Embed Size (px)
Citation preview
RESTRICTEDPCR : BAN 10036
ASIAN DEVELOPMENT BANK J This Report has been prepared forthe exclusive use of the Bank
PROJECT COMPLETION REPORT
OF THE
AQUACULTURE DEVELOPMENT PROJECT(LOAN NO. 329-BAN [SF])
IN
BANGLADESH
September 1989
CURRENCY EQUIVALENTS
Currency Units
Appraisal Report(September 1977)
Project Completion Report(September 1989)
- Bangladesh Taka (Tk)US Dollar ($)
- Tk 1.00 - US$0.065574US$1.00 Tk 15.25
- Tk 1.00 US$0.0304US$1.00 Tk 32.925
ACRONYMS AND ABBREVIATIONS
BKB -DOF -ha -kg -km -lbs -m-mt -
Bangladesh Krishi Bank (Agriculture Bank of Bangladesh)Department of Fisherieshectare(s)kilogram(s)kilometer(s)poundsmeter(s)metric ton(s)
NOTES
(I) In this Report, "$" refers to US dollars.(ii) The Fiscal Year (FY) of the Government ends on 30 June.
PCR: BAN 041
PROJECT COMPLETION REPORT
OF THE
AQUACULTURE DEVELOPMENT PROJECT
(Loan No. 329-BAN[SFJ)
IN
BANGLADESH
SEPTEMBER 1989
Note: This report was prepared by a Bank Mission comprising B. V. Lanier(Project Economist/Mission Leader), R. Schatz (Aquaculture IndustryExpert/Consultant) and R. Ceriño (Senior Loan Administration Clerk).The Mission visited the Project during the period 20 July - 5 August1989.
I.
II.
III.
(ii)
(iii)
1
12
3
33
5
5101011
121314141416
17
1717
(i)
TABLE OF CONTENTS
Page
IV.
Map: Subproject Locations
BASIC DATA
PROJECT DESCRIPTION
A. Objectives, Rationale and ScopeB. Implementation Arrangements
PROJECT HISTORY
A. Preparation and AppraisalB. Implementation
EVALUATION OF IMPLE}IENTATION
A. Project ComponentsB. Project CostC. Project Implementation ScheduleD. Procurement and DisbursementsE. Engagement and Performance of Consultants,
Contractors and SuppliersF. Compliance with Loan CovenantsC. Performance of Borrower and Executing AgenciesH. Performance of BankI. Environmental ImpactJ. Project Benefits
CONCLUSIONS AND RECOMMENDATIONS
A. ConclusionsB. Recommendations
APPENDIXES
(ii)
Note Sub-project 7 deleted.
(iii)
BASIC DATA
A. Loan Identification
1. Country2. Loan Number3. Project Title4. Borrower5. Executing Agencies
6. Amount of Loan
B. Loan Data
1. Appraisal- Date Started- Date Completed
2. Loan Negotiations- Date Started- Date Completed
3. Date of Board Approval
4. Date of Loan Agreement
5. Date of Loan Effectiveness- In Loan Agreement- Actual- Number of Extensions
6. Closing Date- In Loan Agreement- Actual- Number of Extensions
7. Terms of Loan
Bangladesh329-BAN(SF)Aquaculture Development ProjectPeople's Republic of BangladeshDepartment of Fisheries (DOF)Bangladesh Krishi Bank (BKB)TJS$ 18.000 Million (Original)US$ 11.463 Million (Net LoanAmount)
13 August 19775 September 1977
8 November 19779 November 1977
13 December 1977
19 December 1977
19 March 197815 March 1978Nil
30 June 198416 November 19884
- Interest Rate : 1 er cent service chargeper annum0.5 per cent on specialcommitments per annum
- Maturity (Number of Years) : 40 Years- Grace Period (Number of Years): 10 Years
28 November 19804 October 1988US$ 11.463 Million
US$ 4.000 Million(6 January 1986)US$ 2.537 Million(15 November 1988)
16.000
4.504
22.151
11.490
38.151
15. 994
0.000
0.000
20.151
4.531
16.000
4.
2.000
6 .959
38.151
15.994
(iv)
8. Terms of Relending- Interest Rate- Maturity (Number of Years)- Grace Period (Number of
Years)- Second-step Borrower
9. Disbursements- Date of Initial
Disbursement- Date of Final Disbursement- Amount Disbursed- Amount Cancelled
First Partial Cancellation
Second & Final Cancellation
10. Local Costs (Financed)- Amount (US Dollars)- Percentage of Local Costs- Percentage of Total Cost
7 per cent per annum15 Years
5 Years10.5 per cent per annum forsub-projects 2,3,4,5 & 713.0 per cent per annum forsub-projects 6 & 8
US$ 6.959 Million60.6 per cent43.5 per cent
C. Project Data
AppraisalEstimate Actual
(In US$ Million)
1. Project Cost(a) Foreign Exchange Cost(b) Local Cost(c) Total Cost
2. Financing Plan(a) Borrower Financed
- Foreign Exchange Cost- Local Cost
(b) Bank Financed- Foreign Exchange Cost- Local Cost
(c) Total
6.4485.3740.728
12.7416.2152.7150.8111.8681.2510.000
38.151
Oct 1978
Feb 1979 1/Feb 1982 /
Dec 1981Feb 1982
7.6801.3700.2301.3802.4500.7450.0000.0691.6200.450
15.994
Sep 1980
Jan 1982Jun 1987
Jul 1986Dec 1988 21
PPTA Fact-Finding 14-24 Jul 76
4 44
Appraisal J 13 Aug-6 1265 Sep 77
(v)
3. Cost Breakdown By Project Components
(a) Sub-Project 1(b) Sub-Project 2(c) Sub-Project 3(d) Sub-Project 4(e) Sub-Project 5(f) Sub-Project 6(g) Sub-Project 7(h) Sub-Project 8(i) Consultants' Services(j) Project Management Office(k) Total
4. Project Schedule
a. Date of Contract with Consultantsb. Equipment and Supplies Dates
- First Procurement- Last Procurement- Completion of Equipment
InstallationNet FactoryIce Plant
D
Data on Bank Nissions
No. of No. ofType of Mission Date Persons Mandays Specialization of Members
Sr. Fisheries SpecialistFisheries SpecialistOperations OfficerInland Fisheries/AquacultureConsultant
Sr. Fisheries SpecialistFisheries SpecialistFinancial AnalystSr. Operations OfficerCounselProject Manager /
j/ Date of contract award.21 Machinery installed but not yet commissioned.J Pre-Appraisal converted to Appraisal Mission./ Joined the Mission from 31 August to 5 September 1977.
(vi)
No. of No. of'Type of Mission Date Persons Mandays Specialization of Members
Appraisal 1-6 Oct 1977 3 18 Project ManagerFollow-up Fisheries Specialist
Financial Analyst
Review Mission 29-30 Mar 1978 2 4 Sr. Fisheries SpecialistFinancial Analyst
23 Jul- 2 24 Project Economist3 Aug 1980 j/ Credit Specialist Consultant
31 Jan - 2 8 Sr. Fisheries Specialist3 Feb 1981 Project Officer (LA)
23 Feb - 3 39 Aquaculture Specialist7 Mar 1982 Financial Analyst
Project Officer (LA)
17-25 Mar 1983 2 18 Fisheries SpecialistFinancial Analyst cumInstitutional Specialist
22 Jul - 3 45 Sr. Financial Analyst4 Aug 1983 Aquaculture Specialist
Economist Consultant
27 Feb - 3 43 Sr. Fisheries Specialist19 Mar 1985 Aquaculture Specialist 2./
Financial Analyst /
25 Aug - 3 51 Sr. Fisheries Specialist10 Sep 1987 Financial Analyst
Aquaculturist Consultant
BRO Mission 19-21 Feb 1984 1 5 Project Officer23-24 Feb 1984
Loan
24Feb- 1 7
Sr. Financial AnalystAdminis trat ion
2 Mar 1984
/ The Mission also reviewed Loan No. l29-BAN(SF): Fisheries Development Projectand Loan No. 420-BAN(SF): Fisheries Credit Project.
2./ Participation was from 27 February to 16 March 1985.J Participation was from 13 to 16 March 1985.
(vii)
No. of No. of -_________Type of Mission Date Persons Mandays Specialization of Members
Special Loan 1-7 Jul 1981 2 9 Sr. Fisheries SpecialistAdministration Project Officer (LA)
11-16 Oct 1982 3 18 Sr. Fisheries SpecialistProject Officer (LA)Project Officer (LA)
4-5 Apr 1984 3 6 Sr. Aquaculture SpecialistFinancial AnalystLoan Admininstration Asst.
10-13 Oct 1984 1 4 Sr. Financial Analyst
26 Jul - 1 10 Financial Analyst4 Aug 1985
19 Feb - 1 22 Sr. Fisheries Specialist12 Mar 1986
26Apr- 2
268 May 1988
Follow-up 16-30 Oct 1985 1
15
Country 20-24 Jul 1981 2
10Disbursement
8-16 Sep 1985
3
23
Project 20 Jul - 3
51Completion Review 5 Aug 1989
Sr. Agri-BusinessSpecialist )J
Shrimp Culture Expert
Sr. Fisheries Specialist
Control OfficerProject Officer
Control OfficerSr. Project Economist 21Loan Administration Asst.
Project EconomistAquacul ture Industry
EconomistSr. Project Admin. Clerk
/ The Mission included Inception of Loan No. 882-BAN(SF): Flood RehabilitationProject, and visited Loan No. 367-THA(SF) for two days.
2/ Joined the Mission from 12 to 16 September 1985.
Sub-Project 6:
Sub-Project 7:
I. PROJECT DESCRIPTION
A. Objectives. Rationale and Scope
1. The abundant water resources and warm climate of Bangladeshcombined with its long tradition of catching and consuming fish make thecountry particularly suitable for aquaculture development. Furthermore,widespread rural unemployment and poverty, poor nutrition, and thepersisting shortage of foreign exchange suggest that investment in rural-based, labor-intensive fish and shrimp culture projects would beparticularly attractive. This was the general rationale for Bank andGovernment investment in aquaculture development at appraisal in 1977; thatrationale remains well founded.
2. The objectives of the Project as set out in the Bank AppraisalReport were:
(i) to meet the growing local demand for fish;
(ii) to improve the income and employment opportunities of fishermenand fish farmers; and
(iii) to generate export earnings.
3. These objectives were consistent with the Government's overalldevelopment plan at that time and remain the principal objectives offisheries development.
4. The original Project scope (see Appendix 1) included eightseparate, largely independent sub-projects. These were:
Sub-Project 1: Five large carp hatcheries with a combined annualproduction capacity of 750 million hatchlings;
Sub-Project 2: A freshwater shrimp hatchery and 240 ha of freshwatershrimp ponds in Khulna Division producing 224 nit offreshwater shrimp annually;
Sub-Project 3:
Sub-Project 4
Sub-Project 5
Sub-Project 8:
Fish pens covering 100 ha in three canals, with annualproduction of carp of 1,200 mt;
1,600 fish cages covering a total area of 400 ha in KaptaiLake with expected annual production F 4,800 mt of carpand tilapia;
Brackishwater shrimp and fish culture in ponds covering800 ha in Chittagong Division annually producing 540 mt ofshrimp and 1,080 nit of mullet fish;
A fish net factory producing about 110 nit of net annually;
Four fish salting/drying plants, each capable of producing400 nit of final product annually; and
Three ice plants of 10 nit daily production capacity each.
2
5. The Project also included provision of 98 man-months of foreignconsulting services. Provisions for Project Benefit Monitoring andEvaluation were not included in either the Appraisal Report or the LoanAgreement because Project approval predated Bank policy requiring suchprovisions.
6. Total Project cost was estimated at $38.15 million, of which theBank was to finance $18 million (47 per cent), including the entire foreignexchange cost of $16 million and $2 million of the local currency cost (seeAppendix 2 for original cost estimate and actual Project costs).
B. Implementation Arrangements
7. The Project was to be jointly implemented by the Department ofFisheries (DOF) and the Bangladesh Krishi Bank (BKB). DOF was to beresponsible for constructing and operating the following facilities:
(i) the carp hatcheries under Sub-Project 1;
(ii) the freshwater shrimp hatchery and a demonstration farm underSub-Project 2;
(iii) a carp hatchery and demonstration fish cage under Sub-Project 4;and
(iv) a demonstration brackishwater shrimp and fish farm as part ofSub-Project 5.
8. BKB was to be responsible for extending credit to a total ofnearly 2,000 private sub-borrowers who would operate the followingfacilities:
(i) freshwater shrimp farms under Sub-Project 2;
(ii) fish pens under Sub-Project 3;
(iii) fish cages under Sub-Project 4;
(iv) brackishwater shrimp and fish farms and an ice plant underSub-Project 5; --
(v) the fish net factory under Sub-Project 6;
(vi) fish processing facilities under Sub-Project 7; and
(vii) ice plants under Sub-Project 8.
9. DOF was to provide assistance to BKB in selection of sub-borrowersand to assist selected shrimp and fish culturists in the operation of theirfarms, pens and cages. BKB was to be responsible for all procurement ofgoods and services under the Project, including that for the components forwhich DOF was exclusively responsible to operate. At the time of Appraisal,the various components were expected to be completed in three to five yearsfrom the date of Loan effectiveness.
3
II. PROJECT HISTORY
A. Preparation and Appraisal
10. In March 1976 a Bank Project Identification Mission to Bangladeshidentified an aquaculture development project for possible Bank financing.Subsequently, a Bank Fact-Finding Mission visited Bangladesh and determinedthat such a project would be suitable for financing but would requirefurther study and formulation prior to approval of a Bank loan.
11. In November 1976 the Bank approved a technical assistance grantof $270,000 j.J to the Government of Bangladesh to carry out a detailedproject formulation study for both marine fisheries and aquaculturedevelopment. Under that technical assistance, a team of internationalconsultants was selected by the Bank to carry out the study. An investmentproject prepared by the consultants initially included 21 sub-projects, forwhich detailed feasibility analysis was carried out on 13. Fivesub-projects related to marine fisheries were deferred at Appraisal forconsideration under a later project. 2.!
12. The Appraisal Mission for the Project visited Bangladesh inAugust/September 1977 and the Loan was approved by the Board on 13 December1977. At the time of Loan approval, the Government had yet to approve itsown Project Proforma; such approval was required before Projectimplementation could commence. The Government also gave assurances that allland for Project facilities was available for the Project, or would beavailable within six months of the effective date of the Loan. The Loanbecame effective on 15 March 1978.
13. The Project was the first approved by the Bank focusingexclusively on aquaculture development, although earlier marine fisheriesand rural development projects had incorporated small aquaculturecomponents. At the time of preparation and Appraisal of the Project, theBank had no aquaculture specialist on its staff, and the Appraisal Missiondid not include an aquaculturist.
B. Implementation
14. The commencement of implementation was delayed initially for morethan two years while Government approval of its Project Proforma wasawaited. During the course of subsequent implementation there were a numberof substantial changes in the original Project scope. Sub-Project 7 (fishprocessing facilities) was deleted. Sub-Project 1 was changed from theconstruction of five large fish hatcheries to the construction of fivemedium-sized and 40 small fish hatcheries and the up-grading of five fishnurseries. A large encircling embankment was added to Sub-Project 5(brackishwater shrimp/mullet ponds) and a small ice plant was deleted. Sub-Project 2 (freshwater shrimp hatchery/ponds), Sub-Project 3 (fish pens),Sub-Project 4 (fish cages) and Sub-Project 8 (ice plants) were reduced
/ Second Fisheries Development (T.A. No. 180), approved 29 November1976.
2.! Fisheries Credit [Loan No. 420-BAN(SF)J, approved 13 November 1979 for$10.8 million.
substantially in scope. By the time of the Project Completion ReviewMission of July/August 1989, almost 12 years after Appraisal of the Project,only Sub-Project 6 (fish net factory) was fully completed and put intooperation. Additional investment was still required to completeconstruction on Sub-Projects 1, 2, 4, 5 and 8. The revisions and deletionsin the scope of each sub-project as well as the status of each as of August1989 are described in the following section and summarized in Appendix 1.
15. The delays in implementation of the Project are summarized inAppendix 3. During the nearly 11 years between Loan effectiveness and Loanclosing, there were five revisions of Project scope approved by the Bank,as well as a major change in procurement arrangements in 1983 that permittedthe DOF to carry out its own procurement and an increase in foreignconsulting services from 98 man-months to 185 man-months plus the additionof 331 man-months of local consulting services. Foreign exchange costs ofthe Project were only slightly more than one-quarter of those estimated atAppraisal due to the deletion of one Sub-Project 7, reductions in the scopeof five Sub-Projects (Sub-Projects 2, 3, 4, 5 and 8), and less thananticipated expenditures on these same sub-projects (excepting Sub-Project2). Bank financing of local currency costs under the Project was increasedunder the Bank's Special Assistance Program to Bangladesh in 1983 to providefor use of $6 million of the Loan amount that had been allocated for foreignexchange costs. Of the total amount of Loan funds allocated for localcurrency expenditures of $8.2 million ($ 2 million originally allocated, $6million approved in 1983, and an additional $.2 million approved afterProject reformulation in January 1986), $6.96 million was actually disbursedand $1.24 million was cancelled. The Loan was finally closed, after four-and-one-half years' extension, in November 1988.
III. EVALUATION OF INPLEMENTATION
A. Pro lect Components
16. During the late 1970s (when the Project was appraised), worldwidedevelopment of the aquaculture sector had just commenced its rapidacceleration, particularly in Asia. The subsector clearly promised gooddevelopment potential in Bangladesh. The Bank, like most other such donorsat the time, lacked experience in the subsector but was being urged by manyDMCs to provide assistance for subsector development in light of the rapidadvances apparent in many areas. It was in this context the Project wasappraised and in which a number of overly optimistic Appraisal assessmentsof technology potentials led to the selection of technologies for use in theProject which ultimately proved to be inappropriate. Experience duringimplementation eventually showed that deficiencies in the selection atAppraisal of the technology to be utilized in Sub-Project 7 (fish processingfacilities) was inappropriate, with the result that it had to be deleted.Deficiencies in technologies selected for Sub-Project 3 (fish pens) and Sub-Project 4 (fish cages) led to the reduction in scope and poor performanceof these Sub-projects. Appraisal assessment of the institutionalcapabilities of DOF and BKB was also overly optimistic and led to theformulation of a Project of considerable complexity -- eight sub-projects,four with multiple components - - with implementation arrangements which werealso complex and in some cases inappropriate. These problems led to or werecompounded by others discussed later which together caused substantialimplementation delays, major modifications in scope, and poor performanceof the sub-projects, as suimnarized below.
1. Sub-Project 1 - DOF Carp Hatcheries
17. In 1982, the Government informed a Bank Review Mission that arevised Project Proforma for the Project had been approved, and that insteadof construction of five large carp hatcheries under this sub-project, therevised Project Proforma called for the construction of five medium-scalehatcheries, 40 small hatcheries at existing DOF nurseries, and upgrading offive nurseries.
18. Ultimately, eight medium-size hatcheries, 40 small hatcheries andfive nurseries were built or upgraded under the sub-project. In spite ofProject expenditures on this sub-project totalling $7.7 million (exclusiveof associated costs of consultancy services and the Project ManagementOffice), equivalent to over half of actual total Project cost, only 17 ofthese 53 facilities produced hatchlings in 1988, and many of the facilitiescontinue to experience a variety of technical problems. j/ Additionally,budgetary support is inadequate for the operation of many hatcheries. In1988, aggregate production of hatchlings from these 53 facilities was onlyabout 50 million, less that 7 per cent of the original Project target of 750million hatchlings annually.
/ Especially inadequate/poor quality water supplies, water tanks ofinadequate capacity, inadequate electricity supplies, and othercrucial equipment/facilities which do not function due to poormaintenance or improper construction. These problems and solutionswere detailed for each hatchery in several consultants' reports.
19. The failure of many DOF hatcheries to produce any hatchlings andthe low productivity of the operating facilities is the result of a numberof factors. Among the most important of these are: (1) poor siteselection; (ii) poor quality construction resulting in part from inadequateconstruction supervision by consultants and DOF staff; (iii) inadequaterevenue budgets for maintaining and operating the facilities; and (iv) lackof qualified and committed hatchery staff at the facilities no longer underthe control of DOF (see para. 21).
20. With the benefit of hindsight it is clear that the Government'srationale for increasing the number of hatcheries (para. 17) under this sub-project - - i.e. to maximize demonstration/training benefits and minimizehatchling transport (to ponds for stocking) constraints through a largernumber of smaller, widely dispersed hatcheries - - was postulated on thebasis of inadequate information about private hatchery development, andshould not have been agreed to by the Bank. Private sector fish hatcherieswere in fact increasing rapidly in number, and by 1987 (latest year forwhich country-wide data is available) there were 212 private fish hatcheriesproducing about 2,300 million carp fry for stocking in private ponds.Available data show that the rapid development of the private hatcherysector continued during 1988, and it now appears that DOF hatcheries are nolonger needed to provide hatchlings for private fish farmers. The limitedquantity of DOF-produced hatchlings is currently being utilized for stockingopen waters. Even in this regard, however, it may be more cost effectivefor the Government to purchase fingerlings from the private sector ratherthan attempting to produce them in its own facilities.
21. The Government's decision in 1988 to turn over 14 of the Projecthatcheries to Grameen Bank 1/ was an attempt to improve the operationalperformance of these facilities. Unfortunately this move does not seem tobe successful. Two of the Project's medium-scale hatcheries now undercontrol of Grameen Bank were visited by the PCR Mission and neither of thesefacilities was being utilized as a carp hatchery due to the lack of anytechnically qualified hatchery personnel. It is reported that the otherGrameen-controlled facilities were also not operating.
2. Sub-Project 2 - Freshwater Shrin Hatchery and Farms
22. The original scope of this Sub-Project 2 included a DOF hatcheryand a 24 ha demonstration farm plus 216 ha of private ponds for culture offreshwater shrimp (Macrobrachium rosenbergii) in the Khulna Division.Subsequently, all but the hatchery component of the sub-project was droppedand the hatchery site moved to Cox's Bazar. The ponds were deleted from thesub-project scope apparently for lack of interest by private fish farmc'isin constructing new farms for growing freshwater shrimp, principally becauseof the widespread interest in culturing brackishwater shrimp in KhulnaDivision.
1/ Grameen Bank was given full management and budget supportresponsibility for 14 hatcheries under a ten-year contract datedFebruary 1988 with the Ministry of Fisheries and Livestock, whichretained ownership of the hatcheries.
7
23. The shrimp hatchery was retained in the Project on the groundsthat there were already farmers in Khulna Division who would stock thehatchery fry. However, the location of the hatchery was changed to Cox'sBazr based on the consultants' finding that there were no suitable hatcherysites in the Khulna area. In retrospect, the logic of continuing withconstruction of the hatchery after the pond component had been deleted - -removing important features of the original sub-project rationale, inter-component support and linkages - - may be questioned, as may the logic ofmoving the hatchery completely out of Khulna Division where the potentialmarket for the hatchery fry was (and remains) mainly centered.
24. In spite of an expenditure of nearly $1.2 million on the hatcheryat Cox's Bazar, the facility has yet to be operated. The large, steel-reinforced concrete seawater intake system which was finally completed inJune 1989 was very seriously damaged in July 1989 in the first monsoon stormof the season. Attempting to rebuild it to draw water directly from the seadoes not appear advisable because of the completely unprotected, highlyactive (waves and wind) nature of the beach adjacent to the hatchery.Drawing seawater from the Bakkhali River for the hatchery appears to betechnically feasible, but this will require a long, expensive pipeline whichwould be subject to pilferage. Wells sunk to supply freshwater to thehatchery have been found to yield water of insufficient quality (high ironand saline content), but freshwater supplies could conceivably be obtainedfrom Cox's Bazar city water system. Even if water supply problems can besatisfactorily resolved, a number of hatchery equipment will requirereplacement before the hatchery can operate.
25. It appears now that the site selected for the hatchery wasunsuitable because of the lack of ready, low-cost sources of both freshwaterand seawater, a prerequisite for any hatchery. If the hatchery was to bebuilt in the Cox's Bazar area, a site should have been chosen on theBakkhali River. A large private freshwater shrimp hatchery has been builton a site adjacent to the Bakkhali River and it is now operatingsuccessfully.
3. Sub-Project 3 - Fish Pens
26. Originally, 100 ha of private pens in three separate canals wereto be constructed under Sub-Project 3. The scope, however, was reduced in1986 to 10 ha of pens in one canal, and only one pen of one ha wasultimately built, and then only in December 1986. BKB reported that thiswas due to the lack of interest by private fish farmers in fish pens orsubloans for this purpose. BKB also reported that the one pen is inoperation but the sub-borrower has yet to report any production or make anyrepayment on the sub-loan.
27. The one pen put into operation might be considered a pilot projectof sorts for fish pens -- an approach which in retrospect should have beenincorporated in the original sub-project design before proceeding to acommercial scale. On the basis of the performance of the one subloan andthe lack of interest by other private fish farmers in fish pens it must beconcluded that the technical and economic viability of fish pens culture inBangladesh has yet to be demonstrated, and that the selection of thistechnology at Appraisal was ill-advised (para. 16).
8
4. Sub-Prolect 4 - Fish Cages in lCaptai Lake
28. The Appraisal Report provided for 1,600 fish cages each covering2,500 sq m in area. It was subsequently recognized that construction andoperation of the very large, 2,500 sq m cages called for was technicallyimpractical (para. 16) and the scope of this component of Sub-Project 4 wasreduced to 1,600 cages, each of 200 sq m. At the time of this reformulation(1983), BKB procured netting sufficient for the reduced number of smallercages. DOF was to construct and operate a hatchery (as well as ademonstration cage) in the area to supply fingerlings to the private fishcage operators.
29. The technical and economic viability of cage culture in KaptaiLake was not established (para. 16) before sub-borrowers were sought out byBKB. Ultimately, subloans were made between 1984 and 1986 to just 25sub-borrowers, who actually constructed only 58 cages. Subsequently, mostof the cages were damaged in storms and left unrepaired; only 14 remainedin operating condition as of August 1989. Fish cage operators report veryslow growth of carp reared in the cages and no harvests to date. All 25BKB sub-borrowers are in arrears on their sub-loans.
30. The DOF hatchery has yet to be completed and it apparently has anumber of technical problems, related in part to poor site selection. Thesite is a hill-top, some distance from the lake, and reached only by use ofa road subject to flooding. Water supply is inadequate in quantity andquality (high iron content).
31. BKZ remains in possession of the substantial quantity of nettingimported for fish cage construction. There has been some deterioration ofthe nets while in storage, but BKB is attempting to auction the remainingnets. The introduction of cage culture techniques on a commercial scaleinvolving loans from BKB (or any other bank), before testing of thetechnology on a pilot basis in Kaptai Lake, was ill-advised.
5. Sub-Project 5 - Brackishwater Shrim p Culture
32. The development of approximately 800 ha of brackishwater shrimpponds in the Chakaria Sundarban near Cox's Bazar has been largely completed.Construction of a 16 km encircling embankment was not anticipated at thetime of Appraisal, and its completion in 1987 was a costly addition whichdelayed the implementation of Sub-Project 5 for some years. The 5 ton/dayice plant originally included in this sub-project was deleted (and theembankment added) as part of the 1986 Project reformulation.
33. The Government allotted 115 plots of land of 4.5 ha each toprivate parties for shrimp culture under this component. It is reported,however, that many of those allotted leases under the sub-project are notlocal shrimp farmers, contravening the agreed upon selection criteria;these private parties in a number of cases are reported to be wealthy and/orinfluential individuals who now rent their plots to local shrimp farmers.Because a large number of those allotted plots were subsequently found byBKB to be in arrears on previous loans from BKB and/or other banks,precluding the extension of a new loan, only four allottees receivedsub-loans from BKB to construct their shrimp farms. However, many plots arebeing operated as shrimp farms using traditional, low-productivity methods.
Internal supply and drainage canals remain to be built within theembankment.
34. The DOF demonstration farm, with 14 ha of ponds and a number ofbuildings, is largely completed. However, the farm has very limitedoperating funds and shrimp production from the demonstration farm's pondshas averaged less than 70 kg/ha for the past two years, far below the 1,000kg/ha forecast at Appraisal and well under the average productivity oftraditional culture in the area (100-150 kg/ha). In 1988 the farm harvestedonly 90 kg of shrimp. In 1989, only one of the farm's 11 production pondshas been stocked with a small number of shrimp fry, with no production asof July 1989. The last demonstration/training session held on the farm wasin 1987 apparently due to budget constraints and a lack of commitment byfarm staff.
35. The original Project objective of introducing semi-extensiveshrimp culture techniques in the area is not being met (para. 34), thoughthe potential remains to do so. Even at the present low level ofproductivity on the private plots, however, shrimp farming remainsprofitable. The Appraisal Report forecast that pond annual production perha on both demonstration and private farms could reach 1,000 kg of shrimpand 2,000 kg of mullet fish was unrealistic. There is no culture of mulletin Bangladesh to date, and contrary to the Appraisal Report claims, DOFreports there is very little wild mullet fry available for collection andstocking in ponds.
6. Sub-Prolect 6 - Net Making Plant
36. BKB financed a fish net making plant as planned and the factoryhas since 1987 been producing netting at approximately the rate forecast inthe Bank Appraisal Report (20,000 lbs/month). However, the net factory'saudited financial statements for 1987 and 1988 showed substantial lossesbeing incurred, and the company is behind in its repayments to BKB, althoughone repayment has been made.
37. The specifications for the plant equipment were completed by aProject consultant in late 1980, but the equipment was not actually orderedby BKB until late 1985. The factory owner suffered a substantial financialloss because of sharp fluctuation of the yen/taka exchange rate between thetime BKB opened the letter of credit for the equipment and the time thepayment was actually made. The factory owner also reported that threeequipment items received have never been used and were not required for theoperations. Additionally, the equipment specified by the Project consultantand ultimately received by the sub-borrower was designed for making onlymultifilament net, whereas local market demand has increasiigiy shifted tomonofilament net.
38. This sub-project appears to have been basically sound, althoughthe long delay between equipment specification and installation may have ledto purchase of some inappropriate equipment. BKB is now activelyconsidering providing additional financing to the plant owner to upgrade hisfacility.
10
7. Sub-Project 7 - Fish Processing Facilities
39. Four private fish drying/salting facilities were to be constructedunder Sub-Project 7. However, the type of facility proposed was based ona small pilot experiment done at an Australian university using a technologywhich was ultimately shown to be inappropriate for Bangladesh (para. 16).No sub-borrowers were subsequently found and the sub-project was deleted aspart of other modifications in Project scope approved by the Bank in 1986.
8. Sub-Project 8 - Ice Plants
40. Three private ice plants of 10 mt daily production capacity wereto be built. BKB sanctioned a sub-loan in early 1985 for one plant (inKhulna) and though the equipment for this one plant was imported in thatyear, the plant has yet to be commissioned. Problems with the foreignequipment supplier were reported to have delayed start-up of the plant forover three years. The sub-borrower is already in arrears on repayments toBKB. BKB has successfully extended and recovered many loans for ice plants,but reported that the procurement procedures under the Project dissuadedother potential sub-borrowers and resulted in the deletion of two ice plantsunder the 1986 reformulation of the Project.
B. Project Cost
41. As shown in Appendix 2, the actual cost of the Project was only$15.99 million as compared to $38.15 million estimated at the time ofAppraisal. This was mainly because of deletion or reduction in size of manyof the components (see above and para. 15). There was a substantial costoverrun for the construction of the freshwater shrimp hatchery underSub-Project 2, although the cost of the entire sub-project was less thanforecast because none of the freshwater shrimp ponds were built (para. 22).
42. The actual cost of Sub-Project 5 (brackishwater shrimp ponds) wasless than estimated because none of the internal canals have as yet beencompleted and sub-loans were provided to only four of the 115 partiesallotted land under the sub-project (para. 33). Approximately $1.2 millionwas spent on the construction of the perimeter dike around the 115 farmplots, an unanticipated cost at the time of Appraisal.
43. The cost of consulting services was about 30 per cent above theAppraisal estimate because of the near doubling of foreign consultingservices and the addition, requested by DOF and BKB, of 331 man-months oflocal consulting services.
C. Project Implementation Schedule
44. As elaborated previously and summarized in Appendix 3, the Projectexperienced substantial delays in implementation at virtually all stages andultimately, in the nearly 11 years of implementation, only one (Sub-Project6 (fish net factory) of the original eight sub-projects was fullyimplemented and became operational.
45. Implementation was initially delayed by over two years requiredfor Government approval of the Project Profornia. It is not clear if this
11
was a product of premature Bank Appraisal and approval of the Loan or simply-- result of inefficient Government procedures, or both. Subsequent delays
resulted from the following factors:
(i) complex Project design, which was in some aspects impractical;
(ii) difficulty in selecting and obtaining sites;
(iii) cumbersome procurement arrangements;
(iv) inadequate staffing in both Executing Agencies;
(v) poor coordination between the Executing Agencies; and
(vi) insufficient provision for consulting services, poor schedulingof these services, and poor performance by some consultants.
D. Procurement and Disbursements
46. The original arrangement whereby DOF and BKB would work togetherclosely to implement the Project was based on an overly optimistic Appraisalassessment of DOF/BKB institutional capacities (para. 16) and was ultimatelyshown to be unrealistic, leading to many problems. Coordination wasunsatisfactory, and the decision to give all Project procurementresponsibility to BKB, even for DOF components, was impractical and was amajor reason for significant delays in procurement. This arrangement wasreversed in 1986 to allow DOF to carry out procurement related to thesub-project components it was responsible for implementing.
47. The arrangement under which BKB supervised the preparation ofspecifications and tender documents for the fish net factory and ice factoryequipment and for fish pen and cage materials, and then in turn selected thesupplier and arranged the imports, also led to many problems. )J Under theProject, sub-borrowers had little role in selection of the items for whichthey were eventually responsible to repay BKB. In the case of the netfactory and the ice plant, they were burdened with equipment that theythemselves may not have selected. As a consequence, they feel lessobligated to repay BKB for their loans. In the case of the fish cagematerials, BKB imported far more netting than was ultimately required.Experience under the Project shows that utilization of an agriculturaldevelopment bank such as BKB for extensive procurement must be preceded bya pragmatic assessment of institutional capacity.
48. As shown in Appendix 4, there were substantial delays indisbursement under the Project. Other than for payments to consultants,there were no significant loan disbursements until 1983. The long delay indisbursement were a result of problems outlined in paras. 46 and 47 as wellas those listed in para. 45.
/ These and similar problems in other projects led the Bank to institutean end-user preference policy for subloans in 1981.
12
E. Engagement and Performance of Consultants. Contractors and Suppliers
1. Engagement
49. The foreign consulting firm selected to assist in implementingthe Project was the same firm which had prepared the Project under Banktechnical assistance (para. 11). It was one of six firms invited to submitproposals, of which only two firms actually made submissions. The initialrecruitment of foreign consultants required three years, with the fieldingof the first consultants only in late 1980. The originally contracted 98man-months of services (the full provision at Appraisal) were completed byearly 1983, but because of the many delays discussed previously, theconsultants had essentially completed their contract period before most ofProject implementation was underway. It was then recognized that thescheduling of the consulting services had been inconsistent with the slowprogress of implementation and that an extension of the services wasrequired; an additional 87 man-months of foreign consulting services wereultimately engaged, for a total of 168 man-months. It was also agreed thatlocal consultants were needed to assist mainly in supervision of civil worksconstruction under sub-projects/components being implemented by DOF. TheBank agreed to finance additional consultants services requirements underreallocations and reformulations approved in 1983, 1986 and 1987.
50. Local consultants, who ultimately provided 331 man-months ofservices, were selected by the DOF without following competitive selectionprocedures. / The Bank financed the entire cost of these local consultingservices.
2. Performance
51. The international consultants appear to have performed reasonablywell overall. Many, as evidenced by reports reviewed by the PCR Mission,provided extremely useful services, though much of their advice, which wasultimately shown to be correct, was apparently neither heeded nordisseminated by DOF/BKB to managers and local contractors in the field. Itappears, however, that the foreign consultants were either in error or didnot exert enough initiative and/or forcefulness in their advice on thelocation of hatcheries constructed under Sub-Projects 2 and 4 (see paras.23-24 and 30, respectively). A similar judgment seems valid with regard to
/ On 14 September 1983 the Bank conveyed its approval to the Governmentto finance local (including individual) consultants selected by DOFsubject to DOF furnishing the Bank: (i) a listing of the candidates;(ii) justification for their selection; (iii) biodata for eachcandidate; and (iv) draft contract for each consultant. This wasdone even though a Senior Counsel, 0CC had commented during Bankconsideration of the proposal that "the Bank has always insisted thatconsultants be engaged in accordance with competitive selectionprocedures acceptable to the Bank and the Bank should make noexception for local consultants to be engaged under this Project".The Bank approved DOF's engagement of local consultants despite thefact that DOF complied with only condition (iii) above. OGC's cautionultimately proved to be well founded as discussed in para. 52.
13
Sub-Project 3, where the technical non-feasibility of the sub-project should-- have been apparent before 1986 (paras. 26 and 27).
52. Many of the technical problems now being experienced at the DOFhatcheries under Sub-Projects 1, 2, and 4 are a direct consequence of poorsite selection and poor quality construction. The quality of civil worksdone by DOF recruited local contractors (para. 50), particularly for the DOFhatcheries, was frequently inconsistent with the detailed designs (providedby foreign consultants) and was generally poor. There are a number of caseswhere the local consultant certified the work complete, when in fact it wasnot correctly done. In many cases, DOF reported that the local consultantcertified that well water was tested and shown to be free of iron; many ofthese wells now yield water with iron levels far above acceptable standardsfor culturing fish, suggesting falsification of water qualitycertifications. However, it is clear that inadequate supervision ofconstruction by DOF was a significant contributing factor in theseshortcomings, particularly in Sub-Project 1 (para. 19).
53. The international supplier of the ice plant under Sub-Project 8supplied an incomplete package of equipment, according to BKB, thuspreventing the commissioning and operation of the plant (para. 40).
F. Compliance with Loan Covenants
54. The status of compliance with the Project Loan Covenants issummarized in Appendix 5. On balance, given the many difficulties involvedin implementing the Project, the Government and its two Executing Agenciesfor the most part attempted to comply with the covenants and conditions ofthe Loan. Of the total 38 Loan Covenants, 21 were fully complied with.Almost all the remaining 17 covenants were complied with after some delayor were partially complied with. These covenants related to DOF/BKBcooperative actions and actions to be taken by DOF and/or BKB after Projectfacilities became operational; coordination problems between DOF and BKB,as discussed previously (paràs. 45 and 46), precluded full compliance withthe former, and the fact that most Project components were not fullycompleted precluded full compliance with the latter. The principal casesof non-compliance pertained to two Loan Covenants specifying the effectiveinterest rate to be charged to sub-borrowers. The Project Agreement betweenthe Bank and BKB (section 2.03) provides that the sub-borrowers underSub-Projects 2, 3, 4, 5 and 7 were to pay interest of 10.5 per cent perannum to BKB and those under Sub-Projects 6 and 8 were to pay 13 per centper annum; however, BKB is charging the sub-borrowers an additional 3 percent service fee annually, i.e., effective interest rates of 13.5 per centand 16 per cent, respectively.
55. Those Loan covenants requiring specific cooperation/coordinationactivities by DOF and BKB in Project implementation indeed followed from theimplementation arrangements formulated at Appraisal. However, due to thegeneral impracticability of those arrangements, the Loan Covenants derivedfrom them were also ultimately shown to be impractical; their rigidity asformulated compounded problems with compliance.
14
G. Performance of Borrower and Executing Agencies
56. Neither DOF nor BKB performed well in implementing the Project,particularly in the period before 1984. Performance thereafter wasmoderately better. However, the two agencies showed only limited commitmentto the Project and coordination between them was seriously deficient,particularly in the Project's early stages of implementation. However, theBank's assessment of the implementing capacity of both agencies and thepotential for cooperation between the two was overly optimistic at the timeof Appraisal. The weakness of staff assigned to DOF and BKB ProjectManagement Offices and to Project facilities under various sub-projects wasnot anticipated and the Project had no provision for staff trainingprograms. This problem was compounded by a general lack of continuity inDOF and BKB staff assignments.
H. Performance of Bank
57. The Bank's performance during Project Preparation and Appraisal,in terms of both technical and institutional formulation of the Project, wascharacterized by excessive optimism. This may be seen as a product of thelack of Bank experience in the aquaculture subsector at that time (para.16). During the course of implementation, however, the Bank devotedconsiderable attention to the Project (21 missions involving 438 staff days)and exhibited increasing flexibility in modifying the Project scope andimplementation arrangements based on a more realistic assessment oftechnical and institutional potential than had been made at Appraisal. Asa result of continuing problems in Project implementation, there were five(two major) reformulations of Project scope. However, better knowledge ofdevelopments in the aquaculture subsector at the time of and since theBank's approval in 1986 of an expansion of the number of fish hatcheriesunder Sub-Project 1 (see para. 20) have shown that the Bank should havescrutinized more closely the Government's request and rationale in thisregard, and should have disapproved the request.
I. Environmental Impact
58. Of the Project's eight sub-projects, in only three were there anysignificant environmental issues or impacts. These are discussed below.
1. Stocking of Open Waters with Cultured Fish
59. The DOF fish hatcheries and nurseries built or upgraded underSub-Project 1 have produced carp fingerlings which are being used forstocking in open, floodplain waters. This fingerling stocking program isan attempt to enhance the productivity of the country's important floodplainfisheries. The completion of many flood control, drainage and irrigationstructures has degraded and destroyed many natural breeding and nurseryareas for important native fish species. These structures have alsosignificantly altered the natural flow of rivers and streams in the country.These modifications of the riverine and floodplain ecosystem have combinedwith the apparent deleterious effects of increased use of agriculturalchemicals to reduce the productivity of native fish species in thatecosystem. The fish being stocked are a combination of carp species nativeto the river system and other carp species (Chinese carp) that have beencultured widely in Bangladesh for some years. There is no evidence to
15
suggest that these Chinese carp species will be able to establish viablebreeding populations in Bangladesh.
2. Cage Culture of Tilapia in Kaptai Lake
60. It was originally anticipated that the fish cages in Kaptai Lakeunder Sub-Project 4 would be stocked with Tilapia nilotica along withvarious species of carp. During implementation, objections were raised bythe DOF to the stocking of the cages with tilapia on the valid grounds thatsome fish would inevitably escape from the cages. Since Tilapia is knownto be a prolific breeder, DOF's position was that the lake was in danger ofbeing overpopulated with tilapia, to the detriment of carp and othernaturally occurring lake fish populations. Consequently, Project fish cageoperators have not been allowed to stock Tilapia in their cages and thecommercial viability of cage culture in Kaptai Lake has been adverselyaffected as a result.
61. Government officials report that Tilapia nilotica is now foundin significant quantities in the Kaptai Lake and it is being captured bylake fishermen. They report that there is no evidence that the populationof this species is growing rapidly or that it has had any negative impacton the population of other lake species. Meanwhile, cage culturists in thelake who have, in violation of DOF regulations, stocked Tilapia nilotica intheir cages report that this fish is highly productive as a cage culturespecies.
62. In view of the above and the fact that of Tilapia nilotica, unlikeTilapia mozanibique, is widespread throughout Southeast Asia and has lesstendency toward overpopulation, the PCR Mission recommended that the DOFre-evaluate its position on the stocking of Tilapia nilotica in cages inKaptai Lake on the basis of a careful examination of changes occurring inthe lake and riverine ecosystem upon the introduction of Tilapia nilotica.
3. Destruction of Mangrove Forest in Chakaria Sundarban
63. Under Sub-Project 5, about 800 ha of mangrove forest was (or isbeing) cleared to culture brackishwater shrimp. A large portion of theapproximately 100,000 ha of land now being utilized for shrimp culture inBangladesh was originally mangrove forest. Some of this area had earlierbeen cleared for salt pans or for paddy culture, although this was not thecase in the sub-project area.
64. The importance of the mangrove swamps as a nursery ground forshrimp and a breeding and nursery ground for other fLh species is wellestablished. The clearing of 800 ha of mangroves in the Chakaria Sundarbanarea under the Project has clearly reduced shrimp/fish breeding and nurserygrounds in the area, but the effect on resident shrimp/fish populations hasnot been determined. However, the clearing of mangroves under the Projectfollowed the pattern of shrimp culture development elsewhere in the countryand it appears likely that without the Project, private farmers would havemoved quickly to clear the Project area of mangrove and build ponds.Virtually all of the areas adjacent to the Project area have been convertedto shrimp farms, either by private farmers with or without leases of landfrom the Government, or by the Government under other projects (includingan ongoing World Bank Shrimp Culture Project).
16
65. In view of the rapid reduction in the area of mangrove forest inBangladesh and the large potential to increase production of cultured shrimpfrom existing farms, the Government would be well advised to halt furtherdestruction of mangrove forests and concentrate on improving yields inexisting ponds. An active DOF demonstration shrimp farm (see paras. 34 and35) could clearly contribute to increasing yields in existing ponds.Additionally, the Bank's Second Aquaculture Development Project is focussedon improving these yields through improved extension services to existingprivate farmers.
J. Project Benefits
66. Because only one of the eight sub-projects is completed and fullyoperational, it is difficult to evaluate the potential benefit of theProject. The one fully operational sub-project (Sub-Project 6, fish netfactory) is operating near full capacity, but is experiencing substantialfinancial losses (para. 36-38).
67. The Appraisal Report forecast an annual production increase of44,380 mt of fish and 764 nit of shrimp as a result of the Project. In 1989it appears that fish production as a result of the Project will be less than3,000 mt and shrimp production only about 50 mt. Only 32 sub-loans wereprovided under the Project as compared with 1,936 anticipated at Appraisal.Fewer than 500 jobs have been created as compared with nearly 4,000estimated at the time of Appraisal.
68. It is clear that much of the $15.99 million invested to date onthe Project has been for equipment, services and facilities that areunlikely to yield significant benefit. This conclusion applies inparticular to investment under Sub-Project 2 (freshwater shrimp hatchery -- see paras. 23-25), Sub-Project 3 (fish pens -- see paras. 26 and 27) andSub-Project 4 (fish cages -- see paras. 28-30). The same conclusion couldapply to Sub-Project 1 (fish hatcheries) unless radical corrective actionis effected by DOF -- preferably lease or sale of the hatcheries to theprivate sector. It thus appears likely that these sub-projects willultimately lead to production of only a small fraction of the fish andshrimp anticipated from them at Appraisal, and that their overall economicrate of return will be negative. Sub-Project 5 (brackishwater shrimp ponds)and Sub-Project 6 (fish net factory) are now producing some benefits - -shrimp and netting, respectively. The latter is producing at the rateforecast at Appraisal and if current financial problems can be resolved(paras. 36-38), its economic rate of return should be positive. Sub-Project5 is currently producing a small quantity of shrimp but has the potentialto produce shrimp at or above the level forecast at Appraisal if theMission's recommendations are followed and semi-intensive culture techniquesare introduced. The Sub-Project's overall economic rate of return, however,will be well below that forecast at Appraisal due to the high (andunanticipated) cost of the encircling embankment added during the course ofProject implementation (para. 32), and because the culture of mullet asanticipated at Appraisal turned out to be technically unfeasible (para. 35).The ice plant imported under Sub-Project 8 is not yet operative (para. 40),but is expected to eventually be commissioned and produce ice; some Projectbenefits are thus expected, but the economic rate of return will besubstantially diminished from Appraisal expectations as a result of theproblems experienced.
17
IV. CONCLUSIONS AND RECOMMENDATIONS
A. Conclusions
69. Developments in the aquaculture sector in Bangladesh since theAppraisal of the Project have confirmed the validity of the Appraisalassessment of sector potential and the compatibility of Project objectiveswith that potential. The sector has advanced significantly since Appraisalin 1977, in terms of fish and shrimp hatchery operations and cultureproduction, the progressive adoption country-wide of the associatedtechnologies, and private sector participation in these activities.However, the Project's contribution to this impressive advance as well asits overall performance was very seriously constrained by a number offundamental problems. The lack of Bank experience in aquaculture subsectorat the time of Project preparation and Appraisal led to an overly optimisticAppraisal assessment of technology potentials and DOF/BKB institutionalcapacities, which resulted in the Project incorporating some inappropriatetechnologies and design features (para. 16). These problems were compoundedduring implementation by a general lack of commitment to the Project by DOFand BKB. The substantial and progressively flexible Bank efforts to addressthese problems, as well as the provision of additional consultancy services,was only partially successful in overcoming them. In at least two instances-- i.e., Bank approval of the revision of Sub-Project 1 (para. 20) and thewaiver of competitive selection procedures for local consultants (para. 50)- - Bank flexibility in attempting to assist the Project was ultimately shownto be ill-advised. The combined effect of these and other problems detailedin the foregoing were substantial delays in Project implementation andProject benefit turned out substantially less than that forecast atAppraisal.
B. Recommendations
1. Project Related
a. Sub-Project 1 - DOF Fish Hatcheries
(i) DOF should focus its efforts on operating five to tenof its best hatcheries, utilizing its limited capitaland revenue budgets to allow these facilities tooperate at full capacity. The output of thesefacilities should be used mainly for stocking openwaters since private hatcheries and rutseries are nowgenerally sufficient to supply fish farmers. Theremaining DOF hatcheries and nurserie: r'ay be ieedor sold to private parties.
(ii) No additional Bank funds be used for the DOF fishhatcheries and careful reconsideration should be givento the plan to construct additional DOF fish hatcheriesunder the Second Aquaculture Development Project (LoanNo. 82l-BAN[SF]).
18
b. Sub-Project 2 - DOF Freshwater Shrimp Hatchery
70. The location of the DOF freshwater shrimp hatchery is such thatit may not be technically or economically feasible to operate. Thesub-project should be re-appraised, with careful analysis of objectives.It is questionable whether the shrimp fry to be produced will be required,by the time the hatchery can realistically be expected to be operable, nowthat the private sector has successfully entered the freshwater shrimphatchery field. The technical and administrative feasibility of pipingwater from the Bakkhali River to the hatchery should be evaluated as wellas the cost of rehabilitating the hatchery to make it operable in view ofthe deterioration of the facilities and equipment. Training and consultingservices requirements to manage and operate the facility need to beassessed, and revenue budgets necessary to operate and maintain the facilitywill need to be prepared.
c. Sub-Project 4 - Fish Ca ges in Kaptai Lake
(i) BKB should extend no additional subloans for fish cagesin Kaptai Lake until the technology is demonstrated tobe commercially viable. BKB should pursue repaymentby existing sub-borrowers and dispose of the unutilizednet it is storing as planned.
(ii) Because of the pilot nature of the Project and theapparent technical failure of cage culture in KaptaiLake, the Government should consider sharing a portionof the loss being incurred by BKB under thissub-project.
(iii) DOF should provide technical assistance and supervisionto the operators of the remaining 14 private fish cagesand should, based on the performance of these cages,carefully assess the potential for fish cage culturein Kaptai Lake based, particularly on an examinationof changes occurring in the lake/riverine ecosystemupon the introduction of Tilapia nilotica.
(iv) DOF should proceed with its plans to complete the carphatchery near Kaptai Lake utilizing its own funds;the fingerlings produced at this hatchery should beused to increase fish stocks in Kaptai Lake to supportthe capture fishery in the Lake.
d. Sub-Project 5 - Brackishwater Shrimp Ponds
(i) Completion of internal canals and other facilitiesshould be left to sub-project farmers, and thesefarmers should be clearly informed of this decision.Additional sub-loans to these farmers should beprovided by BKB only to the extent that the farmersmeet normal BKB criteria for loans.
19
(ii) BKB should reduce the effective annual interest rateon the four subloans extended under the sub-project tothe level stipulated in the Project Agreement betweenthe Bank and BKB.
(iii) All but one or two of the ponds of the DOFdemonstration farm should be leased to private fishfarmers. (If, after one or two seasons, the pond(s)retained by the DOF are still not effectivelydemonstrating improved shrimp culture techniques, thesetoo should then be leased to private farmers.)Effective demonstration farm activities should comprisepart of a broad-based Government effort to increase theproductivity of existing shrimp farms and halt mangrovedestruction in connection with construction of newshrimp farms.
e. Sub-Project 6 - Fishinz Net Factory
(i) It is recommended that the Bank consider financing theengagement of an international net factory consultantunder the ongoing Second Aquaculture DevelopmentProject J to advise on whether the unutilized piecesof equipment can be used or sold (domestically orabroad); the consultant should also advise on thetechnical and financial viability of converting thefacility to production of monofilament net.
(ii) BKB should reduce the effective annual interest rateof the sub-project subloan to the level stipulated inthe Project Agreement between the Bank and BKB, andshould consider additional financing for the sub-Proj ect based on the recommendations of the consultant.
f. Sub-Project 8 - Ice Plant
BKB should ascertain whether the sub-borrower intends tocomplete construction of the plant, and if so, assist thesub-borrower in bringing the plant into operation; theeffective annual interest rate being charged to the sub-borrower should be reduced to the level stipulated in theProject Agreement between the Bank an'3 BKB. If the sub-borrower does not intend to complete the plant, another sub-borrower should be found or the imported equipment should besold by BKB.
)j Loan No. 82l-BAN(SF).
2. General
a. Assessment of the Basic Assumptions of the Projectby the Bank
Bank assessment of appropriate technologies, institutionalcapacities of executing agencies, and the appropriateness ofpublic versus private sector involvement should be pragmaticand based on all available information at Appraisal. Forsectors/subsectors in which technology and other basicparameters are changing at a rapid pace, such as theaquaculture subsector, project implementation arrangementsand loan covenants should be formulated with sufficientsimplicity and flexibility to allow adjustment to changes inthese assumptions during implementation. The Bank shouldbe informed of such changes and facilitate appropriateadjustments in on-going projects.
b. Assessment of the DMC Recurrent Budget and StaffRequirements Implications of Projects by the Bankat Appraisal
The implications of a project for DMC recurrent budget andstaffing requirements after project completion should becarefully assessed at Appraisal and project approval shouldbe contingent on, inter alia, satisfactory determinationthat these resources will be adequately available afterproj ect completion.
c. Utilization of a DFI as Procurement Agency
It is recommended that utilization of a DFI such as BKB asa procurement agency under a project be undertaken onlyafter a careful assessment at Appraisal that the DFI hasthe institutional capacity for this crucial task.
d. Approval of Project Proforma by the Government as aCondition of Loans Effectivity
It is recommended that Government approval of its ProjectProforma consistently be made a condition of Loaneffectivity.
e. Government Operation of Production Facilities Such as Fish!Shrimp Hatcheries and Farms
Necessary administrative control and accountabilityprocedures of the Government are not generally compatiblewith the operational requirements of production facilitiessuch as fish and shrimp hatcheries and farms. Governmentinvolvement in such facilities should be limited to pilotdemonstration and training. As soon as these objectives arereached, such hatcheries and farms should be leased or soldto the private sector.
Page
21
APPENDIXES
Appendix
1 Original, Revised and Completed Project Scope/ 22Operating Performance
2 Project Investment Costs 23
3 Project Implementation Schedule, 1977-1989 24
4 Yearwise Disbursement of the Loan 25
5 Status of Compliance with Loan Covenants 26
SP-6 One private net maldng plantwith annual production of 110tons of fish net.
SP.7 Private fish processing (saltingand drying) at 4 locatIons.
SP-8 Three private Ice plants eachwith 10 mt/day production and50 ml storage capacities.
98 months of foreign consultIngseMces.
22
Appendix 1
SUB-PROJECT
Original. Revised and Com pleted Project Scope/Operating Performance
COMPLETED SCOPE/ORIGINAL SCOPE FINAL MODIFIED SCOPE W OPERATING PERFORMANCE
SP-1 Five large DOF fish hatcherieswith annual production capacityof 750 mu. hatchlings.
SP-2 One DOF freshwater shrImphatchery producing 10.5 mu, fryyearly. 240 ha of freshwatershrimp ponds for demonstration,nursery and 108 private farmersin Khulna area producing 224shrlmp/$1 .8 mu FX yearly.
SP-3 100 ha of flshpens for up 10100private farmers In 3 major canalsproducing 1.200 t yearly.
SP-4 400ha(l600unitsot2soosqmeach) of fish cages for up to1600 prIvate farmers in KaplalLake producIng 4.800 1carp/tllapia yearly. 1 DOF carphatchery.
SP-5 Bracldshwater shrimp! mulletculture on 800 ha site for 120private farmers end DOFdemonstration farm, near Cox'sBazar producIng 1,080 I mulletand 540 I shrimp/$4.3 mll. FXyearly. 5-ton/day Ice plant
Five medium-size fish hatcheries pIus 40small hatcheries and 5 nurserIes; theadditional facIlities to be built al existingDOF Fish Seed Multiplication Centers.Production target unchanged.
Shrimp hatchery capable of producingboth freshwaterand bracklshwatershrtmpnear Cox's Bazar 240 ha ci pondsdeleted.
10 ha In one area.
32 ha (1600 unIts of 200 sq m each) andhatchery.
16 long perimeter dike around site added;Ice plaid deleted.
8 medIum and 40 small halcherles and Snurseries largely completed. 1988production only 50 mu. hatchlings in 17units and none In 36 units due to watersupply, operating funds, and otherproblems.
1-tatchery seawater Intake system finishedJune 1989 but damaged July 1989. Nofull operation due to this and otherproblems. Site Inappropriate.
One pen (1 BKB subloan) of 1 ha builtand reported In operation; loan In arrears.Inappropriate technology.
58 cages built under 25 subloans, all inarrears. Only 14 In operating Condition byJuly 1989 due to storm damage; fishgrowth slow. Inappropriate technology.Hatchery not operating due to problemsresulting from poor site selection.
Perimeter dike completed but no internalcanals built; only 48KB subloans due tocollateral problems. Many private shrimpfarms operatIng using traditional low-prOdUctMty systems. Mullet culturetechnically Inappropriate. Demonstrationfarm completed but Inactive due to lowbudget, poor maIntenance.
No modification. Completed and producing at targetedoutput levels, but suffering substantiallosses. Loan in arrears but 8KBconsidering additional financing.
Deleted Deleted. Inappropriate technology.
No modIfIcation. One plant partially completed but notoperatIng due to procurement ofIncomplete equipment package. Loan Inarrears but BKB considering additionalfinancing. Two plants cancelled.
168 man-months of foreign consulting 185 man-months of foreign consultingservices and 98 man-months of local services and 331 man-months localconsulting seMces. consulting services rendered.
w Modifications in Project scope summarized above were approved on 19 May 1983 (maJor revisIon), 17 October 1983, 7 January 1986(major revision). 28 October 1986 and 30 June 1987.
(Reference in text: Page 1, para. 4)
Category
CDH SP1 Fish Hatcheries & Fish Stocking
In Ioi.nded Inland WatersCD
SP-2 Fresh Water Shrl Hatchery& Its Rearing In Flshponds
SP-3 Flshpens In Inland WatersCD
rtSP-4 Fish Cages in Lake Kaptal
ci)
SP-5 SniaLlhotder Fishponds& Shriirp Estate
SP-6 Fishing Net Making PLant
cii
SP-7 Fish Processing Facilities
SP-8 Ice PLants & StorageFacilities
Consulting Services
Project Management Office
TOTAL
Project Investment Costs
Actual Costs
Original Estimated Project Cost. Revised Estlm.t.d Costs (Reforsutated) Bank Financed GOB Financed___________________________________ ___________________________________ ______________________ __________ __________ TotaL
DOF BKB ActuaLForeign Cost Local Cost Total Cost Foreign Cost Local Cost Total Cost Foreign Cost Local Cost Local Cost Local Cost Costs
CUSS Ii) (USS H) CUSS H) CUSS H) CUSS H) CUSS H) CUSS H) CUSS H) CUSS N) CUSS H) CUSS H)
1.658 4.990 6.448 1.846 4.707 6.553 1.455 3.733 2.492 0.000 7.680
1.060 4.314 5.374 0.078 1.182 1.260 0.251 0.658 0.461 0.000 1.370
0.333 0.395 0.728 0.035 0.067 0.102 0.186 0.000 0.044 0.000 0.230
LI
7.623 5.118 12.741 0.225 1.500 1.725 0.222 0.676 0.241 0.241 1.380
1.430 4.783 6.215 0.215 4.367 4.582 0.172 1.613 0.665 0.000 2.450
1.479 1.236 2.715 1.519 1.207 2.726 0.745 0.000 0.000 0.000 0.745
0.369 0.442 0.811 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
1.123 0.745 1.868 0.083 0.334 0.417 0.069 0.000 0.000 0.000 0.069
1.125 0.126 1.251 1.799 0.436 2.235 1.404 0.216 0.000 0.000 1.620
'•O0.000 0.000 0.000 0.000 0.400 0.400 0.000 0.063 0.387 0.000 0.450
I-"
16.000 22.151 38.151 5.800 14.200 20.000 4.504 6.959 4.290 0.241 15.994
I IIIX000L KoXoXX) LXX0LXXXXX5001) XXX LXOAXXXXXXXXXXVXOKOVOXJX (Xl
0XXXX0X00000XXX
xox0000000XX0000
I x.oxxxoox
XL LX) (XX Xc000XXXXX XI V 101 IX)
000000000X0000000
LXX XL 101 XX) CX) 0. Xi LX) CXX 00000000X) LX) 0. IX) LX)
I 0. IX) (01 cx, LX 100flXXXXflXVXXXVX000000000000L LX) (XXXI___________ (XL CX LXX XXXXXJ IX.) LX) XL
X0X0X0XXXXXX
XI XL LXX 10 XL IX) (Xl LX) XL LX) XX) (XI (I. LXI LX) (XI WOol IX)
0XXXe.xoXXXXXXXXxxXxoo XXXX0000
H H
I I I I
,_._t_tt_.,t_t_,_, -
M
oXXXoXXoXXXoI I00000X0 I I I I I
¶1 MachInery mOteL led but not yet coeroissioeled.Legerd. Appr.is.l Project cccxx0000xoo Actual Inpjen,entaticc
CD
H-
(Ri
Fro1ec Isn1ementati pn Schedule. 1977-1989
1977
1978 I 1979 I 1980
1981 I 1982 I ¶983 I 1984 I ¶985 I ¶986 I 198? I 1988 I 1989
Stifi -PROJECT
I. Corp Ilotcheries• Proturmltnt- Coemtructiofl
II. Freohmeter Shrli Culture• Procurement- Cucmtruction
III. Fish P.ns- Procurement
CD - Conotruoton- Slosn Euteted (1)
0Ct) IV. Fish Copes
• Procurement- Cmmtruction- Siloano EXteeed (25)
V. Ir.ckiehwster Shriep CultureCD - procurement
- Construction- SLIoang toterojed (25)
VI. let F.ctory- Procur,ent- Construction- Stlo.n Eotecded (1)
CDVII. Fish Processing Plants
- Procurement- - Construction
VIII. Ice Flonts- Procurement- Construction- tthloons Eoteeded 11>
IX. Consulting Services- Setect,Ofl
• Service
J_ I
___ H 1'
I I I
_ I__rr TT'-"jT"1
00500000flXoXXXxx 00000005000 Ru VI (0XX000
I
YearwiseDisbursenent of the Loan
I .5 A I
Cit•1A7•7
1900 1911 1952 5903 1911 lOIS 1954 1957 lOIS TOT AL
90 LC 90 LC 95 60 95 60 Fl tO F! LC CO 10 15 tO CO IC CI 60 IA LC(ASS) (ASS) (USA) (ASS) CUSS) (USA) (09$) (61$) (1)10) (010) CUSS) CUSS) (ASS) (ASS) (ASS) (U(S) CUSS) CUSS) CU(S) CUSS) (US))
010 AUSF0)5At 1 0.00 0.00 0.00 0.50 0.11 0.1$ 93,090.79 0.00 1,0)1.550.05 0.00 53,633.14 0.00 42,304.66 0.00 08,115.40 0.00 125,610.04 0.00 1,454,906.6) 0.00 1.654,906.6)i,sNA.Och.nlAI & (ISO Stocking
109000x0.d InlAid 6.5.1, (70)
Ct) CII SAS'Pnj0Ot 1 (100.) 01.11) 0.05 0.00 0.00 0.50 0.11 0.11 0.00091,043.47 0.00 030,790.69 0.00 239,961.59 0.00 590,767.02 0.00 390,070.42 0.05 I,390,).lS.0I 0.00 3.73)117.27 3,733.1)7.27I-t
OIC FnsJ.ni 9.n95..n1 OffIc. 5.05 0.00 0.00 0.50 0,50 5.0 0.05 0.50 5.00 5.50 0.00 0.00 0.00 0.00 0.50 3,621.15 0.00 59,7)4.54 0.00 52,3)5.32 63,335.32
02$ 5.O'Prnj000 2 0.00 0.00 0.00 0.00 0.0 0.0 0.00 0.00 03,990.74 0.00 00,103.36 0.00 37,307.04 0.00 59,515.43 0.09 109,500,02 0.00 251,416.41 0.00 251.616,41
o (no.54.1., 50n190 5.5011.73 & -
Ct) I.r.,,,g in F,100w (90)
F" 025 Sn . Froj.Ui 2 (LAO.) COIn!) 0.00 0.00 0.00 0.50 0,11 0.0 0.00 0.00 0.00 700.78 0.00 1)0.103.15 0.00 260,547.34 0.00 95.560,76 0.00 174,540.10 0.00 657,024.2) 657,024.21
03 &SO'PnAj.At 3 0.00 0.50 0.00 0.00 0.50 0.05 5.00 0.00 3,090.06 0.00 0.00 0.00 94,157.0) 0.00 70.0)2.50 0.00 9.69444 0.00 156,402.03 0.00 106,402.03FloSpris in InlAnd AltArS CIX)
040 044'Pr05ioI 4 0.00 0.00 0.05 0.00 0.0 0.0 0.00 0.00 0,300.10 0.05 115,620.32 0.00 27,020.42 0.00 30,603.37 0.00 0.00 0.00 222,367.21 0.00 222,367.21flSh C.I.A In tAke 0.95.) (Fl)
Ul045 Sob. Frn,.on 0 (LocAl CAStS) 0.00 0.00 0.00 0,00 0.05 0.05 0.90 22,379.36 900 39,036.10 0.00 55,006.21 0.00 430,292.34 0.00 13,941.06 0.00 110,510.51 0.00 670,793.44 675,793.44
C)) 005 5 0.00 0.00 .0.00 0.00 0.11 0.0 76,904.90 0.00 00,432.04 0.00 13,000.25 0.00 0.00 0.00 0.00 0.00 13,643.00 0.00 171,400.65 0.00 171,600.65S..)Ihnld.r P,St,00nd A ShrI
i.n.inq (51.5,5 (IX)
I-.C-OS 5.C-Frojoo1 S (LAS.) CostA) 0.00 0.00 0.00 0.11 0.50 0.0 0.09 '10,560.42 ' 0.00 03.2)1.00 0.00 54,390.67 0.00 31.5)7.33 0.00 1.305,355.91 0.00 125.394,03 0.00 1,612.016.07 1,610.156.07
06 S'PnAio.i 6 ' 0.00 0.00 0.00 0.50 0.11 0.0 0.00 0.00 0.00 0.50 0.00 0.00 632,260.9) 0.00 105.239,12 . 0.00 6.973,00 0.05 744.473.)) 0.00 744.473.5)1)50 001 N.nt,f.)iunlng Flint IFS)
0? 14b-Proj.ot 7 0.00 0.00 0.00 0.00 0.0 0.00 (.00 0.00 0.00 0.00 0.00 0.00 13,656.00 0.00 54,033.00 0.00 0.00 0.00 00,409.00 0.00 60,409.00Sn.)) ci 1)005 & Sinr.g. Fni)Ilin
licilIti it (PA)
000 050S4II.eiS (1!) 185,131.99 0.00 230,021.00 0.00 010,451,11 0,0 24,042,47 0,00 173,100.14 0.00 05,020.69 0.00 271,310.34 0.00 550,255.31 0.00 3,305.06 0.00 1,404,1)0.40 0.00 1,406,150.40
CII 000coll.ni, ((no.) CUllS) 0.00 0.00 0.00 0.55 0.10 0.0 0.00 4,660.6) 0.00 06,544.38 0.00 (30,625.10) 0.00 034502.09 0.00 21,120.32 0.00 0.00 0.00 216,273.26 216,273.76
CU tn.I 100.509 0.00 0.00 0.00 0.11 0.05 0.0 0.08 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.90 0.00 0.00 0.00 0.00
1 0 1 A L 50,131.99 0,00 2)0,971.00 0,00 070,401.1$ 0.05 190,509,44 930,930.90 1,327,326,44 701,014.10 330,697.76 400,6)6.51 1,110,016.20 1,055,746,52 044,004.13 1,S09,693.74 069,091.06 1,549,937.00 4,503,071.30 6,559,100.37 1l,462,001.75
(C)
0
I-'.
26
Appendix 5Page 1
Status of Compliance With Loan Covenants
No
Loan Covenant Reference Status of Compliance
The Borrower shall cause DOF to:(i) maintain or cause to bemaintained separate accounts forthe Project; (ii) have suchaccounts and related financialstatements audited annually, inaccordance with sound auditingprinciples, by auditorsacceptable to the Bank; (iii)furnish to the Bank copies ofthe unaudited DepartmentalAccounts of DOF not later than6 months after the close of therelated fiscal year; (iv)furnish to the Bank, not laterthan 12 months after the end ofeach related fiscal year,certified copies of such auditedfinancial statements and thereport of the auditors relatingthereto, all in the Englishlanguage.
2 The Borrower shall furnish orcause to be furnished to theBank by DOF and BKB, quarterlyreports on the carrying out ofthe Project and on the operationand management of the Projectfacilities in so far as relevantto DOF and BKB.
Procurement:
Section 4.06 Complied with.L. A.
Section 4.07 Complied with by BKB.L. A. Partially complied by DOF
(reports were not submittedregularly).
3 BKB shall procure all equipment Para. 2 Complied with until 1986.and materials for Sub-Projects Schedule 4 DOF, with the Bank's1, 2, 3, 4 and 5 on behalf of L. A. approval, proceeded withDOF. the procurement of
remaining items in 1986.
4 The tender documents for ice Para. 8 Complied with.making and storage equipment and Schedule 4for the fish net making L. A.
(Reference in text: page 13, para. 54)
Para. 1 (b)
Partly complied with.Schedule 6L. A.
Para. 1 (c)
Partly complied with.Schedule 6L. A.
27
Appendix 5Page 2
machinery shall specify that thesuppliers will provide thenecessary technicians for theinstallation of the equipmentand machinery.
General ImplementationArrangements:
5 DOF shall be responsible for theimplementation of Sub-Projects1 and 2. Fish and shrimp seedsshall subsequently bedistributed effectively and ontime for stocking in variousimpounded freshwaters, existingshrimp farms and shrimp pondestates under Sub-Project 5.
Para. 1 (a) Under Sub-Project 1,Schedule 6 fry/fingerlings are beingL. A. supplied for stocking in
open waters.
6 DOF shall also implement Sub-Projects 3, 4 and 5 togetherwith BKB. The role of DOF shallbe to select appropriate sites;and to design and constructhatcheries, nurseries anddemonstration ponds. DOF shallprepare the master plan, designand layout of the entirebrackishwater shrimp farmingsite at Chakaria Sundarban.
7 DOF shall be technical advisorto BKB regarding BKB's sub-loanoperations under the Project.With this in view, DOF shallassist and give technical adviceto BKB in the preparation oftender documents,specifications, designs, andlayout of fishponds under Sub-Projects 3, 4 and 5.
8 DOF shall assist BKB in the Para. 1 (d)selection of suitable sub- Schedule 6borrowers for Sub-Projects 3, 4 L. A.and 5.
9 The role of BK.B with respect to Para. 1 (e)Sub-Projects 3, 4 and 5 shall be Schedule 6to identify and select sub- L. A.borrowers in consultation with
Partly complied with.
Partly complied with.
28
Appendix 5Page 3
DOF; to procure constructionequipment on behalf of DOF; andto engage contractors for theconstruction of commercial fishand shrimp ponds. BKB shall beresponsible for loanadministration of the sub-loans.
10 The construction of commercial Para. 1 (f) Partly complied with.fish pens and fish cages will be Schedule 6undertaken by individual sub- L. A.borrowers under the technicalsupervision of DOF.
11 BKB shall be responsible for the Para. 1 (g)implementation of Sub-Projects Schedule 66 and 7. BKB's responsibility L. A.includes the selection ofappropriate sites and sub-borrowers; and loanadministration of sub-loans.
Project Management Office:
Complied with.
12 To implement the Project, DOFshall establish a ProjectManagement Office in Dhaka whichshall be headed by a ProjectDirector with the rank of aPrincipal Scientific Officer ofthe Directorate. The ProjectDirector shall be responsible tothe Director of Fisheries. TheProject Management Office shallbe suitably staffed, to thesatisfaction of the Bank, on afull-time basis with competenttechnical and administrativepersonnel.
Proj ect Coordination:
13 Coordination of the activitiesof DOF and BKB in theimplementation of the Projectshall be achieved at Dhakathrough a Coordinating Committeewhich shall be established bythe Borrower. The Committeeshall include seniorrepresentatives from thefollowing agencies and
Para. 2 The Project ManagementSchedule 6 Office was established inL. A. June 1979. The PMO was
supervised by a Proj ect-Director-In-Charge untilthe appointment of a full-fledged Project Directorin February 1982. Alltechnical andadministrative positionswere filled after somedelay.
Para. 3 The Project CoordinatingSchedule 6 Committee was establishedL. A. in January 1979.
Para. 4 (b)
Partly complied with.Schedule 6L. A.
Para. 5 (a)
Complied with.Schedule 6L. A.
Para. 5 (b)
Partly complied with.Schedule 6L. A.
15 The necessary foreign exchange Para. 4 (c)shall be made available by the Schedule 6Borrower to DOF and BKB as the L. A.case may be.
Training of DOF Personnel:
29
Appendix 5Page 4
authorities: (i) Forest,Fisheries & Livestock Division,Ministry of Agriculture(Secretary to act as Chairman);(ii)External Resource Division;(iii) the Planning Commission;(iv) Land Administration andLand Reforms Division; (v) DOF;and (vi) BKB.
Replacement of Eiuipment.Fishing Gears. Materialsand Spare Parts:
14 With respect to Sub-Projects 1and 2 and those parts of Sub-Proj ects 3 to 5 which fallwithin the responsibility ofDOF, DOF shall be responsiblefor the replacement of Projectequipment, fishing gears,materials and spare parts as andwhen necessary.
16 DOF shall set up a refreshercourse in induced breedingtechniques, fish stockingtechniques and methodology tothe existing personnel of itsfisheries extension services.DOF will also recruit a numberof technically qualifiedfisheries personnel and trainthem in fisheries developmentand especially fish stockingprogramming.
17 With the assistance of theconsultants to be provided underthe Project, DOF shallstrengthen its extensionservices. DOF shall prepare orcause to be prepared a manual ofoperation for hatcheries,nurseries, stocking and rearing
Partly complied with.
Partly complied with.
Complied, though delayed.
Not yet done. Due to watersupply and other problems,hatchery is not operating.
30
ADpendix 5Page 5
of fish and shrimp before endDecember 1978. DOF shall givethe Bank an opportunity tocomment on the manual prior toimplementation.
Land Acquisition:
18 The Borrower assures that therewill be no difficulty in makingthe requisite area of landavailable for Sub-Project 1(Fish Hatcheries); Sub-Project3 (Fish Pens); Sub-Project 4(Fish Cages); and Sub-Project5 (Chakaria Sundarban). In somecases, acquisition of privatelyowned land may be necessary.Privately owned land necessaryfor the Project shall beacquired within six months fromthe effective date of the Loanand made available to DOF (by 14September 1978).
19 The Borrower shall, within sixmonths from effective date ofthe Loan (by 14 September 1978),make available to DOF underlease arrangements such bodiesof water as shall be requiredfor Sub-Project 3 (Fish Pens)and Sub-Project 4 (Fish Cages)for a term of at least 10 years,subject to renewals asnecessary.
Development of Kaptai Lake:
20 The development of fisheries inKaptai Lake through provision offingerlings, their stocking inthe lake and the construction offish cages shall be vestedwithin the D0Fs technical andadministrative responsibilities.
21 Capital and Financial Resources:
Para. 6 (b)Schedule 6L. A.
Para. 7Schedule 6L. A.
Para. 6 (a)Schedule 6L. A.
It is necessary to further Para. 8 Complied with.strengthen BKB's capital and to Schedule 6protect its capital and loanable L. A.
Section 2.01
Complied with.(a), P. A.
Section 2.01
Complied with.(b), P. A.
31
Appendix 5Page 6
resources from erosion due toinflation. A review of thematter shall be undertakenyearly by the Borrower and BKBin consultation with the Bank,beginning with fiscal year 1978.Suitable measures as agreedamong the Borrower, BKB and theBank to strengthen BKB's capitaland other financial resourcesshall be adopted and implementedimmediately.
Foreign Exchange Risk:
22 The Borrower shall bear the Para. 9 Complied with.foreign exchange risk with Schedule 6respect to sub-loans made or to L. A.be made by BKB for Sub-Projects3 to 7 of the Project.
Covenants Under the ProjectAgreement with BKB:
Provisions Relating toSub-Loans:
23 With respect to Sub-Projects 6and 7: Whenever BKB proposes tomake a Sub-Loan to a Sub-Borrower for the estimatedforeign currency cost of adevelopment project, BKB shallsubmit to the Bank anapplication for approval of suchsub-loan. Such applicationshall be in a form satisfactoryto the Bank and shall contain adescription and appraisal of thesub-project, the terms andconditions of the proposed sub-loan and such other informationas the Bank shall reasonablyrequest.
24 Except as the Bank may otherwiseagree, no sub-loan shall be madeto a Sub-Borrower unlesssatisfactory arrangements havebeen made for such Sub-Borrowerto provide or be provided withlocal currency funds required to
Section 2.02
Not complied with.(a), P. A.
32
Appendix 5Page 7
carry out the developmentproject, and to acquire or beprovided with suitable land forthe development project.
25 With respect to Sub-Projects 3to 5: BKB shall, semi-annuallyand in respect of each new sub-loan, furnish to the Bank abrief notification, in a formsatisfactory to the Bank,describing the Sub-Borrower towhich BKB has made such sub-loan, the development projectand the sub-project to whicheach sub-loan relates, and theterms and conditions of eachsub - loan.
26 BKB shall submit to the Bank for Section 2.02 Complied with.comment the first five sub-loan (b), P. A.applications for each sub-project.
Section 2.03 Not complied with. Sub-(a), P. A. borrowers being charged 13
per cent interest and 3 percent service charge.
27 Sub-loans for Sub-Projects 6 and7 shall carry interest at therate of 13 per cent per annumwith a repayment period of 12years (including a grace periodof two years from the date onwhich the sub-loan is made.
28 Sub-loans for Sub-Projects 3 to5 shall carry interest at therate of 10.5 per cent per annumwith a repayment period of sixyears (including a grace periodof one year from the date onwhich the sub-loan is made).
Particular Covenants:
Section 2.03 Not complied with. Sub-(b), P. A. borrowers being charged
10.5 per cent interest and3 per cent service charge.
29 In carrying out the Project, BKB Section 3.03 Complied with.shall utilize the services of P. A.the Project Advisor and thefishing net making expert to beengaged by DOF.
30 BKB shall carry out the Project Section 3.04 Complied with.in accordance with plans, P. A.specifications and workschedules acceptable to the
33
Appendix 5Page 8
Bank. BKB shall furnish orcause to be furnished to theBank, promptly after theirpreparation, such plans,specifications, and workschedules and any materialmodifications subsequently madetherein, in such detail as theBank shall reasonably request.
31 BKB shall maintain recordsadequate to record the progressof the Project and eachdevelopment project (includingthe cost thereof) and toreflect, in accordance withconsistently maintained soundaccounting practices, thefinancial condition andoperations of BKB, and shallenable the Bank'srepresentatives to inspect anydevelopment project and toexamine any relevant records anddocuments.
Section 3.06P. A.
Complied with.
32 BKB shall furnish to the Bank Section 3.08 Complied with.quarterly reports on the (b), P. A.execution of the Project and onthe operation and management ofthe Project facilities.
33 BKB shall have its accounts and Section 3.09financial statements (balance P. A.sheet, statement of income andexpenses and related statements)audited annually, and shallpromptly after their preparationbut not later than four monthsafter the close of the fiscalyear to which they relate,furnish to the Bank (a)certified copies of such auditedfinancial statements and (b) thereport of the auditors relatingthereto, all in the Englishlanguage.
Complied with.
Para. 1 The Fishery CreditSchedule 1 Department in BKB was
established on 4 SeptemberP. A. 1979 headed by a Project
Manager. This departmentwas subsequently mergedwith Project CreditDepartment.
37 BKB's sub-loans for Sub-Projects Para. 2 (c)6 and 7 shall be made to sub- Schedule 1borrowers from the private P. A.sector or cooperatives.
Overdues Position:
Para. 8
Complied with.Schedule 1P. A.
34
Appendix 5Page 9
Project Implementation:Financial Matters:
34 Fishery Credit Department: BKBshall establish a Fishery CreditDepartment to be headed by aProject Manager. The ProjectManager shall have, at least,the rank of a Deputy GeneralManager. The Fishery CreditDepartment shall be suitablystaffed, to the satisfaction ofthe Bank, with qualified andcompetent personnel.
Sub-Borrower Selection Criteria:
35 BKB shall, in consultation with Para. 2 (a) Delayed compliance.DOF and the Bank develop Schedule 1 Criteria for selection ofcriteria for selection of sub- P. A. sub-borrowerswassubmjttedborrowers as soon as practicable to the Bank for approval inbut not later than 30 June 1978. May 1981.
36 BKB's sub-loans for Sub-Projects Para. 2 (b) Complied with.3, 4 and 5 shall be made to Schedule 1individual fishermen, farmers P. A.and/or cooperatives in therespective areas where the Sub-Projects will be implemented.
Complied with.
38 In view of the heavy burden ofloans in arrears, BKB shallfurther strengthen its debtcollection procedures incooperation with the Borrower.BKB shall furnish the Bank withinformation on the recovery ofoverdue debts, every year on anannual basis for the next fiveyears commencing with fiscalyear 1978.
