9. Select ion of Construction Contractors
10. Contract Manage net and contract supervision
11. Final Handing over

1.1 Irrigation rehabilitation

In view of the agreed capacity of the Provincial Irrigation Department (PID) the implementation of the
irrigation rehabilitation works would be structured as follows.

A. Main canal and drainage canals

a. Design PID with TA, staff allowances from PMO, MOU with PMO
b. Works Contractor, tender by PMO, contract management by PMO advised by PID
c. Supervision PID, staff allowances from PMO, MOU with PMO
B. Branch, Distribution, Field Canals, Farm Roads
a. Design Contractor DS, tender and contract management by PMO
b. Works Contractor W, tender and contract management by PMO
c. Works FOs with capacity, direct contract with PMO
d. Supervision Contractor DS, tender and contract management by PMO

1.2 Other Infrastructure

A. Other infrastructure

A.1 Infrastructure for groups

a. Needs assessment Social mobiliser, Corporate buyer, PMO
b. Works Contractor or group, contract management by PMO
c. Supervision Group, PMO

A.2 Agro-wells
a. Needs assessment PMO, PDOA, Social Mobilizers
b. Construction Contractors
c. Supervision Community, PMO

2. PRODUCTION AND MARKETING

2.1. Social mobilisation and training

A. Social mobilisation, FO and group formation

a. NGO, tender and contract management by PMO

B. Group members and leaders training

a. NGO, Department of Agrarian Services, with TA, contract management by PMO

C. Training in Water management, Operation and Maintenance

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a. Consultants, contract management by PMO

D. Women groups for vegetables production and marketing

a. NGO for social mobilisation
b. Corporate buyer for extension, marketing,
c. PDOA for training, contract management by PMO

2.2 Production, extension and marketing

A. Inputs, extension and marketing for contract farming

a. Corporate buyer, provision of inputs, training, marketing contracts

B. Inputs and extension for non contract farming

a. Inputs Banks, loans to farmers
b. Extension PDOA, institutional support from PMO

2.3. Other agricultural development and off-farm activities

2.3.1. Other agricultural development

A. Upland agriculture
a. Extension PDOA
b. Model Extension Office PDOA

B. Agro-wells
a. Needs assessment PDOA, PMO
b. Agro-well construction Contractors, contract management by PMO
c. Supervision Community

C. Fruits production
a. Training PDOA
b. Matching grant pre-processing PMO, advise by Corporate buyer
c. Rehabilitation nursery SPMDC

2.3.2. Off-farm activities

A. Women groups for micro-finance
a. Group formation and training Social Mobilizers, supervised by NGO
b. Bank linkages Social Mobilizers, supervised by NGO

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APPENDIX 1. INSTITUTIONAL CAPACITIES M ATRIX

STATUS OF THE EXISTING NATIONAL AND PROVINCIAL INSTITUTIONS PRIVATE SECTOR AGENCIES AND REQUIREMENT FOR CAPACITY ENHANCEMENT
Organisation Strengths Weaknesses Opportunities/Threats Remarks
National Execution
1. Ministry of Economic  Lead Ministry with authority for  Ministry is an amalgamation of  Apparent willingness of the  MED is the key institution
Development (MED) implementing a number of several former ministries with a government to contribute more where regional
national and regional level number of departments, resources to agriculture and development can be
projects and programmes divisions, authorities and rural development to the undertaken under various
donor-funded programmes & northern region ongoing donor-funded
 The ministry in charge of projects, which call for close projects
regional development, tourism, coordination and monitoring an  Initiatives towards responding to
planning and implementation issue at the project level stakeholder needs and potential  MED currently involved in
for IIDP to build better working implementing a number
 Key national pro-poor  Bureaucratic and hierarchical relationships with INGOs / NGOs of projects of regional
programmes and pro-poor institution exist, making project in the North development nature
programmes like Samurdhi, implementation a challenge where scope of IIDP in
Maga-neguma, Gama-neguma  Potential to improve capacities terms of investment is too
& Gemidiriya  Serious budgetary & manpower in donor-funded projects & small to undertake
constraints & problems of programmes with technical
 Availability of senior public mobilizing field staff to backstopping  Provincial level capacities
servants at the top with capable development concerns needs strengthening
technical staff
2 Ministry of Local  The only ministry with direct link  MLG&PC has no long-term  Potential to play the lead role in  MLG&PC is a key
Government & Provincial to provincial councils that has experience in executing rural infrastructure development institution in the area of
Councils (MLG&PC) authority and power for coordination and monitoring PC level physical
coordinating the implementation issues at the project level  Good institutional network to Infrastructure
of a projects of IIDP nature mobilize services but too much development through its
 Training and experience of staff dependence on state sector provincial counterpart of
 The ministry is in charge of the not reflected in delivery of the Project
signed ADB-funded Water provincial level services  Poor record of inter-ministerial
Supply Project to Jaffna & coordination and linking with  IIDP provides an
Killinochchi through PC level  Bureaucratic and hierarchical parallel public and private sector opportunity for the
government authorities institution exist, making timely stakeholders ministry to execute a
project implementation a major irrigation
 Availability of senior public challenge rehabilitation project,
servant at the top with capable with a system of direct /
technical staff  Serious budgetary & manpower outsourced construction
constraints & problems of of irrigation canal
 Sri Lanka Institute of Local mobilizing field staff to dealing system
Governance (SLILG) of MLG&PC with development concerns  Provincial level capacities
is capable of meeting training needs needs strengthening

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3. Ministry of Irrigation &  Lead Ministry with authority for  Ministry is an amalgamation of  Apparent willingness of the  MI&WRM currently
Water Resources implementing major irrigation several two main former government officials to involved in implementing
Management (MI&WRM) construction & rehabilitation ministries with a number of contribute more resources to a number of major
works and introducing water leading departments, divisions, agriculture and rural irrigation projects of inter-
management and Operation & authorities and donor-funded development regional development
Maintenance practices irrigation & water management nature where IIDP can
projects, among which close  Initiatives towards responding to learn lessons in terms of
 In charge of a number of coordination and monitoring have stakeholder needs and potential technical backstopping
national and inter-regional (PC) been issues to reckon with for IIDP to build better working
level projects and programmes relationships with INGOs / NGOs  Provincial level capacities
in the country  Bureaucratic and hierarchical in the North needs strengthening and
institution exist, making timely close supervision
 The ministry in charge of river project implementation a  Potential to improve capacities
basin as well as trans-basin challenge in donor-funded projects &
development managing water programmes with technical
bodies at the national and inter-  Serious budgetary & manpower backstopping
regional level constraints & problems of
mobilizing field staff to
 Availability of very senior public development concerns
servants at the national level
with high technical
competencies
4 Ministry of Finance and  The lead ministry in charge of  Insufficient inter-agency links  Potential to improve capacities  Project steering capacities
Planning (MF&P) financial resources, budgetary and coordination and middle- in donor-funded projects & through managing and
allocations, negotiation of level competent people to programmes with technical coordinating as well as
foreign funds handle planning & monitoring backstopping monitoring at the national
level need to harness with
 In charge national planning,  Bureaucratic and hierarchical  Top level Initiatives and
budget monitoring and public institution exist, making timely commitment for responding to necessary capacity building
investment project implementation a stakeholder needs and
challenge potential for IIDP to build better
 Availability of separate and working relationships
competent departments, divisions  Serious budgetary & manpower
and agencies for external constraints & problems of
resources, budgets, foreign aid & mobilizing field staff to
budget monitoring and banking development concerns

 Availability of very senior public

servants at the national level
with high administrative and
planning competencies

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Provincial Implementers
5. Provincial Ministry of  The lead provincial ministry with  Ministry has group of several PC  Apparent willingness of the top  IIDP provides a golden
Agriculture, Livestock direct link to the key aspects of level leading departments and level government officials to opportunity for the
Development, Lands, irrigation, agriculture, lands, agencies which calls for very contribute more accelerated provincial ministry to
Irrigation and Fisheries livestock and fisheries close coordination and development of the north implement a major
development with provincial monitoring requirement and it irrigation rehabilitation
(MALDLI&F)
authority and power for project has currently posed an issues to  Initiatives towards responding to project, with a system
implementation like IIDP in the reckon with stakeholder needs and potential of direct and/or
North for IIDP to build better working outsourced construction
 The available limited number of relationships with INGOs / NGOs of irrigation canal
 The provincial ministry is also senior technical staff has several who are working in the North system
jointly responsible for the ongoing projects and
implementation of the signed programmes which call for very  Potential to improve capacities  Provincial level
ADB-funded Water Supply high level of working in donor-funded projects & capacities needs
Project to Jaffna & Killinochchi relationships, dedication and programmes with technical strengthening and close
commitments backstopping supervision
 Availability of senior public
servants and competent
technical staff to undertake
projects IIDP nature

 Most of the present admin &

technical staff members have
long-term experience by
working long periods at the
national level (i.e. Irrigation &
Agriculture

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Client Organisations
6. Private Companies  Private sector agribusiness  Larger scale agribusiness may  Companies could play a major  Acceptance and ready
( Cargill Ceylon LTD) companies are very responsive bypass small farmers and role in certification and support from the part of
to new projects and investment microenterprises marketing of organic produce both national and
on own funds provincial authorities of
 Bulk collection is still a problem  Agribusiness enterprise have the government is a
 Good export market efforts due to the spread of farmers potential for linking deciding factor for
demonstrated for various and low volume of farm product modern/commercial sectors to intended results of the
products small farmers programme
 Need for quality control of
 Reconstruction after civil war production, harvesting,  Potential risk that Sri Lankan  Forming closer
attracts good opportunities transport and processing poses agribusiness firms will find it commercial linkages
a huge challenge for the difficult to compete with much between farmers and
 Government policy of private company larger regional competitors agribusinesses is key to
sector led growth coupled with reducing economic
regional development make  Limited field level personnel to  Sustainable issue of marketing isolation
good working atmosphere undertake activities pertaining due to lack of assurance for
to agri-businesses in the North uniform supply of agro-products
 Availability of Central Bank -led
healthy and concessionary  Tendency to use intermediaries
financing for investment on for company purchases due to
processing poor connectivity with
agribusiness associations
 Availability of expertise with
high competency particularly in
processing and marketing

 Good institutional support and

technical backstopping

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[Link] Farmer  A strong network of CBOs  No federation of commodity-  Potential for IFAD to assist in  IFAD policies favour
Groups working in the north backed by based farmer organizations formation of grassroots farmer engagement with small
willing INGOs and NGOs groups that are inclusive of the and resource-poor
 Commodity-based poor and disadvantaged groups farmers via effective
 Government extension organizations all involve small farmer
programmes and the private commercial enterprises and  Current government food-drive organizations
agribusiness companies small/poor farmers are not through national-level
promote producer group generally represented programmes (Gama-neguma,  Special skill development
formation Divi-neguma etc) provides for production,
greater potential for harnessing processing and
benefits from the relevant marketing is required for
components of IIDP achieving intended
results from the project

8. Farmer Organizations &  Strong micro financing  Over concentration of micro  Strong tool to help livelihood  IFAD programmes and
Women Development institution network (rural banks) financing in certain areas activities projects will very likely
Societies for grassroots and the adoptability of the rural continue to work closely
level infrastructure women for micro finance  Familiarization of women into  Need to channel through with rural women
building & livelihood banking and micro financing recognized MFIs with low identifying their micro
enhancement  Women leadership in the use culture in the project area interests financing needs
and the repayment of micro
finance is high thus higher  High lending rates erode the  Awareness and
recognition by institutions earnings of micro ventures orientation programmes
at the project inception
 Success stories for women-led is a must for intended
micro enterprises, particularly intervention in the area
in the conflict affected areas

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Appendix 2 Institutional Setting for IIDP

A. National Setting
1. In view of the scope, objectives and the location of IIDP, four key cabinet ministries will be
directly involved in their various capacities – Ministry of Economic Development, Ministry of Local
Governments & Provincial Councils, Ministry of Irrigation & Water Resources Management, and
Ministry of Finance & Planning.
2. These four ministries and their potential partners (departments, divisions, institutes etc) are
shown in Table 1 below. The Detailed Design Mission had discussions with the representatives of all
the four ministries on the options available for the lead ministry and on the different roles that each
organization would play for project execution at the national level.
Table 1: National Institutions with potential for involvement in IIDP
No. Title of the National Ministry Relevant Departments / Institutes
01 Ministry of Economic Development (MED)98  Uthuru Wasanthaya (Wadakkil Wasantham)
 District Planning Secretariats
 Project for Maintenance Infrastructure for Alleviation of Rural Poverty
 Dept of Commissioner General of Samurdhi
 Samurdhi Authority of Sri Lanka
 Gama Neguma Secretariat
 Gemi Diriya Programme
 Regional Development Division
 Nagenahira Novodaya
 Re-awakening Project of the North & East
 Divi-neguma Programme
02 Ministry of Local Government & Provincial Councils  Provincial Councils (PCs)
(MLG&PC)  Local Authorities (MCs, UCs & PSs)
 Sri Lanka Institute of Local Governance (SLILG)
 Local Loans & Development Fund (LLDF)
03 Ministry of Irrigation & Water Resources Management  Irrigation Department (ID)
(MI&WRM)  Mahaweli Authority of Sri Lanka (MASL)
 Water Resources Board (WRC)
 Central Engineering Consultancy Bureau (CECB)
 Irrigation Management Division
04 Ministry of Finance and Planning (MF&P)  External Resources Department (ERD)
 National Planning Department (NPD)
 Central Bank of Sri Lanka (CBSL)
 Foreign Aid and Budget Monitoring Division (FABMD)

3. At the wider operational perspectives in relation to development, the most outstanding

ministry is undoubtedly the Ministry of Economic Development (MED), which has a number of national
and regional level lead projects and programmes under its execution. As far as Northern Province is
concerned, a number of projects and programmes of rehabilitation and reconstruction nature are
being implemented under the flag of ‘Uthuru Wasanthaya’ (Wadakkil Wasantham), which is a large
scale undertaking aimed at rapid economic development in the North. Most of the agencies coming
under the purview of MED have bearing to IIDP as well.
4. The other two candidates for the national execution of the Project is the Ministry of Local
Government & Provincial Councils (MLG&PC) and Ministry of Irrigation & Water Resources
Management (MI&WRM), given considerations to the sectoral concerns of IIDP. Irrigation being the
biggest component of the Project, one may argue that MI&WRM should be the lead executive agency
at the national level. However, considering the provincial location and the implementation capacity of
NPC and its relevant provincial ministry, MLG&PC was considered as most appropriate. This was
approved by the government in May 2011.
5. The rationale for selecting MLG&PC as the lead agency involves the following:

98
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(a) The central Ministry of Irrigation & Water Resource Management is responsible
constitutionally only for major schemes which are of interprovincial nature. Though Iranamadu
Tank is a major irrigation scheme, its catchment as well as the command area are located
within the Northern Province. Therefore constitutionally, the role of MI&WRM responsible for
water resources is limited in the case of Iranamadu Tank.
(b) Work involved in downstream infrastructure development does not need specialised
engineering skills; and it was found that the responsible provincial ministry (MALDLI&F) in the
Northern Province Council has the required technical capacities to function as the
implementing agency. On the other hand, at the construction phase of a downstream
development programme, the ability of the implementing agency to build up a close rapport
with communities within the province plays a major role for its success. Therefore the best
Lead Project Agency is the MLG&PC which controls the provincial level ministries and
departments managing provincial affairs such as downstream Irrigation works.
6. Since several line departments and the non-government partners including the private sector
and the Northern Provincial Council will have a stake in the project, the management structure needs
to be (a) representative of both national and provincial level agencies; (b) capable of harnessing
different visions, policies, strategies and interventions targeting of the agencies; and (c) flexible to
address changes that could affect the operations of these agencies.

B. Provincial Setting
7. At the provincial level, the province’s Ministry of Agriculture, Livestock Development, Lands,
Irrigation and Fisheries (MALDLI&F) will be the key ministry for project implementation and regular
monitoring. Within this ministry, the Departments of Irrigation, Agriculture and Agrarian Services
together, will play very important implementation roles. Other two ministries that will be indirectly
involved in the project implementation and coordination of certain function are: the Provincial Ministry
of Education, Cultural Affairs, Sports and Youth Affairs; and the Provincial Ministry of Health and
Indigenous Medicine.

Table 2: Provincial Institutions with potential for involvement in IIDP

No. Title of the Provincial Ministry Relevant Department / Institute / Officials
01 Ministry of Agriculture, Livestock Development, Lands,  Department of Agriculture
Irrigation and Fisheries (MALDLI&F)  Department of irrigation
 Provincial Irrigation Engineer - Vavunia
 Dept of Animal Production & Health
 Veterinary Surgeon’s office (DAP&H)
 Provincial Deputy Director/ Agriculture
 Department of Agrarian Services
 Inspector of Inland Fisheries

02 Ministry of Education, Cultural Affairs, Sports and Youth  Provincial Director of Education
Affairs  Provincial Director of Cultural Affairs
 District Sports Officer
 District Youth Officer

03 Ministry of Health and Indigenous Medicine  Provincial Director of Health

 Regional Director of Health
 Director of Indigenous Medicine
.
C. District Setting
8. The Iranamadu Irrigation System is the major development project within the Kilinochchi district,
and the relevant district level agencies hold the direct implementation responsibility under the national
level execution and provincial level supervision and coordination. The district level institutions and key
responsible officials, each of whom has a stake, are given in Table 3.

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Table 3: District Institutions with potential for involvement in IIDP

No. Title of the District level Institute Responsible Officials
01 District Secretariat / Government Agent’s Office  District Secretary / Government Agent
(DS/GA)  Divisional Secretaries / Assistant Government Agents
 Director / Planning / District Planning Secretariat
 Assistant Superintendent of Surveyor
 Fisheries Inspector
 Samurdhi Nilahdari (Development Officers)
 Agricultural extension officers work at the DS division level
02 Department of Irrigation  Director / Chief Engineer / Irrigation – Vavunia
 Deputy Director / Irrigation - Kilinochchi
 Irrigation Engineer / Iranamadu
03 Department of Agriculture  Deputy Director of Agriculture - Extension
 Deputy Director of Agriculture – Seed Production & Farms
 Assistant Director Agriculture - Extension
04 Department of Animal Production & Health  District Veterinary Officer
 Veterinary Surgeon
05 Department of Agrarian Services  Assistant Commissioner of Agrarian Services
 Divisional Officer – Karachchi Agrarian Division
06 Department of Forest Conservation  Range Forest officer
 District Forest Officer
07 Department of Cooperative Development  Assistant Commissioner of Cooperatives
08 Local Authorities Municipal, urban & Pradeshiya  Chairman of Kilinochchi PS
Shaba (Rural Councils)  Chairman of Kandawali PS
09 Department of Education  District Director of Education - Kilinochchi
 Zonal Director of Education – Killinochchi
10 Department of Health & Nutrition  Regional Director of Health Services (RDHS)
 Medical Officer of Health (MOH)

9. The District Secretary/Government Agent is the focal point at the district level administration
and he/she is the convenor of the District Coordinating Committee (DCC) and the District Agricultural
Committee (DAC), both of which are important coordinating bodies at the district level. DCC is co-
chaired by the Minister and the Governor, while the DAC is usually managed by government officials
and is a more regular (monthly) affair than DDC, which meets once in 2 – 3 months.
10. All other institutions and officials, who are functioning at the district level as shown in Table 3
above, will play implementing roles in accordance with the degree of their responsibility to different
components of the Project. However, both irrigation and agriculture officials are expected to play
bigger roles both at the district level and the project level.

D. Divisional & Village Level Setting

11. Kilinochchi district is divided into 4 Divisional Secretary (DS) divisions, which are divided
further to Gramra Niladari (GN) divisions and villages. These are the levels that actual project
implementation takes place. Of the 4 DS divisions in Kilinochchi district, the divisions of Karachchi and
Kandawalai are important for IIDP as they jointly cover the physical location of the Iranamadu system.
12. There is a total of 22 GN divisions and 56 villages around the Iranamadu system. The Gramra
Niladari (GN) is the only grassroots level officer, who is active as the other village level officers like
Samurdhi Development Officer (SDO) and Agricultural Research & Production Assistant (ARPA) are
not fully operational like in the rest of the country and they need some time to be established to render
their respective services to their potential capacity.
13. Apart from government officials who function at the grassroots level, the most active
community organizations in the project area are the Farmer Organizations (FO) and Rural
Development Societies (RDS). The establishment of FOs in all the irrigation schemes is a government
policy established under the provisions of the Agrarian Service Act (No.46 of 2000). The Act permits
one or more FOs for any area as determined by the Commissioner General of Agrarian Development.
In practice FOs are organized in each village. The Commissioner General shall register such FO

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when an application on that behalf is made to him/her by a FO and assign a number for such FOs.
Once registered they are formal FOs and are given legal recognition.
14. Over the years FOs have been functioned under Iranamadu system quite efficiently and
effectively, despite the fact that there were interruptions to cultivation during certain periods of the
armed conflict. Presently there are 21 FOs registered, and they have been federated as ‘Iranamadu
FO Federation’. It is expected that FOs will play a dominant role in the implementation of downstream
development (constructions of D & F channels) in collaboration with the Irrigation Department staff.
Figure 1 below shows the typical structure of a FO.
FIGURE 1 - Structure OF a Farmers’ Organization

15. Although it is reported that RDSs are registered at each village or hamlet level, they are not
quite functional at present, primarily due to the displacement of the majority of farmers from their
original locations from time to time over the past two decades. The design mission was encouraged to
place on record that 3 Women Rural Development Societies (WRDS) have been re-introduced in 3
GN divisions, and they show the potential for greater participation in community and livelihood
development as well as other gender-sensitive or women-centered activities under the project.
Working Paper 6 provided a step-wise schedule for FO strengthening which the Project would
support.

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Appendix 3 Terms of Reference for Key Positions

A. Terms of Reference for Project Director
Under the overall supervision of the NSC, the Project Director would be responsible for the
management of the implementation of the Project. In addition to this overall responsibility, s/he would
carry out the following activities:

 Direct the activities of the staff in the PMO, delegate all the authorities of the Project Director
to the Project Manager in all cases where the exercise of duties will be hampered by the need
to attend non-project duties.
 Undertake the annual programming of activities on the basis of needs and taking into account
results obtained in the previous period;
 Draw up, on the basis of the annual work plan, the required budget, including IFAD and
Government resources and demonstrate its coordination with other funding sources;
 Submit annual work programmes and budgets and annual reports and financial statements to
the NSC for review and approval;
 Supervise the proper implementation of Memoranda of Understanding with line departments
and of the Project Agreement with the partner Corporate Buyer.
 Ensure that transparent and effective tendering procedures are adhered to for the selection of
contractors and consultants.
 Manage the project accounts with the co-signature of the Accountant in the PMO;
 Ensure that appropriate accounts are kept in the PMO and in the Implementing Agencies and
ensure the accounts are properly audited in time;
 Recruit appropriate staff for the PMO, ensure a gender balance in staffing and provide
supervision;
 Establish appropriate Procurement committees to evaluate bids and award contracts
according to national legislation;
 Draw up in a timely manner withdrawal requests and forward them to IFAD through ERD;
 Ensure a proper M&E system is established which provides relevant data in a timely manner.
 Promote an effective management of knowledge, to begin with between IFAD projects which
have already established fiduciary, M&E and KM systems, but also serving the direct interests
of project stakeholders.
 Establish the quarterly and annual reports and financial statements;

Profile

 University degree in civil engineering or equivalent and/or project management, economics,

business administration, etc.;
 At least 12 years previous successful experience in the management of multilaterally financed
development programmes;
 Familiar with disbursement procedures of multilateral financing institutions;
 Experience in leading a team;
 Previous experience in working in the North & East will be an added qualification for
candidates;
 Given comparable background and experience, female candidates are encouraged to apply

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B. Terms of Reference for Project Manager

Under the overall supervision of the NSC and the immediate supervision of the Project Director, the
Project Manager would be responsible for the project level coordination and management of the
implementation of the Project. In addition to this overall responsibility, s/he would carry out the
following activities:

 Manage on behalf of the PD, the activities of the staff in the PMO; exercise all the delegated
authorities of the Project Director and where the exercise of PD’s duties will be hampered by
the need to attend non-project duties.
 Assist PD to prepare the annual programming of activities on the basis of needs and taking
into account results obtained in the previous period;
 Assist PD to draw up, on the basis of the annual work plan, the required budget, including
IFAD and Government resources and demonstrate its coordination with other funding
sources;
 Submit annual work programmes and budgets and annual reports and financial statements to
the NSC through the for review and approval;
 Coordinate the proper implementation of Memoranda of Understanding with line departments
and of the Project Agreement with the partner Corporate Buyer.
 Ensure that transparent and effective tendering procedures are adhered to for the selection of
contractors and consultants.
 Manage the project accounts with the co-signature of the Accountant in the PMO, whenever
the PD is not available;
 Assist ensure that appropriate accounts are kept in the PMO and in the Implementing
Agencies and ensure the accounts are properly audited in time;
 Recruit appropriate staff for the PMO, ensure a gender balance in staffing and provide
supervision;
 Assist establishing appropriate procurement committees to evaluate bids and award contracts
according to national legislation;
 Conduct a proper M&E system is established which provides relevant data in a timely
manner.
 Assist promote an effective management of knowledge, to begin with between IFAD projects
which have already established fiduciary, M&E and KM systems, but also serving the direct
interests of project stakeholders.
 Be in charge of establishing the quarterly and annual reports and financial statements;
 Any other duties delegated by the Project Director to perform on his/her behalf

Profile

 University degree in economics, agriculture economics, business administration, or social

science;
 At least 8 years previous successful experience in the management of multilaterally financed
development programmes;
 Familiar with disbursement procedures of multilateral financing institutions;
 Experience in managing and leading a team;
 Previous experience in working in the North & East will be an added qualification for
candidates.
 Given comparable background and experience, female candidates encouraged to apply.

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ANNEX 6: PLANING, MONITORING AND EVALUATION, LEARNING AND KNOWLEDGE MANAGEMENT

I. PLANNING

1. The Project will commence its planning and budgeting process at the beginning of the fourth
quarter of each year. This process is independent of the other anticipated development activities for
the district and province. The Annual Work Plan and Budget (AWPB) would be prepared by the
Project Management Office (PMO), and would be submitted for approval by the National Steering
Committee (NSC) and IFAD. Once it is approved the AWPB will be part of the annual district and
provincial development programmes. The basis of the planning process of the Project is participatory
planning for the preparation of the AWPB. However, taking into consideration the present socio-
economic situation in the project area, where resettlements had been nearly completed, and the
largest share of project resources would be committed to rehabilitate and improve the downstream
irrigation infrastructure it would be deemed necessary to align the AWPB during the first two years in
line with the cost-table projected proposals. Among several activities proposed during this phase
would also include capacity building for water management and after care of the rehabilitated
infrastructure, environmental mitigation activities such as reclamation of water-logged and salinity-
developed areas, conservation of stream reservations and catchments of the tank, training and social
mobilisation for farmer groups and others formed etc.

2. Thereafter, the participatory process would take place with majority beneficiary participation,
through the existing and newly established farmer organisations, small groups that would be formed
at the water distribution points and women’s rural development societies. The others would be the
stakeholders in the Province, such as the Provincial Ministry of Agriculture, Livestock, Irrigation and
Land and the Provincial Department of Irrigation, Agriculture and Agrarian Services coming under its
purview.

3. Similarly, with the functioning of the rehabilitated irrigation infrastructure the Project will
conduct Participatory Rural Appraisals (PRA) in those areas to determine the mix of activities that will
reflect the requirements of the beneficiaries and that are not predetermined by the project design
document. These would also include deficiencies in the infrastructure developed in the Iranamadu
scheme with project intervention. Thereafter, the PMO will work on the basis of the approved AWPB
with revisions, when necessary during the year, agreed with the NSC and IFAD following an
exchange of letters with IFAD. BWA system introduced under the project provides good set of
indicators to monitor water use efficiency. Poor water use efficiency could be either due to hardware
problems or due to weak organizations. Irrigation Managers can use the data generated during the
practice of the BWA system, to diagnose the actual issue.

II MONITORING

4. The monitoring process will record the delivery of project inputs, and will be concerned with
project performance in delivery of individual services and supplies, timing of coordination of activities
and impact, as set out in the logframe and cost tables. It will take place at three levels in the field:
individual farmer, farmer organization (FO) and project activities, where farmers and all participating
agencies including NGOs and private sector will have Monitoring & Evaluation (M&E) responsibility as
part of their contract obligations. These will be reflected in the Memorandum of Understandings
(MOU) that would be drawn up by the Project Management Office (PMO). In the case of FOs, the
responsibility of M&E and also Knowledge Management (KM) will be delegated to the Management of
the FO while the participating agencies will appoint a focal point each, thereby establishing a network
responsible for M&E and KM for the Project.

5. The basic measurement period will be a quarter. However, due to a specific requirement of
the Provincial and District Administrations that monthly progress reports are submitted, the Project will
also monitor and record monthly the Process Monitoring of the civil works such as the irrigation canal
rehabilitations. The logical framework sets out the inputs and the expected outputs and the Project will
develop the main Monitoring & Evaluation (M&E) indicators that will be used. This will be done at the
initial workshops with the participants, enabling them to understand fully what is being foreseen at
impact by project interventions. In order to facilitate an assessment system for FOs, key indicators will
be developed and included in the system to capture FO performance such as membership;

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leadership; financial management and carrying out O&M tasks of irrigation and bulk water supply
systems. These indicators would be categorized under specific evaluation domains/categories
developed for the Project by the Design Mission. Review and brainstorming sessions will be held
regularly both at the field and at project levels thereby facilitating the process and helping to
overcome bottlenecks in their day to day functions and responsibilities. The M&E Specialist would
maintain and report IFAD RIMS table. The M&E Specialist, in turn would draw up the M&E Plan,
operationalise the logframe, train all responsible in M&E and KM functions and also develop simple
formats for progress control.

6. Thus, those responsible for M&E and also KM, in addition to their general management duties
will be responsible for marshalling, checking and onward dispatch of monitoring data; and at the
PMO, where the M&E Specialist will distil the information and prepare consolidated reports on actual
against Annual Work Plan & Budget (AWPB) target achievements of works performed, inputs delivery,
production of outputs and impact, for inclusion in the monthly, quarterly, bi-annual and annual
progress reports to the Project Executive, Provincial Coordinating Committee (PCC) and National
Steering Committee (NSC).

III EVALUATION

7. Evaluation means to find what Project has achieved against promise/targets and it is a
process where the Project will episodically collect and analyze information on the extent to which the
Project is having the desired effects and impacts, i. e., the desired outcomes are being reached.
Evaluation answers question like whether the Project has delivered what has been set out and how
well it has been done. This too would be a participatory process where the beneficiaries and the
stakeholders would take part. Training the beneficiaries and stakeholder focal points in evaluation
techniques would be an integral item of the M&E Plan.

8. Notwithstanding the regular presentation of the physical and financial progress, the Project
will undertake several annual outcome surveys from year 2; a pre mid term impact assessment; three
rounds of RIMS surveys and finally during the final year of implementation a review at project
st
completion. The baseline and the 1 level of RIMS surveys carried out at the beginning of project
implementation would be the basis for the assessment of project impact. The Project will direct special
studies based on sharing of indigenous knowledge and thematic studies on selected topics that would
help in evaluating impact at completion. The scope for continuation, expansion, and replication of
Project activities will be specifically highlighted at completion assessment.

The M&E will have the following elements:

 Preparation of the M&E Plan for the Project which is a calendar of operations of M&E activities by
the different players who are responsible for the implementation of project activities. The main
players are the following: a) beneficiaries; b) line agencies of districts & province; c) PMO; d)
NGOs; and f) Private Sector. The plan would indicate the time frame for the execution of the
proposed activities. This plan would also pin responsibilities as against the proposed activities.
This plan need to be discussed at the first training session and modified through a common
consensus. Once agreed PMO should periodically monitor the implementation of the M&E plan. It
may be reviewed at the annual project review/supervision missions.
 Collection of baseline data from a variety of sources, including household surveys in Project area
and the RIMS anchor indicators to provide the basis for impact assessments.
 Two independent assessments by an agency, acceptable to IFAD, the project impact in PY3, prior
to the Mid-term Review (MTR) and PY5, at the time of the project completion review. Data will
cover the RIMS anchor indicators, disaggregated by gender and an analysis of the project’s costs
and benefits. In these assessments the studies will review the project’s achievements and
constraints and in particular the performance of: (i) the infrastructure investments; (ii) the farmer
organisations and women’s development groups assisted by the Project; (iii) the performance of
the private sector and the partnership arrangements; (iv) the farm and off-farm production
enterprises developed with project assistance; (v) the district and provincial stakeholders and their
staff, including the PMO; and (vi) the roles of the Provincial Project Coordinating, and National
Steering Committees. Based on the findings of the MTR, a mutually acceptable action plan for the
remainder of the programme will be prepared.
 Project will carry out Annual Outcome Surveys preferably from end of second year of project
implementation. Annual outcome surveys should be simple with indications of % change either

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positive or negative as against the selected impact indicators. The annual impact assessments
should guide the Project Executive and also to take remedial actions if required. These surveys
could be outsourced on a competitive basis.
 Monthly and quarterly reporting for GOSL. These reports will include reporting of project
expenditures, in accordance with government procedures, by component and category of
expenditure, and comparison with the AWPB and appraisal targets, with a reconciliation of
financial and physical information and the presentation of data on an annual and cumulative
basis. Project could adopt the formats generally used by the donor funded projects.
 Six-monthly and annual reporting to IFAD. The formats used will be agreed with IFAD at project
start-up and include appropriate RIMS indicators for inclusion in the annual report.
 At farmer level, participatory M&E performance indicators will be set by the community during the
planning process and monitored by them during implementation and evaluated during subsequent
planning cycles. Indicators will pertain not only to their own socio-economic advancement but also
to performance of their facilitators and trainers. Proposed impact domains/categories acceptable
for the Project and generally used in IFAD for such development projects are illustrated in
Attachment 1. Project with people’s participation should develop relevant and appropriate
indicators under each of the proposed domains/categories.
 An Annual Review Workshop to revise the logical framework and to analyse implications of the
results in the previous year(s) with respect to the objective and long-term goal. The analysis will
be targeted on the key measures for outputs and will provide the basis to: (i) review the overall
implementation progress; (ii) downstream irrigation rehabilitation allowing for the introduction of
innovative Bulk Water Allocation by farmer organisations; (iii) improved irrigation intensity and the
water efficiency (iv) improved sustainable cropping and through contract farming for market led
demand from partner corporate buyers; (v) landless households in the command area and within
the vicinity of the scheme who would be supported in their homestead and upland agriculture and
livestock; and (vi) active gender approach in all its activities, ensuring women would be involved
in water management, cropping and marketing decision making.
 The above workshops would identify successes and means for replication; and (iii) analyse
problems encountered in the course of implementation and discuss corrective actions.
 Thematic and case studies carried out in PY5 and PY6 to complement the impact assessments in
PY3 and PY6 to assess the assertions that the Project contributed to impact at the goal level. The
results of these studies will be used at Project Completion Review in year 6 and also as part of
knowledge management.
 Methods for output monitoring which is the first step towards the evaluation of the performance of
the Project and the main methods recommended are: (i) Activity report by NGO service provider;
(ii) Training evaluation forms; (iii) Monthly reports by M&E focal points at village level; (iv) Process
monitoring by the beneficiaries; (v) Exchange of information with Implementation Officers from
line agencies; (vi) Occasional field visits/direct observations (e.g. infrastructure construction
status); and also random focused discussions with the beneficiaries at field level.
 Design appropriate and simplified formats for output reporting: e.g. use of Request Monitoring
Results (RMR) System which include Activity Request, Activity Cost, Activity Monitoring, Activity
Output and Results Report in one single format with four separate sheets for each of the above
functions. The format includes the impact indicators of the activity right from request stage,
enabling one to monitor the impact (changes) throughout the implementation process thereby
creating a consensus that M&E is the responsibility of all concerned.

IV. LEARNING AND KNOWLEDGE MANAGEMENT

9. Knowledge management is the process that supports the management of knowledge,
including generating, validating, synthesising, assembling, storing, sharing, disseminating and using.
The Project should recognise the need for credible, authoritative and convincing evidence to underpin
its activities and policy initiatives; the existence of extensive knowledge on irrigation development;
and the need to develop the capacity and culture to absorb and contribute to knowledge.

10. Therefore the Project should strive to be a learning organization to deliver high quality
services and enable its beneficiaries to find innovative ways for irrigation development especially in a
post conflict era, and to use the knowledge acquired to foster pro-poor policy reforms. To this purpose
the PMO should aim at sharing the information and knowledge related to irrigation development in
order to promote good practice, scale up innovations and influence policies, thus positioning the fight
to reduce rural poverty as a provincial, national, regional and global priority.

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11. Within the limitations of the funding available the Project intends to undertake an extensive
programme during its project period. Several methods are proposed for KM. Among them are:
preparation of a Knowledge Management Concept Paper for the Project; contributing regularly to the
“District New Letter” on project progress, publication of a “Project News Letter” with contributions from
project beneficiaries, production of CD/DVDs showing innovative approaches, establishing a “Project
Website”, annual workshops and events planned to share local knowledge and information with other
donor assisted projects in the Northern and North East-Provinces and also with all other IFAD projects
locally and abroad, through IFAD Asia Web. These will be used for promotion of learning and
knowledge-sharing. Similar messages will be put out in radio programmes and project would buy
radio and television time for special programmes where beneficiaries too would participate. Among
such success stories would be building and sustaining productive economic partnership with the
private sector.

12. Similarly to the M&E Plan, the PMO should prepare a knowledge management approach paper.
The contents of this paper should be reviewed at the annual sessions. Resources would be made
available for documenting and disseminating various successful experiences of the Project (e.g., on
participatory planning and implementation of Project activities; women’s empowerment through on-
farm and off-farm development; water management though high value crop development etc. etc.).
These would be important for new operations, policy dialogue as well as promote and upscaling. It is
also important to highlight the challenges faced by the Project and staff of stake holders especially in
a post conflict period.

12. Knowledge management instruments will involve the following elements:

 Printed material and CD/DVDs: Project should keep recording of the information printed material
and CD/DVDs produced with their own databases. The availability and functionality of these
databases could be an interesting point to be addressed during the annual review missions, PCR
and CPE missions.
 Website: possible development of a Project website or web-page of the country programme that
contain information on the KM activities. On this it is advisable to have the project’s KM strategy
and a page which contains projects fact-sheets, power point presentations, and list of contacts,
country briefs and M&E trainings.
 Project Issue Sheets: may be produced annually by the Project. This is a means of constant
sharing information process between the ADB and IFAD. Prior approval of the Country Office
before the release of such information is required.
 Project Newsletter: to be issued by the Project containing information about the Project. Through
these newsletters Project may share findings from its implementation findings which would
contribute for the preparation or the country strategy. Project beneficiaries should be encouraged to
contribute on thematic and practical issues.
 District Newsletter: the Planning Department publishes a District News Letter every quarterly.
Project should contribute regularly to this. Since it contain news from several on-going projects and
other development activities in the district, the Project should give a summary of the progress every
quarter highlighting the impact of the Project. Any innovative features of the Project too should be
highlighted.
 IFAD Asia Web: the Project should establish links with IFAD Asia Web. In it are reports, videos,
photos, projects staff trainings are posted. Also there is general information, useful for KM, divided
into: livelihoods research, for development, knowledge networking, M&E, and rural communication.
More specific for some countries are very well structured sections dedicated to sharing knowledge,
divided into: human stories, lessons learned innovations, impact, and project implementation.
 Workshops and Events: Project should organize at country level which involves IFAD staff and
other partners. Its purpose should be to improve the writing skills of the project staff and a step
towards aiming at better knowledge sharing among the staff of the project and its stakeholders. The
workshops and KM events are considered the best moments to let people come together and share
experiences and lessons learned about their work. These are perceived as very good KM activities.
 Local Knowledge: Project will encourage and publicize material on local knowledge gathered both
from the beneficiaries and those involved with implementation of activities. These include the staff
of the respective stakeholders of the Project. Possible avenues will be explored to encourage
presentation of such innovative findings at local as well as foreign forums.

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Attachment 1: Proposed Impact Domains/Categories

The Design Mission identified the following impact domains/categories. They need to be discussed
with the FOs during the training sessions and suitable indicators to reflect the results should be
derived.

(i) Household Income and Assets;

(ii) Women and Empowerment;
(iii) Agricultural Productivity;
(iv) Natural Resources and the Environment;
(v) Institutions and Policies.

(i) Household Income and Assets:

►Did the composition and size of household incomes change (more income sources, more
diversification, and higher income)?
►Did farm households’ physical assets change (farmland, water, livestock, trees, equipment, etc.)?
►Did other household assets change (houses, farm machinery, bicycles, radios, telephones, etc.)?
►Did households’ financial assets change (savings, lending, borrowing)?
►Did the landless poor had been resettled (land distribution, titling, housing)?

(ii) Agricultural Productivity:

►Did cropping intensity change?

►Did return to land and labour change?
►Did children’s nutritional status change (e.g. stunting, wasting, underweight)?
►Did production of high value crops during yala in irrigable lands change?
►Did the demand based water allocation and distribution helped propagate high value crops?

(iii) Women and Empowerment:

►Did women’s organizations and institutions change?

►Did social cohesion and local self-help capacities of women change?
►Did women feel empowered vis-à-vis local and national public authorities and development
partners (private)? (Do they play more effective roles in decision making?)
►Did the women strengthened as partners of development (decision makers in FOs)?
►Did the single women headed households gained more economic stability than before?
►Did the women involvement in water management effective?

(iv) Natural Resources and Environment:

►Did the natural resources base status change (land, water, forest, pasture, fish stocks, etc.)?
►Did exposure to environmental risks change?
►Was the project area exposed to climate change, and if yes, what were the consequences on
natural resources and the environment?
►Are the distributory and the field canals better protected with natural foliage?
►Are the distributory, field canals and drainage canals desilted and cleaned regularly?

(v) Institutions and Policies:

►Did rural financial institutions change?

►Did local public institutions and services provisions change?
►Did National/Provincial/District policies affecting the beneficiaries change?
►Did the regulatory framework affecting the beneficiaries change?
►Did market structures and other characteristics affecting beneficiaries’ access to markets change?
►Did the Government policies regarding ownership of the distributory and field canals change?

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Attachment 2: Monitoring, Evaluation & Knowledge Management Specialist

Job Description:

The participatory process of the Project dictates that much of the responsibility for planning, managing
and monitoring the Project will be with the major participants, namely the target group, stakeholders
and the private sector. Great reliance will be placed on monitoring and evaluation not only to
accurately assess impact on an ongoing basis but to provide timely and usable feedback into the work
planning and budgeting procedures to ensure focus and effectiveness of Project interventions. Clearly
such a system will have to be planned and operated with extreme care and efficiency. The Monitoring,
Evaluation and Knowledge Management Specialist will be responsible for setting up the monitoring,
evaluation and knowledge management systems and ensuring that they are followed effectively. This
will entail a much greater than normal burden of responsibility for the officer and this will be reflected
in the qualifications and status of the appointee. Responsibilities will be:

 In collaboration with all involved groups elaborate a detailed logframe and an inputs, outputs,
uptake and target chart for the Project as the basis of both for the participatory monitoring
systems.
 In discussion with the field and line agency focal points set out the procedures for the monthly,
quarterly and biennial management appraisals to ensure that the conclusions are recorded for the
PMO, incorporated in the AWPBs and reported to the Coordinating and Steering Committees.
 Establish the timing and systems for the annual participatory monitoring workshops, including
arrangements for ensuring fair representation of all participants of the project beneficiaries and
women.
 Work with the Finance/Procurement Specialist to ensure that all Service Provider contracts
include: specifications of the internal monitoring required of the Service Provider; the systems of
reporting; and the penalties for failure to report as specified.
 In conjunction with the Project Executive and Stakeholders, assist beneficiaries and Service
Providers in setting up and using the monitoring and evaluation systems.
 Prepare the framework for benefit monitoring and impact evaluation, which will based largely on
the participatory monitoring process and design the necessary surveys, studies and enquiries.
 Direct the work of those service providers contracted for M&E activities and take the lead in the
contracting and supervision of the technical assistance and consulting inputs required.
 Make monthly, quarterly, biannual and annual progress reports to the Project Executive depicting
the physical and financial progress and also highlighting areas of concern and prepare the
documentation for review at District Coordinating and National Steering Committee meetings.
 Establish horizontal and vertical dissemination of indigenous knowledge through thematic and
case studies that would be undertaken during the Project period.
 Publication of such information in appropriate media suitable and acceptable to the Project
executive.
 Promote annual workshops in the District, Province and also at National level for the dissemination
of information on knowledge and document such findings for future use.

Qualifications and Attributes:

The Monitoring, Evaluation and Knowledge Management Specialist will have a socio-economic
degree or management qualification with significant training in data analysis and understanding and
practical experience in operating relevant statistical computer programmes, such as SPSS or STATA.
He/she will have: at least 7 years experience either in project monitoring or in running management
information systems in the private sector, including direct managerial and budget responsibility.

Previous experience in monitoring, evaluation and knowledge management either IFAD or any other
donor funded project will be an added qualification.

Working knowledge of both Tamil and English are compulsory.

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ANNEX 7: FINANCIAL MANAGEMENT AND DISBURSEMENT ARRANGEMENTS

I. FINANCIAL MANAGEMENT

1. Prior to receipt of the initial deposit in the Special Account, the Project will set up its
accounting and internal control systems. The PMO will maintain appropriate financial records and
accounts in accordance with government systems. These accounts will follow generally accepted
accounting practices and will reflect the progress of the Project and identify its resources, operations
and expenditures. The project accounts will reflect all financial transactions during the project period
for the IFAD loan, and government financing by project component and separately by standard
expenditure categories. The project accounts will be maintained separately. The PMO will consolidate
the project accounts and submit annual financial statements of project expenditures for each fiscal
st
year to IFAD no later than three months after the close of the fiscal year, i.e. 31 March of each year.

2. Initial Advance: A project account in LKR will be established in the PMO. The signatories
to the account would be (i) Project Director; (ii) Project Manager and (iii) Accountant. The Accountant
will co-sign with either the Project Director or, in the absence of the PD, with the Project Manager.

3. Counterpart Funds: The GOSL will include the project AWPBs in the Provincial and National
Public Investment Programmes and will, from 2012 until the end of the project period in 2017 provide
an annual government counterpart contribution to the MLG&PC as required by the project
implementation to finance the project activities. The total GOSL contribution is approximately US $ 4.0
million. Government counterpart funds will be used for the salaries and operating costs will finance all
taxes and duties, will flow through the Treasury in accordance with government procedures.

4. Community Contributions: Steps should be initiated to collect the information relating to

beneficiary contributions in all completed project interventions at the earliest. A system should be put
in place to collect this information on an ongoing basis. Accounting for beneficiary contributions must
be based on information thus collected.

5. Withdrawal Applications: Withdrawal Applications (WA) will be prepared by the PMO. In

order to shorten the delay of replenishments, the PMO will present the WA directly to MLG&PC for
verification, signing and transmission to IFAD. PMO will also copy them to the Provincial Ministry of
Agriculture, Livestock Development, Lands and Fisheries for information.

6. Fixed Assets Management: Project fixed assets will be inventoried and physical verification
of fixed assets must be undertaken at the end of each fiscal year. Inventory reports must be
reconciled with the Fixed Assets Register (FAR) and the FAR must be reconciled with the accounting
records. All assets must be properly tagged and labelled.

II. DISBURSEMENTS
7. The IFAD financing will be disbursed over five years. The disbursement conditions include: (i)
approval by IFAD of the procurement plan for the initial 18 months of the project implementation
period before the first withdrawal from the Loan Account; and (ii) approval of the Project
Implementation Manual by IFAD.

8. For disbursement of the IFAD loan for civil works, vehicles, equipment and contracts each
costing in excess of USD 20 000 will require detailed documentation. Withdrawals from the Loan
Account in respect of expenditures of USD 20 000 or its equivalent, or less, may be made against
certified statements of expenditure. The Programme will retain the relevant documents and make
them readily available for inspection and review by supervision/review missions and the auditors. No
taxes and duties will be financed out of the proceeds of the IFAD loan.

9. The Ministry of Finance will be responsible for foreign exchange risks and repayment of the
principal and interest on the loan to IFAD. Funds from the IFAD loan will flow to a Special Account
maintained in USD in the Central Bank of Sri Lanka and operated by the Ministry of Finance. On
request from Ministry of Finance, IFAD will make an initial deposit from the Loan Account at IFAD to
the Special Account equal to approximately six months worth of eligible expenditures of IFAD share
(up to a maximum of 10% of the loan amount).

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10. Funds from the Special Account can finance all IFAD disbursement categories. IFAD will
continue to accept withdrawal applications for reimbursement, direct payments and special
commitments. Replenishment of the Special Account from the Loan Account at IFAD will be by way of
withdrawal applications, supported by appropriate documentation or certified statements of
expenditure prepared by the PMO, endorsed by Ministry of Local Government and Provincial Councils
and submitted to IFAD for approval.

11. On request from Ministry of Local Government and Provincial Councils, and in accordance
with approved project AWPBs, MOF will advance the IFAD loan funds quarterly in advance from the
Special Account in USD to the project account held in LKR, and handled by the PMO, in a commercial
bank(s) acceptable to IFAD. MOF will authorise the opening of the project account. Project funds from
the project account will finance the activities included in the annual contracts in the project area.
Government financial reporting procedures will be followed. The service standards for MOF will be no
more than five working days for processing payment requests and replenishment requests. Log
should be updated regularly and attached to WAs in which funds related to the contracts are claimed.

III. AUDIT AND CONTROLS

12. IFAD places a high degree of reliance on Project audit reports. Care should be taken to
ensure that the annual audit is conducted on the basis of an IFAD approved audit TOR, according to
International Auditing Standards and the report should be submitted to IFAD within 6 months of the
close of the year. Audit log must be prepared and submitted to supervision missions for verification.

13. Internal Auditor The Project Management Office professional staff would include an
Internal Auditor. The responsibilities of the internal auditor will be among others, to carry out random
spot checks of all financial transactions, including procurement, stock management, etc. at all
agencies involved in project planning and implementation. S/he reports to the Project Director.
Controls by the Internal Auditor will always be ex-post, s/he would not be involved in the actual
financial management in the Project. That is the responsibility of the Project Director, the Project
Manager and the Accountant.

14. Annual Audit In Sri Lanka, IFAD accepts the application of national accounting and auditing
standards as these do not depart significantly from international standards.
15. The Sri Lankan Auditor General will audit the Programme accounts in appropriate time which
is generally during the first quarter of the following year for the previous fiscal year. The Borrower
shall confirm during loan negotiations, the appointment of the Auditor General to undertake the audit
of the Programme. The audit will be carried out by the appointed auditors in accordance with the
standard terms of reference issued by the Auditor General, supplemented by additional requirements
from IFAD, if found necessary. The audit report on the financial statements, utilisation of resources,
operations and management of the Programme shall be delivered to IFAD within 6 months of the end
of each fiscal year.
16. Audit Report: It will be in a Long Form audit and will contain a separate management letter,
which will include a report on the efficiency of the flow of funds procedures. The reply by the PMO to
the management letter will be submitted to IFAD within one month of the receipt of the audited
accounts. The supervision/review missions will verify and report on the progress made in the
implementation of the recommendations in the management letter.

17. Auditing Standard: As per Auditor General’s report for 2008, states that Sri Lankan Auditing
Standards should be for conduct of the project audit. The PLA requires International Auditing
Standards to be used for conducting the Programme audit.

18. Audit ToR: The Project should prepare an audit TOR defining the scope and outputs of the
audit. Consequently, the same need to be approved by IFAD as required by the Guidelines on Project
Audit.

19. Audit Log: The Project should maintain an audit log.

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Figure I: IFAD/Government Funds Flow Diagram

Loan Agreement MOFP

IFAD Public Finance Dept/
Treasury

Transfer IFAD and Notification of

consolidated funds funds allocation
by annual estimates

Withdrawal
Applications
MLG&PC (to IFAD)

Transfer IFAD &

consolidated funds
and authorise
Reporting
funding
Withdrawal
Applications

Kilinochchi PMO
Kilinochchi
State/Commercial Project Director
State Banks
Project Manager
Bank
Project &
Special Accounts
account Finance Manager
Project Operating
Funds

Submit Contracts
AWPBs MOAs

PID, Line Agencies,

Service Providers
(Contract Costs)

Farmer/Women’s Organisations, Groups

Key: Funds Outflows

Lines of Communication/Liaison

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Attachment 1: Post of Internal Auditor

Job Description:

The main function of the Internal Auditor will be to plan, execute and report on audits carried out at
random spot checks and financial transactions, including procurement at the level of all the agencies
involved in planning and implementation.

He/she will also make recommendations regarding internal controls.

He/she will make written observations to the Project Executive and to the Steering Committee
regarding compliance of such recommendations made for internal controls.

Qualifications and Attributes:

The Internal Auditor will have Intermediate professional qualifications from one of the following:

Institute of Chartered Accountants of Sri Lanka (ICASL); Chartered institute of Management

Accountants (CIMA); and Association of Chartered Certified Accountants (ACCA)

OR

National Higher Diploma in Accountancy

AND

Three years of previous experience in the capacity of an Internal Auditor, either in a State of
Corporate Institution.

Working knowledge of both Tamil and English are compulsory.

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 8: PROCUREMENT

ANNEX 8: PROCUREMENT
I. PROCUREMENT OF GOODS & SERVICES

1. Rehabilitation Works Following steps can be identified in procuring goods & services
related to rehabilitation work. It is essential note that, subject to assessment, the Project can use
GOSL procurement guidelines to the extent that it is in line with the IFAD guidelines. IFAD guidelines
will take precedence when there is a contradiction.
1.1 Preparation of Contract Documents
2. Contract documents for rehabilitation work should be prepared according to the conditions of
contracts adapted by Institute of Construction and Training & Development (ICTAD) of Sri Lanka. The
size and scope of individual contracts will depend on the magnitude, nature, and location of the
Project. Rates applicable to the district published by the PID could be adapted to compute the money
value of the estimates. Cost estimates should be forwarded to the relevant authorities for the
approval. After the approval is obtained the standard Bidding Documents will be prepared along with
relevant drawings, BOQ and list of works. All the details of the contract documents should be made
available to the Project Director in both hard copy and electronic copy.
3. The bidding documents shall furnish all information necessary for a prospective bidder to
prepare a bid for the works and non-consulting services to be provided. Bidding documents generally
include: invitation to bid; instructions to bidders and bid data sheet; form or letter of bid; form of
contract; conditions of contract, both general and particular; specifications and drawings; relevant
technical data (including of geological and environmental nature); list of goods or bill of quantities;
delivery time or schedule of completion; and necessary appendices, such as formats for various
securities.
1.2 Selection of construction contractors
4. In selecting construction contractors normal contractual procedures based on National
Competitive Bidding can be adopted. Provincial Council Guidelines can be followed in appointing
Tender Evaluation Committees. The basis for bid evaluation and selection of the lowest evaluated bid
shall be clearly outlined in the instructions to bidders and/or the specifications. If a fee is charged for
the bidding documents, it shall be reasonable and reflect only the cost of their typing, printing or
publishing in an electronic format, and delivery to prospective bidders, and shall not be so high as to
discourage qualified bidders. The bidding documents for works may indicate the estimated total cost
of the contract.
5. Bid security shall be in the amount and form specified in the bidding documents and shall
remain valid for a period (generally 4 (four) weeks beyond the validity period for the bids) sufficient to
provide reasonable time for the Borrower to act if the security is to be called. Bid securities shall be
released to unsuccessful bidders once the contract has been signed with the winning bidder.
1.2.1 Community Participation in Procurement
6. All the rehabilitation works of the Main Canal should be undertaken through qualified
contractors. Where, in the interest of Project sustainability, or to achieve certain specific social
objectives of the Project, it is desirable in selected project components at Distributory and Field Canal
levels to (a) call for the participation of local communities and / or FOs in the delivery of services, or
(b) increase the utilization of local know-how and materials, or (c) employ labour-intensive and other
appropriate technologies, the procurement procedures, specifications, and contract packaging shall
be suitably adapted to reflect these considerations, provided these are efficient. Farmer Organizations
who are having necessary skills could also be awarded directly without calling tenders at the
Engineer’s estimated price as it is the government policy which was introduced to participate
communities in rehabilitation work. However in the case of Iranamadu Project, it is very important to
evaluate the capabilities of the existing FOs to undertake contracts because being a farming
community which is in the process of recovering after a long suffering civil war, chances of involving
FOs as a contractining organizations are very remote.

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1.3 Contract Management and Contract Supervision

7. There are 2 types of contracts:
Category 1: Contracting for Works in Main Canal and Drainage Rehabilitation
Category 2: Contracting for Canal System below the Main Canal
There is a need to identify different roles of the various stakeholders in contracting for above works.
There are two main parties identified in civil engineering contracts namely “Employer” and “Engineer”
and their representatives. Following table summarise the different roles to be played by Project
Implementaion Staff.

Category Employer Employer’s Engineer Engineer’s

Representative Representative

1 Contracting for Provincial Chief Project Director (PD) IE of the PMO Staff An Engineer from PID
Works in Main Canal Secretary / Project Manager Staff appointed by PID
and Drainage (PM) to work under the PM
Rehabilitation

[Link] for Secretary of Project Director (PD) Outsourced Team Leader of the
Canal System below Ministry of / Project Manager Engineering Consultancy Team
the Main Canal Provincial (PM) Consultancy
Government Company

8. It is also proposed to procure Machineries for future Operation and Maintenance (O&M)
works of the Main Canal and Farm roads. Initially, the same machineries could also be used for the
rehabilitation of selected work such as desilting which would not be outsourced but directly
implemented by the Project Director through force account. Design and Construction Supervision of
Main Canal & Drainage Canal rehabilitations which amounts to about Rs. 214,798,000.00 will be
undertaken by the staff of PID which is lead by an Irrigation Engineer appointed by PID. Selection of
construction contractors for contract packages prepared by the PID staff and outsourced consultants
will be undertaken by the Project Manager independently adapting acceptable procurement
procedures such as National Competitive Bidding. Outsource consultants should assist the Project
Manager in Tender Evaluation by preparing required reports and evaluation criteria required in
selecting construction contractors.

9. Management of contracts: For construction supervision, Construction Engineer, a team of

Engineering Assistants having required experience and Work Supervisors should be deployed by the
outsourced consultants. WP 3 indicates the BOQ of consultancy contracts. As the Engineer for
construction contracts, in addition to construction supervision to assure the quality, outsource
consultants should do the checking of contractual claims submitted by the contractors and
recommend for payments to the PD. Consultants should also be allowed to use the equipment of field
laboratory provided under the project to do required quality testing during construction phase.

10. Project Manager of PMO will undertake the contracting of the contractors for the construction
activities supervise by PID staff. Irrigation Engineer appointed by the PID will be the “Engineer” for all
the construction work undertaken by PID staff. Total estimated value of the outsource consultancies
amounting to Rs. 69,420,000,000.00. Appendix 4 of WP No 3 indicates estimates for the number of
contracts to be implemented by PMO and details of contracts to be supervised separately by the PID
staff under Project Director and Outsourced consultants under Project Manager. There is a need to
identify different roles of the various stakeholders in executing construction contracts. It is proposed
that the Chief Secretary would be the employer and the Project Director will play the role of the
employer’s representative. Deputy Director of Irrigation working under PID will be the Team Leader of
a special unit established in his office which is responsible for implementation of overall program from
the initial design phase up to the contract completion. After the initial design phase Deputy Director
who will also play the role of the Engineer during the implementation phase of construction contracts.
Functions stipulated in construction contracts should be carried out by a professional field staff
comprising of a qualified professional Irrigation Engineer, Engineering Assistants and Work
Supervisors working under Deputy Director. Irrigation Engineer will be the Engineer Representative
responsible for carrying out the contract management and construction supervision of works which
would be executed through private contractors or the FOs.

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1.4 Final Handing Over

11. After the completion of the work it is very vital to take over the completed work from the
contractors in the presence of Farmer Leaders. It is very important to keep the reports developed with
the farmers readily available as a guideline/proof to show that the items rehabilitated were decided in
a participatory manner. Depending upon the nature of work, a trial operation can be implemented to
check the hydraulic adequacy of the system giving special attention to the functioning of Water
Measurement Structures.
II. PROCUREMENT OF CONSULTANCY WORKS
12. As there is a shortage of technical staff within PID, the Project, through the “employer” (Chief
Secretary), could outsource the rehabilitation work of selected canals and other specialised work such
as canal calibration & O&M training to a qualified consultancy firm having necessary experience in
executing similar works. ICTAD guidelines for Quality Cost Based System (QCBS) should be adopted
in procuring the services of qualified consultancy firms which could be short listed by calling
Expression of Interest (EOI). Under QCBS, proposals are evaluated based on both their technical
merit and price. Technical Evaluation Committee appointed for short listing & selecting such out
source consultants should comprise of representatives from PID and from the PMO. During execution
phase, Project Director of PMO will be the Engineer and the Deputy Project Director of Irrigation will
be the Engineer’s representative for Consultancy Contracts.
13. Outsourced Consultancy Team should be lead by a Chartered Civil Engineer who would play
the role of the Team Leader during initial design phase and the Engineer. Representative for the
construction contracts during the construction phase. Consultancy Firm should play the role of the
“Engineer”. In addition, the consultancy team should comprise of Design and Construction Engineer
and an Institutional Development Specialist who would assist the technical staff in conducting PRAs
and Walkthrough Surveys etc. Outsource consultants should also assist the Project Director in Tender
Evaluation by preparing required reports and evaluation criteria required in selecting construction
contractors.
14. For construction supervision, a team of Engineering Assistants and Work Supervisors should
be deployed by the consultants. All the payments certified by the private consultants should be
recommended by the Project Director for the quality before submitting to the Project Manager for
payments. Final handing over of the work implemented through outsourced private consultants to the
FOs should be done in the presence of Project Director.
15. Same procurement System could also be adapted for specialised works such as Calibration
of Canals and Training of Stakeholders for Water Management.
Methods of Procurement
16. National Competitive Bidding (NCB) NCB is also competitive bidding advertised nationally
for procuring Goods or Works. However, foreign bidders are not to be precluded from participation,
and Domestic preference will not be applicable.
To be adopted where:
 For packages costing less than US $200,000* (Goods) / US $ 10,000,000 (Works)/US$
500,000( IT Systems);
 Works are scattered geographically or spread over time;
 Works are labour intensive;
 The Goods and Works are available at prices below international market

17. Bidding for Procuring of Consultancy Services The hiring of consultants will be
undertaken through competition among qualified short-listed firms in which the selection is based both
on the quality of the proposal and on the cost of the services to be provided (Quality and cost-Based
Selection [QCBS]).
Steps
 Preparation of the Terms of Reference (TOR);

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 Preparation of cost estimate and the budget;

 Advertising;
 Preparation of the shortlist of consultants;
 Preparation and issue of the Request for Proposal (RFP);
 Receipt of proposals;
 Evaluation of technical proposals : consideration of quality;
 Evaluation of financial proposal;
 Final evaluation of quality and cost incorporating the weight assigned to quality of the
proposal and the cost as quoted; and negotiations and award of the contract to the selected
firm.
 Publication of award and debriefing of unsuccessful consultants.

18. The Terms of Reference should include:

 Background
 A precise statement of objectives;
 An outline of the tasks to be carried out;
 A schedule for completion of tasks;
 The support/inputs provided by the client;
 The final outputs that will be required of the Consultant;
 Mid-term review and Progress Reports required from Consultant;
 Outlining of training needs if any;
 List of key positions whose CV and experience would be evaluated.

19. Cost estimate and the budget The Cost Estimates or Budget should be based on the PMO
assessment of the resources needed to carry out the assignment; staff time, logistical support, and
physical inputs (for example, vehicles and laboratory equipment). Costs shall be divided in to two
broad categories; (a) fee or remuneration and (b) reimbursable
20. Evaluation criteria The Evaluation criteria shall be as specified in the information to the
consultants. Evaluation of technical proposals shall be done first before opening the Financial
Proposal. Financial proposal shall be opened publicly followed by their evaluation. Thereafter the
combined Technical and Financial evaluation shall be done for final section of the consultant and the
selected firm shall be invited for negotiation.
21. Negotiations Negotiations shall include discussions of the TOR, the methodology, staffing,
PMO’s inputs, and special conditions of contract. The selected firm should not be allowed to
substitute key staff, unless both parties agree that undue delay in the selection process makes such
substitution unavoidable or that such changes are critical to meet the objectives of the assignment.
Financial negotiations shall include clarification of the consultants' tax liability and how this tax liability
has been or would be reflected in the contract.

III. OTHER METHODS OF PROCUREMENTS

3.1 Shopping
22. Shopping is an appropriate method for procuring readily available off-the-shelf goods or
standard specification commodities of small value, or simple civil works of small value. Shopping is a
procurement method based on comparing price quotations obtained from several suppliers (in the
case of goods) or from several contractors (in the case of civil works), with a minimum of three, to
assure competitive prices, and is an Requests for quotations shall indicate the description and
quantity of the goods or specifications of works, as well as desired delivery (or completion) time and
place. Quotations may be submitted by letter, facsimile or by electronic means. The evaluation of
quotations shall follow the same principles as of open bidding. The terms of the accepted offer shall
be incorporated in a purchase order or brief contract.
3.2 Force Account
23. The use of force account may be justified where:
 Quantities of construction and installation works that are involved cannot be defined in

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advance : Example Drainage Cleaning

 Construction and installation works are small and scattered or in remote locations for which
qualified construction firms are unlikely to bid at reasonable prices- Ex: Small repairs in
canals
 Construction and installation works are required to be carried out without disrupting ongoing
operations Ex: Repairs to be undertaken in canals with minimum interruption to water issue
during cultivation season
 Emergencies needing prompt attention. Ex: Breaching of Canal Banks due to flooding
24. It is also proposed to procure a set of equipment for future Operation and Maintenance (O&M)
works of the Main Canal and Farm roads. Initially, the same equipment could also be used for
rehabilitation work using force account method, especially for earth work items which are difficult to
quantify and therefore to execute through private contractors on measure and pay basis.

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st
Procurement Plan for the 1 18 months of the Project
RFP / Bid IFAD'S No Proposals Evaluation Finalized IFAD’s No Objection

Contract Nb.,
TOR/ Bid doc final objection for TOR Received by (Technical /# (Technical /#

Total Cost
Prequalified draft Short list/ Final the Project Combined/Draft Combined/Draft Name of Services

Currency
Quantity

Value &
[Link]
Item Comp Method of Advertising for shortlist finalized forwarded RFP or Bid doc RFP / Bid doc Authorities Contract/Final Contract/Final Contract) Contractor / completed
No. onent Description of Goods, works and services Units selection EOI (date) (date) (date) (date) issued (date) (Date) Contract) (Date) (Date)** Nationality (date)
Component 1: Irrigation Rehabilitation
Out-sourcing consultancies for ToR preparation, (ref. WP 3,
1 Appendix 2) Firm 1 23.85 NCB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need not comply need to comply 1st Qrt 2012 need to comply need not comply SL 1st Qrt 2012
2 Consultants for surveying, GIS and PRA etc Firm 2 28.50 NCB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need to comply need to comply 1st Qrt 2012 need to comply need to comply SL 1st Qrt 2012
Bid
Procurement of a Fleet of Machineries
3 Packages Lsum 47.00 NCB 2nd Qrt 2012 2nd Qrt 2012 2nd Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 2nd Qrt 2012
Bid
Rehabilitation of Main canals (major contract)
4 Packages Lsum 130.20 NCB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 2nd Qrt 2013
Bid
Branch and distributory canal (major contract)
5 Packages Lsum 140.00 NCB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 2nd Qrt 2013
Bid
Rehabilitation of Field canals (medium contract)
6 Packages Lsum 92.00 NCB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 3rd Qrt 2013
Bid
Drainage Improvement (major contract)
7 Packages Lsum 33.90 NCB 2nd Qrt 2012 2nd Qrt 2012 2nd Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 2nd Qrt 2013
Bid
Canal bund strengthening (small contract)
8 Packages Lsum 3.00 LS 1st Qrt 2012 1st Qrt 2012 2nd Qrt 2012 need not comply need to comply 2nd Qrt 2012 need to comply need not comply SL 1st Qrt 2013
Bid
Farm Roads (medium contract) Packages
9 Lsum 157.40 NCB 2nd Qrt 2012 2nd Qrt 2012 2nd Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 2nd Qrt 2013
Sub-total 655.85
Component 2: Production and Marketing
10 Group formation, mobilization and training - consultancy Firm 1 15.10 QCBS 1st Qrt 2013 1st Qrt 2013 1st Qrt 2013 need not comply need to comply 1st Qrt 2013 need to comply need not comply SL 2nd Qrt 2013
11 Out sourcing soil suitability study Firm 1 12.00 NCB 2nd Qrt 2012 2nd Qrt 2012 2nd Qrt 2012 need not comply need to comply 3rd Qrt 2012 need to comply need not comply SL 4th Qrt 2012
12 Purchasing processing equipment Packages 3 0.90 LS 2nd Qrt 2013 2nd Qrt 2013 2nd Qrt 2013 need not comply need to comply 3rd Qrt 2012 need to comply need not comply SL 4th Qrt 2013
Sub-total 28.00
Component 3: Programme management
Bid
13 Office furniture & equipment (several bid packages) Packages 3 2.00 LS 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need not comply need to comply 1st Qrt 2012 need to comply need not comply SL 1st Qrt 2012
14 4WD double cabs units 3 12.30 ICB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need to comply need to comply 1st Qrt 2012 need to comply need to comply SL 1st Qrt 2012
15 Motor bikes units 7 7.00 ICB 1st Qrt 2012 1st Qrt 2012 1st Qrt 2012 need to comply need to comply 1st Qrt 2012 need to comply need to comply SL 2nd Qrt 2013
16 Consultancy- gender action plan prepare & implement Firm 1 1.20 QCBS 2nd Qrt 2012 2nd Qrt 2012 2nd Qrt 2012 need to comply need to comply 3rd Qrt 2012 need to comply need to comply SL 2nd Qrt 2013
17 Baseline study contracts Firm 1 3.50 NCB 1st Qrt 2012 1st Qrt 2012 2nd Qrt 2012 need to comply need to comply 2nd Qrt 2012 need to comply need to comply SL 3rd Qrt 2012
Sub-total 26.00
Total (Rs million) 709.85
Total (US $ million) 7.03

NCB = National Competitive bidding; LS = local shopping; ICB = international competitive bidding; Lusm = lump-sum cost allocation

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ANNEX 9: PROJECT COST AND FINANCING

I. BASELINE AND TOTAL COSTS

1. The total Project costs of the proposed five-year Project are expected to be USD 29.32
million. Of this amount USD 23.46 million will be in base costs. Of the base costs, component 1 –
infrastructure development—accounts for USD 17.1 million or 73% of the base cost. Component 2 –
production and marketing will account USD 5.05 million or 22% of the base costs and component 3,
Project management, is allocated USD 1.3 million or 6% of the base cost. With over 95% of the funds
being directed at project interventions that will directly benefit the poor, the costs are reasonably well
structured (see Working Paper 8 for details).

2. Originating from the base cost, the annual amounts for contingencies, which may occur
during the Project execution, are built in. The total contingencies are based on 7% physical
contingencies and average of 18% price contingencies which will take into account the domestic and
foreign inflation. The utilized base currency is the LKR; its projected annual inflation rate is 5.5%. The
projected annual inflation rate for the LKR and the price contingencies are given in Table 1.

3. The estimated total amount for contingencies is USD 5.85 million, which represents 25% of
the total Project baseline costs. The high level of physical contingencies (10% of the base cost) is
explained by the post conflict situation of the Project area. However, due to the low capacity of the
PID, some activities under infrastructure development are outsourced to consulting services.

4. The total Project costs (Table 2) which are the baseline cost plus the contingencies costs
amount to USD 29.32 million.

5. Investment costs account for 95% of the baseline cost; recurrent cost accounts for the other
5%. Among the three Project components, Infrastructure Development and Production and Marketing
have a total budget of 95% of the baseline-cost and project management takes the balance 5%.

6. Recurrent costs represent 5% of the baseline costs, of which Salaries represent 3.9% and
beneficiary contribution for O&M of field canals 1.0%.

II. COSTS BY COMPONENTS

7. Table 3 illustrates the total costs by components and by year of Project execution.
Infrastructure Development, with a total base cost of USD 17.1 million, represent 73% of the total
project cost. Detailed cost tables provide the cost of sub-components and activities.

8. The Production and Marketing Component, that represents 22% of the total cost with USD 5
million, has three sub-components. The details cost tables presents the costs (Table 6).

9. Project Management represents the remaining 5% of the total cost. The detailed costs make-
up for each component is presented in Tables 3.

III. COSTS BY YEAR OF EXECUTION

10. In Table 3, a calendar of the funds assignments is also presented. The second year is when
the single biggest share of funds (37%) will be allocated. While in the third year it will be 34%. The
st
Project will disburse 83% of it funds during the 1 three years. This distribution is justified by the
sequence of high expenditure for infrastructure development and beneficiaries incorporation, which
requires in the second and third years and relevant funds both for downstream development and for
production services support.

IV. FOREIGN COSTS

11. Local and foreign exchange costs are reported by disbursement category. In general the low
preponderance of foreign costs (5%) has to be attributed to the fact that only limited acquisition of
machinery and equipment is foreseen, so that important currency saving is possible (see Table 4).

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V. PROJECT FINANCIERS

12. Of the total costs of 29.32 million, IFAD will finance a loan of about USD 22.23 million, or 76%
of total costs. Private sector who will be involved in the marketing activities will finance about
USD 1.23 million or 4.2%, while producers will contribute USD 2.7 million or 9.2%. The government
will forego all taxes and duties, amounting to USD 2.8 million and contribute to various other activities
with a total contribution of USD 3.15 million or 10.8% of total costs (see Table 5).

Table 1: Annual inflation rate of LKR and Price Contingencies

Contents Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6
2012 2013 2014 2015 2016 2017
% inflation rate 6.169 5.650 5.500 5.500 5.500 5.500

Price Contingencies 119.7 123.8 128.1 132.5 137.0 141.7

Source: IMF; World Economic Outlook Database, April 2011 & Project Costab Price Contingencies

Table 2 (a): Project costs by Components

% % Total
(LKR '000) (USD '000) Foreign Base
Local Foreign Total Local Foreign Total Exchange Costs

1. INFRASTRUCTURE DEVELOPMENT 1,758,928 122,158 1,881,085 15,990 1,111 17,101 6 73

2. PRODUCTION AND MARKETING 556,265 - 556,265 5,057 - 5,057 - 22
3. PROJECT MANAGEMENT 123,633 20,324 143,957 1,124 185 1,309 14 6
Total BASELINE COSTS 2,438,825 142,481 2,581,307 22,171 1,295 23,466 6 100
Physical Contingencies 162,182 9,294 171,476 1,474 84 1,559 5 7
Price Contingencies 465,465 7,543 473,008 4,231 69 4,300 2 18
Total PROJECT COSTS 3,066,472 159,318 3,225,790 27,877 1,448 29,325 5 125
Source: Project Cost Tables

Table 2 (b): Project costs by Components and Expenditure Categories

(LKR '000)

PRODUCTION
INFRASTRUCTURE AND PROJECT
DEVELOPM ENT M ARKETING M ANAGEM ENT Total
I. Investment Costs
A. Civil W ork 2,134,409 14,164 - 2,148,573
B. Vehicle - - 27,294 27,294
C. Equipm ent & Materials 65,768 35,080 2,264 103,112
D. Advisory Services & Studies 113,363 70,742 45,790 229,895
E. Training groups in O&M 15,068 110,976 5,540 131,584
F. Inputs, sustainable agriculture - 269,145 - 269,145
G. Training, inputs, m arketing - 179,394 - 179,394
Total Investment Costs 2,328,608 679,500 80,888 3,088,996
II. Recurrent Costs
A. Salaries & Allowances 21,974 - 80,570 102,545
B. O&M Costs - - 7,316 7,316
C. Beneficiary Contribution in O&M 25,692 - 1,241 26,933
Total Recurrent Costs 47,666 - 89,128 136,794
Total PROJECT COSTS 2,376,275 679,500 170,015 3,225,790

Taxes 291,398 2,337 17,170 310,905

Foreign Exchange 137,034 - 22,284 159,318

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Table 3: Project costs by Components – Total Costs by year

Base Cost (LKR '000) Base Cost (USD '000)
2012 2013 2014 2015 2016 Total 2012 2013 2014 2015 2016 Total

1. INFRASTRUCTURE DEVELOPMENT 284,296 803,850 641,943 142,806 8,191 1,881,085 2,585 7,308 5,836 1,298 74 17,101
2. PRODUCTION AND MARKETING 5,275 145,742 190,489 197,521 17,237 556,265 48 1,325 1,732 1,796 157 5,057
3. PROJECT MANAGEMENT 37,242 32,253 27,987 21,702 24,772 143,957 339 293 254 197 225 1,309
Total BASELINE COSTS 326,813 981,845 860,419 362,030 50,200 2,581,307 2,971 8,926 7,822 3,291 456 23,466
Physical Contingencies 21,178 77,184 59,753 13,361 - 171,476 193 702 543 121 - 1,559
Price Contingencies 24,410 145,853 184,432 101,099 17,214 473,008 222 1,326 1,677 919 156 4,300
Total PROJECT COSTS 372,400 1,204,882 1,104,605 476,489 67,414 3,225,790 3,385 10,953 10,042 4,332 613 29,325

Taxes 56,020 140,952 109,041 4,892 - 310,905 509 1,281 991 44 - 2,826
Foreign Exchange 59,682 54,872 37,052 7,712 - 159,318 543 499 337 70 - 1,448
Source: Project Cost Tables

Table 4: Project Cost by Expenditure Categories with Foreign Exchange Cost

Expenditure Accounts by Years -- Base Costs

Base Cost (LKR '000) Base Cost (USD '000) Foreign Exchange
2012 2013 2014 2015 2016 Total 2012 2013 2014 2015 2016 Total % Amount
I. Investment Costs
A. Civil Work 203,439 750,170 592,353 133,613 - 1,679,576 1,849 6,820 5,385 1,215 - 15,269 4.9 748
B. Vehicle 14,066 10,060 2,012 - - 26,138 128 91 18 - - 238 77.0 183
C. Equipment & Materials 43,956 20,644 20,081 8,018 - 92,699 400 188 183 73 - 843 43.1 363
D. Advisory Services & Studies 44,257 55,482 51,468 14,775 26,916 192,899 402 504 468 134 245 1,754 - -
E. Training groups in O&M 1,496 23,529 35,582 44,842 2,279 107,728 14 214 323 408 21 979 0.1 1
F. Inputs, sustainable agriculture - 52,750 72,901 94,950 - 220,601 - 480 663 863 - 2,005 - -
G. Training, inputs, marketing - 46,177 61,897 40,776 - 148,850 - 420 563 371 - 1,353 - -
Total Investment Costs 307,215 958,813 836,293 336,973 29,195 2,468,490 2,793 8,716 7,603 3,063 265 22,441 5.8 1,295
II. Recurrent Costs
A. Salaries & Allowances 18,226 19,070 19,070 16,433 12,698 85,497 166 173 173 149 115 777 - -
B. O&M Costs 1,161 1,266 1,171 1,277 1,171 6,045 11 12 11 12 11 55 - -
C. Beneficiary Contribution in O&M 211 2,696 3,885 7,347 7,136 21,274 2 25 35 67 65 193 - -
Total Recurrent Costs 19,598 23,032 24,126 25,056 21,005 112,816 178 209 219 228 191 1,026 - -
Total BASELINE COSTS 326,813 981,845 860,419 362,030 50,200 2,581,307 2,971 8,926 7,822 3,291 456 23,466 5.5 1,295
Physical Contingencies 21,178 77,184 59,753 13,361 - 171,476 193 702 543 121 - 1,559 5.4 84
Price Contingencies 24,410 145,853 184,432 101,099 17,214 473,008 222 1,326 1,677 919 156 4,300 1.6 69
Total PROJECT COSTS 372,400 1,204,882 1,104,605 476,489 67,414 3,225,790 3,385 10,953 10,042 4,332 613 29,325 4.9 1,448

Taxes 56,020 140,952 109,041 4,892 - 310,905 509 1,281 991 44 - 2,826 - -
Foreign Exchange 59,682 54,872 37,052 7,712 - 159,318 543 499 337 70 - 1,448 - -

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Table 5: Disbursement Accounts by Financiers

Disbursement Accounts by Financiers
(USD '000)

Local
The Government IFAD Beneficiaries Private Sector Total For. (Excl. Duties &
Amount % Amount % Amount % Amount % Amount % Exch. Taxes) Taxes
1. Civil Work 2,807 13.7 17,400 85.0 259 1.3 - - 20,466 69.8 1,244 16,647 2,574
2. Vehicle 154 61.9 94 38.1 - - - - 248 0.8 201 -106 154
3. Equipment & Materials 2 0.6 435 99.4 - - - - 437 1.5 2 433 2
4. Advisory Services & Studies 95 4.4 2,066 95.6 - - - - 2,160 7.4 - 2,066 95
5. Training groups in O&M 2 0.1 1,144 99.9 - - - - 1,146 3.9 1 1,143 2
6. Inputs, sustainable agriculture - - - - 2,447 100.0 - - 2,447 8.3 - 2,447 -
7. Training, inputs, marketing - - 380 23.6 - - 1,231 76.4 1,611 5.5 - 1,611 -
8. Salaries & Allowances 21 2.9 712 97.1 - - - - 732 2.5 - 732 -
9. O&M Costs 78 100.0 - - - - - - 78 0.3 - 78 -
Total PROJECT COSTS 3,158 10.8 22,231 75.8 2,706 9.2 1,231 4.2 29,325 100.0 1,448 25,051 2,826

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Expenditure Accounts Breakdown

(USD '000)

Physical
Base Cont.
Costs + Plus
Base Cost Physical Contingencies Price Contingencies Total Incl. Cont. Price Price
Local Local Local Local Cont. on Cont. on
For. (Excl. Duties & For. (Excl. Duties & For. (Excl. Duties & For. (Excl. Duties & Base Physical
Exch. Taxes) Taxes Total Exch. Taxes) Taxes Total Exch. Taxes) Taxes Total Exch. Taxes) Taxes Total Costs Cont.
I. Investment Costs
A. Civil Work 748 12,594 1,928 15,269 75 1,259 193 1,527 47 2,361 329 2,737 869 16,214 2,449 19,532 17,757 1,776
B. Vehicle 183 -93 147 238 10 -3 6 13 8 -10 -0 -2 201 -106 154 248 235 13
C. Equipment & Materials 363 356 123 843 - 8 - 8 13 69 5 87 377 433 127 937 928 9
D. Advisory Services & Studies - 1,674 80 1,754 - 10 2 12 - 312 13 325 - 1,995 95 2,090 2,077 13
E. Training groups in O&M 1 977 1 979 - - - - 0 217 0 217 1 1,193 2 1,196 1,196 -
F. Inputs, sustainable agriculture - 2,005 - 2,005 - - - - - 441 - 441 - 2,447 - 2,447 2,447 -
G. Training, inputs, marketing - 1,353 - 1,353 - - - - - 278 - 278 - 1,631 - 1,631 1,631 -
Total Investment Costs 1,295 18,866 2,279 22,441 84 1,273 201 1,559 69 3,667 346 4,082 1,448 23,807 2,826 28,082 26,271 1,810
II. Recurrent Costs
A. Salaries & Allowances - 777 - 777 - - - - - 155 - 155 - 932 - 932 932 -
B. O&MCosts - 55 - 55 - - - - - 12 - 12 - 67 - 67 67 -
C. Beneficiary Contribution in O&M - 193 - 193 - - - - - 51 - 51 - 245 - 245 245 -
Total Recurrent Costs - 1,026 - 1,026 - - - - - 218 - 218 - 1,244 - 1,244 1,244 -
Total 1,295 19,892 2,279 23,466 84 1,273 201 1,559 69 3,885 346 4,300 1,448 25,051 2,826 29,325 27,515 1,810

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Table 6: Derailed Costs

IRANAMADU IRRIGATION DEVELOPMENT PROJECT Unit
Table 1. INFRASTRUCTURE DEVELOPMENT Cost
Detailed Costs Quantities (USD Base Cost (USD '000)
Unit 2012 2013 2014 2015 2016 Total '000) 2012 2013 2014 2015 2016 Total

I. Investment Costs
A. Irrigation Rehabilitation
1. Main canal - IIDP /a km 10 21 - - - 31 38 382 802 - - - 1,184
2. Main canal structures - GOSL /b lumpsum 91 91 - - - 182
3. Canals below main canal
Branch & distributory canals /c km 10 80 45 - - 135 25 255 2,036 1,145 - - 3,436
Field canals /d km 10 50 63 - - 123 21 208 1,038 1,308 - - 2,554
Drainage canals /e lumpsum 81 404 323 - - 808
Farm roads lumpsum 704 1,407 1,407 - - 3,518
Subtotal 1,247 4,886 4,184 - - 10,317
4. Canal Bund Strengthening /f lumsump 9 36 27 - - 73
5. Downstream development
Outsourcing for consultancy work /g lumpsum 35 280 280 - - 595
Preparation of survey & GIS maps /h lumpsum 259 - - - - 259
Subtotal 294 280 280 - - 854
6. Training on O&M & Calibration lumpsum - 32 32 31 - 95
7. FOs strengthening /i FO 6 8 7 - - 21 1 4 5 4 - - 13
8. Equipments /j lumpsum 364 64 45 - - 473
Subtotal 2,390 6,196 4,573 31 - 13,190
B. Other Infrastructure
Infrastructure for groups unit - 65 150 211 - 426 1 - 82 188 265 - 534
Rain water harvesting structures /k HH - 500 500 1,000 - 2,000 1 - 273 273 545 - 1,091
Public buildings /l lumpsum 27 18 - - - 45
Small agrowells unit 10 270 380 270 - 930 1 11 307 432 307 - 1,057
Subtotal 39 679 893 1,117 - 2,728
Total Investment Costs 2,429 6,875 5,466 1,148 - 15,918
II. Recurrent Costs
A. Allowances for the staff & other costs /m lumpsum 38 45 45 23 9 161
B. O&M of the Canals /n lumpsum - 21 31 61 61 174
Total Recurrent Costs 38 66 76 84 71 335
Total 2,467 6,941 5,542 1,233 71 16,253

_________________________________
\a Force account method for de-silting, debris removal, & cleaning in the main canal (40% of the cost)
\b GOSL allocation for PID work in the project area
\c W ork outsourced to external consultants
\d W ork outsourced to external consultants
\e W ork undertaken by PID staff
\f Forest trees are planted to strengthening canal banks
\g For design work with 4 Teams: each Team for 2000 ha for 3 years
\h GIS maps & 1:5000 digital maps
\i Existing FOs are strengthen to operate bulk water management system
\j For maintaining main and drainage canals
\k One structure per household (HH)
\l Building repaire for PMU & community halls
\m Allowances for PID staff involved in implementation activities and other costs
\n Canals below the main canals is under farmers' responsibility

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IR A N A M A D U IR R IG A T IO N D E V E L O P M E N T P R O J E C T U n it U n it
T ab le 2 . P R O D U C T IO N A N D M A R K E T IN G C ost C ost
D e ta ile d C o s ts Q u a n titie s (L K R (U S D B a s e C o s t (L K R '0 0 0 )
U n it 2012 2013 2014 2015 2016 T o ta l '0 0 0 ) '0 0 0 ) 2012 2013 2014 2015 2016 T o ta l

I. In v e s tm e n t C o s ts
A . S o c ia l m o b ilis a tio n a n d tra in in g
1 . G ro u p fo rm a tio n a n d s tre n g th e n in g
W om en & you th n on -p ad d y c rop g rou p s /a G rou p - 63 149 211 - 423 60 1 - 3 ,7 8 0 8 ,9 4 0 1 2 ,6 6 0 - 2 5 ,3 8 0
S oc ial m ob ilizers /b P ers -yr - 3 11 21 18 53 120 1 - 360 1 ,3 2 0 2 ,5 2 0 2 ,1 6 0 6 ,3 6 0
T rain in g /c p ers on s - 345 785 1 ,0 9 0 - 2 ,2 2 0 15 - 5 ,1 7 5 1 1 ,7 7 5 1 6 ,3 5 0 - 3 3 ,3 0 0
S u p p ort to s oc ial m ob ilizers /d lu m p s u m - 3 ,3 0 0 220 420 360 4 ,3 0 0
S u b to ta l - 1 2 ,6 1 5 2 2 ,2 5 5 3 1 ,9 5 0 2 ,5 2 0 6 9 ,3 4 0
B . P ro d u c tio n , e x te n s io n a n d m a rk e tin g
1 . P ro d u c tio n : in p u ts fo r s u s ta in a b le a g ric u ltu re
a . U n d e r c o n tra c t fa rm in g , Y a la
N on -ric e c rop d ivers ific ation d em on s tration p lots /e lu m p s u m - 2 ,3 2 0 6 ,1 3 0 6 ,9 0 0 - 1 5 ,3 5 0
In c rem en tal on -farm c os ts - Y ala /f ha - 625 870 625 - 2 ,1 2 0 42 - 2 6 ,2 5 0 3 6 ,5 4 0 2 6 ,2 5 0 - 8 9 ,0 4 0
O n -farm d em on s tration s for s an d w ic h c rop s /g n u m b er - 25 25 50 - 100 3 - 63 63 125 - 250
S u b to ta l - 2 8 ,6 3 3 4 2 ,7 3 3 3 3 ,2 7 5 - 1 0 4 ,6 4 0
2 . E x te n s io n
a . U n d e r c o n tra c t fa rm in g , Y a la
F arm er train in g /h lu m p s u m - 1 5 ,0 0 0 1 5 ,0 0 0 5 ,0 0 0 - 3 5 ,0 0 0
b . E xten s ion offic e /i n u m b er - 3 3 - - 6 310 3 - 930 930 - - 1 ,8 6 0
c . N o t u n d e r c o n tra c t fa rm in g , M a h a
O n farm d em on s tration p lots of G A P , M ah a /j p lot - 100 100 100 200 500 66 1 - 6 ,6 0 0 6 ,6 0 0 6 ,6 0 0 1 3 ,2 0 0 3 3 ,0 0 0
F arm er train in g on G A P /k g rou p - 50 100 100 103 353 6 - 300 600 600 618 2 ,1 1 8
V alid ation w orks h op s /l no - - 1 1 - 2 300 3 - - 300 300 - 600
In c rem en tal on -farm c os ts - M ah a /m ha - 2 ,5 0 0 3 ,4 5 5 4 ,5 0 0 - 1 0 ,4 5 5 20 - 5 0 ,0 0 0 6 9 ,1 0 0 9 0 ,0 0 0 - 2 0 9 ,1 0 0
S u b to ta l - 5 6 ,9 0 0 7 6 ,6 0 0 9 7 ,5 0 0 1 3 ,8 1 8 2 4 4 ,8 1 8
S u b to ta l - 7 2 ,8 3 0 9 2 ,5 3 0 1 0 2 ,5 0 0 1 3 ,8 1 8 2 8 1 ,6 7 8
S u b to ta l - 1 0 1 ,4 6 3 1 3 5 ,2 6 3 1 3 5 ,7 7 5 1 3 ,8 1 8 3 8 6 ,3 1 8
C . O th e r a g ric u ltu ra l a n d /o ff fa rm d e v e lo p m e n t
1 . S oil s u itab ility s tu d y /n lu m p s u m 5 ,0 0 0 7 ,0 0 0 - - - 1 2 ,0 0 0
2 . U p la n d a g ric u ltu re
V arietal ad op tab ility trials - M ah a /o n u m b er - 10 10 10 - 30 50 - 500 500 500 - 1 ,5 0 0
V arietal ad op tab ility trials - Y ala /p n u m b er - 10 10 10 - 30 50 - 500 500 500 - 1 ,5 0 0
S u b to ta l - 1 ,0 0 0 1 ,0 0 0 1 ,0 0 0 - 3 ,0 0 0
3 . A g ro-w ells in u p lan d /q n u m b er - 100 200 200 - 500 20 - 2 ,0 0 0 4 ,0 0 0 4 ,0 0 0 - 1 0 ,0 0 0
4 . N o n -p a d d y c ro p s p ro d u c tio n
T rain in g for volu n tary c om m u n ity p rofes s ion al /r n u m b er - 50 50 50 - 150 10 - 500 500 500 - 1 ,5 0 0
T rain in g in p re-p rim ary p roc es s in g /s p ers on - 189 447 633 - 1 ,2 6 9 3 - 567 1 ,3 4 1 1 ,8 9 9 - 3 ,8 0 7
E q u ip m en t for p roc es s in g /t n u m b er - 6 14 22 - 42 300 3 - 1 ,8 0 0 4 ,2 0 0 6 ,6 0 0 - 1 2 ,6 0 0
R eh ab ilitation of N u rs ery /u n u m b er - 2 2 - - 4 3 ,0 0 0 27 - 6 ,0 0 0 6 ,0 0 0 - - 1 2 ,0 0 0
S u b to ta l - 8 ,8 6 7 1 2 ,0 4 1 8 ,9 9 9 - 2 9 ,9 0 7
5 . W o m e n g ro u p s fo r m ic ro fin a n c e
G rou p form ation an d train in g g rou p - 50 50 50 - 150 50 - 2 ,5 0 0 2 ,5 0 0 2 ,5 0 0 - 7 ,5 0 0
L in kag es to M F Is & B an ks g rou p - 50 50 50 - 150 50 - 2 ,5 0 0 2 ,5 0 0 2 ,5 0 0 - 7 ,5 0 0
S u b to ta l - 5 ,0 0 0 5 ,0 0 0 5 ,0 0 0 - 1 5 ,0 0 0
6 . M arket lin kag es /v lu m p s u m - 200 1 ,0 0 0 500 - 1 ,7 0 0
T o ta l 5 ,0 0 0 1 3 8 ,1 4 5 1 8 0 ,5 5 9 1 8 7 ,2 2 4 1 6 ,3 3 8 5 2 7 ,2 6 5

_________________________________
\a U n it c os t is for m ob ilizin g a g rou p
\b P aym en t for S M @ R s 1 0 0 0 0 /m on th
\c G rou p m em b ers an d lead ers
\d N G O s u p p ort to S M s . N G O s is rec ru ited c om p etitively
\e L ow lan d s Y ala in farm ers field s
\f C as h c os t of L K R 4 0 7 5 0 p er h a s om e w ou ld b e from p vt s ec tor
\g F or c rop s b etw een M ah a & Y ala s eas on s
\h O n n on -ric e c rop p rod u c tion an d c om p os t p rod u c tion (in -s itu an d ex-s itu ) at field d em on s tration s ites b y A Is of P D O A
\i D evelop m en t of m od el E xten s ion offic e
\j S an d w ic h c rop s in b etw een s eas on s (p u ls es / s u n h em p )
\k A t D em on s tration s ites (in M ah a) b y A Is
\l O n g ood ag ric p rac tis es
\m T otal c os t of L K R 1 9 8 6 0 fin an c ed b y farm ers th rou g h (b an k) loan s
\n A reas w ith s u itab le s oil typ es w ill b e id en tified for c rop d ivers ific ation
\o F or O F C s /V eg etab les in u p lan d
\p F or O F C s /V eg etab les u p lan d
\q F or ag ro w ells for u p lan d s (m ax R s . 1 0 0 0 0 0 p er w ell )
\r O n p roc es s in g , valu e ad d ition , an d m ic ro fin an c e
\s 3 p ers on s p er g rou p
\t F or p re-p rim ary p roc es s in g eq u ip m en ts u n d er m atc h in g g ran ts
\u A t P aran th an S P M D C ’s fru its p lan tin g m aterials
\v T h rou g h w orks h op s w ith th e p vt s ec tor an d farm ers

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IRANAMADU IRRIGATION DEVELOPMENT PROJECT

Table 3. PROJECT MANAGEMENT
Detailed Costs

Unit
Cost
Quantities (LKR Base Cost (LKR '000)
Unit 2012 2013 2014 2015 2016 Total '000) 2012 2013 2014 2015 2016 Total
I. Investment Costs
A. Equipment
Office furniture and equipment lumpsum 2,000 - - - - 2,000
B. Vehicles
4X4 Double cab pick-up number 3 - - - - 3 4,100 12,300 - - - - 12,300
Motor bikes number 2 10 2 - - 14 1,000 2,000 10,000 2,000 - - 14,000
Subtotal 14,300 10,000 2,000 - - 26,300
C. M&E and KM
1. Training of focal points
Field level sessions - 2 2 - - 4 400 - 800 800 - - 1,600
Project level /a lumpsum 1,000 2,000 - - - 3,000
Training material sets 5 5 5 - - 15 100 500 500 500 - - 1,500
Subtotal 1,500 3,300 1,300 - - 6,100
2. Reviews & studies
Baseline with RIMS 1st Level number 1 - - - - 1 3,500 3,500 - - - - 3,500
Mid termassessments of/M&E and KMplans lumpsum - - 1 - - 1 3,000 - - 3,000 - - 3,000
Annual impact assessment lumpsum - 1 - 1 1 3 2,000 - 2,000 - 2,000 2,000 6,000
Pre MTR assessment with/RIMS 2nd Level lumpsum - - 1 - - 1 3,500 - - 3,500 - - 3,500
Thematic studies /b study - - - 3 3 6 500 - - - 1,500 1,500 3,000
PCR with RIMS 3rd Level lumpsum - - - - 1 1 3,500 - - - - 3,500 3,500
Subtotal 3,500 2,000 6,500 3,500 7,000 22,500
3. Productions & publications
CD & DVD lumpsum - - 1 2 7 10 250 - - 250 500 1,750 2,500
News letter (quarterly) number - 4 4 4 4 16 100 - 400 400 400 400 1,600
Website development lumpsum - 1 - - - 1 75 - 75 - - - 75
Workshops at farmer level lumpsum - 1 1 1 1 4 35 - 35 35 35 35 140
Workshops at Project level lumpsum - 1 1 1 1 4 50 - 50 50 50 50 200
Thematic studies on/indegenious knowledge study - - 2 2 3 7 500 - - 1,000 1,000 1,500 3,500
Subtotal - 560 1,735 1,985 3,735 8,015
Subtotal 5,000 5,860 9,535 5,485 10,735 36,615
D. Gender action plan lumpsum 1 1 1 1 1 5 600 600 600 600 600 600 3,000
Total Investment Costs 21,900 16,460 12,135 6,085 11,335 67,915
II. Recurrent Costs
A. PMOOffice
Office hire month 12 12 12 12 12 60 25 300 300 300 300 300 1,500
B. Salaries & Allowances
Project director /c person month 12 12 12 12 12 60 30 360 360 360 360 360 1,800
Project manager person month 12 12 12 12 12 60 100 1,200 1,200 1,200 1,200 1,200 6,000
Irrigation engineer person month 12 12 12 12 12 60 90 1,080 1,080 1,080 1,080 1,080 5,400
Agric & business specialist person month 12 12 12 12 12 60 90 1,080 1,080 1,080 1,080 1,080 5,400
Procurement specialist person month 12 12 12 12 - 48 80 960 960 960 960 - 3,840
Finance manager/accountant person month 12 12 12 12 12 60 80 960 960 960 960 960 4,800
M&E and KMspecialist person month 12 12 12 12 12 60 80 960 960 960 960 960 4,800
Gender & SMspecialist person month 12 12 12 12 12 60 80 960 960 960 960 960 4,800
Internal audit person month 12 12 12 12 12 60 80 960 960 960 960 960 4,800
Secretary person month 24 24 24 24 24 120 35 840 840 840 840 840 4,200
Driver person month 36 36 36 36 36 180 25 900 900 900 900 900 4,500
Office assistant person month 12 12 12 12 12 60 25 300 300 300 300 300 1,500
Security guard person month 12 12 12 12 12 60 25 300 300 300 300 300 1,500
DSA for field work & other allowances /d persons 360 360 360 360 180 1,620 6 2,160 2,160 2,160 2,160 1,080 9,720
National Steering Committee /e person 28 28 28 28 28 140 2 56 56 56 56 56 280
Subtotal 13,076 13,076 13,076 13,076 11,036 63,340
C. O&M costs
Office building lumpsum - 100 - 100 - 200
Equipment unit 1 1 1 1 1 5 100 100 100 100 100 100 500
Vehicle unit 1 1 1 1 1 5 400 400 400 400 400 400 2,000
Website lumpsum - - 1 1 1 3 10 - - 10 10 10 30
Subtotal 500 600 510 610 510 2,730
D. Office utilities
Electricity, water & services /f unit 1 1 1 1 1 5 300 300 300 300 300 300 1,500
Office stationery etc. lumpsum 200 300 300 200 - 1,000
Subtotal 500 600 600 500 300 2,500
Total Recurrent Costs 14,376 14,576 14,486 14,486 12,146 70,070
Total 36,276 31,036 26,621 20,571 23,481 137,985
\a General training of project staff
\b Special topics that may be required
\c Since the PD is doing part time work, only an allowance is paid
\d DSA is 5 days per month per officer for 6 officers in the PMU & drivers' overtime etc
\e 7 members per quarter @Rs 2000 per meeting
\f GOSL will pay

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ANNEX 10: ECONOMIC AND FINANCIAL ANALYSIS

99
I PROJECT BENEFITS

Agricultural Production Benefits

1. The main quantifiable benefits arising from the Project are derived from the selective OFCs
(other field crops) recommended by the private sector such as Cargills based on the market demand
and that are grown by the farmers during meda and yala seasons. The lowland under the agrowells
would also be the additional areas that would bring productive benefits during yala season. In addition
the maha paddy crop and the incremental extent that would be financed by the Banks after
rehabilitation of the down stream canals would also add to the benefits of the Project. The farmers
would be encouraged to grow these OFCs under contractual buy-back guarantee scheme. Since
these would be grown under extensive organic conditions there would also be a premium value for
such products at farm gate. Thus the incremental outputs of these crops under the above conditions
are estimated in terms of annual production at Project maturity (see Working Paper 7 for details).

2. As a proportion of the present volumes produced by the beneficiary farms, the incremental
production for the selected crops for the analysis is as follows: green gram 759 mt; black gram 759
mt; cabbage 22,547 mt; capsicum 12,683 mt; tomato 12,547 mt; chilli 423 mt and red onion 456 mt.

3. With Project situation the following extent of low land in the command would be brought under
OFCs (mainly vegetables and pulses) during yala and is estimated as follows:
Command area meda season: 1,214 ha
Command area yala season: 3,382 ha
Area yala season under agrowells: 81 ha
Total: 4,677 ha
4. However, with Project situation and during maha Paddy would continue to be grown and will
reach the maximum of 8,455 ha and 2000 ha in yala season from year 4 under improved conditions.

Main Assumptions

5. The economic evaluation of the Project is based on the following assumptions:

(i) Project implementation period is five years. However it is assumed that the activities that are
supported by the programme will continue for further period and a 15 year-period is assumed as
the planning period for the economic analysis with a 20-year period as one of sensitivity scenarios.
Almost all the main canal components which take a major part of the rehabilitation investment of
the Project would have a life time of 15-20 years. Thereafter a main intervention would be
necessary to refurbish these irrigation structures..

(ii) The financial benefits and costs are in 2011 constant terms.

(iii) The wage rate for peak agricultural period work is 550 LKR per day. During non-peak times the
off-season wage rate for construction work is 500 LKR per day. In economic prices the shadow
peak wage rate is 495 KR per day and the off-season shadow wage rate is LKR 450 per day.

(iv) Prices of outputs are based on field observations, interviews with producers in the Project area.
Paddy, which is the main output of the Project, is treated as a traded good and therefore boarder
prices are used to compute the economic benefit (price computation is in WP 7).

(v) A Standard Conversion Factor of 0.90 was used to convert prices of inputs and other financial
costs into economic costs. This is the most recent estimate of the SCF, calculated by the ADB’s
Project Economic Evaluation Division, Economics and Development Resource Center, from
recent World Bank documents. Project farmers will use organic manure which is produced in the
locality.

(vi) Average farm size of majority of the farmers in the lowland is 2 hectares.

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See Table 4, Annex 15

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(vii) For With-Project situation where extensive down-stream development is envisaged, with the
availability of irrigation water on demand. The infrastructure development has been phased out
to 30%, 40% and 30% during year 1, 2 and 3 respectively. The capital cost of the ADB project for
Iranamadu tank rehabilitation work (not the component in raising the bund) is also included in the
cost of this Project. Although this cost is already included in the economic analysis of the ADB
project, inclusion of this capital cost into this Project would fully justify the benefits of the Project
as they are attributable to the rehabilitation of Iranamadu tank improvement.

(viii) Improvement of irrigation facilities and rationalization of water will pave the way for a sandwiched
season (meda) also for the cultivation of OFCs.

(x) The increases in yields and decreases in production costs are expected to build up gradually
after adoption of recommended cultural practices, such as; use of quality seeds, adjusting the
cropping pattern and input levels.

(xi) The extension support, buyback agreements and the premium price offered for organic and other
products by the corporate buyer would yield enhanced benefits to the farmers.

II. ANALYSIS AT THE COMBINED AGGREGATE FARM LEVEL

6. Quantified benefits are estimated from the above economically productive activities. The
incremental benefits would derive from the following (crop models are presented in Working Paper 7):
7. Cultivation of a maha crop of paddy, using improved cultural practices such as high yielding
varieties and organic manure. The input cost of the incremental extent cultivated in year 2, year 3 and
year 4 of 2,500, 3,455 and 2,500 ha would be funded by the Banks and thereafter the farmers will be
in a position to cultivate a total extent of 8,455 ha from year 5. A price of Rs 28/g has been tagged for
paddy under improved conditions.
8. Benefit calculation is done on the basis of a single model with 8,455 ha of paddy in maha
(November to February); 1700 ha of paddy in yala (May to August); 1,214 ha of a sandwich crop of
pulses and legumes in meda (March to May); and 3,382 ha of OFCs during yala (June to September).
In addition, the agrowells in the lowlands cover 81 ha of vegetables during yala. This composite
model is based on a variety of appropriate mono crops grown in the area. These are among the crops
that would have a great demand in the markets outside the project area, recommended by the
corporate buyer. As per project extension activities, since farmer orientation and training would take
place during year 1, the cultivation of a sandwich crop would commence from year 2. Also due to the
rehabilitation of the badly neglected canal system that would take place during years 1-3 of Project
implementation, in year 2, the incremental extent cultivated would be 15% (i.e. 121 ha). This would
add another incremental increase of 40%. This is illustrated in Table 1 below and Working Paper 7
provides details.
9. Mostly pulses and legumes are selected for the meda season. The two crops identified for the
benefit calculation are black gram and green gram. These have a future in the processing endeavours
that the women organisations would take up. It is assumed that the uptake of these two crops would
equally distributed. Based on the extension support from the corporate buyers, the farmers will
extensively use organic manure instead of artificial fertilizers. It is reported that the use of organic
manure would enhance the yields by 10-30%. However a modest increase of 10% is considered in
the mono-crop calculations. In keeping with the contractual agreements of the Corporate buyers
where a premium price (say an increase of 30%) over the farm gate price is offered for crops grown
for forward contract, the unit price is worked out accordingly and used for the calculations.
10. The three OFCs selected for the analysis in yala are: cabbage, capsicum and tomato. The
total extent available for cultivation is thus equally divided among the three crops for the uptake.
Similar to the above, the crops would be supplied under forward sales conditions and thus qualify for
a premium farm gate price. Thus an increase of 30% of the average price is considered.
11. Lastly, the benefit calculation is derived from the area under the agro-wells that would be
constructed in the command area where water will not be available during yala season. It is
anticipated that a total of 81 ha would be brought under the agro-well programme. The OFCs selected
for the analysis are high value crops such as chilli and onion. The area available would also be
equally divided among these two crops. The extent should have an incremental increase form 30% in
rd
year 2, to 40% in 3 year and another 30% in year 4 and reach the full extent of 82 ha in year 4 and

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thereafter. Other conditions similar to organic production would apply for these as well. There will also
be an enhanced price on the farm gate price for these products.
Table 1: Implementation schedule
crop season extent yr 1 yr 2 yr 3 yr 4 yr 5 yr 6
Catchment With-out Paddy Maha ha 3,380 3,380 3,380 3,380 3,380 3,380
Paddy Yala ha 1,691 1,691 1,691 1,691 1,691 1,691
With Paddy Maha
Catchment 1. Paddy (unimproved) Maha ha 3,380 800
2. Paddy (improved) Maha ha 2,500 5,955 8,455 8,455 8,455
Vegetables Meda ha 121 364 728 1,214 1,214
1. Green gram Meda ha 61 182 364 607 607
2. Black gram Meda ha 61 182 364 607 607
Paddy (unimproved) Yala ha 1,691 676
Vegetables Yala ha 338 676 1,691 3,382 3,382
1. Cabbage Yala ha 113 225 564 1,127 1,127
2. Capsicum Yala ha 113 225 564 1,127 1,127
3. Tomato Yala ha 113 225 564 1,127 1,127
Vegetables Yala ha 24 57 81 81 81
Agrowells 1. Chilli Yala ha 12 28 41 41 41
2. Onion Yala ha 12 28 41 41 41
Source: Component 2 – Production and Marketing, Project design, 2011

III. NON-QUANTIFIABLE BENEFITS

12. The agricultural production strategy consists in a more efficient use of the existing resources
and capacity of farmers.

13. With the introduction of the demand based water allocation and distribution procedures to
manage water among the farmers a feeling of ownership and participation in water management
among the farmers would be created. As a result whatever the water savings in maha would be made
available for the next yala season.

14. The Project promotes the women to establish their social capital as ‘producer groups’,
‘contract farmers’, and ‘agro- entrepreneurs’ with skills in producing better quality products of fruits
and vegetables during yala season catering for the market demand.

15. The project support would be provided for development of agrowells in uplands and will
facilitate the diversification of uplands for fruit growing. The construction of a fruits- and vegetable
processing plant by Cargills near Kilinochchi will further improve demand. Provision of financial
support for the horticulture nursery in Paranthan will be favourable towards this target.

16. Farmers in Iranamadu area face difficulties in obtaining quality seeds for
paddy/OFCs/vegetables. The private sector does not like to engage in OFC seed production due to
low profit margin as a result of government administered prices. The capacity of FOs would be
developed for self/commercial seed production programmes of paddy/vegetables/OFCs with the
support of the Department of Agriculture.

17. The Project will support in the formation sub-groups in relation to the production enterprises.
Training in skill development and establishing linkages with the financial institutions would be
encouraged. These micro enterprises for women will provide multiple livelihood options. The areas
with multiple prospects include agro-processing, agro-business, local craft industry, livestock based
value addition work, production of organic fertiliser.

18. Capacity building of the PID will be a major area envisaged by the Project. Some of the
design work of the Project together with implementation of some of the infrastructure activities will be
outsourced thereby bring in new technology and knowledge to the PID.

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IV. ECONOMIC ANALYSIS

100
Results

19. The overall economic rate of return, EIRR of the Project is estimated at 38% as the base
case. When the tank rehabilitation cost of the ADB project is included, the EIRR decreases to 29%
making the IIDP Project still economically justifiable. Results of the possible scenarios are shown in
the table below. With the sensitivity analysis applied to an unlikely event of simultaneous increase in
costs of 10% and a one year delay in getting benefits, the EIRR would come down to 12%, still viable.
The Project is sensitive to benefits reductions too.

Scenario Base case - EIRR 1 year delay in benefits - EIRR

Without ADB Capital cost for Iranamadu Tank Rehabilitation
Base case 38% 17%
10% cost increase 29% 12%
20% cost increase 20% 6%
10% benefit reduction 25% 10%
20% benefit reduction 12% 1%
20-year planning period 39% 19%
With ADB Capital cost for Iranamadu Tank Rehabilitation
Base case 29% 13%
10% cost increase 21% 8%
20% cost increase 14% 3%
10% benefit reduction 18% 7%
20% benefit reduction 7% -2%
20-year planning period 30% 16%

20. Thus, this analysis indicates the Project is robust, even with tank rehabilitation cost, and
would remain economically viable under foreseeable adverse conditions except drastic benefits
reductions.

100
The full analysis of the economic viability of the project is presented in Working Paper 7.

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 11: PROJECT IMPLEMENTATION MANUAL

ANNEX 11: PROJECT IMPLEMENTATION MANUAL – ANNOTATED OUTLINE

A. Purpose and contents of the PIM

1. The purpose of this Programme Implementation Manual (PIM) is to assist the staffs of the
Programme Management Office (PMO), who are responsible for planning, implementation, monitoring
and supervision of the Project. The PIM will enhance the overall skill and understanding of the PMO
and the stakeholders about the project implementation details. It is also intended to guide improving
the overall M & E / MIS processes. What is provided in this Annex is only a outline of necessary
material that should be included in the PIM.
B. Procedures for adjustments and updating of PIM
2. The content in this Annex is extended outline with some annotation that will provide the basis
to prepare the final and detailed PIM. Once the Project starts, this Annex will be thoroughly reviewed
by the Project staff with the support of IFAD if required and update to include all required details to
facilitate project implementation. A team of consultants comprising an Irrigation Engineer, an
Institutional Specialist, a Procurement Specialist and an Agricultural Economist would be hired to draft
the detailed PIM using this current annotated outline. The draft detailed PIM could be discussed at the
project start-up workshop and endorsed it acceptability.

1. PROJECT SUMMARY
A. Project Area, Target Groups and Targeting
3. IIDP is located in Kilinochchi District of the Northern Province, involving 22 GN Divisions. It
covers about 8 455 ha of the Iranamadu command area. The target group is the total population of
farmers with lands in the command area which is about 6 999 households with 22 095 persons.
4. Targeting Inclusive targeting approach, i.e. all the households in the tank command areas
will be beneficiaries. However IIDP would implement the following wherever possible to ensure
poverty targeting: a) by prioritising rehabilitation investments in favour of small farmers; b) by
investment support to farmers at the tail end of distribution and field canals; c) by developing
vegetable production with the involvement of women groups; and d) by support to households in
upland agriculture outside the command area.
B. Project Rationale
5. In the preparation of the ADB/ADF Jaffna-Kilinochchi drinking water supply project, the local
government and farmer representatives indicated that they agreed to the extraction of water from
Iranamadu for Jaffna on condition that the downstream irrigation infrastructure would be rehabilitated
and would allow a productive use of irrigation water in the existing command area of 8 455 ha. At the
request of the government, IFAD agreed to support the downstream irrigation development project as
a complement to the ADB/ADF project.
C. Project Goal, Objectives
6. Poverty reduction and increase in household incomes above the poverty line is the goal. Twin
objectives are (a) to improve irrigation infrastructure and promote its effective management by Local
Government and Farmer Organisations (FOs) including women with water saving management
methods, and with climate change adaptation and mitigation measures; and (b) to sustainably
improve water and land productivity.
D. Project Components
7. The Project has three components. Component 1. Infrastructure development The first
component consists of two sub-components: a) irrigation rehabilitation; and b) other infrastructure
development.
8. Under irrigation rehabilitation, the Project would undertake design, implementation and
supervision of works to render the Iranamadu scheme fully operational. This would require the
rehabilitation of a) the two main canals over their total length of 30 km, b) the drainage canals, and of
c) all distribution (135km) and field canals (123km). Farm roads would also be improved and
repaired. The Project would introduce an innovative system of farmer managed Bulk Water Allocation
system. This would be facilitated by strengthening 21 existing FOs and establishing new FOs and
Women and Youth Groups.

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9. Rain water harvesting structures, marketing structures, seedling nurseries, small storage
units, buildings for simple primary processing equipment, an essential stretch of farm roads etc are
included under other infrastructure development.
10. Component 2. Production and marketing The second component has three sub-
components: a) social mobilization and training; b) production, extension and marketing; and c) other
agricultural and off farm development. These three will have outcomes that would support livelihood
improvements of the beneficiaries.
11. Social mobilization sub-component would form and strengthen about 425 women groups
including youth for non-paddy crop production in addition to strengthening the FOs who will manage
the irrigation systems. Training programmes for the women and youth in social leadership, accounting
and financing, non-paddy crop cultivation, off-farm income generation activities, agricultural
processing, and organic fertiliser production etc would be supported.
nd
12. Under the 2 sub-component sustainable cropping techniques for diversified crops will be
promoted. The Bulk Water Allocation system provides the opportunity for diversification. The
Department of Agriculture would also be strengthened to provide extension. Credit linkages would be
created to finance the increased cost of production. To ensure effective market demand for specific
crops, the Project would seek partnership with the private sector to create marketing contracts, which
would be agreed upon before starting each cropping season. A part of the incremental cost of non-
paddy crop cultivation and extension would be financed by the private sector who would agree to
purchase the farm products.
13. Under the third sub-component the Project would support upland agriculture in rain fed fields
and homesteads; training of voluntary community professionals on processing and value addition of
non-paddy crops; providing matching grants to purchase agro-processing equipment for women and
youth groups; and rehabilitate the fruit plant nursery at Paranthan. As off-farm activities, about
150 women and youth groups would be supported for micro enterprise development.
14. Component 3. Project management A Project Management Office (PMO) would be
established in Kilinochchi, under the direction of a Project Director. Implementing line departments
are Provincial Irrigation, Agriculture, and Agrarian Services and they would sign Memoranda of
Understanding with the Project. The partnership with the private sector would be defined in a Project
Agreement. Additional implementation capacities would be tendered from qualified private
contractors, consultant firms and NGOs. A gender action plan would be implemented.
E. Organization and Management – see Chapter 3 below.
15. The Project would be implemented under the responsibility of the Ministry of Local
Government and Provincial Councils (MLGPC) as the Lead Project Agency. The management and
implementation structure comprises three levels of operation: (a) national/provincial; (b) district and
(c) project area. Thus the proposed institutional arrangement would have the following institutions:
a. National Ministry of Local Government and Provincial Councils (MLG&PS),
b. Provincial Ministry of Agriculture, Livestock and Irrigation (Departments of Irrigation,
Agriculture, Agrarian Services & other relevant district agencies); and
c. Project level implementation agencies – Project Management Office, Private Sector,
NGO, and grassroots Organisations (FOs, WRDSs)
16. The NSC is the legislative authority of the Project. The NSC comprises of Secretary to
Ministry of Local Government and Provincial Councils – Chairperson; Secretary, Ministry of Irrigation
and Water Resource Management – Member; Chief Secretary, Northern Provincial Council -Member;
Director General of the External Resources Department, Ministry of Finance – Member; Director
General of the Department of National Planning – Member; Secretary, Provincial Ministry of
Agriculture, Livestock and Irrigation, NPC – Member; Representative of the Private Sector, - Member.
Project Director, – Secretary;
17. A Provincial Steering Committee would coordinate, supervise and oversee the performance of
the Project. District level coordination would be facilitated by the District Coordinating Committee
(DCC), which is an existing body. The Project will finance logistical requirements of only the NSC.
F. Project Benefits and Beneficiaries

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18. The overall economic rate of return, EIRR of the Project is estimated at 25%. The reason why
the return is relatively high is that rehabilitation investments usually are more profitable, and in this
case allow a diversification into higher value crops. With sensitivity analysis applied to a simultaneous
increase in costs of 20% and a reduction in benefits of 20%, the EIRR would come down to 16%. A
delay in benefits of 2 years would result in an EIRR of 9%. These indicates that the project
implementation needs to be strictly monitored to follow the prescribed time schedule to prevent it
become unviable to the economy.
19. The project beneficiaries are 6 999 households in the project area who would benefit from
improved irrigation infrastructure, crop diversification and ensured markets though forward contracts.
A typical household cropping at present 0.8 ha of paddy during maha and 0.4ha of vegetables during
yala. They currently earn a net income of LKR 122 348 or LKR 2 913 per person per month, which is
below the poverty line of LKR 3 318. In the With project situation, the typical household would farm
1.5 ha during maha with paddy and 0.8 ha with vegetables during yala. This would yield an income of
LKR 257 000 or LKR 6 119 per person per month, 84% above the poverty line.
G. Project Costs and Financing
20. The estimated total costs of the Project would amount to LKR 3.22 billion or
USD 29.32 million. Project costs would be financed by the Sri Lankan Government for USD 3.158
million, representing 10.8% of total costs, including part of the salary costs and the operating and
maintenance costs of the PMO and all taxes and duties. IFAD would provide a highly concessional
loan of USD 22.231 million (75.7%). The private sector would be expected to finance a part of the
costs of extension and inputs for agricultural production under forward contracts. This would amount
to USD 1.23 million or 4.2% of total costs. Farmers not producing for forward contracts would finance
their incremental sustainable input costs through (bank) loans. They would also finance irrigation
maintenance and contribute to matching grants for equipment and agro-wells. Their contribution
would amount to 9% of project cots.
H. Innovative Features
21. The innovative features are (a) Bulk Water Allocation system for managing irrigation water
which is on demand basis; (b) getting Farmer Organizations very closely and decisively included in
the irrigation water distribution, management and undertaking O&M of the system which will minimize
the role of the government authorities involved in irrigation management; (c) ensuring the private
sector involvement is supporting farmers to decide high value crops to be cultivated to meet the
market demand, supplying extension support and farm inputs and initiating forward sales contracts.
The methodologies and agreements will have to be developed to ensure private sector partnership
and included into the PIM at a later stage. (d) Conservation of canal banks with vegetative means,
which will prevent farmers encroaching into the canal banks, will also be an innovative feature.
I. Expected Project Outcomes
22. Medium and long term outcomes include: (a) Irrigation infrastructure is rehabilitated within the
st
1 three years of the Project; (b) water distribution / release based on demand, and operation of field
canals are farmer managed; (c) women effectively participate in water and land management; (d)
sustainable agricultural productivity of diversified crops is increased; (e) forward contracting with
private corporate buyers ensures remunerative markets; and (f) sustainable FOs delivering irrigation
services to farmers.

J. Environmental Assessment and Risks

23. The rehabilitation of irrigation structures in the command area are expected to bring about
many positive environmental benefits with almost no direct negative impacts. It is expected that the
improved water flow in the irrigation system, re-vegetation of the riparian zones, adoption of water
conservation measures, rainwater harvesting and ground water recharge and crop diversification will,
as a package of interventions, help build the resilience of the project area to climate variability and
anticipated climate shocks.
24. The risk factors of the Project, all of which could be mitigated with various interventions,
include (a) limitation in continuing irrigation based livelihood activities during canal rehabilitation
period; (b) reluctance of the PID staff to follow new innovations introduced such as BWA and Riverine
Forestry which are new concepts to this region; (c) overcome the traditional belief that Irnamadu

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tank is meant only for paddy cultivation, which prevent cultivating high value non-paddy crops; (d)
overstretching of women time as they will get involved in bulk water allocation system which may
affect the domestic affairs; (e) crop failures and yield reduction; (f) proposed forward sales contracts
between farmers and agribusiness companies could face contract breaching by either party; (g)
getting the women and youth groups mobilized and initiating access to micro-credit; (h) soil
degradation with continuous cropping and excessive fertilizer application with subsidies; (g) and
management and project staff issues.
K. Sustainability
25. The project concept ensured a higher degree of farmer ownership of the irrigation
infrastructure which is higher than in an “ordinary” scheme because infrastructure improvement was a
condition for the use of part of the water from the reservoir for Jaffna drinking water supply. The sense
of ownership and sustainability would be further strengthened by participatory design. For the design
of the rehabilitation of the distribution and field canals, participatory planning would be undertaken,
after having operated the rehabilitated main canal for one season so that agreed design needs for
these canals reflect actual felt needs rather than suggested solutions from outsiders.
26. The introduction of the innovative Bulk Water Allocation system has a proven effect on
sustainability as it leads to fewer water conflicts, a reduced incidence of crop failures and an
increased irrigation intensity. Also, farmers are actively involved in maintenance and there is a
reduction in broken gates, broken pipe outlets and cases of silted canals.
27. The promotion of sustainable agriculture, mainly for non-paddy crops, would protect farmers
against the financial risk of possible changes in the generous subsidies for chemical inputs.
2. PROJECT COST ESTIMATES
28. The assumptions used in the economic analysis include the following. Project implementation
period is five years and 15-year period is assumed for the economic analysis. The financial benefits
and costs are in 2011 constant terms. The wage rates were based on market rates and the shadow
peak wage rate is 495 KR per day and the off-season shadow wage rate is LKR 450 per day.
Prices of outputs are based on field observations. Average paddy farm size is 2 hectares. For
With-Project situation a combined aggregate farm model was prepared with several combinations of
OFCs that would substitute paddy fully in yala season and also supplement with OFCs in meda
season. The increases in yields and decreases in production costs are expected to build up gradually
after adoption of recommended cultural practices. The extension support, buyback agreements and
the premium price offered for organic and other products by the corporate buyer would yield
enhanced benefits to the farmers.
29. The following details related to the Project cost are presented in:
WP 8 Detailed cost estimates by component and year, base costs and costs including
contingencies
WP 8 Summary Cost Tables
WP 8 Expenditures accounts by financiers
PDR Annex 8 Procurement tables

3. PROJECT ORGANISATION & MANAGEMENT

A. Organization, staffing and NSC
30. The Project would be implemented under the responsibility of the Ministry of Local
Government and Provincial Councils (MLGPC) as the Lead Project Agency. The management and
implementation structure comprises three levels of operation: (a) national/provincial; (b) district and
(c) project area. Thus the proposed institutional arrangement would have the following institutions:
a. National Ministry of Local Government and Provincial Councils (MLG&PS),
b. Provincial Ministry of Agriculture, Livestock and Irrigation (Departments of Irrigation,
Agriculture, Agrarian Services & other relevant district agencies); and
c. Project level implementation agencies – Project Management Office, Private Sector,
NGO, and grassroots Organisations (FOs, WRDSs)
31. The NSC is the legislative authority of the Project. The NSC comprises of Secretary to
Ministry of Local Government and Provincial Councils – Chairperson; Secretary, Ministry of Irrigation

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and Water Resource Management – Member; Chief Secretary, Northern Provincial Council -Member;
Director General of the External Resources Department, Ministry of Finance – Member; Director
General of the Department of National Planning – Member; Secretary, Provincial Ministry of
Agriculture, Livestock and Irrigation, NPC – Member; Representative of the Private Sector, - Member.
Project Director, – Secretary;
32. A Provincial Steering Committee would coordinate, supervise and oversee the performance of
the Project. District level coordination would be facilitated by the District Coordinating Committee
(DCC), which is an existing body. The Project will finance logistical requirements of only the NSC.
B Project Implementation and Implementation Arrangements
33. The Project will be coordinated by the Project Implementation Unit (PMU) with professional
staff (PDR Appendix 5 provides the list of staff members) and implemented by existing provincial
departments such as Provincial irrigation Department, Provincial Agriculture Department, Department
of Agrarian Services, and various service providers and the private sector by providing extension.
4. RESPONSIBILITIES OF PMO
A. Staff Recruitment
34. All staff recruitment, except those who are seconded from the existing government service,
would be undertaken on competitive and transparent manner. The government circulars in
appointments, salary scale and other procedures need to be followed. The NSC should approve all
appointments. IFAD “no objections” would be obtained for the recruitment of the Project Director,
Project Manager and Finance Manager.
B. Staff Responsibilities
35. Responsibilities are listed in the respective ToRs (WP 3 and 6). The Project Director, with the
concurrence of NSC, could re-assign / revise additional duties as and when necessary. These will be
listed and finalised in the final and detailed PIM.
C. Management of Memoranda of Understanding (MOU)
36. All MOUs are managed by the PMU. Sample MOUs are provided (WP 4 and 6) and these
would be finalised once the project commences. Each MOU should have, inter alia, the detailed ToR,
time frame and deliverables according to the time frame, payment system that is linked to
deliverables, required binding clauses, a simple dispute settlement clause and exit clauses. All MOUs
should be approved by the NSC.
D. Management of Project Agreement with Corporate Buyer
37. A sample agreement with essential items, is presented in WP 4. These should be finalised
with each buyer, i.e agreement perobe buyer, during project implementation. All the conditions listed
above for MOU should be followed in the preparation of these agreements too. The Project Manager
can have one master agreement and with each buyer and the producers / producers organizations
could have several giving reference to the master agreement.
E. Project planning
38. The Project will commence its planning and budgeting process at the beginning of the fourth
quarter of each year. Once the identification of activities mainly irrigation rehabilitation activities using
st
participatory methods, AWPB will be prepared. The PMU can request IFAD for assistance in the 1
time AWPB preparation in addition to the training that will be provided at the start-up workshop. The
details step of planning is listed in Annex 6 of the PDR. These steps should be thoroughly discussed
after commencing the Project and finalised including all practical strategies, responsibilities, timing
and resources required.
E. Procurement
39. All procurement will be undertaken in accordance with IFAD’s Procurement Guidelines or,
pending assessment, with the Government Procurement guidelines as long as these are not in
contradiction with the IFAD Procurement Guidelines. See Chapter 5 below for an outline.
F. Financial management
40. All financial management will be the responsibility of the Finance Manager. The PMO will
maintain appropriate financial records and accounts in accordance with government systems. These

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could be spelt out in details in the finalised PIM. The Project accounts will reflect all financial
transactions during the project period for the IFAD loan, and government financing by project
component and separately by standard expenditure categories. The PMO will consolidate the project
accounts and submit annual financial statements of project expenditures for each fiscal year to IFAD
st
no later than three months after the close of the fiscal year, i.e. to report by 31 March of each year.
The necessary formats for these are presented in the Loan Disbursement Manual of IFAD which
could be included in the finalised PIM.
41. A Special Account in USD would be opened by the Ministry of Finance (MOF) in the Central
Bank. In addition, there will be a project account to be held in LKR to be handled by the PMO. The
signatories to the PMO account would be (i) Project Director; (ii) Project Manager and (iii) Accountant.
The Accountant will co-sign with either the Project Director or, in his/her absence, with the Project
Manager. Government financial reporting procedures will be followed. All implementing agencies
(i.e., Provincial Departments responsible for irrigation, agriculture, and agrarian services) would keep
separate accounts for all transactions involving project finance. These accounts would be available
on request by the PMO Internal Auditor, project supervision / review missions and the annual audit.
G. M&E, Knowledge Management (KM)
42. The full-time M&E officer of the PMU will be responsible to undertake all M&E work and
coordinating KM activities. The IFAD M&E manual and the IFAD KM strategy could be closely
consulted to undertake these activities. These would be integral parts of the finalised PIM. At the
finalising stage IFAD, on request, would provide support to prepare the M&E manual and KM action
plan which will then become a part of the PIM.
H. Reporting
43. The main reporting requirement of the project include AWPB and the 18-months procurement
plan (two months before the beginning of each calendar year); project baseline and RIMS baseline
report (soon after project commencement); bi-annual project progress report (July, each year) and
annual progress report (February each year – previous year report); annual Result and Impact
Measurement System (RIMS) report (two months after each year); annual out-come survey (if
possible annually or bi-annually); Mid-term review report; project completion report and various KM
reports. The Project Director is responsible for all reporting.
I. Gender Action Plan
44. A Gender Action Plan has been proposed (PDR Annex 2) for the Project. This needs to be
discussed at the project level and operationalised for implementation. The Gender and Social
Mobilizing Specialist of the Project will coordinate the finalisation activity.
PIM Annex 1: Outline of AWPB and Procurement Plan
5. PROCUREMENT PROCEDURES
A. General Conditions of Procurement
45. All procurement will be undertaken in accordance with IFAD’s Procurement Guidelines or,
pending assessment, with the Government Procurement guidelines as long as these are not in
contradiction with the IFAD Procurement Guidelines. If so, then the Project should adhere to the
latter. Both guidelines will be highlighted in details in the final PIM.
B. Procurement Methods
46. All possible procurement methods are listed in Annex 8. The proposed methods (procurement
limit of these methods should be assessed at the project level, agreed upon by the NSC and included
in the final PIM) for the Project include National Competitive Bidding, National Shopping, Direct
Contracting, and Quality and Cost Based Selection of consultants. If appropriate Force Account
method will be used for certain canal rehabilitation methods where work quota measurement is
difficult for awarding and monitoring contracting.
C. Procurement Procedures
47. Principles of competitiveness, transparency, equity (i.e. giving equal opportunities for all
potential buyers) and economy will be use in all bidding. The details step meeting these principles and
other methodological details of the bidding procedures will be described in the final PIM.
D. Review of Procurement Decisions

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48. The 1 18-months procurement plan (PP) of the Project is presented in PDR Annex 8. This
plan with the Annual Work Plan and the Budget (AWPB) which should include all procurement entiies,
should be submitted to the NSC for its approval. Once NSC reviews them and approves IFAD will
st
provide “no-objection” to the AWPB for the Project to implement. This is the 1 point of review. In the
PP the subsequent review methods are listed – whether a particular procurement entity needs post-
or prior-review of IFAD etc. These would be adopted as planned. The thresholds for post or prior
review for different procurement items will be detailed in the final PIM. Sample of post reviewed items
will be examined during supervision.
E. Procurement Committee
49. There will be mainly two procurement committees – one at the Project level for procurements
with a value that is less than a particular limit. This will be appointed by the Project Director and
concurred by the NSC and IFAD will provide no-objection. The second committee, established at the
Provincial / District Level will handle all other procurement which are above the threshold. The NSC
should approve this committee too and IFAD will provide no-objections. The members of these two
committees will have to be decided and included in the finalised PIM.
F. Procurement Plan
st
50. The 1 18-months procurement plan is presented in PDR Annex 8. The procurement method
are listed in WP 3 and 4. Overall project procurement methods under each expenditure category is
presented in WP 8 with all other cost tables.
6. FINANCIAL ADMINISTRATION AND MANAGEMENT
A. Project Costs and Financing
51. The project cost and financing is summarised in PIM Chapter 1 above and the details will be
included in the PIM in Sri Lankan rupees.
B. Flow of Funds
52. The IFAD financing will be disbursed over five years. Funds from the IFAD loan will flow to
the Special Account operated by the Ministry of Finance (MOF). On request from MOF, IFAD will
make an initial deposit from the Loan Account at IFAD to the Special Account equal to approximately
six months’ worth of eligible expenditures of IFAD share (up to a maximum of 10% of the loan
amount). Replenishment of the Special Account from the Loan Account at IFAD will be by way of
withdrawal applications (WA). The type of all documents that need to support the WA and the
approval steps will be included in the finalised PIM which is also available in the Loan Disbursement
Hand Book (available on IFAD Website). On request from the Ministry of Local Government and
Provincial Councils (MLGPC), and in accordance with approved project AWPBs, MOF will advance
the IFAD loan funds quarterly in advance from the Special Account in USD to the project account held
in LKR by PMO.
C. Types of Accounts
st
53. The 1 generation account is the special dollar account maintained by the Central Bank and
operated by the Ministry of Finance and Planning. The second generation account is opened and
operated at the lead ministry, MLGPC, which is the ministry account in rupees. The third generation
account is opened at the Project level, the project account, which provides financing for all project
operations.
D. IFAD Disbursement Procedures
54. This is clearly and completely presented in the Loan Disbursement Hand Book which will be
closely reviewed and required details will be included in the finalised PIM.
E. Check List for Withdrawal Applications & Forms
55. This information too will be obtained from the Hand Book and included in the finalised PIM.
For specific operational aspects, WA will be prepared by the PMO and the PMO will present the WA
directly to MLG&PC for verification, signing and transmission to IFAD. PMO will also copy them to the
Provincial Ministry of Agriculture, Livestock Development, Lands and Fisheries for information.
F. Audit Procedures, TOR Auditor

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56. IFAD places a high degree of reliance on Project audit reports. Care should be taken to
ensure that the annual audit is conducted on the basis of an IFAD approved audit TOR, according to
International Auditing Standards and the report should be submitted to IFAD within 6 months of the
close of the year. The project will be audited frequently by an internal auditor and annually by an
external audit appointed by the Auditor General of Sri Lanka. The required ToR and other procedures
will be presented in the final PIM.
G. Financial Statements
57. The Financial statements should be annually prepared and sent to IFAD two months after the
end of each financial year. The information, quality and the standard of the statement are presented in
the Hand Book which will be included in the finalised PIM.
H. Project Completion
th
58. The project completion will be on the 5 anniversary of the project inception. At completion a
Project Completion Review (PCR) will be done. No disbursement done after completion. The loan will
be closed six months after completion.
7. MANAGEMENT INFORMATION SYSTEM
A. Introduction
59. The monitoring process will record the delivery of project inputs, outputs and outcomes. It
also focuses on the project performance in delivery of individual services and supplies, timing of
coordination of activities and impact. Log-frame and the cost tables will be the basis to monitor. The
basic measurement period will be a quarter, but in to meet specific requirements monthly progress
reports will be submitted. The Project will develop the main Monitoring & Evaluation (M&E) indicators
that will be used. This will be done at the initial workshops with the participants, enabling them to
understand fully what is being foreseen at impact by project interventions. Once it is developed at the
very initial stage of the Project, PIM will be updated with those information.
B. Project M&E Framework, Responsibilities, Indicators
60. M&E will take place at three levels in the field: individual farmer, farmer organization (FO) and
project activities, where farmers and all participating agencies including NGOs and private sector will
have Monitoring & Evaluation (M&E) responsibility as part of their contract obligations. These will be
reflected in the Memorandum of Understandings (MOU) that would be drawn up by the Project
Management Office (PMO). PIM will guide their preparation. In the case of FOs, the responsibility of
M&E and also Knowledge Management (KM) will be delegated to the Management of the FO while
the participating agencies will appoint a focal point each, thereby establishing a network responsible
for M&E and KM for the Project. There are several steps of developing an effective M&E plan. These
will be highlighted in the finalized PIM. PDR Annex 6 provides a guide for such steps. The possible
final M&E and KM products would be listed in the finalised PIM.
61. Methods for output monitoring which is the first step towards the evaluation of the
performance of the Project and the main methods recommended are: (i) Activity report by NGO
service provider; (ii) Training evaluation forms; (iii) Monthly reports by M&E focal points at village
level; (iv) Process monitoring by the beneficiaries; (v) Exchange of information with Implementation
Officers from line agencies; (vi) Occasional field visits/direct observations (e.g. infrastructure
construction status); and (vii) random focused discussions with the beneficiaries at field level. The
final PIM will list the timing and officers’ responsibilities in collecting these information.
C. Knowledge management plan
62. Knowledge management (KM) is the process that supports the management of knowledge,
including generating, validating, synthesising, assembling, storing, sharing, disseminating and using
knowledge. The Project should recognise the need for credible, authoritative and convincing evidence
to underpin its activities and policy initiatives; the existence of extensive knowledge on irrigation
development; and the need to develop the capacity and culture to absorb and contribute to
knowledge. The PIM will highlight the IFAD KM strategy to address these issues in details.
63. Several methods are proposed for KM in the Annex 6. The initial step is to prepare the
Knowledge Management Concept Paper for the Project. The final PIM will provide some examples of
concept papers from other regional projects. The final PIM will also provide basic guidance to prepare
some of the KM material such as a “District New Letter” on project progress, publication of a “Project

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News Letter” with contributions from project beneficiaries, production of CD/DVDs showing innovative
approaches, establishing a “Project Website”, annual workshops and events planned to share local
knowledge and information with other donor assisted projects.
D. Reporting and Communications
64. M&E reporting will be done through bi-annual and annual progress reports, RIMS report,
annual outcome surveys and special studies. Section H of Chapter 4 above dealt with reporting and
the guidance that the finalized PIM would provide in the preparation of such reports.
8. IRRIGATION DEVELOPMENT
A. Rehabilitation plan, type of infrastructure, type of structures, priorities, phasing of
implementation
65. Irrigation infrastructure rehabilitation component were listed in Chapter 1 of PIM. Main
objective of an irrigation system is to deliver right quantity of water at the right time to the right crop,
and removal of excess water after irrigation. Usually in irrigation rehabilitation, more attention is given
only to improve structural quality of supply canals only. However in the proposed approach, equal
importance would be given to hydraulic quality of canal network including drainages. Also the
rehabilitation needs should be identified in closed collaboration with the farmers. Proposed approach
is based on strategy that promotes FOs to take over the responsibilities of the O&M of the
rehabilitated system after its implementation phase. Due to cost consideration the following
st
Prioritization Strategy could be used to phase out the rehabilitation work: (1 ) Distributory Canals
nd
(DCs) and Branch Canals (BCs); (2 ) Small Holders Field Canals (FCs) and Farm Roads – FCs &
Farm Roads which serve large number of farmers having small farm lots. These farmers are
rd
sometime called Colony Farmers; (3 ) Larger Holders Field Canals and Farm roads - FCs serving
farms of more than 2 Ha. (Most of these farms are located under Left Bank areas); (4) LB and RB
Main Canal; (5) Environmental Mitigation works including Cleaning of Drainage Canals and
rehabilitation of Salt Water Barriers
B. Responsibilities PID
66. A special unit that will be managed by the Project Director will be established to undertake
design and supervision of rehabilitation activities in Main Canals and Drainage Improvements. Project
Director will lead the technical team comprising of an Irrigation Engineer and two Engineering
Assistants responsible for the design and supervision of the rehabilitation of Main Canal and
Drainages. Project will also provide an Engineering Consultant to review the designs. Table 22 of
Appendix 1 of Working Paper 3 indicates other assistance provided to the unit by the project. PMO
will undertake the contracting of the contractors for the construction activities of Main Canals &
Drainage Improvements with closed collaboration of PD.
C. Contracting for design and supervision, criteria, procurement method
67. Designs & Supervision of canal system other than Main Canal Rehabilitation & Drainage
Improvement would be executed through outsourced private consultancy firms. Project Manager will
be technically responsible for procurement of the outsourced consultancy services. ICTAD guidelines
for Quality Cost Based System (QCBS) should be adopted in procuring the services of qualified
consultancy firms after a short listing procedure by calling Expression of Interest (EOI). Under QCBS,
proposals are evaluated based on both their technical merit and price. Technical Evaluation
Committee appointed for short listing & selecting such out-source consultants should comprise of
representatives from PID. During execution phase, Irrigation Engineer (IE) of PMO will be responsible
for managing the Consultancy Contracts on behalf of Project Manager. Same procurement System
could also be adapted for specialised works such as Calibration of Canals, Training of Stakeholders
for Water Management and specialised surveying works such as GIS mapping and soil surveys.
Further details of responsibilities in supervision and monitoring etc will be discussed in details and
included in the finalised PIM.
D. Contracting for works, criteria, procurement method
68. There is a need to identify different roles of the various stakeholders in contracting for works.
There are two main parties identified in civil engineering contracts namely “Employer” and “Engineer”
and their representatives. There are 2 types of contracts: Category 1: Contracting for Works in
Main Canal and Drainage Rehabilitation; Category 2: Contracting for Canal System below the Main
Canal. The staff dealing with the two categories are listed below.

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Category Employer Employer’s Engineer Engineer’s

Representative Representative

1 Contracting for Works in Provincial Chief Project Director (PD) IE of the PMO An Engineer from PID
Main Canal and Drainage Secretary / Project Manager Staff Staff appointed by PID
Rehabilitation (PM) to work under the PM

[Link] for Canal Secretary of Project Director (PD) Outsourced Team Leader of the
System below the Main Ministry of / Project Manager Engineering Consultancy Team
Canal Provincial (PM) Consultancy
Government Company

E. Management of contracts
69. For construction supervision, Construction Engineer, a team of Engineering Assistants having
required experience and Work Supervisors should be deployed by the outsourced consultants. As the
Engineer for construction contracts, in addition to construction supervision to assure the quality,
outsource consultants should do the checking of contractual claims submitted by the contractors and
recommend for payments to the PD. Consultants should also be allowed to use the equipment of field
laboratory provided under the project to do required quality testing during construction phase. Project
Manager of PMO will undertake the contracting of the contractors for the construction activities
supervise by PID staff. Irrigation Engineer appointed by the PID will be the “Engineer” for all the
construction work undertaken by PID staff.
F. Trial run and handing over procedures
70. After the completion of individual contracts it is very vital to take over the completed work from
the contractors and hand over to the FOs in the presence of Farmer Leaders. During this process, it is
very important to keep the reports developed with the farmers during work identification phase, readily
available as a guideline/proof to show that the items rehabilitated were decided in a participatory
manner. Depending upon the nature of work, a trial operation can be implemented to check the
hydraulic adequacy of the system giving special attention to the functioning of Water Measurement
Structures. At this stage Project Director should play a role of consultant to FOs by checking the
performance of the final product.
71. After the completion of the total project, an inventory on project features should be developed.
For this purpose, GIS with a dynamic and user friendly information system can be developed so that it
could also be used latter as a management tool. The Main Features of the information system include
general interactive layout map of the project; details of infrastructure such as canal network, location
of the structures with as built drawings, calibration charts of water measuring structures and general
information; details of lands such as ownership, crops being cultivated, extents and maps to provide
copies of survey plans on request; tools for querying and finding necessary information such as
finding a land owned by a certain farmer etc and details of areas which are prone to salinity
development. These information and the description of the structure would be handed over to the
community during the handing over process. Further details on the agents to takeover will be
deliberated during the finalization stage of PIM.
9. OTHER INFRASTRUCTURE
A. Needs assessment and planning of productive infrastructure farmer groups
72. Need assessment is done in participatory manner as described in the above section and also
in WP 3.
B Contracting and Handing Over
73. Contracting and handing over of the other infrastructure such as buildings etc will follow the
same process listed above. The specifics would be developed as appropriate during the finalization of
PIM.
10. SOCIAL MOBILISATION
A. Approach, strategy, role of NGO(s) and PDAS

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74. Social mobilization / inclusion would be undertaken with the assistance of specialised state
agencies such as district level Department of Cooperative Services, Agrarian Services, Education,
Health and Nutrition and Department of Agriculture, in addition to the specially recruited NGOs. The
roles of each partner would be discussed in a participatory manner and be included in the finalised
PIM. WP 6 provides details.
B. Selection procedures NGO(s)
75. Competitive and transparent method would be adopted in the NGO selection process. It will
be based on a tender. IFAD no-objection will be sought if necessary.
C. Contracting NGO(s)
76. Once selected, Project Manager will manage the NGO involvement. MOUs and a legally valid
contract would be used in contracting NGOs. All contract documents will have to be cleared and
th
approved by the NSC. All the conditions listed in Section C of the 4 Chapter above should be
adopted.
D. Implementation plan
77. The mobilization plan needs to be in consonant with the rehabilitation and irrigation
management plan. These plans are detailed in WP 3. In the finalization stage of the PIM, mobilization
plan will be prepared taking into consideration the timing of all project activities.
E. Mobilisation and training field staff by NGO(s)
78. A Training Need Assessment (TNA) is required to formulate an appropriate training program
for PID Staff as well as for FO Leaders. Chapter 11 below provides further outline.
F. Criteria for group formation, group strengthening
79. Forming a canal based institutional setup within the project area is the final objective of
forming groups. The operational feasibility of canals is therefore the main criteria of group formation.
On the basis of irrigation canal operations, 21 registered FOs which operate at different levels are
already in operation. These would strengthen rather than forming new organizations. Strengthening
would need to address FO financial management; exposure to external audit checks by the Provincial
Agrarian Services Department (PASD); formulating appropriate by-laws by FO Federation apex
ratified by PASD to streamline FO internal management; increasing exposure of FOs, as legal
entities, to new and profitable processing/marketing technologies; and leadership qualities.
G. Supervision of field staff by NGO(s)
80. The focus of the field supervision is usually on the irrigation rehabilitation work below the main
canal. For construction supervision, Construction Engineer, a team of Engineering Assistants having
required experience and Work Supervisors should be deployed by the outsourced consultants who
are function as NGOs as the “Engineer” for construction contracts. In addition to construction
supervision to assure the quality, outsource consultants should do the checking of contractual claims
submitted by the contractors and recommend for payments to the PD. The timing of recruitment and
additional responsibilities of such consultants, part of which are presented in WP 3, would be detailed
in the finalised PIM.
H. Contract supervision by PMU
81. Design & construction supervision of the Main Canals Rehabilitation and Drainage
Improvement can be undertaken by the PID with presently available staff through a special unit.
Project Director of the PMU will lead a technical team which should comprise of an Irrigation Engineer
and two Engineering Assistants in addition to work supervisors. The details of the supervision work
will be outlined in the final PIM.
11. TRAINING
A. Approach for staff training, farmer training, gender
82. The training focus of the staff is mainly on the future challenge of operating the Main Canal to
meet variable flows created by demand based operation of Bulk Water Allocation (BWA) system and
to manage the BWA system itself. Commitment of the staff of the Main Canal Operation unit is the key
to the success of proposed BWA. In view of this need it is required to focus on three major aspects of
staff training: (a) estimation of water availability, (b) computation of water requirement by performing

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an operation study, and (c) design aspects on major components of an irrigation reservoir. An
approach and the method on the basis of these requirements will be detailed out in the final PIM.
Appendix 6 of WP 3 provides further details for finalization.
83. Training of farmers should be undertaken in two steps. First session would be for FO leaders
and the second session is for farmers. Appropriate strategies to get the farmers’ full participation will
be dealt with in the final PIM. Under the classroom training, farmers should be made to understand
the status of water availability in Iranamadu Tank and how water reaches their individual FO areas.
Other areas of focus would be water requirement variations of different crops, properties of different
soil types and their relationship with water retaining capacities, potential of salinity development in
excessive water use and poor drainage, crop evapo-transpirations and minimization of unavoidable
losses and runoff etc. Which are factors to determine the BWA system operation. Training programs
on water measurements and associated O&M instructions should be designed with simple and easy
to understand concepts and estimation methods. These will be included in the final PIM. Activities
related to calibration should be implemented, along with farmer training on water measurements.
Practical part of the training sessions could be undertaken during the land preparation periods.
Specific items in such a training would also be included accordingly.
B. Training plan for staff, for leaders and members of farmer organization, for women groups
84. Training programmes will be based on the requirements listed above. The appropriate timing,
emphasis of each training programme, coverage of the targets groups etc need to be discussed in
details before preparing the plan. Such details or basis to agree upon will be included in the final PIM.
The basis for such programme is presented in Attachment 2 of WP 8.
D. Training plan for bulk water allocation and for system operation, for staff, for farmers
85. The description under training (section A above) is the basis for this discussion as well.
Details that will appear in the section will determine the training plan.
E. Contracting for plans implementation
86. The outline needed to develop the PIM under this section is highlighted in Chapter 8 above.
F. Contract management, supervision and Follow-up monitoring
87. Rehabilitation work in Distributory and Field Canal levels and Farm Roads will be
implemented by the PMO through outsource consultancy groups. Contract arrangement and
supervision is one of the step in the stepwise activities in contracting consultants. Supervision
functions stipulated in construction contracts will be carried out by a professional field staff comprising
a qualified Irrigation Engineer, Engineering Assistants and Work Supervisors deployed by the
outsource consultants. Both aspects would be detailed in the final PIM.
12. MARKETING
A. Demand estimate for different crops by Corporate buyer
88. To provide assured market linkages, the project would enter into a partnership with the private
sector (for example Cargills, Keels Super, exporters of fruits and vegetables). All of these or few of
them will enter into agreements (MoU) with the project to provide their expertise both in sustainable
production and in direct marketing through forward contracting with farmer groups. Demand estimates
for different crops will be prepared by such companies periodically and disseminate such information
to farmer Organizations (FO) through the Project. Project’s Agro Economist is the link between
companies and FOs. The specific process through which the information would flow will be developed
in the final PIM.
89. The project will support workshops for farmer groups and women group representatives to
educate them in market and marketing. The private sector would periodically indicate its market
demand in terms of type of crops, quality requirements, quantities demanded, primary processing
needs and delivery modalities. It would also indicate the farm gate price, a floor price and the pricing
mechanism to accommodate fluctuating market prices. The methods to maintain such information
flow will be detailed in the final PIM. Groups interested in working with the private sector will be
supported by the Project in their negotiations of forward contracts and contract fulfillment will also be
supervised by the Project. Detailed steps of undertaking it will be presented in the final PIM.
B. Annual Water allocation by Local Government and farmers

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90. Irrigation rehabilitation, capacity building on efficient water use and issue of water on demand
would improve the water use efficiencies. The improvement of irrigation infrastructure and capacity
building of farmers on efficient water use are expected to bring down the current high water usage.
Approach for these activities are listed in Chapter 8 of PIM. The changes in water use efficiency
would increase the annual cropping intensity. With the introduction of the Bulk Water Allocation
system, the decision on the cropping pattern would be decentralised to the FOs and accordingly a
required volume of water will be released.
C. Definition of cropping patterns by farmers in consultation with Corporate buyer
91. The types of diversified crops will depend on the market demand which is facilitated by the
Project through linking the private sector. A number of interventions is required for the development of
the vegetable production in the project area. These interventions include provision of market
information, improvement in market-oriented extension, investments on infrastructure of vegetable
markets, improvement of post-harvest handling through investments in proper structure and means of
transportation, off-seasonal production through irrigation investments, capacity building on post-
harvest handling and marketing and strengthening of FOs for production and marketing. Details of
practicing these interventions will be presented in the final PIM.
D. Application of sustainable agriculture
92. Sustainable agricultural farm practices should be applied in the project area for facilitating
sustainable agricultural production in the highlands and where possible also on paddy-lands in the
yala season. The practices are outlined in Chapter 13 below.
E. Forward contracting, modalities, price
93. Approach towards the forward contracting could include the following. These would be
detailed out in the final PIM. Company/s will be a corporate buyer (not exclusive) of selected produce
of vegetables and fruits on a buy-back arrangement. Volume and the price of such purchases will be
determined depending on the demand for such items at the time of Forward Contract agreements.
Understanding between the farmer and the company as to the type and the quantity to be produced
will be the underline principle of the partnership. Separate MoUs with different FOs will be
encouraged. The details of forward sales agreements, MOUs etc will be presented in the final PIM.
F. Extension, training, inputs support by Corporate buyer
94. The partner companies will provide extension and technical support to farmers. Also they
provide seeds, costs of which are to be recovered from the payment to supplies. Companies usually
opt to conduct a need assessment with the proposed group of farmers using a questionnaire and then
conduct training and farmer empowerment for selected farmers. The training will be often conducted
by hiring a relevant subject specialist from the Department of Agriculture. The ToR for such training
will be listed in the PIM. The selection of appropriate methods for training has to be done considering
the convenience of farmers and effectiveness of training, which is to be addressed in the final PIM. In
this regard technology demonstration units have to be set up in the project area. As a means of
motivating farmers and to provide knowledge, it is important to conduct cross visits to share the
experiences with farmers, CBOs and NGOs who are adopting good farming practices. The details of
timing etc will be presented.
G. Contract fulfillment by farmers
95. It is the responsibility of the respective FO to fulfil the contractual obligations, which is not
limited to FO’s office bearers alone but to individual farmers too. Potential disputes in the programme
implementation process resulting from breaching of contracts could occur between the FOs and
marketing companies. Under this contract farming arrangement, the Project has to intervene to settle
such disputes. Such disputes will be dealt according to the provisions of agreements between them. It
may be provided in the relevant agreements that the parties shall attempt to settle in good faith and
amicably, any doubt, dispute, controversy or claim arising from. The such provisions will be derived
and included in the final PIM.
H. Review of results by farmers, Corporate buyer, lessons
96. Results as to compliance of agreements (MoU) between the marketing companies and FOs
will be reviewed monthly and records will be kept at the project office. The details to be included in the
records will be presented in the final PIM. The project team will involve in reviewing the targets and
sharing responsibilities between FOs, if necessary, in consultation with FOs and marketing company.

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13. AGRICULTURAL DEVELOPMENT

A. Approach, sustainable agriculture
97. The intensification of land utilization and increase in dependence on external inputs such as
chemical fertilizers, agro-chemicals, etc necessitated adopting sustainable productions system reduce
such inputs. The project support has to be extended to promote sustainable agriculture through the
capacity building and promoting farmer groups on good agricultural practises. The detailed steps of
achieving that within the scope of the Project will be outlined in the final PIM. WP 4 on agriculture will
provide required specific information to prepare the details of the PIM.
B. Trials and demonstrations by PDOA
98. The PDOA and RARDC will support the diversification programs through field demonstration
of crops and related farmer training, testing of varietal adoptability, promotion of good agricultural
practises, organic manure production, and soil testing services. The timing, strategic places for
demonstrations, farmers involvement, demonstration method, financing, institutional responsibilities
and farmers’ learning systems etc will be listed in the final PIM.
B. Water allocation and cropping pattern, upland cropping
99. Cropping pattern, particularly the upland cropping will be based on two aspects: cooperate
demand and the water availability under the BWA system. The PIM based on the information
available in WP 3 and WP 4, various crop models as examples will be presented taking the two
aspects into account. The finalized PIM also will present economics of water use and the profitability
of the crops models.
C. Extension advice by PDOA
100. Programme support could be provided for the development of extension and training facilities
of PDOA of Killinochchi, which is currently in need of resources and facilitation to improve their
services. Seed and planting material production and seed processing facilities at Paranthan and
Killinochchi also need support. Specifics of the type of support, timing and appropriate methods of
providing support will be decided in consultation with the PDOA and presented in the final PIM.
D. Sustainable inputs, bank loans
101. A part of the farm inputs will be provided by the cooperate buyers when the farmers are in
forward sale agreements. The specifics of this modality will be presented in the finalised PIM.
102. With regard to credit, the Project will facilitate only credit linkages with the current credit
market. New Comprehensive Rural Credit Programme (NCRCP) financed by the Central Bank of Sri
Lanka (CBSL) and operated through state and some private banks provide agricultural credit for
paddy and non-paddy crops. In addition the JBIC financed Poverty Alleviation Micro-Finance Project II
(PAMP-II) also provides credit for agriculture, but mainly for paddy. Such are the products that are
available for the farmers. The Project staff and the PIM preparation team will have detailed
discussions with the banks and final details or creating credit linkages will be presented in the PIM.
Some basic information about credit facilities is found in WP 6.
14. IMPACT ASSESSMENT
A. Household survey approach, baseline, mid-term, completion
103. The baseline study will be initiated soon after project inception. This will be contracted out to a
team of consultants. The experience of other IFAD projects in conducting baseline studies would be
presented in the finalized PIM to be replicated in this project. The final PIM will outline the timing,
approach, type of experts needed etc for the study and the coverage of the Mid-term and project
completion studies. The appropriate survey approaches and the methodology of conducting the study
including sampling etc will be the responsibility of the team of consultants with close consultation with
the project staff.

A. Basic indicators for surveys

104. The indicators of the baseline study will very much depend on the input, output, outcome and
impact indicators that will be included into the operationalised log-frame of the Project. The final PIM
will include the finalized log-frame of the Project and a list of baseline indicators that will be eventually

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used for impact monitoring. In addition the PIM will deliberate on the RIMS baseline survey and the
RIMS studies. The standard methodology of RIMS and the reference to IFAD information base will be
presented.
B. Sampling, control group
105. Delineation of the baseline study, RIMS and Mid-term survey samples and corresponding
control groups will be the joint responsibility of the team of consultants who will undertake respective
studies and the Project staff. RIMS study will have no control group. The finalized PIM will present the
required criteria for selecting the samples.
C. Contracting
106. The team of consultants to undertake the studies would be contracted out using a competitive
and transparent bidding process. The required steps of such a process is listed in Chapter 5 above.
D. Analysis of results
107. The RIMS analysis will have to use the standard analytical methods that is prescribed in the
RIMS manual. The finalized PIM will provide the detailed reference for the manual. The other two
studies will mainly use the log-frame indicators as the basis for its analysis. However it is the study
team in consultation with the Project that will determine the type of analysis required. Key among the
results that are needed to include in the studies are project’s achievements and constraints.

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PIM Annex 1(a): Annual Work Plan and the Budget - Template

Timetable for

Responsible
Indicators Implementation targets Budget

Unit/ Staff
implementation
Results #

Objectives/Expected Results
Project RIMS Appraisal Revised Planned Unit Achieved Achieved Appraisal Revised Planned Budget Financiers Spent Spent
Q1 Q2 Q3 Q4 % % % %
Indicators Indicators (Total) (Total) (Annual) Cost (Cumulative) (Annual) (Total) (Total) (Annual) Category (Cumulative) (Annual)
IFAD Gov.
(A) (B) (C) (D) (E) (F) (F.a) (G) (Ga) (H) (I) (J) (K) (L) (L.a) (M) (N) (O) (P) (Q) (R) (S)
C1 Component 1 - Purpose:
SC1.1 Sub-Component 1.1:
1.1.1 Output 1.1.1:

Activity [Link]
Activity [Link]
Activity [Link]
Etc.
Total Budget for Output 1.1.1:
1.1.2 Output 1.1.2.

Activity [Link]
Activity [Link]
Etc.
Total Budget for Output 1.1.2:
1.1.3 Output 1.1.3.

Activity [Link]
Activity [Link]
Etc.
Total Budget for Output 1.1.3:
Total Budget for Sub-Component 1.1:
SC1.2 Sub-Component 1.2:

1.2.1 Output 1.2.1

Activity [Link]
Activity [Link]
Etc.
Total Budget for Output 1.2.1:
1.2.2 Output 1.2.2.

Activity [Link]
Activity [Link]
Etc.
Total Budget for Output 1.2.2:
Total Budget for Sub-Component 1.2:
Etc.
Etc.

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PIM Annex 1(b): Procurement Plan - Template

Country
PROCUREMENT PLAN FOR GOODS/WORKS
Project Title / Loan/Grant Ref:
Project Implementation Agency:
DATE OF GPN: …………….
Thresholds:
STATUS AS OF (Date): ………………
IFAD APPROVAL DATE: Original: …………… Current: ……………
Review by IFAD

IFAD’s No Proposals IFAD’s No

Evaluation
Package No.

TOR/ RFP Final Objection

Prior/Post

Objection Received Finalized Contract Expenditure

Estimated Method of Advertising Prequalified Draft RFP Name of
SL No.

(Technical /#
for TOR by the (Technical /# Number, incurred to
Description of Goods/W orks Cost (Rs. Selection for EOI Shortlist forwarded Issued Combined/Draft Contractor/
Shortlist/ Project Combined/Draft Value and Date (Rs.
Min) @ (Date) Finalized to the bank (Date) Contract/Final Nationality
Final REP Authorities Contract/Final Currency Min)
(Date) (Date0** Contract)
(Date)** (Date) Contract) (Date)
(Date)**

1 2 3 4 5 6 7 8 9 10 11 12 13 14 16 19
Component-1 :

*PP

R 1

*PP

R 2

*PP

R 3

*PP
R 4

A
Component 1 - Total

Component-2 :
*PP
R 2
A
Component 2 - Total
Grand Total - (Goods/Works)

*PP: Target dates agreed as per Procurement Plan R: revision 1,2 etc. A: actual dates ¨RFP (Request for Proposal): Same as ‘Bid Document’ #Technical and Financial
** Applicable in case of ‘Prior Review’ by IFAD
@ State whether (i) Direct Contracting; or
(ii) Competitive. If Competitive, then state whether International Competitive Bidding (ICB), National Competitive Bidding (NCB), International or National Shopping
(iii) W ork by Force Account (if applicable)

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ANNEX 12: COMPLIANCE WITH IFAD POLICIES

I. IFAD POLICIES

1. In this Annex, reference is made to those IFAD policies available on the web-site. Otherwise,
the Learning Notes have been consulted.

II. THE PROJECT OUTLINE

2. The TOR of the Detailed Design Mission specifies that particular attention should be given to
simplifying the proposed design included in the Inception Note.
3. Schematically, the present project design has two, interrelated focuses: a) development of
irrigation infrastructure, and b) providing support to diversification of production and to marketing in
partnership with a private corporate buyer, to ensure that the irrigation capacity is productively and
sustainably used.
4. A starkly simplified project design, only including irrigation infrastructure development has
been considered, as it was the expressed preference of some officials in the Ministry of Finance, but
has not been applied for several reasons: a) the present situation, with most of the population
returned to their pre-war homesteads and resuming their land-rights or land entitlements, allows for a
re-start of diversified agricultural development and rendering production techniques more sustainable
101
and more environment friendly, similar to what they had been before the war . There is local
knowledge available to apply sustainable agricultural practices; b) without support for diversification,
farmers would apply paddy cropping in both agricultural seasons. Under present and foreseeable
market conditions, with a de facto government administered ceiling price for quality paddy and in spite
102
of high but unsustainable subsidies for chemical fertilisers , the project impact for a large majority of
small project farmers with less than 2ha would not be sufficient to allow their incomes to exceed the
poverty line while financial and economic return of the project would not justify the required
103
investments in irrigation system development ; c) to promote sustainability after project completion,
a partnership with a corporate buyer would ensure effective demand for diversified farm output on the
basis of contract farming. This partnership would be developed in the second component.
5. IFAD Policy consideration The Project supports households who have recently returned to
104
their pre-conflict residence to re-build their economic activities and assets. In this, it reflects IFAD’s
Post-Conflict policy which states that “Engagement in post-crisis situations may include: (a) the
design and implementation of a new programme that includes activities specifically aimed at ……
105
reconstructing and reactivating the development capacity of IFAD’s target groups…..”

A. Components

6. The Project would have three components and several sub-components, relevant policy
considerations are noted where applicable.
Infrastructure development
7. Irrigation rehabilitation The ADB implements a project which increases the capacity of the
Iranamadu reservoir through higher bunds and rebuilding of headworks. Part of the increased water
holding capacity will be used for drinking water supply to Jaffna, where groundwater sources have
become unsuitable due pollution by intensive agriculture and improper sanitation. The IFAD project
would rehabilitate the downstream infrastructure, including two main canals, distribution canals, field
canals and drainage canals and the required structures. It would develop agrowells for tail enders,
benefiting from improved groundwater table levels.

101
during the conflict period, cropping was focused on paddy monocropping for paddy regional self-sufficiency
102
the subsidy represents 80% of the market value of fertilizers
103
the financial rate of return on irrigation investments, with paddy being the only crop with an irrigation intensity
of 1.3, would be negative
104
or what remained of that
105
EB 2006/87/R.3/Rev.1, pg.6

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8. Implementation has integrated several IFAD policy considerations. The rational of the Project
is based on consultations with farmer organisations, who agreed to the improvement of the reservoir
and the supply of drinking water to Jaffna, on condition that the downstream infrastructure was
106
simultaneously rehabilitated. Therefore, they were involved “from the earliest possible stages” . For
the design of the rehabilitation of the distribution and field canals, participatory planning would be
undertaken, after having operated the rehabilitated main canal for one season so that agreed design
needs for these canals reflect actual felt needs rather than suggested solutions from outsiders.
9. The Project would support the introduction of an innovative Bulk Water Allocation system, as
successfully practiced in the Mahaweli System H, promoting irrigation flexibility and the opportunity of
on-demand water supply. To manage the system, female and male farmers would be grouped
around water distribution point and such groups would manage the amount of water allocated to it.
107
This constitutes an instrument for equitable water management . Irrigation Department staff and
farmers will be trained and exchange of experience with System H officials and farmers will be
promoted.
10. The Project would support groups in applying their traditional manner of equitable distribution
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of water rights during the yala season under which farmers with up to 2 acres receive water rights
for 2 acres while those with larger lands receive water rights for only one-third of their land. This
tradition favours those having small lands at the tail end who lease the unusable land from larger
owners upstream, bringing their water rights with them.
11. Other Infrastructure The other infrastructure would serve to strengthen the target group’s
marketing activities and the capacity of public services to provide the required advisory and training
services.
Production and marketing
12. Social mobilisation and training To enable female and male target group farmers to
productively use the improved irrigation system, there is a need for group formation, strengthening or
re-structuring and for training, both in water management and in production and marketing. The
Project would help farmers to diversify their (yala) cropping systems towards high value fruits,
vegetables and other crops, using sustainable, organic or low external input technologies in order to
safeguard the environment and the groundwater resources. Both the water management modalities
and the promotion of sustainable agriculture constitute innovations in the local context but sufficient
previous experience (sustainable agriculture) or experience elsewhere (System H for water
management) exists to include these approaches in the design. They meet the three requirements
IFAD’s policy on innovations has formulated: (i) new to its context of application. (ii) useful and cost-
effective in relation to a goal. (iii) able to “stick” after pilot testing. . The emphasis on sustainable
109
110
agriculture is derived directly from the IFAD Strategic Framework 2011-2015.
13. In these institutional support activities, the Project would ensure that women participate, not
only as members of farmer and women groups but also as office bearers, responsible for water
management and decisions on cropping patterns within water distribution groups. An overall target
for the participation of women in the Project of 50% of all beneficiaries has been set. In this, the
Project would support two of the three pillars of IFAD’s Gender Strategy: women involvement in
a) economic empowerment; and b) decision making.
14. Production, extension and marketing The Project would support farmer and women
groups to divert (yala) production towards high value crops such as fruits, vegetables and other crops.
With the Bulk Water Allocation system, farmer groups around a distribution point can decide their own
cropping pattern and sustainable production techniques. The private sector companies such as
Cargills, as project partners, would advise on its demand for quality crops and would provide
extension advice in coordination with the Agricultural department. They would sign forward contracts
with interested farmer groups. The approach meets IFAD’s criteria for an innovation and fits in its
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policy for partnerships with the private sector . A similar approach is applied in the NADEP project.

106
Learning Note 3.2, para 2.
107
[Link]., para 3
108
[Link] para 4
109
IFAD, Innovation Strategy, Dec.2007, pg.7
110
EB-2010-101-R-12, pg 79: Principle of Engagement 8: Sustainability
111
IFAD. Private Sector, Development and Partnership Strategy, 2007, pg 33 and Box 5, which informs about the Sao Tome
experience with organic cocoa and the French corporate buyer from KAOKA. Since 2007, this approach has been further

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 12: COMPLIANCE WITH IFAD POLICIES

15. Other agricultural development and off-farm activities Upland agricultural development
inside and outside the command area would be promoted by the provision of agrowells, support to
fruits and seed production. Off-farm activities would include skill training and linkages with existing
Micro-finance institutions. This strengthening of access to existing sources of micro-finance services
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is an element of IFAD’s Rural Finance Policy.
Project management
16. The Project will be managed by a Project Management Office under the Provincial Ministry of
Agriculture, Irrigation, Livestock Development, Fisheries and Lands. It supports the Secretary of the
Ministry, who is the Project Director in managing the Project. Implementation would be undertaken by
the Irrigation Department, the Agricultural Department and the Agrarian Department on the basis of
Memoranda of Understanding. Where capacities of these Departments are insufficient, activities will
be outsourced by the Project to reputable and competent agencies in the private and NGO sectors.
The corporate buyers such as Cargills will be project partners, and would co-finance a part of the
project costs from their own resources. The PMO requires a staffing with professional capacities in
Irrigation, Marketing, Procurement, Finance, M&E and Knowledge Management, Gender and Internal
Audit.
17. The project management function is integrated in the existing provincial government structure,
in line with the considerations in the Learning Note: Designing for Implementation.
18. Lessons from previous IFAD projects indicate that the continuity of project managers is
difficult to ensure under the government regulations for pay and incentive scales for donor financed
projects. This project design has chosen to replicate the management structure of the NADEP project
with a high level part-time project director within the government structure, i.e. the Secretary of the
Ministry, and a full time project manager to whom the project director delegates his/her authority
during his/her absence.
19. To strengthen the accountability for the use of IFAD funds, and in addition to the regular
annual audits, an Internal Auditor will carry out random spot checks of the accounts and
documentation of all implementing agencies. This supports the implementation of IFAD’s Zero
113
Tolerance policy on the proper use of loan and grant resources .

expanded in Sao Tome to also include organic coffee and pepper.

112
IFAD, Rural Finance Policy, 2009, pg.17
113
EB 2005/86/INF.8, IFAD Policy On Preventing Fraud And Corruption In Its Activities And Operations, Dec.2005, pg.3

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 13: CONTENT OF THE PROJECT LIFE FILE

ANNEX 13: CONTENT OF THE PROJECT LIFE FILE

WORKING PAPERS

1 Socio-Economic Situation, Poverty, Gender and Target Group

2 Poverty Context of Sri Lanka with Special Reference to Northern Province
3 Irrigation Infrastructure
4 Agricultural Development and Marketing
5 Environment and Social Review Note
6 Institutional Analysis
7 Economic Analysis
8 Project Costs and Financing

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 14: DRAFT MEMORANDUM OF UNDERSTANDING

ANNEX 14: DRAFT MEMORANDUM OF UNDERSTANDING

between

Provincial Irrigation Department

and
Iranamadu Irrigation Development Project,
referred to as the Project
-------------------------------------------------------------------------------------------------

Concerning the following responsibilities in implementation of the project component in the defined
period stipulated in the project document

Project Title: Iranamadu Irrigation Development Project (IIDP) Killinochchi District

Project Component: Rehabilitation of Irrigation Infrastructure

PURPOSE OF THE MOU

To implement the Rehabilitation of Irrigation Infrastructure component of the project titled “Iranamadu
Irrigation Development Project” (IIDP) Killinochchi District the Killinochchi District within a period of
four years as stipulated in the Project proposal.

We the undersigned would like to enter into this MOU with the common objective of bringing the
project to a successful completion. The responsibilities of the partners are indicated in this agreement
under section 4 – Responsibilities, within the terms of the agreement and in the framework of mutual
partnership.

Timely completion of the all activities of the project component (as given in the table below) with high
quality standard to the satisfaction of the beneficiary farm families and the client.

RESPONSIBILITIES:

Responsibilities mutually agreed include: PD is responsible for providing services defined in the
following table to PID staff who are directly involved with the IFAD funded Project activities related to
rehabilitation work in Main Canal and Drainages of the system:

ITEM QT
POST UNIT UNIT COST AMOUNT
NO. Y

1 Allowances
1.1
Allowance for Deputy Director MM 48 30,000.00 1,440,000.00
1.2
Allowance for Irrigation Engineer MM 48 25,000.00 1,200,000.00
Allowance for a Consulting Engineer to
1.3 review the Main Canal Structure MM 6
150,000.00 900,000.00
Designs
1.4
Allowance for Dman MM 36 10,000.00 360,000.00
1.5
Allowances for Clerk MM 96 5,000.00 480,000.00
1.6
Allowance for EA MM 48 15,000.00 720,000.00
1.7
Allowances for Work Supervisors MM 134 10,000.00 1,340,000.00
2 Other Costs
2.1
Hiring a Vehicle Veh M 48 90,000.00 4,320,000.00
2.2
Machine Operators MM 144 15,000.00 2,160,000.00

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2.3
Computer & Photo Copying machine 250,000.00
2.4
Stationeries & Communications Rs 60 30,000.00 1,800,000.00
Machine Running Cost (Fuel,
2.5 Lubricants & maintenance) to be paid Allow
1,500,000.00
under force account
2.6
Miscellaneous 30,000.00

PID should also assist outsource consultants in organizing & conducting PRAs and Walk through
Surveys.

PID should provide facilities for outsource consultant to carry out their technical functions such as
permission to use of material testing laboratories and canal operations flexibilities required for
calibration.

PIS should assist outsource consultant in handing over process of completed works to the FOs. PID
representative must participate during the handing over ceremony.

WHEREAS THE

Northern Provincial Irrigation Department and the Project shall undertake the responsibility of the
implementation of the project in accordance with the project implementation plan,

Northern Provincial Irrigation Department and the Project shall recruit the necessary staff to
implement the project and conduct necessary trainings to staff and beneficiaries of the project,

Northern Provincial Irrigation Department and the Project shall hire and engage suitable and
necessary experts and consultants to meet the requirements of trainings,

Northern Provincial Irrigation Department and the Project shall maintain all field progress reports and
financial records of the field and submit NDF to prepare monthly and final accounts,

Northern Provincial Irrigation Department and the Project agree that project funds shall only be used
for the purposes of the project as specified in the budget schedule and no additional expenditure not
included in the agreed budget shall be met in any circumstances.

We the under signed state here that the above agreement was read and understood by us and agree
to bound by its terms and conditions. We further understand that this agreement is valid only to the
aforementioned project and is confined to the time period stipulated in the project document.
We do hereby agree to be bound by the agreement that will be signed between the PID and the
Project.

………………………………………….
Provincial Director,
Province Irrigation Department
Killinochchi District, Sri Lanka
For the Government of Sri Lanka

…………………………………………..
Project Director
Iranamadu Irrigation Development Project
– IIDP Killinochchi District
Sri Lanka

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 15: FACTS AND FIGURES

ANNEX 15: FACTS AND FIGURES

Table 1. Trends in Human Development Indicators 1980 – 2010

Source: UNDP, Explanation note on 2010 HDR composite indices, Sri Lanka

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DESIGN COMPLETION REPORT - MAIN REPORT – ANNEX 15: FACTS AND FIGURES

Table 2. Organisation chart

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