Government of Nepal

Ministry of Water Resources

Department of Irrigation
Irrigation and Water Resources Management Project

PROJECT IMPLEMENTATION MANNUAL

COMPONENT A

March 2008

1
ABBREVIATIONS AND ACRONYMS

ADB = Asian Development Bank

AICC = Agriculture & Irrigation Coordination Committee
AO = Association Organizer
APP = Agriculture Perspective Planning 1995
APPSP = Agriculture Perspective Planning Support Program
ASC/ASSC = Agriculture Service Centre/ Agriculture Sub Service
Centre
ATEIP = Agriculture Training and Extension Improvement
Project
BPP = Block Production Program
CAS = Country Assistance Strategy
CATC = Central Agriculture Training Centre
CBO = Community Based Organization
CCC = Central Coordination Committee
CDP = Crop Diversification Project
CGAE = Community Group Approach of Agricultural
Extension
CGISP = Community Ground Water Irrigation Sector Project
DADO = District Agriculture Development Office
DCA = Development Credit Agreement
DCC = District Coordination Committee
DDC = District Development Committee
DDG = Deputy Director General
DFID = Department for International Development
DG = Director General
DGM = Deputy General Manager
DHM = Department of Hydrology & Meteorology
IDD/IDSD = Irrigation Development Division/Sub Division
Offices
DISSPRO = District Seed Self-sufficiency Program
DLW = District Level Workshop
DOA = Department of Agriculture
DOI = Department of Irrigation
DTT = District Technical Team
DTW = Deep Tube well
EIA = Environmental Impact Assessment
FAO = Food and Agriculture Organization
FFS = Farmer’s Field School
2
FGs = Farmer’s Groups
FIGs = Farmer’s Interest Groups
FMIS = Farmers Managed Irrigation System
FMP = Financial Management Plan
FSP = Farmer’s Seasonal Planning
FWDR = Far Western Development Region
GFO = Groundwater Field Office
GO = Group Organizer
GON = Government of Nepal
GW = Groundwater
GWD = Ground Water Division
GWFOs = Ground Water Field Offices
HYV = High yielding variety
HRTB = Human Resources Development and Training
Branch
ICM = Integrated Crop Management
IPNM = Integrated Plant Nutrient Management
IPM = Integrated Pest Management
ICWM = Integrated crop and water management
ICWMP = Integrated crop and water management program
IDA = International Development Association
IHDP = Integrated Hill Development Program
IPFT = Intensive Progressive Farmer’s Training
IWRMP = Irrigation and Water Resources Management Project
IRC = Integrated Resources Centre
IRDP = Integrated Rural Development
FMIS = Farmer managed irrigation scheme
ILC = Irrigation Line of Credit Pilot Project
IMT = Irrigation Management Transfer
IMD = Irrigation Management Division
ISF = Irrigation Service Fee
JICA = Japan International Cooperation Agency
JT/JTA = Junior Technician/ Assistant Junior Technician
LSGP/A = Local Self Governance Policy/ Act
M&E = Monitoring and Evaluation
MET = Monitoring and Evaluation Team
MOAC = Ministry of Agriculture and Cooperatives
MOF = Ministry of Finance
MOWR = Ministry of Water Resources
MTW = Medium Tube well
3
MWDR = Mid Western Development Region
NAES = Nepal Agricultural Extension Strategy 2063
NGOs = Non Governmental Organizations
NISP = Nepal Irrigation Sector Project
NPC = National Planning Commission
NSC = National Steering Committee
OFWM = On-farm Water Management
O&M = Operation & Maintenance
OPD = Office of Project Director
O/S = Overseer
PAD = Project Appraisal Document
PCT = Project Coordination Team
PIC = Project Implementation Committee
PIU = Project Implementation Unit
PJM = Participatory Joint Management
PMs = Project Managers
PMC = Project Monitoring Committee
PPAs = Production Pocket Areas
PSC = Project Steering Committee
RAC = Regional Appraisal Committee
RAD = Regional Agriculture Director/ Directorate
RCC = Regional Coordination Committee
RDs = Regional Directors
RID = Regional Irrigation Director/ Directorate
SAC = Sub-project Appraisal Committee
SLAM = System Level Mass (Assembly) Meeting
SMS = Subject matter specialist
SPIN = Special Program on Food Production in Support of
Food Security
STW = Shallow Tube well
TA = Technical Assistance
TFT = Training of Farmers Trainers
TST = Technical Staff Training
TV = Television
VDC = Village Development Committee
WECS = Water and Energy Commission Secretariat
WUA = Water Users Association

4
 Table of Contents

1 PROJECT OBJECTIVES ....................................................................................... 6

2 PROJECT COMPONENTS ................................................................................... 6
2.1 Component A: Irrigation Infrastructure Development and Improvement ..... 6
2.2 Implementation Arrangement of Component A ............................................... 11
3. PROCESS AND FORMATS FOR DIFFERENT STAGES OF SUB-PROJECTS
PREPARATION UNDER COMPONENT A .............................................................. 15
4. OPERATION MANUAL FOR COMPONENT A............................................... 16
4.1 Sub-Project Implementation Procedural Guidelines for Component A ............. 16
4.2 Procedural Guidelines......................................................................................... 16
4.3Time frame of subprojects implementation (SW &GW) under component A.... 31
5. GUIDELINES FOR ASSESSMENT OF SOCIAL AND ENVIRONMNETAL
ISSUES AND PREPARATION OF SEMP ................................................................. 31
6. MONITORING AND EVALUATION OF OUTCOMES/RESULTS..................... 44
7. PROCUREMENT ARRANGEMENT ..................................................................... 45
8 FINANCIAL MANAGEMENT ........................................................................... 46
8.1 Planning and Budgeting...................................................................................... 46
8.2 Funds Flow Arrangements.................................................................................. 47
8.3 Project Financial Accounting, Reporting and Internal Controls......................... 47
8.4 Financial Management Staffing.......................................................................... 48
8.5 Internal Audit ...................................................................................................... 49
8.6 Implementation Progress Reports (IPRs)............................................................ 49
8.7 External Audit..................................................................................................... 50

Appendices

ANNEX: 1
Guidelines for Identification, Sub-Project Prioritization, Feasibility Study, Social and
Environmental Management Plan, Appraisal, Detail Design And Approval For
Implementation of The Sub Project
ANNEX: 2
Memorandum of Agreement
ANNEX: 3
Terms of Reference for NGOs
ANNEX: 4
Implementation Timeframe
ANNEX: 5
Results Framework and Monitoring

5
1 PROJECT OBJECTIVES

The objective of the proposed project is to improve irrigated agriculture

productivity and management of selected irrigation schemes, and enhance
institutional capacity for integrated water resources management. The
primary target beneficiaries groups of the project are the water users of the
selected irrigation schemes.

Key indicators proposed to measure the achievement of the Project

Development Objective (PDO) are: increase in productivity of selected
(main) crops; increase in cropping intensity; resources raised and O&M
expenditures incurred by water user groups; extent of “satisfaction”-as
defined through structured score cards-of water users with the irrigation
service delivery; preparation (for government approval and enactment) of an
integrated water resources policy and appropriate regulatory framework; and
establishment of a national water resources database.

2 PROJECT COMPONENTS

The project will consist of the following four components:

Component A: Irrigation infrastructure development and improvement,
Component B: Irrigation management transfer (IMT)
Component C: institutional and Policy Support for Improved Water
Management
Component D: integrated crop and water management

Though there are four different components of IWRMP, this manual deals
with component A only. The scope and activities of component A are:

2.1 Component A: Irrigation Infrastructure Development and

Improvement

The objective of this component is to improve irrigation water service

delivery in selected schemes in Mountain, Hills and Terai areas and expand
groundwater irrigation in the Terai. The components is designed to address

6
the following issues: (a) structural and operational weaknesses in the
traditional FMIS, with consequent low water efficiency and low agricultural
productivity; and (b) low exploitation of the excellent groundwater potential
of the Terai and lack of an appropriate plan for systematic development of
groundwater irrigation.

The output of this component will be better irrigation services from existing
and /or new schemes in the Western regions, both in the Hills and Terai,
which are or will be managed by farmers (FMIS). It involves four sub-
components (i) physical rehabilitation and modernization of small and
medium FMIS in the mountains, hills and Terai; (ii) Capacity Building of
WUAs and DOI as appropriate; (iii) development and improvement of sixty
DTW groundwater schemes; (iv) supporting, through electrification, ten
groundwater irrigation schemes; and (v) preparation of a groundwater
irrigation development plan. Under component A, support will be provided
for improved irrigation water delivery on about 26,392 ha through
rehabilitation and improvement of 168 FMIS spread over forty districts Of
this 50 are to be taken up in the first year.

With regard to groundwater, the project will directly support DTW ground
water schemes covering an estimated area of 2,100 ha. It will also support
indirectly, to ten groundwater irrigation schemes with a total command area
of 3000 ha through electrification (provisioning of electricity distribution
lines from the nearest grid) over the life of this project.

The following selection criteria and project preparation guidelines are used
for surface irrigation schemes

Selection Criteria

(a) Poverty pocket areas: According to the Nepal Poverty Map developed
by WFP, CBS and WB, high concentrations are found in Terai due to a
much higher population density, Poverty line is established by CBS in 2003
that represents the level of per capita expenditure required to meet basic
needs. In case of Nepal the Poverty line is Rs. 7,696 per person per year at
2003 commodities price index level. The direct calorie intake method
provides an alternative measurement of poverty and is based on the number
of people that consume less than an established minimum calorie
requirement. For Nepal, this requirement is set at 2144 kilocalorie per person
per day (CBS, 2005)
7
Maps for both measurement of poverty were prepared at subdistrict
(ILAKA) level. A cluster of poorest Ilaka can be observed in the Hills and
Terai of the Far and Mid Western Development Regions.

(b) Water availability to meet the crop water requirement in the potential
area.

(c) No major social conflict; cohesive farmer groups exist;

(d) Some forms of users’ organization as well as their participation in the

irrigation system management exist;

(f) Willingness of users to change;

(g) Absence of potential conflicts regarding water sharing, land acquisition

issues and others.

Sub-project Preparation Guidelines for Surface Irrigation Schemes: The

following steps will be followed for preparing sub projects.

1. Type of Intervention: Priority will be given to Rehabilitation and

modernization of sub-projects.

2. Once the candidate system is selected, pre-feasibility, feasibility study

along with assessment of social and environmental issues and preparation of
SEMP would be undertaken.

3 Preparation of detailed Engineering Design of the rehabilitation or

modernization plans with participation of the beneficiaries, along with the
capacity development of WUA and DoI, integrated social and environment
assessment & management and economic evaluation of each sub projects.

The key elements considered are:

• Detail Engineering of sub-project (See various steps of detail
engineering design in annexes)
• Participation of beneficiaries: All sub-projects are demand driven;
genuine interest of beneficiaries is to be assessed based on their
involvement in system management in the past.
• Assessment of institutional capacity of WUAs
8
 • Social and environmental screening, likely project impact and
mitigation measures
• On farm crop and water management package in irrigated area, in
Hills, Mountain and Terai
• Economic evaluation

Selection criteria for groundwater Irrigation schemes are:

Priorities of selecting the command area of groundwater irrigation projects

are: (i) poverty pockets areas as explained earlier for surface irrigation
schemes, (ii) areas where potential for high-income generation through
production of high value crops exists., appropriate climate, good access to
market, access to credit and access to existing, Pocket Package Program
(PPP).and willingness of farmers to diversify (iii) availability of electric
supply in sub-project areas; (iv) as far as possible low arsenic contamination
below 50 ppb in groundwater resource in sub-project area.

After selection of GW sub-project cluster area, the following Groundwater

project preparation guidelines will be followed

1. Based on the existing hydro geological maps and available data on

groundwater conditions, VDCs should be selected and project preparation
should be initiated.

2. Well construction, procurement of electric pump sets

3. Rural electrification: Either there exists transmission line in the sub-

project area or there is likelihood to have rural transmission line within
stipulated project period

4. Rural access road improvement to tube well cluster

5. The groundwater should be low arsenic contamination, or be

maintained at 50 ppb which is the current drinking water standard in Nepal
and other serious social and environmental factors should be minimum

6. Economic and financial evaluation

7. Existing diesel-operated pumps in DTW clusters would be converted

into electrically operated units integrating rural electrification
9
8. Capacity of WUAs

A rapid appraisal of 50 surface schemes and 3 DTW proposed for the first
year was done through field offices located in different parts of the project
area including some remote areas. The prioritization of selected project can
be done based on the form 4 in annex-1. The IDD/IDSD would prioritize for
feasibility study of each sub-project according to the main components
influencing the potential development with support of DADO.

The project design has also considered the nature and extent of arsenic
contamination in groundwater in Terai and the actions proposed in the study
“Arsenic Testing and Finalization of Groundwater Legislation” conducted
by the DoI with the Bank’s support in 2003-04. Actions proposed in the
study such as detailed monitoring, the design of an arsenic management
framework in the Terai and related institutional and legal modifications have
been incorporated. The selection of groundwater sub-projects has been made
by avoiding districts affected by arsenic contamination.

The expected outputs of component A are:

(i) Improved and assured delivery to about 26,392 ha through

rehabilitation and improvement of FMIS surface irrigation systems
(10,680 ha in the hills, 1,024 ha in the mountains and 14,688 ha in the
Terai).
(ii) Conversion into electrically operated from diesel operated existing 30
DTW to provide irrigation to about 1200 ha at affordable energy cost
for tube well operation.
(iii) Development of 3 clusters (30 DTW) of deep tube wells to irrigate
about 900 ha.

The total area under surface irrigation and groundwater irrigation is

28492ha.

Support to FMIS in the event of Natural Disaster

The irrigation schemes in hills and mountains are liable to face severe
damages due to natural calamity or fragile geological environment, which
needs assistances from the government for its revival and to bring it in an
operational condition. Likewise, in Terai also the schemes are frequently
10
damaged due to floods. During such natural disasters, the repair works
certified by the concerned IDD/IDSD/GFO beyond the capacity of WUAs
will be supported by DoI to maintain irrigation systems in participation of
users as per irrigation policy.

2.2 IMPLEMENTATION ARRANGEMENTS of COMPONENET A

At the center, a Project Steering Committee (PSC) chaired by the Secretary

of Ministry of Water Resources (MoWR) will provide the overall policy
guidance and necessary coordination. The PSC will consist of
representatives from MoWR, Ministry of Agriculture and Cooperatives
(MoAC), Ministry of Finance (MoF), National Planning Commission
(NPC), Water and Energy Commission Secretariat (WECS) and the Nepal
Federation of Water Users’ Association. The Director General (DG) of DOI
and Project Director (PD) will function as the Member Secretary and Joint
Member Secretary respectively.

There will also be a Project Implementation and Coordination Committee

(PICC), chaired by the DG (DOI), which will function under the PSC. The
PICC will examine and approve individual irrigation sub-projects. The OPD
will report to the PICC. The organization chart is shown in Chart 1.The same
committee would also coordinate with different departments and other
concerned stakeholders and will review the M&E reports prepared by OPD.
Members would include the Deputy Director General of Technology
Transfer & Coordination (Agriculture Extension) in DOA and all the
concerned Deputy Director Generals (DDGs) in DoI. The team leader of the
IWRMP consultants would act as an advisory member and the Project
Director as its member secretary.

At the regional level, a Regional Project Support Unit (RPSU) will be placed
in each Regional Irrigation Directorates (RID) of DOI, with assigned staff
from RID and Regional Agriculture Directorate (RAD). The director of RID
will head the RPSU as project manager for the concerned region. It would
have the SDE from RID, the subject matter specialists (SMS) from RAD,
sociologist and geologist as members and the representative from
implementation consultants as adviser. The Groundwater Field Offices
would also work under the guidance and supervisions of the RID and
maintain close link with GWRDP. The RPSU will review in detail the
subproject appraisal documents submitted by IDD/IDSD/GFO, verify if

11
necessary at field level and would recommend to the RAC (Regional
Appraisal Committee) the approval of the sub-project implementation.
Detailed cost estimates would be approved by the authorized officer. The
RPSU will be responsible ensuring the technical and economic viability of
the sub-projects.

The Regional Appraisal Committee (RAC) will be formed in each region

which would appraise each sub-project and provide its recommendation to
the PICC for its final approval for implementation. The project manager of
each concerned regional irrigation office will chair the committee with
representatives from RD, RAD, RD of NPC.

A mobile irrigation team (MIT) will be formed under RPSU to monitor

subproject quality and verify implementation activities. The MIT will be
headed by Class II Senior Divisional Engineer (SDE) with one Class III
sociologist, one Class III agronomist, one Class III geologist and one Class
III engineer as members.

A sub-project appraisal committee (SAC) will be formed at the District

level. The IDD/IDSD/GFO/IMT PU chief will chair the SAC with
representatives of DADO and DWRC as members. The sub-project
management unit (SMU) will implement the sub-project at this level. The
chief of the concerned irrigation development division or subdivision or
groundwater field office or irrigation management transfer project units
(IDD/IDSD/GFOs/IMT PU) will head the SMU as the District subproject
manager. For districts where no IDD/IDSD exists, another IDD/IDSD staff
member will be assigned as deputy subproject manager and work full-time
for the SMU.

The project will be implemented over a period of five years. Overall

responsibility for management of the project would rest with Department of
Irrigation (DOI). Project management would be undertaken by a Project
Director whose office will be located in the DOI. Support staff for Office of
the Project Director (OPD) will be provided by DOI. The OPD will be
responsible for overall coordination of the project and arranging technical
support for project implementation at the central level and also for
coordinating various implementing agencies and their activities. The main
responsibilities of the OPD would include: (a) overall implementation of the
project including management of the annual work plan and budget; (b)
financial management; (c) monitoring, quality assurance and control; (d)
12
preparation of periodic progress reports; (e) provision of technical assistance
for field operations; and (f) supervision of cross-cutting issues including
gender, indigenous people, resettlement and other social and environmental
matters.

Implementation of project activities will be based on a three-tier structure:

(i) the OPD would consolidate all project activities at the center and
coordinate with various implementing agencies; (ii) a Regional Project
Support Unit (RPSU) in each Regional Irrigation Directorates (RID) assisted
by the Regional Agriculture Directorate (RAD) will undertake project
implementation, and (iii) a sub-project management unit (SMU) will
implement the sub-project at the District level. In addition, a District
Technical Team (DTT) will be established under each SMU to implement
component D (Integrated Crop and Water Management) at the sub-project
level.
Annual independent reviews (external technical audits) will be carried
out by an external independent agency, the National Vigilance Center.
This has become a mandatory procedure in implementation of development
projects under GoN. The independent reviews will assess whether
processes, technical standards and quality are met and whether financial,
social and environmental guidelines are followed. They will also assess
the performance of DOI/DOA and WECS in implementing the project as
well as managing the sector within the decentralized governance
structure. The findings of external technical audits would be
disseminated and discussed annually at various levels, including by the
PICC for corrective measure.

13
ORGANIZATION STRUCTURE AND RESPONSIBILITIES

S.N. ORGANIZATION STAFF RESPONSIBILITIES

1 PSC Chairman : Secretary MOWR • Overall guidance and
Members : MOWR (Joint Secretary) : MOAC direction on police principles
(Joint Secretary); MOF (Under Secretary); • Coordination among DoI,
NPC (Joint Secretary); WECS (Joint DoA, NEA, DHM and
WECS
Secretary); Nepal Federation of Water Users
Association (Chairman/Representative);
and Project Director as Joint Member
Secretary; Member Secretary; DG/DOI
2 PICC Chairman : DG, DOI; Members: DDG of • Approval of individual Sub-
Agriculture Extension of DoA, all the Projects
Concerned DDGs of DoI, the Team Leader of IWRMP
implementation Consultants as advisor; Member
Secretary: Project Director (PDO)
3 OPD Projector Director : Class I Senior Engineer , SDE-2: • Facilitating technical support
Engineers-5, Sociologist-1 and supporting staff and managing project
implementation at the central
level.
• Preparing Annual Work Plan
and Budget
• Coordinating all stakeholders
of the project
• Maintaining financial
accounts
• Monitoring of all the project
activities
4 RPSU/RAC Chairman : Director RID • Managing individual sub-
Members : Director RAD, Regional Director NPC and project Implementation,
other invitees as required annual work plans and
Imp. Consultant as advisors budgets;
• Appraisal of sub-project
• Controlling sub-project
quality through monitoring,
support, and verifying
• Implementation by
mobilizing MIT
• Supervising social and
environmental management
plan
• Liaising with the OPD
5 MIT Team Leader : SDE • Design and Cost e3stimate
Members : Sociologist -1 verification
Agronomist -1, Geologist-1, Engineer -1 • Overall quality control
• Supervision of social and
environmental plan
6 SAC Chairman : IDD/IDSD Chief • Appraisal of sub-project
Members : Representatives from DADO,
Representative from DWRC
7 SMU Chairman : IDD/IDSD office - in charge • Undertaking of all the field
Members : Engineer, sub-engineer of DoI, WUA activities of the sub-project
Representative as required (from identification to
monitoring of completed
schemes)
8 DTT Chief : DoI Engineer • Implementation of integrated
Members : SMS DoA, Sub-engineer DoI, JT DoA crop water management
program

14
Figure 1: Implementation Set up for Component A-IWRMP

Project Steering Committee

Chair: Secretary, MOWR

Project Implementation and Coordination Committee

Chair: DG, DOI

Programme
Coordinator
Technical Project Director (WECS)
Assistance (DoI)
Programme
Coordinator
(DoA)

Regional Irrigation Directorate – Regional Agriculture Directorate

Regional Director – Regional Director

Project Office District Agriculture

District
IDD/IDSD/GFO/IMT Coordination Development Office
PU Committee

District Technical Team (ICWM)

3. PROCESS AND FORMATS FOR DIFFERENT STAGES OF SUB-

PROJECTS PREPARATION UNDER COMPONENT A

Process and formats required for different stages of project preparation such
as the Project Identification, Prioritization, Feasibility study and Detail
Engineering Phase of surface and groundwater sub projects and Appraisal is
given in Annex -1.

15
4. OPERATION MANUAL FOR COMPONENT A

4.1 Sub-Project Implementation Procedural Guidelines for

Component A

Irrigation and Water Resources Management Project has been prepared as an

integrated endeavor encompassing the lessons learnt from its predecessor
NISP and the agriculture supports and interventions. For the implementation
of Component A: ‘Irrigation Infrastructure Development and Improvement’
the procedural guideline steps for the surface and ground water schemes
have been designed based on experience gained during the implementation
of NISP, incorporating the integrated approach to water resources and
irrigated agriculture proposed in IWRMP.

4.2 Procedural Guidelines

Implementation quality is to be assured through adoption of all the steps as

set out in the detailed procedural guidelines documents in annex 1, a concise
version of which is presented below.

4.2.1 Surface Water Schemes

Step 1: Information Dissemination: The Irrigation Development

Division (IDD), Irrigation Development Sub-Division (IDSD) and District
Agriculture Development Office (DADO) and their sub centre (ASC) would
be responsible for disseminating information on Component A type of sub-
project, principles and procedures for their selection and implementation, to
all beneficiaries in those areas having the potential for enhancing irrigated
agricultural practices utilizing surface or ground water resources. The
regional irrigation directorate (RID) with assistance from the local office of
the department of hydrology and meteorology (DHM), Ground Water Field
Office (GFO), District Level WUA Federation and Local Bodies would keep
and update the sub-basin water resource inventories. At the central level
policy makers, politicians, National Irrigation Federation of Water Users
Association Nepal (NIFWUAN) and the media would be briefed about the
program through workshops and meetings.

Step 2: Application: If Farmers group or existing water user’s

organizations having no legal identity are in need of assistance to improve or
extend their irrigation system or supporting infrastructures would form an

16
ad-hoc WUA committee and then collectively complete an application form.
The application is to be signed by all beneficiaries households before
submission through the nearest ASC/ASSC to the IDD/IDSD, along with an
upfront cash deposit of NRs 50 per ha for surface irrigation.

Step 3: Initial Screening and Selection Criteria: IDD/IDSD

technicians with the assistance of DADO staff would screen the application,
to verify if it meets the selection criteria for IWRMP support. The selected
list would be communicated to the DDC.

Step 4: Identification Survey: IDD/IDSD and DADO/ASC staff

would form a site visit team to verify the information given on the
application form. The WUA ad-hoc committee would liaise with the visiting
team and assist in updating the application form if necessary. The visiting
team would then prepare an identification study report based on the
identification questionnaire filled in when in the field. In case of unviable
Sub-projects, the upfront cash deposit could be returned at this stage.

Step 5: Classification as Major or Minor Rehabilitation: Based on

field data collected to date, the Sub-project will be classified by the
IDD/IDSD into major or minor rehabilitation, using fixed criteria for hill and
Terai area. This would dictate the nature of further studies.

Step 6: Sub-Project Prioritization: The IDD/IDSD would prioritize

each sub-project according to the main components influencing the potential
development. The prioritization together with the identification report
including major and minor classification would be discussed by IDD/IDSD
with support from representatives of DADO to finalize the prioritization of
sub-projects for feasibility study. The prioritized list would be
communicated to the DDC.

Step 7: Feasibility Study: The RID & OPD would undertake the
feasibility study. If the sub-project is large or potentially challenging a local
consultant could be deployed. The mobile irrigation team (MIT) and RAD
staff would extend technical support to the study team as required. The
WUA or beneficiary group would be closely involved in the fieldwork and
discuss the scope of works and preliminary cost estimates. To ensure
uniformity in the feasibility study and its report presentation, the approach
detailed in the procedural guidelines would be strictly followed. The report
would include screening of alternatives as well as describing the optimum
17
solution; realistic construction cost and benefits estimation for performing an
economic analysis and environmental assessment of the sub-projects. SEMP
would be carried out according to the guidelines on environmental
considerations in the detailed Procedural Guidelines.

Step 8: Social and Environmental Assessment: SEMP will be compulsory

for all those projects which do not required IEE or EIA during feasibility
study.

Step 9: Appraisal and Detailed Design): The feasibility report would be

scrutinized by SAC members, and to include site verification by MIT/TA
team if felt necessary, before being technically reviewed and endorsed by
the technical assistance (TA) team. If found technically feasible and
economically viable the sub-project would be discussed in Regional Project
Support Unit (RPSU) and Mobile Irrigation Team (MIT) and recommended
to RAC in turn for their appraisal. If the RAC feels necessary, detailed
engineering design of the proposed infrastructures would be undertaken. The
detailed design would include site investigations, working drawing
preparation and quantity takeoff, to enable an accurate cost estimates to be
derived. The MIT would check the designs before a final technical review
and endorsement from the TA team. The feasibility report would get
recommended to PICC at OPD, before submission to the DG/DOI for
approval.

Step 10: Approval and Tender Document Preparation: All the sub-projects
in IWRMP will need appraisal and recommendations from SAC and RAC,
and then only it will be approved for implementation by PICC through the
OPD review. In the case of approval of the cost estimate the financial rules
and regulations will prevail.

The approval information would be communicated to RAD, DADO and IDD

who in turn would inform the concerned WUA and the DDC. IDD/IDSD
would then finalize cost sharing arrangements with the WUA and prepare
tender documents based model LCB documents for those works to be
undertaken by contract.

Step 11: Resource Mobilization and Implementation Plan: The SMU

would discuss with the WUA the program for Sub-Project rehabilitation and
include in their District implementation Plan of approved Sub-Projects.
These to be submitted to RID who would include in their annual work
18
(budget) program, to be then forwarded to Central DOI for approval by the
National Planning Commission. The WUA would be required to participate
with SMU in implementation plann. The plan would specify inter-alia
individual responsibilities of WUA, SMU, DADO and RID staff during Sub-
Project implementation period.

At this stage the WUA would be required to deposit balance of upfront cash
to make up 0.5% of the investment cost, otherwise no further works would
be undertaken by DOI.

Step 12: Formalize Farmer Organization and Participation: The WUA

constitution and its by-laws would be formalized by the general assembly of
users and the WUA registered with the IDD/IDSD under Irrigation
Regulations (1993), which then be informed to DWRC. Technical support
and training of the WUA at this time would be provided by the MIT, SMU,
& DADO staff and NGOs if required. A memorandum of Agreement
(MOA) between SMU and WUA detailing the cost sharing arrangement and
work breakdown agreement of all the construction works would be finalized
and signed in front of the General Assembly of users group. After this and
before construction Baseline Survey would be carried out by SMU and
DADO combined staffs. Also social assessment would be conducted by the
help of NGO or AO under the guidance of the MIT sociologist according to
the guidelines of Social Assessment.

Step 13: Construction: Tenders would be floated for the SMU parts, and
contract awarded as per Govt. of Nepal financial rules keeping transparency
with the WUA. A construction committee would be formed by the WUA to
supervise and monitor the quality of works being carried out both by SMU
contract as well as by WUA according to the work breakdown agreement.

After confirmation that WUA have completed 20% of their work

contribution according to the MOU, then SMU will proceed with the SUB-
Project implementation. Such condition will be specially mentioned in the
contract agreement with the contractor. Overall contribution of farmers
should be at least 10% of the Project Cost.

Training would be conducted by IDD/ RID staff or NGO (if engaged) for
construction committee members on quality control and supervision of
works. WUA would be encouraged to take part in the final measurement of
contract works. WUA part of works would also be recorded and evaluated
19
by SMU. If during construction, variation in the scope of works demands a
cost overrun of more than 10% from the original estimate, then the works
would be suspended until the WUA contributes in cash or labor, on a pro-
rata basis, their share of the cost over-run. MIT would check on construction
progress and quality of works.
Contract Commissioning: Any piece of contract, when completed should be
commissioned by IDD/ IDSD technical staff in association with WUA and
contractor within the liability period of contractor. Contractors would rectify
the defects noticed duly.

Step 14: Commissioning: After physical completion of works according to

the MOA, SMU technicians along with WUA members would conduct a
walk through of the system during test runs of the system, to identify any
defect and operational problems. During the contract maintenance period,
the contractor would rectify the defects (if any) that would fall under his
liability. SMU would prepare a completion report and organize the signing
with WUA of the certificate of work completion in accordance to the MOA.
A copy of the report, signed by the WUA, would be forwarded to RID/DOI
for recording in their management information system.

Step 15: Operation and Maintenance: After completion, the WUA would
receive back the O.5% upfront cash deposit from SMU as potential seed
money for future O&M of the system. Thereafter, the DADO/ASC/NGO,
the WUA and farmers would strengthen their linkages with other support
agencies. SMU/RID or NGO would carry out O&M and water management
trainings to WUA members as needed. NGO would provide to the WUA
continuing advice to ensure future sustainable agriculture practices. RID
would make provision for budgetary support to completed Sub-Projects in
case of natural unforeseen disasters for the stabilization period, whereas
WUA will be responsible for carrying out regular operation and maintenance
and resource collection in terms of ISF to meet the O&M expenditure.

Step 16: Result Framework and Monitoring: The Result framework and
monitoring of component A (Surface) defining project development Object
(PDO), Outcome indicators, Baseline survey, Target values, Data collection
and reporting and use of intermediate Outcome Monitoring to verify the
timely and satisfactory completion of component A. The responsibility for
data collection and reporting will be done by IDD/IDSD and WUA.
Monitoring and Evaluation system shall comply participatory methods
leading to participatory monitoring and evaluation.
20
Figure A.1: Procedural Guidelines Steps for Sub-project Implementation
of Surface water Schemes

SW Implementation Plan in IWRMP

Step-1 Information Dissemination

Step-2 Demand Application

Step-3 Initial Screening and Selection

Initiation Phase
Identification Survey
Step-4

Step-5 Classification of Major/Minor

Step-6 Sub-project Prioritization

Feasibility Study
Step-7

Social and Environmental Assessment

Step-8

Sub-project Approval for

Step-9 Implementation.

Legalization of WUA

Step-10 Approval and Tender Document Preparation

Step-11 Resource Mobilization and Implementation

Step-12 Formalize WUA and participation

Application Phase

21
 Step-13 Construction

Step-14 Commissioning

Step-15 Operation and Maintenance

Step-16 Result Frameworks and Monitoring

4.2.2 Guidelines for Ground Water Schemes

The most important strategy for groundwater irrigation component of

IWRMP will be that deep tube wells will be installed only in those areas,
where STW is not technically feasible. Secondly, the Deep tubewells will
be installed in blocks or clusters only, so that a well defined command area
could be irrigated by the tube wells in the cluster. As a result, it is expected
that the cost of developing other supporting infrastructures and services,
such as electricity transmission and supply network, technical support
services, agricultural support services, agricultural market development and
others, could be optimal and more effective. However during
implementation, the size of the sub-project or cluster area might vary
according to the prevailing topographic and hydrological condition in the
command area. The necessary infrastructures such as electrical lines,
transformers, and rural roads will be developed based on the scheme and its
command area. It is envisaged that the capacity building, sensitization to
users and mobilization activities will be focused on this sub-project basis to
implement the IWRMP more efficiently and effectively. Certain key
assumptions are made to plan and implement the groundwater schemes:

a) New groundwater irrigation development areas will be selected

primarily in those areas where other sources of irrigation means are
not available and/or are not adequate to achieve the level of
efficiency as stipulated by the APP (1994), NWP (2005) and the
Irrigation Development Vision (2005). These plan documents have
envisioned year-round irrigation facility development, including
conjunctive use of surface and groundwater, in the agency as well
as farmers' managed surface water schemes.

22
b) Based on the available data on arsenic testing in groundwater
(Report on 'Sate of Arsenic in Nepal, 2003' and other recent data),
Village Development Committees (VDCs), where shallow aquifers
are free from arsenic contamination problem (i.e. arsenic content
level below 50 ppb limit – the interim national standard for
drinking water in Nepal), have been identified as the potential
areas for groundwater sub-project development, both STW and
DTW schemes.

c) Because of the low capital and operating costs, the project has
emphasized on developing STW sub-projects (clusters), where the
tube wells will be operated by electric motor operated pumping
sets. Therefore, priority will be given to those VDCs, where
electricity supply system already has a full coverage, followed by
those VDCs where this facility is available in parts of the VDC
area.

d) Deep tube well irrigation sub-projects will be restricted to those

areas only, where shallow tubewells are not feasible, because of
their hydro-geological conditions.

e) The groundwater sub-projects will be targeted to those rain-fed

areas, where poverty stricken subsistence farmers are in a majority,
and where there is a potential to make significant improvements in
their living standard through STW irrigation. ISEA survey and
assessment will support such area for implementing the
groundwater schemes.

f) The STW schemes will be owned by the group of farmers (WUG)

within the command area of each well (average 3 ha per STW). It
will be managed, operated, repaired and maintained by the group
members itself.

g) Once the schemes are constructed, the DTW schemes will be

commissioned to the respective WUGs (farmers within the
command area of 30 ha of each well), who will bear the
responsibility of managing, operating, repair and maintaining the
schemes at their own cost. These WUGs will be registered at the
respective GFOs, as per the existing Irrigation Policy and Irrigation
Regulation.
23
 h) In each sub-project (i.e. cluster), all the WUGs within the sub-
project area will form a Water Users' Association (WUA) with the
representation from each WUG. As per the existing Irrigation
Policy and Irrigation Regulation, the WUAs will be duly registered
at the District Water Resources Committee and will operate as the
umbrella organization of the groundwater irrigators for collective
effort in agricultural development in the area.

i) The project has also envisaged incorporating programs to enhance

the capacity of the farmers and the local workshop technicians in
repair and maintenance of the electro-mechanical equipments of
the tubewell systems.

j) In all the sub-projects, the Integrated Crop and Water Management

Program (ICWMP) of the component D of the IWRMP will be
implemented for agricultural economic development in the areas.

Procedural Guideline Steps for Ground Water Irrigation Schemes:

Step 1 HYDROGEOLOGICAL STUDY/CLUSTER IDENTIFICATION: Based

on the available hydro geological data, existing surface & GW
irrigation schemes, and the availability/proximity of the support
infrastructures such as electric power, rural road, agri-markets
and agricultural support services, the GFO identifies the
cluster areas suitable for STW/DTW sub-project development.
The MIT provides assistance to the GFO, if necessary.

Step 2 INFORMATION DISSEMINATION: The GFO, after consulting

with the DADO, disseminates information to the VDCs of the
identified clusters about the IWRMP and its implementing
procedures. VDC officials and the farmers obtain the full details
about the project from the GFO and discuss among themselves
about participating in the project. The RID keeps inventory of
the existing clusters and update data on groundwater resources
availability in the area/district. Local NGOs/CBO will be
involved in sensitizing the farmers and group formations for
DTW sub-project formulation. They will assist and support the
farmers to form ad-hoc WUA committee.

24
Step 3 APPLICATION: Farmers hold discussions among themselves,
assisted by NGOs, and organize into groups (for each
DTW/STW cluster) and form an ad- hoc WUA Committee for
each cluster (i.e. sub-project). The WUA together with the GFO
will delineate the cluster area, whose sizes will be 300 ha each.
The size of the area may be compromised if there are genuine
constraints from physical, technical and social aspects. The
WUA prepares its program, completes the APPLICATION
FORM and submit it along with the up-front cash deposit to the
GFO. The first installment of (Rs.200 per hectare) up-front cash
will be 0.5% of the total cost of the DTW/STW system. The
sub-project will provide 11 KV Rural Electrification and Access
Road Improvement in 3000 ha STW cluster area at project cost
whereas WUA will drill STW, install 4 inch casing pipe along
with, filter, pump, motor and 440 volt LT line from II KW HT
line at their own cost. The GFO assists the sub-project area
farmers in this process. The GFO receives the APPLICATION
FORM along with the up-front cash, and screens all the forms
thus received to verify that they meet the requirements of
selection criteria for identification study. The GFO, with
assistance of the DADO, selects the clusters for sub-project
identification studies, and informs SAC/DDC of the selection
list.
Step 4 SUBPROJECT IDENTIFICATION: The GFO, the DADO/ASC and
Sub-project staff visit the cluster sites, collect the relevant data
and prepare IDENTIFICATION REPORT for each cluster. The
GFO discusses the Identification Reports in the Sub-project
Appraisal Committee (SAC), and prioritizes the clusters for
further studies. The MIT provides assistance, if necessary. The
respective WUA ad-hoc committee liaises with the sub-project
identification team and discusses the project proposals during
this stage. NGOs/CBOs will facilitate the GFO and farmers in
the identification activities.
Step 5 FEASIBILITY STUDY: The GFO/RID prepares Feasibility Study
programs for the prioritized clusters, and conducts detailed
feasibility study after obtaining approval from the RID. This
may be conducted by the GFO itself or may use the service of
the local consultant. The WUA Ad-hoc committee members and

25
 the farmers are actively involved with the feasibility study team
in collecting data, conducting surveys, and in designing and
estimating the cost of the sub-project. All the pre-existing
irrigation and drinking water ground water schemes will be
tested for arsenic content in their groundwater and will be an
integral part of the feasibility report. The feasibility report will
contain a detailed project design, including the design and cost
for electricity supply network in the ground water development
sub-project area. The feasibility study will be supported by
lithologic investigation by investigative slim hole in the sub-
project area. In case of the DTW sub-projects, this investigation
should indicate good potential of deep aquifers, but not the
shallow aquifers. IEE/EIA assessment would be carried out
according to the prevailing guidelines mentioned as per
integrated social environmental management framework
(ISEMF). The MIT and RAD staff will provide technical
support and assistance to the feasibility study team of the GFO
or the consultant. Prepares the Integrated Social Environmental
Management Plan in consultation with the ad-hoc WUAs and
NGOs to find the social and environment dimensions of the sub-
project areas defining marginal, subsistence farmers,
disadvantaged groups, gender issues and environment problems.
Step 6 APPRAISAL: SAC appraises the Feasibility Study Reports and
recommends to the RAC for approval. The MIT/RID team
appraises the feasibility report by checking the detailed designs,
drawings, and cost estimates, supported by site verification. The
WUA and the farmers assist the field survey team and confirm
the proposed project design, and the project sites. If found
necessary, the MIT/RID may suggest for additional surveys and
for upgrading the feasibility study report. The TA team
undertakes technical review of the sub-project feasibility report
and endorses it. With the endorsement of the TA Team and the
recommendation of the MIT/RID, the SAC submits the sub-
project report to the RAC. The appraisal document from RAC
shall be sent to GWRDP for review before approval by PICC
through OPD.
Step 7 INTENSIVE INFORMATION DISSEMINATION, FARMERS'
MOBILIZATION & ORGANIZATION: Once the sub-project is
approved by the PICC, the GFO mobilizes the NGO for

26
 intensive information dissemination to the beneficiary farmers
in the sub-project area. The WUA plays an active role in this
activity, and it is the main responsibility of the NGO that they
provide full details about the project and mobilize the farmers
into forming the WUGs. The farmers obtain all the information
about the project and its implementation procedures and
organize themselves into the Water User Groups (WUGs). The
GFO approves the groups after field verification.
Step 8 RESOURCE MOBILIZATION: In case of DTW, the WUA deposits
the balance amount of the up-front cash to make deposit of
0.5% of the total cost of the DTW system, whereas in case of
the other ground water development schemes, the full cost of
well drilling,, installation of well with pipe, filter and the LT
440 V electricity connection and electric pumping set, will be
born by WUA where the project will provide11 KV HT rural
transmission line and rural access road to these cluster area of
about 300 ha at project cost. The GFO prepares sub-project
implementation plan, together with the WUA, DADO, NGO
and other stakeholders. The RID approves the implementation
plan and includes in the annual work plan.
Step 9 FORMALIZE FARMERS' ORGANIZATION AND PARTICIPATION:
The NGO sees that the WUA finalizes its constitution by the
general assembly of all the members, and that the WUA is
registered. In this process, the TA team, GFO and DADO/ASC
also provide necessary technical and advisory assistance. The
WUA then signs a memorandum of understanding with the
GFO in front of the general assembly for the implementation of
the sub-project in the area.
Step 10 COST ESTIMATION, APPROVAL AND TENDER DOCUMENT
PREPARATION: After RAC and PICC approval, GFO informs
the RAD, DADO, DDC and the WUA about the approval of the
sub-projects. The GFO then discusses the final cost estimate,
including the cost sharing arrangements, with the WUA, to
which, the WUA and its members agrees. The invitation of
tender bid, their evaluation and award of contract will be carried
out as per the rules and regulations of the government of Nepal.
Step 11 CONSTRUCTION: The GFO starts the construction works
only after ensuring that the WUA has deposited a total of 15%
of the total cost, cash and kind combined, in case of DTW
subproject, while in the case of other ground water subproject,

27
 full cost of drill, installation of casing pipe filter pipe line with
centrifugal electric pumps, LT electricity connection, will be
born by WUGs through WUA. The project will provide full cost
of HT transmission line and access rural road to cluster area.
The up-front cash will be collected from WUG and deposited in
the joint account of GFO and WUA. The civil construction
work may be contracted out or may be done by force account.
The GFO staff supervises the drilling works; tube well testing,
pump installation, power supply line and other civil works. The
WUA also forms a construction supervision committee, which
supervises all tube well and civil work construction, pumping
set and electric fittings suppliers, and ensures their quality
before the payment to the contractor or the suppliers. In case of
the ground water development schemes, the respective water
user groups (WUGs) will drill well, install casing pipe, filter
and purchase the pumping set and install LT electricity
connection at their cost.
Contract Commissioning: Any piece of contract, when
completed should be commissioned by GFO technical staff in
association with WUA and contractor within the liability period
of contractor. Contractors would rectify the defects noticed
duly.

Step 12 COMMISSIONING: The GFO, DADO/ASC staff and the WUA

and the beneficiary farmers make a walkthrough of the system
and identify the defects and operational problems. The WUA
certifies that all facilities constructed and installed are working
properly. The GFO prepares a completion report and WUA
signs the certificate of completion for the work, and informs the
MIT, which is entered into the MIS system for record.
Step 13 OPERATION & MAINTENANCE: The WUA of the DTW sub-
projects gets back its 0.5% cash amount deposited as up-front
cash, and deposits in a bank account as the seed money for future
O & M. From this time on, the WUA assumes the full
responsibility of all future operation and maintenance of the tube
well system, pumping sets and electric components of the
pumping system. In case of the other ground water development
schemes, once the scheme is complete, the system becomes the
property of the group, and their maintenance and repair will be
the responsibility of the group members. The groups will be
28
 encouraged to set up a repair and maintenance fund, for which
the project will provide support in their capacity building. With
the assistance of the DADO, NGO and the GFO, WUA and its
member farmers strengthen their linkages with the private
workshops, and agricultural support service providers. The GFO,
DADO, NGO and TA play advisory roles to help in developing
capacity of the WUA in O & M and water management aspects.
When necessary, these agencies organize appropriate training
programs. The GFO arranges budget for unforeseen remedial
measures, such as due to disaster and other eventualities. The
Integrated Crop Water Management program under IWRMP will
be activated in those areas for overall agriculture production
enhancement activities.
Step 14 Result Framework and Monitoring: The Result framework and
monitoring of component A (Groundwater) defining project
development Objective. Internal Outcome indicators, Baseline
survey, Target values, Data collection and reporting and use of
intermediate Outcome Monitoring to verify the timely and
satisfactory completion of component A. The responsibility for
data collection and reporting will be done by IDD/IDSD, GFO
and WUA. GWRDP shall be responsible for monitoring ground
water (GW) sub-projects. Monitoring and Evaluation system
shall comply participatory methods leading to participatory
monitoring and evaluation.

29
Figure A.2: Procedural Guidelines Steps for Sub-project Implementation
of Ground water Schemes

GW Implementation Plan in IWRMP

Step-1 Hydro-geological study /GW-cluster

Step-2 Information Dissemination

Step-3 Demand Application

Initiation Phase
Sub-project Identification
Step-4

Step-5 Feasibility Study

Step-6 Appraisal & Approval

Sub-project Approval
for Implementation.

Step-7 Intensive interaction with farmers for

mobilization, and organization of
WUAs/WUGs
Step-8 Resources Mobilization

Step-9 Formalize the WUAs organization and

ensure participation for capital cost.

Legalization of WUA

Step-10 Cost estimation, Approval and tender

Application Phase
Step-11 Construction

Commissioning
Step-12

Step-13 Operation and Maintenance

Step-14 Result Frameworks and Monitoring

30
4.3 Time frame of subprojects implementation (SW &GW)
under component A

Component A is planned to be completed over five years of Project period.

Implementation of FMIS sub-projects rehabilitation and Deep Tube well sub
project in 3 clusters of 30 tube wells each cluster of 10 tube wells would take
two to two and half years. The annual implementation plan of activities
under this component is given in Annex -4

5. GUIDELINES FOR ASSESSMENT OF SOCIAL AND

ENVIRONMNETAL ISSUES AND PREPARATION OF SEMP

PURPOSE OF THE GUIDELINES

The purpose of the guidelines described is to facilitate effective participation

of WUA and help the IMD/IDD/IDSD/GFO staff and others associated with
the Irrigation and Water Resources Management Project (IWRMP) in
understanding and appreciating the social and environmental issues related
to the project and in planning, implementing and monitoring the required
measures to mitigate any adverse social and environmental impacts resulting
from the proposed interventions at the sub-project level.

UNDERSTANDING THE CONTEXT

Any unsustainable human intervention into natural regime of soil and water
resources can cause instability and threat to equilibrium of nature and impact
the livelihood of the local communities. For example, unplanned excavation
of canal can pose instability and undue extraction of natural resources (Earth
materials viz. Soil, Sand, and Boulder including surface or Ground Water)
can cause major or minor social and environmental disturbances. Depending
on the scale of intervention and sustainable capability of the nature, the
social and environmental effects may be local, regional and sometimes
national. Therefore, all irrigation sub-projects proposed to be included under
IWRMP are required to be screened against the prevailing legal regulations
criteria and the Social and Environmental Framework (SEMF) of IWRMP
and agreed with the World Bank and complying with its Social and
Environmental Safeguard Policies. However, in case of environmental
aspects in addition to SEMF, depending on the scale of intervention at the

31
subproject level may be subjected to Environmental Impact Assessment
(EIA) or Initial Environmental Examination (IEE) in accordance with the
Environmental Protection Rules (EPR 1997 amended in 1999) of
Government of Nepal (GoN). In sub-projects which do not require EIA/IEE,
social assessment should be undertaken to assess whether the project
activities have any adverse social impacts and accordingly determine
whether a social management plan is required, specifically the need for a
resettlement plan (RAP), indigenous peoples development plan (IPDP),
gender action plan (GAP), etc.

The SEMF is designed to provide a guideline at the sectoral level for Social
and Environmental Assessment (SEA) of irrigation sub-projects proposed
for implementation under IWRMP and incorporates all the essential policy
and regulatory features of the GoN's social and environmental policy
regime.

Environmental and Social Management Framework: The ESMP,

prepared as part of ISEA and approved by the GoN for application in
IWRMP provides specific operational framework for streamlining the
assessment and management of potential social and environmental issues
that may arise due to sub-project interventions. The ESMF, through
screening, identifies potential issues potential issues early in the sub-project
cycles, internalization of the sub-project specific concerns into the planning
and design (including Bill of Quantity), participation of stakeholders
including affected people, early-on in the sub-project cycle. Involvement of
stakeholders will continue throughout the sub-project level preparation and
implementation. The ESMF includes appropriate and adequate safeguard
measures that help minimize the environmental and social issues during
implementation and post implementation. In doing so, the prevailing Acts
and regulations of the government of Nepal and that of the World Bank are
blended and made assertive to ensure that any potential adverse
environmental and social impacts arising from the project activities are
minimized to the extent possible at one hand while potential beneficial
impacts are realized optimally for the benefits of the people on the other
hand. The ESMF also reaffirms that the environmental and social issues are
identified and mitigated at all stages of sub-project cycles and that due
procedures specified under ESMF are adopted by all stakeholders viz the
Project, the consultants, the contractors and WUAs. Moreover, the affected
people will be adequately consulted and involved in all the process of

32
project planning and implementation so that their genuine voices and
demands are not left unheard.

ESMF requires that:

• All sub-projects are subject to the social and environmental screening

and field verification
• Initial Social and Environmental Examination (IEE/ISE) or detailed
Social and Environmental Assessment (EIA/SIA) are undertaken, if
required
• Each sub-project will have specific SEMP
• Sub-project level RAP and IPDP, wherever required, is prepared.
• Consultation with the stakeholders and affected parties will be carried
out throughout the sub-project cycle.
• Social and Environmental monitoring will be ensured at different
levels- Centre, Region and sub-project.

Environmental and Social Screening: The IWRMP sub-projects are

required to be screened against the set of environmental and social criteria
derived from the GON regulation and the Bank’s safeguard policies. These
include sub-project type threshold, location and potential impacts as well as
negative list that cannot be funded under the project. Desk screening will be
field verified. The screening process establishes the level of social and
environmental investigation necessary for a sub-project and highlights the
potential issues. The screening of a sub-project results one of the following:

• Sub-project exempted from formal environmental and Social

investigations (IEE/ISE) and (EIA/SIA) will have simple sub-project
specific SEMP
• Sub=Project require IEE/ISE
• Sub-project requires detailed EIA/SIA
• Sub-project is ineligible for funding under IWRMP as it falls under
negative -list.

33
Steps in Social and Environmental Assessment Process vis-à-vis the Sub-
Project Cycle

Stages in Sub- Steps in the Assessment Process

Project Cycle
Project 1 Social and Environmental Screening of sub-projects
Identification & and Field Verification
Pre-Feasibility 2 Preparation of Social and Environment Management
Studies Plan for sub-projects not requiring IEE/ISE, EIA/SIA
Project Design 3 Initial Environmental Examination (IEE):
Assessment of environmental impacts to determine the
level of EA is required; its recommendations are
incorporated into the project design. (for those sub-
projects listed in Schedule 1 of EPR and for requiring
only IEE level studies)
4 Initial Social Examination (ISE); Together with
IEE, conduction of ISE for sub-projects falling under
IEE category
5. Scoping and TOR: Identification of potential
impacts and projects alternatives, and propose terms of
reference for EIA and SIA. (for those sub-projects
listed in Schedule 2 of EPR also fulfilling the WB’s
safeguard policies)
6. Baseline Data Collection: Identification of current
and future environmental and socio-economic
conditions without the project
7. Social and Environmental Impacts in terms of
characteristics such as magnitude, extent, duration and
significance in quantitative terms as far as possible;
describe all reasonable alternatives, including
preferred and ‘no action’ options
8. Mitigation Measures Design: Design to avoid,
reduce and minimize adverse environmental and social
impacts
9. Public Consultation and Participation:
Occurrence at various stages in the assessment process
to ensure quality, comprehensiveness and effectiveness
of the stakeholders’ participation and to examine their
views is fairly and adequately addressed. The IEC

34
 strategy suggested should also be incorporated during
this process.
10. ISEA Report Preparation: Summary of all
information obtained, analyzed and interpreted in a
report form; also include a non-technical summary
including methods used, results, interpretations and
conclusions made. GON’s EPA and EPR do not
demand for ISEA report. Rather IEE/EIA is sufficient
for EA process but it should incorporate physical,
chemical, biological, social, economic and cultural
aspects/environment as these are considered to be the
inseparable parameters of the existing environment as
a whole.
Project 11. Review and Approval of ISEA Report: Review
Appraisal/Approval of report to assess if all possible issues have been
adequately addressed and to facilitate the decision-
making process; decide if project should proceed, or if
further alternatives must be examined or totally
abandoned.
12. Public Hearing: As per the EPR, project related
details including the impacts and their mitigation
measures should be disseminated to the public and
their involvement process during the implementation
should be discussed. The representatives related with
local governance, project affected people and other
stakeholders are invited during the process.
Implementation 13. Preparation of Social and Environmental
Plan, Engineering Management Plan (SEMP): Determination of
Design specific actions to take during engineering design and
construction stages to minimize negative impacts and
enhance the positive impacts. Formulation of
Resettlement Action Plan and/or Women, Indigenous
and Disadvantaged/ Vulnerable (Dalits, Land less)
Groups Development Plan, if required.
Engineering 14. Social and Environmental Monitoring:
Design & Determination of compliance with SEMP and social
Construction mitigation plans (Resettlement and other plans)
Works
Post-Construction 15. Environmental Audit : Commission the audit two
years after the sub-project completion
35
Applicable Bank Social and Environmental Policies: Following Table
summarizes the Bank safeguards operational policies that are applicable to
the project and how they will be addressed under IWRMP

World Bank Policy Applicable due to How addressed under

IWRMP
Environmental Different sub-projects Each sub-project requires
Assessment (OP/BP are likely to have environmental screening
4.01) different social and and preparation of EMP
environmental impacts and monitoring during
based on their exact implantation.
location and activities
Indigenous People Project may be Sub-Project screening will
(OP 4.10) implemented in areas determine the applicability
inhabited by Indigenous of this OP. IP
People (IP) development Plan referred
as Vulnerable Group
Development Plan
(VGDP) will be prepared
for schemes with IP and
other vulnerable sections
to help them benefit from
the project. A VG
(Vulnerable Group)
development strategy has
been prepared as part of
ESMF
Involuntary Sub-project may require Sub-project screening will
Resettlement (OP/BP private property determine the applicability
4.12) acquisition and/or of this OP. Resettlement
appropriation (of land, Plan (RAP) will be
commercial and prepared based on the
residential structures R&R policy framework to
resulting in loss of ensure that those affected
livelihood) by project activities are
helped to improve or
regain their livelihoods
and standards of living in
real terms.
36
International Nepal is an upper Exemption to Notification
Waterways (OP/BP riparian country has been obtained as the
7.50) activities are very small
irrigation schemes.

Social and Environmental Management Plan (SEMP): Each sub-project

is required to have its own SEMP, which will be prepared based on the
respective IEE/ISE or EIA/SEA, as applicable to a sub-project. For sub-
projects exempted from formal IEE/ISE or EIA/SEA, SEMP will be
prepared following simplified and participatory approach including walk-
through surveys, field observations, simple measurements, interviews with
the key informants and consultation with local communities and
stakeholders. Guidelines for Preparation of social and Environmental
Management Plan and a Model Social and Environmental Plan have been
prepared which will help WUAs, NGOs and project staff to identify social
and environmental issues and prepare SEMP, as required. The SEMP will be
summarized in a simple matrix table and supported by map showing
components as well as social and environmental features/issues identified.
The SEMP of sub-project identifies site-specific appropriate and cost-
effective measures that will mitigate or reduce the identified adverse social
and environmental impacts to acceptable levels. The mitigation measures
should be integrated into sub-project plan/design, estimates and tender
documents including in Bill of Quantity (BoQ).Sub-project SEMP also
covers capacity development and training, institutional arrangement
implementation and monitoring and also required budget. No construction
activities in a sub-project will be undertaken unless mitigation measures
stipulated under SEMP (and required to be completed before taking up civil
works) are completed. The cost of SEMP at the sub-project level will be an
integral part of the detailed project report prepared at the irrigation scheme
level.
Social Screening: All the sub-projects must go through social screening
process as indicated in the ESMF. The screening process clearly outlines the
adverse potential impacts of the sub-projects in terms of loss of lands, loss of
residential and business structures, loss of livelihoods, loss of access to
traditional resources and adverse impacts to indigenous people. The
community willingness and interest to contribute their lands and other assets
voluntarily are also documented during social screening and people are
informed to refuse or make their choice for such donations so that
involuntary acquisition does not occur at all. Only in cases of voluntary
37
surrender of lands and other properties the policy mandates the Project to
sign the Memorandum of Understanding (MOU) to this effect. However, if
the screening shows losses of private properties and displacement of people
the Project should mitigate the issues in compliance with the stipulated
compensation procedure specified in R&R framework.
The R&R policy for the project is explicit that no one regardless of their
ownership to the land and other assets lost for the project would be forced
unless compensated of losses and/or provided their entitlements. Categories
of the likely losses identified in the R&R policy framework include: i) loss
of private land ii) loss of occupied land (encroachers/squatters). iii) loss of
crops iv) loss of private and community structures, etc. The R&R
entitlements framework agreed for the project is given below:

Types of Entitlement Unit Entitlement

Impact
1. Agricultural, Residential, Commercial Land
1.1 Loss of Titleholders Cash compensation equivalent to the
private land amount as per Land Acquisition Act; and
resettlement allowance in cash equivalent
to the difference between compensation as
per the Land Act and full replacement
value as per current market price in the
same vicinity, plus value of all land
transaction fees and charges. Families who
become landless allotted land as per
provisions of the Land Acquisition Act.
1.2 Loss of Non Non titleholders (squatters and
occupied land titleholders(Encroachers/S encroachers) will not be entitled to any
(public land) quatters) compensation for their affected
unauthorized/illegal extensions over public
land. Vulnerable encroachers with
economic losses may be entitled to
assistance as a vulnerable group.
Resettlement assistance to those most
vulnerable to restore pre-displacement
level livelihoods. Vulnerable groups may
include but not be limited to
ethnic/indigenous minorities, women
headed house holds, the most poor, the
disabled, elderly and landless/ex-kammaiya
38
 families.
2. Crop Loss
2.1 loss of Titleholders Advance notice for crop harvesting
perennial/non- Compensation for perennial crops and trees
perennial calculated as annual net product value
crops multiplied by number of years for new
crop to start producing.
Compensation in cash for lost standing
crop.

Non titleholders occupying Advance notice for crop harvesting

public lands Compensation for perennial crops and trees
(Encroachers/Squatters) calculated as annual net product value
multiplied by number of years for new
crop to start producing.
Compensation in cash for lost standing
crop.
Rehabilitation supports to the non-title-
holders, especially the vulnerable groups.
3. Houses and Structures
3.1 Loss of Titleholders Cash compensation equivalent to the
house & amount as per the Land Acquisition Act
structures and at replacement value without
deduction of depreciation.
Non Non titleholders (squatters and
titleholders(Encroachers/S encroachers) will not be entitled to any
quatters) compensation for their affected
unauthorized/illegal extensions over public
land but will be provided cash
compensation to the structures at
replacement value without deduction of
depreciation.
Resettlement assistance to those most
vulnerable groups to restore pre-
displacement level livelihoods.

4. Community Facilities and Resources

4.1 Loss of Titleholders (Local Compensation for re-establishment or re-

39
common community) constructing lost community resources,
properties facilities such as religious and cultural
structures or providing alternatives in
consultation with affected communities.
4.2 Titleholders Cash compensation/transition allowance.
Temporary
Losses
In addition, the affected people will be provided counseling services to find
suitable lands for resettlements.
Strategy for Indigenous People Development: The indigenous peoples
(referred as janajatis ) and other vulnerable groups (including dalits) in
Nepal are normally characterized by marginal and small land holding size,
land mostly in the tail end of the command area, mostly practice traditional
agricultural practices with limited benefits from irrigated agriculture, limited
exposure to emerging market, limited access to institutional credit, farm
inputs and agricultural extension, lack or poor leadership, marginalization in
the decision making process, inadequate participation in decision-making in
WUA functioning; lack of consultation regarding water management
practices etc. In order these issues, a strategy for indigenous peoples’
development has been prepared for the project and included as part of
ESMF. This strategy is based on GON’s specific policies and programs
being implemented for development of these groups and is aimed at helping
them access project benefits and improve their participation in the planning
and implementation of the project activities at the sub-project level.

Social Issue Strategies Proposed Activities

Lack of low Educate Frequent meetings, periodical
level of
WUA/project staff review & interactions with
participationon involvement of indigenous/Dalit groups
indigenous people
and Dalits in the
WUA or different
tiers of the WUA
Lack or poor Training in Work with groups to communicate
leadership leadership & the goals, strategies and plans of
qualities organizational WUA and the project.
development Ensure adequate representation for
members in the WUA executive
committee
40
 Design and organize specific
capacity building programs for these
groups
Low level of Ensure need based Facilitate exposure to improved
participation in agricultural agriculture practices including IPM,
the improved extension and with support from the line
agricultural support services departments such as the DoA and
development research institutes
process Ensure supply of seeds, fertilizers,
pesticides and technical know how
in coordination with line
departments and credit agencies
Support in periodic soil testing and
demonstration plots for the
indigenous people/Dalits with the
help of line departments as DoA.
Organize exposure trips to
agricultural farms, research stations
and progressive farmers under the
project
Establish linkages with the
agriculture-marketing network,
provide logistic support.
Access to Extend support to Provide information on various
institutional access to formal credit lending institutions
credit to institutional credit available in the area
initiate Help the eligible families to
income- complete formalities
generating Ensure that the credits received are
activities productively used for the various
income–generating activities as
wanted by the groups.
Low literacy Promote functional Integrate with mass education and
literacy, Tune total literacy programs
agricultural Farm extension programs to include
extension programs audio-visual aids and participatory
to the needs of the learning methods.
illiterates Customize training programs to
meet the needs of illiterate and neo-
literate communities
41
Problem of Facilitate the intra- Organize social mobilization
social equity social group campaigns by involving all types of
interaction to lessen indigenous and Dalit group people
the effect of rigid for public awareness to share
class and caste- irrigation development benefits
based hierarchy equitably.
Create social space for all to have
their say in the process of benefit
sharing.

The strategy includes a set of activities including specific programs

proposed to be extended to these vulnerable groups as well as dovetailing
ongoing development programs of GoN for the socio-economic benefit of
these groups. This requires concerted and coordinated efforts of the project
and other government agencies involved directly or indirectly with the
implementation of IWRMP. The strategy also requires sub-project
preparation and implementation of sub-project specific Vulnerable Group
Development Plan (VGDP), envisaged under IPDP, to help them take
advantage of the proposed sub-project level project activities and access
benefits at par with others.
Social and Environmental Monitoring and Auditing: Social and
environmental monitoring will be carried out at IWRMP level as well as a
sub-project level. The IWRMP level monitoring will include monitoring of
social and environmental aspects and is planned thrice a year (four-monthly)
matching with GoN review schedule. The sub-project level monitoring will
be conducted routinely during pre-construction, construction and
operation/maintenance stages. Social and environmental auditing will be
undertaken on representative samples on a six-monthly/annual basis through
an external agency (which will be hired by the project).
Implementation Arrangement for ESMF implementation: At the project
level there will be dedicated staff to address social and environmental
aspects of IWRMP who will work in close coordination with their respective
counter parts in the development and help ESMF implementation,
monitoring and capacity building.
Social and environmental screening will be done by a multi-disciplinary
team consisting of an environmentalist, an engineer and a sociologist and
constituted at RID or GRWDB level (project management for IWRMP). The
Mobile Irrigation Team will have sociologist and environmental specialist in
order to monitor implementation status of SEMP on four-monthly basis.
Sub-project implementing team will keep records of the environmental and
42
social works and activities undertaken in a routinely basis. Social and
environmental auditing will be undertaken through an independent party.
Since the proposed planning and implementation of project activities at the
sub-project level is the responsibility of the local communities through their
farmers’ organization, WUAs have a major role in ensuring the
implementation of ESMF activities as an integral part of the project
activities at the sub-project level. In order to facilitate community
mobilization and help WUAs in planning and implementing project
activities including SEMP, NGOs will be engaged by the project. The
Project includes a well detailed training and capacity building plan to help
all project functionaries at all levels- project, region, district and sub-project.

Environmental and social screening criteria: All proposed sub-projects

are required to be screened against the prevailing legal criteria to determine
whether the sub-projects are subject to IEE, EIA or No-EA process or the
sub-project should not be included for funding under IWRMP if they fall
under the negative/non-eligibility list. Source: (For details refer to “Social
and Environment Management Framework (SEMF) under Integrated Social
and Environment Assessment (ISEA) chapter 6.1 & 6.2 prepared by
IWRMP/DoI: Initial Sub-Project Screening as per GoN’s EPR and WB
safeguard policies–Criteria and Guidelines”).
SEA Procedure: These cover Initial Social Assessment (ISA), IEE and
EIA/Social Impact Assessment (SIA) based on the prevailing policy, plan
and legislation and project practices. The SEA procedures are enhanced
through participatory public consultation and disclosure of relevant SEMP at
the project level. Source: (For details refer to “Social and Environment
Management Framework (SEMF) of ISEA: Social and Environmental
Assessment Process chapter 6.3
Implementation Responsibilities: The SEMF outlines the roles and
responsibilities of the related political, public, private sector, community and
non-governmental agencies in screening and assessing social and
environmental concerns. Source: SEMF of ISEA
Planning Social and Environmental Mitigation Measures: This describes
how a typical Social and Environmental Management Plan (SEMP) is
developed and its contents (refer annex-1 for detailed steps). It also provides
guidance on how to prepare and ensure the effective implementation of the
social and environmental management tasks during the stages of sub-project
development, monitoring and evaluation.

43
6. MONITORING AND EVALUATION OF OUTCOMES/RESULTS

Project monitoring and evaluation of outcomes has been designed to

facilitate: (a) results-based management; (b) learning and process
enhancement (through process monitoring by participatory methods,
involving group self-ratings, reviews, score cards, satisfaction surveys, etc);
and (c) impact evaluation (involving use of appropriate baseline and
controls).

The OPD will have overall responsibility for planning and coordinating
M&E activities. In this role, the OPD will coordinate M&E activities of the
three sets of entities that will be involved with data collection and analysis:
(i) the implementing departments/agencies, including at the regional and
district levels; (ii) an external M&E agency (to be engaged for baseline
survey and pre-MTR and pre-ICR impact assessments); and (iii) beneficiary
WUAs and other relevant stakeholders. The PICC will function as an
oversight body to monitor overall project implementation on a quarterly
basis.
There will be a dedicated M&E unit in the OPD headed by the Project
Director. The unit will have lead responsibility for ensuring that relevant
entities involved in project M&E use appropriate data collection, analysis
and reporting methods and instruments and have appropriate procedures for
ensuring quality and reliability of data (such as the use of “without project”
reference sites – or “control” sites – and “triangulation” with other available
data where feasible). In particular, it will oversee development of the
relevant formats and software data collection, compilation, analysis and
reporting at various levels on a periodic basis. In this regard, it will
coordinate with the M&E unit in WECS, project M&E units at regional and
sub-regional levels, the external M&E agency, and NGOs facilitating data
collection at the WUA level. It will report on a quarterly basis on project
implementation progress to PICC.

At the regional level, each RID and RAD will have M&E units responsible
for coordinating activities in the concerned districts/ divisions/ Ground
Water Field Offices (GFOs). At the district level Irrigation Development
Division (IDDs)/GFOs/District Agriculture Development Offices (DADOs)
shall be the coordinating agencies for the M&E activities. The process of
participatory M&E undertaken by the beneficiary WUAs will be facilitated
by local NGOs and by the local level project implementing agencies as

44
appropriate. The data collected will be filled in standard formats at the
IDD/GFO/DADO level and forwarded to M&E units at the RD levels. At the
RD level, all the data received from lower levels will be complied and
forwarded to central M&E units. The M&E unit under the OPD will analyze
the date and produce simplified informative formats for distribution to the
PICC, World Bank, NPC, WECS and other concerned agencies for their
review and timely feedback.

Overall, the M&E activities undertaken within the project would include:
baseline study; regular performance tracking of inputs and outputs by
concerned implementing agencies; participatory M&E by beneficiary
WUAs; and pre-MTR and pre-ICR performance assessment and impact
evaluation surveys. The results framework and monitoring of Component A
and component B is shown in Annex 5.

Both IDA and GoN will carry out a formal six-monthly review of project
implementation progress and achievement of project development objective.
This will allow for necessary mid-course corrections in response to changing
local conditions, including with respect to the security situation.
7. PROCUREMENT ARRANGEMENT
Under this project procurement will be required for the rehabilitation of
existing irrigation schemes, construction of small tertiary canals and other
minor construction works. Most of these works would be of medium or
small value and shall be procured through National Competitive Bidding
(NCB) using national procedures and model documents agreed with or
satisfactory to the Bank or when appropriate, through quotations. Small
works in secondary and tertiary canals in transferred irrigation systems will
be contracted out to respective WUAs up to 3.5 million as per clause 97 of
procurement regulation.. The procurement for works will be done through
National Competitive Bidding (NCB)/ Local Competitive Bidding (LCB) as
per process set out in regulation’s chapter 5 of Public procurement
regulation 2064 using national SBD agreed with or satisfactory to the Bank.
The threshold value of NCB and LCB will be as agreed with World Bank.
Assignments that require the services of firms or individual consultants
include studies and assessments, development of a national water resources
database, and training will be procured as per process agreed with WB. The
threshold value will be also agreed with Bank.

45
8 FINANCIAL MANAGEMENT

8.1 Planning and Budgeting

The central level budgeting procedures for preparation, approval,
implementation, and monitoring are elaborated in the Financial
Administration Regulations (FAR). The annual work program and budget
will be based on the work program to be prepared by DOI for Components
A, B, and D, WECS for Component C, and DOA for Component D. DOI
will coordinate through the Ministry of Water Resources (MOWR) and
DOA, the Ministry of Agriculture and Cooperatives. Annual work
programs and budgets are submitted to the National Planning Commission
(NPC) and the Ministry of Finance (MOF) for discussion. Work programs
will be prepared based on the guidelines provided by NPC and budget
preparation guidelines provided by MOF.MOF releases authorizations for
expenditure to respective ministries, which in turn releases authorizations to
respective departments and then to spending units. In case of WECS,
authorization is issued directly to WECS. Because irrigation sector
program is a priority (P1) program of the government, funds will be
promptly released as soon as the authorizations from respective ministries to
departments are received accompanied by the Annual Work Plans.
At the regional and district level for components A, B and D, respective
regional and district offices (Regional Irrigation Directorates and Divisional
Irrigation Offices in case of irrigation sector, and Regional Agricultural
Directorates and District Agricultural Development Offices in case of
agriculture sector) are responsible to prepare their annual work programs
and budgets based on the Ministry directives and guidelines. In case of
irrigation sub-projects, applications for sub-projects will be reviewed and
approved by Project Implementation and Coordination Committee (PICC).
Before sub-project proposals are submitted to PICC, they would have been
reviewed and screened through a sub-project appraisal committee (SAC) at
the district level and by a Regional Appraisal Committee (RAC) at the
regional level. Following the approval of PICC, divisional irrigation offices
and participating communities will sign a Memorandum of Understanding
(MOU)/Letter of Agreement, which will contain terms and conditions
including fund release criteria. In order to participate in the program,
communities are required to make a matching fund contribution as per the
Irrigation Policy, before DOI provides the budget authority to district offices
for IDA’s share. Implementation Manual for implementing farmer-managed
irrigation schemes will provide details of procedure. The Manual will

46
contain details of how users’ contribution will be accounted and other
reporting formats.
8.2 Funds Flow Arrangements
GON releases the budget as per the approved work programs to respective
departments (DOI, WECS and DOA) in three tranches as per its fund release
procedures. The budget approved by GON will be indicated in the
government’s budget (Red Book) under separate budget heads under each
implementing agency. Prior to the approval of the work program and
budget, one-third release of the previous year expenditures or projected
expenditures for the first trimester, whichever is greater, will be made to the
respective agency through the concerned DTCO. Fund release for IDA’s
share of expenditures will be pre-financed through GON’s consolidated
fund. Upon approval of the work program and budget, appropriate
adjustment will be made against the advance for the first trimester release.
Subsequent second and third trimester releases are based on performance
reflected by the physical progress reports as required by Schedule 2 of the
FAR.

For reimbursement of IDA’s share of expenditures to GON’s consolidated

fund, two Special Designated Accounts (one each for DOI/WECS and
DOA) will be established at the Nepal Rastra Bank to facilitate quick
payments of various activities under the project including the reimbursement
under terms and conditions acceptable to IDA. DOI and DOA will designate
the signatories to operate these accounts, and they will normally be the
Coordinators and Finance Officers, and they will be authorized to issue
checks. Report based disbursement procedures will be applied for
withdrawal of funds from the Grant. Reporting formats for Implementation
Progress Report will be prepared, discussed and agreed with the Bank prior
to negotiations.
8.3 Project Financial Accounting, Reporting and Internal Controls
All three implementing agencies of the components (DOI, WECS, and
DOA) will maintain books of accounts and prepare accounts on a cash basis.
DOI will coordinate activities under Components A (Irrigation Infrastructure
Development) and B (Irrigation Management Transfer), WECS will
coordinate activities under Component C (Institutional and Policy Support)
and DOA will coordinate activities under Component D. There will be two
sets of Implementation Progress Reports and Audit Reports – one, a
consolidated report for irrigation component and institutional policy support

47
component, and the other for the agriculture component. Each component
implementing agency will compile the monthly statement of expenditures
(SOE) within seven days following the end of each month. WECS will send
its statement of expenditures to the OPD which will be consolidated in the
report to be prepared by DOI. Both DOI and DOA will be adequately
strengthened to maintain accounting information using spreadsheet or
appropriate software.

Accounting information will be regularly updated in the DOI and DOA

system to timely generate financial reports. As required by government
system, both DOI and DOA will maintain Main Loan Ledger, Subsidiary
Loan Ledger, Withdrawal Monitoring Register, Special Designated
Accounts Ledger and other ledgers. Each unit – DOA and WECS – will also
separately maintain these ledgers. GON’s internal control system will be
applied to monitor the progress of the Project in accordance with sound
accounting practices. A Project Implementation Manual will be developed
by DOI and DOA which will also include financial management
arrangements. Activity-based subsidiary record for monitoring the detail
accounts/key indicators will also be maintained by DOI and DOA. The
accounting systems contain the following features: (i) application of
consistent cash accounting principles for documenting, recording, and
reporting its financial transactions; (ii) a well-defined chart of accounts that
allows meaningful summarization of financial transactions for financial
reporting purposes; (iii) maintenance of withdrawal monitoring register, the
record of Statement of Expenditures (SOEs) and Designated Accounts
register; (iv) the asset register; (v) monthly closing and reconciliation of
accounts and statements; and (vi) the production of annual financial
statements. Proposed Implementation Manual for farmer manager irrigation
system will provide details of procedure for implementing and financing
irrigation sub-projects.
8.4 Financial Management Staffing
The OPD at DOI will be the overall coordination office to coordinate the
overall implementation and management of project activities. The OPD will
have a qualified full-time dedicated Project Director, two senior divisional
engineers, five engineers (one of whom will coordinate environmental
aspect), one Sociologist, one Procurement Specialist, one Accounts Officer,
two Accountants and one computer expert. The designated Procurement
Specialist will also provide support to procurement activities of WECS and
DOA. In WECS for implementing Component C, the Project Management

48
Team will comprise of a Project Coordinator, the Accounts Officer and the
Accountant. Similarly, in DOA, for implementation of Component D, the
Project Management Team will have one Project Coordinator, one Agro-
Economist, one overseer, two Agriculture Extension Officers, one Accounts
Officer, one Accountant and one Computer Assistant. Teams at WECS and
DOA will closely coordinate with the OPD Team.
8.5 Internal Audit
District Treasury Controller Offices (DTCOs) in districts are responsible to
carry out the internal audits of all cost centers operating in the districts.
Internal audits are carried out on a trimester basis. Divisional Irrigation
Offices and District Agriculture Development Offices are responsible to
maintain district level accounts by budget heads. These offices forward the
monthly expenditure statements to their respective departments, which then
will prepare their consolidated expenditure statements. For technical audits
of civil works, an arrangement will be made through the National Vigilance
Center (NVC).
8.6 Implementation Progress Reports (IPRs)
Total project costs are estimated around US$65.0 million of which IDA
contribution is US$50.0 million, government counterpart contribution is
US$10.0 million, and users contribution (in kind or cash) is about US$5.0
million (only for irrigation sub-projects). While developing annual work
programs and budgets, each implementing agency will formulate programs
to be separated by activity or work program fully funded by IDA or GON.
For irrigation sub-projects, proposed Implementation Manual will contain
details of accounting users’ contribution in the books of accounts and how
they should be reported.

The interim Financial Reports of the Project Implementation Progress

Reports will report total investments inclusive of IDA contribution,
government contribution and users’ contribution to be separated by specific
activity so that total investments as envisaged can be tracked and monitored.
The OPD for irrigation and institutional support components and DOA for
agriculture component will separately produce from the outset project
implementation progress reports, showing the sources and uses of funds,
output monitoring report, procurement management report and narrative
progress report in formats to be agreed upon during negotiations. To match
the public sector planning and reporting cycle, the IPRs will be produced on

49
a trimester basis and submitted within 45 days from the end of the preceding
trimester.
8.7 External Audit
The following is the audit1 requirements under the Project:

Annual consolidated project financial statements and Designated Accounts

statements (one each for irrigation/institutional support and agriculture
components) will be audited by OAG, which is considered acceptable by
IDA for this purpose, and submitted to IDA within six months after the end
of the fiscal year – January 15.

The following audit reports would be monitored in the Audit Report

Compliance system (ARCS):
Implementing Audit Auditors Audit Due Date
Agency
OPD of DOI Project Consolidated OAG 6 months after the end of
Financial Statements (for fiscal year (January 15th)
irrigation and institutional
policy support
components)
DOA Project Consolidated OAG 6 months after the end of
Financial Statements (for fiscal year (January 15th)
agriculture component)

The Irrigation Financial Management Reporting (FMR)- Forms in English is

given in Annex6.

1
Terms of reference acceptable to IDA need to be discussed and agreed with OAG.
50
List of References (IWRMP)

1. Borrower's Project Implementation Plan of IWRMP

2. Project Appraisal Document of IWIMP
3. Water Resources Act (1992) and Regulation (1993)
4. Procedural Guidelines for Farmer Managed Surface Irrigation System under NISP
5. Design Manuals for Irrigation Projects in Nepal, Sir M MacDonald & Partners Ltd, Feb
1990

51