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ASIAN DEVELOPMENT BANK PCR: BAN 16090
PROJECT COMPLETION REPORT
ON THE
SECOND AQUACULTURE DEVELOPMENT PROJECT(Loan No. 821 -BAN[SF])
IN THE
PEOPLE'S REPUBLIC OF BANGLADESH
July 1997
CURRENCY EQUIVALENTS
Currency Unit - Taka (Tk)
At Appraisal At Project Completion
Tkl.00 = $00330 $0.0237$ 1.00 = Tk30.30 Tk42.15
BBBKBDOFEIAPBPpUNDP
ABBREVIATIONS
- Bangladesh Bank- Bangladesh Krishi Bank- Department of Fisheries- Environmental Impact Assessment- Participating Banks- Project Proforma- United Nations Development Programme
GLOSSARY
Bagda
Local name for marine shrimp - Penaeus monodon
Beel
Low-lying depression in a floodplain that may or may not dry up during the dry season
Fingerlings Juvenile fish larger than 2.5 cm
Fry
Juvenile fish larger than hatchlings but smaller than fingerlings
Galda
Local name for freshwater shrimp - Macrobrachium rosenberg,,
Haor
Large low-lying depression in a floodplain that may be reduced during the dry season to aseries of beels
Hatchlings Newly hatched fish
Polder
Area of low-lying land reclaimed from the sea through building of a perimeter dike
Spawn
Local term for hatchlings (used as a noun)
NOTES
The fiscal year (FY) of the Government ends on 30 June. FY before a calendar yeardenotes the year in which the fiscal year ends, e.g. FY 1995 ends on 30 June 1995.
(ii) In this Report, h1$hm refers to US dollars.
[0]
CONTENTS
Page
BASIC DATA
MAP vu'
PROJECT DESCRIPTION
1
EVALUATION OF IMPLEMENTATiON
2
A. Project Components 2B. Implementation Arrangements 4C. Project Costs 4D. Project Schedule 5E. Engagement of Consultants and Procurement of 6
Goods and ServicesF. Performance of Consultants, Contractors, and Suppliers 7G. Conditions and Covenants 7H. Disbursements 8I. Environmental Impact
8
J. Performance of the Borrower and the Executing Agencies 9K. Performance of the Bank 10
Ill. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS
10
A. Financial Performance 10B. Economic Performance 11C. Attainment of Benefits 12
IV. CONCLUSIONS AND RECOMMENDATIONS
13
A. Conclusions 13B. Recommendations 14
APPENDIXES
16
A. Loan Identification
1. Country
2. Loan Number
3. Project Title
4. Borrower
5. Executing Agencies
6. Amount of Loan
7. PCR Number
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
2 Jan 19888 Mar 19882
30 Jun 199231 Dec 19963
1 percent per annum4010
tI
BASIC DATA
Bangladesh
821 -BAN(SF)
Second Aquaculture Development Project
People's Republic of Bangladesh
(i) Department of Fisheries (DOF) under theMininstry of Fisheries and Livestock for thenoncredit components, and (ii) Bangladesh Bank(BB) through three participating banks - AgraniBank, Bangladesh Krishi Bank, and Rupali Bank forthe credit component
SDR38,308,0001
426
18 Jul 19864Aug 1986
4 Nov 19866 Nov 1986
16 Dec 1986
20 May 19873 Nov 1987 (amended)
5
6
7
8.
Date of Loan Effectiveness- In Loan Agreement- Actual- Number of Extensions
Closing Date- In Loan Agreement- Actual- Number of Extensions
Terms of Loan- Service Charge- Maturity (no. of years)- Grace Period (no. of years)
Disbursements
a. Dates:
Initial Disbursement
14 Jan 1991
Final Disbursement Time Interval
15 Apr 1997 6 yrs, 3 months
1 This amount was equivalent to $45,455,000 at negotiations and equivalent to $56,078,000 at the closng of theloan.
111
b. Amounts ($'OOO)
Last Net NetOriginal Amended1 Revised Amount Amount Amount Undisbursed
Ca qoryAlloflon Allocation Allocation Cancelled Available Disbursed
A. DOF Components
1. CMI Works 1279
1,279 1,390
1,390
1,104
2. Equipment Materials, Supplies, and Vehicles 1.475
1,475 2,792
2,792
1,833
3. Consulting Services 0
1,620 2,170
2,170
2,097
4. Intemahonal Training and Feilowshrps 600
600 1,043
1,043
911
5. Operating Costs 1.633
1,633 858
856
633
6. Local Expenditures
A. Chill Works 3,169
3,169 6,723
5.723
5,227
B. Equipment. Materials, Supplies, & Vehides 601
601 904
904
278
C. Consulting Servces 0
204 445
445
347
0. Operating Costs 4,092
4,092 4350
4,350
3,8894,994
7. Unallocated 8,266
9,092 1231
1,2314,994
Subtotal (A) 21,315
23,965 21,906
21,906
16,319
B. BB Component
8. International Fellowships 72
72 67
57
65
9. Credit 6,990
6,990 1,984
5,000 1,984
3.508
10. Local Expenditures
A. Credit 12,699
12,899 12,397
8,006 12,397
10,082
B. Training and Workshops 16
16 59
59
34
Subtotal (B) 19,977
19,977 14,507
13,006 14,507
13,689
C.Other Expenditures
11. Serve &other Charges during Consb'jction 1339
1,339 1,643
1,643
505
12. Prior Technical Assistance Costs 174
174 203
203
154
Subtotal (C) 1,513
1,513 1,846
1846
659
Total 42,805
45,455 38,259
18,000 38,259
30,667
9. Local Costs (Financed by the Bank)
- Amount ($ million) 19.857
- Percentage of Local Costs 76
- Percentage of Total Costs 52
After United Nations Development Programme financing for consultants did not materialize
2. Financing Plan
Appraisal Estimate
Foreign Local Total
C. Project Data ($ million)
1. Project Cost
Appraisal Estimate
Actual
Foreign Exchange Cost
18.244
12.174
Local Cost
41 .756
26.113
Total Cost
60.000
38. 287
Borrower-financed 0.000
Bank-financed 15.919
Others:
- United Nations Development 2.325Programme
- Bangladesh Bank 0.000
- Participating Banks 0.000
- Subborrowers 0.000
Total 18.244
4.777 4.777
26.886 42.805
2.591 2.591
1.600 1.600
5.577 5.577
41.756 60.000
Actual
Foreign Local Total
0.000 2.335 2.335
10.810 19.857 30.667
0.107 0.308 0.415
0.283 0.812 1.095
0.974 2.801 3.775
12.174 26.113 38.287
0.325 2.650 0.000 0.000 0.000
3,043 4,142620 800
8 61
1 69
181 754
411 1,192
204 1,943
0 600
224 425
277 1,1012,308 2,872
1,290 1,385
3,660 3,660
6,823 9,715
19,050 28,719
619485
155582611485
2,097
911
118177189149
0
0
6,578
3,0942,515
3,7133,000
336
220249
347
0
158618831734
2444
911
6611,1851,275
835
1,656
0
12,076
7791,3621,464
984
1,656
0
18,654
1,991 3,330
505 0
505
0 174
154 0
154
1,991 3,504
659 0
659
41,756 60,000
12,174 26,113
38,287
V
3. Cost Breakdown by Project Component ($ '000)
Particulars Appraisal Estimate Actual Expenditures
Foreign Local Total Foreign Local Total
A. DOF Components
1. Civil Worksa. Flood Plain Fisheries Enhancement 1,099b. institutional Development 180
2. Equipment, Materials, Supplies, and Vehiclesa. Shrimp Culture DevelOpment 53b. Carp Culture Development 68c. Flood Plain Fisheries Enhancement 573d. Institutional Development 781
3. Consulting Services 1,739
4. International Training and Fellowships 600
5. Operating Costsa. Shrimp Culture Development 201b. Carp Culture Development 824c. Flood Plain Fisheries Enhancement 564d. Institutional Development 95
6. Duty and Land Acqusition 0
7. Unallocated 2,892
Subtotal (A) 9,669
B. BB Component
8. FelLowships and Training 72 16 88 65 34 99
9. Credit 6990 20,699 27,689 4,872 14,003 18,875
Subtotal (B) 7,062 20,715 27,777 4,937 14,037 18,974
C. Other Expenditures
10. Service and other Charges during 1,339Construction
11. Prior Technical Assistance Costs 174
Subtotal (C) 1,513
Total 18,244
vi
4. Project Schedule
Appraisal Estimate Actual
Date of Contract with Consultants
Civil Works Contract
- Date of Award- Completion of Work
Materials, Equipment, and Vehicles
- First Procurement- Last Procurement
Fielding of Consultants
First Fielding- Termination of Contract
Jul 1988
Aug 1988Nov 1991
Jun 1988Jun 1992
Jul 1988Dec 1991
Dec 1990
Feb 1993Dec 1996
Jun 1988Jun 1996
Feb 1991Jun 1996
D. Data on Bank Missions
No. ofType of Mission Date No. of Person- Specialization
Persons days of Members
Fact-finding 4-18 Mar 1986 3 42 Senior Financial AnalystSenior Country OfficerProgram Officer
Appraisal 18 Juf-4 Aug 1986 4 60 Senior Financial AnalystSenior Country OfficerAgriculture Credit SpecialistSenior Counsel
Follow-up Appraisal 25 Aug-10 Sep 1987 2 32 Fisheries SpecialistSenior Financial Analyst
Contact 14-19 Jan 1987 1 6 Country Manager
Review (1) 29 Jun-21 Jul 1988 2 22 Senior Project Economist
Review (2) 29 Sep-I Oct 1990 2 4 Senior Project EconomistProject Economist
Special ProjectAdmiristration(SPA)1
Review (3)
Review (4)1
Review (5)
Review (6)
Review (7)
Review (8)
Review (9)
SPA1 (2)
Review (10)
Review (11)
Review (12)
8-15 May 1992
26-27 Aug 1992
2-4 Sep 1992
15-18 Sep 1992
16 Jun-4 Jul 1993
3-14 Jul1993
1 Feb 1994
2 May-29 Jun 1994
9-17 Nov 1994
26 Nov-5 Dec 1994
14-16 Feb 1995
21 Apr-6 Jun 1996
1 7
2
1
2
1
2
1
2
1
2
2
2
2
2
6
3
14
1
12
8
4
4
10
Project Completion 26 Nov-5 Dec 1996
3
14Review
VII
Senior Project Engineer
Senior Project SpecialistProject Officer
Senior Project Specialist
Resident Representative, BRMProject Officer
Senior Project Specialist
Senior Project SpecialistSenior Project Specialist
Resident Representative, BRM
Senior Project SpecialistProject Assistant
Senior Financial Analyst
Senior Project SpecialistProject Assistant
Senior Project SpecialistProject Assistant
Senior Project ImplementationOfficerSenior Project Officer
Senior Project ImpLementationOfficerSenior Project OfficerProject Assistant
Mission combined with review of other project(s)
VIII
89 000E 91°45E
!PANèHAGARH-, BANGLADESH
SECOND AQUACULTURE
fl DEVELOPMENT PROJECT)ThAKURGAO
rIILFAMAPI,, (as completed)
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PjectAreafor ProjArea1oroodpiain COX'SBAZAR . P
•\.,.Shrimp Culture Development Fisheries Enhancement
Project Area for National CapitalCarp CuLture Development District Boundary .Additional Area for VShrimp Culture Development ._._._._ Internauonal Boundary
Additional Area for (Boundaries not necessarily authoritative)CarpCulture Development 3 V . 3
89°ooE 91045E
97-1366 HR
I. PROJECT DESCRIPTION
1. The abundant water resources and warm climate of Bangladesh combined withits long tradition of catching and consuming fish make the country particularly suitable foraquaculture and inland fisheries development. Furthermore, widespread rural poverty, poornutrition, and the persistent shortage of foreign exchange suggest that investment inrural-based, labor-intensive aquaculture and inland capture fisheries should be given a highpriority. This was the general rationale for involvement of the Bank and the Government inaquaculture and inland fisheries development at appraisal in 1986, as it was for earlier Bankand Government investments in this sector. That rationale remains well founded today.
2. The objectives of the Project as set out in the Bank's appraisal report were to
(i) promote the continued growth of shnmp production from pond culture togenerate added foreign exchange earnings;
(ii) increase the availability of fish for local consumption;
(iii) expand employment opportunities and increase incomes in rural areas;and
(iv) make optimum use of the natural resources of the country.
3. To meet these objectives, the Project set out to address two major constraints tomore rapid aquaculture development: slow transfer of technology and inadequate credit. Also,the Project included a pilot scheme to enhance the productivity of the inland capture fishery.
4. The Project objectives were consistent with the Government's overalldevelopment plan at the time and remain the principal objectives of fisheries development inthe country today.
5. The original scope of the Project included four components:
(i) Shrimp Culture Development. Extension services to shrimp farmers, frycollectors, and fry handlers in four coastal districts were to bestrengthened, and shrimp farmers and related industries were to begiven access to credit.
(ii) Carp Culture Development. Extension services to fish farmers in 21 highfish culture-potential districts were to be strengthened, and fish farmersand related industries were to be given access to credit.
(iii) Culture-Based Floodplain Fisheries Enhancement. Selected beels (low-lying depressions in the floodplain) in two floodplain areas were to be
2
developed as dry-season nurseries for carp hatchlings stocked by theProject. These carp fingerlings were then to be released into thefloodplain once the floods inundated the beels.
(iv) General Implementation and Institutional Support. Field staff of theDepartment of Fisheries (DOF); farmers; fry handlers; and creditinstitution staff were to be provided with training; new offices, DOF fieldstaff were to be provided with transportation and other equipment; andconsulting services were to be made available.
EVALUATION OF IMPLEMENTATION
A. Project Components
6. The chronology of the main events in Project implementation is given inAppendix 1. With the exception of the credit portions of the Project, and some modestexpansion of the areas for shrimp culture and fish culture extension, the Project scope waslargely implemented as appraised (see Appendix 2). Principal modifications were made in thefollowing areas.
Extension
7. Central to both the shrimp and carp extension components of the Project wasthe selection and operation of demonstration farms using private farmers' ponds. The appraisaltarget was 148 shrimp and 1,113 carp demonstration ponds. Both of these targets wereexceeded, with demonstrations successfully completed on 185 private shrimp farms and 1,352private carp farms.
8. Shrimp demonstration farm yields (for marine shrimp ponds) were targeted toreach 250 kilograms(kg)/hectare(ha) at appraisal. Actual average yields on the 115 marineshrimp demonstration farms was 258 kg/ha, and fresh water shrimp demonstration farms (70)had average yields of more than 500kg/ha, as well as over 600 kg/ha of carp in the sameponds. No targets were set for freshwater shrimp farms at appraisal as such farms were notexpected to be a significant part of the Project.
9. The 1,352 carp demonstration farms were expected to increase their yieldsfrom about 900 kg/ha to 2,100 kg/ha under the Project. Actual average production on privatedemonstration farms averaged over 4,400 kg/ha for the demonstrations conducted between1992 and 1996 on more than 1,000 farms, and the 1995/96 average yield was just over 5tons (t)/ha.
10. Two additional coastal districts were added to the four original shrimp cultureextension districts and one district was added to the 21 original fish culture extension districts.These expansions of the Project area had no significant impact on Project implementation andwere accommodated within the Project cost.
3
2. Floodplain Fisheries
11. At appraisal it was anticipated that a cumulative total of 4,300 ha of beels wouldbe stocked as nurseries under the Project, with a phased build up to 1,600 ha in the fifth andfinal year of the Project. The actual cumulative total area of beels developed and stocked asnurseries was just under 2,500 ha over six years. The level of stocking peaked at 905 ha in1996, substantially below the planned level of 1,600 ha in the final year of the Project. Failureto achieve the target stocking areas was caused by a number of problems. In some of theearlier years, inputs were not procured on time. In some years, early flooding prevented use ofsome beels. And in 1996, procurement and lease agreements were in place for stocking morethan 1,600 ha, but the national hartals (strikes) caused a major delay in the stocking ofhatchlings and ultimately only 905 ha could be stocked.
12. Given the pilot nature of this program, and the technical and administrativedifficulties in developing the capacity within DOF to carry out this endeavor, the appraisaltargets were probably unrealistic. The actual achievement in terms of numbei and area ofbeels stocked, and more importantly, impact on fish landings, was substantial. In the sensethat this pilot component actually worked and produced a significant increase in fish harvestsat a relatively low cost, this component can be deemed a success (see the followingdiscussion of the benefits).
3. Institutional Support
13. Training and mobilization of DOF field staff were key elements of the Project'sefforts to help DOE to become a more effective field extension organization. Ninety DOF staffwere provided with a total of 366 person-months of international training (see Appendix 3).Most of this training was carried out in Thailand, and the facilities and courses offered weregenerally appropriate for Bangladesh conditions. In addition, 6,619 person-days of localtraining for DOF field staff was provided under the Project, as were 3741 person-days oftraining for. private farmers, fry handlers, and others.
14. The provision under the Project of 209 motorcycles, 52 vehicles, and 8motorboats was key to providing mobility to DOE field staff. Also, the construction of 26 districtand 4 divisional DOE office/housing complexes was important to strengthening the presence ofDOE in the rural areas.
4. Credit
15. There were long delays in implementing the credit portions of the Project andultimately only about 68 percent of the Bank funds provided for credit were utilized, with thebalance being canceled. Difficulties of communication and coordination between DOF;Bangladesh Bank (BB); and the three participating banks (PBs) were part of the problem, as
4
was an agreed interest rate on subloans of 16 percent that was substantially higher than theprevailing rate of 13 percent on equivalent loans from the same PBs to this sector. The Bankand BB finally agreed to a reduction of the Project subloan interest rate to 13 percent in 1994,and after holding a number of Project-sponsored workshops for branch staff of the PBs,disbursement of credit proceeded rapidly. International training for 38 staff for a total of 9.5months was provided in Thailand under the credit component (see Appendix 3).
B. Implementation Arrangements
16. DOF was responsible for all Project components except those involving credit,and after the delay in recruitment of consultants until 1991 was resolved, DOF generallyimplemented its components satisfactorily.
17. Credit was provided to borrowers by Agrani Bank; Rupali Bank; and BangladeshKnshi Bank (BKB) under the direction of BB. As noted earlier, significant lending activity did notcommence until 1994. About 85 percent of the credit provided under the Project went to short-term loans to shrimp farmers, and 14 percent to short-term loans to fish farmers. Only about 1percent went to related industries, in part due to a failure of field offices of the PBs to realizethat Project subloans could be provided for related fishery industries (see Appendix 4).
C. Project Costs
18. The Project costs estimated at appraisal and actual at loan closing are shownbelow:
Table 1: Project Costs Estimate($ '000)
Component Appraisal Estimate Actual
Foreign Local Total Foreign Local Total
DOF Component
9,669
19,095 28,719
6,578
12,076 18,654
Credit Component
7,062
20715 27,777
4,937
14,037 18,974
Services Chrges + Prior
1,513 1,991 3,504
659 - 659Technical Assistance
Total 18,244 41,756 60,000 12,174 26,113 38,287
5
19. Of the total Project cost of $60 million estimated at appraisal, the Bank was tofinance $42.805 million (the equivalent of SDR36.074 million at the time of the original loanagreement in May 1987). The United Nations Development Programme (UNDP) was to provide$2.65 million for consulting services, with the balance financed by the Government, BB, threePBs, and subborrowers. Prior to loan effectiveness, the Bank agreed to increase the loanamount by $2.65 million to a total of SDR38.308 million when UNDP financing failed tomaterialize. The loan of $45455 million was for financing $27.21 1 million equivalent of localcosts and $18.244 of foreign costs. Due to the substantial appreciation of the SDR vis-a-visthe US dollar over the long period between the loan agreement and loan closing, the value ofthe original loan amount of SDR38.308 million was equivalent to $56078 million at loanclosing.
20. The actual cost of the Project was $38.287 million. Total loan disbursement was$30.667 million of which $19.857 million was for local costs and $10810 million for foreigncosts.
21. The actual cost of the DOF components (estimated at appraisal at $28.719million equivalent including $9.715 million in contingencies) totaled $18.654 million. The mainreason for the cost underrun is the reduction in scope of the floodplain component (seepara.11). Actual Bank financing for these components was $16.319 million. In 1995, when itwas apparent that the fully allocated amount for these components could not be utilized, anamount of $5.0 million was canceled from the DOF components.
22. For the credit component, the actual cost was $18.974 million compared to theappraisal estimate of $27.777 million. Due to the problems outlined in para. 15 , there were nodisbursements from this component during the initial years of implementation. Only in 1994did the first disbursement for credit take place. ln 1994 and again in 1995, portions of thecredit component of the loan were canceled totaling $13 million. Subsequently, in late 1995,the Bank agreed to a reallocation of $3 million in savings from the DOF component to thecredit component as disbursements under the credit component increased rapidly during thesecond half of 1995. Actual Bank financing for the credit component was $ 13.689 million.
D. Project Schedule
23. The loan was originally approved in December 1986, but the Loan Agreementwas not signed until May 1987. The amended Loan Agreement, required to provide for thereplacement of the UNDP funding of the cost of consultancy services, was signed and the loanbecame effective in March 1988. The Government's Project proforrna (PP) was riot approveduntil early 1991, and the revised PP including all Project components was only approved inearly 1993. Only in 1991 did implementation begin in earnest. The approval of the PP is nowalways a condition for Loan effectiveness, but this was not the case when this Project wasapproved.
6
24. There was also a long delay in finalizing the recruitment of consultants such thatconsultants were not fielded until January 1991. This delay resulted from a failure within theGovernment to agree on the ranking of the consulting firms. Only when the Bank threatenedto cancel the loan was the first-ranked firm finally invited for negotiations.
25. Land acquisition for district and divisional offices and for the Project's three carphatcheries also was a significant source of delayed implementation. Ultimately, all requiredland was acquired. The delays were more the result of Government bureaucratic issues andsite selection rather than social issues.
26. The original closing date for the loan was 31 December 1992, but because ofthe delays in start-up, this was subsequently extended three times until the final closing date of31 December1996.
27. Civil works under the Project (for DOF offices and carp hatcheries) did notcommence until 1994 due to problems encountered by DOF in obtaining a suitable localengineering firm. The Project's extension and floodplain stocking programs generallycommenced in 1991 after the arrival of the consultants, and from that date onwardimplementation of those programs generally proceeded in a timely manner.
28. Credit disbursements were also delayed as discussed in para. 22 (see alsoAppendix 4).
E. Engagement of Consultants and Procurement of Goods and Services
29. After a delay of nearly three years, (see para. 24), an international firm ofconsultants, in association with a domestic firm, was contracted to provide consulting servicesfor the Project. These services commenced in January 1991 and ultimately were completed inJune 1996. The Project utilized 167 person-months of domestic consultants (89 person-months more than anticipated at appraisal) and 194 person-months of foreign consultants (8person-months more than anticipated at appraisal). These extensions were justified by thedelays in implementation and the expansion of the Project area.
30. Design and construction supervision for the DOF buildings and hatcheriesprovided under the Project were initially contracted to a domestic firm in February 1992. Therewere repeated delays in this work due to a contract dispute, and DOE terminated its contractwith this firm in December 1993. Another domestic firm was engaged by DOF in February1994 to complete the engineering work.
31. Construction of the Project's DOF offices and three carp hatcheries was carriedout by domestic contractors.
7
32. Except for the Project vehicles, motorcycles, minor equipment items, andchemicals, most Project goods were procured locally using standard Government procedures.However, these procedures are cumbersome and often led to delays in delivery of supplies ontime to meet the strict seasonal requirements of the extension and floodplain stockingprogram.
F. Performance of Consultants, Contractors, and Suppliers
33. The work of the consultants, both domestic and international, was generallysatisfactory, though more emphasis should have been placed on improved shrimp fry handlingrather than on shrimp hatchery technology.
34. With the exception of the first local engineering firm, the performance of Projectengineers, suppliers, and contractors was generally satisfactory.
G. Conditions and Covenants
35. In general, there was satisfactory compliance with the loan covenants except forthe following (detailed analysis of compliance issues is presented in Appendix 5).
1. Administration of Water Bodies Under the Floodplain Fisheries Component
36. The Government agreed (Schedule 6, para. 5 of the Loan Agreement) that itwould transfer management and control of all selected nursery beels to DOF, and that DOFwould lease out such beels for periods of at least ten years. Control of these beels was nevertransferred from the Ministry of Lands to DOF, and leases continue to have terms of threeyears or less. This failure of compliance remains a major barrier to the sustainability of thefloodplain beel nursery stocking program.
37. Also, in para. 6 of Schedule 6 of the Loan Agreement, DOF was obligated towork out, within one year of the start of Project implementation, a cost-recovery system for thebeel nursery program. The failure of the government to transfer management and control ofthe beels to DOF prevented DOE from developing a cost-recovery plan, and under currentarrangements there is a likelihood that the beel nursery program will not be sustained.
2. Financial Conditions of Participating Banks
38. Schedule 6, para. 12 of the Loan Agreement required that the equity of each ofthe three PBs (BKB, Agrani Bank, and Rupali Bank), reach at least 3 percent of the totalassets by the, end of 1988 and that equity remain at least 3 percent of the assets thereafter.Further, in para. 15(a) of Schedule 6 of the Loan Agreement, the PBs are required to maintaina provision for bad debts for a minimum of 5 percent of their loan portfolios. These covenants,considered to be reasonable, were however not fully complied with.
8
39. BKB has suffered substantial losses for a number of years, and it generallyremained far from complying with either of these conditions. Its equity position has been negativein most recent years, and its reserve funds have been substantially less than 1 percent of itsoutstanding loans.
40. Agrani Bank's position has been somewhat better, but it has also failed to complywith the Loan Agreement. Equity as a percentage of assets has varied between 1.8 percent and3.2 percent over the past 5 years, and its reserves as a percentage of outstanding loans hasremained below 1 percent.
41. Rupali Bank substantially complied with the Loan Agreement for both equityparticipation and provision for bad debts. From 1991 to 1993, the ratio of equity to totalassets was 2.7 percent, 3 percent, and 5 percent respectively, against a requirement of 3 percentin the Loan Agreement. Bad debt provisions were 17 per cent, 23 percent, and 25 percentof the total loan portfolio in 1991, 1992, and 1993 respectively against the requirement of 5percent.
H. Disbursements
42. As shown in Appendix 6, there were substantial delays in disbursements under theProject. There were no disbursements for Project implementation until 1991 and nodisbursements for credit until 1994. The long delay in disbursement was a result of problemsoutlined in paras. 23 to 27.
I. Environmental Impact
43. The Project was not expected to have any significant adverse impact on theenvironment, though an environmental specialist was included on the consultant team to assistDOF in developing systems to monitor environmental impacts. The environmental impactassessment, completed in May 1992 by an internationally recruited ecologist, concluded that theshrimp and carp culture components did not exhibit any significant environmental impacts (seeAppendix 7).
44. The environmental study focused in depth on the beef nursery program forfloodplain stocking, and concluded that this program "will not cause significant impacts orirretrievable losses to the existing fishery, rare or endangered species, wetlands or ecologicallysensitive areas. The chemicals expected to be employed are commonly used throughout theworld (including Bangladesh) for fishenes work and are considered safe even at drinking waterstandards because they quickly biodegrade, do not bioaccumulate and are target specific." Theconsultant did, however, recommend measures to mitigate any potential environmental effectsof the floodplain stocking program, including minimizing the use of chemicals. Theserecommendations were generally followed.
9
45. Subsequent to the completion of the environmental impact study, questionswere raised by a foreign-based nongovemment organization about the potential negativesocial and environmental impacts of the beel nursery portion of the Project. 1 Bank staff,Project consultants, and DOF staff considered these questions carefully and spent a good dealof time responding to them and making adjustments in the design of this component of theProject where deemed appropriate.
46. The unusually rapid growth of the area covered by shrimp ponds since 1991was unanticipated at the time of appraisal, and the financial success of shrimp farming in theProject area has itself created a potential environmental problem. By 1994195, DOF estimatedthat the total area under shrimp culture was 141000 ha, of which marine shrimp pondscomprised 130,000 ha. The area of freshwater shrimp culture grew from less than 700 ha in1991 to more than 11,000 ha in 1994, and the rapid growth of freshwater shrimp culture areais reported to have continued in 1995 and 1996. Construction of new ponds was not financedunder the Project.
47. The construction of tens of thousands of hectares of shrimp ponds withoutsupply and drainage canals has made maintenance of good water quality almost impossible.This has been a major contributing factor to the white spot disease epidemic that has spreadthroughout the marine shrimp culture area since 1994, and the danger of a similar epidemicstriking freshwater shrimp farms cannot be ignored. There is an urgent need to make a majorinvestment in supply and drainage canals if this industry is to be maintained. In Bangladesh,as in other countries (Indonesia, Taipei China, Thailand, and elsewhere), the legal, social, andpolitical barriers to preventing or solving the problem of rapidly expanding shrimp pond areasare formidable. It should, however, be noted that the shrimp culture development in theProject areas took place in areas formerly used as seasonal rice farms and did not involve thedestruction of mang roves.
J. Performance of the Borrower and the Executing Agencies
48. Delays in recruitment of consultants and staffing of the Project ManagementOffice were the principal reasons for the extended period of Project implementation. Beginningin 1991, DOF's performance was generally satisfactory, and the training and other institutionalsupport provided to DOF under the Project resulted in the creation of an effective ruralfisheries extension system in the Project area.
49. The Borrower's failure to date to transfer management and control of floodplainbeels to DOF has stalled any progress toward development of an effective cost-recoveryprogram, and the sustainability of the floodplain stocking program is now in doubt.
1 One of the main concerns related to the use of rotenone [see Appendix 7, item (vi)] and villagers killingsnakes and frogs as these fled from the treated beels.
10
50. Also, the sustainability of the successes of the Project's fish and shrimp cultureextension efforts is a question as the Project closes. The Government's concrete commitmentto maintaining suitable levels of support to sustain fisheries extension and floodplain stockingprograms in the Project areas should remain a high government priority.
51. Cancellation of a major portion of the credit portion of the loan was a result ofless than full commitment to the Project on the part of BB arid the PBs.
K. Performance of the Bank
52. The Bank's performance was generally satisfactory in terms of timely monitoringand approvals, though the Bank could probably have been firmer on the issue of transfer ofbeel management to DOF and the related matter of cost-recovery for floodplain stocking.
53. The Bank was flexible in responding to needs of the Project as it was beingimplemented. Project administration was delegated to the Bangladesh Resident Mission inSeptember 1987 and remained with the Resident Mission until the closing date.
54. During the course of the Project, the Bank fielded a total of 15 review missions(see Basic Data). This is considered adequate.
55. At appraisal the Project provided for construction of DOE carp hatcheries in aphased manner taking into account the development of carp hatcheries in the private sector.By early 1994, construction on the proposed three hatcheries had not started. It should havebeen clear by that time that sufficient carp hatchlings were available from existing private andpublic sources to successfully carry out the floodplain stocking program. At that point, therewas no longer clear justification for construction of these hatcheries, and the Bank should nothave approved their construction.
Ill. EVALUATION OF INITIAL PERFORMANCE AND BENEFITS
A. Financial Performance
56. Evidence available from the Project's impact assessment surveys suggests thatprivate demonstration farmers (and other farmers who have followed the example of thedemonstration farms) in both the carp and shrimp sectors generally realized high financialprofits 1 from their pond improvements and revised management strategies (see Appendix 8).
In most cases, no significant capital improvements were made to fish or shrimp ponds; the increased yieldsand profits resulted from improved pond management. This improved management generally involvedincreased Levels of inputs, resulting in increased harvests 6-10 months later. Since both cost and revenueincreases occurred within the same year, calculation of an annual financial or economic internal rate of returnis not meaningful in these cases.
11
In carp areas, annual yields improved from about 1 tiha to over 4 tlha and the benefit-costratios for improved pond management strategies averaged well over 2:1 for the final three yearsof the Project.
57. For marine shrimp ponds (culturing mainly Penaeus monodon) average annualyields increased from about 100 kg/ha to 258 kg/ha, nd benefit-cost ratios generally exceeded2:1. However, the marine shrimp demonstration program was sharply curtailed in 1995 and 1996with the spread of the white spot disease (also referred to as the China virus) from Thailand toBangladesh, and the outlook for marine shrimp culture yields is now uncertain.
58. The Project also carried out demonstrations of polyculture of freshwater shrimp(Macrobrachium rosenbergii) and carp in private ponds with positive results. These ponds hadannual average production of 515 kg/ha of shrimp as well as 651 kg/ha of carp. Cost-benefit ratiosaveraged 1.5 to 2.5 for these ponds. Most of this culture is carried out in small ponds (less
than .3 ha) in areas that are flooded in the wet season and used for just one crop of paddy peryear. Many of these pond owners still cultivate one paddy crop early in the year, then flood theirfields to produce shrimp and fish during the latter 5-7 months of the year.
59. Virtually all of the credit provided under the Project was for short-term operatingloans, with repayment due within 12 months from receipt of the loans. Most loans went torelatively prosperous shrimp farm owners.
60. Information as of loan closing, suggests that subloan disbursements by the threePBs totaled Tk622 million, approximately $15 million (see Appendix 4) and that repayments ofprincipal and interest of Th337 million had been made, Th342 million remained outstanding, andTkl 16 million was classified as overdue. While this level of overdue repayments (19 percent of theoriginal disbursements) is unsatisfactory, it is relatively low by comparison to other agriculturesector lending in Bangladesh. BB reports that for the period from 1 July 1994 through 30 June1996, the agriculture sector loan recovery rate averaged only 20.1 percent.
B. Economic Performance
61. The high yields achieved by Project fish and shrimp farmers and the generally highlevels of profits realized suggest that the Project's carp and shrimp culture components had higheconomic rates of return. However, since the Project focused on the general strengthening ofDOF at the district and thana 1 levels, and since the floodplain fisheries component was a piloteffort that may not be sustained, estimation of a meaningful economic internal rate of return forthe Project has not been done.
Thana is an administrative unit within a district; the thana is the focal point for implementation of theGovernment's development programs.
12
62. For the floodplain component of the Project, data is available to confirm theeconomic viability of floodplain stocking of the type carried out under the Project. lmpact surveysreport that the average cost of stocking and managing beels as nurseries was only about Tk4/kgof fish finally harvested (of which Tk2Jkg is the harvesting cost). Since the fish have an averagelanded value of at least Tk30.Q0/kg, the economic returns are unusually high for this program. Byway of contrast, the Project's smaller program of purchasing commercially available fingerlings fordirect stocking in open waters involved an estimated cost of about Tkl 2/kg of fish finallyharvested. The clear implication is that floodplain stocking is economically viable, and that themost cost-effective way to do it is through a beel nursery program, where such a program istechnically feasible.
C. Attainment of Benefits
63. Cultured shrimp production in Bangladesh grew from about 19,000 tin 1990191 t01,000 tin 1994/95 as a result of increases in pond yields as well as expansion of pond area. TheProject's extension and training efforts certainly were important contributors to this increasedproduction. Earnings from exports of shrimp have also grown dramatically since 1990, almostexclusively due to increases in cultured shrimp production. Shrimp exports earned $262 million in1994/95 compared to just $113 million in 1990/91.
64. The principal beneficiaries of the Project's shrimp culture component are owners ofshrimp farms and workers employed by these owners. Marine shrimp farms, which are large insize, almost all over 2 ha and many over 10 ha, are typically owned by wealthier farmers andthese were the main recipients of Project subloans. But freshwater shrimp farms are typically verysmall, less than 0.5 ha, and a high percentage of these are owned and operated by traditionalpaddy farmers. An independent review of the impact of freshwater shrimp culture undertaken byCARE International concluded that the "Gher (freshwater shrimp pond) revolution appears to havehad a positive effect, and certainly most members of the community confirm this." There is adirect and positive employment impact for women employed in the shrimp processing plants as aresult of the huge increase in shrimp production and processing for export. Most employment inthese plants is of women.
65. The epidemic of white spot disease that has struck marine shrimp farms inBangladesh in the past 2-3 years raises serious questions about the sustainability of benefits frommarine shrimp culture. While no cure is known to exist for this disease, which appears to havebeen brought into Bangladesh with imported shrimp fry from Thailand, improved pondmanagement appears to be the key to mitigating its impact, and DOE extension efforts in marineshrimp culture areas are now focused on helping farmers make these adjustments. The benefitsof this continued DOE extension effort are potentially large.
66. In the carp culture sector, the main beneficiaries are pond owners and theirworkers. Most demonstration farmers were influential people, including school teachers, whoother farmers were most likely to respect and ultimately follow. While some benefits from theProject will accrue to those constructing new ponds, most of the increased production and profithas come from improved management of long-existing village ponds. Many of these ponds aresmall, less than 0.3 ha, and are owned by typical farm families.
13
67. The floodplain fishery component has had two main groups of beneficiaries. Thepeople, often landless, who fish the open and public water areas have confirmed that their catchrates increased significantly. In addition, leasees of beels stocked as nurseries, as well asteasees of nonstocked beels, and their workers report significantly higher harvests as a result ofthe stocking program.
68. Beel leasees acknowledge that their harvests have improved significantly as aresult of the use of their beels as nurseries, but they are reluctant to privately fund the preparationand stocking of their beels as nurseries since the benefit of this stocking will also be realized byothers. It appears doubiful that DOF will have sufficient funds available through its regularrevenue budget to sustain this highly successful floodplain stocking program.
69. Finally, the impact studies reveal that the Project has had a significant positiveimpact on the effectiveness of DOF as a field organization. Thana fisheries officers in the Projectdistricts are now well trained, mobile, and appear to be well motivated to have a genuine andcontinuing impact on the aquaculture industry. This may be the most enduring benefit of theProject.
70. DOF is well staffed at the field level to continue its highly effective extensionprograms but lacks the funds to continue to finance inputs for demonstration ponds. Ideally, DOFwould be provided with a permanent revolving fund to annually finance all or a portion of theinputs for new demonstration ponds, with this fund being replenished each year by demonstrationfarmers at the end of each growing season.
lv. CONCLUSiONS AND RECOMMENDATION
A. Conclusions
71. The Project was well conceived in its rationale, objectives, strategy, and scope.There was a delay of nearly five years between appraisal and actual implementation, but onceimplementation finally began in 1991 it proceeded relatively efficiently.
72. The Project was successful in meeting most of its objectives. One of the reasonsfor this success, in contrast to the failure of the Bank's first Aquaculture Development Project,1was the relative simplicity of its objectives, scope, and implementing arrangements. Utilizing theexisting structures and staff of DOF and the banking system, the Project set out to improvefisheries extension, implement a pilot floodplain stocking program, and provide credit to theaquaculture sector. It did not require establishment of new institutions or require a complexsystem of coordination between Government organizations. This is a useful lesson for futureaquaculture, and other agriculture sector, projects in Bangladesh and elsewhere.
Loan No. 329-BAN(SF): Aquaculture Development Project, for $ 18 million approved on 13 December 1977.
14
B. Recommendations
1. Project-related
73. There are six Project-related recommendations:
(i) This Project has proved that a DOF aquaculture extension system utili.zingwell-trained and equipped staff demonstrating improved techniques anprivate demonstration farms can be highly effective. This model should becontinued in the Project area and may be extended to other districts in thecountry. However, sustaining this extension effort will require Governmentcommitment of regular funds to continue to finance extension work,including demonstration farms.
(ii) At the time of appraisal, there was uncertainty as to whether newGovernment carp hatcheries would be needed. By 1989 (when the projectcompletion report for the first Aquaculture Development Project wascompleted) 1 it was clear that many DOE hatcheries were not operating inspite of many years of foreign assistance. And thus by 1994, it should havebeen apparent that construction of large, new Project hatcheries could becanceled with no negative impact on the Project's objectives. In future,Bank staff should be more critical in their assessment of a Project'sneeds, and less hesitant to make changes to Project scope in response tonew developments. Now that the new hatcheries have been built, it will bewasteful not to operate them. In this regard, at least in the short run, theGovernment should be urged to provide sufficient funds from their annualbudget to provide for necessary staff and operating expenses. But therecord has shown that DOE is not well suited to sustain the operation ofhatcheries that are commercial production organizations. Therefore, it isrecommended that the Government move expeditiously to lease (or sell)the three Project hatcheries to qualified private firms. Notably, DOF, withthe support of the World Bank, has recently taken steps to lease some ofits smaller carp hatcheries/nurseries to private parties.
(iii) The least effective component of the Project was the extension effort aimedat improving the survival rates for wild-caught shrimp fry. Because of thehuge numbers of people involved in this business (estimated to be about200,000), their high mobility, their low level of education, and their limitedresources, it is extremely difficult to have a significant impact on theirpractices. Yet fry availability is certain to be a key constraint to continuedexpansion in the sector, and reduced mortality of shrimp fry during theirtransportation to farms is likely to offer a more cost-effective way toincrease fry availability than hatchery production. Future projects and DOFefforts should focus more specifically in this area.
1 PCR: BAN 329: Aquaculture Development Project, September 1989.
15
(iv) There is an urgent need to develop canal infrastructure for the shrimpculture areas, to facIitate water supply to ponds and pond drainage, inorder to protect the gains made by this industry and to create anenvironment for further growth. Provision of such infrastructure could formthe basis for future Bank assistance in the sector.
(v) Aquaculture credit remains problematic because of collateral issues andthe small size of most subloans. The fact that ponds are often owned bymultiple parties makes securing loans difficult and participating banks arealso not enthusiastic about making loans as small as Tk20,000. Also, infuture projects care must be taken to ensure that interest rates on subloansare consistent with other credit facilities offered in the project area.
(vi) It is recommended that preparation of the Project performance audit reportshould be undertaken at the earliest after three years. It will then be
evident whether DOF has been able to sustain and extend the effectiveextension system introduced under the Project. At that time it will also beknown whether the floodplain stocking program has continued. Even ifDOF does not have sufficient funds to continue the program, it is likely thatprivate entrepreneurs, after realizing that no more Government funds willbe available, will continue stocking entirely using their own funds as thefloodplain stocking has proved to be highly profitable.
2. General
74. There are two general recommendations:
(i) Future aquaculture and inland fisheries in Bangladesh and elsewhereshould avoid complex and/or multiple project components requiring multipleand cooperating executing agencies.
(ii) Future projects in this sector should also focus on shifting the role ofGovernment away from direct fish production or hatchery operation towardextension, infrastructure, resource management, and resourceenhancement.
30
8,42
31
8,43
34
10,56
16
APPENDIXES
Number Title Page Cited on(page, para.)
1 Chronology of Events 17 2,6
2 Original and Completed Project Scope 20 2,6
3 International Training Under the Project 22 4,15
4 Project Credit Disbursements and Recovery 23 4176,28
11,60
5 Status of Compliance with Principal 25 7,35
6
7
8
Loan Covenants
Annual Disbursements by the Bank
Summary of the Environmental ImpactAssessment Study of the Beel NurseryFloodplain Stocking Component
Summary of Production Targets andActual Achievements
Dates
1986
1. iFeb
2. 18 Jul-4 Aug
3. 4-6 Nov
4. 16 Dec
1987
5. 20 May
6. 12 Sep
17
Appendix 1, page 1
7. l8Aug
8. 29 Oct
9. 3Nov
10. 3Nov
11. 29 Dec
1988
12. 8Mar
13. 8Mar
CHRONOLOGY OF EVENTS
Events
Consultants submitted final report for Project preparatorytechnical assistance
Appraisal
Loan negotiated
Board approval
Loan Agreement signed
Board approved increase in loan amount by $2650 millionfor consulting services as United Nations DevelopmentProgramme financing did not materialize
First extension of loan effectivity date until 31 October1987
Bangladesh Resident Mission (BRM) authorized to signamended Loan Agreement
Amended Loan Agreement and Project Agreementssigned
Second extension of loan effectivity date until 2 January1988
Third extension of loan effectivity date until 29 February1988
Fourth extension of loan effectivity date until 8 March 1988
Loan effectivity declared
18
Appendix 1, page 2
1989
14. 14 Sep Project administration delegated to BRM
15. 22 May Operational plan of Bangladesh Bank accepted by BRM
1990
16. 15 Dec Contract signed Between Department of Fisheries (DOE)and consulting firm
1991
17. 14 Jan
First disbursement under DOF component for consultants
18. 24 Jan
Project Proforma (PP) approved
19. 5Feb
20. 29 Dec
1992
21. 31 Dec
1993
22. 7Jun
23. 15 April
24. 2 Dec
1994
25. 12 Jun
26. 27 Dec
Consultants fielded
Project area for credit component extended
First loan closing date extension until 31 December 1995
First disbursement under credit component for training
First PP revision
Bank approved lowering of interest rate to subborrowersfrom 16 percent to 13 percent
Partial loan cancellation of $10.0 million from the creditcorn ponent
Second loan closing date extension until 30 June 1996
19
Appendix 1, page 3
1995
27. 27 Jun
Partial loan cancellation of $3.0 million from creditcomponent and $5.0 million from DOF component
28. 2Sep
Second PP revision
29. 27 Dec Reallocation of an additional amount of $3.0 million to thecredit component from expected savings from the DOFcorn ponent
1996
30 3 May
31. 3lDec
1997
32. 15 April
Third loan closing date extension until 31 December 1996
Loan closed
Final disbursement, loan account closed, and theundisbursed balance of $7.6 million canceled.
20
11
Appendix 2 page 1
SUMMARY OF ORIGiNAL AND FINAL PROJECT SCOPE
Original Scope at Appraisal
Final Scope
A. Shrimp Culture Extension (4 Districts)
1. Training of Department of Fisheries(DOF) staff, farmers, fry catchers &fry handlers
2. 148 private demo ponds
3. Transportation and otherequipment
B. Carp Culture Extension (21 districts)
1. Training of DOF staff and farmers
2. 1,113 private demo ponds
3. Transportation and otherequipment
C. Floodplain Fisheries in Upper MeghriaRiver Basin and Dhaka areas
1. By final year stock 1,600 ha ofbeels as carp nurseries
2. Construct DOF hatcheries with 750million hatchling annual capacity
3. Transportation and otherequipment
D. DOF Institutional Support
1. 402 person-months of internationaltraining for 22 DOF staff
A. Area expanded to 2 more districts (total of 6)
1. Local training of DOF personnel, farmers,fry handlers, and others of 3,741 days
2. 185 demos completed
3. Equipment supplied
B. Area expanded to 1 more district (total of 22)
1. 6,619 days of local training of farmers,and DOF staff
2. 1,352 demos completed
3. Equipment supplied
C. Stocking program mainly in Upper MeghnaRiver Basin
1. Developed and stocked 905 ha of beelnurseries in 1996
2. 3 DOF hatcheries completed in 1996
3. Equipment provided
4. 10.5 million fingerlings stocked in HailHaor
D. Support provided
1. 90 DOF staff received 366 person-monthsof international training
2. Construct district and other offices
21
Appendix 2, page 2
2. 26 district, 3 divisional, and 1 Projectmanagement offices constructed
3. Transportation and other 3. Equipment providedequipment
4. 264 person-months (186 4. 361 person-months (194 international) of
international) of consultant services services provided
Credit through Bangladesh Bank, E. Only about $13.6 million of Bank loan
Agrani Bank, Rupali Bank, and utilized (balance canceled)Bangladesh Krishi Bank ($19.9million allocated from the total Bankloan of $45.5 million)
Loans to shrimp and fish farmers 1. 99 percent were short-term loans forand related industries shrimp (85 percent) and fish (14 percent)
2. 20 months of international trainingfor 20 participating banks (PB)staff; also in-country workshops
culture; I percent was long-term loans forice plants
2. 38 PB staff received 9.5 person-monthsof international training and in-countryworkshops held
22
Appendix 3
INTERNATIONAL TRAINING UNDER THE PROJECT
Subject Matter Training Course No. of Month Total institution Period of Training RemarksTrainees TraIneea Trainee and Country Training Cost
Month of Training ($)
A. DOF Component
1 Long-term Training
Fish Culture Masters Degree 3 20.0 60.0 AlT, Thailand JCn 1994 CompletedAqua Engineering Masters Degree 2 20.0 40.0 AlT, Thailand Jan 1994 197,913 CompletedFisheries Management Masters Degree 4 20.0 80.0 AlT. Thailand Jan 1994 Completed
Subtotal (1) 9 60.0 180.0 197,913
2. Short-term Training
Management Training Shari-tern, training 2 1.0 2.0 Aubam University. Nov 1993 CompletedCourse USA
Fisheries/Management 4 2.25 9.0 Aubam University, Nov 1993 70726 CompletedStatistics USA
Computer Management 4 2.25 9.0 Aubam University, Nov 1993 CompletedUSA
Prawn Hatchery/Culture 3 3.0 9.0 NACA, Thailand Apr 1995 Completed
Extensive Shrimp Culture 4 3.0 12.0 NACA, Thailand Apr 1995 32,857 Completed
Srimp Hatchery 6 3.0 18.0 NACA. Thailand Apr 1995 Completed
Planning and Monitoring 5 2.0 10,0 NACA, Thailand Jul 1995 i74,589 Completed
Carp Culture 16 2.0 32.0 AlT, Thailand Sep 1996 Completed
Fishenes Management 4 0.5 2.0 Th5iland, Viet Nam Nov 1995 35.913 Completed(Study TOufl and Chains
Shrimp Culture (Bagda) 12 2.5 30.0 NACA, Thailand Mar 1996 103425 Completed
Shrimp Hatchery 9 2.5 22.5 NACA, Thailand Apr 1996 92,320 CompletedMgmt. (Galda/Bagda)
Shrimp Culture (Galda) 12 2.5 30.0 NACA, Thaliand Apr 1996 103.425 Completed
Subtotal (2) 81 185.5 713,225
Subtotal {A 90 365.5 911.138
B. Bangladesh Bank Component
Srackish Aquacutture 38 025 9.5 AlT, Thailand Sep 1995 64.954 Completedand Banking Issues
Subtotal (B) 39 9,5 64954
Total 128 375.0 976,092
DOF Department of Fisheries; AlT Asian Institute of Technology; NACA = Network of Aquaculture Centres of Asia
23
Appendix 4, page 1
PROJECT CREDIT DiSBURSEMENTS AND RECOVERYTable 1: Credit Disbursements by Participating Banks and by Type
(As of 31 March 1997)
(Amounts in Tk million)
Bank Shrimp Culture CarpCulture Ice Plants Total CreditLoan # Amount Loan # Amount Loan # Amount Loan # Amount
Agrani 1,652 251 314 18 3 5 1,969 274
Rupali 168 99 4 0 0 0 172 99
BKB 2,266 176 1,090 71 1 1 3,357 248
Total
4,086
526 1,408 90
4 6
5,498 622
% ofTotal
74
85 26 14
0 1
100 100
AverageLoan Size(Tk'OOO) 129 64 1,500 113
BKB Bangladesh Krishi Bank
Notes: ncluded in the carp culture loans are an unspecified number of carp hatcheries and
carp nurseries. Some PB branches distinguished carp hatchery, nursery and cufture
subloans, but the majority of branches classified all carp loans as "carp culture".
24
Appendix 4, page 2
Table 2: Recovery Rate by Participating Banks
(As reported by Bangaldesh Bank from Data throughout the Project Period)(Amounts in Tk million)
Bank
Disbursements Recovery Outstanding Overdue
Agrani Bank(% of disbursements)
Rupali Bank(% of disbursements)
BKB(% of disbursements)
Total(% of disbursements)
Notes: (i)
U
(iv)
274 190 106 91(69) (39) (33)
99 61 45 14(61) (45) (14)
249 86 191 11(35) (77) (4)
622 337 342 116(54) (55) (19)
The sum of amounts recovered and amounts outstanding (and their corresponding
percentages) exceed total disbursements because of accrued interest.
Most BKB subloans were made in 1995 and 1996 and therefore the proportion of BKBs
outstanding loans remains large and the proportion of overdue loans remains small
as many subloans were still within the grace period as of 31 March 1997.
Overall recovery rates for the agriculture sector, including aquaculture, loans from these three
participating banks was substantially worse during the past two years (1 July 1994-30 June
1996) than the recovery rates of Project subloans as reflected in this table. For the past two
years, agriculture sector recovery rates were as follows:
Agrani Bank: 30.9%
Rupali Bank: 40%
BKB: 27.5%
For the Project, of the total amounts that have come due for repayment (principal
and interest) of Tk453 million, the actual amount repaid (recovered) of Tk337 million
was 74 percent of the amount due as of 31 March 1997.
Section 4.06 (b) of
Complied with, however withthe LA some delays.
Section 4.07 (b) of
Complied with.the LA
25Appendix 5, page 1
STATUS OF COMPLiANCE WiTH PRINCIPAL LOAN COVENANTS
SLNo. Loan Covenant Reference Status of Compliance
The Borrower shall make available, promptlyas needed, the funds, facilities, services, landand other resources which are required, inaddition to the proceeds of the Loan, for thecarrying Out of the Project and for theoperation and maintenance of the Projectfacilities.
2, The Borrower shall (i) maintain, or cause to bemaintained, separate accounts for each Part ofthe DOF Components; (ii) have such accountsand related financial statements auditedannually, in accordance with sound auditingstandards, by auditors acceptable to the Bank;(iii) furnish to the Bank, as soon as availablebut in any event not later than six (6) monthsafter the end of each related fiscal year,certified copies of such audited accounts andfinancial statements and the report of theauditors relating thereto, all in the Englishlanguage; and (iv) furnish to the Bank suchother information concerning such accountsand financial statements and the audit thereofas the Bank shall from time to time reasonablyrequest.
3. Without limiting the generality of theforegoing, the Borrower shall furnish, or causeto be furnished, to the Bank quarterly reportson the carrying out of the DOF Componentsand on the operation and the management ofthe Project facilities under the DOFComponents. Such reports shall be submitted insuch form and in such detail and within such aperiod as the Bank shall reasonably request,and shall indicate, among other things, progressmade and problems encountered during thequarter under review, steps taken or proposedto be taken to remedy these problems, andproposed program of activities and expectedprogress during the following quarter.
Section 4.02 of the
Complied with.Loan Agreement(LA)
4. Promptly after physical completion of the Section 4.07 (c) of Complied with.Project, but in any event not later than three (3) the LAmonths thereafter or such later date as may beagreed for this purpose between the Borrower
Schedule 6, para Complied with.2(b) of the LA
26Appendix 5, page 2
and the Bank, the Borrower shall prepare andfurnish to the Bank a report, in such form andin such detail as the Bank shall reasonablyrequest, on the execution and initial operationof the Project, including its cost, thePerformance by the Borrower of its obligationsunder his Loan Agreement and theaccomplishment of the purposes of the Loan.
The Borrower shall ensure that the Project Section 4.09 cthe Complied with.facilities under the DOF Components are LAoperated, maintained and repaired inaccordance with sound administrative,financial, engineering, and maintenance andoperational practices.
DOF shall be responsible for implementing theDOF components. For monitoring andsupervising the day-to-day implementation ofthese components, DOF shall establish aProject Management Office (PMO) not laterthan 30 days after the Effective Date. The PMOshall be suitably staffed and adequatelyequipped, and headed by a full time suitablyqualified Project Director to appointed inconsultation with the Bank, who shall beresponsible to the Director of DOF.
The main responsibilities of PMO shall include(i) day-to-day implementation of the DOFcomponents; (ii) preparation of detailedimplementation plans and programs; (iii)procurement of equipment, materials andsupplies; (iv) land acquisition and physicalfacility construction; (v) administration of theconsulting services; (vi) fielding of Projectpersonnel; (vii) provision of extension services;(viii) implementation of overseas training andfellowships of DOF staff; (ix) execution ofstocking for the culture-based floodplainfisheries enhancement; (x) monitoring of theimplementation of the Project includingpreparation of PBME activities and periodicreports; and (xi) provision of assistance inidentifying sub-borrowers under theBangladesh Bank (BB) components.
Schedule 6, para
Delayed, then complied with.1(a) of the LA
8. The BB components shall be implemented by Schedule 6, para 2 Complied with.BB together with the Participating Banks. The of the LARural Credit Project Department of 138 shall beresponsible for management of BBComponents within BB and liaising with theParticipating Bank and liaising with B.B.
Schedule 6, para 5
Not complied with.of the LA
Schedule 6, para 6
Not complied with.of the LA
27Appendix 5, page 3
9. The Borrower shall establish a Project Schedule 6, paraCoordination Committee within the Ministry of 3(a) of the LAFisheries and Livestock in Dhaka not later than30 days after the Effective Date. Except as theBorrower and the Bank may otherwise agree,the Committee shall consist of the Secretary ofthe Ministry of Fisheries and Livestock, whoshall be the Chairman and representatives ofDOF, Ministry of Finance, BB, theParticipating Banks and the Bangladesh WaterDevelopment Board.
Delayed, then complied with.
10. The Project Coordination Committee shall be Schedule 6, para Partially complied with.responsible for helping with policy decisions 3(b) of the LAfor timely and effective implementation andcoordinating the implementation of the Project,and meet as considered necessary but at leastonce in every three months.
11. DOF shall assist each Participating Bank in Schedule 6, para 4 Partially complied with.identifying sub-borrowers, helping with the of the LApreparation of sub-loan applications, providingtechnical support to sub-borrowers andmonitoring the implementation of sub-projects.
12. The Borrower shall cause DOF to manage andcontrol the water bodies selected as nurseriesfor Part 3 under arrangements satisfactory tothe Bank. Such arrangements shall include acontract of administration of the fisheries insuch water bodies with a tease of at least aperiod of 10 years whereby DOF shall beresponsible for preparing such water bodies foruse as nurseries, including constructingtemporary dykes, increasing fisheriesproductivity of such water bodies for nurseriesand providing fish fry to be released in suchwater bodies.
13. DOF shall, within one year after thecommencement of the implementation of theProject, work out leasing policies of selectedwater bodies to the public, including licensingand catch-sharing in such selected water bodieswith a view to instituting an appropriate costrecovery system for the investment andoperating expenditures required for Part 3.Such leasing policies shall be finalized andimplemented in consultation with the Bank.
Schedule 6, para
Complied with.10(a) of the LA
Schedule 6, pan Delayed, then complied with.10(b) of the LA
28Appendix 5, page 4
14. The construction of the carp hatcheries underPart 3 shall be implemented in phased mannertaking into account the development of carphatcheries in the private sector for which sub-loans shall be provided under the BBComponents. The details relating to theconstruction of such hatcheries including thenumber and sites shall be decided byagreement between the Borrower and theBank.
Schedule 6, para 7of the LA
Partially complied with.
15. Without limiting the generality of the Schedule 6, para 8 Partially complied with.provisions of section 4.02 of this Loan of the LAAgreement, the Borrower shall ensure that thelands required for the facilities under Part 3 aremade available to DOF on timely basis.
16. DOF shall, on a timely basis and in accordance Schedule 6, para 9 Partially complied with.with the agreed implementation schedule, of the LAidentify and select farmers for participating inthe demonstration activities under Parts 1 (a)(ii)and 2(a)(ii) with their ponds to be used asdemonstration farms.
17. Under Part 4, (I) about 16 DOF staff shall beprovided overseas fellowships and about sixDOF staff shall be provided overseas trainingin such fields as fish and shrimp culture,aquaculture engineering, fisheries managementand shrimp hatchery technology and operationduring the period of the implementation theProject and (ii) about 20 staff of theParticipating Banks shall be provided overseasfellowships in the field of loan appraisal andpost advance supervision and the trainingworkshops shall be held.
18. DOF and BB shall each be responsible forpreparing programs of training for the purposesof Parts 4(u) and 4(iii), respectively, andsupervising their implementation. Not laterthan six months after the effective date, DOFand BB in consultation with the ParticipatingBanks shall each prepare their respectiveprograms and furnish such programs to theBank, for its concurrence. such programs shallinclude details relating to the courses to befollowed, the institutes at which overseastraining and fellowships are to be undertaken,criteria for selection of trainees, the number oftrainees to be selected and in the case ofworkshops, the scope of activities of suchworkshops and the number to be held.
29Appendix 5, page 5
19. DOF shall carry out PBME activities under theProject. DOF shall make use of the data andinformation during the implementation of theProject, as supplemented by additional surveysas necessary. The data and information shallcover performance of shrimp and fish farmersand hatchery operators, fish processing andmarket activities, fish farmers' and fishermen'sincome, employment, technology and othersocio-economic conditions. DOF shall prepareand submit detailed plan for PBME activitiesindication the information to be collected andthe methodologies to be used, within 10months after the Effective Date.
Schedule 6, para 11of the LA
Partially complied with.
20. The Borrower shall increase the equity of each Schedule 6, para 12 Partly complied with.Participating Bank to a level of two per cent of of the LAits respective total assets before the end of1987; to a level of not less than three per centof its total assets by the end of 1988; andmaintain it at that minimum level thereafter.
21. Notwithstanding any revision of anyParticipating Bank's structure of interest rates,the Borrower shall ensure that the interestspread of 7.5 per cent to each ParticipatingBank and the interest spread of 2.5 per cent toBB under the Project are maintained. To thisend, the Subsidiary Loan Agreement and theParticipation Agreement shall each includeadequate provisions, satisfactory to the Bank,that shall enable the BB and each ParticipatingBank to maintain such interest spreads.
Schedule 6, para 13 Complied with.of the LA
22. 14. The Borrower shall bear the foreign Schedule 6, para 14 Complied with.exchange risk on the portion of the Loan made of the LAavailable to BB.
23. The Borrower shall cause each Participating Schedule 6, paraBank to raise and maintain its provision for 15(a) of the LAbad and doubtful debts to the followingminimum levels of its loan portfolio:
(i) three per cent by the end of 1986;(ii) 3.75 per cent by the end of 1987; and(iii) five per cent by 31 July 1986
PartLy complied with.
24. The Borrower shall cause each Participating Schedule 6, para Complied with.Bank to provide the Bank, through BB with 15(b) of the LAsuch information regarding the status ofoverdue debts as the Bank may reasonablyrequest from time to time.
35,000.000
30.000.000
25,000,000
. 20.000000
E0I?
15,000,000
10.000.000
5.000.000
30
Appendix 6
ANNUAL DISBURSEMENTS BY THE BANK ($)
Year DOE Component BB Comnonent Other ExDenses * Total Project
Annual Cumulative Annual Cumulative Annual Cumulative Annual Cumulative1988 0 0 0 0 800 800 800 8001989 0 0 0 0 1,551 2,351 1,551 2,3511990 0 0 0 0 781 3,132 781 3,1321991 1,306,357 1,306,357 0 0 6,473 9,605 1,312,830 1,315,9621992 1,260,722 2,567,079 0 0 17,093 26,698 1,277,815 2,593,7771993 1,458,667 4,025,746 81,985 81,985 30,713 57,411 1,571,365 4,155,1421994 2,592,203 6,617,949 483,070 565,055 51,101 108,512 3,126,374 7,291,5161995 4,480,505 11,098,454 5,641,464 6,206,519 88,985 197,497 10,210,954 17,502,4701996 4r156,338 15,254,792 5,459,638 11,666,157 334,878 532,375 9,950,854 27,453,3241997 1,064,208 16,319,000 2,022,945 13,689,102 126,625 659,000 3,213,778 30,667,102
DOF = Department of Fisheries; BB = Bangladesh Bank* Includes recovery of the technical assistance cost, service, and other charges
Bank Disbursements ($)
-.- DOF Component-.- BB Component—e-- Total Project
•__••u1968 1989 1990 1991 1992 1993 1994 1995 1996 1997
Years
31
Appendix 7, page 1
SUMMARY OF THE ENVIRONMENTAL IMPACT ASSESSMENT STUDYOF THE BEEL NURSERY FLOODPLAIN STOCKING COMPONENT
1. The Project as appraised included provision for an internationally recruitedenvironment consultant, and in early 1992 this consultant carried out an initial environmentalevaluation for the entire Project, and an environmental impact assessment (EIA) for thefloodplain component. The consultant's report, Environmental Impact Assessment of theBangladesh Second Aquaculture Development Project, was completed in May 1992.
2. The study noted that the standing stock of fish in the northeast region was beingoverfished and that this was leading to inadequate recruitment of young fish into theharvestable population. This was likely to lead to a collapse of the fishery. Further, as carpstocks decline, indigenous non-carp species were likely to experience extreme fishingpressure, with a resultant negative impact on incomes of fishing communities and potentialdecrease in biodiversity.
3. The purpose of the Project's floodplain component was to increase theavailability of carp in the northeast region of the country, improving catches and incomes, andreducing fishing pressure on wild species that are less valuable. Seven species of carp werestocked under the Project, three of which were indigenous and widely available in thefloodplain. Four other carp species (three Chinese carps plus common carp) have beencultured in Bangladesh since the I 960s and 1 970s.
4. The potentially significant environmental impacts investigated in this EIA arelisted below followed by the study's conclusions with regard to these potential impacts.
1. The Effects of Exotic Carp Species Introduction.
5. Several studies of stocking of carp in similar environments have shown thatthere is no competition between the stocked carp and indigenous species, or that the stockedfish are replacing or reducing the productivity of the indigenous fish.
2. Reduction in Wild Fish Stocks and Species
6. The total area of beels to be stocked as nurseries (1,800 ha in the final year ofthe Project) comprises less than 3 percent of the total area of dry-season water bodies in theProject area. Also, the Project's selected beels are leased bodies from which virtually all fishare removed by harvesting, whether or not they are to be used in nurseries for the subsequentseason. Consequently, the treatment of selected beels with the piscicide, Rotenone, is likely tohave no significant impact on wild fish stocks, and the increase in carp yield resulting from thestocking program should lead to a reduction of fishing pressure on wild stocks.
32
Appendix 7, page 2
3. Reduction in Genetic Diversity of Existing Fish Stock
7. The ratio of wild to hatchery fish will remain large even with the program, and thegene pool of the indigenous carps is likely to be largely unaffected. Further, there is abundantevidence that Chinese carps will not breed in the wild in Bangladesh. Common carp arealready well established in the floodplain.
4. Effects on Wetlands or Ecologically Sensitive Areas
8. Out of 68 beels and haors in the Project area, 6 have been identified asimportant for their nature conservation value. Proposals have been made to establishappropriate natural reserves in these 6 critical areas (at the time of the EtA study, no wetlandreserves had been established in the northeast region). The EtA study recommended that nochemicals be used in the beets within any of these critical areas, if the beets in these areas areto be selected for this program.
5. Loss of Aquatic Plants
9. The study concludes that the removal of water hyacinth and other aquatic plantsrepresents no adverse impact to the aquatic environment.
6. Toxicological Impacts of Piscicides, Pesticides, and Herbicides
10. Rotenone will be used prior to stocking carp hatchlings to eliminate predator andcompetitor fish remaining in the beels. Rotenone is an extract from derris root piants and hasbeen used routinely in the United States and around the world (including Bangladesh) since1949. Roterione kills fish by blocking oxygen uptake, resulting in suffocation. It loses its toxicityin several days under natural conditions. It is generally nontoxic to most mammals and birds atconcentrations used to sample fish populations. The study concludes that use of rotenoneposes no adverse impact to the environment or people in the Project area.
11. The pesticide, Sumithion, is used in the beels to kill insects that are harmful tothe hatchlings. The study concludes that given the low application rates being used in the beels,its rapid deactivation in water, and its low toxicity, Sumithion poses no significant impacts to theenvironment or to people in the Project area.
12. The herbicide, Sonar (also known as floridone), may be used for vegetationcontrol in some beels. Water treated with Sonar has been deemed by the United StatesEnvironment Protection Agency to be safe for drinking or swimming, and the study concludesits use in this Project poses rio risk to the environment or humans.
33
Appendix 7, page 3
7. The Effects of Chemicals
13. None of these themicals are carcinogenic, and all of them have been usedthroughout the world for many years for similar types of activities.
8 Hazards to Rare or Endangered Species.
14. There are no fish or macrophyte (aquatic plant) species listed as threatened orendangered in Bangladesh, and the Projectss beel nursery program does not kill non-gillbreathing animals. Actions by people observing rotenoning may result in frogs, turtles, orsnakes being killed as these animals escape the treated beels. To prevent this, the studyrecommends selecting beels in sparsely populated areas and exerting firm control over peopleon the beel banks during rotenoning.
15. The study then lists a number of recommendations for the floodplain program tominimize conflicts with the ecosystem. These measures generally involve minimizing the use ofchemicals and preventing crowds of people from gathering at beel sites during watertreatment.
16. The study also recommends a continuing program of careful monitoring of thesocial and environmental impacts of the stocking programs.
26,000 tons
6,655 tons
34
Appendix 8
SUMMARY OF PRODUCTiON TARGETS AND ACTUAL ACHIEVEMENTS
A. Shrimp Culture Extension
Target Improvement in Annual Yield
Demonstration Pond Actual Annual YieldsBagda Ponds (Marine Shrimp)Gaida Ponds (Freshwater Shrimp)
B. Carp Culture Extension
Target Improvement in Yield
Demonstration Pond Actual Annual YieldsAll demo ponds, 1989-1996Demo ponds, 1992-1996Demo ponds, 1995-1 996
C. Floodplain Fisheries
Appraisal Estimate of Final Year Production
Actual Production Estimate, 1996
from 90 to 250 kg/ha
258 kg/ha of shrimp515 kg/ha of shrimp and651 kg/ha of fish
from 900 to 2,100 kg/ha
3,760 kg/ha4,459 kg/ha5,035 kg/ha
Hatchlings Stocked in Beel Nurseries, 1991-1996: 861 million
Estimated Survival to Fingerling Stage (376 %) 324 million
Estimated Survival of Fingerlings to Harvest (10%): 12,960 tons
Total Fingerlings Stocked Directly : 13 million
Estimated Survival to Harvest (25%) : 1,300 tons
Stocking Cost/kg of Fish HarvestedUsing Beel Nursery System (10% Survival) : Tkl.95Direct Stocking of Fingerlings (25% Survival) : TklO.25
