NEPAL
DELIVERY OF RURAL DEVELOMENT SERVICES:
A COMPARATIVE ASSESSMENT OF
ALTERNATIVE INSTITUTIONAL ARRANGEMENTS
WITH A FOCUS ON THE TARAI
October, 2000
TABLE OF CONTENTS
Table of Contents ....................................................................................................................................... i
Foreword ................................................................................................................................................... ii
Acknowledgements……………………………………………………………………………………….iii
Acronyms ................................................................................................................................................. iv
Summary and Conclusions………………………………………………………………………………..v
I.
II.
III.
IV.
V.
INTRODUCTION ......................................................................................................................................... 1
A.
Background ................................................................................................................................. 1
B.
Objectives and Scope of the Study .............................................................................................. 1
C.
The Nepal Tarai ................................................................................................... 2
THE CONCEPTUAL FRAMEWORK ............................................................................................................. 6
A.
Presentation of Conceptual Framework....................................................................................... 6
B.
Provision and Production ............................................................................................................ 7
C.
Polycentricity and Co-Production ............................................................................................... 7
D.
Public vs. Private Nature of Goods and Services ........................................................................ 8
E.
Social Capital Development ...................................................................................................... 10
STUDY METHODOLOGY .......................................................................................................................... 11
A.
Case Study Methodoloty ........................................................................................................... 11
B.
Desk Study ................................................................................................................................ 11
C.
Field Visit .................................................................................................................................. 12
D.
Identification of Actors and Steps in the Delivery Process ....................................................... 13
E.
Efficiency Performance Evaluation ........................................................................................... 14
F.
Process Performance Evaluation ............................................................................................ ...15
G.
Limitations of the Study ............................................................................................................ 16
DEFINITION AND CLASSIFICATION OF GOODS AND SERVICES .............................................................. 17
A.
Definition of Agricultural Technology Services ....................................................................... 17
B.
Definition of Infrastructure Services ......................................................................................... 18
C.
Classification of Services .......................................................................................................... 20
INSTITUTIONAL MODELS ........................................................................................................................ 22
A.
Generic Models ......................................................................................................................... 22
VI.
VII.
VIII.
B.
Agricultural Technology Models ............................................................................................... 23
C.
Rural Infrastructure Models....................................................................................................... 24
SUMMARY OF THE CASE STUDY ANALYSES ........................................................................................... 28
A.
Overview of Cases Studies ........................................................................................................ 28
B.
Agricultural Technology Case Studies ...................................................................................... 28
C.
Irrigation Case Studies .............................................................................................................. 33
D.
Drinking Water Supply Case Studies ........................................................................................ 39
E.
Roads and Bridges Case Studies ............................................................................................... 42
F.
Electricity Distribution Case Studies ......................................................................................... 45
G.
Summary Findings .................................................................................................................... 48
ASSESSMENT OF THE CAPACITY OF INSTITUTIONAL ACTORS .............................................................. 51
A.
Central Government Departments/Agencies ............................................................................. 51
B.
Local Bodies .............................................................................................................................. 52
C.
NGOs ........................................................................................................................................ 54
D.
CBOs ........................................................................................................................................ 55
RECOMMENDATIONS .............................................................................................................................. 56
A.
General Recommendations ........................................................................................................ 56
B.
Sector- Specific Recommendations ........................................................................................... 57
C.
Specialized Sectoral or Multi-Sectoral Funds ........................................................................... 64
References ........................................................................................................................................................... 65
Boxes:
Box 1:
The Invisible Tubewells ............................................................................................................... 36
Box 2:
Bhairahawa Lumbini Groundwater Irrigation Project .................................................................. 37
Box 3:
Trying to Correct the Incorrigible ................................................................................................ 38
Box 4:
Missing Infrastructure .................................................................................................................. 47
Box 5:
Inefficient Resource Allocation.................................................................................................... 49
Box 6:
Apportioning 'black money' ......................................................................................................... 51
Box 7:
Right-to-Information Act? ............................................................................................................ 57
Box 8:
Seed Production and Multiplication ............................................................................................. 60
Box 9:
The need for competitive funds .................................................................................................... 64
Figures:
Figure 1:
A Polycentric Support Structure for Development Functions ........................................................ 8
Figure 2:
Types of Goods .............................................................................................................................. 9
Figure 3:
Classification of Infrastructure Services ...................................................................................... 21
Figure 4:
Classification of Agricultural Technology Services ..................................................................... 21
Tables:
Table 1:
List of Districts Visited by the Study Team .................................................................................... 12
Table 2:
Number of Cases Studied by Sector ................................................................................................ 28
Table 3:
Efficiency Performance Ranking of Agricultural Research Models ............................................... 29
Table 4:
Process Performance Ranking of Agricultural Research Models.................................................... 29
Table 5:
Efficiency Performance Ranking of Agricultural Extension Models .............................................. 31
Table 6:
Process Performance Ranking of Agricultural Extension Models .................................................. 31
Table 7:
Efficiency Performance Ranking of Surface Irrigation Models ...................................................... 33
Table 8:
Process Ranking of Surface Irrigation Models ................................................................................ 34
Table 9:
Efficiency Performance Ranking of Institutional Models in Shallow Tubewell ............................. 35
Table 10:
Process Performance Ranking of Institutional Models in Shallow Tubewells ................................ 35
Table 11:
Efficiency Performance Ranking of Drinking Water Models ......................................................... 39
Table 12:
Process Performance Ranking of Drinking Water Models ............................................................. 39
Table 13:
Efficiency Performance Ranking of Rural Roads Models .............................................................. 43
Table 14:
Process Performance Ranking of Rural Road Models .................................................................... 43
Table 15:
Efficiency Performance Ranking of Bridge Models ....................................................................... 44
Table 16:
Process Performance Ranking of Bridge Models ............................................................................ 44
Table 17:
Norms Used in LCM and AM Type Models for Roads and Bridges .............................................. 45
Table 18:
Efficiency Performance Ranking of Electricity Distribution Models ............................................. 46
Table 19:
Process Performance Ranking of Electricity Distribution Models .................................................. 46
Table 20:
Summary of the Efficiency Performance Evaluation by Sector ...................................................... 48
Table 21:
Summary of the Process Performance Evaluation by Sector .......................................................... 48
Table 22:
Number of NGOs in Tarai, by Regions ........................................................................................... 54
Table 23:
Involvement of NGOs in Various Sectors ....................................................................................... 54
Maps:
Map 1:
Map of Nepal Showing Tarai Districts and the Study Districts ........................................................ 3
Map 2:
Map of Tarai Demarcating the Areas with Relatively low Social Capital ........................................ 5
Annexes:
Annex 1:
The Tarai in the Context of Nepal ................................................................................................... 69
Annex 2:
Development Indicators and Ranking of Tarai Districts ................................................................. 70
Annex 3:
Population and Man/Land Ratio in Tarai Districts .......................................................................... 71
Annex 4:
Average Holding Size in Tarai Districts ......................................................................................... 72
Annex 5:
List of Peoples Contacted ................................................................................................................ 73
Annex 6:
List of the Case Studies ................................................................................................................... 77
Annex 7:
The Fund Setup ............................................................................................................................... 80
Annex 8:
Comparative Evaluation of Institutional Performance .................................................................. 104
Annex 9:
Main Fund Set-Up Orientations .................................................................................................... 115
FOREWORD
In spite of five decades of development efforts supported by the international donor community,
Nepal has only experienced limited economic and social progress. This is due to adverse physical
constraints including the rugged terrain and severe difficulties of communications. It is also due to
political instability and flawed development policies that have led in part to ineffective institutional
arrangements to implement development programs. As a result, many areas of the countries,
including the Tarai, have been unable to move out the vicious circle of low productivity subsistence
agriculture and are trapped into poverty. Rural poverty remains a perennial problem with almost half
the population currently living below poverty line.
In order to address the weaknesses of rural development, the Government prepared in 1996 the
Agriculture Perspective Plan (APP), a 20 year strategic blueprint for development focused
prominently on, but not limited to, agriculture development. The goal was to bring about a
sweeping transformation of the rural economy while reducing poverty levels down to 14 percent
by the year 2015. The experience of recent years, unfortunately, suggests that this goal is
elusive. Rural producers (particularly the poorer ones) are neither given access to the required
inputs, nor provided with the proper rural services. The deficiency in rural services is largely
due to the failure of existing -- mostly government – controlled -- institutions. Hence the focus
of the present study on Nepal’s experience with various institutional options for delivery of rural
development services.
The study analyzes Nepal’s experience with various institutional options and seeks to identify
those sustainable and cost-effective options that have the highest impact on growth and poverty
reduction. One aspect taken into account in the analysis is the degree to which service delivery
is decentralized. Hence the attention given to the recent government decentralization efforts.
The study examines some 60 case studies covering agricultural technology support services
(research and extension) and infrastructure services (irrigation, rural roads, water supply and
rural electrification). These case studies cover twelve districts (out of 20) in all five Tarai
development regions. The analysis shows that the state agency-managed service delivery system
is largely inefficient and unsustainable. In contrast, the services managed by alternative
institutions such as CBOs, NGOs and private sector operators have higher standards and are
more cost-effective. In the latter case, evidence suggests that there is a high level of
beneficiaries’ participation in project implementation and service delivery cycle. This permits a
high cost sharing of both investment and O&M costs with end-users thereby creating a strong
sense of ownership amongst them.
Important policy implications are derived from the above analysis. First and foremost, the study
suggests the need for a changing role of the Government more aligned with changed
circumstances. The Government should refrain from delivering services except if they concern
public goods which non-government institutions have no incentives to handle. It should rather
focus its efforts on assuming the required provisioning functions, including definition of the
legislative and regulatory framework, planning and programming at national and regional level,
supply of funding resources and enforcement of safeguard and associated rules. Other policy
recommendations include decentralization of service delivery, reform of the subsidy policy
aligned with the need to create a ‘level playing field’ amongst development actors, development
of social capital particularly in the southern Tarai, and establishment of sectoral funds. These
recommendations are geared to promoting polycentricity (institutional pluralism with
competition amongst institutional actors) as it is proven the best strategy for efficient,
transparent, and sustainable service delivery arrangements. It can be safely argued that the
findings from the case studies although they are based on the circumstances prevailing in the
Tarai are broadly applicable to the country as a whole.
I believe that the findings and recommendations of the present study are both vital and timely as
an input for the His Majesty’s Government to reorient its current rural development strategy,
especially at the time when it is embracing decentralization and community driven development.
What is needed at this juncture and without delay is to implement on a pilot scale the best
performing models, i.e., those providing for participation of beneficiaries at the grassroots in the
context of decentralization, and ‘scale up’ implementation as quickly as the required lessons are
learnt from project implementation. The World Bank is certainly ready to contributing to this
task starting with the projects that it is currently funding.
Hans M. Rothenbuhler
Country Director for Nepal
World Bank
ACKNOWLEDGEMENTS
The present study was commissioned by the World Bank to a Nepali NGO, SAPPROS (Support
Activities to Poor Producers of Nepal). The SAPPROS team who carried out the study
comprised the following professionals: Shree Krishna Upadhyay (Team Leader/Institutional
Expert), Dr. Govind P. Koirala (Economist), P. P. Adhikari (Rural Energy Specialist), Hare Ram
Shrestha (Rural Roads Specialist), Devendra B. Bajracharya (Irrigation Expert), Rajesh Bhattarai
(Drinking Water Specialist), and Khadga J. Gurung (Agriculture Specialist). The Team was
supported by Khop Narayan Shrestha, Badri Raman Sharma, Bimal Khatiwada, Ms. Pramita
Bista (Khadka), Bidya Nath Bhattarai, and Jagadish Babu Tiwari. The logistical support was
provided by Narendra Bahadur KC, and the secretarial work performed by Rabi Thapa and Raj
Kumar Rupakheti. The entire SAPPROS team is to be commended for preparing the draft of this
study particularly as regards the depth of the field work they conducted, their subsequent
analysis of the data and drafting of the report, and their continuous readiness and availability for
participating in consultations and discussions all along the study with the various authorities and
stakeholders.
The World Bank staff core team headed by Jean-Claude Balcet (Task Team Leader, SASRD)
comprised the following Bank staff members: Philippe Dongier (INFWS), Navin Rai (SASSD),
Sugandha Shrestha (SASRD/SACNP) and Andrea Ryan (SASIN). This core team worked
closely with SAPPROS all along the study. It provided SAPPROS technical and analytical
guidance as well as editing support. It dealt with the organization of the various fora for
discussion including three national seminars (February and June 1999, and June 2000). Other
Bank staff members were closely associated to the core team both in the Bank Field Office and
at Headquarters: Hans Rothenbuhler (Country Director for Nepal), Jeeva Perumalpillai-Essex
(SASRD Team Leader for Nepal), Ohn Myint (SASRD), Robert Epworth (SASRD), Ram
Chandra Mishra (SASRD/SACNP), Tashi Tenzing (SASIN/SACNP), Shyam Ranjitkar
(SASRD/SACNP), Surendra Joshi (SASIN/SACNP), Guang Shen (SASIN), and Tjaarda Storm
Van Leeuwen (SASEG). Prof. Christopher Garforth (Consultant, The University of Reading), as
well as Anthony Willett (Technical Assistant MASDAR/AREP), provided support for the
agricultural research and extension part of the study. The Peer Reviewers were Robert
Thompson (Director RDV), Lynn Bennett (SASSD), Gotz Schreiber (ECARD) as well as Dr.
Mohan Man Sainju (Institute of Integrated Development Studies-IIDS, Kathmandu).
Heartfelt thanks go to all the officials and professionals contacted during the preparation of this
report. Amongst these are first and foremost the members of the Review Committee at the
National Planning Commission (NPC) who assumed responsibility for the study review process
under the guidance of Honorable Prithvi Raj Ligal, Vice-Chairman of NPC: Hari Shanker
Tripathi (Member NPC/Head of the Review Committee), Jagdish Pokherel (Member NPC) and
Shankar Sharma (Member NPC) and Champak Pokharel. Hari Upadhayaya (ConsultantCEAPRED) who provided technical support for the review process is also to be thanked.
Heartfelt thanks go as well to the officials of the following ministries and agencies who devoted
precious time to react to the study team questions and give precious feedback: Ministry of
Agriculture, Ministry of Local Development (DOLIDAR), Ministry of Water Resources, Nepal
Agricultural Research Council (NARC), and Agriculture Development Bank of Nepal (ADBN).
A special debt of gratitude is owed to Dr. Mohan Man Sainju (IIDS) and to Dr. Yam Radav
(Winrock International) for their valuable feedback on the various drafts of the report. Dr.
Sainju, both personally and as an official Peer Reviewer for the study, was an inspiration all
along the study preparation process.
Thanks go to the members of the donor community who reacted to early drafts of the report and
were instrumental in organizing the June 1999 National Seminar: Richard Vokes (ADB),
Henning Kracher (UNDP), Peter Rhode (GTZ), Sam Bickesteth (DIFID) and Winston Rudder
(FAO).
Finally, the greatest debt of gratitude is owed to the farmers, producers and community leaders
who were interviewed and consulted at grassroots level. They provided the wealth of
information on which the findings of this report are based. This information has increased
tremendously the knowledge base and understanding of the process of delivery of rural
development services in the Tarai. It is hoped that, when they are applied, the recommendations
of this study which are rooted on stakeholders’ perceptions and knowledge will go a long to
empower them and in turn help raise the level of services provided to them and hence improve
their well-being.
ACRONYMS
AAFMIS
Agency Assisted Farmer Managed Irrigation System
ADB
Asian Development Bank
ADB/N
Agricultural Development Bank of Nepal
Agro-Vets
Agriculture and Veterinary Services
AIC
Agriculture Inputs Corporation
AM
Agency Model
APP
Agriculture Perspective Plan
AREP
Agricultural Research and Extension Project
BLGIP
Bhairahawa-Lumbili Groundwater Irrigation Project
CBO
Community Based Organization
CDO
Chief District Officer
CEAPRED
Center for Agricultural Policy, Research, Extension and Development
CWSS
Community Water Supply and Sanitation
DANIDA
Danish International Development Agency
DCP
Command Area Development Project
DDC
District Development Committee
DDT
Di-chloro Di-hexa Tetrachloride
DFID
Department for International Development (UK)
DOI
Department of Irrigation
DLS
Department of Livestock Services
DOLIDAR
Department of Local Infrastructure Development and Agriculture Road
DWSS
Department of Water Supply and Sewerage
FUG
Forestry Users Group
HARP
Hill Agricultural Research Project
HH
Household
HMG/N
His Majesty's Government of Nepal
ICIMOD
International Center for Integrated Mountain Development
IFAD
International Fund for Agriculture Development
INGO
International Non Governmental Organization
JMIS
Joint Managed Irrigation System
LCM
Local Bodies/CBO Model
LCM-D
Local Bodies/CBO Model with Direct Influence of Donor Management Model
LGP
Local Governance Program
LI-BIRD
Local Initiatives for Biodiversity Research and Development
M&E
Monitoring and Evaluation
MHPP
Ministry of Housing and Physical Planning
MLD
Ministry of Local Development
MOF
Ministry of Finance
NARC
National Agriculture Research Council
NCM
NGO/CBO Model
NEA
Nepal Electricity Authority
NGO
Non Governmental Organization
NM
NGO Model
NPC
National Planning Commission
NZIDP
Narayani Zone Irrigation Development Project
O&M
Operation and Maintenance
PDDP
Participatory District Development Program
PM
Private Sector Model
RWSSFDB
Rural Water Supply and Sanitation Fund Development Board
SEAN
Seed Entrepreneurs Association of Nepal
SFCL
Small Farmer Cooperative Limited
SFDP
Small Farmer Development Program
SIF
Sectoral Investment Fund
SMIP
Sunsari Morang Irrigation Project
SNV
Netherlands Development Agency
UG
Users Group
UNDP
United Nations Development Program
USAID
United States Agency for International Development
VDC
Village Development Committee
WFP
World Food Program
WUC
Water Users Committee
WUG
Water User Group
SUMMARY AND CONCLUSIONS
1. Objective and Scope of the Study. The study examines recent experience with various
institutional arrangements for delivery of rural development services in the Tarai and makes
recommendations for the future development of cost-effective service delivery in the context
of the ongoing process of decentralization. The services studied have traditionally been both
funded and delivered by central government agencies.
More recently, alternative
arrangements have been introduced, mostly on a small and local scale, and it is timely to
review this experience and learn from it. The services studied are: agricultural technology
services (research and extension), irrigation (surface and groundwater), drinking water, rural
roads and bridges, and rural electric power distribution.
2. The Nepal Tarai. The focus on the Tarai is consistent with the Agriculture Perspective
Plan’s view that the region is a potential area for agriculture-led economic growth. APP
identifies access to basic infrastructure as a constraint to growth. The Tarai is not
homogenous. Population density and intensity of cultivation increases from west to east;
levels of social capital are higher in the north than the south. These differences have
implications for the types of investments and services that are required for development.
3. Conceptual framework. The framework of the study is based on four sets of concepts drawn
from institutional and rural development theory:

the distinction between provisioning – decisions about what goods and services will be
made available to a community, including decisions on the allocation of public funds, and
production – the creation and delivery of the goods and services. Actions on both fronts
need to be taken based on the subsidiarity principle, i.e., the closer to beneficiaries, the
better the decision-making process

polycentricity – pluralism in the delivery of services, which creates competition on the
supply side, and gives users choice on the demand side, and co-production – the
participation of both government and other partners in the production of services

the distinction between private goods – which exhibit high excludability and high rivalry
and are therefore likely to be supplied at appropriate levels by the private sector unless
there are significant market distortions, and public goods – which are low on both
parameters and are therefore unlikely to be supplied by the private sector because no
profit can be secured from doing so. In between are toll goods and common property
resources or community goods

social capital – the ability of people to work together for a common purpose, which is
related to the degree of trust and reciprocity between them
4. Study methodology. The study methodology is based on a case study approach, i.e., an
institutional analysis at the micro level. Sixty cases of service delivery were selected which
were thought to represent the range of different delivery models tried in Tarai districts. For
each case, the institutional model was conceptualized and the roles of key actors in the
various steps in the delivery process were identified. Data were collected through desk study
and interviews with stakeholders during field visits to project sites. The strengths and
weaknesses of the institutional model underlying each case were assessed in terms of
efficiency performance (quality of physical construction and service, cost effectiveness,
impact and sustainability), and process performance (user involvement and co-production
index). Where appropriate, the models were compared.
5. Limitations of the study methodology. The sample is purposely selected to include a range
of models deemed interesting both as ‘best’ or ‘not so best’ practices. However, the sample
does not include all possible models, and is not statistically representative. The case study
approach favors the depth of analysis of each case rather than the breadth of coverage. Cost
estimates are not always available on model performance, so that subjective judgement is
used in performance evaluation. The study does not purports to map out development
strategy for the Tarai, but only identifies the best performing models and the policy
framework for these models to work.
6. Generic models. Five generic institutional models are presented: Agency Model, Local
Bodies model, NGO model, CBO model and Private sector model. From these, various
composite models were identified in the field, representing different combinations of actors
in various roles.
7. Findings from model evaluation across sectors. The findings show that the traditional
Agency model performs inefficiently in all sectors. Where NGOs, CBOs and the private
sector are involved, the efficiency and impact are more promising. The study reveals a clear
emergence of multiple and alternative sources of service delivery: polycentricity is already
developing and is succeeding in bringing service delivery closer, and making it more
accountable and responsive, to users. The report presents a summary analysis of the capacity
of the various institutional actors.
8. Findings from model evaluation by sectors

Agricultural technology. The agricultural technology sector case studies include Agency,
NGO, Private and Agency/Private collaborative models. Concerning research, the need for
continued public funding for applied and adaptive research for crops other than industrial
crops is highlighted, as this is essentially a public good. NGO involvement in conducting
research facilitates higher levels of farmer participation. For industrial crops the private
collaborative model is found to perform well. None of the models succeed in involving
poorer farmers, however, so that research is not targeted on the problems faced by these
poorer farmers face. In extension, the Agency model was assessed as poor in quality and
coverage, and relatively expensive. Private sector extension delivery is effective for specific
types of service, e.g., through a factory’s contract with the farmers who supply raw material,
or through agro-vets who supply advice and information along with purchased inputs.

Surface irrigation. The NGO/CBO model was found to be the most efficient. It has low
implementing and maintenance costs and high quality of construction, and it is sustainable
because operation and maintenance costs are raised locally from users. Involvement of the
NGO provides training and assures a higher quality of construction than the pure CBO
(farmer managed irrigation) model. The Agency involvement increases costs and tends to
lead to performance below potential.

Groundwater (shallow and deep tubewells, and treadle pumps). The four models identified
(Agency, Agency/CBO, Agency/Private sector, and NGO/Private sector) are not strictly
comparable because they use different technologies for extraction.
Overall, the
Agency/Private sector model works well. The agency under this model is the Agricultural
Development Bank of Nepal which provides funding and technical assistance. Public costs
(including subsidy) are lower, and technical performance is higher, than for other agency
models. Under all agency models, the subsidy has distorted investment, with expensive
pumping equipment installed where lower cost alternatives would have been more
appropriate. The NGO/private sector is another model that works; its performance is highly
dependent on the technical capacity of the NGO. The findings of the study are broadly
consistent with other recent reviews of irrigation in Nepal.

Drinking water. Four models were studied in the drinking water sector: Agency,
Agency/CBO, NGO/CBO, and Fund/NGO/CBO. The pure Agency model performs least
well. The Agency/CBO models represent instances of hand-over to a CBO of a facility
constructed by the Agency, without capacity building or earlier involvement of the
community in system design and construction. These models do not perform optimally
either. The Fund/NGO/CBO model performs more effectively than the other models and
also scores relatively high on process. Users are involved directly in procurement and in
construction, leading to high transparency. However the Fund does not compensate for the
higher costs incurred in more remote areas. This weakness should be remedied.

Roads and bridges. Five models were identified in this sector (Local bodies/CBO, Local
bodies/CBO with direct donor influence, Agency, CBO, and NGO/CBO. For roads, the first
two models give the lowest costs of construction and high transparency. Direct involvement
of a donor in management improves performance because it is accompanied by support for
training, technical supervision, and monitoring and evaluation. The local bodies and CBOs
ensure maximum involvement of users, particularly where it is the VDC rather than the
DDC, which has responsibility. For bridges, the NGO/CBO model is the most effective
institutional arrangement.

Rural electric power. Three models for electricity distribution were studied: Agency,
Agency/CBO and Private/CBO. The most effective is where the private sector works in
conjunction with CBOs. It gives better technical supervision and low cost in system
establishment, involvement of the users in planning and construction, and adequate provision
for operation and maintenance. The pure Agency model has high cost. The monopoly
position of the National Electric Agency (NEA) as sole generator of power contributes to
high costs, as does the lack of control of power theft in distribution. The Agency/CBO
model, where CBOs buy power in bulk and then distribute to users, has potential if the high
cost of NEA power can be reduced through competition in generation.
9. Policy recommendations across sectors.
recommendations:








The study offers the following general policy
create a consistent ‘level playing field’ across models and actors, particularly with regard
to subsidy levels: incentives tend to favor larger, more capital intensive investments, and
more wealthy communities
decentralize service delivery, disengage line agencies and give CBOs the driving role
define the Government’s ‘provisioning’ function; delineate precisely its ‘production’
function as justified in the case of public goods
tailor institutional arrangements to local circumstances and sector conditions (with cross
sector coordination)
align government budget with investment priorities as perceived by stakeholders in the
various sectors concerned
focus social capital development on the southern Tarai to lay the appropriate base for
implementation of institutional models
target models in the western Tarai given its higher level of poverty
create sectoral funds as a means to promote polycentricity
10. Policy recommendations by sectors

Agricultural technology. For research, the study recommends that stakeholders be more
closely involved in setting the research agenda, that public funding should be at least in part
through an autonomous competitive fund, that public sector should recover some costs where
research provides private benefit, and that a proper incentive framework be developed as
basis to capacity building in the NGO and private sectors. In extension, the private sector
should be allowed to cater for private goods. However, to develop the market in agricultural
advice, agro-vets need access to credit, and a regulatory framework is needed to assure
quality of service. For public goods extension, government should consider contracting
service delivery to the private and NGO sector. This could be done in part under a
competitive fund that would favor innovative institutional arrangements

For irrigation and drinking water, beneficiaries should be involved in project identification
and also in project design and execution. Cost recovery levels should be based strictly on
economic criteria. Sectoral funds should be established, which can legally receive resources
from HMG/N and donors and contract a diverse set of actors on a competitive basis. The
model for such sectoral funds is the Rural Water Supply and Sanitation (RWSS) Fund. For
existing large and complex schemes, a shared management arrangement is recommended,
with the agency managing headworks, main distribution canals, deep tubewells and
accessories, and user groups managing all the lower elements of the system

In the rural roads/bridges and electricity distribution sectors, competent facilitators are
needed to support the development of beneficiary groups who can take part in construction
and be responsible for the maintenance of completed roads. Training is a key element in
capacity building and sustainability. Sectoral funds are recommended for these sectors also.
CHAPTER I: INTRODUCTION
A.
Background
1.01
Nepal is a country rich in natural beauty and locked in poverty. Despite billions of
dollars of investment in Nepal’s development, almost half of the Nepalese population
live below the poverty line. The failure of past development efforts to yield
sustainable growth in Nepal can be linked to weak institutions and inappropriate
government policies 1. In recognition of the importance of institutions to effective
development, this study seeks to examine Nepal’s experience with various
institutional options for growth- and poverty-related service delivery and to make
recommendations on appropriate and realistic institutional arrangements that can be
applied in the Tarai districts.
1.02
The Tarai region was chosen for the study because it was identified in the
Agriculture Perspective Plan (APP) as a prime agricultural region, and potential
candidate for a national green revolution. The comparative advantages of the Tarai
region are: abundant irrigable land, high groundwater potential, scope for cost effective infrastructure, capacity to adopt new technology, and access to do mestic
and international markets. However, the potential of the Tarai districts has not been
realized, due largely to the lack of good roads to transport products to market,
absence of well controlled year-round water for irrigation, land degradation due to
poor soil management, ineffective extension systems, lack of proven technologies
for the region, inadequate institutional support, absentee landlordism, and a lack of
social capital in some areas.
1.03
If these obstacles are overcome the Tarai districts could reach a higher level of
development, generating significant growth for Nepal and reducing national poverty.
The first step towards realizing this potential is the identification, creation, and
support of appropriate institutions for better rural development services.
B.
Objectives and Scope of the Study
1.04
This study analyzes Nepal’s past experiences in rural development investments to
make recommendations on institutional arrangements for the future. The review
identifies sustainable and cost-effective arrangements that will have the highest
impact on growth and poverty alleviation.
In recommending institutional
arrangements attempts have been made to build on recent decentralization efforts of
His Majesty’s Government of Nepal (HMG/N).
1
This conclusion is supported by analysis of 43 countries that shows that growth rates are adversely affected by dubious
policies and institutions (Devarajan, 1996). When policies and institutions faltered a negative relationship was found
between public investments in capital and the national growth rate.
2
1.05
Five major sectors are covered in the study 2. These sectors and the sub-components
within these sectors are outlined below:
(a)
Agricultural technology: agricultural research and agricultural extension services;
(b)
Irrigation development: both surface water irrigation as well as shallow and deep
groundwater irrigation development;
(c)
Drinking water: the components reviewed under this sector are gravity fed systems,
shallow groundwater-based systems (including hand tubewells) and deep groundwater
based systems;
(d)
Rural roads: minor feeder roads comprising district roads, village-level roads, and
corporate roads as well as bridges; and
(e)
Rural electrification: power distribution was the only sub-sector considered for the
purpose of this study;
1.05
Under each of these sectors and their sub-components (or sub-sectors), the key crosscutting themes
or issues taken into consideration are: institutional pluralism, decentralization, and local
governance, as well as the overarching theme/issue of sustainability.
C.
The Nepal Tarai
1.06
The analysis was purposely focussed on the Tarai region of Nepal. Before
beginning with the analysis, it is worthwhile to re-examine the reasons that have
prevailed in the selection of the Tarai as the focal region for the study against this
region’s comparative advantages for agricultural growth and poverty reduction.
Regional variations in resources, services and the capacity of key actors are also
reviewed, as they play an important role in determining the most appropriate
institutional arrangements for Tarai’s different districts.
1.07
The Tarai is one of five physiographic zones in the country and is a part of the IndoGangetic plain comprising a tract of low flat land ranging in altitude from 22 m below
sea-level to 600 m above. The Tarai stretches along the southern boundary of the
country extending almost the entire length of the border with India. The Tarai’s soil is
alluvial and fine to medium-textured. It is often deep and possesses good water holding
capacity. The climate is subtropical with an annual rainfall ranging between 1,000 to
2,700 mm. The Tarai districts are presented in Map 1.
2
These sectors are those targeted by the Agricultural Perspective Plan, except drinking water.
3
1.08
The Tarai in the context of Nepal. The Tarai is Nepal’s grain basket and produces a
sizeable surplus of rice. Compared to Nepal’s other regions, the Tarai has a comparative
advantage for agriculture with its fertile soil, the proportion of cultivable land,
topography, climate, availability of groundwater, and relatively well-developed economic
infrastructure. The Tarai covers only 23 percent of Nepal’s surface area, yet holds 47
percent of its population, 53 percent of the cultivated area, and 68 percent of the
irrigated area. The Tarai shares the 1,000 mile open border with India that facilitates
informal cross-border trade (see Annex 1).
1.09
Geographical Trends in the Tarai. Within the Tarai there is significant regional
variation with noticeable trends from West to East, and North to South.

Western to Eastern Tarai. Increase in population density. The eastern areas were
settled first (with little migration today). These areas are more suitable for
cultivation due to the good soil quality and reliable rainfall. A greater fraction of
the land is cultivated. There is little cultivable land available, and the amount of
land under forest has fallen.

Northern to Southern Tarai. Tarai’s northern regions were settled primarily by Hill migrants; and
the southern regions are populated by native Tarai people. This has lead to distinctly different
settlement patterns. Land distribution in the North is more equitable than in the South, and
consequently the southern regions have a relatively lower level of social capital and income
distribution is more skewed . Southern Tarai has more cities and urban centers; its proximity to the
Indian border has resulted in greater economic integration with the Indian states of Bihar and Uttar
Pradesh. In contrast Tarai’s northern regions are more integrated with Nepal’s Hill districts. The
southern Tarai has better topographic and soil conditions, and greater groundwater resources.
1.10
Understanding these trends is important to design developmental activities, and to tailor
institutional arrangements to specific circumstances. For example, the relatively lower
level of social capital in some of Tarai’s southern parts will mean that priority activities
there would include social mobilization to enhance social capital.
1.11
Level of affluence. A comparative study of Nepal’s 75 districts prepared by
ICIMOD/SNV (1997) has assessed the relative level of affluence of each district using a
composite index based on current and potential levels of development. This index is
derived from the following base indicators: poverty and deprivation, women’s
empowerment, natural resource endowment, socio-economic infrastructure development,
educationally disadvantaged population, per capita food production, overall literacy,
infant mortality, drinking water coverage, irrigated area, road density, forest using
households, per capita forest area, health and development, and infrastructure
development. These indicators and the composite index, compiled for each Tarai
districts, are presented in Annex 2. According to the ranking, Jhapa is the most affluent
district while Rautahat is the least. Additional data on population including land man
ratios and average land holding size are presented in Annex 3 and 4 respectively.
4
Map 1
5
CHAPTER II: THE CONCEPTUAL FRAMEWORK
A.
Presentation of Conceptual Framework
2.01
The present study is designed to examine the institutional arrangements (or
institutional models) underlying a discrete number of case studies, identify the
strengths and weaknesses of these models and whenever possible proceed with a
comparative evaluation of the models as applied in any given sub-sector. The
study does not aim to elaborate a development strategy for the Tarai. The socio economic context at the macro level is taken as given (see para 2.04 below). The
focus is purposely on institutional dimensions as they are applied at the micro
level.
2.02
The study borrows from key concepts governing institutional analysis as they
apply to the delivery of services. Institutional analysis, has evolved dramatically
in recent years due in part to the recognition of the key relationship betwee n
institutions and development processes. Ostrom (1993) introduces institutions as
the fourth implicit pillar of development, supplementing the other three pillars of
neo-classical economic theory, e.g., endowments, technologies and preferences.
Institutions, whether they are states, societies or groups are vital tools through
which individual preferences are collected, channeled and transformed into
actions, goods and services. This is aptly stated by North (dates?) who provides
the following definition of institutions: “Institutions provide the framework within
which human beings interact. They establish the cooperative and competitive
relationships which constitute a society and more specifically an economic order.
Institutions are a set of rules, compliance procedures and moral and ethical
behavior norms designed to constrain the behavior of individuals”.
2.03
The key concepts of institutional theory on which the present study is based are: (a)
provision and production; (b) pluralism and competition (‘polycentricity’ and ‘coproduction’); (c) public vs. private nature of goods and services; and (d) participation and
empowerment; the key role of social capital development .
2.04
Another premise upon which this study’s conceptual approach is based is that the
policy and regulatory framework should be adequate if institutions are to work
efficiently under any model.
Providing an enabling environment in which
beneficiaries can operate efficiently is a prerequisite for institutional arrangements to
produce the desired results. Distortions arising from ill-conceived economic policies
(as it will be seen in the case of tubewell subsidies) need to be removed. The
management and preservation of environmental resources is also key to pave the way
for the sustainability of institutional arrangements. A case in point is the overall
availability of water resources for irrigation. In the absence of adequate water use
6
regulations, overall water resources may be depleted, voiding any positive results
from potentially efficient model at the micro-level.
B.
Provisioning and Production
2.05
According to institutional theory, there are two key and separable concepts in the
delivery of goods and/or services--namely provision and production (ACIR, 1987).
Provisioning refers to the process whereby decisions are made regarding what
goods and services will be made available to a community. In contrast, production
refers to how these goods and services will be ‘produced’. Provision criteria are
concerned with how to satisfy the public’s preferences (through beneficiary
responsive planning and funding), while production criteria involve, the efficient
management of human and material resources.
2.06
This study questions how the provisioning and production functions can be implemented
to maximize efficiency, equity, responsiveness, accountability, and sustainability in the
delivery of rural goods and services. A key principle in determining responsibilities for
provisioning and production is to assign these responsibilities to the most appropriate
level of government, and to the most appropriate institutions or agency operating at that
level (Martinussen, 1987). This is defined in terms of effectiveness (degree of objective
achieved), efficiency (minimum cost without compromising quality) and responsiveness
(degree of flexibility to accommodate the changing needs of beneficiaries as articulated
by them). In Nepal’s case this will involve deciding on responsibilities between the three
levels of government – the central government, DDCs, VDCs, or municipalities – as well
as NGOs, the private sector and CBOs operating at these three levels.
2.06 Another consideration in determining the responsiveness of institutions is the ‘subsidiarity’
principle that shows improved accountability and transparency when functions are carried
out at the lowest possible level, and as close to the beneficiaries as possible. If this
principle is followed, the institutional set-up (and corresponding capacity for providing
rural development services) will improve.
C.
Polycentricity and Co-Production
2.07
Another guiding principle in task allocation between institutions, is a preference for
pluralism and competition over hierarchy. In Nepal, User Groups (UGs) and CBOs
have not been important sources of influence and power traditionally. The
hierarchical approach is still ingrained in Nepal’s current democratic system of
governance – a system often criticized for its adherence to tradition that tends to
prevent a more responsive provisioning and production of services. In Nepal, the
public functions of government are still typically implemented centrally, and with
little participation from potential beneficiaries. The concept of institutional
pluralism would introduce competition amongst institutional actors, and provide the
public with a menu of options for accessing development resources. This important
concept of polycentricity which underlies the analysis of this report refers to an
environment where there are multiple providers of the same services. This creates
competition and opportunities of synergies on the supply side, and permit to offer a
7
range of options amongst which beneficiaries can select depending upon their own
circumstances and preferences on the demand side. Figure 1 contains a diagram
exemplifying how a polycentric institutional arrangement of the above type could be
established for carrying out development functions in Nepal.
Figure 1: A Polycentric Support Structure for Development Functions
Financial Institutions
Institutions
Financial
and Funds
LOCAL GOVT.
USERS
GROUP
USERS
GROUP
CONSUMERS
Consumers
CITIZENS
Citizens
NATIONAL GOVT.
SECTORAL
MINISTRIES
SECTORAL MINISTRIES
REGIONAL GOVT.
DESIGN BUREAU
BUREAU
CONSTRUCTION
CONSTRUCTION
BUREAU
BUREAU
OPERATING
BUREAU
BUREAU
Quality
Monitors
SECTORAL
SECTORAL MINISTRIES
MINISTRIES
CONSTRUCTIO
N BUREAU
OPERATING
BUREAU
DESIGN
BUREAU
CONSTRUCTION
BUREAU
OPERATING
BUREAU
DESIGN
DESIGN
BUREAU
BUREA
U
CONSTRUCTION
FIRMS
FIRMS
DESIGNERS
BUILDERS
OPERATORS
2.08
Another development model with tremendous scope and demonstrated success is the coproduction model – an arrangement that allows substantial private and CBO participation
in the delivery of public services. Co-production requires the government to relinquish
some functions and join forces with the private sector to overcome public sector
inefficiencies. In developing countries, rural infrastructure has often been produced in
partnership between the government and private citizens – a co-production model
(Cernea, 1985). If well-structured, co-production projects can achieve exceptional levels
of efficiency and sustainability due to the public/private synergy. In particular, due to the
market incentives introduced through private sector involvement there is little scope for
corruption in the co-production model
2.09
One overall responsibility that government carries is that of creating a policy environment which supports
any chosen set of institutional arrangements. Polycentricity and pluralism, for example, can only function
if government introduces policies which creates space for and encourage alternative producers of services.
Effective implementation of local government reform and deconcentration of central government functions
creates an environment in which local CBOs and NGOs can have a voice in provisioning and a stake in the
production of development services.
D.
Public vs. Private Nature of Goods and Services
8
2.10
The nature of the supplied good/service is an important factor when defining the most appropriate
institutional arrangement for the delivery of goods and services. Goods and services can be private or
public: pure private goods and services are characterized by complete exclusion (i.e., excludability) in
consumption where one can be prevented from using the good/service; and pure public goods and services
have shared uses/consumption (i.e., low rivalry) so one consumer does not inhibit the consumption of the
good/service by another consumer. Between these two extremes are goods and services with varying
degrees of rivalry and excludability (Ostrom, 1993) which render these goods and services to become toll
goods or common property resources (community goods). Definitions of the key categories describing the
nature of goods and services are provided below, and these classifications are presented in Figure 2.

Public goods exhibit joint use/consumption, or low rivalry (if ‘A’ consumes it, it is
still available for ‘B’ to consume); and low excludability (it is difficult for ‘A’ to
prevent ‘B’ from gaining access to it).

Private goods exhibit alternative use/consumption, or high rivalry (if ‘A’ consumes
it, it is not available for ‘B’ to consume); and high excludability (‘A’ can easily
prevent ‘B’ from using it).

Toll goods exhibit joint use/consumption, or low rivalry; and high excludability.

Common pool resources (referred to as ‘community goods’ in the text) exhibit
alternative use/consumption, or high rivalry; and low excludability.
9
Figure 2: Types of Goods
High
(low)
Sharing of Consumption (high)
Private Goods:
Rice, shoes,
bicycles,
haircuts, books
Toll Goods:
theaters, cinema
halls, telephone
service, toll roads,
cable TV, electric
power, libraries
Feasible
(Low Cost)
Exclusion
Common-Pool
Resources:
water pumped from
a groundwater
basin, fish taken
from a river, crude
oil extracted from
an oil pool
Public Goods:
peace and security
of a community,
national defense,
mosquito
abatement, air
pollution control,
fire protection,
streets, weather
forecasts, public TV
Alternative Use
Joint Use
Low
Infeasible
(Costly)
2.11
The provision of private goods can best be managed by competition, a policy environment
where market failure situations like monopolies, monopsonies, and cartels are avoided;
this falls under the government’s regulatory function. Delivery of public goods and
services poses more difficult problems. In this study the focus is more on the institutional
models that characterize efficient delivery of such public goods and services for the
development of rural areas. In public goods and services, voluntary effort will not work
because potential users have incentives to hold out or act as free-riders. This is why the
market cannot be relied on, and institutions, with a set of rules, are needed for the
production, delivery and use of the public goods and services.
E.
Social Capital Development
2.12
In addition to above considerations, the form of institutions that will be most effective
under any given circumstances will depend largely upon the amount of social capital
accumulated by a community. Social capital is defined as the degree of trust and
reciprocity between members of the society or community. It is the ability of people to
work together in groups and organizations for a common purpose. The greater the trust
between members of the community, the greater likelihood of there being an effective
10
community institution for handling the development related public goods. Culture,
religion, and pattern of income distribution have significant bearing on social capital
which can vary widely between groups and regions. Where social capital levels are low,
additional facilitation is required to allow the groups to become viable, otherwise groups
exist only in name. There are several examples in Nepal of participation in organizations
where members are nominated rather than elected, and where this adversely impact the
delivery of development services.
2.13
As with all institutions, it is essential that the benefits from the creation of community
groups are estimated. Group formation should be considered only where costs remain
lower than the associated benefits (e.g., savings in infrastructure building, better O&M
leading to increased production, etc.). If this cannot be proven then alternative options
should be explored, such as private sector delivery. Such cost/benefit assessment of
institutional options have rarely been carried out in Nepal. As a consequence, the fact
that the delivery of goods and services (particularly those of a public good nature) has
largely been inefficient and costly has been left unrecognized.
2.14
This study paves the way for analyzing the performance of the institutional options. With
the above principles in mind, the study reviews and examines various models of
delivering goods and services to the people and beneficiaries, and formulate
recommendations as to what are the most appropriate models given the local
circumstances for the development of the Tarai districts. The goal particularly is to
improve the efficiency and equity in the execution of projects in the Tarai with the hope
of greatly enhancing the welfare of the rural Nepali populations.
11
CHAPTER III: STUDY METHODOLOGY
A.
Case Study Methodology
3.01
This study has an operational focus–consequently the analysis draws primarily
from case studies of on-the-ground experiences of different approaches to
delivery of rural infrastructure and agricultural technology services in Nepal.
The case study methodology aims at examining in-depth a discrete number of
cases studies to identify the institutional models for rural services delivery
underlying these case studies, and assess the strengths and weaknesses of these
models. The methodology does not purport to make any statistical inferences
or to be exhaustive in terms of its coverage of the range of models applicable to
the delivery of rural development services. It aims rather at illustrating a
discrete number models typically being applied in rural Nepal, based on the
analysis of both ‘best’ and ‘not so best’ practices, and compare these models in
terms of both performance and process outcome (see Section E and Section F
below).
3.02 The case studies were carefully selected through desk studies and interviews in order be
representative of the range of different delivery models that have been tested across the
different Tarai districts in each of the sub-sectors reviewed. For each case study the
institutional model was conceptualized, with particular attention paid to the roles and
responsibilities of key actors, and the key steps in the delivery process (or in the ‘project
cycle’). The information collected was then used to assess the efficiency and effectiveness
of the different models – both in terms of process and performance outcomes. This gave
the basis for determining the strengths and weaknesses of the model and allowed for a
consistent comparison of performance across models when circumstances
permitted such a comparison. 3 Based on key findings derived from these
evaluations, recommendations were developed for each sector. Wherever
possible previous reviews were examined and supporting empirical research
was checked to confirm findings. The institutional arrangements observed in
the case studies are discussed in Chapter VI, the performance evaluation
findings are presented in Chapter VII, and the final recommendations are made
in Chapter IX.
B.
3
Desk Study
The case study write-up and summarization are presented in the sector annexes (Volume II) of the present study. This
includes the scoring description and performance evaluation for the models underlying the case studies.
12
3.03
During the desk study information was collected from studies, reports, books
and articles related to the sectors covered under the study. In addition to this
initial review, discussions were held with relevant central-level stakeholders,
local line agencies, and Non-Governmental Organizations (NGOs), etc., to jointly
identify a range of case studies from across the Tarai districts that was
representative of the different modes of service delivery for each sector. In
most instances, several cases of each institutional model within each sub -sector
were identified and information on these cases was summarized to maximize
consistency of observations. The final list of cases is presented in Annex 5.
C.
Field Visits
3.04
Field visits consisted of visits to project sites, and interviews with stakeholders to collect
detailed information for all selected case studies. At least one field visit was completed
for each case study reviewed. During the field visit, the study team met with key
stakeholders, including community members, community leaders, farmers, community
based organizations, staff from project executing agencies (both local and regional
offices), as well as representatives from line agencies, District Development Committees
(DDCs), Village Development Committees (VDCs) , local NGOs, international NGOs
(INGOs), and private sector operators. The list of institutions visited and persons met are
presented in Annex 6.
3.05
In order to systematically elicit responses, sectoral and thematic checklists were prepared
and formed the basis of interviews and site visits. These checklists were pre-tested and
refined before use in the field. They served to collect information on the roles and
responsibilities of key actors in the delivery cycle, i.e., project initiation, planning,
facilitation (including technical support if needed), funding and resource allocation,
implementation management, conflict resolution, monitoring and evaluation (M&E), and
operation and maintenance (O&M). Data was also collected on project outcomes (or
performance). This included observations and beneficiary feedback on the quality of the
services provided (e.g., condition, relevance and delivery efficiency), the standard (e.g.,
reliability and level of service), the economic efficiency of service provision (e.g., capital
cost/unit and capital cost/beneficiary). It was also based on evidence (sometime
anecdotal) of project impact, observations on institutional and financial sustainability,
and information on user commitment to project implementation as well as operation and
maintenance. To facilitate comparison across case studies, background information on
the case study was also gathered, including project type, project scale and complexity,
project scope and coverage, and time since project completion.
3.06
By design, the districts in which case studies were selected had a relatively high level of
government, donor and INGO/NGO involvement. As a whole, 13 out of the 20 Tarai
districts were covered as part of the cases studies (Table 1). Some interesting
institutional models not currently used in the Tarai, but with potential application in the
Tarai, were also examined by taking case studies from the Hill districts. The Hill districts
13
visited were Kavre in the central region (for the NGO model in agricultural extension),
Syangja and Lamjung in the western region (for private sector and (Community-Based
Organization - CBO models for electricity distribution), and Dailekh (for the NGO model
in agricultural extension).
Table 1: List of Districts Visited by the Study Team
Development
Region
Eastern
Districts visited
Jhapa, Morang, Saptari, Siraha, Sunsari
Central
Bara, Chitwan, Parsa
Mid-western
Banke, Dang
Western
Kapilvastu, Nawal Parasi, Rupandehi,
D.
Identification of Actors and Steps in the Delivery Process
3.07
Key institutional actors. The information gathered through the desk studies and field
visits was synthesized to identify the roles and responsibilities of key actors in project
development. For the purposes of this study, the following key institutional actors were
identified as follows:

Individual end-users: end-users of services (rural dwellers in the broader sense,
including farmers under differing land tenure arrangements: owner-operators,
tenants, sharecroppers, etc.)

CBOs: including User Groups (UGs), and community associations;

NGOs: non-profit service organizations affiliated or not with the Social Welfare
Council;

Private sector: individual private operators, companies or industry associations;

Local government bodies: decentralized governments in the districts (DDCs) and
the villages (VDCs);

Agencies: government sectoral services/agencies with their field offices (this
includes the Agricultural Development Bank (ADB/N) for shallow tubewells); and

Funds: autonomous investment funds.
14
3.08. Key steps. The roles and operating arrangements for these different actors were examined
along the ‘delivery cycle’. It is worth noting that this delivery cycle differs markedly
across sectors and across the range of goods and services that are delivered. The digging
of boreholes and the installation of pumps for water supply for instance is performed
typically along a project-type cycle, whereas extension services or road maintenance are
typically undertaken as part of routine programs. The number and the nature of the
process steps are also different (for details see Annex 7 presenting the individual models
covered).
3.09
The key delivery steps considered in the study are subsumed under the two stages of the
delivery cycle, i.e., the ‘provisioning’ stage and the ‘production’ stage:
(a)
Provisioning Stage

Project/service initiation: formulation of demand, submission of project request;

Project/service planning: preparation and design, including facilitation, capacity
building and provision of technical assistance services;

Funding: provision of funds and non-financial resources;

Resource allocation:
allocation of funds
projects/subprojects or primary/secondary services;
(b)
Production Stage

Project execution/service delivery:
project implementation, including
construction management of infrastructure projects, or provision of project
management services (e.g., for agricultural services)

O&M: funding, repair and operation of systems (not applicable for management services)

M&E: regular assessment of project implementation/service delivery (including financial
monitoring), and project/service impact and outcomes
and
resources
between
3.10
Case studies in each of the respective sectors (and sub-sectors) were often illustrative of
the same model. This permitted the analysis of the same institutional arrangement in a
variety of settings and project circumstances, thereby increasing the confidence and
robustness of findings. The complete description of the institutional models identified
and evaluated for each sector is presented in matrix and diagram format in Annex 3.
E.
Efficiency Performance Evaluation
15
3.11
A key component of this study is the evaluation the efficiency of the models across the case studies
reviewed. To this effect, the performance was measured according to pre-identified performance ‘criteria’.
For the infrastructure sectors the five criteria were:
(a)
infrastructure standard;
(b)
service delivery standard;
(c)
cost effectiveness;
(d)
impact (descriptive only); and
(e)
sustainability.
The agricultural technology services, since they possess slightly different characteristics, were rated based
on the following four criteria only:
(a)
service delivery standard;
(b)
cost-effectiveness;
(c)
sustainability; and
(d)
impact (descriptive only).
3.12
After extensive consultation with sector specialists, several sets of easily measurable indicators that suitably
(but not perfectly) captured the above performance criteria were developed 4. The list of indicators used
varied according to the sector being examined (see complete list of indicators for each sector in Annex 8.)
It is important to note that the relative values of indicators were compared only within sub-sectors for a
given type of infrastructure or service (e.g., tubewell cases were compared to other tubewell cases only, and
not to surface irrigation cases; dirt roads were compared to dirt roads and not to gravel roads). This ensured
that comparisons were made across projects or services of similar design and/or service standards.
3.13
The indicators served two functions. They provided a tool for identifying particular strengths and
weaknesses associated with each models. They permitted also, whenever circumstances were sufficiently
similar, to proceed with the comparative evaluation of the different institutional arrangements in given subsectors.
3.14
For each case study, the performance was measured against the indicators on scale of 0 to 3 (0 reflecting
lack of performance and 3 reflecting high performance,). By nature, many of these indicators had elements
of subjectivity and therefore explicit statements justifying the scoring were provided next to the assigned
values. Where quantitative values were applicable (e.g, cost per hectare or cost per beneficiary), the range
of values reflected in a 0 to 3 score was given. These ranges are summarized for easy reference in the
Annexes I-V, Volume II., which may available as reference document at the World Bank Kathmandu
Office. Where there were several cases representing a single institutional arrangement, the score for each
of the indicators was averaged across cases to obtain a single performance evaluation table for the overall
institutional model presented.
4
For example, to capture the relative cost effectiveness of different delivery arrangements in the provision of rural roads,
dollar values for both capital cost/km and capital cost/beneficiary were compared between models for each sub-sector.
16
3.15
For sub-sectors where roughly identical services are being produced, the comparative evaluation of the
different institutional arrangements was then completed by comparing the average score (based on the
values of the indicators) for each performance criterion. It should be emphasized that the compilation of a
total aggregate value for each institutional arrangement was deliberately avoided, because it oversimplified
the analysis, and implied an equal relative importance (weighting of 1) of the different performance
dimensions. Instead the individual values of the different parameters were preserved, to illustrate the
diversity existing across case studies and allow for a more effective evaluation and discussion of the
various strengths and weaknesses of the different models. The ‘preferred’ model for each sector was
identified by ranking the different arrangements based on an inspection of the profile across the parameters.
The ranking was made easier by the fact that a better model often scored high in all or most indicators and
criteria.
F.
Process Performance Evaluation
3.16
To complement and cross-check the ‘efficiency’ performance evaluation described
above, an additional ‘process-based’ evaluation was also completed for each institutional
arrangement. This process-based review was designed to verify factors associated with
the process of project implementation that have been identified in empirical
investigations as important contributors to project success, i.e.: (a) the level of
participation or beneficiary involvement in key project/service delivery steps (see para
3.08 above and (b) the total number of actors involved in the various project
implementation steps (or co-production index). The process evaluation is also meant to
measure the degree to which poor segments of the communities effectively participate in
and benefit from the service delivery process, and in turn determine whether the models
are likely to serve as instruments to reduce poverty. For the purpose of this ‘process’
ranking, a higher level of inclusion of beneficiaries is considered as preferable (in line
with the ‘subsidiarity’ principle defined in the theoretical framework); similarly, a
higher ‘co-production index’ is valued higher because of possible synergies that it may
generate (see Chapter IV for a detailed discussion of these concepts.)
G.
Limitations of the Study
3.17
It is important that the limitations of a study of this type be recognized at the onset and
taken into account in the interpretations of the findings.

The sample of case studies is not intended to be representative in any statistical
sense of the situation prevailing on the ground; rather it is illustrative of the main
kinds of institutional arrangements that are used in the various sectors in rural
Tarai; there are clearly other models (mostly composite or hybrid models) in
operation which are not covered by the study

The study is not a review of best practices only; indeed, the intent has been to
identify both ‘best’ and ‘not so best’ practices, and select case studies
17
accordingly, the presumption being that it is useful also to identify what are the
possible shortcomings of certain models and learn from cases that did not yield
expected results. Here again the coverage of ‘best’ and ‘not so best’ practices is
neither exhaustive nor representative in a statistical sense

Whilst the scoring of the performance criteria was made as objectively as
possible – including seeking the perceptions of the clients – subjective judgement
had to be used to determine the final scoring for each model

Direct comparison between models within a given sector is not always
appropriate because the models are used to deliver non-equivalent service or a
different combination of services, or because the circumstances surrounding
delivery are substantially different

Cost estimates (overall cost-effectiveness, cost per beneficiary or per ha) should
be treated with caution because of the inherent difficulty (particularly in
agricultural technology) in obtaining basic data and in identifying comparable
cost data across models

The study is focussed on the assessment of the ‘efficiency’ of institutional
arrangements – including from the viewpoint of beneficiary participation,
accountability and transparency; however, although equity considerations are
not systematically factored into the quantitative assessment, an attempt has been
made to take these consideration into account in the overall model assessment
each time the information gathered (including farmers’ perception) permitted to
pass such a judgement
18
CHAPTER IV: DEFINITION AND CLASSIFICATION
OF GOODS AND SERVICES
4.01
The most appropriate arrangement for delivering the various goods and services examined in this study will
differ depending on the nature of these goods and services -- whether they are public, toll, common pool, or
private goods or services. For instance, a pure public good would have to be under the control of the
government or a parastatal, otherwise it can result in serious under-investment or flawed delivery.
However, institutional arrangements can also effectively change the nature of a good or service. In the
same, way, an open access road can be turned into a toll good by charging people to use it; and a water tap
which is a community good when anyone is free to use it becomes a toll good when a water user association
controls access, and a private good when it is installed in a private house. Whenever institutional
boundaries or controls are created to control access to a public good or community resource, it becomes
either a toll or a private good or service. In this chapter, the goods and services are defined in terms of
their ‘public’ or ‘private’ nature, and the above related issues are discussed piecemeal as each type of good
and service is presented.
A.
Definition of Agricultural Technology Services
4.02
The agricultural technology services which support farmers include:

the development of new knowledge

the development of new and adapted technologies which farmers can use to improve the
productivity, sustainability and efficiency of their farming system

the provision of advice and information which farmers need in order to solve problems, realize
opportunities and make appropriate decisions

the supply of material inputs which incorporate (new) knowledge and technology
4.03
The first two of these services are typically public goods, but can be turned into toll goods through legal
protection of Intellectual Property Rights (IPRs), or by the new knowledge or technology being usable only
by growers who market their crop through a single channel. The third service lies somewhere in between
public and private, depending on the degree to which the advice and information is farm-specific. Soil test
for instance is private because the results are only applicable to the single farm, while advice on plant
spacing, and information on market prices, are public. The fourth service is intrinsically private.
4.04
In this study, agricultural technology services are grouped into two main categories, agricultural research and
agricultural extension. The range of activities considered as part of the case studies, both for research and
extension, is limited to farming. Within farming it is further limited to cropping activities (both field and
home gardens). Other on-farm activities, such as forestry-related activities, livestock rearing, fish farming,
etc., have been purposely left out of the scope of the study for lack of time and resources.
Agricultural research
4.05
Research activities include the generation of new scientific knowledge (basic research), generation of
technologies which incorporate new scientific knowledge (including new and improved varieties of crops:
applied research), and the adaptation of technologies to specific agro-ecological and farming system
contexts (adaptive research). The production of breeder and foundation seeds is not a research activity per
se, but is a necessary part of the sequence of activities in technology development. In the Nepalese context,
basic research is done in the international agricultural research institutes and scientific institutions overseas.
Research conducted within the country is mainly applied and adaptive in nature and is the focus of the
19
present study. In this study, the research activities considered focus on crop variety selection and
improvement, and production of breeder and foundation seeds.
Agricultural extension
4.06
Agricultural extension covers the provision of advice and information for farming activities in the broader
sense. There is some extension also within the supply of material inputs, when suppliers provide
information and advice to farmers who buy inputs from them. These activities therefore are also covered
under the study. As was indicated in para 4.04 above, however, the analysis under this study is
circumscribed to cropping activities, and do not touch upon other on-farm activities such as livestock
activities.
4.07
Six types of services are considered under the study:
i.
Farm technology information service
ii.
Exposure to the performance of a new technology (e.g. through result
iii.
Enhancement of practical or cognitive skills for increasing the efficiency with which producers
use their resources (e.g. through method demonstrations and training)
iv.
Identification of farm-specific problems and opportunities (e.g. diseases, pests, soil conditions)
v.
Technical advice to solve farm-specific problems
vi.
Marketing information (e.g. prices of inputs and produce).
demonstrations)
Of the above, i, ii and iii are typically public goods; iv is a toll good; while v and vi are private goods. Extension is
not simply the ‘dissemination of technology’: it is essentially a demand-driven activity which responds to farmers’
needs for information and advice.
B.
Definition of Infrastructure Services
4.08
The infrastructure sectors examined in this study are: irrigation, drinking water, power,
and roads. In Tarai, within each of these sectors, a number of services and technology
options (or ‘sub-sectors’) are available. Since the nature of each subsector’s good or
service has distinct properties they are reviewed and analyzed separately.
Irrigation
4.09
Both surface and groundwater irrigation technologies are examined; within the range of
groundwater options, shallow tubewells, deep tubewells, and manual pumps are evaluated
as they are the principal means of groundwater exploitation; a brief description of the
these services is provided below.
i.
Surface water irrigation systems sourced from water supply at ground surface,
and supplied through network of channels to a group of beneficiaries;
ii.
Groundwater irrigation: irrigation systems sourced from an underground water
supply, including shallow tubewell and deep tubewell technologies.
20

Shallow tubewell irrigation systems are sourced from shallow underground
confined or unconfined aquifers using a divisible technology that benefits
individuals/small groups; water is supplied through confined and unconfined
shallow aquifers that can be pumped by centrifugal pumps; and

Deep tubewell irrigation systems are sourced from underground supply using a
more ‘lumpy’ technology; water is supplied through confined and unconfined
deep aquifers which require either vertical turbines or submersible pumps for
pumping.
Drinking water
4.10
Both surface water gravity systems and groundwater sources of drinking water are
commonly applied technologies in Tarai, making them the focus of this review; these
services are defined below.
i.
Gravity water supply systems: water supply network, sourced from ground level
and supplied through a network of underground pipes to a group of
beneficiaries;
ii.
Groundwater supply systems: water supply network, sourced from underground
aquifers, including shallow tubewell and deep tubewell technologies.

Shallow tubewells water supply systems are sourced from a shallow underground
supply using a divisible technology typically benefiting individuals/small groups,
powered by manual or mechanical pumps; and

Deep tubewells water supply systems are sourced from deeper underground
supplies using a more lumpy technology typically benefiting individuals/small
groups; requiring either vertical turbine or submersible pumps for extraction.
Roads
4.11
This study focuses on both minor feeder roads and bridges Within each of the road
categories there are further technical distinctions–roads may be earthen, gravel, and/or
asphalt. Bridges examined are single lane of varying lengths (10-100m) of either brick or
reinforced concrete constructions.
21
i.
Minor feeder roads:. minor feeder roads which are local in nature and include
district roads; village roads; and corporate roads described below.

District roads are defined as roads within the district which provide one or more
villages with access to the nearest market or higher classes of roads;

Village roads are short nonthrough roads linking single villages directly to the
district road; village roads are owned by VDCs. The lengths of road are typically
short, normally less than ten kms.

Corporate roads are roads which are built for the exclusive use of a private entity
or project e.g., the gravel roads built by Bhairahawa-Lumbili Groundwater
Irrigation Project (BLGIP).
ii.
Bridges: small bridges servicing local communities/populations.
Power
4.12
Grid distribution is the preferred option for expansion of electricity in Tarai, i.e.,
electricity distribution networks from a central substation or transformer fed from a
central source, servicing a community. Existing operating diesel pumps are only partially
used due to the lack of adequate distribution lines, and thus this subsector is a major
constraint to the provision of electricity.
C.
Classification of Services
4.13
The subcomponents defined above are classified in terms of their public or private goods
characteristics, as defined in the analytical framework and presented in the following
Figure 3 and Figure 4.
22
Figure 3: Classification of Infrastructure Services
Excludable
Rival
Non-excludable
Common property
Private
Goods
Shallow
Tubewell
Deep Tubewell
Grid
Distribution
Gravity
water supply
Surface
Water
Irrigation
Nonrival
Corporate
Strategic Highways
Rural Road
(feeder; village roads)
Roads
Toll
Goods
Figure 4: Classification of Agricultural Technology Services
Public
Goods
23
Excludable
Rival
Non-excludable
Private
Common
Goods
Property
Input supply
Identification of farm
Level problem
Advice on solving a
problem or improving
production
assistance with
Information on
farmer experiments
new technology
Nonrival
skill enhancement
through training
Toll
Goods
marketing information
exposure through
exposure through
Public
demonstration
mass media
goods
24
CHAPTER V: INSTITUTIONAL MODELS
5.01
This study examines a range of institutional models for delivering rural development services in each sector
considered as they emerge from the case study analysis. These models are typically variations of five
generic models (Agency, Local Body, NGO, CBO and Private Sector). This chapter first describes the
generic models, and then presents how the models apply in the various sectors under consideration. Due to
the differing nature of service delivery in each sector, it has not been found useful to proceed to any model
aggregation across sectors. The models are therefore just categorized and described separately with the
exception of extension and research models that are presented jointly. In Chapter VI, all these models are
examined for their comparative efficiency and process (equity) performance under the varying
circumstances likely to prevail in the Nepal Tarai as exemplified by the case studies.
5.02
In spite of efforts, through the sample selection, to cover a wide range of service delivery models as
representative as possible of the situation prevailing in the Tarai, the study coverage is not exhaustive.
Other models do exist. Reference to these models is made in the discussion of the case study results in
Chapter VI to confirm, qualify or supplement the model assessment performed through the individual case
studies, and when appropriate formulate propositions for supplementary investigation.
A.
Generic Models
5.03-5.04 The five generic models are presented in detail in Annex 7. Their main characteristics are as follows.
(a)
Agency Model (AM): In this model, the entire delivery process (i.e., both provisioning and
production) is in the hands of the central government, either through a line ministry and/or a
parastatal agency (Figure 5). Typically, the ‘provisioning’ (at least in part) comes under the line
ministry. The services of the line ministry or the parastatal agency are now typically
‘deconcentrated’ to the local level, but they can remain centralized at least regionally (the case of
large projects headquartered in the regions). The line ministry or parastatal services can either
perform all the works themselves on ‘force account’, or they can contract out service delivery
activities to NGOs, CBOs or private operators (outsourcing). They can also establish partnerships
with local bodies to provide technical support to the latter in service delivery (typically through
staff secondment or execution of specific tasks).
25
Figure 5: Flow Chart for Project Execution/Service Delivery
Agency Model (AM)
NPC
Agency
-
Project initiation
Preparation and design
-
Construction & its monitoring
-
Project approval.
Allocation of fund
- Monitoring and evalution
-Ministry of Finance
- Releases Fund
-
Donor
Local bodies Model (LM): In this model service delivery comes completely under the
responsibility of the local bodies, i.e., District
Development Committees (DDCs) and Village
Development Committees (VDCs). The local bodies are formally elected structures. They
typically work with NGOs (formally -or non-formally created), CBOs (typically informal
structures) or private operators. To make up for their limited technical capabilities, the local
- government agencies or the NGOs/private sector
bodies seek technical support from either
operators. VDCs that typically have minimal capacity also seek DDC support for provision of
technical assistance.
- ation
Non-Governmental Organization Model (NM): In this model, the NGO (either local, national or
Project
(b)
(c)
international NGO) is contracted by the central or the local government, or directly by donors,
either to take charge of entire program or to provide specific services within given programs.
NGOs typically work in partnership with CBOs. They can also contract out services to private
operators. International NGOs are generally financed by donors, and have strong technical and
administrative expertise. The Nepali NGO community has expanded considerably in recent years,
especially since the advent of the democracy at the beginning of the 1990s. Nepali NGOs exhibit
wide differences in operational capability. A few national NGOs are well equipped technically. In
contrast, the bulk of the local NGOs are still technically weak.
(d)
Community-Based Organization Model (CM): CBOs are typically informal user groups created
at grassroots level to perform, manage or oversee specific socio-economic activities of direct
26
operational relevance to local communities. The CBO executive committees, where they exist in
the case of more formal CBOs, are selected by end-users belonging typically to the same
community. In the pure CBO model, CBOs assume responsibility for all the steps in the service
delivery cycle, including project planning, programming and execution (Figure 6). Typically,
however, whilst CBOs are consulted and involved in upstream part of the delivery process, they
only assume full responsibility when facilities are handed out to them. At that point, they have full
control over operation and maintenance, and related cost-recovery.
Figure 6 : Flow Chart of Project Execution/Service Develivery
CBO Model (CM)
User Group
Users
Beneficiaries form a
User Group (UG)
UG mobilizes resources from users (including
labor) for project construction and maintenance
and/or for acquisition of services. It monitors and
supervises construction work.
Project construction and/or
service delivery
(e)
Private Sector Model (PM): In this model, the private sector is fully in charge of service delivery.
This typically happens in the case where private operators are able to pass the cost of the service to
end-users either through the sale of inputs or the purchase of products. The end-users in turn are
willing to pay for the service because of its private or ‘toll’ excludable nature. Private operators
typically work in partnership with other actors in the delivery process (NGOs, government
agencies, etc.), not only as contractors but also as technical assistants. They may also enter into
partnership with other government or NGO actors for technical support.
B.
Agricultural Technology Models
5.05
Four basic institutional models in the provision of agricultural technology services are
identified under this study. These models are described in detail in Annex 7,
Appendix 1. They span the range of agricultural research and extension activities
described in Chapter IV.
27
C.
(a)
Agency Model: In this model technology generation and dissemination functions
are carried out by the government. The agricultural research is carried out by
Nepal Agricultural Research Council (NARC) through it research farms and
outreach stations while the extension function is carried out by the Departments of
Agriculture (DOA) and the Department of Livestock Services (DLS) through their
network of district offices and service centers. The extension services are
provided normally on demand from clients by Subject Matter Specialists (SMSs),
Junior Technicians (JTs), Junior Technical Assistants (JTAs). All of these staff
are government staff.
(b)
NGO Model: There are some specialized NGOs, that carry out agricultural
research activities. Local Initiatives for Biodiversity Research and Development
(LI-BIRD), is an example. It is constituted by a group of professional agricultural
researchers who carry out a range of applied and adaptive research activities using
project funding from national and international sources. Similarly for agricultural
extension some NGOs have evolved who have been providing technologies to the
farmers in selected pockets of the country. The work of SAPPROS in Dailekh,
Chitwan, Gorkha, Lamjung and that of Center for Agricultural Policy, Research,
Extension, and Development (CEAPRED) in Koshi Hills, Kavre and
Sindhupalchok are some notable examples. The services these NGOs provide are
generally of a holistic nature: they aim at building social capital broadly prior to
focussing on extension for key commercial cropping activities. They are typically
financed by INGOs and/or bilateral donors.
(c)
Agency/Private Sector Model: Under this model, the government associates with
various commercial agro-processing establishments in the private sector such as
sugar factories, tea estates, fruit and vegetable processing industries, etc., in
producing the technologies for the latter on a cost-sharing basis.
(d)
Private Sector Model: Many mid-level agricultural professionals in Nepal have
begun to sell agricultural and livestock inputs to the farmers by opening small
agriculture and veterinary services (agro-vet) shops. In some districts that have
agricultural potential (such as Chitwan) wholesaling arrangements have also been
developed within the private sector. These agro-vets have been providing some
level of extension messages to their clients. Similarly, some agro-based industries
in the private sector (such as sugar mills) have been providing extension services
on their own to the contract farmers.
Rural Infrastructure models
Irrigation Models
5.06
Six institutional irrigation models were considered as part of this evaluation--these are
described in Annex 7, Appendix 2. These models span the three irrigation technologies
described in Chapter IV (surface water irrigation, shallow tubewell irrigation and deep
tubewell irrigation).
28

Surface irrigation model
(a)
Agency Model: The DOI and its field offices (the agency) implement and manage
their identified projects or those identified (demanded) by the communities. There
is minimal beneficiary participation in the project cycle, except for the O&M of
tertiary and farm-level canals. Project implementation is undertaken by the
agency or through hired contractors.
(b)
Joint Agency/CBO Model: Both the agency and CBOs are involved in the project
cycle. Projects are identified and designed jointly by the agency and the users
(CBOs); and the projects are executed by the agency with labor-based user
contributions. O&M responsibility is shared between the agency and the CBOs,
with the latter taking responsibility for the downstream part of the irrigation
network (tertiary and farm-level canals).
(c)
Agency/CBO Model: Several CBOs [UGs or water user committees (WUCs)] are
formed to work with the line agency’s technical assistance and partial financial
support. The complex technical functions are undertaken by the agency, so the
agency relies on specialized contractors. The project is handed over to the CBOs
after completion at which time CBOs take over management responsibility. The
difference with the joint agency/CBO model is that the agency does not retain any
management responsibility when the project is completed.
(d)
CBO Model: The users are organized as CBOs and carry out the project cycle and
once the project is completed, assume O&M responsibilities. They bear the cost
or it is partially mobilized from external sources.
(e)
NGO/CBO Model: The NGO mobilizes part of the resources, with the CBOs
contributing a fraction of the funding required and the full labor requirements.
The ownership of the infrastructure rests with the CBOs from the very beginning
and hence there is no hand-over process. This model is favored by specialized
CBOs.
(f)
NGO/Private operators Model: The NGO assists private entrepreneurs with
contacts and demonstrating equipment with individual users. The latter are
involved in the design of the project, and formulate requests for custom-made
equipment; they bear full capital and O&M costs (this model only applies to small
sprinkler and drip systems)

Groundwater irrigation models
(a)
Agency model: The DOI and its field offices (agency) implement and manage the identified
projects or those demanded by the communities. There is minimal beneficiary participation in the
project cycle, particularly before the hand-over, if any. Project implementation is undertaken by
the agency or through hired contractors. This model is applied in the deep-tubewell cases studied.
29
(b)
Agency/CBO model: The DOI and its field offices (agency) identify the farmers needing the
irrigation and form the group of beneficiaries (minimum of three members per group). These
groups drill the wells and upon submission of the well certification and the availability of
minimum specified command area, the agency provides the pumping-set free of cost which
represents the subsidy from the government. The group takes care of operation and maintenance
afterwards. This model is applied in the provision of shallow tubewells as part of the Agriculture
Perspective Plan (APP) program.
(c)
Agency/Private sector model: In this model, the agency identified as the Agricultural Development
Bank of Nepal (ADB/N) provides credit, technical support and monitoring of the shallow
tubewells (both well and pumping equipment) to those individual farmers who demand these
services. The individuals operate and maintain the system besides repaying the bank loan. This
model is practiced in the provision of shallow tubewells to the individual farmers.
(d)
NGO/Private sector model: In this model, the NGO, when it is required, develops small
groundwater irrigation technology using shallow aquifer (such as treadle pump) and provides the
technology prototype to the private entrepreneurs who manufacture and sell the products to the
individual farmers. In this process, both NGO and the manufacturers are involved in the marketing
of the products and providing technical support to the buyers. The system, upon installation, is
operated and maintained by the individual farmers. This model is applied in the case of manual
pumps which command a maximum of 0.25 ha per unit pump.
Drinking Water Supply Models
5.07
In the drinking water supply sector, four different institutional models were considered for evaluation.
These models are briefly outlined below, and described in more detail in Annex 7, Appendix 3. The
models are found in practice for the three drinking water technologies described in Chapter IV (gravity
water supply, shallow tubewells and deep tubewells).
(a)
Agency Model: The Department of Water Supply and Sanitation (DWSS) and its
field offices (the agency) implement and manage their identified projects, and/or
those demanded by the communities. There is minimal (if any) beneficiary
participation during the project cycle.
(b)
Agency/CBO Model: Several CBOs are formed to work with the line technical
assistance and partial financial support of the line agency. The complex technical
functions are undertaken by the agency. For that purpose, the agency relies on
specialized contractors. The primary distinction from the agency model is that the
agency does not retain management responsibility on project completion, but
hands it over to the CBOs who then assume responsibility for O&M.
(c)
NGO/CBO Model: The NGO mobilizes part of the resources, with CBOs
contributing a portion of the funding required and the full labor requirements.
From the beginning, CBOs retain ownership of the infrastructure, so there is no
hand-over. This model is favored by specialized CBOs.
(d)
Fund/NGO/CBO Model: This is similar to the NGO/CBO model with NGOs
facilitating and providing technical services to the CBOs who retain ownership of
the infrastructure. The primary distinction is that resources are continuously made
30
available from a single central fund that reviews communities’ applications
against eligibility criteria.
Rural Roads and Bridges Models
5.08
Five different institutional models of rural roads and bridges were considered in the evaluation of the rural
roads and bridges case studies. Detailed descriptions of these models can be found in Annex 3, Appendix
4. These models span the different levels of minor feeder roads (district roads, village roads, corporate
roads and bridges) described in Chapter IV.
(a)
Local Bodies/CBO Model: DDCs and VDCs act as executing agencies. They
mobilize the communities for the construction work. There are two variants of
this model: (i) where the DDC hires a contractor to implement the works and
nominates a user committee, and (ii) where the VDC mobilize a democratically
formed user committee in construction organization without involving external
contractors.
(b)
Local bodies/CBO with direct influence of donor management model: Similar
model to the one described above, except that donors play an active role in
implementation through resource allocation decisions, strong capacity building
requirements and regular monitoring and evaluation.
(c)
Agency Model: The Department of Roads, parastatal organizations and field
offices implement the projects identified by themselves or demanded by the
communities with limited, if any participation of beneficiaries. The agency hires
the contractors to build the infrastructure directly.
(d)
CBO Model: Users organize as CBOs, implement the project and assume O&M
responsibilities once the project is completed. The cost is either fully borne by the
CBOs or partially mobilized from external sources.
(e)
NGO Model: The NGO mobilizes part of the resource, with a contribution from
the CBOs including a portion of the capital cost and the full labor requirement.
The ownership of the infrastructure remains with the CBOs throughout the life of
the project, and during operation and maintenance. This model is favored by
specialized CBOs/UGs.
Electricity Distribution Models
5.09
Three different institutional models of electricity distribution have been considered for evaluation and are
described in detail in Annex 3, Appendix 5. Brief outlines of the models are provided below.
(a)
Agency Model: The Nepal Electricity Authority (NEA) and its field offices (the
Agency) implement and manage the project identified by themselves and/or
demanded by the communities. There is minimal participation of beneficiaries in
the project cycle. Project execution is undertaken by the agency on force account
or through hired contractors;
31
(b)
Agency/CBO Model: CBOs are nominated by regional agency staff to work with
the line agencies technical assistance and partial financial support. In reality the
agency retains control and management of the project implementation in a similar
manner to the AM model described above, with the exception that the project is
handed over to the CBOs after completion at which time the CBOs take over
management responsibility; and
(c)
Private/CBO Model:
Private enterprises work directly with community
organizations to jointly design and construct infrastructure. CBO contributes a
portion of the capital cost, mobilizes labor and pays private operator a fee/tariff
for ongoing operation of the system.
32
CHAPTER VI: SUMMARY OF THE CASE STUDY ANALYSES
A.
Overview of Cases Studies
6.01
Case studies were selected after comprehensive desk audits and interviews (for details of this process refer
to discussion of study methodology in Chapter III). Sixty cases in different sectors and subsectors were
covered. The list of cases by sector is presented in Annex 4. The number of cases studied by sector is as
follows: (Table 2).
Table 2: No. of Cases Studies by Sector
Sector
Agricultural Technology

Agricultural research
9
(3)

Agricultural extension
(6)
Irrigation
6.02
Number of cases
26

Surface irrigation
(11)

Groundwater irrigation
(15)
Drinking water supply
11
Rural roads and bridges
11
Rural Electrification
Total
3
60
A summary of analysis of the case studies was completed for each sector and is presented in the following
pages. For more detailed information regarding the analysis refer to the relevant case study annexes in
Volume II of the study which contains case write-ups, case evaluations and preliminary discussion of
analysis.

Annex I
Agricultural Technology (research and extension)

Annex II
Irrigation

Annex III
Water Supply

Annex IV
Roads and Bridges

Annex V
Power
B.
Agricultural Technology Case Studies
6.03
Four institutional models of agricultural technology are considered as part of the
evaluation of the case studies and are described in detail in Annex 7, Appendix 1. These
models, already been summarized in Chapter V (para 5.02) are the following:
33
(a)

Agency Model (AM)

NGO Model (NM)

Agency/Private Sector Model (APM)

Private Sector Model (PM)
Agricultural Research Case Studies
Presentation of Case Studies
6.04
The following case studies have been prepared:
(a)
NARC research station (agency model): This case study covers applied and
adaptive research, i.e., conducting on-station and on-farm trials of new wheat
varieties, to test their suitability for farmers' conditions.
(b)
LI-BIRD (NGO model) is adaptive research, including the selection of varieties,
adapting the seed priming technology to local conditions, etc.
(c)
Eastern Sugar Factory/NARC collaboration in sugar research (agency/private
sector model) is adaptive research; the factory takes breeder seed from NARC (the
agency) and tests it under farmers' conditions. Because the benefits of the findings
are experienced (at least in the short term) only by the factory contract farmers,
this kind of research can be considered a toll good.
Evaluation of Models
6.05
The process and performance evaluation of the institutional models underlying the agricultural research
case studies is presented in Figure 7 and Figure 8 below. Given the discrete and non-comparable nature of
activities covered under the three case studies an attempt to provide an overall efficiency performance
ranking would have been meaningless at best and misleading at worst. Such a ranking therefore has not
been attempted. The overall process performance ranking has been kept since it provides a useful insight
into the comparative merits of the models in terms of participation of the beneficiaries (Table 3).
6.06
The institutional comparison in efficiency performance shows the agency/private sector collaboration
model to be particularly effective. However, the specific context makes the research more of a toll than a
public good, which in turn makes it more attractive for the private sector to finance and produce it because
they have a means to realize the benefit from the investment through the quality and quantity of farm
produce that their contract growers supply. The model cannot therefore be used uniformly in applied and
adaptive research, but can be regarded as particularly effective in similar conditions. Generally, however,
relying on the private sector to invest in agricultural research will leads to sub-optimal levels of investment
because of the public good nature of research and free-rider problems. Therefore, the government can
identify those research areas which it can leave to the private sector, those where it can collaborate by
financing important public good elements which the private sector will not, and concentrate its own
research funding on those areas where the private sector will have no interest. Specifically, it can reduce its
cost liability for research by cost-sharing collaboration with agro-industry operators and commodity
associations.
Table 3: Number and Ranking of Case Studies: Agricultural Research Models
34
AM
No. of case studies
Efficiency ranking
Process ranking
NM
1
< -----------------------------3
APM
1
1
No ranking -------------------------------- >
1
2
Rating (in numerical values)
Figure 7: Efficiency Performance Rating
Agricultural Research Models
3.5
3
3
2.6
2.5
2
1.5
1.9
1.8
1.9
2
2.6
2.4
2
2
1.4
1
1
0.5
0
AM
NM
APM
Agricultural research models
Service standard
Cost effectiveness
Impact
Sustainability
35
Rating (in numerical value)
Figure 8: Process Performance Rating
Agricultural Research Models
12
10
9
4
2
1
Agricultural Research Models
Users' involvement in no. of project steps (no.)
Co-production index (no.of steps)
6.07
The evaluation of the process performance shows that the NGO model proved successful in getting the
participation of the beneficiaries (higher score in ‘process performance’ ranking). This is important in
adaptive research across the board both for crops which are produced for subsistence and for the open
market. The NGO model also performed well in terms of cost-effectiveness and impact, in comparison
with the agency model. For this kind of adaptive research (seed variety selection and adaptation), which is
a public good for which public funding is appropriate, the commissioning of NGOs to carry out the
research might therefore represent better value for money and lead to greater impact than by carrying out
the research through government research stations.
6.08
The analysis of the case studies further suggests that none of the models as currently implemented is
effective at including poor and marginal farmers in research. In the Agency managed case, the research
conducted was not focused on the problems faced by resource poor farmers, while even in the more
efficient models those farmers directly involved in adaptive research (NGO model) or benefiting from it
(agency/private sector model) tended to be the relatively better off members of the farming community.
(b)
Agricultural Extension Case Studies
Presentation of Case Studies
6.09
Six case studies were reviewed for agricultural extension services:
(a)
Two case studies representative of the agency model, i.e., agricultural extension
through the Ministry of Agriculture’s Agricultural Service Centers, one each in
district covered by the Agricultural Research and Extension Project (AREP) and a
non-AREP district
(b)
Two case studies representative of the NGO model, i.e., extension as part of a
holistic service delivery program, and as part of an income generation program
respectively.
36
(c)
Two case studies representative of the private sector model, i.e., extension as part
of input supply activities by agro-vets and as part of contract farming by private
sugar processing company.
Evaluation of Models
6.10
The process and performance evaluation of the institutional models underlying these case studies is
presented in Figure 9 and Figure 10 below. No attempt here has been made to provide an overall
efficiency performance ranking for the various models given the differing nature of the services covered by
the case studies (Table 4).
Table 4: Number and Ranking of Case Studies: Agricultural Extension Models
No. of case studies
Efficiency ranking
AM
NM
PM
2
2
2
< ------------------------------------- No ranking ------------------------------------->
Process ranking
3
1
2
Rating (in numerical
value)
Rating (in numerical
value)
Figure 10: Process Performance Evaluation
Agricultural Extension Models
Figure 9: Efficiency Performance Evaluation
18 Agricultural Extension Models
16
14
12
10 2.3
2 8
1.6
6
1.5
4
3
2.7
2.8
2.5 2.4
2.5
2.1
2.1
2
0
AM
AM
NM
NM
PM
Agricultural extension models
PM
Users' involvementAgricultural
(no. of steps)extension
Co-production
index (no. of actors in delivery steps)
models
Service standard
6.11
Cost effectiveness
Sustainability
Impact
The cases relating to agricultural extension cover a diverse range of activities and interventions, i.e.,
agricultural information and advice come as parts of very different packages. In the agency model, advice
and information is no longer combined with material inputs. In the NGO model, advice and information is
provided as part of a project intervention which includes marketing support, supply (though not necessarily
with any subsidy) of inputs, and support for savings and credit. In the private sector (agro-vet) model,
advice and information are provided alongside purchased inputs -- but are therefore likely to be restricted to
37
information related to those inputs and not to farmers' problems which cannot be solved by purchased
inputs. In the private sector (sugar factory) model, advice and information are related to the specific crop in
which the factory has an interest. This diversity makes it inappropriate to make a simple overall
comparison of the effectiveness of the different models underlying the case studies. These case studies
however, certainly, do permit to identify and discuss the individual strengths and weaknesses of the models.
6.12
The NGO model, the cases of which were implemented in the hills, performed well in terms of both
efficiency and process. The strength of this model lies in the full participation of the beneficiaries in all
stages of project planning and implementation and in the more holistic type of intervention, which includes
infrastructure and marketing support, than is possible within the mandate of government agencies. It also
has a relatively low cost per beneficiary. The social mobilization of the community during the initial phase
of the NGO involvement has also enhanced the social capital in the project areas. Weaker points in the
model include lower coverage, focus on accessible areas, and high level of dependence for financial support
from donors. The sustainability of the model is therefore in question until an assured model of funding is
developed for this kind of holistic intervention. It was not possible to separate out the costs of the
technology service from the overall project and intervention cost in either of the two cases. However, it is
clear that the intervention as a whole covers public, toll and private goods. Therefore a mix of funding by
central and local government, groups, and individuals would in principle be appropriate.
6.13
The agency model is rated by users as low in terms of efficiency performance. The case studies show that
the quality and coverage is poor and costly. This is related in part to the inability of the agency to provide
the services as a package, including not only extension advice but also supply inputs or credit. It is also
related to the lack of focus of the extension agency on problems and opportunities that are not particularly
relevant to farmers in each local area. The process performance ranking is also rated as low. Farmers are
much less closely involved in the planning and implementation of services than in the other models. This
makes for consistent low overall performance of the agency model. The strengthening of local government
bodies should help improve the functioning of this model by building in greater accountability and
participation, making agency services more locally relevant and responsive to farmers' needs. However,
greater use of NGO and private sector institutions to deliver publicly funded services should also be an
appropriate option to consider. The case studies reveal the risks that farmers face in not being given the
right advice. One of the case studies indicates that agency staff caused loss to farmers. However, in other
models too, there is little to protect farmers against inaccurate information or inappropriate advice.
Nonetheless, the farmers' perceptions of the government extension service are clearly poor compared to
NGOs and agro-vets.
6.14
It appears from the evaluation of the case studies that (a) an individual model is particularly suited to the
nature of the activity considered, for which in turn a service either of a public or a private nature is
appropriate; and (b) that the models are not mutually-exclusive; depending on the activities performed by a
given communities one or several different models can be used separately or in conjunction.
Further Considerations on the Performance of the Agricultural Technology Models
6.14
Upadhyay (1999), aptly summarizes the low effectiveness of the agency in agriculture extension by
underscoring that it falls short of meeting the objectives of raising agricultural productivity and farm
incomes. Concerning research, he stresses that there is no significant shift in the emphasis of research in
terms of commodities, disciplines and problem areas relevant to farmers’ circumstances. The impact on
crop yields therefore remains limited.
6.15
In extension, the example of the pocket-package program undertaken by the public agency illustrates the
problem. The program covers only 0.4 percent of the households and 3 percent of the irrigated area, but it
receives 60 percent of the total extension budget. On this basis, per household extension expenditure per
farmer is about Rs.15,000 (average of the 5 districts visited). This tends to indicate that the APP program
38
in these districts is not a mass production program but merely a demonstration program. Even with this
massive investment, returns are far less than satisfactory.
6.16
A recent study (NPC, 1998) shows that at national level only three percent of households have been visited
by an agriculture/livestock extension worker. Two third of the households contacted thought agricultural
and livestock services were bad. In contrast, only three percent said they were good. Baidya (1999) reports
that the absence of staff at the public facilities, especially health and agricultural facilities, is a pervasive
problem all over rural Nepal. The average trek time required by rural dwellers to access agricultural centers
in rural areas is reported to be 2.5 hours. He further says that more than one-half of public spending is not
used in the proper way, the construction sector being cited as perhaps the worst in public sector financing .
C.
Irrigation Case Studies
Evaluation of Surface Irrigation Models
6.17
6.18
Six institutional models are considered for the surface irrigation sub-sector as part of the
evaluation of the case studies. They are described in detail in Annex 7, Appendix 2.
These models, already been summarized in Chapter V (para 5.06), are the following:

Agency Model (AM)

Joint Agency/CBO Model (JACM)

Agency/CBO Model (ACM)

CBO Model (CM)

NGO/CBO Model (NCM)

NGO/private operators Model (NPM)
Eleven case studies have been prepared on the models for surface irrigation. The
evaluation of these models (based on efficiency and process performance) is presented in
Figure 11 and Figure 12. The ranking is in Table 5 below.
Table 5: No. of Case Studies and Ranking of Surface Irrigation Models
AM
JACM
ACM
CM
NCM
NPM
1
1
6
1
1
1
Figure 11: Efficiency Performance Evaluation
Figure
12: Process
6
3 Ranking
1
Surface5 Irrigation
Models4
2
Number of case studies
Efficiency ranking
6
4
5
1
16
2.3
2
15
1.5
2.5
1.5
1.5
1
0.5
AM
1.5
10
8
0
0
0
9
5
5
AM
2.2
13
10 10
1
6
3 3 3
2.5
2.32.3
12
1.7
1.5
3
3 3 3 3
2
10
1 10
2
3
2.9
20
Ranking (in
numerical value)
Ranking (in numerical
value)
Process ranking
3.5
3
2.5
2
1.5
1
1
0.5
0
Surface Irrigation Models
JACM
JACM
ACM
ACM
CM
CM
NCM
NCM
NPM
NPM
Surface
irrigation models
Surface irrigation models
Physical infrastructure
User involvement (no. of project/delivery steps)
Service standard Cost effectiveness Sustainability
Co-production index (no. of actors in projects steps)
Impact
2
39
6.19
The case study analysis indicates that the best performing model for the provision of surface water
irrigation is the NGO/CBO model. This model was also ranked second, based on process, behind the pure
CBO model, popularly known as farmer-managed irrigation system that out-performed all other models.
The NCM model’s strengths are the low implementing and operating costs, quality of construction, and
existence of adequate O&M resources. The users’ high level of participation at each stage of the project
cycle is key for eliciting strong ownership. The NGO assistance–with a focus on farmers’ training in
irrigation management–provides efficient participation that carries through to O&M.
6.20
Other findings of the case study analysis are:
(a)
Under the agency/CBO model surface irrigation (cases I3 and I5), the agency’s
intervention in existing community irrigation systems increases the cost of system
development; also, the government’s inability to get into appropriate contract
terms with CBOs leads to irrigation systems performing below potential; and
(b)
Under the agency/CBO model shallow tubewell irrigation, analysis suggests
caution in distributing the shallow tubewells as misuse of subsidy is evident.
Evaluation of Groundwater Irrigation Models
6.21
There are three more or less distinct technologies used in groundwater irrigation as defined in the
classification (Chapter IV) namely manual pumps, shallow tubewells and deep tubewells. The choices of
these technologies, in most cases, is determined by factors other than institutional such as the area to be
irrigated, affordability, etc. For example, the smallholders choose manual pumps which are very
inexpensive and adequate for their holdings. Shallow tubewells typically irrigate up to 6 ha (average 2 ha)
and are chosen by those farmers who either have that much of their own land for irrigation or can sell the
water to the neighbors. Deep tubewells, on the other hand, have high discharge and can cover more land
under irrigation (typcically more than 50 ha)
6.22
Moreover, there are some areas in Tarai where shallow aquifers are not present or adequate and thus deep
tubewell will be the only choice. Similarly, in many of the northern belt of Tarai, manual drilling is not
feasible due to the presence of boulders. There, deep boring using the rig machine may be a better
technology choice. The study has found that the average per hectare cost of shallow tubewell is much lower
(Rs.20,131) compared to deep tubewells (Rs.145,135) which suggests that whenever the choice of shallow
tubewell is feasible this will prove to be the more efficient choice. The shallow tubewell technology is
divisible, more flexible and simpler, and therefore within the maintenance capacity of the farmers. The
study has found evidences where the complex deep tubewell technology was applied by the agency in areas
where shallow tubewells were clearly feasible.
6.23
Four institutional models were considered as part of the evaluation of case studies in gro3undwater
irrigation sub-sector. They span into the above three different forms of groundwater irrigation namely
manual pumps (such as treadle pumps), shallow tubewells and deep tubewells. These models, described in
detail in Annex 7, Appendix 2 and summarized in Chapter V (para 5.06), are the following:
6.23

Agency model (AM) (Surface and deep tubewell irrigation)

Agency/CBO model (ACM) (Shallow tubewells)

Agency/Private sector model (APM) (Shallow tubewells)

NGO/Private sector model (NPM) (Treadle pumps)
In terms of model comparison, the deep tubewells are installed only by the agency and hence no
performance comparison of institutional models is warranted. Similarly, the manual pumps (treadle pumps)
are also implemented under a single NGO/private sector model. The only institutional performance
40
comparison can be made in the case of shallow tubewells where two different models are applied namely
agency/CBO model (ACM) and Agency/private sector model (APM).
6.24
The evaluation of these models (based on performance and process) is presented in Figure 13 and Figure
14. The ranking is in Table 6 below.
Table 6: No. of Case Studies and Ranking of Groundwater Irrigation Models
Deep
Tubewells
No. of case studies
Efficiency ranking
Process Ranking
Shallow tubewells
ACM
Models
NPM
ACM
APM
5
-IV
1
-I
5
II
II
4
I
II
Figure 14: Process Performance Evaluation
Groundwater Irrigation Models
Figure 13: Efficiency Performance Evaluation
Groundwater Irrigation Models
11
Ranking (in
numerical value)
Ranking (in
numerical value)
12
3.5
3
2.5
2
1.5
1
0.5
0
10
8
11
10
3
6
7
3 3 38 3 3
42
1.6
41.6
3
2.7 7
7
2.2
2 2
2
2.2
1.2
1
2
3 3
0
ACM
ACM
NPM
ACM
Groundwater
irrigation
NPM
ACMmodels
APM
APM
Groundwater irrigation models
User involvement (no. of project/delivery steps)
Co-production
index
(no. of actors inCost
project/delivery
Physical infrastructure
Service
standard
effectivenesssteps)
Sustainability
6.25
Impact
The above tables show that the NGO/private sector model is best in both efficiency and process
performance. But the case studies concerned only treadle pumps cases. It remains to be checked whether
this model has the potential to be applied also to shallow tubewells. For shallow tubewells, the comparison
shows that, while both APM and ACM models are equivalent in process performance, the agency/private
sector model outperforms the agency/CBO model in efficiency performance. The APM model is more cost
effective and yields better impact. The ACM model has better physical infrastructure, but its performance is
low on cost and impact. This model also involved more subsidy and sometimes a twofold subsidy to the
41
farmers because free pumping sets were provided to the farmers having already subsidized wells from
ADB/N. The farmer’s share of cost was therefore almost eliminated. For deep tubewells the ACM model
yields poor results across the board. The possibility that the use of the APM model would result in better
performance for this model also would need to be checked.
Box 1: The Invisible Tubewells
When the Agricultural Perspective Plan (APP) prescribed the expansion of shallow tubewells to achieve
water control throughout the year in Tarai, the Government readily endorsed this policy. It promised to
provide the required financing. It also established a subsidy and precise rules under which the subsidy
should be granted, one of these rules being the constitution of user groups to manage the tubewells. The
policy soon proved to be flawed and unsustainable: (a) the farmers established pseudo user groups to
obtain the subsidy (60 percent); these groups of course disappeared rapidly, and the tubewell ownership
soon couldn’t be identified anymore; and (b) the funding fell far short of total demand; therefore a large
fraction of the requests were left unfunded or were funded with delays so long that they effectively
cancelled out the benefit of the subsidy.
On two counts therefore the tubewells became ‘invisible’, either because they just didn’t materialize for
lack of funding or because the owners went underground.
6.26
The analysis of the case studies calls for the following general remarks:
(a)
Subsidy: The model ranking shows that the performance is negatively correlated
with the level of subsidy. The agency-managed systems are almost fully
subsidized and performed poorly. Whereas the CBO or individually-managed
systems with little or no subsidy, fared well. This is because the high level of
subsidy leads to the selection of inadequate technology and over-sized projects.
(b)
Technology: The choice of technology is found to have substantial bearing on
cost effectiveness. The case studies indicate that groundwater irrigation systems
are often over-designed (engines and pumps of excessive capacity) reducing the
cost-effectiveness of both deep and shallow tubewells. Electrically operated
shallow tubewells are cheaper to own and operate compared to the diesel drivenshallow tubewells. But the power supply is often nonexistent since the power grid
is yet to be sufficiently extended. Also, in some cases, expensive deep tubewells
are installed where cheaper substitutes, such as shallow tubewells or surface
irrigation schemes, are possible. In fact, deep tubewells often run below capacity.
Hence, in the long-term, tubewells end up being inferior with respect to O&M
costs per hectare compared to surface water irrigation systems.
(c)
Institutions: The institutional performance in surface water irrigation is found to
be superior to groundwater systems. This is largely due to the fact that tubewell
groups are often artificial, and therefore dysfunctional, as they were created to
access the subsidy attached to community tubewells.
(d)
Link with extension: A final finding is that very little coordination is recorded
between irrigation and agricultural extension services. Hence, the impact of
irrigation which is only one of the improved elements of the agricultural package
is generally lower than expected.
42
Box 2: Bhairawa-Lumbini Groundwater Irrigation Project
This project is claimed to be one of the most successful case of irrigation investment. A total of 178
deep-tubewells have been erected in 3 phases of the project out of which 12 have been abandoned due
to undesirable tubewell location. The average cost per tubewell in this project has been around Rs
12.5 million which is claimed to cover an average command area of 120 hectares running an average of
1,800 hours per well per year.
The study team found the following:
 Tubewells have been erected in sites where there were alternative irrigation mechanisms from the
surface system of Sorha-Mauja as well as the shallow-tubewells
 In one randomly selected tubewell command area, there were as many as 25 shallow tubewells in
operation
 One tubewell was found to have commanded a net area of only about 13 hectares
 Another tubewell was running for only 115 hours per year
 In the loop system of water distribution built in the third phase, farmers could not obtain the
required amount of irrigation in adequate time because at least three loops had to be opened,
requiring three farmers with the same amount of land to come together. This is a difficult and
questionable constraint because there is typically a large variation in plot size in any particular
irrigation scheme
 Some beneficiary farmers expressed “this is an insurance system for us and will use it whenever
there is drought”. They were relying on the subsidized tubewells for back-up supply only
 Cost per hectare was over Rs.100,000 compared to about Rs. 30,000 if it had been a shallow
tubewell which was clearly feasible. Also the initial cost is a full loan liability to the government
against the capital subsidy for shallow tubewells of only 9,000 per hectare
 In many cases, the farmers reported that they could not use the system because NEA would
disconnect the power without consultation with the farmers
 The Staff Appraisal Report for this project states that “ small farmers represent a minority (page
101)” which means that this huge subsidy has not gone to the poor
 The technology used is beyond the reach of the local farmers and therefore there is hesitation on
their part in the hand-over process
Further Considerations on the Performance of Irrigation Models
6.27
To confirm the results of the analysis, the study findings were cross-checked with findings from other
studies of institutional performance of irrigation models. These studies show that government-managed
irrigation models invariably have higher capital and O&M cost per hectare and lower operating efficiency.
If the actual net command area served by the systems is considered (in place of the claimed command area
which is often inflated for official purposes) the difference in cost and efficiency is clearly even greater.
6.28
The following additional results, consistent with the findings of the present study, emerge from the above
studies:
(a)
In an evaluation of 150 irrigation systems in Nepal (Lam, 1997), the performance of
CBO-managed systems was found to be higher than the agency-managed systems.
(b)
A recent evaluation of the International Fund for Agricultural Development
(IFAD) projects in Nepal produced the following conclusions: (i) the productivity
of IFAD projects in Nepal that have used line agencies such as DOI and the
Department of Forestry, is low and has not contributed to equity-oriented
economic growth; and (ii) the technology for the Groundwater Irrigation and
Flood Rehabilitation Project implemented by DOI was demonstrated at the outset
to be too costly for any adequate cost-recovery from the farmers; hence, the
perverse recommendation that subsidies be granted across the board to all farmers.
43
(c)
An NPC/UNDP study (1992) on the comparative evaluations of various irrigation
systems found several infrastructure schemes built by the government as grossly
ill-conceived. They exhibited very high cost, wrong technologies and lack of
performance. The rate of subsidy which varies across agencies and across schemes
was also identified as the root cause of such an outcome.
Box 3: Trying to Correct the Incorrigible
The Banganga Irrigation System in Kapilvastu district (see case I24) whose construction started
about six decades ago, was completed about three decades ago by the agency. It has a potential
command area of 6,200 ha which could benefit 13,000 farming households. In the last winter season,
this system provided irrigation water for only 1,000 hectares. This is the first and probably the only
storage type of irrigation system in the country.
From the very beginning, several efforts were made to improve the efficiency of the system. The
command area was expanded between 1970 and 1978 at a cost of Rs.22.3 million. This did not
succeed and another project by the name of Command Area Development Project was applied with
the loan and TA assistance of ADB, IFAD and UNDP in 1982. In 1991, USAID provided assistance
of $0.5 million for improving irrigation management which was implemented by International
Irrigation Management Institute. All these efforts proved futile as local people have destroyed the
structures. Currently, an Irrigation Management Transfer Project is being implemented with a loan
from ADB but there is least a hope of improvement.
D.
Drinking Water Supply Case Studies
6.29
A prerequisite for water supply for drinking purposes is that the source of supply should be permanent.
This is in contrast to water supply for irrigated agriculture since non-permanent sources of water can be
used as well for irrigation given the seasonal water requirements of farming activities. This explains why
different sources of drinking water at community level are rarely combined in the context of rural Tarai. In
fact, the choice of the source of water (either surface or ground water) and the choice of the technology are
made once and for all at the start of the project depending on circumstances prevailing locally, based on
criteria such as water availability and costs. The decision about institutional arrangements is then reached
independently once the technology has been selected. It is therefore it is possible to measure insitutional
performance across the entire sector irrespective of the technology employed.
6.30
The following four institutional models are considered as part of the evaluation of the
drinking water case studies. These models are described in detail in Annex 7, Appendix
3, and already summarized in Chapter V (para 5.07).

Agency Model (AM)

Agency/CBO Model (ACM)


NGO/CBO Model (NCM)
Fund/NGO/CBO Model (FNCM)
Evaluation of Drinking Water Supply Models
6.31
To assess the institutional performance of drinking water supply schemes, eleven case studies were
reviewed. The evaluation of the models underlying the case studies (based on efficiency and process
performance) is presented in Figure 15 and Figure 16 below. The ranking of the models is in Table 7.
44
Table 7: No. of Case Studies and Ranking of Drinking Water Models
AM
ACM
NCM
FNCM
Number of case studies
Efficiency ranking
3
IV
5
III
1
II
2
I
Process ranking
IV
III
I
II
Ranking (in numerical
value)
Figure 15: Efficiency Performance Evaluation
Drinking Water Models
3.5
3
2.5
2
1.5
1
0.5
0
3
3
3
3
3
3
3
2.5
2
1.7
1.3
0.7
1.7
1.4
0.8
0.2
AM
ACM<
NCM
PNCM
Drinking water models
Physical infrastructure
6.32
Service standard
Cost effectiveness
Sustainability
The evaluation indicates that the Fund/NGO/CBO model delivers drinking water supply more effectively
relative to the other arrangements. This model was also ranked second based on process behind the
NGO/CBO collaborative model which involves many more actors in the different project steps.
45
Ranking (in numerical
value)
Figure 16: Process Performance Evaluation
Drinking Water Models
19
20
14
15
10
5
12
11
8
8
NCM
FNCM
6
3
0
AM
ACM
Drinking water models
User involvement (no. of project/delivery steps)
Co-production index (no. of actors in project/delivery steps)
6.33
In the Fund/NGO/CBO model, users are totally involved from the beginning of project
initiation and pre-feasibility, to the project’s completion and O&M. The NGO is the
facilitator and the design of the system is undertaken with the users’ approval and
coordination. In addition, the users procure materials (they either collect local materials
and transport non local materials), and complete the entire construction work. In the case
studies examined a health and sanitation program was incorporated in the project,
resulting in improved community hygiene. The Fund/NGO/CBO is poor in terms of
equity, however, because it provides a predetermined contribution that does not
compensate for the higher project costs incurred in remote hilly areas. Also, the fund
board has a centralized structure and there is no field office to provide regular assistance,
monitoring and evaluation. Finally, the fund restricts financing to drinking water supply
systems only, and provides no flexibility for users to upgrade their system to enhance
water supply for other income generating and health related activities.
6.34
The second best model in terms of performance was the NGO/CBO model arrangement.
This model stimulates local NGO and CBO development. Users are involved from the
initiation and pre-feasibility stage, to the systems construction and O&M. The software
components (community mobilization) of the projects implemented using this model were
found to be strong and effective. Financing was delivered directly to users for
construction which minimized delays and resulted in technically sound systems. In the
cases examined a national NGO and local NGO jointly facilitated and provided technical
support to the users who performed the construction work. There is no up-front cash
contribution needed for the projects examined. A health and sanitation package is also
linked with the system and it is effectively implemented.
6.35
Unlike the Fund/NGO/CBO model, this model had a centralized delivery system (in
addition to financing). All procurement was completed by the national NGO leading to
46
poor transparency at the local level and a slight increased in unit cost for each system 5.
In the case reviewed the national NGO had not fully partnered with the local NGO, the
local NGO were performing many of the functions that should have been undertaken by
the CBO and thus capacity building of the CBO had been weak.
6.36
Many examples of the Agency/CBO model emerged after the policy change in the eighth
plan requiring the hand-over of agency-managed projects to communities. In the project
sites visited as part of the preparation of case studies of this model, the system had been
constructed with the lead role of agency using contractors and subsequently handed over
to the community after the formation of CBOs. The practice of involving communities in
the project design and implementation had rarely been observed in reality. The model has
very low transparency and users provide no contribution. The CBOs often had been
formed artificially in a top-down basis under pressure of the agency, they are not prepared
financially or technically to operate or maintain the project. The projects have not
included software components that would enhance community capacity, and little
consideration has been given to the affordability of O&M costs. The study team’s view is
that this institutional arrangement has been used by government as an ‘escape’ to avoid
accountability for the problems that typically emerge from agency managed systems by
handing the systems over to the community. In many cases the community reluctantly
went along with the hand-over as it was ‘forced’ into accepting; in certain cases, it just
refused. Design details were rarely provided to the CBOs on hand-over, infrastructure
quality was not considered adequate (systems were not always complete, or had already
deteriorated). Due to the lack of accountability, project costs are very high under this
model.
6.37
The Agency managed model is the poorest performing and least preferred. The agency
solely implements and operates, and performs maintenance, without user involvement.
The findings reveal that transparency throughout the life of the project is very low.
Despite high levels of social capacity in the case studies reviewed (particularly Pithuwa
DWS, Dalkebar DWS and Prithivinagar DWS), the agency water supply systems fare
poorly due to negligence, lack of accountability, and transparency.
6.38
Other findings, relevant to gravity and groundwater systems respectively, drawn from the case study
analysis, are:
5
(a)
Surface-fed Systems:

A comparison of cases studies implemented over a long period of time (Case D4, D7 and D8)
suggests an increase in the agency’s neglect of system construction in more recent years. The
newer systems do not generally function as well as the older systems; and

Case D9 reveals the utter neglect of the government in operating the drinking water system. A
dead monkey that fell in the RVT was removed only after three weeks. People are reported to
have died of water-borne diseases due to very poor quality of water. Even the watchman of the
system used alternative source of water for drinking and cooking.
Unit costs, however, although higher than in the Fund model, remained in the low range, and therefore leading to the same
rating of ‘3’.
47
(b)
Groundwater-fed systems:

Case D4 shows that the agency has chosen complex and high cost technologies which was not
possible to be easily maintained by the community. It was learned that such a selection of
complex and high cost technology was induced by high rate of subsidy (60 percent to 85 percent)
for the equipment and lack of accountability. These projects were initially justified by deflating
costs and inflating benefits through showing fictitiously high numbers of beneficiaries.

Case D4 also reveals that the currently nonfunctioning system was not demanded by the users.
Deep tubewells were implemented despite the users demand for shallow tube wells. The user
committee still pays the base charge (‘demand’ charge) for electricity even though the system is
not in operation.

Failed borings (D4, D7, D11) that produce either inadequate discharge (D7) or no discharge (D4)
or discharge with high turbidity and iron content (D11) not suitable for drinking purpose are
features in some of the agency model projects. Despite these risks, the implementing agencies
have either handed over the project (D4) to the community or are trying to do so (D10, D11).

Case D11 also shows how the insufficient allocation of annual budget by the government leads to
substantial delay in construction completion of infrastructure projects.
Further Considerations on the Performance of Drinking Water Supply Models
6.39
E.
The finding that agency managed models perform poorly is further supported by two studies undertaken by
NPC/UNDP which found the following about the DWSS agency managed schemes:

The target size (in terms of number of beneficiaries) was often inflated to justify the over-design of
schemes (e.g., Kalyanpur, Pithuwa, Anandban, Dhulabari, and Prithvinagar). This had the
following chain reaction: large targeted population; high potential water demand; requirement for
large water supply; long distances to secure water sources; huge distribution network resulting in
high cost; long completion time because of inadequate budget; O&M required even before the
system was completed; revision needed in estimates; frequent staff turnover; WUCs reluctant to
take over because schemes were large and complex.

Allocation of investment funds was highly susceptible to political pressures.
transparency in funding allocation and accounting of costs was common.

Prototype designs were used with insufficient consideration to location specificity, and little
recognition of indigenous knowledge.

Procurement delays occurred due to the cumbersome procedures and guidelines of both HMG/N
and donors. This gave way to a tendency to over-design and over-procure. Many times, excess
procurement was found easier, but clearly entailed higher costs and wastage of funds.
Constructions were commonly oversized with for instance provision of lavish ‘chaukidar’ quarters
(guard house). Contracting was made without strict technical standards and technical supervision
of project execution was poor. This gave incentives for contractors to engage into cheap subcontracting activities. Typically, there were several layers of subcontracting with clear adverse
implications on construction quality.
Roads and Bridges Case Studies
The lack of
48
6.40
Five institutional models of roads and bridges are considered as part of the evaluation of
the case studies and are described in detail in Annex 7, Appendix 4. These models,
already been summarized in Chapter V (para 5.08), are the following:

Local Bodies/CBO Model (LCM)

Local bodies/CBO with direct influence of donor management model (LCM-D)

Agency Model (AM)

CBO Model (CM)

NGO Model (NCM)
Evaluation of Rural Roads Models
Seven case studies of rural roads were investigated to determine the performance of the underlying service
delivery models. The performance evaluation of these models (based on efficiency and process) is
presented in Figure 17 and Figure 18. The ranking of the models based on this performance is in Table 8
below.
Table 8: No. of Case Studies and Ranking of Rural Roads Models
AM
LCM
CM
LCM-D
Number of Case studies
Performance ranking
2
IV
1
III
3
II
1
I
Process ranking
IV
II
I
II
Figure 17: Efficiency Performance Evaluation
Rural Roads Models
Ranking (in
numerical value)
6.41
4
3
2
2.4 2.5
2.3
1.5
2
1.5
1
3
2.7
2.6 2.5 2.6
2
2
2.2
1.3
1
0
AM
LCM
CM
Rural roads models
Physical infrastructure
Service standard
Cost effectiveness
Sustainability
LCM-D
49
Ranking (in
numerical
value)
Figure 18: Process Performance Evaluation
Rural Road Models
14
15
12
10
12
10
5
0
2
1
2
0
AM
LCM
CM
LCM-D
Rural road models
User involvement (in no. of project/delivery steps)
Co-production index (total no. of actors in project/delivery steps)
6.42
Based on the evaluation, the local bodies/CBO model with direct influence of donor in management (LCMD) is found to be the highest performing model. A further breakdown between how the models is applied at
DDC and VDC, demonstrate that the local bodies/CBO model with direct influence of donor in
management model as applied at DDC level is the most performing. Direct influence in management by
the donor appears to improve outcomes because it is accompanied by technical assistance support under
which important activities like training/orientation, technical supervision, monitoring and evaluation are
carried out 6. It also provides a public auditing system which greatly improves transparency. The LCM-D
model maximizes the involvement of users which reduces costs. The model, however, carries the risks of
not being fully sustainable since funds must be mobilized by the community for technical assistance and
project auditing once the donor has left. This is one reason why this study advocates the establishment of
autonomous funds as they would take over such a responsibility.
6.43
The LCM-D as applied at VDC level was ranked second for performance. Construction cost in this
arrangement was the lowest of each of the models, and transparency is high. However other aspects like
training, and social mobilization are lacking, and technical supervision is weak. In comparison to this
model, work execution under the DDC/CBO (LCM) model without donor influence is found not to be
transparent, with weak social mobilization, high costs, and pseudo-functioning UGs nominated by the
DDC. As with other sectors, the agency model is characterized by high costs, without either social
mobilization or involvement of users.
6.44
Other interesting findings from the case study analysis are: (a) local bodies, particularly VDCs, are
successful at mobilizing communities to build village roads on a participatory basis (Case Nos. R1, R2,
R3); and (b) among the local bodies, the performance of the DDC is almost similar to that of the agency
(Case R4). This implies the need in looking at the local bodies model to differentiate between the DDCdriven and the VDC-driven sub-models, with the VDC-driven sub-model being far more effective. This is
in line with the ‘subsidiarity’ concept which indicates that the lower the institution is located in the
6
This technical assistance is provided by local engineers and other specialized local staff (from NGOs or the private sector)
and not by expatriate staff.
50
institutional hierarchy, the more participation one can generate on the part of the beneficiaries and therefore
the higher the performance of the model.
Evaluation of the Bridge Models
Four case studies were prepared involving bridges, representing three separate models: (a) DDC/CBO
model (local/bodies CBO model, two cases); (b) NGO/CBO model (one case); and (c) CBO Model (one
case). The efficiency and process evaluation of the institutional models of bridges drawn from the case
studies are presented in Figure 19 and Figure 20 below. The ranking is in Table 9.
Table 9: No. of Case Studies and Ranking of Bridge Models
No. of case studies
Efficiency ranking
Process ranking
LCM
NCM
CM
2
III
III
1
I
II
1
II
I
Figure 19: Efficiency Performance Evaluation
Bridge Models
Ranking (in
numerical value)
6.45
4
3
3
3
3
2.5 2.5 2.5
3
2.1
2.3 2.5
2.1
1.5
2
1
0
LCM
NCM
CM
Bridge models
Service standard
Cost effectiveness
Sustainability
Impact
51
Ranking (in
numerical
value)
Figure 20: Process Performance Evaluation
Bridge Models
13
15
11
11
8
10
5
3
2
0
LCM
NCM
CM
Bridge models
User involvement (in no. of project/delivery steps)
Co-production index (no. of actors in project/delivery steps)
6.46
Based on the evaluation of case studies the NGO/CBO model is found to be the most effective institutional
arrangement for delivery of bridges. The NGO involvement provides support for important activities like
training/orientation, technical supervision, and monitoring and evaluation. The NGO in the case examined
worked closely with communities so that transparency is strong and as a result the cost per meter of bridge
is low.
6.47
The CBO model was the second strongest model. Construction cost is least in this arrangement, however
other aspects such as training, and social mobilization are lacking and technical supervision is weak.
Problems ensuring community access to funds is a real constraint under this arrangement, and in the case
reviewed led to some delays to project implementation.
6.48
In contrast, the performance of works under the Local Bodies/CBO model at DDC level was found to be
non-transparent, with low social mobilization and high costs. There is the provision for involvement of
UGs in this model but oftentimes these UGs are artificial and not functional in a true sense as UG members
are nominated by the DDC.
Further Considerations on the Performance of Road and Bridge Models
6.49
On a purely cost effectiveness level, a review of earlier studies depicts high per km cost differences
between the agency models and the models with CBO participation. A significant contributor to this cost
differential is the use of different standards. Conventional standards used for estimating construction work
in agency-managed systems incorporate significantly higher margins – contractors are aware of these large
cost allowances, and therefore ‘bid high’ on agency managed contracts which raises costs. The extent of
this effect is illustrated in Table 10 which shows quoted rates for equivalent activities in a local
bodies/CBO and agency managed projects.
Table 10: Norms Used in LCM and AM Type Models for Roads and Bridges
Work Item
Norm used in
RCIW* Projects
(LCM)
(person day/cu.m.)
Conventional Norms
used for HMG/N
projects (AM)
(person day/cu.m.)
52

Earthwork excavation in
ordinary soil
0.47
0.70

Earthwork excavation in
hard soil
0.59
0.80

Earthwork excavation in soft
rock
0.71
3.00
*Rural community infrastructure work
6.50
A final interesting finding from the case analysis is that CBOs can self-mobilize to build relatively
complex, large span bridges. As shown in Cases R7 and R8 such bridges have been built at about one-tenth
of the cost of a similar structure delivered by an agency under contract system.
F.
Electricity Distribution Case Studies
6.51
Three institutional models for electricity distribution are considered as part of the
evaluation of the case studies and are described in detail in Annex 7, Appendix 5. These
models, already been summarized in Chapter V (para 5.08), are the following:

Agency Model (AM)

Agency/CBO Model (ACM)

Private/CBO Model (PCM)
Evaluation of Electricity Distribution Models
These alternative models for provision of power distribution services are represented in three separate case
studies. The process and performance evaluation of the institutional models in electricity distribution
drawn from the case studies are presented in Figure 21 and Figure 22. The ranking of these models is in
Table 11.
Table 11: No. of Case Studies and Ranking of Electricity Distribution Models
AM
ACM
PCM
No. of case studies
1
1
1
Efficiency ranking
III
II
I
Process ranking
III
I
II
Figure 21: Efficiency Performance Evaluation Electricity
Distribution Models
Ranking (in numerical
value)
6.52
3.5
3
2.5
2
1.5
1
0.5
0
3
2
2.8
3
3
2
1.5
1.5
1
0.8
AM
1
1
ACM
PCM
Electricity distribution models
Phyical infrastructure
Service standard
Cost-effectiveness
Sustainability
53
Ranking (in
numerical value)
Figure 22: Process Performance Evaluation
Electricity Distribution Models
20
16
15
10
10
5
15
6
5
0
0
AM
ACM
PCM
Electricity distribution models
User involvement (no. of project/delivery steps)
Co-production index (no. of actors in project/delivery steps)
6.53
The evaluation suggests that for power distribution the private sector working in conjunction with CBOs
(Private/CBO model) is the most effective institutional arrangement and thus is ranked best from a
performance perspective. The reasons for better performance of the private sector model include improved
technical supervision in system establishment, low costs of establishment, involvement of users in
planning, construction and cost sharing, and adequate provision of O&M. The only area of weakness is the
reliance on the monopoly for power supply of the National Electricity Authority (NEA) with occasional
(programmed and non-programmed) interruptions of power supply. This prevents this model from being
perfectly reliable.
6.54
The relatively new private sector/CBO PCM model compares very favorably with the Agency model
currently in place. Almost all the electricity distribution lines in the country have been erected by the NEA
which collects power tariffs through site offices (Case E1). NEA’s high cost in power generation and
distribution systems have led to high power tariff rates in Nepal. This is caused, among other things, by up
to 39 percent energy loss in transmission in the NEA distribution systems (as well as power theft, poor
maintenance of lines, etc.) The cost of transmission per household is found up to Rs. 47,500 in the case of
NEA compared to an average transmission cost of about Rs. 7,700 incurred by the private sector (Butwal
Power Company-BPC).
6.55
The intermediary Agency/CBO model was ranked second in efficiency but first in process. In this model
the electricity is sold on a wholesale basis to the CBOs which retail electricity to end-users. It is not as
efficient as the private sector driven model because of the losses and high cost incurred by the agencyestablished distribution system. This model however has the potential to perform better than any other
models if it is completely driven by the private sector, with the latter involved not only in establishing the
distribution grid, but also in producing the electricity.
Box 4: Missing Infrastructure
Famous economist and Nobel laureate Prof. Amartya Sen introduced the concept of missing women. He
claimed that in India, the number of women should have been more than men since the human biology
favors women’s greater longevity. In fact, the ratio of women to men historically has been 1.06 to 1. When
the Indian women count fell short of men, Prof. Sen derived the difference between the number of women
54
that should have been there according to the biological norm and the number actually counted and termed
the difference in count as missing women.
We apply this concept to the development of various infrastructure in Nepal. When a shallow tubewell can
be installed in Rs.50,000 and the government spends 10 times as much to do the same under the banner of
a donor project, 9 tubewells are clearly lost and these lost tubewells could be labeled as “missing”. The
government has spent already Rs.140,000 per hectare in irrigation and Rs.3,400 per capita in drinking
water supply in present value terms. Yet it has produced infrastructure which are functioning at a level of
30 percent in irrigation and 50 percent in drinking water. If the appropriate institutional model had been
used, all the irrigable areas in Nepal could have been irrigated and all the people could be availed safe
drinking water. These are clearly “missing” cases.
The “missing” infrastructure can be attributed to the temptation of the line agency staffs to choose larger,
complex and high cost technologies. This is due to perverse staff incentives, high levels of subsidy and the
absence of beneficiary participation in the choice of technology.
Another cause of the ‘missing women’ phenomena is inaccurate and inflated reporting. For example, about
2,000 km of graveled roads is reported to have been built as part of the community initiatives in Chitwan
district, but the road statistics of the government reports only 500 km of roads in Chitwan.
G.
Summary Findings
6.56
In the course of the institutional evaluation, the study team made several observations relating to the sectors
covered under the study. These are presented under general and under sectoral headings:
Summary of Cross Sectoral Analysis
6.57
By compiling the results of the sectoral analysis we are able to observe consistent trends across sectors.
Table 12 and Table 13 present the summary results of the efficiency and process performance evaluation
for each sector.
Table 12: Summary of the Efficiency Performance Evaluation by Sector
Sector
Agricultural Technology
Irrigation
Drinking water
Roads
Subsector
Preferred model
Ag. Research
-
Ag. Extension
Surface
Groundwater
Surface
Groundwater
Rural Roads
Bridges
CM
ACM
FNCM
NCM
LCM
NCM
PM
Electricity
Table 13: Summary of the Process Performance Evaluation by Sector
Sector
Agricultural Technology
Irrigation
Sub-sector
Preferred model
Ag. Research
APM
Ag. Extension
NM
Surface
CM
Groundwater
ACM
55
Drinking water
Roads and bridges
Electricity
Surface
FNCM
Groundwater
NCM
Rural Roads
LCM
Bridges
LCM
Power Distribution
ACM
6.58
The preferred models have in most cases scored better in both process and performance. This implies that
the adoption of the right process, i.e., the involvement of the beneficiaries and the incorporation of multiple
actors in project steps, leads to better performance outcomes, both in term of efficiency and equity. The
strengths of the preferred models were found to be strongly related to the participation of beneficiaries in
almost all phases of project development, cost sharing arrangements, low overall costs, and high
transparency and flexibility – attributes that jointly contribute to greater sustainability.
6.59
The analysis of institutional performance in service delivery further shows that the agency model involving
the government departments and parastatal agencies does not perform satisfactorily. This model was
consistently rated the lowest overall. Yet these departments and agencies continue to undertake the bulk of
the activities in each sector. As part of their interventions, due to lack of transparency and the absence of
proper monitoring in procurement, the use of private contractors -- in infrastructure projects particularly -has resulted in financial leaks, poor quality infrastructure, and lack of accountability towards beneficiaries.
6.60
The analysis depicts a clear emergence of multiple and alternative actors who are performing better than the
government in almost all sectors. Yet, thus far, this has failed to induce a sense of competition amongst
government structures, and the bulk of the government development budget continues to be allocated to
these structures although they are clearly shown as the most inefficient structures (see Box 5).
Box 5: Inefficient Resource Allocation
The allocation of resources made in the 8th Five Year Plan (1992-1996) investment program is not
consistent with the degree of institutional efficiency of implementing arrangements in targeted areas.
For example, the Department of Irrigation (DOI), which operated (and still operates) largely under
agency model (ranked lowest) and covered only 55 percent of targeted areas, received almost 90
percent of the irrigation development budget. In contrast, the Agricultural Development Bank of Nepal
(ADB/N) with about 41 percent of the area targeted received only 6 percent of the budget. The 9 th Plan
hardly corrected this situation. Despite the inefficiency of DOI’s agency model of intervention, the
Government further increased the area targeted by the department to almost 66 percent, and allocated
the department 95 percent of the total budget. Therefore the irrigation budget allocation per hectare is
highly skewed in favor of DOI. This budget stands at about Rs.140,000/ha for DOI, vs. only
Rs.12,500/ha for ADB/N and Rs.25,000/ha for NGOs.
6.61
In agency-managed programs, particularly in the irrigation sector, there has been also a clear tendency for
government to choose larger and more complex project solutions. This has led to perverse incentives
within the government agencies which financially (through enhanced rent seeking opportunities) and
professionally (through wider recognition) reward government employees for larger scale construction
works. This poses a clear challenge to communities: they have no alternative but to rely on high level
subsidies to afford such schemes. Moreover, the cases studied showed that the level of subsidy is not
consistent across agencies and between large and small projects (with larger projects enjoying higher levels
of subsidies). There is also a clear lack of accountability and transparency on the part of agency staff. In
that respect, the study team found at times that government offices were not forthcoming in disclosing
information.
56
6.62
The study results clearly document the lack of performance of agency-managed systems. The logical
conclusion is that government, whenever feasible alternatives exist, should retrench from the ‘production’
of services, clearly better handled by other actors in the delivery cycle. In contrast, there remain vital
‘provisioning’ functions that have not received sufficient attention on the part of the government, despite a
clear need for government involvement in these functions. These include functions such as planning and
programming at national and regional level, definition of the legislative and regulatory framework (e.g,
enactment and enforcement of legislation for groundwater use, and more broadly for use of environmental
resources, establishment and enforcement of norms and standards for inputs supply), and provision of
funding and enforcement of associated rules and procedures.
6.63
Finally, it is clear also from the study results that the alternative community-based arrangements, although
clearly more effective, are not a panacea. They do require selective application and must be carefully
tailored to specific circumstances in order to perform well. This is illustrated by a case study (Case D4)
where a community infrastructure program in the Southern Tarai is performing poorly due to low levels of
social capital. In these instances, capacity constraints, and the ways of overcoming them, become a vital
feature of the institutional design. The next chapter examines these issues in some detail.
57
CHAPTER VII: ASSESSMENT OF THE CAPACITY OF
INSTITUTIONAL ACTORS
7.01
A consistent finding that can be drawn from the analysis of each of the sectors is that central
agencies/government departments in Nepal are under-performing local bodies, NGOs and CBOs in the
delivery of goods and services to Tarai communities. This suggests that there is a need to redistribute the
roles and responsibilities of actors – in particular shifting some of the direct production-related functions
within the sectors from the government to the more efficient institutions. This transfer has started in recent
years but at a very slow pace. The government still possesses the largest network of offices and staff in
every sector and is allocated the lion’s share of the development budget.
A.
Central Government Departments/Agencies
7.02
Despite a large organizational network of offices in all sectors, government employees have few incentives
to perform up to the required standards. Low government salaries force staff in many places to resort to
rent seeking to supplement income (Box 6).
Box 6: Apportioning ‘black money’
A recent report prepared with the assistance of international donors referred to the amount received under
a large scale public works program as ‘black money’. The distribution of ‘unofficial’ costs and related
payments was reported as follows:
 Local audit office
10%
 Local politicians,engineers and overseers
10%
 Direct overseer
25%
 District engineer
15%
 Overseeing accountant and above
35%
 District engineer
15%
 Entertainment costs
5%
Total
100%
Source: World Bank, Combating Rural Public Works Corruption: Food-for-Works Programs in Nepal,
May 1998.
7.03
A high-level administrative reform committee set up in 1991 after the restoration of multiparty democracy
found many redundancies in positions and staff within the government and recommended a 25 percent
reduction in staff. Overstaffing continues to be a problem. This clearly came out from the study team field
observations – for example, the case study in the Saptari district drinking water offices (Case D11) showed
that a total of 55 staff were employed to manage only two small-scale drinking water projects. The present
government is keen to abide by the recommendations of the reform committee, and, as a first step, is
currently planning to reduce the number of ministries from 27 to 21.
B.
Local Bodies
7.04
A significant breakthrough in reducing administrative inefficiencies and promoting decentralization
occurred in 1999 with the passage of the Local Self-Governance Act. This came about as a result of the
lobbying of local bodies for the release of greater development, administrative and financial authority at
their level. The Act represents a comprehensive legislative package for decentralized development and a
milestone in the process of devolution of authority. Among its clauses are provisions enabling elected local
bodies to establish sectoral units within DDCs, to collaborate with the private sector on joint ventures, to
58
levy local taxes and to exercise judicial authority. But the required application by-laws and decrees are yet
to be promulgated and the speed at which the related decentralization programs are implemented remains
slow. The challenge now lies in giving local authorities the required resources and training to develop their
institutional and managerial capacity. This is a prerequisite for local authorities to assume greater
development functions effectively. Concomitantly, appropriate safeguard mechanisms for transparency and
accountability need to developed and implemented.
7.05
Under the Local Self-Governance Act of 1999, local bodies are expected to function as self governing
structures with full authority over local affairs. They are expected to gradually assume a greater role in
setting program priorities, resource allocation, coordination and monitoring programs at both district and
village level. Presently, both the revenue base and technical capability of local bodies is too limited to
implement most programs at the scale required. Furthermore, a high-level commission on decentralization
in Nepal has revealed that local bodies are highly dependent (90%) on the central government resources for
development purposes. Therefore, local bodies need both to increase revenue collection at local level and
establish effective partnerships with line agencies, CBOs, NGOs, and private operators in orders to leverage
their resources and enhance their effectiveness. This study results suggest that the issue of implementation
capacity at the district and village level, as well as the need to build partnerships between the different
actors operating along the service delivery cycle, are key to the effective delivery of services and need to be
squarely addressed. The study also provides strong evidence that the planning and coordination processes
at the center, district and village level need to be strengthened if decentralization is to proceed effectively.
7.06
There are 75 DDCs and 3,913 VDCs in Nepal. Most DDCs now have their own technical unit to plan and
supervise construction works of agency projects. However, this unit is headed not by DDC staff but by
Ministry of Local Development (MLD) staff. This creates a dual accountability system clearly leaving
more authority with MLD. This dual system dilutes responsibilities with attendant lack of transparency and
creates a context propitious to conflicts. The situation is different at VDC level. VDCs have very limited,
if any, technical capacity. They are generally totally dependent on on DDCs for technical support since
MLD activities do not reach down to that level. In rare cases, wealthier VDCs can circumvent this problem
by hiring private technicians for planning and construction supervision (Case R4).
7.07
The challenge of decentralization in the context of Nepal is to put in motion a real transfer of decisionmaking power closer to those most concerned by the exercise of this power. This goal is therefore not only
to undertake an administrative deconcentration of line departments, but to set the stage for, and proceed
with, a real devolution (or delegation 7) of power down to elected bodies at the local level. This requires
the existence of minimal technical and administrative capacity. In this respect, the case studies demonstrate
that whereas the required capacity rarely exists at local level when no real devolution has taken place, local
actors – DDCs, VDCs, NGOs and CBOs – are able to develop their capacity and deliver effectively when
they are given appropriate authority.
7.08
Field observation and anecdotal evidence regarding decentralization collected under this study point to the
following observations and the need to address attendant issues to lay the groundwork for successful
decentralization:
7

Each level of government believes that decentralization should stop at their level and are reticent
to proceed to further devolution of power down the line. This is true as much for the line
ministries and their deconcentrated structures, and as for the local bodies (DDC vs. VDCs, and
these local bodies vs. other structures down the line);

There is great variation in the resource base of local bodies and in the level of support from the
central government at local level;
Deconcentration involves the shifting of workload from the central line agencies to the local line agencies. Delegation refers to
the transfer of authority outside the regular bureaucratic structure
59

The allocation of central resources is skewed in favor of the more affluent local bodies. There is a
clear positive correlation between central resource allocation and the degree of affluence at district
level particularly. The plans and priorities passed by the local body councils, and therefore their
financial requests, are not fully entertained by the central government;

Fiscal decentralization still lags behind administrative decentralization. For instance, the
funding channeled through local bodies from the central government (‘block grants’) is only
6.7 percent of the development budget (3 percent of the total government budget). In
parallel, the fiscal base of local bodies remains small. Thus far, only the easier sources of
local taxes (such as indirect taxes) have typically been exploited by the local bodies.
Finally, there is no consistent revenue sharing arrangement between the central government
and the local bodies;

The capacity (technical, financial, and management) of the local bodies is very limited. The
information base of the local bodies, in particular, is poor and not updated regularly. Key donorfunded operations (e.g., Planning District Development Program-PDDP and Local Government
Program (LGP) are attempting to build up DDC capacity across the board; others are focussing on
strengthening capacity in a particular sector (road sector for instance through DOLIDAR under the
Road Infrastructure Project – RIP). These efforts represent a step in the right direction;

Heavy bureaucratic tendencies have emerged in DDCs activities with consequent high transaction
costs. An income/expenditure analysis showed that overheads are far greater at DDC (47 percent)
vs. VDC (7 percent) level.
C.
NGOs
7.09
Successful decentralization relies on aligning the interests and capacities of the various actors at the
grassroots, this means that local governments should be encouraged to work with NGOs and CBOs to
complement their respective strengths and weaknesses and thus produce effective development outcomes in
a synergistic way. In this regard, the interface between the ‘formal’ sector consisting of the local bodies
and the largely ‘informal’ sector consisting of NGOs/CBOs should be strengthened.
7.10
Many NGOs have emerged in Nepal since the restoration of multiparty democracy at the beginning of the
1990s. Their estimated number at present is around 22,000. The distribution of the NGOs by region as
well as their sectoral affiliations are shown below in Figure 23 and Figure 24.
60
Figure 23: Number of NGOs in Tarai, by Regions
10%
4%
10%
14%
62%
Eastern
Central
Western
Mid-Western
Far-Western
Source: Maskay, B. K., NGOs in Development: Search for a New Vision, Kathmandu, 1998.
Figure 24: Involvement of NGOs, by Sectors
3% 6%
8%
6%
46%
3%
18%
10%
Community development
Women w elfare
Youth
Moral development'
Environment protection
Child w elfare
Health services
Handicapped and disabled
Source: Maskay, B. K., NGOs in Development: Search for a New Vision, Kathmandu, 1998.
7.11
Although the total number of NGOs in Nepal is large, the number of active NGOs is considerably smaller
since many NGOs are believed to be inactive due to lack of funding and technical support. The active
NGO group is still a mix bag. Some NGOs have unfortunately shown opportunistic tendencies for
misusing donor or government resources. On the other hand, there is a core group of strong and serious
NGOs that have a demonstrated capacity and commitment to perform. It is therefore necessary to establish
61
a stringent screening criteria for NGO involvement in the facilitation of development work. The strengths
of NGOs in Nepal are their capacity to reach out to, and create awareness among, target constituencies at
the grassroots and their flexibility of operation. They also generally provide a better overall working
environment for their staff than that existing in the government.
7.12
A major constraint faced by NGOs and CBOs in Nepal is the restrictive legal regime in
which they have to operate. The support to these organizations from the government is
also very poor. Therefore, NGOs are currently highly dependent upon the International
NGOs as well as bilateral and multilateral donors. This dependence has created
uncertainties in the volume and sustainability of NGO operations. Indeed, donors rarely
make long term funding commitments (projects typically do not exceeding five years, and
therefore contracts are for three years or less). Furthermore, the changes in the policies
among donor countries and institutions affects contract execution and renewal. Contracts
at times are terminated not due to lack of performance, but in reaction to budget cuts from
the donor government. To remedy this situation, this study proposes the establishment of
general and sectoral funds so that NGOs are given a more secure operating environment
and therefore the continuity in the development work can be assured.
D.
CBOs
7.13
Community-Based Organizations (CBOs) are informal user groups typically created at community level.
CBOs have flourished in Nepal in recent years. They represent a key capital that should be mobilized to
the fullest. A study shows that there are more than 17,000 CBOs involved in the irrigation sector alone 8.
About 97 percent of the community forests in the Hills are also managed by the CBOs. Most of the
existing rural infrastructure works such as roads, trails, suspension bridges, and drinking water supplies are
built by the communities through their own CBOs. Where CBOs are truly involved, projects have been
shown to be more successful. This is not surprising when, as the direct beneficiaries of the development
projects, CBOs have the highest stake in the quality of the development works. Both the literature and the
current case studies show that CBOs are in greater number and perform better in an environment where
there is high level of overall social capital. Therefore, in areas where social capital is low (such as Southern
Tarai), there is a need to enhance awareness and social mobilization so that CBOs are able to develop to
their full potential, and be fully associated to development work.
8
These NGOs are involved mostly in managing community irrigation systems.
62
Chapter VIII: RECOMMENDATIONS
8.01
Drawing from the analysis of the case studies as well as general field observations, anecdotal evidence and
findings from relevant studies, this chapter makes general and sector-specific recommendations for delivery
of rural development services in Tarai. These recommendations concern measures at the policy level that
are a prerequisite to the implementation of the preferred models, and more specific recommendations
focussing on key institutional aspects of service delivery as they have emerged from the case studies. The
main cross-cutting theme in drawing up recommendation is decentralization. Most recommendations are
therefore directly or indirectly linked to the current government decentralization policies. Another
overarching conclusion is that the implementation of the preferred models, as a menu of competing options
offered to rural end-users, is currently constrained by the overall lack of resources earmarked for rural
services and the skewed way in which the funding is allocated, still in favor of inefficient government
department and agencies. The study therefore advocates the creation of specialized autonomous funds
(sector specific or multi-sectoral) that end-users will be able to access through a competitive and transparent
selection process.
A.
General Recommendations
8.02
The study’s main general recommendations are as follows:

Create more consistent incentive framework. This concerns mostly subsidies linked to cost
recovery or to the purchase of inputs and equipment that are required for and impact service
delivery. The level of subsidy built into service delivery provided by agencies varies significantly
across sectors. Evidence suggests that the subsidy is typically skewed in favor of more wealthy
communities, and that it biases community choices in favor of large scale and technically complex
systems that operationally and financially less sustainable. Policies should be reviewed to alter
this perverse incentive framework and reform it so as to ensure consistency both within and across
sectors.

Decentralize service delivery. The government agency model has been shown to perform poorly
in each sector as compared to local bodies. This points to a need to push the decentralization
process, and, aligned with this push, a need to transfer government’s service delivery functions to
the more efficient institutions identified in each sector. This implies the restructuring of line
ministry services, including downsizing and better alignment of skill mix with technical
requirements and relevant provisioning functions. Such a restructuring has also been suggested by
the high level Administrative Reform Commission (1991). The government is currently intent to
further consider the recommendations of this commission.

Align government budget with investment priorities. The case studies show that the public
development budget allocated for rural infrastructure is grossly inadequate to cover the investment
needs as assessed by communities. In fact, even those projects that have been approved as
priorities under the public investment program are consistently under-funded – funding amounting
to barely 10 percent of the estimated cost of completion of infrastructure projects is released
yearly. Thus projects have to rely on several annual funding cycles in order to be completed. This
leads to serious project delays, and prevents timely project completion. It is therefore
recommended that government be more selective in its budgetary allocations, allocating full
project budgets to fewer projects on an annual basis.

Develop social capital in Southern Tarai. The case analysis provides convincing evidence of the
potential success of community based initiatives. However, this success relies heavily on the level
of social capital and capacity at the local level. In the northern Tarai where levels of social capital
are high, there is already substantial evidence of community organized and managed systems. In
63
the southern Tarai however, social capital is relatively low and needs to be developed. For this
reason, a program of initial social mobilization and capacity building is recommend on a massive
scale in the southern parts of the Tarai. This could conceivably be achieved through the National
Volunteer Service that is proposed to be established. Without such social mobilization, community
infrastructure will not be properly operated and maintained.

Target development in the Western Tarai. In order to redress imbalances in the level of service
delivery, priority should be given to investments in Western Tarai which is comparatively more
agriculturally backward and under developed.
Box 7 Right-to-Information Act?
The case study evaluation has shown that decisions within the government have been relatively non
transparent. The study team also experienced difficulties getting government offices to release project
information. It is therefore our recommendation that a ‘right to information act’ be considered that: (a)
provides full disclosure of project documents; (b) makes it mandatory to prepare regular technical audits
of all government administered projects so that project execution be fully transparent and project
management is made fully accountable; and (c) establishes legal provisions that give dissatisfied
beneficiaries the opportunity to sue and possibly penalize those agencies or individuals who deliberately
engage in unethical, discriminatory or illegal practices leading to poor quality infrastructure.
B.
Sector-Specific Recommendations
Agricultural Research
8.03
In agricultural research, the study indicates that the following issues need to be resolved: (a) research
agenda setting procedure; (b) seed production and multiplication; and (c) financing and cost sharing.
(a)
Research Agenda Setting
8.04
Research activities should be respond to the problems as identified by farmers and agricultural
entrepreneurs at the grassroots. Hence, the research agenda must be set through wide consultations with
these stakeholders. There is a need for regular interaction of the research personnel with the other actors in
the delivery cycle starting with the end-users who are the ultimate clients of research:

End-users: farmers’ groups in the extended outreach sites, and irrigation user groups within
irrigated schemes;

Representatives of agro-processing factories and commodity associations;

Agro-vet dealers, and representatives of the seed trade and production business (including the
Seed Entrepreneur’s Association of Nepal-SEAN); and
64

Government cadre and/or NGO agents in charge of agricultural extension work.

Other institutions (universities) and/or NGOs specialized in research activities.
8.05
These interactions would provide a large relevant researchable agenda on farmers’ and agricultural
entrepreneurs’ problems. Additional data collection through agro-vets and extension agents to identifying
agricultural problems may also supplement the establishment of the research agenda. These problems
should be ranked systematically using the economic criteria (potential returns from research) in a way that
fully take into account farmers’ perceptions of the risks and assessment of returns associated with the
activities concerned. The number of research tasks to be carried out should be prioritize and aligned
realistically with resource availability. This research agenda should also provide for potential research
possibilities outside NARC. Institutions other than NARC should be able submit and obtain funding for
research proposals on issues that they are best equipped to investigate as was demonstrated by the case
studies, for vegetables production in the Hills (specialized NGOs) or production of industrial crops (sugar
or tea factories).
(b)
Financing and Cost Sharing of Agricultural Research
8.06
Since research is typically a public good, it needs to be financed to a large extent by the government. An
exceptions to this rule is when access to research results can be restricted to a defined set of users, and/or
when research results are fully incorporated as inputs into the production of private goods. In these
situations, cost-sharing or privately- financed research activities are appropriate.
8.07
Bearing the above in mind, two major options to channel of public funds into research are proposed. The
first option is through NARC core financing, either by the government from its own resources or with the
help of donors. The purpose would be to carry out basic research activities of high priority and high
potential returns. In that case, NARC will also be able to sub-contract part its research activities to the
other research organizations that have demonstrated competence in agricultural research as documented by
the cases under this present study (such as agricultural universities, agricultural farms, NARC and researchoriented NGOs).
8.08
The second option is the establishment of a completely autonomous research fund which would be
legislatively eligible to receive funding from the same sources. This fund would award research contracts
to the same set of organizations that have demonstrated capabilities for agricultural research on a
competitive basis using predetermined criteria to evaluate research proposals. This approach has been
initiated under the Hill Agricultural Research Project (HARP) funded by the Department For International
Development (DFID). Government is considering to transform HARP into a ‘research fund’. A similar
fund could be created for research activities related to Tarai agriculture. The donors providing resources to
the fund would specify the commodities, activities, geographical areas and other conditions to be complied
with in undertaking research, and research awards would be made accordingly. The fund would allow
donors to carry out their regular monitoring of the status and impact of the activities performed from their
respective resources. The fund would ensure cost efficiency in agricultural research. Equity issues in
research need to be addressed as part of the provisioning function to be assumed by the government. The
government would consider these issues during the negotiations with the donors.
8.09
As demonstrated by the case studies, the private sector organizations and the NGOs involved in agricultural
research are still technically quite weak and would need to be strengthened. One way to achieve such
capacity building of research organizations would be to hire experienced researchers, made available from
65
NARC, universities and other government structures, as these structures are streamlined and downsized.
These staff would be given the required incentives to first effect the move and then increase their
performance.
8.10
In the case of collaborative research models, the participation and cost contribution should be
sought from the private sector ‘collaborator’ depending on t he magnitude of benefit that this
collaborator derives from the research output. For example, the Association of Sugar Factories
would collaborate with NARC or other research organizations for research on sugarcane varieties or
cultural practices by contributing part of the research cost. Such a share in cost contribution would
be negotiated and could change over time as research priorities evolve. In this regard, Case A3 has
shown how a sugar mill has financed and conducted adaptive research on sugarcan e with marginal
support from NARC. Research on high-value crops similarly would be done on a collaborative
basis with the respective commodity associations. This cost -sharing arrangement, coupled with the
collection of one percent of seed sales revenue, would be important elements to relieve the
government liability on agricultural research.
8.11
Building upon the analysis of the case studies, the main features of the proposed new system of research
financing would be threefold:

Polycentricity in conducting and financing agricultural research should bring about competition
and synergy between the different actors and consequently increased efficiency at all steps of the
research cycle;

Client orientation and empowerment: research would be conducted on field level problems as
perceived and prioritized by client farmers and entrepreneurs;

Cost-sharing: the cost of research would be shared and partially recovered depending of the nature
of the research activities and the roles ascribed to the various actors.
Box 8: Seed Production and Multiplication
 Shortages of the required amount, quality and variety of seeds are commonly-reported problems in
Nepal. To remedy this problem, and lay the basis for implementation of better technology service
delivery, this study suggests the following prescriptions along the seed production and delivery cycle
spanning both research and extension activities:
 Estimate the quantity of different varieties of seeds demanded by farmers using past trends, and new
information from extension agents and sample surveys;
 Produce the breeder seeds of these varieties in the NARC farms under strictest supervision by the
breeder scientist;
 Collaborate with SEAN to produce foundation seeds from the breeder seeds within the NARC farms,
other farms or outside under the strict supervision of the scientist (this may require the change in
legislation to allow the private sector like SEAN to have access to the breeders seed);
 Provide the foundation seeds to SEAN, the Agricultural Input Corporation (AIC) or any other
potential organization for multiplication through the seed-growers’ association members under strict
technical supervision of the respective organization;
 Obtain certification from the Seed Board;
 Sell seeds through AIC outlets and agro-vets; and
 Set aside one percent of the value of seed sold for research.
Agricultural Extension Services
8.12
The study has found that the preferred models depend on the local circumstances surrounding farming
activities. In the case where extension is related to a technology embedded into a material input or
equipment which farmers are willing to buy, the advice and information relating to that technology can
66
efficiently be supplied at the point of sale. The cost can be passed to the end-users through the pricing of
the input or the equipment, since it is then a pure private good producing benefits exclusively for the enduser. In this case, both provisioning and production of the service are done by the private sector, typically
agri-business operators, such as the agro-vet establishments and the large scale processing units (sugar
factories, tea estates, etc.) There is a role, however, for the public sector in establishing quality standards,
and the framework in which agro-vets would be encouraged to expand and improve their technology
service.
8.13
Agro-vets are currently constrained by two main factors: (a) the lack of technical knowledge in agriculture
as most such establishments are owned and operated by the people with non-agricultural background; and
(b) these establishments have currently no access to institutional credit for working capital. The
agricultural graduates can be attracted in this growing business by providing them training in business
management and practical field extension. Even the agricultural curriculum can be modified to include
business management. Institutional credit can be arranged through the ADB/N. Government could further
improve the capacity of these private sector providers through offering training, on a partially subsidized
basis which recognizes the need to compensate for market failure. This would be backed up by developing
an appropriate regulatory framework. For example, agro-vets should be able to show that they can provide
appropriate advice in respect of the inputs that they sell, and be provided by the Government with some
kind of certification to that effect. This will protect farmers from incompetent suppliers and help to
increase overall confidence in the private sector.
8.14
For industrial commodities like sugar or tea, where it is in the interests on the part of the processing and
marketing companies to ensure a regular supply of high quality produce from growers, both provisioning
and production of extension services can be left to these companies. The cost of these services in this case
is build into the pricing structure agreed with farmers as part of their production contracts with the
factories. This cost is fully or partly passed over to end-users depending their respective negotiating
positions, the farmers finding it equally advantageous to produce high quality products that will eventually
fetch a premium on the market.
8.15
The NGO model works well where extension functions are integral parts of a holistic, integrated
intervention at community or VDC level. The success of NGOs in engaging the active participation of
users in all stages of the technology related interventions suggests that the weak accountability and quality
of agency-managed services could be addressed by contracting out the production of extension services to
NGOs and other non-government actors. Although the complete outsourcing of the extension function to
the private and NGO sectors is not yet practiced in Nepal, it is being heavily debated. This option certainly
should be experimented with. Some NGOs have been performing some extension functions under donor
funding with considerable success as the two case studies concerning NGOs show. Such subcontracting
could be funded under the proposed research and extension fund.
Irrigation and Drinking Water
8.16
The case studies prepared on irrigation and drinking water systems show invariably that the following key
elements are found to result in low cost (both capital and O&M), functional and sustainable infrastructure:
(a) the involvement of beneficiaries in all the step of the project/ service delivery cycle; (b) the development
of local institutions (User Groups or CBOs) by catering to their needs for management support; and (c) a
higher level of cost sharing by beneficiaries. The case studies reviewed showed that the management
systems developed by government agencies (DOI, DWSS) did not incorporate these elements and
consequently the infrastructures implemented under these systems were high cost, mostly non-functional
and unsustainable.
8.17
The performance comparisons made under this study are convincing enough to set the stage for
recommending the key following best practices concerning infrastructure construction or rehabilitation:

Involve beneficiaries in project identification. To that effect, identify the potential influence area
(command) of the scheme and assign a competent facilitator (such as NGOs) for assisting in the
creation of grassroots beneficiary institutions (CBOs) if these institutions are not in existence.
67
The facilitation will involve social mobilization, development of the social capital, group
organization, assistance in developing the regulatory framework and management rules, etc., in a
way which enhances the capacity of the beneficiaries to build and maintain the given
infrastructure.

Involve beneficiaries in project design and execution. All decisions relating to the technology to
be used, selection and hiring of technical personnel, provision of materials, etc., in particular, will
be made by the UG/CBO as legitimate representative of the beneficiaries. During the execution,
the beneficiaries will provide labor for various activities, the magnitude of contribution of a
household being based on mutually-agreed rules of the UG. If a household is willing to offer more
labor than its due share, this household will receive the market wage, part of which could be
retained as his/her savings in the form of labor certificate. The beneficiaries may also be required
to contribute cash and materials besides labor, which they can obtain with loans from the financing
institutions. The facilitator should help them develop such linkages with institutional partners.

Establish cost-recovery basis strictly on economic criteria. If it is deemed necessary to take
equity considerations into account, the additional cost should be borne by the government as part
of its provisioning function, and not by the beneficiaries. In all cases, the beneficiaries must be
informed up-front in a transparent manner of the roles and contributions expected from them, as
soon as the infrastructure is found technically feasible.

Set up sectoral funds (such as the Irrigation Development Fund) with legislative capabilities to
receive resources from HMG/N and donors and subcontract infrastructure building functions to an
array of diverse organizations on a competitive basis (in order to build a ‘polycentric’
arrangement). Decide precisely on the type and level of contribution that the Fund and the
beneficiaries have to make for a particular type of infrastructure. This ratio of contribution will be
the same for all organizations financing the same infrastructure unless, of course the government
provides additional resources in particular circumstances on equity grounds. The government in
such cases, should have a transparent formula for doing so. For example, the government may
take up the additional cost of material transportation in the case of a remote area project.
Specific Recommendations for Existing Large and Complex Water Schemes
8.18
The evidence collected from the case studies on the large and complex systems indicate that these systems
have neither demonstrated economies of scale nor performed satisfactorily based either on efficiency or
process-based performance criteria. In hindsight, these systems should not have been built. Rather,
alternative low cost and decentralized systems should have been considered as these latter systems have
shown far greater potential in terms of efficiency, equity and sustainability. For example, in one case study
(drinking water in Kalyanpur, Saptari), four shallow tubewells could have fulfilled the drinking water
requirements of the local populations rather than the present complex and largely nonfunctional large
overhead system.
8.19
When the wrong investments have been made -- like the complex infrastructures described in the case
studies -- these investments represent a sunk cost that cannot (and should not) be recovered. The solution is
therefore to operate these systems in the most efficient and cost-effective way. To that effect, this study
proposes a ‘shared management’ arrangement. Under such an arrangement, the agency will manage the
public service part of the system (often the most complex) such as the headwork, the main distribution canals,
the deep tubewells and accessories, etc. The water distribution systems downwards will be fully managed by
the beneficiary institutions. It is recommended that the agency and the UGs enter into contracts that will
clearly delineate the roles and responsibilities of each other. In order to recover the full O&M costs, the
agency will sell water at a wholesale rate at the point up to which the agency management holds. This is a
prerequisite to avoid that the infrastructures deteriorates for lack of O&M funding. This arrangement is
similar to the ‘joint management’ exemplified in some of the cases.
Rural Roads
68
8.20
Based on the case analysis the following recommendations are made for the rural road sector.

Identify locations where the roads can be economically extended -- priorities should be determined
in close liaison with local bodies through a participatory process;

Identify the potential beneficiaries or the influence zone of each road link or road segment;

Deploy a competent facilitator (such as NGOs) for developing the institution of the beneficiaries.
The facilitation will involve social mobilization, enhancing social capital, group organization,
helping form rules, etc., in a way which enhances the capacity of the beneficiaries to establish and
maintain the rural road network serving their communities;

Apply a public auditing system through an independent audit organization during sub-project
execution. As shown in Case R1, the use of a public audit organization is key in curbing
corruption and thus reducing costs;

Train local people selected by the UG in the technical O&M of the subprojects; and

Set up a rural access fund with administrative and financial autonomy, and legislative capability to
receive resources from HMG and donors to subcontract rural access related works such as roads,
bridges, trails to a multitude of organizations on a competitive basis (polycentric arrangement).
Electricity Distribution
8.21
For the provision of power distribution, the case study of Lamjung district (Case E3) provides an interesting
and convincing model, illustrating the major recommendations from the present study, i.e., how a group of
users can organize themselves to buy electricity on a wholesale basis from a substation or a transformer,
and manage the distribution by themselves including tariff fixation and fee collection. Since users are selfmanaging the electricity retailing, free-riding like power theft has been avoided. The profit margins built
into the tariffs, as well as the gains from the absence of power theft, have been sufficient to provide the
funding to employ several local staff. The conclusions of this case study have been corroborated by the
other case studies.
8.22
Based on the above, the following recommendations are made for the rural electrification of the Tarai
villages:

Identify the locations (dense settlements and clusters of tubewells) and the potential beneficiaries
where the electricity grid can be economically extended;

Estimate the wholesale rate at which power can be sold to UGs at a local substation or transformer;

Deploy a competent facilitator (such as NGOs) to assist the community in the creation of
beneficiary groups. The facilitation will involve social mobilization, enhancement social capital,
group organization, helping form rules, etc., in a way which enhances the capacity of the
beneficiaries to establish and maintain the rural energy related subprojects;

Train local people selected by the UG in the technical operation and maintenance of the
subprojects; and

Set up a rural energy fund with legislative capability to receive resources from HMG and donors to
sub-contract rural energy related works such as bio-gas, solar power, improved cooking stoves,
micro-hydroelectrical schemes, to a multitude of organizations on a competitive basis (polycentric
arrangement).
C.
Specialized Sectoral or Multi-Sectoral Funds
8.22
A polycentric approach to development – involving ‘competing’ actors working in partnership – is the
much advocated concept underlying this study.
As was seen as part of the sector specific
recommendations, the funding mechanism best suited to effectively implement institutional arrangements
aligned with the polycentric concept, is one that can provide resources for development functions on a
69
competitive basis. This can be achieved by setting up fully autonomous and independent specialized
sectoral and multi-sectoral funds. The preliminary guidelines for the establishment and operation of such
funds are presented in Annex 9. Box 9 summarizes the recommended approach to establish competitive
funds.
Box 9: The need for competitive funds
The cases analyzed under the present study have given clear evidence of the government's relative
inefficiency in the delivery of rural development services in the sectors considered. This evidence is
largely supported by other studies. In contrast, the study has demonstrated that the involvement of the
other actors -- especially the CBOs and NGOs that are close to grassroots communities -- have led to the
establishment of efficient, equitable and sustainable delivery systems.
Against this realization, the study has shown that the bulk of the development resources are still being
channelled through the government departments/agencies leaving only meager resources for the other,
more efficient, actors. As a result, these actors have not been able to scale up their operations in want of
resources and technical/managerial capacity. Some of these actors have received direct support from
donors, but donor-funded projects have suffered from the uncertainty about the continuity of such a
support.
Hence, alternative (more permanent) sources of funding are required. The proposal made under this
study relate to the creation of autonomous sectoral/multi-sectoral funds specially earmarked for
development of service delivery in rural areas. These funds should support on a sustainable basis the
better performing actors. This will be achieved by allocating the funding on a competitive basis though
systematic and tranparent selection mechanisms. The Funds will provide the instruments for the
government to channel part of the development resources away from the bureaucratic departments to
other structures that are b etter placed and equipped to provide an effective delivery of services. The
competitive funding system under which these funds will operate will be open to all actors, giving
incentive even to the bureaucratic departments to perform better for their own survival.
70
LIST OF REFERENCES
APROSC/JMA. 1995.
Nepal Agriculture Perspective Plan, Kathmandu, Nepal.
Adivory Commission on International Relations (ACIR), 1987. Organization of Local Public Economies,
Washington D.C.
Baidya, B. G., 1999.
Poverty Profile of Nepal, New Era, Kathmandu, Nepal.
Cernea, M., 1985.
World Bank.
Putting People First: Sociological Variables in Rural Development,
Central Bureau of Statistics, 1998.
Nepal: Kathmandu, November.
Report on the Labour Force Survey, His Majesty's Government of
Curtis Donald. 1991. Beyond Government: Organizations for Common Benefit, Development Studies,
McMillan Press, Hong Kong.
Devarajan, 1996. Adjusting vs. Non-Adjusting Countries. World Bank Publication.
Fukuyama Francis. 1995.
Trust: The Social Virtues and the Creation of Prosperity, The Free Press. USA
HMG/N, 1991.
A Report of the Administrative Reforms Commission, Kathmandu, Nepal
HMG/N, 1999.
Local Self-Governance Act 1999, Kathmandu, Nepal
HMG/USAID, 1992. Cresting a Supportive Policy Environment for Irrigation System Turnover & Joint
Management, Contract No. 367-0153-c-00-1235-00, Kathmandu, January.
IIMI. 1991. Process and Performance Evaluation of ADB/N Supported Irrigation Schemes, Vol I-IV,
Kathmandu, Nepal
Lam W. Fung. 1998.
Governing Irrigation Systems in Nepal: Institutions, Infrastructure, and Collective
Action, USA
Lindsey Quentin W. 1986. Civilization, Nepal and the Structural Design of Society, North Carolina,
USA.
Maskay, B. K. 1998. Non-Governmental Organizations in Development: Search for a New Vision,
Kathmandu,
71
Ministry of Finance, 1998.
Budget Speech (FY 1998/99), His Majesty's Government of Nepal, Kathman
National Planning Commission, 1992.
June.
The Eighth Plan (1992-1997), His Majesty's Government of Nepal,
National Planning Commission, 1992.
June.
The Ninth Plan (1997-2001), His Majesty's Government of Nepal,
National Planning Commission, 1993. Case Studies of Water Supply Systems in the Central and Western Region:
Project Status, Problems and Issues, His Majesty's Government of Nepal, Kathmandu.
NPC/UNDP, 1994.
Irrigation Development in Retrospect: Search for a Breakthrough, Kathmandu,
August.
Ostrom Elinor, Larry Schroeder and Susan Wynne. 1993. Institutional Incentives and Sustainable
Development: Infrastructure Policies in Perspective, Westview Press
Ostrom Elinor. 1992.
Crafting Institutions for Self-Governing Irrigation Systems, USA
Ostrom Vincent, David Feeny and Hartmut Picht. 1993. Rethinking Institutional Analysis and Development:
Issues, Alternatives and Choices, USA. NPC, 1992. Review of Ongoing Development Projects: Irrigation
Sector, Kathmandu, May.
Suzuki Satomi. 1999. Human Development and Self-Reliance: A Case Study of Small Farmer
Development Program (SFDP) in Kumroj, Nepal, Cornell University, USA.
UNDP, 1999.
Nepal: Common Country Assessment, Kathmandu.
Upadhyay, H., 1999.
Poverty, Food security and agricultural Research in Nepal, Kathmandu.
Wade Robert. 1994.
Village Republics: Economic Conditions for Collective Action in South India, USA.
World Bank, 1999.
"Nepal Rural Water Supply & Sanitation Project" Mid-Term Review Report
(November 15 to December 30), Kathmandu, December
World Bank, 1999.
Country Assistance Strategy (1999-2001), Kathmandu, Nepal.
72
ANNEX 1
The Tarai in the Context of Nepal
Indicators
Tarai
Rest of Nepal
Number of Administrative Districts
20
55
Proportion of Nepal’s Surface Area (%)
23
77
Proportion of Cultivated Area (%)
Proportion of Irrigated Area (%)
Proportion of Forest Area (%)
Proportion of Population (%)
Proportion of food grain Production (%)
Annual Population Growth Rate (% 1971-1991)
Population Density (Persons per sq km), 1991
Road Network (km roads per sq km surface area)
53
68
24
47
60
3.5
264
0.13
47
32
76
53
40
1.3
91
0.04
Source: Agricultural Perspective Plan (APP, 1995), Central Bureau of Statistic (CBS, 1998)
73
ANNEX 2
Development Indicators and Ranking of Tarai Districts
Indicators
S.
N.
District
Overa
ll
Comp
osite
Index
Of
Devel
opme
nt
Pover
ty
And
Depri
vation
Index
Wom
en's
Empo
werm
ent
Index
Natur
al
Resou
rces
Endo
wmen
t
Index
Socioe
cono
mic
Infras
tructu
re
Dev.
Index
Educa
tionall
y
Disad
vanta
ged
Popul
ation
Per
Capit
a
Food
Produ
ction
1
3
3
13
17
16
18
15
19
14
10
2
6
5
12
7
8
9
11
4
1
4
4
13
18
16
17
15
19
9
11
2
6
8
10
5
7
12
14
13
1
3
3
12
15
11
18
12
17
16
14
2
4
7
13
5
6
9
10
8
1
2
2
12
9
13
10
8
7
11
4
17
18
3
5
19
15
14
16
6
1
2
2
9
17
15
11
10
19
12
6
3
7
4
18
14
8
13
16
5
19
13
13
9
1
5
6
8
7
4
10
18
16
11
14
12
2
3
15
12
11
11
6
7
2
4
5
3
18
17
16
1
8
14
15
10
9
13
19
Overa
ll
Litera
cy
Rate
Infant
Morta
lity
Rate
Drink
ing
Water
Cover
age(
%)
Irriga Road Forest
teed Densi ry
Area( ty(%) Users
%)
H.H.(
%)
Per
Capit
a
Forest
Area
Healt
h And
Devel
opme
nt
Index
Infras
tructu
re
Devel
opme
nt
Index
1
2
2
7
5
3
4
6
8
10
12
15
13
9
11
17
19
16
18
14
9
11
11
14
15
8
1
4
18
12
10
17
7
3
16
19
2
5
13
6
10
8
8
1
2
7
6
4
3
5
9
12
13
11
16
17
14
15
18
19
Rank
1. Jhapa
2. Morang
3. Sunsari
4. Saptari
5. Siraha
6. Dhanusha
7. Mahottari
8. Sarlahi
9. Rautahat
10. Bara
11. Parsa
12. Chitawan
13. Nawalparasi
14. Rupendehi
15. KapilVastu
16. Dang
17. Banke
18. Bardiya
19. Kailali
20. Kanchanpur
Source:- Nepal Districts Profile -1999 ( Publisher NRA)
19
17
17
12
6
8
2
3
1
4
10
18
13
15
5
14
11
7
9
16
7
9
9
19
18
16
15
17
12
11
10
8
5
14
4
1
13
6
2
3
3
6
6
4
2
9
19
12
5
7
10
1
11
16
13
8
18
17
15
14
6
7
7
4
3
10
15
17
14
19
18
16
13
11
8
5
2
1
9
12
19
17
17
18
11
14
12
6
9
8
1
15
10
16
13
3
7
5
4
2
10
1
1
17
18
11
19
2
4
15
5
13
6
3
7
12
16
14
9
8
74
ANNEX 3
Population and Man/Land Ratio in Tarai Districts
S.N.
District
Population
Land area Ha.
Man/Land Ratio
1. Jhapa
593737
160600
3.70
2. Morang
674823
185500
3.64
3. Sunsari
463481
125700
3.69
4. Saptri
465688
136300
3.42
5. Siraha
460746
118800
3.88
6. Dhanusha
543672
118000
4.61
7. Mahottari
440146
100200
4.39
8. Sarlahi
492798
125900
3.91
9. Rautahat
414005
112600
3.68
10. Bara
415718
119000
3.49
11. Parsa
372524
135300
2.75
12. Chitawan
354488
221800
1.60
13. Nawalparasi
436217
216200
2.02
14. Rupendehi
522150
136000
3.84
15. Kapalvastu
371778
173800
2.14
16. Dang
354413
295500
1.20
17. Banke
285604
233700
1.22
18. Bardiya
290313
202500
1.43
19. Kailali
417891
323500
1.29
20. Kanchanpur
257906
161000
1.60
Eastern
2658475
726900
3.66
Central
3033351
932800
3.25
Western
1330145
526000
2.53
Mid-Western
Far-Western
930330
675797
731700
484500
1.27
1.39
TERAI
ALL NEPAL
TARAI %
8628098
18491097
46.7
3401900
2.54
Source: Statistical Year Book of Nepal 1999, Central Bureau of Statistics
ANNEX 4
Average Holding Size in Tarai Districts
75
S.N.
District
No. of holdings
Area of holdings
Average holding size
---------------------------- ha ------------------------------1. Jhapa
74727
105121
1.41
2. Morang
77857
110912
1.42
3. Sunsari
43746
64197
1.47
4. Saptri
65211
83170
1.28
5. Siraha
65322
76991
1.18
6. Dhanusha
69956
73688
1.05
7. Mahottari
58019
63753
1.10
8. Sarlahi
65729
75196
1.14
9. Rautahat
63438
65995
1.04
10. Bara
53488
60981
1.14
11. Parsa
40529
43496
1.07
12. Chitawan
53428
42814
0.80
13. Nawalparasi
64187
71567
1.11
14. Rupendehi
67839
73197
1.08
15. Kapalvastu
51400
90415
1.76
16. Dang
48072
56456
1.17
17. Banke
35912
49073
1.37
18. Bardiya
31590
50727
1.61
19. Kailali
51931
70057
1.35
20. Kanchanpur
35237
46986
1.33
Eastern
326863
440391
1.35
Central
404587
425923
1.05
Western
183426
235179
1.28
Mid-Western
115574
156256
1.35
Far-Western
87168
117043
1.34
TERAI
1117618
1374792
1.23
ALL NEPAL
2736050
2597400
0.95
40.8
52.9
129.6
TARAI %
76
ANNEX 5
List of Contacts
S.N.
Name of Person / Agency
Address
1. Honble. Prithvi Raj Ligal
Vice-Chairman National Planning Commission
2. Honble. Dr. Jagdish Pokharel
Member, National Planning Commission
3. Honble. Hari Shanker Tripathi
Member, National Planning Commission
4. Mr. Oye Mint
World Bank
5. Dr. Chris
World Bank
6. Mr. Jean Claude Blacet
World Bank
7. Dr. Abdul Ghani
World Bank, Bangladesh Dhaka Office
8. Ms. Andrea Ryan
World Bank
9. Mr. Magdalena Manzo
World Bank
10. Dr. Bhola Chalise
Director, Nepal Electricity Authority
11. Dr. Narayan Gajurel
Department of Irrigation
12. Mr. Arun Ranjitkar
Director General, Department of Water Supply and Sewerage
13. Mr. Udaya Raj Soti
Secretary, Ministry of Local Development
14. Mr. Sharada Prasad Sharma
Joint Secretary, Ministry of Water Resources
15. Mr. Devendra Pratap Shah
General Manager, Agriculture Development Bank of Nepal
16. Dr. Hari Krishna Upadhyay
Executive Chairman, CERPED
17. Mr. Raj Babu Crests
Executive Director, RWSSFDB
18. Mr. Jeeven Lal Shrestha
Member Secretary, Ground Water Development Board
19. Mr. Suresh Uprety
Project Coordinator, Community STW (IFAD)
20. Mr. Umesh Pandey
Director, NEWAH
21. Mr. Dinesh Bajracharya
Er. NEWAH
22. Mr. Prem Bahadur Karki
Chief, Ground Water Development, Parsa District
23. Mr. Ram Krishna Uprety
Chief, District Irrigation Office, Parsa District
24. Mr. Hari Gopal Gorkhali
Controller, Supervision Office, Birgunj, ADB/N
25. Mr. Purushottam Shrestha
Manager, Main Branch Office, Bharatpur, Chitwan District
26. Mr. Chaudhery
Chairman, District Development Committee, Parsa District
27. Mr. Upendra Paneru
Chairman, JMC-Nepal, Chitwan District
28. Mr. Deepak Khanal
Khanal Poultry, Bharatpur
29. Mr. Indra Shrestha
Avinash Poultry, Bharatpur
30. Mr. Netra Dhakal
Proprietor, Nepal Agro Vets, Narayanghat
31. Mr. Tika Ram Pandey
Chairman, Deep Tubewell WUG, Jamuniya
77
32. Mr. Hari Lall Shah
Chairman, Deep Tubewell WUG, Rajbiraj
33. Mr. Bhesh Raj Panta
Chairman, WUG, Budhi Rapti Community Irrigation
34. Mr. Prem Bahadur Shahi
Senior Hydrologist, Kapilvastu Tubewell Project
35. Ms.Gomati Upadhyay
Members, WUG, Devdaha, Nwalparasi
36. Mr. Surya Narayan Thakur
Mechanical Engineer, Bhairahawa Lumbini Groundwater Project
37. Mr. Sukhdev Neupani
Chairman, Chhattis Mauja Irrigation Project.
38. Mr. Hom Nath Gyawali
Tubewell Operator, Jahada Tubewell, Jamuniya
39. Mr. Hom Bahadur Thapa
Sub Branch Manager, ADB/N, Parasi
40. Mr. Shyam Krishna Sharma
Pump Dealer, Bharatpur
41. Mr. Prakash Neupani
Well Driller, Bharatpur
42. Mr. Shanker Sarawagi
Pump Dealer, Narayagharh
43. Ms. Guan Prasad Sharma
Manager, National Drilling Company, Gaidakot
44. Mr. Krishna Kumar Verma
Chairman, Central Farmers Committee, Rajapur
45. Mr. Keshab Shyakya
Chief, District Water Supply Office, Butwal.
46. Mr. Krishna Kumar Sharma
Members, WAG, Pithuwa Irrigation System.
47. Ms. Pavitra Rajbhandari
Member, WUG, Group Tubewell, Parvatipur.
48. Mr. Rishi Ram Tiwari
Member, WUG, Group Tubewell, Gunjanagar
49. Mr. Banu Ram
Chairman, Janakalyan Irrigation System.
50. Mr. D.R. Rana
Butwal Power Company, Butwal.
51. Mr. Saroj Banskota
Chief, District Water Supply Office, Butwal.
52. Mr. Phul Bahadur Ghising
Chairman, Letang Community Irrigation System, Letang.
53. Mr. Nanda Lall Dhakal
Chairman, Naubasta Irrigation System, Chisapani, Bankey.
54. Mr. Parasu Ram Mahoto
Member, WUG, Group Tubewell, Phulkatti, Siraha.
55. Mr. Krishana Pathak
Member, WUG, Group Tubewell, Latebari, Jhapa.
56. Mr. Tulsi Bahadur Khatri
Chairman, Group Tubewell, Mahadevpuri, Bankey
57. Mr. Balaram Bhandari
Communitity Development Center, Suarya Pattuwa, Bardia
58. Mr. Bhim Bhadur Oli
Chairman, Group Tubewell, Sitapur L Gaoni, Bankey
59. Mr. Bhawani Upadhyaya
Development Consultant Services
60. Ms. Samarathi Lodh
Member, Tubewell WUG, Pakadi, Nawalparsi
61. Saroj Baskotota
District Engineer, DWSO/Chitwan
62. Krishna Bahadur Tiwari,
Chairman, user group committee, Pithuwa Drinking Water Supply Project
(PDWSP)
63. Babu Ram Thapa Magar
Peon, PDWSP
64. Damodar Bhatta
Assistant Pump Operator ,DWSO/Chitwan, PDWSP
65. Buddhi Bahadur Rayamaji
Site Incharge,DWSO/Chitwan, PDWSP
78
66. Ms. Manorama Sharma
Motivator, NEWAH, Surya Patuwa Drinking Water Supply Project
(SPDWSP)
67. Mr. Santu Thapa
Health Motivator, SBK, SPDWSP
68. Mr. Suresh Kumar Chaudari
Health Motivator, SBK, SPDWSP
69. Mr. Keshav Lal Shakya
District Engineer, DWSO/Rupandehi, Anandaban Drinking Water Supply
Project (ADWSP)
70. Mr. Keshav Raj Neupane
User group Committee Chairman, ADWSP
71. Mr. Hari Prashad Khanal
VMW, Bhimshanti Drinking Water Supply Project (BDWSP)
72. Ms. Sarita Gurung, member
User group committee, BDWSP
73. Mr. Manashree Gurung
Member, User group committee, BDWSP
74. Mr. Thakur Pokharel
Benificiaries, BDWSP
75. Mr. Upendra Panueru
Director, JMC, BDWSP
76. Mr. Shree Ram Shrestha
Chairman, User group committee, Dhulibari Drinking Water Supply
(DDWS)
77. Mr. Mani Kumar Uperati
Secretary, User group committee, DDWS
78. Mr. Madhav Bahadur Aryal
District Engineer, DWSO/Saptari, Kalayanpur Drinking Water Supply
Project (KDWSP)
79. Mr. Bali Chasudhari
VDC Chairman, Kalyanpur, KDWSP
80. Mr. Ram krishna Shah
VDC member, KDWSP
81. Mr. Toya Narayan Kharal
Vice-Chairman, User group Committee, Batauli Drinking Water Supply
project (BDWSP)
82. Mr. Tara Lamichane
Team Leader,GYC, BDWSP
83. Mr. Hom Nath Acharya
Field Coordinator, GYC, BDWSP
84. Mr. Rajesh Koirala
Overseer, GYC, BDWSP
85. Mr. Dil Maya Kharal
VHP, BDWSP
86. Mr. Bhakta Bhadur Gurung
Secretary, User group Committee, BDWSP
87. Mr. Uma Nanda Kharal
VMW, BDWSP
88. Mr. Bhojraj Nainabasti
Beneficiaries, BDWSP
89. Mr. Nar Bahadur Lama
Chairman, User group Committee, Letang Drinking Water Supply Project
(LDWSP)
90. Mr. Dev Nath Yadav
Operator, LDWSP
91. Mr. Rabindra Kumar Dev
Assistant Engineer, Dhalkebar Drinking Water Supply Project (DDWSP)
92. Mr. Janaki Saran Bhagat
Overseer, DDWSP
93. Mr. Ishor Nath Mishra
Overseer, DDWSP
94. Mr. Buddhi Nath Paudel
Chairman, user group committee, Kakarvitta Drinking Water Supply
Project (KDWSP)
95. Mr. Ram Chandra Upreti
Secratory,user group committee,KDWSP
96. Mr. Mishri Prasad Shrestha
Consultant, Fourth Rural Water Supply Projects, ADB/M
97. Mr. Kumar Dhakal
Consultant, Fourth Rural Water Supply Projects, ADB/M
79
98. Mr. R. P. Sapakota
National Wheat Research Center, Bhairahawa, Rupandehi
99. Mr. R. Mishra
Director Regional Agri-Research Station, Khajurah, Nepalgunj, Banke
100. Mr. K. Adhikari
Chief National Maize Research Programme, Rampur, Chitawan
101. Mr. Govinda Koirala
Chief, Regional Agriculture Research Station, Parawanipur, Bara
102. Mr. Madhav Joshi
Co-ordinator, National Grain Legumes Research Programme, Rampur, Chitawan
103. Mr. Prakash Neupane Rijal
ASC, Rupandehi
104. Mr. Lok Nath Devkota
Chief, ADO, Bharatpur, Chitawan
105. Mr. Ramchandra Agrahari
Chief, ADO, Saptari
106. Mr. Gaffar Mansoor
Chief, Fish Farm, Lahan, Saptari
107. Dr. Hari Dahal
Chief, ADO, Siraha
108. Mr. Purushottam Acharya
Officer, ASC, Lahan, Siraha
109. Dr. Kamal Kantajha
Chief, District Livestock Office, Rupandehi
110. Dr. Ram Kumar Mandal
Asst., District Veterinary, Sunasari
111. Mr. Dev Raj Adhikari
Chief, District Livestock Section, Bharatpur, Chitawan
112. Mr. Ratan Dhoj Shahi
Chief, ADO, Rupandehi, Bhairahawa
113. Mr. Raghupati Kantha
Asst. Agronomist, ADO, Chandragadhi, Jhapa
114. Mr. Purna Man Lawati
Act. Chief, AIC, Bharatpur, Chitawan
115. Mr. Shiva Dutta Dhakal
Co-officer, District Co-operative Office, Bharatpur, Chitawan
116. Mr. Madhav Bahadur Panta
Chief, ADO, Dhanusha
117. Mr. Durga Prasad Adhikari
Coordinator, SEAN, Kathmandu
118. Mr. Mitra Raj Duwadi
President, SEAN, Chitawan
119. Dr. Hari Krishna Upadhyay
Executive Chairman, CEPRED, Kathmandu
120. Dr. T. N. Shrestha
Director, CEAPRED
121. Dr. R. K. Rawat
Coordinator
122. Dr. Anil Subedi
Executive Chairman, LIBIRD
123. Mr. Hari Ghimire
Field Technician, PCI, LIBIRD, Chitawan
124. Dr. Maheswor Bharati
Coordinator, Seed Sector Support Project
125. Mr. Hari Gopal Gorkhali
ADB/N, Monitoring Supervision, Regional Office, Birganj
126. Mr Ramesh Lal Karna
Chief, ADO, Bardiya
127. Mr. Chandra Kanta Devkota
Estension Officer, DADO, Chitwan
80
ANNEX 6
List of the Case Studies
Projects Name
Type of System
Location
Remarks
1. Pituwa Drinking Water Supply Project Agency Managed
Shaktikhor VDC,
Chitawan
Drinking Water
2. Surya Patuwa DW Supply, Health &
Sanitation Project
NGO/CBO Managed
Surya Patuwa VDC,
Bardiya
Drinking Water
3. Kalayanpur Drinking Water Supply
Project
Agency/CBO Managed
Kalyanpur VDC, Saptari Drinking Water
4. Kakarvita Drinking Water Supply
Project
Agency/CBO Managed
Kakarvitta Municipality Drinking Water
5. Anandaban Drinking Water Supply
Project
Agency/CBO Managed
Shankarnagar VDC,
Rupandehi
Drinking Water
6. Dhulabari Drinking Water Supply
Project
Agency/CBO Managed
Dhulabari VDC, Jhapa
Drinking Water
Letang VDC Morang
Drinking Water
7. Letang Drinking Water Supply Project Agency/CBO Managed
8. Bhimshanti Drinking Water Supply
Project
Fund/NGO/CBO Managed Shanrarnagar VDC,
Chitawan
Drinking Water
9. Bataule Drinking Water Supply
Project
Fund/NGO/CBO Managed Devghat VDC, Tanahu
Drinking Water
Agency Managed
Dhalkewar, Dhanusha
Drinking Water
Prithivinagar VDC,
Jhapa
Drinking Water
10. Dhalkewar Drinking Water Supply
Project
11. Prithivinager Drinking Water Supply Agency Managed
Project
12. Sorah Mauja Irrigation
Farmer Managed Irrigation Rupandehi
Irrigation
13. Rajapur Irrigation System
Farmer Managed Irrigation Bardia
Irrigation
14. Narayani Zone Irrigation
Development Project
Agency Managed
Irrigation
15. Banaganga Irrigation System
Joint Managed Irrig.
System
16. Bhairahawa Lumbini Ground Water
Project I
Agency Assited Farmer
Managed
Reupandehi
Irrigation
17. Bhairahawa Lumbini Ground Water
Project III
Agency Assited Farmer
Managed
Rupandehi
Irrigation
18. Jamuniya - Jahada Tubewell
Agency Assited Farmer
Managed
Nawalparasi
Irrigation
19. Sunawal Tubewell
Agency Assited Farmer
Managed
Nawalparasi
Irrigation
20. Pithuwa Irrigation System
Agency Assited Farmer
Managed
Chitawan
Irrigation
21. Kumroj Irrigation System
Agency Assited Farmer
Managed
Chitawan
Irrigation
22. Anjna Irrigation System
Agency Assited Farmer
Managed
Chitawan
Irrigation
Parsa, Bara
Irrigation
81
23. Janakpur Irrigation System
Agency Assited Farmer
Managed
Chitawan
Irrigation
24. Sunderpur Irrigation Project
Agency Assited Farmer
Managed
Morang
Irrigation
25. Dahana Sing Irrigation Project
Agency Assited Farmer
Managed
Morang
Irrigation
26. Sitapur Irrigation
Agency Assited Farmer
Managed
Bankey
Irrigation
27. APP Shallow Tubewell
Agency Assited Farmer
Managed
Nawalparasi
Irrigation
28. APP Shallow Tubewell
Agency Assited Farmer
Managed
Bankey
Irrigation
29. APP Tubewell
Agency Assited Farmer
Managed
Saptari
Irrigation
30. ADB/N Shallow Tubewell
Agency Assited Farmer
Managed
Chitawan
Irrigation
31 ADB/N Shallow Tubewell
Agency Assited Farmer
Managed
Chitawan
Irrigation
32. ADB/N Shallow Tubewell
Agency Assited Farmer
Managed
Jhapa
Irrigation
33. ADB/N Shallow Tubewell
Agency Assited Farmer
Managed
Jhapa
Irrigation
34. ADB/N Shallow Tubewell
Agency Assited Farmer
Managed
Jhapa
Irrigation
35. IFAD Tubewell
Agency Assited Farmer
Managed
Siraha
Irrigation
36. Kalikhola Irrigation Project
NGO/CBO Managed
Citawan
Irrigation
37. Treadle Pump
NGO/Private Users
Managed
Siraha
Irrigation
38. Boteghat Bridge
CBO Managed Model
Kumroj, Chitwon
Bridge
39. Harnary Bridge
NGO/CBO Model
Kumroj, Chitwon
Bridge
40. Madhauliya Bridge in Kotihawa
DDC/CBO Managed
Model
Amuwa Road,
Rupandehi.
Bridge
41. Jiba Khola Bridge
DDC/CBO Managed
Siraha
Bridge
42. Kumroj Section of Parsa
VDC Managed Model
Kumroj – Sauraha Road Road
43. Manigram – Tinaue Road
VDC Managed
Rupandehi
Road
44. VDC Roads in Parroha, Rupandehi
VDC Managed
Rupandehi
Road
45. Roads built by Bhairahawa-Lumbini
Ground WP
Agency Managed Model
Bhairahawa, Rupandehi Road
46. Sitapur Rural Road, RCIW
Donor /DDC/CBO
Managed Model
Siraha
Road
47. Siraha - Balan (Hulaki) Road, Siraha. Agency Managed Model
(DoR)
Siraha
Road
48. Ramnagar Mirchaiya Road
Siraha
Road
VDC Managed
82
49. Basbiti - Maleth – Dighawa
Agriculture Road
DDC/CBO Managed
Saptari
Road
50. National Wheat Research Program
NARC Managed
Bhairahawa, Rupandehi Agriculture
51. LIBIRD (NGO)
LIBIRD Managed (NGO) Kaski
Agriculture
52. Rupandehi District
Department of Agriculture Rupandehi District
Agriculture
53. CEPRED
CEPRED
Kathmandu
Agriculture
54. SAPPROS
SAPPROS
Kathmandu
Agriculture
55. BPC
Butwal Power Company
Butwal
Electricity
56. NEA
Nepal Electricity Authority
Electricity
57. Gitanagar Service Centre of Chitawan
Chitawan District
Electricity
58. Lamjung Electricity Users
Organization, Beshisahar
Lamajung
Electricity
59. Private Company Users Group
Managed System
Syangja
Electricity
Dang
Agricultural
60. ADO, Dang
Agency Managed
83
ANNEX 7
Model Description

Appendix 0:
Generic Models

Appendix 1:
Agricultural Technology

Appendix 2:
Irrigation

Appendix 3:
Water Supply

Appendix 4:
Roads

Appendix 5:
Power
84
ANNEX 7
Appendix 1
Functions of Various Actors in
Agricultural Technology Models
Agency Model (AM, Agricultural Extension )
Sub-project
cycle
Key actors
Agency
CBO
Users
Initiation
Project initiation is done by the Agency and it
is approved through line ministry. Program is
prepared based on regional planning and budget
workshop done in all five development regions.
Users are consulted
Planning
Agency does all the preparatory works that
include conducting of regional planning and
budgetary workshop, and compilation of
program and budget. Program and budget
estimates are submitted to NPC through line
ministry. No coordination with the CBO has
been observed during the process.
Ag. Service Center
(ASC) staff consult
with CBOs before
planning and budget
workshop
Funding
NPC allocates annual budget However,
submitted budget is not fully sanctioned by the
NPC. In AREP districts, funding is done by the
World Bank.
No involvement. CBO
does not know amount
of funds allocated to
service centers.
Execution
Ministry directs the DADO and then DADO
instructs the ASC and ASSC to implement the
project
CBO organizes the
group formation to
implement project.
Involvement in
implementation
activities
Monitoring &
Evaluation
Monitoring & Evaluation of the project is done
by the Agency.
No involvement
No role
Financing
NPC allocates the annual budget. MOF releases
budget to Department which in turn releases
budget to its regional and district offices
No involvement
No role
Users express their
demand
85
Sub-project
cycle
NGO/CBO Model (NCM) ( Agricultural Extension )
Key actors
NGO
CBO
Users
Initiation
Project initiation and facilitation
is provided by the NGO.
No involvement
The users present their
demand to the NGO
Planning
NGO coordinates with the users
after observing field conditions
and plan accordingly in
consultation with the users
CBO is formed that coordinates
with the NGO and users to
formulate the planning process
The users express their
demands and ask the
NGO to make plan
according to their
schedule.
Funding
The Donor provides fund to
NGO that will be used according
to the plan
CBO takes responsibility to mobilize
the users and collects the additional
funds required from the users and
VDC.
Users contribute the
agreed amount for the
implementation of the
project
Execution
NGO facilitates and provides
technical support to the CBO and
to the users.
CBO mobilizes the users and
execute the project.
Users are directly
involved on the
implementation as
directed by the CBO
and NGO.
Monitoring &
Evaluation
The NGO and CBO do
monitoring & Evaluation of the
project.
CBO checks the field activities.
No role
Financing
NGO releases funds phase by
phase at the field as required
CBO is responsible to mobilize the
users' contribution
The users put their
agreed amount for the
project.
Private operator Model (PM) ) (Sugarcane Mill, Agricultural Extension )
Sub-project
cycle
Initiation
Planning
Funding
Execution
Monitoring &
Evaluation
Financing
Key actors
Private firm
Private firm examines the potential areas
for cultivating sugarcane
The private firm consults with users about
the area of production and the detailed
planning
Private firm provides the loan to the users
for the purchase for planting materials and
chemical fertilizer.
Private firm provides the technical
assistance needed at the field.
Private firm frequently checks quality of
product at the field and give instructions as
necessary
Private firm provides loans to users
User
Users express their interest to participate in
sugarcane production
Users express their capacity and their demand,
and show their commitment to the private firm
and sign the agreement.
Users also contribute the labor and cash for the
production.
Users follow the instruction of private firm and
execute accordingly
No role
No role
86
Agency Managed (AM) ( Agricultural Research)
Sub-project
cycle
Key actors
Agency
Users
Initiation
Project initiation is done by the Project (AERP) and it is
approved through line ministry.
The users are consulted.
Planning
Agency (AERP) consults with the line ministry and the
department. Subsequently, agency goes to the field and
discusses with the users for planning.
The users express their demands
at regional technical working
group meetings
Funding
Donor and the ministry provide the fund for the project.
No role
Execution
NARC and AREP direct regional agriculture research
center and agriculture research center for the
implementation of the project.
Users are involved in outreach
research site
Monitoring &
Evaluation
NARC and AREP performs project Monitoring &
Evaluation
No involvement
Financing
AREP provides funds to NARC and NARC releases
budget to concerned centers and stations.
No involvement
Private agro-vet Model (PM) ( Agricultural Service delivery )
Sub-project
Key actors
Cycle
Agro-vet
Initiation
Identifies the potential location to
establish the shop
Consult with already
formed village-based
CBO
Users present their
demand to agro-vets
Planning
Prepares plan keeping in view of
client demand and potential of the
area
CBO expresses its
demand as per situation
Users express their
demands to agro-vets
Funding
Manages own funds
No involvement
No role
Execution
Facilitates and provides technical
support to the CBO and to the users.
CBO mobilizes the users
and execute.
Users carryout as per
suggestion provided by
the agro-vet.
No role
No role
CBO is responsible to
mobilize resources for
agro-vets.
No role
Monitoring & Monitors and supervises, take
feedback from clients
Evaluation
Financing
Provides service delivery to users as a
loan
CBO
Users
87
ANNEX 7
Appendix 2
Functions of Various Actors in Irrigation Models
CBO-managed Model (CM)
Sub-Project
Cycle
Key actors
Agency
Users
Project Initiation
No role
Users identify and initiate the project. Water Users Committee (WUC)
formed
Preparation/Design
No Role
WUC after consultation prepare and design the project
Funding Allocation
No role
WUC raises funds from users and allocates these funds
Exec./Construction
No role
WUC executes project and construct facilities
Monitoring & Eval.
No role
WUC carries out monitoring & evaluation works
Op. & Maintenance
No role.
WUC is responsible to carry out O& M
Financing
No role
WUC allocates the resources.
Agency-managed Model (AM)
Key actors
Sub-project cycle
Agency
Users
Project Initiation
Initiation done by agency.
No role
Preparation/Desig
n
Agency carries out project preparation and design
No role
Funding
Allocation
NPC approves the project and allocated fund. Funds
disbursed by Ministry of Finance
No role
Execution/Constr
uction
Construction carried out Agency
No role
Monitoring &
Evaluation
NPC responsible for monitoring and evaluation by apex level
institute. However, agency often performs monitoring and
evaluation
No role
Operation &
Maintenance
Agency is responsible for O&M.
Users involved at tertiary
and farm level
Financing
World Bank financed the project and Ministry of Finance
arranged the counterpart fund.
Agency/CBO-managed Model (ACM)
Sub-project
cycle
Key actors
88
Agency
Users
Project
Initiation
Agency sensitizes users
through awareness
campaign
Users initiate and demand project along with upfront cash
contribution. In case of ADB/N implemented project loan
has to be approved
Preparation/
Design
Agency carries out project
preparation and design
Users consulted during feasibility study and informed about
cost sharing arrangement. However, users not involved in
design. Users raise funds for capital contribution or they
agree to labor contribution or both. In case of ADB/N
implemented project, users to borrow money equivalent to
some fraction of works costs as capital contribution, and to
agree to contribute in kind too; users consulted during
design phase.
Funding
Allocation
NPC approves project and
allocates funds. Funds are
disbursed by Ministry of
Finance.
Provide implementing agencies for cash and labor
contribution as agreed at design stage
Execution/
Construction
Construction carried out by
Agency through contractors.
In case of ADB/N
implemented projects, no
contractor for surface water
Contribution in kind provided. Involvement in the
procurement of contractors
Monitoring &
Evaluation
(M&E)
NPC also responsible for
M&E by apex level
institute. However, in
practice, agency does
project M&E
No involvement
No involvement of users except in some cases for
supervision and monitoring
Project financed by donors
and counterpart funding
arranged by Ministry of
Finance
Capital cost and labor contribution provided by the users
Operation &
Maintenance
Financing
Users responsible for O&M
89
Joint Agency/CBO Model (JACM)
Sub-project
cycle
Key actors
Agency
Users
Project
Initiation
Agency sensitizes users for joint management
system.
Users involved in discussions with agency
re the possibility of undertaking project
under joint management.
Preparation/
Design
Agency carries out project preparation and
design
Users were involved in the assessment of
works to be carried out to keep system
intact or improvement.
Funding
Allocation
NPC approves project and allocates funds.
Funds disbursed by Ministry of Finance.
Users assures implementing agencies for
cash and labor contribution required
Execution/
Construction carried out by Agency using
contractors.
Contribution in kind provided. Users
Involved in procurement of services of
contractors.
Monitoring &
Evaluation
(M&E)
NPC was also responsible (M&E) from apex
level institute. However, in practice, agency
does project (M&E).
Users also involved in monitoring and
supervision construction
Operation &
Maintenance
Jointly with users
Jointly with Agency
Financing
Project financed by donors and counterpart
funds arranged by Ministry of Finance.
Capital cost and labor contribution
provided by users
Construction
90
NGO/CBO Model (NCM)
Sub-project
cycle
Key actors
NGO
Users
Project
Initiation
NGO facilitates project identification
by users
Users identify project and initiate implementation
Preparation/
NGO conducts feasibility study.
Preparation and Design is carried out in
consultation of users
Users involved during in project preparation and
design so as to confirm their requirements. Users
assure labor contribution
Funding
Allocation
Donor disburses funds to NGO
Users take responsibility to collect local materials
and provide other unskilled works
Execution/
Facilitates construction works by users
Contribution in kind. Users are involved in
construction
Monitoring &
Evaluation
NGO conducts monitoring and
evaluation.
Users also involved in construction monitoring and
supervision
Operation &
Maintenance
Provides training and facilitation.
Users are responsible
Financing
Project financed by donors. NGO
facilitates for financing.
Sharing of capital cost in the kind
Design
Construction
NGO/Private operators/CBO Model (NPCM)
Sub-project
cycle
Key actors
NGO
Private Operator
Users
Project
Initiation
No role
Sensitizes users
If convinced user contract private
Preparation/
Design
Provides technical
services on demand
Provides technical
services on demand
Users involved on design
Funding
Allocation
Execution/
Construction
No role
No role
Users have to bear entire cost of system
No role
Arrange materials and
technician
No role
Monitoring &
Evaluation
No role
No role
Users involved on monitoring and
supervision
Operation &
Maintenance
No role.
No role
Users are responsible for O&M
Financing
No role
No role
Users have to arrange for total
financing
91
ANNEX 7
Appendix 3
Functions of Various Actors in Drinking Water Supply Models
Sub-project
cycle
Project
Initiation
Preparation/
Design
Funding
Allocation
Execution/
Construction
Monitoring &
Evaluation
(M&E)
Operation &
Maintenance
Financing
Agency –CBO Managed Model (ACM)
Key actors
Agency
Project initiation is done by the Agency and it is
approved through line ministry. It is largely based
on either community demand or political demand
depending upon the size of the project
The Agency does all the preparatory works
including preliminary survey and design. The
technical proposal with detailed cost estimates is
submitted to NPC through line ministry
NPC allocates annual budget to the sectors
(DWSS). DWSS in turn allocates the budget for the
respective sub-projects
The Agency selects and uses the
consultants/contractors through competitive
bidding. The Agency use the contractors for project
execution. Consultants/DWSS engineers manage
and supervise construction, and contractors work
under agency direction
Monitoring & Evaluation of the project is done by
the Agency. Agency appoints consultants, monitors
and supervises works during implementation (for
smaller projects, supervision might be undertaken
directly by the Agency)
Project Operation & maintenance is done by the
Agency through branch/local offices only before the
project is handed over to the community.
NPC allocates the annual budget. MOF releases the
budget to DWSS. DWSS releases the budget to its
district offices. The district offices use the
contractor and the fund is released according to the
contractual arrangement.
CBO
Although CBO should work hand in
hand with the Agency for the initiation of
the project, it is observed that this is
rarely the case
No consultations with CBO hence no say
in the preparation and design processes.
No involvement. CBO does not know the
total amount of funds allocated to their
projects even after project completion
No involvement. CBO is not involved
during the procurement and execution of
the project. However, in some projects, it
is found that the contractors for minor
excavation works use local labor
Project Monitoring & Evaluation is done
by the CBO only after the project is
handed over to the community when
CBO takes all the responsibility
Operation & maintenance of the project
is done by the CBO only after the project
is handed over to the community and
CBO takes over
After the project is handed over to the
community, CBO collects tariff to cover
service charges from users. The
revenues generated from tariff and others
are used for system expansion, O&M and
staff salaries.
92
Agency Managed (AM)
Subproject
cycle
Key actors
Agency
Users
Project
Initiation
Project initiation is done by the Agency and approves
through line ministry. It is largely based on either
community demand or political demand depending upon the
size of the project
Although users should work hand
in hand with the Agency for the
initiation of the project, it is
observed that the users are rarely
involved
Preparation/
Design
Agency does all the preparatory works including
preliminary survey and the design. Technical proposal with
detailed cost estimates is submitted to NPC through line
ministry
No involvement and no
consultation with the users
Funding
Allocation
NPC approves the program and allocates annual budget to
the sectors (DWSS). DWSS in turn allocates the budget for
the respective sub-projects.
No involvement
Execution/
Agency selects and uses the consultants/contractors through
competitive tender. Consultants/DWSS engineers manage
and supervise construction, and contractors work under
agency direction.
No involvement. However, in
some projects, it is found that the
contractors for minor excavation
works use local labor.
Monitoring
&
Evaluation
Monitoring & Evaluation of the project is done by the
Agency. Agency-appoints consultants monitors and
supervises works during implementation (for smaller
projects, projects supervision might be undertaken directly
by the Agency).
No involvement
Operation &
Maintenance
Operation & maintenance of the project is done by the
Agency through branch/local offices.
No involvement
Financing
NPC allocates the annual budget. MOF releases the budget
to DWSS. DWSS releases the budget to its district offices.
The district offices use contractors and funds are released
according to the contractual arrangement. Govt/agency
collects tariff to cover service charges from users through
local offices
No involvement
Construction
93
NGO/CBO Model (NCM)
Subproject
cycle
Key actors
NGO
CBO
NGO facilitates involvement of local CBO/Users
for the project initiation. NGO examines the
project request from the Users/CBOs using
demand responsive approach.
User/CBOs present the project request to the
NGO either by themselves or by local
government. NGO examines their demand
and assesses commitment. It finally supports
users for preparation of pre-feasibility study
Preparation/ Facilitates pre-feasibility study, subproject
planning and technical preparation. It coordinates
Design
CBO undertakes the task of project
preparation and work hand in hand with
NGO in project preparation. The CBO has its
say on the planning and design of the projects
Project
Initiation
with CBO for the design of the project and also
negotiates with the CBO regarding their
respective commitments and responsibilities
Funding
Allocation
NGO mobilizes the fund from various donors,
INGOs, charity funds etc. NGO approves the subprojects and allocates the fund. It disburses the
funds and also provides the funds to local NGOs
for community mobilization, health and sanitation
works.
No involvement. The CBO might know
the allocated fund to their project if they
wish to know from the NGO
Execution/
Const,
NGO and local NGO facilitates the planning for
execution and construction work. The INGO and
the local NGO provide technical support and the
non-local materials. The labor contribution is
made by the CBO/users.
The CBO uses the users who provide the labor
contribution for the execution of the project. All
the non-local materials are provided by the
NGO and the CBO are not involved on the
procurement
Monitoring
&
Evaluation
NGO and local NGO does the monitoring and
evaluation work at the initial stage of construction
and during project period before it is handed over
to the community.
CBO also does the monitoring and
evaluation work during the construction
and takes all the responsibility for the
operation and maintenance of the project
after it is handed over to them.
Operation &
Maint.
No involvement.
CBO takes the responsibility for project
operation and maintenance. CBO collects
tariffs for the operation and maintenance
Financing
NGO mobilizes the funds from various donors,
INGOs, charity funds etc. NGO also provides the
fund to local NGOs for community mobilization,
health and sanitation works
CBO mobilizes users for labor or cash
contribution or sometimes even by both.
94
Fund/NGO/CBO Model (FNCM)
Sub-project
cycle
Project
Initiation
Key actors
Fund
No involvement
Preparation Investigates the pre-feasibility
study using the support
/ Design
agencies (SA). It approves the
project and call the NGO to
sign the contract, releases the
fund to NGO. This permits to
start the development phase
based on the SA report and its
own investigation.
NGO
CBO
NGO facilitates the local
CBO/Users for the project
initiation. NGO examines the
project request from the
Users/CBOs using demand
responsive approach.
User/CBOs present the project
request to NGO either by
themselves or by local
government. The NGO
assesses their commitment and
finally carries out the prefeasibility study
After the pre-feasibility study,
NGO facilitates Users/CBOs
for sub-project planning and
technical preparation. It
coordinates with CBO for the
design of the project and also
negotiates with the CBO
regarding mutual
responsibilities
CBO undertakes the task of
project preparation and
prepares the layout plan. NGO
facilitates CBO and work hand
in hand in project preparation.
The CBO has its say on the
planning and design of the
projects
Funding
Allocation
NPC allocates annual budget
to the Fund Board for subprojects from the loan
provided by the donor (World
Bank-IDA) and Fund Board
then provides the fund to
approved projects
NGO mobilizes funds from
fund board. Fund board
approves the sub-projects and
allocates funds. It disburses
funds to NGOs’ account and
CBOs’ account for the
development and implement
phases after a tri-party contract
signed among Fund Board,
NGO and the CBO
CBO collects the agreed
amount (up front cash of 2.5%
of the hardware cost + 3% of
the total cost for maintenance)
and deposits in bank as a
commitment. Total funds for
hardware (skilled labor + non
local-material + other funds
for health and sanitation) is
then deposited on the same
account by the Fund Board for
the implementation
Execution/
Constructio
n
No involvement
NGO facilitates the planning
for execution and construction
work and provides technical
support. The labor
contribution is made by the
CBO/users.
The CBO provides labor
contribution for the execution
of the project. All the nonlocal materials are procured by
the CBO from the money
provided in their account
Monitoring
&
Evaluation
Fund Board assigns the
support agency for the
Monitoring & Evaluation
after the completion reports
from the NGO are presented to
the Board demanding for
every part of payment
NGO does the Monitoring and
Evaluation work at the initial
stage of construction and
during the project period
before it is handed over to the
community
CBO also does the Monitoring
and Evaluation work during
the construction and takes all
the responsibility for the
operation and maintenance of
the project after it is handed
over to them.
95
Operation &
Maintenance
No involvement
No involvement.
CBO takes the responsibility
for project O&M and collects
corresponding tariffs
Financing
NPC allocates the budget for
the sub-projects requested by
the Fund Board through line
ministry. Fund board gets the
fund from the loan (World
Bank-IDA) and allocates the
fund to approved projects
NGO mobilizes the fund from
Fund Board.
CBO mobilizes the users for
labor and cash contribution.
CBO uses the provided fund
deposited in its account by the
Fund Board for the
procurement of non-local
materials, skilled labor cost
and transportation cost for
non-local materials up to the
road head.
96
ANNEX 7
Appendix 4
Functions of the Various Actors in the Road and Bridge Models
Local body/CBO Model (LCM)
Sub-Project
Cycle
Key Actors
Local body
Project
Initiation
Local Body (DDC) identifies the
project that is subsequently
approved through the line ministry
by NPC
Project
Preparation
Design
Once program approved in
principle, DDC engineers, on their
own or through consultants, survey
site and submit technical project
proposal with cost estimates
through the line ministry to the
NPC for approval and funding.
Meantime facilitates CBO creation
Funding
Allocation
DDC gets the fund from the donor
or by itself from its annual
allocated budget and transfer to
CBOs for the implementation of
the project.
Constructio
n/ Execution
Donor
CBO
Users
Individuals or
groups request
Agency through
VDC and start
organizing CBO
Formation of CBO
in progress
Donor allocates
funds through
government to
DDC for the
agriculture roads
Free labor
contribution is
mobilized by CBO
Free labor
contribution is
made by the
users
DDC provides the technical
support, prepares design and cost
estimate. Construction supervision
is carried out by the Agency
CBO mobilizes
users for road
works, procures
construction
materials and
award specific
component of work
to contractor
Users provide
some free labor
Monitoring/
Evaluation
DDC on its own, monitors and
supervises work during
implementation for smaller
projects.
Members of the
CBO also monitor
the physical
progress of the
work.
Operation
and
Maintenanc
e (O&M)
Hand over O&M functions to
VDC or CBO.
VDC takes over
O&M functions
Financing
Capital cost for implementation is
arranged by mobilizing internal
resources and donor support
through annual budget
.
97
Local bodies/CBO Model (DDC) with direct influence of donor (LCM-D)
Sub-Project
Cycle
Key Actors
Donor
DDC
CBO
Project
Initiation
No involvement
DDC facilitates project
initiation through VDC and
local CBO/Users, examines
project request from the
Users/CBOs using demand
responsive approach
User/CBOs present project request
to DDC through VDC DDC
examines demand and assesses
commitment and finally carry out
the pre-feasibility study
Preparation/
Design
Appoints the
consultants/NGO to
provide technical services
to support the DDC.
Assist DDC in preparing
design and cost estimates
of roads.
After the pre-feasibility study,
DDC facilitates for subproject
planning and technical
preparation by Users/CBOs. It
coordinates with CBO, with
assistance of donor appointed
consultants, for project design
and also negotiates with the
CBO regarding mutual
commitments
CBO undertakes project
preparation and prepare the layout
plan and consultant TORs. DDC
facilitates the CBO and work hand
in hand in project preparation. The
CBO has its say on the planning
and design of the projects.
Funding
Allocation
WFP provides the
commodity (rice) or cash
for the payment to the
labors and donor (e.g.,
GTZ) provides the tools
and equipment and bear
the cost for training
DDC through MLD receives
the fund for the procurement
of construction material. and
for the payment to the skilled
labors.
CBO mobilizes the free labor
contribution from the users
Execution/
Constructio
n
Provides the management
support to the DDC by
appointing the
consultants.
DDC facilitates the planning
for execution and construction
work and provides technical
support by its own or with the
technical assistance from
donor. Labor contribution is
made by the CBO/users.
The CBO uses the users who
provide the labor contribution for
the execution of the project. All the
non-local materials are procured by
the DDC.
Monitoring
&
Evaluation
Donor itself or assigns the
support agency for the
Monitoring &
Evaluation.
DDC does M&E at the initial
stage of construction and
during the project period
before it is handed over to the
community.
CBO also does M&E work during
the construction
98
Operation &
Maintenance
No involvement as such.
However it provides
support for the first one
year of operation and
maintenance
Financing
NPC allocates the budget
for sub-projects requested
by DDC through line
ministry. Ministry gets
the fund from donors
(WFP and GTZ) and
allocates the fund to
approved projects.
CBO takes the responsibility for
the operation and maintenance of
the project. by itself or through
VDC.
DDC mobilizes the funds from
MLD.
CBO mobilizes the users for labor
and cash contribution. CBO uses
the funds (commodity or cash)
provided to them.
Agency Model (AM)
Sub-Project
Cycle
Key Actors
Agency
Users
Project
Initiation
Project initiation is done by the Agency and approved through
line ministry. It is largely based on either community demand
or political demand depending upon the size of the project.
Although users should be
involved and work hand in
hand with the Agency for
project initiation, it is
observed that users are rarely
involved.
Preparation/
Design
Agency does all the preparatory works that includes
preliminary survey and design. Technical proposal with
detailed cost estimates is submitted to NPC through line
ministry. No coordination with the CBO has been observed
during the processes.
No involvement and no
consultation with the users
Funding
Allocation
NPC approves the program and allocates annual budget to the
sectors (DoR, MLD). DoR in turn allocates the budget for the
respective sub-projects.
No involvement
Execution/
Agency selects and uses the consultants/contractors through
competitive tender. Consultants/DWSS engineers manage and
supervise construction, and contractors work under agency
direction.
No involvement. However, in
some projects. At times,
contractors for minor
excavation works use local
labor
Construction
Monitoring & Monitoring & Evaluation of the project is done by the
Agency. Agency-appoints consultants monitor and supervise
Evaluation
No involvement
works during implementation (for smaller projects, projects
supervision might be undertaken directly by the Agency.
Operation &
Maintenance
Operation & maintenance of the project is done by the
Agency through branch/local offices (divisions).
No involvement
Financing
NPC allocates the annual budget. MOF releases the budget to
DoR. DoR releases the budget to its Divisional offices. The
Divisional offices release funds to contractors according to
the contractual arrangement.
No involvement
99
NGO/CBO Model (NCM)
Sub-Project
Cycle
Key Actors
NGO
CBO
Project
Initiation
NGO facilitates participation of the the local
CBO/Users in project initiation. NGO examines the
project request from the Users/CBOs using demand
responsive approach
User/CBOs present project request to the
NGO either by themselves or thru local
government. NGO examines their
demand and assesses their commitment
and facilitates pre-feasibility study by
users
Preparation/
Design
Facilitates participation of CBO in pre-feasibility
study, sub-project planning and technical preparation.
Coordinates with CBO for project design and
negotiates with CBO regarding mutual commitments
for project execution.
CBO undertakes the task of project
preparation hand in hand with NGO. The
CBO has its say on the planning and
design of the projects
Funding
Allocation
NGO mobilizes the fund from various donors,
INGOs, charity funds etc. NGO approves the subprojects and allocates the fund. It disburses the fund
and also provides the fund to local NGOs for
community mobilization, health and sanitation works.
No involvement. The CBO might
know the allocated fund to their project
if they wish to know from the NGO
Execution/Co
nstruction
NGO and local NGO facilitate the planning for
execution and construction. NGO and local NGO
provide technical support and non-local materials/
equipment. The labor contribution is made by the
CBO/users
The CBO provides labor contribution for
project execution through users. All the
non-local materials/ equipment provided
by the NGO. CBO are not involved on the
procurement.
Monitoring & NGO and local NGO do the monitoring and
evaluation work at the initial stage of construction
Evaluation
CBO also does the monitoring and
evaluation during the construction
and during project period before it is handed over to
the community.
Operation &
Maintenance
No involvement.
CBO takes responsibility for project O&M
after project is handed over to them..
CBO collects fees to paid for O&M
Financing
NGO mobilizes the fund from various donors,
INGOs, charity funds etc. NGO also provides fundsto
local NGOs for community mobilization, health and
sanitation works.
CBO mobilizes the users for labor or
cash contribution or sometimes even by
both
CBO Model (CM)
Sub-Project Cycle
Key Actors
Users
Agency
Project Initiation
No role
Users identify and initiate the project. UC is formed among the Users.
Preparation/Design
No Role
Users themselves prepare after consultation and design the project.
Funding Allocation
No role
UC raises fund from the users and allocates.
Execution/Const.
No role
UC executes and construct project.
100
Monitoring & Ev.
No role
UC carries out monitoring and evaluation works.
Operation & Maint.
No role.
UC is responsible to carry out O& M of the project.
Financing
No role
UC allocates the resources.
Local bodies Model (LM) (VDC)
Sub-Project Cycle
Key Actors
VDC
Users
Project Initiation
VDC based demand of local
community identifies project.
Projects are relatively small
Users identify and initiate the project. UC is formed
among the Users
Preparation/Design
VDC technicians prepare cost
estimate. Receive DDC
technical assistance
Users are consulted for the preparation of cost
estimates
Funding Allocation
VDC allocates fund from its
annual grant
UC also raises fund from the users
Execution/
UC executes and construct project
Construction
VDC directly hires the workers
and mobilizes the work or it
forms the UC for project
execution.
Monitoring &
Evaluation
VDC itself, or sometime
through DDC technical staff,
does project M&E
Members of UC also carry out monitoring and
evaluation works.
Operation &
VDC itself take the
responsibility of O & M or hand
over to the UC.
UC is responsible to carry out O& M of the project
VDC allocates funds from its
annual grant received by
government through DDC
UC also raise the funds required to the project and
mobilizes the free labor from the users
Maintenance
Financing
101
ANNEX 7
Appendix 5
Functions of Various Actors in Power Models
Agency Managed (AM)
Sub-Project
Cycle
Agency
Project
Initiation
Agency identifies the project and the program is
approved through the line ministry by NPC
Project
Prep.
Design
Once the program is approved in principle, agency
engineers, on their own or through consultants,
survey site and submit technical project proposal
with cost estimates through the line ministry to the
NPC for approval and funding.
Donor’s appraisal
may be needed
Funding
Allocation
Ministry of Finance through annual budget allocates
available funds across agencies/sectors programs,
approved by NPC according to government priorities
and sound donors for the funding possibilities
Considers proposal
and,if accepted,
provides matching
funds
Construction
/ Execution
Smaller projects, agency engineers execute on their
own strength. In bigger projects, agency selects
consultants / contractors through competitive
tender.Together with the consultants and contractors
they supervise and manage the construction till
commissioning.
Donors are usually
involved in
selection of
consultants and
contractors
Monitoring/
Evaluation
Agency on its own, monitors and supervises work
during implementation for smaller projects. In large
projects agency is assisted by selected consultants
for M&E as per financing agreements. Progress is
reported on regular quarterly basis to NPC through
line ministry for evaluation. After completion the
project, consultants and contractors are released
Operation
and
Maintenance
(O&M)
O&M functions ( including revenue collection) are
managed by Agency through its branch and local
offices
Financing
Both capital cost and O&M cost are financed
through annual budget.
Key Actors
Donor
Users at times
request Agency’
help
Users pay monthly
bill as per the
existing tariff
Donor provide
matching funds
Agency/CBO Model (ACM)
Sub-Project
Users
Key Actors
102
Cycle
Agency
Donor
CBO
Project
Initiation
Agency identifies the project and the program
is approved through the line ministry by
NPC.
Project
Preparation
Design
Once the program is approved in principle,
agency engineers, on their own or through
consultants, survey site and submit technical
project proposal with cost estimates through
the line ministry to the NPC for approval and
funding. In the mean time motivate users to
register CBO.
Appraisal by
Donors may
be needed.
Registration
of CBO in
progress
Funding
Allocation
Ministry of Finance through annual budget
allocates available funds across
agencies/sectors programs, approved by NPC
according to government priorities and sound
donors for the funding possibilities
Considers
proposal and if
accepted
provides the
matching fund
CBO
registered with
the local
authority
Constructio
n/ Execution
Smaller projects, agency engineers execute
on their own strength. In bigger projects,
agency selects consultants/ contractors
through competitive bidding. Together with
the consultants and contractors they supervise
and manage the construction till
commissioning. In the mean time, agreement
for bulk supply of electricity is negotiated
with CBO
Monitoring/
Evaluation
Agency on its own, monitors and supervises
work during implementation for smaller
projects. In large projects agency is assisted
by selected consultants for monitoring and
supervision as per financing agreements.
Progress is reported on regular 4 monthly
basis to NPC through line ministry for
evaluation. After completion and
commissioning the project, consultants and
contractors are released.
Operation
and
Maintenance
(O&M)
Hand-over the O&M functions to CBO as per
the agreement
Users
Individuals or
groups request
Agency and
start
organizing
CBO
CBO
negotiates for
rates and
condition for
bulk power
purchase and
sign
agreement
Take over the
O&M
functions
including
revenue
collection and
payment to
agency as per
the bulk
purchase
agreement
Users pay
monthly bill
to CBO as per
tariff fixed by
agency.
103
Financing
Capital cost for implementation is arranged
by mobilizing internal resources and donor
support through annual budget
O&M budget
is provided by
CBO through
portion of
revenue
collected
104
Private operator Model (PM)
Subproject
Cycle
Key Actors
Agency
Pvt
User
Organization
Users
Project
Initiation
Company identifies project in
consultation with community
and facilitates organization of to
user’s group
UO ad hoc
committee
requests cy to
undertake project
and initiate
process of UO
creation
Company
motivators
work with
users to form
UOs
Project
Prep. &
Design
Company engineers and
technicians prepare project in
consultation with UO to achieve
project objectives as per
technical standards
UOs involved in
project layout
and routing of
lines and poles
License
Receives
applicat. and
issues
license
Funding
Allocation
Gov. kept
informed
about
progress
regarding
funding
situation
Constr./
Execution
Monitorin
g&
Evaluation
Donor
Company apply for license
through line agency to the
ministry and explore funding
sources.
Considers cy
proposal and
if accepted
provides
matching
funds
through gov.
Company makes informal
approach to Donor/HMGN for
possible funding and keeps the
government informed of the
progress
UOs make
commitment for
contribution
(cash or kind)
Company undertakes overall
management of construction and
procurement of materials and
technical supervision. Company
may hire skill labor and external
experts, if required, for the
supervision and construction in
consultation with UOs.
Local material
Collection/
transportation
and supply of
laborers for
construction,
erection and
stringing of
distrib. lines.
Company through its employees
collects progress reports and
reports to licensing authority
and financing parties as required
and monitors progress and
service standards
Contribute
materials and
laborers and
local materials
through CBOs
105
Operation
and
Maint.
(O&M)
Company provides power
supply and technical support to
UO
Financing
Receives funds in its account
directly and report to donor and
others as per the financing
agreement
UOs manage
O&M with
technical support
from company.
UOs undertake
to collect tariff
and deposit in cy
a/c.
Users pay
monthly bill
through UO
to Company
106
ANNEX 8
Comparative Evaluation of Institutional Performance
The Terai Rural Development Options Study examines past experiences and develops
recommendations regarding suitable institutional arrangements for future investments in the
Terai. A key component of this analysis is the comparative evaluation of institutional
performance across the case studies reviewed.
To assist with this analysis a number of indicators have been developed to capture institutional performance.
For the infrastructure sector, indicators have been grouped according to the following five performance
dimensions/parameters: (a) infrastructure standard ; (b) service delivery standard; (c) cost effectiveness; (d) impact
(where directly measurable) 9; and (e) sustainability.
For the agricultural technology sector, alternative measures/emphasis are appropriate. Hence for this sector the first
three dimensions are consolidated and represented in (a) service standard, with (b) impact, and (c) sustainability also
evaluated.
The indicators serve a twofold function: (a) they allow comparative evaluation of the different institutional
arrangements and (b) they provide a tool for identifying particular strengths and weaknesses associated with each
model (e.g. dimensions with low scorings will illustrate areas of weaknesses). Appendix 1 outlines the proposed
sector-specific performance indicators.
Measuring Performance. It is intended that for each case study, documented material be used to assign values (30) to each of the indicators. Where measurement of indicators is based on the subjective assessment of the research
team, the basis on which the assessment is made is explicitly stated within accompanying remarks/comments.
Comparing Performance.
The relative values assigned to these indicators then enables comparison of the
performance of different arrangements within each subsector (e.g., shallow tube wells, deep tube wells and surface
water irrigation technologies are compared independently).
For ease of comparison, indicators may be aggregated within each of the five measurement dimensions to provide a
composite value based on % total score/total possible score. Although this score can be used for direct comparison
of cases, the detailed comparative analysis should include an assessment of profile across each and all performance
indicators.
The compilation of a total aggregate value for each institutional arrangement is avoided. This would lead to
oversimplification, and implied assumptions on the relative importance of the different performance dimensions.
There is greater value in maintaining separate measurements of the different dimensions, to allow evaluation of the
various strengths and weaknesses of the different models.
As the preferred institutional arrangement is one where a minimum ‘satisfactory’ score is achieved for each
measurement dimension, a minimum acceptable ‘cutoff’ score has been determined for each dimension. This cutoff
score is used to exclude low performing models. The preferred models are then determined by inspecting the profile
across parameters and/or indicators of the remaining options.
9
Within the infrastructure sectors direct measurement of impact cannot be quantified for the drinking water,
power and road sectors.
107
ANNEX 8
Appendix 1
Sub-sector performance indicators
TABLE 1: IRRIGATION (comparisons of shallow tube wells, deep tube wells and surface water to be done
separately)
CASE STUDY NAME:
Location:
System Age: (yrs from completion)
No. Beneficiaries:
System Size: (ha)
Level of Social Capital: (High, Med, Low)
System Complexity: (High, Med, Low)
INDICATOR
RATING/ REMARKS
A.
Physical Infrastructure
i.
Existing condition: overall standard of
infrastructure
ii.
Implementation
B.
 Delivery efficiency: years from inception to
completion of construction
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
 Appropriateness of design: does standard of
infrastructure meet needs
Fully appropriate (3); Partially under/over designed
(2-1); Not appropriate (0)
Service Standard (water delivery)
i.
Total water availability: average water
delivery/hectare
ii.
Water equity: (headend water delivery/ha –
tailend water delivery/ha)
iii.
Reliability: regularity of water supply
C. Cost effectiveness [comparisons to remain within
subsectors so that technology/ infrastructure standards
are equivalent]
i.
Fully Operational (3); Partially operational (2-1); Not
operational (0)
Actual value assigned, then rated as High (3);
Medium (2); Low (1) or None (0)
Actual value assigned where possible, then rated as
equitable (3); partially equitable (2-1); Not equitable
(0)
Year round (3); Seasonal/regularly available (2-1);
Not reliable (0)
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
Economic efficiency:
 Capital cost/hectare
 O&M cost/hectare
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
108
D.
Impact (productivity)
i.
Increase yield/hectare
ii.
Increase in cropping intensity
E.
Actual value assigned, then rated as High (3);
Medium (2); Low (1) or No increase (0)
Actual value assigned, then rated as High (3);
Medium (2); Low (1) or No increase (0)
Sustainability
i.
Institutional:
 Transparency – do beneficiaries have
knowledge of processes, are they conducted
openly?
High (3); Medium (2); Low (1); None (0)
 Accountability - can beneficiaries change
outcomes/processes?
 Flexibility – can institutional arrangement
adapt to changing conditions?
ii.
Financial:
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
 O&M fund/arrangements
iii.
User Commitment:
 User contribution to capital cost (%)
 User contribution to O&M (%)
Adequate (3); Partially Adequate (2-1); No
arrangements in place (0)
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
109
TABLE 2: DRINKING WATER
(comparisons of shallow tube wells, deep tube wells, gravity fed systems to be completed separately)
CASE STUDY NAME:
Location:
System Age: (yrs from completion)
No. Beneficiaries:
System Size: (m2 service area)
Level of Social Capital: (High, Med, Low)
System Complexity: (High, Med, Low)
INDICATOR
RATING/REMARKS
A. Physical Infrastructure
i.
Existing condition: overall service standard of
infrastructure
ii.
Implementation
Fully Operational (3); Partially operational (2-1); Not
operational (0) (where possible measure %
functioning/not functioning taps to assign
comparative rating)
 Delivery efficiency: years from inception to
completion of construction
Actual value assigned, then rated as High (3);
Medium (2); Low (1) on comparative scale
 Appropriateness of design: does standard of
infrastructure meet needs
Fully appropriate (3); Partially under/over designed
(2-1); Not appropriate (0)
 Complementarity: Is the service provided
jointly with sanitation and other health
related services?
Yes (3); No (0)
B.
Service standard (water delivery)
i.
Total water availability: average water
delivery/capita
Actual value assigned, then rated as High (3);
Medium (2); Low (1) or None (0)
ii.
Water Quality: is the drinking water suitable for
drinking
Potable (3), Not potable (0)
iii.
Water equity: Is water equitably distributed
amongst users within the command area?
iv.
Rated as High equity (3); Medium equity (2); Low
equity (1); No equity (0)
Reliability
Year round (3); Seasonal/regularly available (2-1);
Not reliable (0)
C.
Cost effectiveness [comparisons to remain within
subsectors so that technology/infrastructure
standards are equivalent]
i.
Economic efficiency:
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
 Capital cost/capita
 O&M cost/capita
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
D.
Impact (not directly measurable)
110
E.
Sustainability
i.
Institutional:
 Transparency – do beneficiaries have
knowledge of processes, are they conducted
openly?
 Accountability - can beneficiaries change
outcomes/processes?
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
 Flexibility – can institutional arrangement
adapt to changing conditions?
ii.
Financial: O&M fund/arrangements
iii.
User commitment:
 User contribution to capital cost (%)
 User contribution to O&M (%)
High (3); Medium (2); Low (1); None (0)
Adequate (3); Partially Adequate (2-1); No
arrangements in place (0)
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
111
TABLE 3: ROADS (comparisons of earth, gravel and pitch roads to be done separately)
CASE STUDY NAME:
Location:
Age: (yrs from completion)
No. Beneficiaries:
Road length: (m2 )
Level of Social Capital: (High, Med, Low)
Road Complexity: (High, Med, Low)
INDICATOR
RATING/REMARKS
A. Physical Infrastructure
i.
Existing condition: overall service standard of
infrastructure
ii.
Implementation
B.
Fully Operational (3); Partially operational (2-1); Not
operational (0)
 Delivery efficiency: years from inception to
completion of construction
Actual value assigned, then rated as High (3);
Medium (2); Low (1) on comparative scale
 Appropriateness of design: does standard of
infrastructure meet needs?
Fully appropriate (3); Partially under/over designed
(2-1); Not appropriate (0)
Service standard (traffic level)
i.
Total traffic serviced/yr
ii.
Equity: proportion of poor in road service area
iii.
Reliability
Actual value assigned, then rated as High (3);
Medium (2); Low (1) or None (0)
Actual % assigned, then rated as High equity (3);
Medium equity (2); Low equity (1); No equity (0)
Year round (3); Seasonal/regularly available (2-1);
Not reliable (0)
C.
Cost effectiveness [comparisons to remain within
subsectors so that technology/infrastructure
standards are equivalent]
I
Economic efficiency:

Capital cost/capita

O&M cost/capita
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
D.
Impact – not directly measurable
E.
Sustainability
i.
Institutional:
112
 Transparency – do beneficiaries have
knowledge of processes, are they conducted
openly?
High (3); Medium (2); Low (1); None (0)
 Accountability - can beneficiaries change
outcomes/processes?
High (3); Medium (2); Low (1); None (0)
 Flexibility – can institutional arrangement
adapt to changing conditions?
ii Financial: O&M fund/arrangements
High (3); Medium (2); Low (1); None (0)
iii User commitment:
 User contribution to capital cost (%)
 User contribution to O&M (%)
Adequate (3); Partially Adequate (2-1); No
arrangements in place (0)
Actual value assigned, then ranked High (3); Medium
(2); Low (1); None (0)
Actual value assigned, then ranked High (3); Medium
(2); Low (1); None (0)
113
TABLE 4: POWER (comparison of grid distribution systems )
CASE STUDY NAME:
Location:
No. Beneficiaries:
Level of Social Capital: (High, Med, Low)
INDICATOR
A. Physical Infrastructure
i. Existing condition: overall condition of
distribution/transmission network
ii. Implementation
 Delivery efficiency: years from
mobilization to completion of construction
 Appropriateness of design: does technical
standard of network meet needs?
B.
C.
D.
E.
Power delivery (service standard)
i. Total power demand serviced (kWh)
ii. Equity: Do regions serviced include those with
a significant proportion of poor?
iii. Reliability
Cost effectiveness [comparisons to remain within
subsectors so that technology/infrastructure
standards are equivalent]
i. Economic efficiency: % energy losses in
distribution
Impact – not directly measurable
Sustainability
i. Institutional:
 Transparency – do beneficiaries have
knowledge of processes, are they conducted
openly?
 Accountability - can beneficiaries change
outcomes/processes?
 Flexibility – can institutional arrangement
adapt to changing conditions?
ii. Financial: Collection rates (%)
iii. User commitment:
 User contribution to capital cost (%)
 User contribution to O&M (%)
Age: (yrs from completion)
Command Area: (m2 )
System Complexity: (High, Med, Low)
RATING/REMARKS
Fully Operational (3); Partially operational (2-1); Not
operational (0)
Average of following two ratings:
Actual value assigned, then rated as High (3);
Medium (2); Low (1) on comparative scale
Fully appropriate (3); Partially under/over designed
(2-1); Not appropriate (0)
Actual value assigned, then rated as High (3);
Medium (2); Low (1) or None (0)
High targeting (3); Medium targeting (2); Low
targeting (1); No poor serviced (0)
Constant supply (3); Intermittent supply (2-1); No
supply (0)
Actual value assigned, then rated as High (3);
Medium (2); Low (1) on comparative scale
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
Adequate to cover costs (3); Partially Adequate (2-1);
No collection (0)
High (3); Medium (2); Low (1); None (0)
High (3); Medium (2); Low (1); None (0)
TABLE 5: AGRICULTURAL RESEARCH (seed technology)
CASE STUDY NAME:
Location:
Time: (project duration)
No. Beneficiaries:
Service Area: (m2 )
114
Level of Social Capital: (High, Med, Low)
Service Complexity: (High, Med, Low)
INDICATOR
RATING/REMARKS
A. Research Standard
i.
Appropriateness of research: in terms of content
in relation to farmers needs and opportunities in
the area. This is a qualitative indicator based on
data on farmer perceptions and on research team
assessments.
ii.
Economic efficiency: cost/variety of seed
developed
iii.
Quality of service: beneficiary assessment of
quality
iv.
Equity: Does variety selection target needs of
poor? This is a qualitative measure based on
research team assessments of number of
varieties addressing low input, secondary crop,
stressed land constraints of the poor.
v.
Fully appropriate (3); Partially appropriate (2-1); Not
appropriate(1)
Actual value assigned, then rated as High (3);
Medium (2); Low (1) (i.e. “high efficiency” (3) =
“low cost per beneficiary”)
Rated as High (3); Medium (2); Low (1)
Rated as High (3); Medium (2); Low (1)
Reliability: germination %
Actual % assigned, then rated as High (3); Medium
(2); Low (1)
B.
Impact – not directly measurable
C.
Sustainability
i.
Institutional:
 Evidence of agency plans to phase out and
move to new crop or beneficiaries
High (3); Medium (2); Low (1)
 Accountability - can beneficiaries change
outcomes/processes?
High (3); Medium (2); Low (1)
 Flexibility – can institutional arrangement
adapt to changing conditions
High (3); Medium (2); Low (1)
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TABLE 6: AGRICULTURAL INPUT SUPPLY( seed , fertilizers)
CASE STUDY NAME:
Location:
Time: (project duration)
No. Beneficiaries:
Service Area: (m2 )
Level of Social Capital: (High, Med, Low)
Service Complexity: (High, Med, Low)
INDICATOR
RATING/REMARKS
A.
Supply Standard
i.
Adequacy and reliability: ability of supply to
meet demand needs in terms of volume and
timing. This is a qualitative indicator based on
data on farmer perceptions and on research team
assessments.
Fully adequate (3); Partially adequate (2-1); Not
adequate (0)
ii.
Economic Efficiency: market cost/kg
iii.
Quality of input: measured as germination % for
seeds, and nutrient content for fertilizer.
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
iv.
Quality of service: beneficiary assessment of
service
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
v.
Coverage: number of beneficiaries serviced per
y ear
Rated as High (3); Medium (2); Low (1)
Actual value assigned, then rated as High (3);
Medium (2); Low (1)
B.
Impact
C.
Sustainability
i.
Institutional:
High (3); Medium (2); Low (1)
 Transparency – do beneficiaries have
knowledge of processes, are they conducted
openly?
High (3); Medium (2); Low (1)
 Accountability - can beneficiaries change
outcomes/processes?
High (3); Medium (2); Low (1)
 Flexibility – can institutional arrangement adapt
to changing conditions?
ii.
Financial: Are costs recovered
Costs fully recovered (3); Partial costs recovered (21); No costs recovered (0)
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TABLE 7: AGRICULTURAL EXTENSION SERVICES
CASE STUDY NAME:
Location:
No. Beneficiaries:
Level of Social Capital: (High, Med, Low)
INDICATOR
A. Service standard
i. Appropriateness of service: in terms of content and
timing, in relation to farmer needs and opportunities
in the area. This is a qualitative indicator based on
data on farmer perceptions and on research team
assessment.
ii. Economic efficiency: cost per beneficiary (e.g. per
member of active group)
iii. Quality of service:
 frequency of contact between beneficiaries and
technical staff
 beneficiary assessment of quality
iv. Equity: proportion of women members of active
groups
v. Coverage: number of beneficiaries serviced per
year, per member of field staff
B. Impact
i.
Increase in yield and/or income (where the
data are available – e.g. in the case of NGO
projects and the public sector extension service
available in irrigation command areas). [These
data will have to be interpreted with care,
because increases in yield and income are
functions of several interacting factors –
including the irrigation itself.]
C. Sustainability
i. Institutional
 evidence of agency plans to phase out and
move to new area or beneficiaries
 accountability: can beneficiaries change
outcomes/processes (e.g. get the field agent
sacked or moved in case of poor
performance; change focus of technical
advice/training)
 flexibility: can institutional arrangements
adapt to changing circumstances?
ii. Financial: level of beneficiary contribution /
cost recovery
Time: (project duration)
Service Area: (m2 )
Service Complexity: (High, Med, Low)
RATING
Fully appropriate (3); Partially appropriate (2-1); Not
appropriate (0)
Actual value; then rated as High (3); Medium (2);
Low (1) (i.e. “high efficiency” (3) = “low cost per
beneficiary”)
% beneficiaries in contact at least monthly; then rated
as High (3); Medium (2); Low (1)
rated as High (3); Medium (2); Low (1)
Actual % figure; then rated as High (3); Medium (2);
Low (1)
Actual number per field staff; then rated as High (3);
Medium (2); Low (1)
% change in yield and/or income over two (?) year
period
Clear plan and strategy in place (3); intention but no
strategy in place (2-1); none (0)
High (3); Medium (2); Low (1)
High (3); Medium (2); Low (1)
Costs fully recovered (3); partial costs recovered (21); no costs recovered (0)
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ANNEX 9
MainFund Set-Up Orientations
A polycentric approach to development–involving ‘competing’ actors–is the much advocated
theme of this study. To effectively execute this arrangement, an additional funding mechanism
is needed which can provide resources for development functions on a competitive basis. This
can be achieved by setting up a series of fully autonomous and independent general and sectoral
funds. This annex presents the main orientations along which these funds can be set up.
The trusts funds or sectoral funds are not new institutional arrangements in Nepal. The Rural Water Supply and
Sanitation Fund has been in existence for over three years and thus far has given clear evidence of the viability of
this approach. This fund is performing well relative to the WSSD department and can serve as a model for other
departments. The success of this approach is now reportedly leading some bilateral donors such as DFID and the
Finnish International Development Agency to plan setting up other general and sectoral funds. The advantage of a
fund arrangement is that it allows donors to change their financing mode from the traditional mode directed to
specific projects to an alternative mode designed to finance programs concerning key investments in given sectors.
The funding cover the entire range of investments required along the delivery cycle and this funding goes directly to
the actors that are best placed to take informed project-related decisions because their represent or are mandated by
the end-users. This approach has been well tested in over 20 countries where well established social investment
funds have already materialized and brought about profound changes in donor/local organizations interactions.
Drawing from the experiences of Sectoral Investment Funds (SIF) approach and other fund arrangements from
Nepal and elsewhere, this study makes the following specific proposals for the general structure and functioning of
the fund:

The fund should have a board of directors comprised a limited number of individuals (9 to12 individuals
representing NGOs, private sector operators, beneficiary CBOs and government departments/parastatal
agencies). In order to maintain the independence of the fund, the representation of the government should
not constitute the majority. This board would be the highest policy making body of the fund, with full
authority to establish its own administrative and operating rules including staff incentive structure. The
board will hire competent and professional staff from the market using transparent recruitment criteria;

The management team of the fund should be headed by an executive director recruited by the board. The
divisional structure and staffing of the fund will be decided by the board as per needs. The transparency of
the fund management and accounting is paramount and measures should be taken to ensure this is
maintained. Well accepted business accounting principles will be followed for maintaining accounts which
will be audited every six months by an independent chartered accountant approved by the board;

The fund should have transparent and scientific/objective eligibility criteria to evaluate the funding
proposals received from various institutions and individuals for development works/activities. These
criteria should include, technical and economic considerations, efficiency considerations, capability
assessments, upper cost bounds, magnitude and nature of cost sharing by the beneficiaries, etc.

The fund should receive resources from the government, the donors and any other taxes levied out of the
development projects financed by the Fund. For example, the Research and Extension Fund should receive
the tax fee levied on the transaction of seeds. Similarly, the Rural Road Fund should receive a certain
portion of the gasoline tax. We propose that the government should initiate the sectoral funds with the
allocation of a certain proportion (say 10 percent, initially) of the sectoral budget from the government
departments. The government could then review the relative performance of the sectoral funds vis a vis the
departments on an annual basis, and from this review, increase or decrease the contribution depending on
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results. Such an approach would demonstrate the commitment of the government towards the sectoral
funds and will thus prompt the donors to contribute to the funds;

Bilateral and multilateral donor resources should be made available to the fund as a grant through the
government. Donors will be able to specify preferred geographical coverage and project components,
allowing them to track disbursements, and carry out their regular project monitoring function. While the
fund will only ensure cost-effectiveness and efficiency criteria, any equity consideration will be the sole
responsibility of the government who could target poorer regions through subsidies as part of its
provisioning function. For example, we showed in Cases D6 and D7 that the Drinking Water Fund Board,
although very efficient in its operation, has not been able to reach to the remote and deprived areas simply
because they have had common policies for accessible and remote areas. The government in such cases
could provide additional material transportation cost and increased level of subsidy through the fund to
ensure these regions are adequately covered;

In addition to the financial audit specified above, the completed subprojects financed by the fund should
also be subjected to regular technical and operational audits. These audits will ensure accountability by
identifying weaknesses, problems and areas for improvement, and should be enforced through a systems of
performance rewards and penalties.
Under Nepal’s legislative structure, funds must be registered under the Development Committee Act or through
special charter. This makes the registration process cumbersome and allows the government to have a majority on
the board thus defeated the purpose of its autonomy and independence. Hence it is proposed to enact a general trust
fund act under which, various types of funds can be easily registered and operated.