(J
CTT- Y3b ?rs             J>k-a^ - J-jz- $
ETH/78/013
UNDP/FAO
DEVELOPMENT OF IRRIGATED AGRICULTURE WATER RESOURCES DEVELOPMENT AUTHORITY
(FORMERLY VALLEYS AGRICULTURAL DEVELOPMENT AUTHORITY)
ETHIOPIA
DABUS IRRIGATION PROJECT FEASIBILITY STUDY
FINAL REPORT
VOLUME II
MAIN REPORT
AND
ANNEX I - STATEMENT OF WORK, SERVICES AND SPECIFICATIONS
HALCROW-ULG LIMITED
February 1982-J
ETHIOPIA
BASIC COUNTRY DATA
Currency Equivalents
Birr 1.00- US$0,443
Fiscal year: 8 July - 7 July
US $1.00= Birr 2.07
Calendar Year;
Population;
I    September - 10 September
II   September, 1580 fGCj = 1 Meikwem. t973 (EC)
Year
1975 (GC)
million^
27.2
Projected Annual Growth {%)
Urban (%)
12
1980 (projected)
1985 (projected)
30,8
35.3
2.52
2.76
14
16
Area:
km'
Gross area
1,200,000
Cropped area (1976/77)
Annual crops;
’ cereals
-    pulses
-    oilseeds
-    cotton
-    others
46.730
6.910 1.760
320 720
Permanent crops
Total cropped area
56,740 4,100
60.540
of which irrigated
600 approx.
Grass Domestic Product
1979/80.
Birr 280 per person
Retail Price Index (Addis Ababa I
1963
1975
100
170.1
1980 (JanAovI
354.5 ave annual increase 16-j
■■Gto 007
ETH/78/013
UNDP/FAO
DEVELOPMENT OF IRRIGATED AGRICULTURE WATER RESOURCES DEVELOPMENT AUTHORITY
(FORMERLY VALLEYS AGRICULTURAL DEVELOPMENT AUTHORITY)
ETHIOPIA
DABUS IRRIGATION PROJECT FEASIBILITY STUDY
FINAL REPORT
VOLUME II
MAIN REPORT
AND
ANNEX I - STATEMENT OF WORK, SERVICES AND SPECIFICATIONS
HALCROW— ULG LIMITED
SURDEROP PARK
SWINDON, WILTS
ENGLAND.SN4QQD
February 1982Agriculture - Engineering - Rural Devetopnwrt
Registered OH Ice: Burderop Park, Swindon. Wiltshire SN4 OQD. England
Tataoftofrt; Swindon (07931 912479
C4bM«' PrnouiiMfl Sw>n. WUt*. Tilw: 44044 <Aj*B HALWIL Ql
Your Ref: Contract DP 'ETH/WOIJXJAGOA
Our Ref: WW/DAB 33
The Director,
Administrative Services Division.
Food and Agriculture Organization of the United Nations, Via delta Terme d'Caracalla,
ROME 00100, Italy.
Dear Sir,
19th March lQ82
DEVELOPMENT OF IRRIGATED AGRICULTURE IN ETHIOPIA
Dabus Irrigation Project — Feasibility Study
In accordance with the above contract we have pleasure in enclosing 50 copies of our Final Report on the Dabus Irrigation Project.
The report presents our proposals and analyses for the development of 5,100ha of irrigated and 5,500ha of rainfed agriculture at Dabus.
In finalizing the report we have taken into account the comments contributed by Project and Government members since submission of the draft Final Report, and in particular arising from discussions with the Task Force Mission in June 1981.
We take this opportunity to thank your representatives in Ethiopia, the General Manager and staff of the Water Resources Development Authority (formerly Valleys Agricultural Development Authorityl and members of the Task Force Mission for their assistance and contributions to this study.
Yours faithfully HALCROW-ULG LIMITED
Managing Director ;A.R. Hardy
Directors of Services SJ. Alien JR Bed ford D.F. Neville
Bwdof Olnctort; R.S.Bixttr RF.Cam.cho C.L, dart. Rtgirtwed ir> England Mo. 1319084
P J. Godard
XL. Gould
London Office, Short l«nd« W6 BBTETHIOPIA
DABUS IRRIGATION PROJECT
FINAL REPORT
Contents
VOLUME!
-                SUMMARY
VOLUME 11
mae^ REPORT
Annex I
Statement of Work. Senicci and Specifications
volume m
VOLUME IV
VOLUME V
VOLUME VI
Annex II
Annex 111
Annex [V
Annex V
Annex V[
Annex VII
Annex VU1
Annex EX
Annex X
Annex XI
Annex XU
Annex XU!
Annex XIV
Annex XV
Annex XVI
Annex XVII
Policies and Inhibitions
Social Implications
Environmental Implications
The Project Area
Sods and Land Evaluation
Topographical Surveys
Climate. Hydrology and Water Requirements
Engineering
Agricultural Potential and Yield Projections Farm Development
Organisation and Management Marketing and Prices
Project Cort Estimates Economic Accounting Prices Economic Evaluation
Agro-Indurtrial ComponentETHIOPIA
DABUS IRRIGATION PROJECT
MAIN REPORTETHIOPIA
DABUS IRRIGATION PROJECT
MAIN REPORT
Contents
Contents 
>
Disclaimer
*
Acknowledgements
Abbreviations 
v
SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS
1.              INTRODUCTION AND BACKGROUND
A.           Introduction
B,           National Background
11            THE BASIS OF THE PROJECT
111.         THE PROJECT AREA
A.           Geographical Location
B.           Geology. Topography and Soils
C            Climate and Water Resources
D.           Infrastructure and Inslitutions
E.           Present Land Use and Fanning
IV             THE PROJECT OPTIONS
V. THE PROJECT AND ITS IMPLEMENTATION
A.           Project Description
B.           Detailed Features
1 -r 6
8
9
11
12
13
15
18
19
C.
Agro-industrial Plant
25
D.
Project Phasing
26
E
Project Costs
27
F.
Financing and Disbursements
30
G.
Procurement
30
H.
Environmental Impact
31
VI.            ORGANISATION AND MANAGEMENT
A.           General Aspects
B.           Specific Aspects
vn. PRODUCTION, MARKETING AND FINANCIAL RESULTS
VIII.          BENEFITS AND JUSTIFICATIONS A.           General
B.           Economic Evaluation
31
32
A
Agricultural Development
35
B.
Marketing and Prices
37
C.
Financial Re rums
39
40
42TABLES
Table 1
Table 2
Tabic 3
Table 4
Table 5
Tabic 6
Table 7
Tabic 8
Table 9
Table 10
FIGURES
Figure 1 - Figure 2 * Figure 3 - Figure 4 -
Field Inputs by Consultants Staff
Summary of Agricultural Areas and Production in Ethiopia Current Market Prices
Gross and Net Areas for Irrigated and Rainfed Development Summary of Capital Costs
Cumulative Development of Nel Cropped Areas Product Prices and Values
Agricultural Costs and Returns at Full Development Dabus Enterprise - Financial Projections
Technical Assistance
Location Map
The Project Area (farm boundaries and access) Development Programme
Location of Hydro Electric Power SiteDisclaimer
The views expressed in this document are solely those of the Consultant, and do not necessarily coincide with, and do not commit the Government of Ethiopia, or the Food ar.d /Agriculture Organization as the executing agency of the United Nations Develop ment Programme, under whose auspices the study has been commissioned.Acknowledgements
Hafcrow-ULG wishes to record its thanks and appreciation to I he many officials and staff of the departments and institutions of the Provisional Military Government of Socialist Ethiopia for their untiring assistance m (he preparation of this report. Without their whole-hearted co-operation, and the efforts of VADA in particular on technical, cultural, and administrative aspects of the work, the mutual objectives of the study could not have been achieved.AID Bank
AMC
EELPA
EPID
ERA
FAO
GOE
HEP
IAR
MMEWR
MOA
MPP
MSFD
PA
RRC
Supreme Council USSR
VADA WRDA
WADC
Calendar Years
EC
GC
-V-
ETHtOPIA
DABUS IRRIGATION PROJECT
Abbreviations
Agricultural and Industrial Development Bank
Agricultural Marketing Corporation
Ethiopian Electric Light and Power Authority
Extension Projects Implementation Department Ethiopian  Roads  Authority  (replaced  by  Ethiopian  Transport Construction Authority in 1981)
Food  and  Agriculture  Organization  of  the  United  Nations Provisional Military Government of Socialist Ethiopia Hydroelectric Power
Institute of Agricultural Research
Ministry  of  Mines,  Energy  and  Water  Resources  (replaced by the Ministry of Mines and Energy in 1981)
Ministry of Agriculture
Minimum Package Project
Ministry of State Firms Development
Peasant's Association
Relief and Rehabilitation Commission
National Revolutionary Campaign and Central Planning Supreme Council
United States Bureau of Reclamation
Valleys  Agricultural  Development  Authority  (since  November 1981 VADA has been replaced by the Water Resources Development  Authority  of  the  Water  Resources  Commission) Water Resources Development Authority [see VADA) Western Agricultural Development Corporation (MSFD)
’ Ethiopian Calendar
- Gregorian Calendar
EC, 1971 commences on 11 September 1978, GCETHIOPIA
DABUS IRRIGATION PROJECT
Summary of Conclusions and Recommendations
L The Dabus Irrigation Project described in the following report would compose
a mixed irrigation and rainfed agricultural development scheme, with its own hydro
electric power station. A new access road would be required on the right bank ot the Dabus river, from Mendi to a new Dabus bridge within the project area. High value,
foreign exchange earning crops would be required. Agricultural production would need
to be mechanized, and all the staff and most of the labour required would need to be imported into the area and accommodated on site.
ii.           The project xs planned would comprise S.lOOha under pumped irrigation from the Dabus river and 5,5O(lha of rainfcd agriculture. Of the irrigated area. l,4O0ha would
he in permanent production of grapevines for raisins under surface irrigation, and the remaining 3,700ha would be under overhead irrigation for cotton, ginger, peppers and sugar cane. On the rain fed area, cotton, maize, niger seed (ncug) and peppers would be grown. Cotton, cotton seed oil, raisins and sugar (small scale factories) would be pro cessed on site.
iii.          The cost of the project is estimated at Birr l78 millions with a foreign exchange component of 61% (US? 53 millions), all in 1980/8! prices. This cost increased by price contingencies is Birr 315 millions at current costs, with a foreign exchange component of US$ 86 millions.
iv.          Although the project would support most aspects of Government’s policy for agricultural development, under the costs imposed both by the nature of the scheme as planned and by the haulage distances, the annual financial returns are calculated to break even with the total annual costs (including amortization of the investment). The economic- rate of return is estimated at l(F£.
v.           The hydro-electric power component would require a geotechnical site investi gation prior to final appraisal of the project by an international funding agency. After completion of this study and final design work it is anticipated that the project could commence by 1985 for completion in 1989.
vi.         The project would be implemented by WRDA. using local contractors, and both the agricultural and processing would be managed by the Western Agricultural Develop’ merit Corporation as a state farming operation.Pagel
ETHIOPIA
DABUS IRRIGATION PROJECT
MAIN REPORT
I. INTRODUCTION AND BACKGROUND
A. INTRODUCTION
1.01  In  1977  the  Provisional  Military  Government  of  Ethiopia  (GOE)  proclaimed  the establishment of the Valleys Agricultural Development Authority (VADA)1.
“The principal objectives of the Authority shall be to ciyordinate. regulate and supervise (he development and utilization of the land and water resources of river valleys for agricultural development*1.
The circumstances surrounding the creation of VADA were a combination of food short age in drought stricken areas, long term decline of traditional highland agricultural
areas due to overcrowding, and an economy affected by failing exports and security problems. Self-sufficiency in food production has been the prime objective of agricultural policy, with longer term objectives of creating employment, improving the trade balance, producing raw materials for agro-industrial development, and securing a fair distribution of development resources throughout the country* these objectives still apply.
1.02 VADA was to be the catalyst for identifying and developing the agricultural potential of the under-exploited resources of land and water in the river valleys of (mostly) lowland Ethiopia.
1,03 In order to accelerate VADA’s activities. GOE requested the Food and Agriculture Organization (FAO) of the United Nations to provide technical assistance in reviewing
the resources of the valleys. An FAO/Technical Co-operation Programme contract was awarded to Halcrow-ULG Limited of the United Kingdom The team worked in Ethiopia under an FAO/TCP project manager from January through June 1978 with the objective
of evaluating the development potential of some 50 projects and proposing a priority development programme.
1.04 Following this study UNDP/FAO support was continued with the establishment of the “Development of Imgated Agriculture'’ project, and a core FAO team was attached to VADA to develop and refine the programme. The Dabus basin was selected for further study, and in May 1980. after international tender. Halcrow-ULG Limited was contracted1 * 3 to prepare a feasibility study of the Dabus Irrigation Project.
1 During 1981. VADA was replaced by the Water Resources Development Authority, under the new Water Resources Commission (Proclamation 217/198))
3 Contract No DP/ETH/78/013 - 2/AGOAPage 2
] .05 The consultants commenced work in Ethiopia in May, 1980. A schedule of the
consultant's staff is given in Table I. The consultants completed an inception report in
June, 1980 and an Interim Report in September 1980 which was reviewed in Addis Ababa
by an FAO task force in October/November 1980. Progress reports were produced in November 1980 and in March 1981 The consultants completed field-work in Ethiopia in February 1981.
History of I he Project
1,06 The Dabus Irrigation Project was first identified al limited reconnaissance level by the United States Bureau of Reclamation (USSR)* 1 during 1958-1964 as a mixed hydro- electric and irrigation project.
1.07 The project was one of the 51 reviewed by Halcrow-ULG Limited in 1978. and was included in the priority development programme. The development programme was based on a ranking methodology worked out in two phases. Firstly, each potential project was scored on the basis of its physical, demographic and development qualities as defined in data available to the consultant from previous reports and documents. Secondly, the resultant ranking was modified to take account of other key factors such as accessibility2 and GOE’s immediate objectives. After re-ranking, the ten best scoring projects were included in a priority programme. The Dabus project area was rated highly both on its inherent develop ment qualities (mainly as a law cost irrigation scheme for 15,000ha), and on the re-rating for other factors (mainly because of its capacity for settlement, its accessibility and its significance for regional development, within general government policy).
1.08 Further identification work was carried out by FAO/VADA team during 1978 and
1979, and aenai photography was sub-contracted. Ortho-photographic maps with 2m contours were prepared in July 1980.
B. NATIONAL BACKGROUND i Annex IE)
Demography
1.09 There has been no recent census, hut the national population is generally thought to be about 32 million, increasing at some 2.5% pa  About 87% of the total population is rural, living mainly in the highlands above 1.40Qm. Die extensive lowlands which surround the high plateau are inhabited mainly by nomadic pasturalists The agricultural areas in the high lands have been aver-pop dated for many years, leading to degradation of soil fertility and to soil erosion, but the situation has reached crisis point several times in that last decade, and famine in the worst hit areas (WoUo, Tigra i) has become evident. This has been
2
’ United States Bureau of Reclamation: The Land and Water Resources of the Blue
Nile Basin, 1964.,
2 When the programme was prepared many potential project areas were inaccessible both for security reasons, and/or lack of roads.
1 Based on two national sample surveys in 1964-67 and 1968-70.Par 3
partly due to vagaries in the climate (mainly unreliable rainfall). Famine has been worse in
the and areas of the east and south, and the situation has b«n exacerbated by military activities on two fronts in the north (Eritrea) and in the south-east (Ogaden).
1
1.10 The area of the country is 1.2 million km . There are about 6.1 million ha under
crops (93% annual crops), and a further 1.8 million ha under fallow, pasture or other
agricultural use. These data are contrasted to the total estimated 790,000km  of potential agricultural land. The population density overall is 26 persons per km , but all but about
2 million pasturalisls are farming in the highlands ut a density of about 4,2 persons per ha of cropped land.
1
1
1
Agricultural Sector
LI I Except on the state farms, farming methods arc traditional, using ox-plough or
hand labour for cultivation . Crop production statistics are based on general surveys. These indicate little change in production dunng the six years up to 1979/80* About 89% of the cropped area is devoted Co food crops and oilseeds and 97% of this is produced on peasant farms. Food crops and oilseed comprise: 84% cereals (mostly teff, maize and barley); 12% pulses (mostly horse beans and chick peas); and 4% oil seeds (mainly niger seed, or neug). State farms have been increased to I00,000ha. Co-operative farms have declined in area from about 62.000ha to 42,000ha. In addition to food crops, the state farms grow most of the cotton, sisal and commercial tobacco, and some of the coffee.
1,12      The much needed land reform implemented immediately following legislation in 1976 has had one adverse, if short term, impact on trade. Whereas previously share-cropped farms produced a proportion of crops for the commercial markets, rhe emphasis has now shifted to food crops. Even so. nutrition in the country is about 70% of calorific require ments. Apart from cereals, sugar is in short supply (about 5kg per person per year, but hard to get in the rural areas), and so also is cooking od. Firewood prices have been increasing sharply. The combination of the static food production and the disasters which have hit the country has turned Ethiopia into a significant importer of food. Imports of cereals built up
to a level of 200,000 tonnes in 1977. which have continued.
1.13      Ln the livestock sector, the droughts have caused many losses in the nonudic areas. Combined with the increasing population, this can only have reduced the already inadequate intake of animal protein.
The Economy
1.14       Apart from the agricultural picture indicated above, production has been hit by the security situation. Sesame production in the north west has been seriously curtailed, but will revive when peace is re-established. Cattle production (hides and skins are an important export) had recovered by 1977 but has been fut again by the recent droughts of
1 Some co-operative and settlement schemes also have tractors.Page 4
1980/81. Exports of oilseeds and pulses have been reduced to a minor level However, production of coffee, the major export crop, has recovered and now exceeds the 1973/74 level. Small quantities of cotton were exported again in 1980.
1.15      With the expanding population predominantly living in the rural highlands, agricul ture dominates the economy, providing about one half of the gross domestic product, and 93% of the exports. In 1979/80, 74% of total exports was coffee. 15% hides and skins, and 4% oilseeds and pulses. Overall, the recovery in exports since 1977 has been small, and export volumes have declined during the last six years. By contrast, impartshave increased both by volume and unit price, and the trade balance has declined steadily. This has not been fully offset by increases in transfers or capital receipts; thus, the overall balance of payments is weak. Alter several years of stagnation, economic growth has shown signs of recovery, and the estimated GDP had reached Birr 280 per person by 1979/80. Meanwhile inflation has been running at about 14-15% pa, mainly due to the cost of cereals and spices.
1.16      Local capital and foreign exchange are scarce. There is considerable pressure on food supplies, and continued population pressure in the highlands. Industry' has declined, especially in the north and will need raw materials, skilled labour, and power for its rehab ilitation. Although the resiliance of an agriculturally based economy is well proven, the pressure on the highland areas has reached a stage from which it will lake many years to recover, and (hen only if the pressures are reduced.
Policies for Agriculture
1.17      Basic Objectives With these conditions, GOE has developed a mixed agricultural development policy which emphasises self-sufficiency* social development and foreign exchange earnings. GOE’s basic objectives are to:
a. ensure adequate supplies of loodsrufTs;
h.  earn  foreign  exchange,  or  substitute  for  foreign  exchange  expenditure; c            create more opportunities for employment; and,
d.           secure more balanced regional development.
1.!« Food Production is currently about 1,800 calories per person per day and will decline unless availability can be increased steadily al about 2.5% per year and by more if the present deficit is to be recovered. The Relief and Rehabilitation Commission (RRC) has responsibilities for food aid, but also for longer term development in the creation of new settlements in the more sparsely populated areas (especially the south west). RRC's policy is to concentrate on creating settlements al minimum cost operated with minimum supervision. Such settlements are inevitably a first stage development, limited by the resources available and organized mainly to achieve subsistence for the new settlers. The established peasant sector is now organized into peasant's associations (PAs) The
r
Ministry’ of Agriculture (MOA) is charged with the development of the PAs by providing training in improved fanning techniques and inputs though its Agricultural Development Department which is now implementing the second Minimum Package Project (MPP),Page 5
MO A is iJ$o building up commercial agriculture among groups within the PAs, uutally as service co-operatives but later as fully-fledged producer co-operalives. Marketing of basic crops is at prices fixed by GOE through the Agricultural Marketing Corporation (AMC), which is committed to purchase the major food crops.
1.19 The Valleys Agricultural Development Authority I VADA l under the Ministry of
Mines, Energy and Water Resources has a substantial programme for the development of river valleys, mainly in the lowland areas.
1 20 .Although producing considerable quantities of foodstuffs, the Ministry of State
Firms Development fMSFD) has a major responsibility for the production of industrial crops, and has recently been encouraged (o take on both processing and external marketing for products not covered by existing organisations-
1.21      Foreign Exchange. The country's major foreign exchange earner, the Coffee and Tea Development Ministry, has a programme of expansion, and the MSFD is being encour aged to develop new export crops where appropriate, At present, small quantities of any saleable product are being exported when the opportunity arises.
1.22      Creation of Employment has a high priority; labour intensive techniques are encouraged and have the additional benefit of conserving foreign exchange.
1.23       Regional Development GOE has emphasised that it considers the historic concen tration of investment in the market dominated economy surrounding Addis Ababa, and in the Awash Valley (irrigated agriculture), has been unjust. With its emphasis on better distribution of the available wealth and improvement to the standard of living in lhe poorer and more deprived sections oT the community, GOE has made a special policy of regional development The creation of the Valleys Agricultural Development Authority (VADA)
to develop agriculture in the outlying regions of the country is an example of this pursuit
of more equitable distribution of investment, rhe policy is a priority and acknowledges the additional costs incurred through remoteness and lack of existing infrastructure.
1.24       There are currently about 80,000ha developed for irrigation nationally. 70% of
this is in the Awash Valley and is mainly utilised for sugar cane, cotton and maize /About 16% lies in the March-Gash basin (maize and cotton), and 7% lies in the Rift Valley Lakes area (cotton, maize and a little tobacco). A further 6% is planted mainly to maize and sorghum in the Wabi Shabelle. About 2 0,000 ha of the above requires rehabilitation, leaving a net irrigated area of some 60.000ha. It is partly because of the concentration of invest ment in the Awash Valley (also because of water shortage at the season of low river flow) that GOE wishes to extend its investment in irrigation io other regions.
Planning and Implementation
1.25      Planning is the responsibility of the National Revolutionary Development Campaign and Central Planning Supreme Council (the Supreme Council). which has recently Page 6
prepared the first confidential draft of the 10-year Investment Plan for Socialist Ethiopia
(1980/81-1989/90). It is understood that this 10-year Plan incorporates the above Ipub- lished) policies The plan itself fails into two main sections: (a) an emergency action programme principally concerned with The relief and rehabilitation of the distressed areas, and (b) a new programme of action for the 1980Y
1.26      Implementation of the 10-year Plan. Under the present organisation the implemen tation of the agricultural components of the plan will fail to (he agencies indicated in paras ITS to 1,22 above. These agencies are more fully described in Annex II. It is further understood that the plan has the support of the major international agencies.
IL THE BASIS OF THE PROJECT
2.01 The National Basis, in the previous chapter, the underlying state of food security 
in Ethiopia has been staled. As the country is dominated by small scale agriculture and short of other raw materials for industry, recovery and redevelopment will need an agri cultural base. Some long term investments of considerable significance are in hand. Land reform has created a base for stability in the rural areas and the organisation now exists to train peasant farmers in more productive techniques. The resettlement programme is gaining momentum.
2.02 There is ample evidence that the production of sufficient food will continue
to be uncertain if agriculture remains an essentially subsistence activity. Il is therefore regarded as necessary lo develop commercial agriculture to create a marketable surplus, both to pay for the inputs needed lo increase productivity and to increase the foreign exchange earnings required lo develop the nation's infrastructure. An important step in this direction has been the adoption of the Second Minimum Package Project supplying inputs and technical assistance in 440 districts of the country. The short term redevelopment of commercial agriculture in the rainfed areas will depend a great deal on the successful imple- mentaion of this project. Nevertheless, presem policy in Ethiopia requires that product and input prices are fixed centrally and lake into account conditions in the metropolitan areas. While so much of the potential food production capacity in the country is insulated from
the forces of supply and demand, the risk remains that farmers may not find the necessary incentive to increase production to the levels required. There is therefore a need to control the development of productive capacity more closely, and to apply selective treatment on a temporary basis if conditions should dictate an unprofitable price structure.
2.03 Although development of the traditional rainfed areas would relieve, and possibly cure, the food supply problem in the short term, the limits of pressure on the land have been reached in those areas where erosion and sod degradation have taken hold. As population increases, this pressure will become irresistabjc and transmigration inevitable The resettlement programme has therefore been continued at maximum capacity, moving families to rhe areas of lower population density.Page 7
—04 People From the distressed areas resettled on small sub sis tenet- holdings find it difficult to break through into commercial production. If they fail to achieve this, the
present situation of these people could merely become transferred to the new areas, which could themselves become centres of poverty. It follows that as many as possible of the new settlers should be moved into situations with potential for commercial development beyond self-sufficiency.
2.05 The broad strategy is therefore to create new settlements in the outlying regions employing the maximum number of viable settlement units. These would be provided with sufficient infrastructure to develop concentrated areas of production with commercial potential, but which are discernable enough for GOE to provide protection, should pricing policies created for other purposes tend to defeat the commercial objectives of the project.
2.06 National Resources for .Agricultural Development. Ethiopia has limited detailed information on its physical resources, especially those outside the highlands. In view of the need to develop the lowlands, more information on these areas needs to be built up, particularly where stable resources of water and power arc available.
2.07 Ethiopia is now building up a useful cadre of engineers and agricultural technicians 
with experience of developing and operating crop production under irrigation. Although
labour is plentiful, it would mostly have to be moved into the remote areas. Management
of labour has been proving difficult and until wage comparability and working conditions 
have been worked through this would be a problem for any development scheme. Given the present degree of experience among both technicians and labour, a considerable amount of technical assistance from international sources would be required to develop a project of this nature as outlined above. In contrast, there are a number of local contractors with the accumulated experience which would be required to implement projects of this nature
2.08 Capita] for both infrastructural development and annual operations is scarce. It is probable that a major project would need international support. The organisation of working capital supplies is as yet undeveloped, and at present only state farms and a few co-operatives are supplied through the Agricultural and Industrial Development (AID I Bank. Although the Bank's operations are gradually being extended, there is no basis on which to manage an intensive agricultural development based on peasant farmers; this is a serious constraint on such a scheme at present. In the foreseeable future, capital for the type of scheme envisaged would need to be channeled through an established organisation such as RRC or MSFD.
2.0^ Operational Management. The basic strategy calls for the establishment of an inten sive commercial development scheme in an area of low population density. Under the existing government structure there are two main organizations which could supply operational management. The Relief and Rehabilitation Commission (RRC) is experienced in the establishment of settlement schemes, but its programme is already heavily committed. RRC’s experience and objectives are mainly in the field of rain fed subsistence agriculture; it has no significant experience in the fields of agro-industrial processing and marketing. The Ministry of Slate Farms Development, through its regional enterprises has experience in large scalePage 8
management and in the production of non-food and industrial crops. It has limited experience in the management of settler labour, but considerable experience in handling migrant and organised casual labour. MSFD is therefore presently best suited co provide the long term project management. One condition which would modify this conclusion would be the use of a mono-cropping system I such as sugar cane or coffee! on an industrial scale. Under these circumstances management responsibility would fall to the relevant ministry or corporation.
2.10 Organisational aspects apart, it is now widely accepted by development planners that production responds significantly where farmers produce and market their own crops. This condition is. of course, subject to an appropriate margin between product prices and pro duction costs; for example, few farmers would set out to produce surplus maize under pre sent value:pricc relationships in Ethiopia. However, the consultants believe that the develop ment of trained farm workers, able to eventually become small commercial farmers in their own right, would be of great benefit to Ethiopia m the future. For reasons of lack of training, both in technical and management activities, the absence of established infrastructure, parti cularly with regard to input supply, farm mechanisation and credit, it is recommended that
the implementation of the type of project envisaged should he earned out under the manage ment of the Ministry of State Firms Development. However, there should be a long range objective to develop independent commercial farm units (co-operatives, groups or individuals) once the necessary training and infrastructure can be provided.
2.1 I In conclusion, the rationale for the Dabus project is the need fora slate farm organi sation to establish an intensive commercial development enterprise (if necessary with price adjustments), relying mainly on resettled labourers who would have longer term prospects of becoming farmers tn their own right. The project would need to pay for itself in foreign exchange terms, and would aim at the maximum exploitation of the available land and water resources; it should develop an agro-industnii capacity in keeping with the need to minimise transport costs on its surplus production, and should rely on hydropower for its power re quirements. The project should emphasise high value crops required either nationally or for export to meet the costs of developing and running a “remote” project, but should grow enough food crops to cover the basic requirements of its staff and labour. Such a project located in a presently remote and under-developed area would become a new centre of economic activity commensurate in size with the nearest major population centre of Nekemte. 430 km to the east. In undertaking the project. VADA would be fulfilling its principal objectives “to regulate and supervise the development and utilization of the land and water resources of river valleys for agricultural development".
IE THE PROJECT AREA
A. GEOGRAPHICAL LOCATION ( ANNEX V)
1
3,01 The project area (Figure 11 is located  on both sides of the Dabus river, a tributary of the Blue Nile (Abbai) river. The centre of the area is 55km north east of the town of Asosa
2
(population 2,400). capital town of the province . and 430km (by road) west of Nckcmtc
1 Latiiude l0°02 to ia°14Nand Longitude 34°St to 35°02E
3 Ethiopia is sub divided administratively into 14 Kefle lingers ur adminisirative regions. 102 awrajas or provinces, and 586 woredas or districtsPage 9
(population 24,000), capital town of I he Wclcga Administrative Region. The distance from Addis Ababa by road is “60km, some 17 hours drive by landrover. The right bank lies in Mendi district of Gimbi Province. The left bank in Asosa province ties mostly in Gizcn district but partly in Asosa district. Welega region is bordered to the west by Sudan (border town Kurmuk is 90km by road), to the north by the Blue Nile and to the south by the Gambcla plain.
3.02 The characteristics of the Dabus river are influenced by rhe Dabus swarnp some
95kni upstream to the south. The river flows out of the swamp at elevation 1.375m. flows through rhe project area from 970m to 935m, and joins the Blue Nile at 520m.
B. GEOLOGY. TOPOGRAPHY AND SOILS (ANNEX VI AND VII)
Geology
3.03 The area is underlain by gneiss and other metamorphic rocks, while hasalt occurs in
the surrounding area. Basalt is extensive in the area round the Dabus swamp.
Topography
3,04 The study area has a relatively flat central portion at an elevation of 960 to 1,000m.
The slopes gradually become steeper towards the edge of the project area at about 1J 50m. The Dabus river becomes more incised as it crosses the plain, falling 35m from 970m. In the east, it enters a gorge 100m deep. Tributaries of the Dabus river, of which the Shaga river is the most important, divide the basm in a number of broad ridges, which are generally from 600 to l.800m wide. A few hili ridges rise above the general level of the basin.
3.05 Slopes of 2 to 5 per cent are common throughout the area. Gentler slopes occur mainly between the Dabus and Shaga rivers and on the right bank of the Dabus. Along the valleys the slopes become steeper, commonly 5-8 per cent; these gradients occur frequently to north of the Shaga river and along the periphery of the study area.
3.06 The valleys of even quite minor streams are steeply incised, varying in depth from 0.5 to 12m. Such valleys farm severe limitations to agriculture, particularly where (hey occur close together This dissection is strongest and steepest in the eastern pun of the area north of the Shaga river.
3.07 The detailed surveys of the sample areas showed that land levelling requirements for surface irrigation on the flattest areas (under 2% slope) would be in the order of 700m /ha.
3
Soils 
3.08 Nearly ill soils are of clay texture, with sandy clay or sandy clay loam in some surface horizons. The main differences in the soils are in colour, porosity, structure and con sistence, and these characteristics are closely related to topography.Page 10
3.09 Upper slopes are occupied by red days, some times with a slightly lighter surface texture. The effective depth is generally at least LSm though a few shallower soils occur. These soils are classified at nitosols. The lower slopes arc occupied by two types of grey soil;
moderately porous and friable material. which is mottled;
- slightly porous, firm material, faintly mottled, with calcium carbonate
concretions.
3.10 The mottled material (gleysol) normally overlies die other (vertic I material, with the depth to the latter decreasing down the slope, The vertic material has slickensides and other characteristics of the vertisols, such as a gilgai microrclief. The vertisols develop wide vertical cracks in the dry season. The depth to the vertic material forms the basis for the subdivision of the grey soils:
gley sols are those with the vertic material below a depth of 40cm,
- vertisols are those with the vertic material at or near the surface, ie. within
the upper 40em of the profile.
At semi-dclailed level it was not possible to map the difference between the gleysols and vertisols as they cannot be distinguished on the aerial photographs.
3.11 Hilly and dissected areas are characterised by the occurcncy of rock outcrops and shallow soils and there is a narrow strip of alluvium along the Dabus river.
3 J 2 The pH of the sods is generally about 6.0 at the surface with values rising to about
8.0 in the subsoil of some vertic soils. The sods are moderate in nitrogen, very low In phos phorus and moderately high in potassium. There are no apparent salinity hazards.
3.13 The infiltration rate of the red soils is in the order of 8cm/hr. and of the gleysols 
and vertisols in the order of Ion/hr. Available water capacities are about 8.4cm per 100cm of soil in the red soils and 10 5-13.5cm in the gleysols and vertisols.
3.1 4 Electrical conductivity measured on water samples from the Dabus river gave values of between 65 and 100 micromhos per cm. These levels fall into the category of a potentially severe problem on the FAO*sguideline scale, and under certain circumstances could affect the permcahdity of the soil. Although such a consideration is important in soils in arid
areas in which there is likely to be an equibilhim in the system depending on the presence of soluble salts this is not the case in the soils in Dabus. The soils are already strongly leached and have acceptable infiltration rates formost irrigation systems. This situation is not likely to change under the influence of irrigation provided good water management and cultivation techniques are practised.Page 11
C CLIMATE AND WATER RESOURCES (ANNEX V[H)
Climate
3-15 Rainfall. Until VADA installed a meteorologic rd statton al Dabus camp (elevation
1,000 m asl) in July 1980, the nearest was at Asosa (1.540m) which has records since 1959. Other records of lesser duration have been received from stations near the project area. Rain fall at Dabus has been computed using this information, supplemented from the short series obtained at Dabus camp during the study. The rainy season lasts from May to October with rainfall averaging 200mm per month June through September, though showers continue even in the driest months of December and January.
Average monthly Rainfall (mm)
J
Trace
A
20
J
247        0
60
F
4
M
58
A
238        N
7
M
8
J
177
S
211        D
■■
3.16      Rainfall is relatively reliable in hydrological terms. Using monthly totals during ID years, the coefficient of variation for die onset month of May (critical for rain fed agriculture) was calculated at 0.46. Higher values (therefore lower rainfall reliability) were obtained for daily rainfall totals for 10 day periods, 0,86 for the first decad and 0.69 for the second decad.
3.17      Temperature. Temperatures range from 40°C to 7 °C, and the mean annual tempera ture is estimated at 25°C. rhe coldest temperatures occur in December and January (about I3°C) and the hottest tn March, April and May Mean monthly temperatures vary (Tom 27°C in March to 23°C in June and July
3.18      Humidity. Sunshine and Wind, Mean relative humidity at Asosa varies from 54% in February to 87% in July, but there is substantial variation between years. Average daily sunshine hours it Asosa vary from 3.3 in August to 8.9 in Febuary, Sunshine hours appear appreciably higher at Dabus camp: records during site work in 1980/81 showed 5.6 hours in August to 9.2 in February' 1981 though there are no comparable data for Asosa in that period Wind speeds are relatively low. averaging about 70km per day Records at Dabus camp ranged from 6 3 km/day in November to 101 km/day m February
Water Resources
3,19      The two catchment areas which feed tile Dabus river through the project area are those of the Dabusnver itself 10,100 km , and the Hoha catchment 179km . The Dabus 
2
2
river is gauged near Asosa, and records are available from 1962 to July 1979, when access to rhe gauging station became blocked Records are available for this period but data for 53 months are missing. Rrvertlow data based on twice daily river-stage observations are avail able for the Hoha river since 1965.Page 12
3.20        The Dabus river flows into the Blue Nile, and subsequently into Sudan. The exist ence of a large swamp in the upper catchment has a controlling effect on the extreme flow characteristics of the river at the project area. Although the rams commence in May/J one, and peak in July and August, the highest nver flows do not occur until September and October because of the Dabus Swamp. Flow subsides quite quickly, roughly halving each month until March and reaching its lowest level in April.
Monthly Rows in the Dabus River ( Asosa)
(Selected values at 80% Exceedance Probability!
D
J
F
M
A
M
Sept
, . .m2 ,-$ec.
fr t -
■■
86
44
25
18
14
17
400
Under an irrigation scheme, the critical months tor water supply would be March and Apnl. and for power requirements would be November. The flows above would be sufficient to irrigate some 12-14,000 ha of a crop like sugar cane.
3.21         Extreme value analysis of daily flood flows at the Dabus river gauge near Asosa indicate a mean daily annual maximum of 540 m  /sec. und an historical maximum since 1963 of 810 m  /sec (in 1967). The probable maximum flood at the gauging station was estimated as 1570m /sec taking into consideration the attenuating effect on the swamp. On account of the relatively steep slope up from the river, annual flooding is only marginal, and no special flood protection works would be required, except round special installations on the nver bank.
3
3
3
3.22       Water Quality. Annual sedimentation is estimated at 0.84gm/!itre, but any control structures should be designed to 1.2 gm/lit re. pH values of samples from both the Dabus and Hoha rivers varied from 6.5-7.0. The chemical analysis of the samples indicated no problems, and the sodium adsorption ration was very low (0.18-0.23). Electrical conductivity was very low (between 65 and 100 micromhos per cm). This could create permeability problems, (para 3.14).
D, INFRASTRUCTURE AND INSTITUTIONS
3.23       Apart from a new road constructured in 1978/79 from just outside Asosa into
the project area, there is no infrastructure in the area. The nearest AMC marketing depot is at Gimbi. The Ministry of Agriculture (MOA) has a regional office at Nekemte, and a pro vincial office (staff of five) al .Asosa. MOA has stations in each district staffed with one exten sion agent. Asosa district has three stations and Gizen district two. The RRC has a major settlement project 8km north of .Asosa. There is a 40-bed health centre at Asosa staffed by a health officer with three nurses, two sanitaries and four assistants.  A clinic has been built
in the project area at Ondulu but was not opened by January 1981. There is one elementary school in the project area. Power is provided for the town of .Asosa by a diesel generator.
1
1 The vectors  of try  panosomes  and river blindness  arc  present in the area, but neither disease has been observed by the study team in the human population, though malaria is endemic.Page 13
E. PRESENT LAND USE AND FARMING (ANNEX V)
3.24       The area is entirely rural. Based on a hut count from the aerial photography over a 23,300 ha area and a sample survey earned out in some of the villages, there are about 1,000 cultivators and 3,500 people in the immediate area of the project: there are only a few more in the whole of the basin. The villages (10-60 huts/village) arc all situated on the higher lying and more free draining red soil, on which most of the cultivation takes place. The area lies within the tsetse belt, and there are few cattle and very little game (some pig and monkeys). Reportedly, there were many more cattle until the arrival of the tsetse 10-15 years ago.
3.25       Burning and shifting cultivation is practised. There is no significant pressure on the land, which seems to be cultivated for about five seasons on average, though this vanes widely. Villages move as the soil fertility falls, and communities sometimes return in a cycle ot about 20 years; some have never returned within living memory.
3.26       Interviews with farmers and observations revealed the main crops to be maize, sorghum and beans, with chillies for spicing food, and sesame and niger seed (neug) for oil. Other crops grown include millet, yams, okra, Kcrkedeh. pumpkins, gourds, and some cotton and dark tobacco. Mango trees are common, and some citrus trees were seen.
3.27       Virtually all cultivations are carried out by hand-hoe* a light tool with a cutting edge of about ^Omm. Measurement of several sample plots indicated a cultivated area of about one half hectare per family. The few families still owning cattle are able to manage up to 2l/iha. Sometimes, no cultivations are made, and seeds are planted with a planting stick. The total estimated land cultivated annually with the project area is therefore in the order of 500ha.
3 28 Crop Production. The main crops of maize and sorghum are planted in single stand
or mixed with beans, and maybe other crops. Although some excellent cobs of maize were seen, the sorghum grains were small and gritty; yields appear to be some 500-700 kg per haT plus, say, 70 kg per ha of beans from the mixed crop. No artificial fertilizers or agricultural chemicals are known to have been used in the area: indeed, of a consignment of 100 tonnes fertilizer brought to Asosa some years ago, 90 tonnes remains in the MOA’s store.
3.29       Livestock Production. Once predominantly a livestock area, the cattle population has been reduced to a low level. Discussions with farmers revealed that the cattle started to die off from a new disease about 15 years ago. which is about the time when the tsetse fly began to come into south west Ethiopia. A natural response (reflected in the reaction of farmers at Angar-Gurin after a recent prophylaxis trials had broken down) would have been for fanners to sell off most of their cattle once trypanosomiasis began to take a hold. Numbers now appear to be reduced to about one sixth of the traditional levels, and the remaining animals arc kept in small herds; they arc rarely used for land cultivation now. Conditions varied across the area though the reason remains obscure,; adults are about 250 kg liveweight. Trypanosoma vivax and TXongolense have both been identified from blood samples, and other diseases known to exist in the area are rhinderpest, anthrax and bluck- quarter. Parasitic worms are common; also digestive infections in young stock.Page 14
3.30       Land Tenure. Since the passing of land reform legislation in 1976 at least six pea* sants1 associations have been established in the area; all farmers at least nominally belong to one. In law. the authority to appoint farming cultivation rights co individuals is vested in the PA. However, there is so little pressure on the land (and none from surrounding areas) that cultivators have been able to continue fanning according io their traditional habits and rights, and the law has not been invoked.
3.31        Socio-economic Conditions. The inhabitants are partly of indigenous origin (Fakumkumi and partly descendants of immigrants from Sudan (Wntawits) during the 18th and 19th centuries. The main common language is Wotawit, but many speak Arabic, The people are now referred to as Jebelawi, and are generally iriuslims. The village survey showed only 80-85% hut occupancy, small groups (2.5 - 3,9 persons per hut) and a tow average of 1.5 children per household. Men seem to average 1.5 wives, and each wife has her own hut.
3.32       Food production is below subsistence. The estimated half hectare per family will provide only about 100kg food grains per person. When the area was visited in March (planting season May/June), virtually all the grain stores were empty. As agriculturalists, the people are not very active, but some work as migrant labour in Sudan, others practice a cross-border trade, Gold and coffee are smuggled out of the area, and food, cooking oil and clothing is brought back. Il has not been possible to estimate the quantity or value of this trade indeed much (or most) of it originates from elsewhere in the border area. However, there is little evidence of significant consumer goods. Food changes hands in very small quantities, and quantities and prices are sometimes difficult to relate to market values in Asosa, Levels of nut* ntion arc quite evidently inadequate. What cannot be grown or purchased is made from forest products such as roots and honey, or purchased with cash earned selling honey and firewood in Asosa.
333 Producer Prices in the area have little significance for a major project, as so little produce is traded at present. Information from farmers indicated a 200 - 300% differential between post-harvest prices, and prices before harvest. At the extreme range, farmers sold mai2e for as little as Birr 7/qt (100 kg) but boughtit for Birr 43/qt. In .Asos a in August 1977, EPrD, collecting data for the RRC, reported the price of maize on the open market at Birr 55/qk Kebele 01 in Asosa reported open market prices for maize increasing steadily through 1980 from Birr 30/qt in January to Birr 36/qf in August. Spot checks were carried out within
a few days in Kurmuk, Asosa and Nekemte. These open market prices were subject to wide variation, and generally referred to small quantities. As such, they do not in themselves constitute a sufficient basis for price projections. The values were:
Open .Market AMC Nekemte(W/S) AMC (ex-farm) Price
, ........................... Birr/100 kg
Maize (State Farm) Maize (Peasants Assn) Sorghum (State Fanns)
39
31
17
40
Sorghum (Peasants .Assn)                  50
Hancot                                               100
Sesame                                             140
22—26 33-37
—
34-42
Neug (Niger Seed)
69Page 15
334 A similar contrast between official and open market prices exists with cooking oil.
The data can only be compared at retail price level, where the official price is Birr 1.00 per litre, whereas in Asosa the price is Birr 3.50 - 4.00 per litre (ex-local press Birr 2.00 - 3.50 per litre) or Birr 2.0 per litre at rhe Sudan border.
tv, THE PROJECT OPTIONS
4.01 The broad format of the project has been set out in the rationale for its development
in Chapter II, and which concluded the need for an intensive commercially based agricultural development to exploit the land, water and power resources in the undeveloped Dabus basin, simultaneously enabling the resettlement of people from the distressed arras to provide the basic labour requirement. A long term objective would be lo encourage the settlers to take up commercial farming in their own right, whether in cooperatives, groups or as individuals.
The development would be implemented by VADA, and the operational management would he under one of the existing organizations which, in the context of the project would pro bably be the Ministry of State Farms Development (MSFD).
The .Main Constraints
4.02 The resource evaluations carried out under the study have been presented in Annexes I-VHI and Annex X. The main conclusions of the resource studies are as follows. The area
is lightly populated with a mainly pastoralist people who have not been able to adapt to the loss of their livestock. Their standard of living is very low and many are forced to leave the area to trade (mostly illegally) to obtain enough money to survive at all. Others depend upon wild forest products to make up for their inability lo grown enough food for themselves.
The climate is suited to tropical crops. However, production potential under existing con ditions is constrained by a fairly short monomodai rainy season, farmers' inability to cultivate sufficient land without tractor power, and the absence of a market for crops suited to their productive capacity. These constraints mean there is no significant cash economy, and no purchasing power to buy seed or other inputs. There is no infrastructure and no significant opportunity to make use of modem methods of production. Left to themselves, these people must remain at the edge of survival, move away, or further decline.
4.03 The soils arc clays, with inherent agricultural potential varying from adequate to medium-good. The best half of the area would, given irrigation water, grow almost any common tropical crop except swamp rice: the least good would be suitable for crops including sugar and cotton tolerant of dense days. Rainfall is adequate for medium to short season crops, but would need irrigation to take full advantage of the medium-long season crops, or perennials. The Dabus river, modified by the holding capacity of the Dabus swamp upstream can provide an un typically stable flow with sufficient capacity to irrigate 12,000-14,000 ha through Lhe critical stages of the dry season. The fall on the river is well located to provide local hydropower of up to 9MW without storage, and if the holding capacity of the swamp were developed, a bast load hydropower station producing some I00MW could be constructed.
.Although such an ampul would considerably exceed any possible requirements of the Dabus project, there is some doubt whether it would be worth carrying to Addis Ababa. However, it could provide an inexpensive local power resource for development of the far west of the region.Page 16
4.04 Development of the area would not be without problems. The land area suitable for development was originally thought to comprise 10,000^15,000 ha suitable for irrigation jnd
a further 8,000-12,000 ha suitable for rainfed agriculture. Although the gross area of sods suitable for cropping is much as anticipated in the interim report, the detailed survey and mapping work has revealed the full extent of dissection ol the terrain.
Land Area for Development
4.05 The reconnaissance survey covered 38 600 ha : the survey initially eliminated 21,700
t
ha as being unacceptably hilly, dissected or steep to have appropriate agricultural value. Pie new aerial photography covered 23,900 ha, including virtually all the land with suitable potential identified in the sods reconnaissance. Following detailed analysis of the photographs and maps, elimination of slopes exceeding 10% (rainfed) or 5% (irrigable area), streams and hills, it was found that the gross potential areas were reduced to 13.400ha( runted > and 9,300 (irrigable). Following further reductions for losses after development due to infra structure, the net potential areas were estimated at 11,400 ha (rainfed) and 7.400 ha (irrigable) (Table 4).
1
Gross area (recce soils survey) rejected after recce rejected after map analysis
Gross arable area
losses Id infrastructure, etc Net potential arable area
Rainfed
................ ha ..
38,600 (21,700) 25,210
13,390
2.010
11,380
Irrigation
38.000 29.330
9.270 1,850 7,420
4.06 Further analysis showed chat it would be unprofitable to develop the right bank 
for rainfed farming unless there was other justification for building the access. Also, the
cost of supplying irrigation water to the area north of Shaga would be increased unacceptably by I he greater conveyance distances and pumping costs. These two areas would therefore have to he eliminated from their respective schemes. This would reduce the rainfed scheme to
"•>,000 ha, but the inclusion of the rainfed production north of Shaga would enable the mixed scheme to be increased to 10.600 ha (Table 4);
Rainfed
.............. ha .
Irrigation
Mixed scheme
right bank
1,980
left bank
— 
north of Shaga
3,100
5,540
—
Total
5,540
5,080
Rainfed only scheme
right bank
—
—
left bank
3.480
_
north of Shags
5,540
—
Total
9.020
-
Inception report: June 1980Page 17
System of Irrigation Water Supply
4 07 The irrigation system originally identified in the USBR report comprised a relatively 
low cost offtake up-stream with water brought down the right bank, partly siphoned across 
to the left hank to feed both the left and right bank areas of the project. The study has shown that this solution would not be viable for two reasons. Firstly the canal would have to cross more gullies and pass through much more rock than had been anticipated in the reconnaissance work, this would directly increase the costs, which would now have to be spread over a much reduced area. Secondly, both the micro and macro relief is more severe than had been antici pated, and surface distribution systems would be too costly. Thus, much of the benefit of the originally low cost gravity feed plan has to be discounted, and the cost of a pipe distribution system would have to be added. An alternative solution of constructing a dam nearer the pro ject using a shorter canal system was also examined, but the least cost solution under prelimin ary analysis1 proved lobe a pumped supply system.
4.08 The question of power for rhe pumps was then examined The supply of thermal
(diesel) power for a large irrigation scheme in the far west is clearly unreasonable. The choice then lies between linking the scheme to the national grid (shortly to be brought to Nekemte) through a 220 km power line, or developing the natural hydropower potential of the Dabus river fora local self-sufficiency scheme. Subsequent analysis has shown neither option to have a clear advantage over the other: the choice would therefore be made for external reasons. For the purpose of project evaluation, the self sufficiency' scheme has been adopted. A re maining option is the development of the full hydropower potential of the Dabus river as a major hydropower scheme to produce about 100MW of base load power This would open considerable prospects for regional development, but its detailed consideration is beyond the scope of this study.
The Basic Develop mem Options
4.09 The basic development options are therefore defined as:
x Scheme 1:                       a 9.000ha rainfed agricultural development bused on mechanized farming with or without parallel agro-industrial development and relying on thermal power generation for all power requirements1 2; or,
b. Scheme II:                      a mixed 5,100ha pumped irrigation scheme based on overhead water application and 5,600 ha of rainfed scheme with agro industrial development and self-sufficient hydro-power.
.Agricultural Development Options
4.10       Livestock or Tractor Power. Previous experience in the region has shown that, although it is possible to maintain small quantities of cattle healthy in the presence of try panosomiasis under the strictest veterinary supervision, protection is exceedingly difficult to maintain. It is therefore at present considered impractical to base a relatively large project on this desirable form of draught power. Once the land has been cleared and a proposed anti- trypanosomi3$is project (starting in the south west) has been made effective, it would he
1    Inception report: 1980
2    use of local hydropower would require not only the power station and its facilities but also the construction oi the Mendi Dabus road adding unacceptable capital costs to a rainfed scheme.Page IB
both desirable and useful to re-introduce cattle into the area. Moreover, This would be comple mentin' to the proposals to develop small scale commercial farming in the future. However,
the system cannot be used as the basis for a development project at present, and cultivation
by tractor power would be a necessary component.
4,11         Scheme I, The experience of the Asosa State farm has shown that a rain fed scheme based on mechanized production of the low value food crops is not viable at that distance from the major markets. Production would therefore need to be based on higher value crops, pro cessed on site to reduce transport costs. The Dabus basin would have an advantage over the Asosa scheme in that it could grow and process cotton for lint and oil. Other suitable medium high value crops would include peppers for drying and oleoresin extraction (in Addis), cotton, niger seed, and beans and maize/sorghum to feed the farm staff and to provide phyto sanitary' crop breaks.
4.12      Scheme II, The rainfed sector would adopt a similar approach to the agricultural aspects described above. The irrigated sector would have to face high costs. The most viable engineering options incorporate the cost of developing the hydropower scheme and the con struction of access, as well as the provision of a pumped and piped irrigation water distribution system. The irrigated sector would therefore need to concentrate on producing the highest value products in which the area has some natural advantage. Distance demands that bulk should be minimized and the high foreign exchange investment requires a high proportion of exportable products to recover that investment.
4.13      Under irrigation, the area would have a natural advantage in the production of ginger in marketable quantities and also for sugar cane. There is a considerable local deficit of sugar but justification of a full scale modern vacuum pan production system would be difficult
at present because of GOE’s plans to proceed with Fincha’a sugar project. The team has therefore opted for the small scale open pan sulphitation sugar manufacture process. Although a less efficient process, it is labour intensive and may be built up step by step in units of about 20Oha and would produce acceptable ''plantation while'* grades of sugar. The area would also grow good sweet grapes suitable for raisin production, and cotton for ginning locally. Another medium value crop would be mareko red peppers, a variety suitable for oleoresin extraction after bulk reduction by sun drying, The warmer climate and provision of irrigation would provide a nature! advantage in early harvest for pan of the crop: this would he welcomed in the Addis factory to both expand and regulate the throughput.
4.14      The mixed irrigation scheme would therefore comply with all the main features of present government policy for the agricultural development of the valleys.
V. THE PROJECT AND ITS IMPLEMENTATION
A„ PROJECT DESCRIPTION
5.01 The GOE has a policy to develop the lightly populated valleys of Ethiopia which em braces rese ttlement and equitable regional development with the exploitation of under utilized resources and the generation Of foreign exchange. The broad rationale of the project hasPage 19
been discussed tn Chapter II. Constraints to the development of the area and the main opportunities to remove them have been outlined in Chapter IV. This chapter provides a more detailed description of the project works and activities and a definition of the costs and phasing.
5.02 The Valleys Agricultural Development Authority has the lead responsibility for upgrading the investigations on a series of priority projects, and for arranging finance and supervising their implementation. Within the programme, the present project is in an advanced stage of preparation. It would form a major new centre tn an undeveloped region, and it would be aimed at the establishment of cash crops and agro-industry based on a local hydropower scheme, It would shorten the access by road to the Sudan border, create new roads in the area, housing and general infrastructure. It would develop commercial farming, and in doing so. would train many families in modem agricultural techniques. Advanced training and experience in the production of high value crops, processing and marketing would be induced through a technical assistance programme lasting for the duration of the project.
5.03 Over a period of five years the project would develop the irrigation of 5,100 ha
(Farm A)J for the production of cotton, grape vines for raisin production, mareko peppers for processing, and sugar cane. During the same period, it would develop 5.500 hx for rain- fed agriculture (Farm Bl to supply food lor the increased population, oil seeds and also in clude rainfed cotton and prppeis. Processing facilities would be installed for ginning cotton, expelling oil from cotton seed, sugar manufacture and for preparing raisins for the inter national market. Production would, at least initially be completely mechanised. Accom modation for the project staff and farm labourers would be provided, together with the general administrative structures, communications, stores and factories, workshops and residential facilities The project would establish a new frontier of development in the region and establish a hitherto unavailable data base for general use in the neighbouring area,
The project would be administered by VADA and the operational management would he
by lhe Ministry of State Farm Development through its commercial enterprises.
B. DETAILED FEATURES lANNEX IX^
Pre-construction Works 
5.04 Internationally financed projects are frequently restricted to a five-year development period. Because the hydropower component would require a geotechnical, and design study before final (international) acceptance of the project, there would be a built in delay of about three years before the construction contracts could be awarded. If the associated investment tn studies and access roads were included in a five year project, there would be insufficient time left to complete lhe project itself. These features have therefore been included in the project as pre-start up costs, as this will [hen enable the project to be developed over a reason able period. Funding couid be requested on a pre-project investment basis. The necessary work would be the construction of the access road to the hydropower site for lhe geotechnical investigations. Other works would also be required in advance of the project, A piloi farm
1 For reference purposes the mixed irrigated and rainfed scheme has been sub-divided into two farms - Farm 'A1 (sub-divided into three units Al, A2 and A3) for the irrigated sector and Farm lB’ (sub-divided into three units Bl „ B2 and B3) from the rainfed area.Page 20
would be established as soon as possible, and, following the initial appraisal, the final project designs and tender documents would need to be prepared for competitive tender.
5.05 HydropowtT Access Road. Access to the hydropower site would be from Hie right
bank. In determining the route for this access the advantages of combining a direct road
link from the project area and lhe hydropower site to Mendi outweighed the alternative of
an extension of the existing Asosa-Dabus road to the hydropower site. The former route
would reduce the Mendi-Dabus road distance by about 100km. Two possible routes from Mendi to the project area were reconnoitered, both of appreciably the same length. The selected route starts 5km west of Mendi and follows an existing track lor 10km. It then con tinues northwestwards along a broad ridge for some 15km before heading west for a further
10km to the hydropower site, the total length being 35kml, A 15 km link from lhe ridge would lead down to the project area.
5.06 A 20 ha pilot farm should be established as soon as possible. GOE has agreed a locat ion (near the Dabus camp) close to the existing access from Asosa. MSFD would supply the irrigation set which is available from an existing farm.
5-07 The remaining (major) components would include the geotechnical studies of the hydropower site, and the preparation of designs and tender documents for the project, including lhe hydropower station
General Works and Facilities for (he Project
5.08 Access and Internal Roads - Existing access to the project area is along a 45 km all- weather road from Asosa, Dre proposed 6m wide surfaced all-weather road to be built direct from Mendi would reduce the distance from Addis Ababa by 100km.
5.09 Access within the project area would be provided by a network of all-weather and
farm access roads. Surfaced all-weather roads would connect each unit farm centre and the major river pump station sites. Unsurfaced farm access roads would provide access to the remaining areas for crop management and extraction purposes Where possible, rhe road alignments would follow the ridges of interfluves Io minimise the drainage huyard.
5.10 The all-weather roads would have reinforced concrete bridge crossings .it major drainage lines and culvert crossings al minor drainage courses. Concrete drifts (fords), founded on rock, would be provided at drainage courses on farm access roads. Substantial Hows in these st re am courses only occur for limited periods and it is anticipated that drifts would be impassable for no more than a few days at a tune.
5.1 1 Apart from the completion of tire 15 4 km to lhe Mends link road, 52 kms of all- weather roads and 123 km of larm access roads would be required. Overall. I 1 bridges and major drifts, and 17 minor drifts, culverts and structures would be constructed-
1 For the pre-start up investment, the road from Mendi junction to the HEP station only would be constructed.Page 21
5.12 A road bridge across the Dabus river is proposed to link the new access road to the
left bank area of the project It would comprise six 15m spans to cross [he main channel and one 15m span to cross aside channel. The brtdgc structure would comprise reinforced concrete deck and beams supported on masonry piers founded on bedrock.
General infrastructure
5.15      Project Buddings Within the constraint of the limits imposed hy the irrigable area, farms have been located along the tine of the ndges. There is 3 good central location for the project headquarters (Figure 2) which would also comprise the Farm A centre (irrigated). For management purposes, each farm has been sub-divided into three units: the best situated unit on each farm would be expanded into the farm centre. Each administrative centre would have its own associated village to accommodate the appropriate staff and labour (para. 5,17). All construction would be part of the project, established by contract,
5.14 The basic construction for permanent office accommodation would be concrete block walls, with a concrete base and a corrugated sheet roof. Stores would he steel frame, clad and roofed with corrugated sheeting. Low cost buildings (briefing rooms, tractor sheds and cotton stores) would be of eucalyptus poles, with cladding and concrete floors as appro priate.
5.! 5 The infrastructural requirements are listed below:-
Project Centre
Office accommodation (administrative; Office accommodation (technical) Office accommodation (technical assistance) Maintenance units and project workshop General store
Inputs store
Food store 1J number)
Training centre
Guest house
Project (State) Farms (Farms A and Bl
Office accommodation (administrative) Irrigation office (Farm 'A’ only)
Irrigation store (Farm A* only)
Pest Controls materials store
Area m3
114
124
72
500
30
670
670 (each)
90
170
each
32
8
30
30
Trials unit materials store
12
Tractor shed
7
Briefing room
48
General store
30Pap? 22
Farm units (Units Al. A2. A3: Bl. B2 and B3I
each
Office accommodation (administration)
Inputs store
Cotton store
Unit workshop and tractor sheds
34 no
200
224
Mill house
72
5.16       Suitable facilities have been allowed lor the plant, services, workshops, stores and staff accommodation for (he agro-industrial components.
5 17 Accommodation would need to be provided for all project staff ( and permanent and casual labour) except for the few posts which could reasonably be recruited locally. Five main types of house have been planned. ‘A’ type houses accommodating the management staff;
type the senior professional staff;*C' type the junior professional and office staff: type the supervisory field staff: and ‘E’ type (tukuls) the settled labour. Casual labour would be provided with shelter and sanitation facilities for their short stay on (he project.
5.18       Project housing, type A to D inclusive, have concrete floors, concrete block walls and corrugated sheet roofing. Type E housing for settled labour would be traditional ‘tukuls’ with mud walls reinforced by bamboo and grassed roofs. Housing for casual labour w ould be
r
in smaller shelters made from mud walls and having grassed roofs.
5.19       Senices Potable water would be provided from slow sand filters and pumped into overhead storage reservoirs at each farm centre to facilitate gravity distribution. Sewerage from the project staff housing would be contained in septic tanks. Casual labour shelters would be provided with pit latrines. Power would be provided to each farm unit from a 1 5 kV field
line. Step-down transformers would convert the power to meet the required voltages for domestic lighting, workshop and processing plant needs.
5.20       Hydro-electric power The annual project power requirement at full development is estimated at 22 GWhr. The power demand varies considerably during the year from an estimated peak of 8.7 MW in November to a minimum monthly of 1MW in August and Sept ember.
5.21       It is proposed that a project hydropower station is built at the site on the Dabus river originally identified by the USBR study, some 22km upstream of the project area (Figure 4). The station would comprise three 3MW generating sets.
5.22       The potential power output of (he 9MW station at 100% load factor is estimated at 79 GWhr/year. There is therefore considerable surplus pow cr available for export to other
r
outside users.Page 23
5.23      Land Development The soil type and density of bush or tree cover are closely related. Sample tree counts from each of the major soil types were used to provide a basis for cost estimates for land clearing:
Tree Counts on Sample Areas
Soil type
Trec Size by Girth
20Q-5 00mm
500-800mm
over 800tnm
.. .numbers per ha ... ,
Red
1.169
167
60
Grey
125
53
17
5.24     As most of the trees are less than 500mm girth the land clearing task is light and the majority of the work would be undertaken by labour gangs. Heavy plant would only be required to finally grub out and windrow remaining debris prior to the iirst cultivation. Salvaged timber would be stored for firewood in the reserve ureas bordering the gullies. State Farms (WADC) has expressed a strong preference that clearing should be carried our as a fully mechanized operation. It is emphasised that a cost contingency of 25% has been allowed, which should cover the additional cost in the event that handwork threatened to delay the project.
5.25      Land Levelling as not considered necessary for thE sprinkler irrigated areas. Levelling would he required for the surface irrigated grapevine areas with the initial earthmoving being carried out by machinery and the contour furrows and basins being prepared by hand labour.
5,26      Soil Conservation measures in the form of broad-based (enacts would be provided throughout the project area. Drainage lines and incipient gullies would be left untouched including a strip of vegetation from 30 to 50m wide on either side. Control on the occur* rence of burning in these areas would have to be exercised. Land steeper than 10% and having shallow soils would be planted with eucalyptus or similar type of tree to assist in erosion con trol and proride a future source of firewood.
5.27      Flood Protection Bunds alongside the Dabus were not considered necessary due to the limited area susceptible to inundation. However, flood banks to withstand a 1 in 200 year return period flood would be necessary at the river pump station installations.
5.28      Irrigation Systems Two systems comprising a net 5,080 ha are envisaged. Grape vines would be established in one block of 1.400 ha along the western end of the main ridge between the Shaga and Dabus rivers. These would be irrigated by a modified furrow system with a gravity fed water supply through contour canals, and a piped distribution network to gated outlets. Water would be pumped from the Dabus river into a night storage reservoir which would supply the gravity system. Works would comprise the construction of the reservoir of 75,OOOm  capacity, supplied through 5.1 km of buried main, some 3,7 km of
J
contour canals. 53.4 km of buned pipe mains and 1.8km of gated pipe.Page 24
5.29        The remaining 3.680 ha net of irrigable land would be irrigated by an overhead sprinkler system using hand moved laterals and designed to a basic 14 day, 16 hour cycle. A layout was devised based on a small, 168m x 336m (5.6 ha), field module to utilise as much of the arable land as possible. A 24 x 24m sprinkler spacing is proposed Water would be supplied to each field module through a hydrant from the underground main. The system would comprise 653 sprinkler field modules, together with 175 km of buried mains
5.30        The irrigation system would be supplied by six main river pump stations com- pnstng a total of 19 low head axial flow electric powered pumps installed on the river banks and discharging into sedimentation basins. The combined capacity of these units is 5.DOO lit/sec for a required capacity of 4,240 lit sec. Banks of high pressure centrifugal pumps. 59 units in all, with a combined capacity of 4,650 lit- sec would feed water into 22 buried mains. A further 7 booster pump units on the sprinkler mains (rated at 420 lit sec in total) and 7 low head centrifugal pump units (rated at 500 lit/scc in total! serving 3 buried mains in the grape irrigation area would be required.
5.31     The engineering design catena are summarised in Annex IX Appendix I
.Agricultural Equipment
5 32 Agricultural equipment requirements are straight forward. No especially complex machinery would be required, the most sophisticated being for the rotovation of land for irrigated crops of peppers and ginger. The peak requirement occurs during land preparation and cultivations which coincide for several crops in the second half of May. The late May requirement is considerably greater than for other months and a 12-hour effective working day has been assumed for this short period. Assuming an effort would be made to ensure the maximum number operational machines available during this period, tractor requirement has been based on an allowance of 8% out of commission pending major repairs or break downs. A fleet of I I x 70-90 HP wheeled tractors would be required. The calculation
has been made on the basis that the cotton spraying programme would be done by air, and that most of the other spraying work would be done by hand. Basic tractor operations in cluding crop transport and maize shelling would require 770 hours per tractor per year, and
the following equipment:
Units
7Q-90 HP wheeled tractors
I 14
Rot ova tors
18
Ploughs
44
Harrows
20
Ridge rs
23
Rippers
2
Planters
28:
Cultivators
12
Lifters
3
Trailers (all types)
47
Maize Sheik rs
10
Rotary Cutters
20
Stationary Threshers
7Page 25
In addition to the above, a number of other machines and miscellaneous equipment would be required, in which is included two direct drive agricultural tracklayers, six grinder/ hammer miU seis, hand tools and hand sprayers (both motorised for the vine area, and conventional knapsack type).
Agricultural Credit
5 J 3 .Agricultural credit would be provided by the .Agricultural and Indus trial Develop ment Bank for the State Farms Enterprise.
C. AGRO-IN DUST RIAL PLANT
5.34      Cotton would be ginned on rite. Ginnery machinery has been based on 33% lint from cotton grade MS I I-16 Acala type at 12% moisture with a production of 2.500
tonnes lint per season. A 10-hour average day has been taken, allowing for additional shitts in emergency The basic unit would comprise 2 saw gins (5 bales x 500 lb per hour), with balanced extractor cleaner-feeders and a 10-bale per hour press ginning standard 26-28
lb/ft3 density this producing 20 tonnes/day of
7
lint. Power requirement would be 00 HP
Buddings and stores would be prefabricated steel joist and corrugated sheet, and would include offices, a workshop and storage for both in-coming seed cotton and hales awaiting shipment. Housing for the permanent staff would be provided at the project scale and shelter would be provided for the season*il labour.
5.35      Cottonseed Oil Seed would also be processed locally using a simple 20-tonne per day ex pc Iler press on a three shift basis through the season. Cotton seed would be bagged and stored under tarpaulins. Machinery would comprise a de-linter, roller and press, and the oil would be neutralised and bleached so that it could be used locally. Buildings, accommodat ion, offices and tankage on site would be provided.
5,36      Sugar Three small scale sugar cane processing plants would be included in the project. A traditional Indian system, but using modem cane crushers to gain a high milling efficiency, is proposed. The open pan sulphilation (OPS) process is used for clarification instead of the expensive and large scale vacuum pan. The initial equipment would need to be purchased from India, but quite a lot could be manufactured locally if the system were to be repeated. Each plant would require a six-roller mill, sulphiiarion tank, boiling pans, settling tank, filter, crystallisers and centrifuges. Evaporation would be carried out in wet bagasse furnaces which should provide virtually ail fuel requirements. Power requirement, mainly for the mill, but also for the knives, carrier and other facilities, is about 125HP for each 80 ted mill. Apart from the plant itself, the necessary buildings, stores and houses would be provided.
537 The OPS system is the result of much research to combine the efficiency of large scale modern plant with traditional equipment to produce a more easily managed and small scale unit. It is well proven, and in extensive use in the Indian sub-continent.Page 26
5.3S Fruit Cleaning and Drying To obtain good world market prices, a modem plant
would be required for the preparation of raisins for export. The machinery' would provide for the removal of sand, stones, small stalks and cap stems, while a washing process would be required for the removal of surface dirt, insecticides and sugaring. The product would be finally dned by spinning
D PROJECT PHASING (FIGURE 3l
5,39 Project phasing falls into two periods, the first senes of activities are the pre-start
up, or pre-construction activities necessary for the reasons given in para 5.04 above. The second phase of construction would commence alter final appraisal of the project following completion of the geotechnical studies for the hydro-electric power site.
Pre-construction Activities 
5.40 The programme is based on a decision by September 1981, by GOE to proceed
with I he next stage of the study, the negotiation with a funding agency for appraisal and finance. Nine months has been allowed for this. but it has been assumed that GOE would be prepared to fund the intermediate activities itself, on the basis that the investment would be recovered under the eventual loan as pre-project funding. It has therefore been assumed that design and tender of the HEP access road would go ahead during 1981, under GOE’s own resources. Construction of this road would commence at the end of the rains in 1983, and the geotechnical investigations on the hydro-electric power (HEP) site would begin as soon as the rough access had been cut. The field work for the geotechnical investigations would need to be substantially completed before June 1983 when the rains could severely restrict such work. The report itself would be prepared after this.
5.4 E The designs and tender documents Tor the project would commence in 1983 before completion of the geotechnical studies, but could not be finalised until the results of these studies were available. Final designs would be finished by early 1984, and the tenders returned m June 1984.
The Development Period
5.4 2 Contracts could be awarded by end July 1984. Allowing a three month mobilisa tion period’, construction could commence by December 1984. 1985 has been taken as year I of this project.
5.43       The first activities would be the ordering of the HEP equipment, which follow immediately on award of contracts. The first construction activities would be the comple tion of the Mtndi link road, and the start of the foundation work on the Dabus Bridge and the HEP station. Work would also start simultaneously on land clearing and the project infrastructure.
1 Covering the latter part ol the wet season.Page 27
5.44        Agricultural development would commence with the planting of some 5OOha of maize in the first season. Rain fed crops would be developed initially, with processing of cotton required by the end of year 2. The vine nursery (35 ha) would also be established during the first year under ramfed conditions.
5.45       The HEP equipment would be delivered towards the end of year 1(15 months)
for installation, and power supply would commence by the end of year 2. This would
enable irrigation to commence during the dry season of 1986/87. The installation of the surface irrigation system would be completed by the end of 1987. and land development by the end of 1989.
E. PROJECTCOSTS
Capital Cosis
5.46       Project cost estimates have been prepared on the basis that works would be earned out by national contractorts) with supervision by an international firm of consulting
engineers under the general management of the Valleys Agricultural Development
Authority. Civil works have been partly based on recent contract values for a range of similar activities in Ethiopia, These have been upgraded where appropriate to rake account of inflation, but current examples have been made available for most types o!‘ work. Local quotations have varied quite significantly, and in such cases, average values have been used and/or the unit rates built up from basic costs. It has been assumed that the national contractor would have sufficient plant, at least to commence the work. Sufficient allow
ance of foreign exchange has been built into the contractors rates to allow far the replace ment of worn out machinery. Al! costs have been brought up to mid-1980/81 levels.
5,47       Virtually all plant, machinery and equipment, would be imported. It has been necessary to estimate the major investment in the hydropower plant from experience else where. but formost other major items, quotationshave been received from manufacturers. The largest single component is the irrigation equipment. Three quotes have been examined, and the highest estimate taken. However, two lower quotes (out of three) gave confidence to use lower estimates for the important mam pipe costs. Budgeting quotations have also been used as the basis for the cotton ginnery equipment, the oil mills and the fruit preparation line. I 977 estimates for the OPS sugar factory were updated with professional
.id vice.
5.48       Physical contingencies have been allowed on ail items. For the majority of components. 10% capital and operating costs has been used. For two components this has been increased because of particular uncertainty over measured quantities: The Mendi- Dabus access road has been charged with a 20% contingency and the land clearance with 25%, 5% has been allowed for design and supervision, and an average of 8% for the agro industrial plant.Page 28
Component
PROJ ECT CAPITAL COSTS1
Casts
Total         Local         Foreign 
............ Birr millions,..............
Foreign Exchange US millions3
Pre-construction
7.8
3.8
4.0
51
1.9
Finance
2.2
2.2
-
-
-
Construction phase
Civil works
- access and Dabus bridge
14.7
8.0
6.7
46
3.2
- land development
10.7
6.5
4.2
39
2.0
- irrigation systems
44 0
17.6
26.4
60
12.8
- infrastructure, accommodation
18 9
11.3
7,6
40
3.7
- hydropower
21.8
4.8
17.0
78
8.2
- design and supervision
11.0
2.2
8.8
80
4.3
Vehicles and planl
13.1
1.3
11.8
90
57
Technical assistance
5.5
0.9
4.6
85
■» ?
Ari ■ *i
Agio-industry
11.9
39
8.0
67
3.9
Sub-total
161.7
63.1
98.6
61
47.6
Physical contingencies
16.3
6.6
9.6
59
4.6
Total (1980/81 prices!
178.0
69.0
109.0
61
52.7
Price contingencies'3
136.7
67.0
69.7
51
33.7
Total Cost Estimate
314.7
136.0
178.7
57
86,4
Source : Table 5
See Annex XIV
Converted at Birr 2.07 = USS 1 00
Corn pounded annually ar 10% for offshore costs and 14% for local costsPage 29
5.49      Pnce contingencies have been calculated on an estimated 10% p.a. international inflation and 14% p.a. for local costs.
5.50      Project Capital Cost Estimates are summarised in the cable on the previous page. Tlie project, including physical contingencies, is valued at Birr 178 millions 1 (1980.81 prices) with a foreign exchange component (FEC) of 61% (US$52.7 millions). The addition of pnce contingencies raises the estimated cost to Birr 314.7 million over the project life, and the EEC to USS 86 4 millions.
Pre-construction Costs • Disbursements Required2 1982            19K3            1984            Total
Millions of Bin
Investments
4.4
1.7 
0.6
6.7
Contingencies
0.8
0.2
0.1
Sub-Total
5.2
1.9
0.2
1.1
7.8
Capitalisation (Finance)
1.2
0.4
0.1
2.2
Total at pre
construction
6.9
2.3
0.5
10.0
Local
3.4
22
0.4
6,0
FEC (51%)
3.5
1.1
0.4
4,0
Project - Disbursements Required3
(I)
1985
(2)
1986
(3)
1987
(4)
1988
(5)
1989 Total
Foreign Exchange
57.fi
52.7
38.1
24.5
5.8
178.7
Total
103.4
88.1
70.0
43.9
94
314.7
Millions of Birr .. +, ...........—  •......... * ■
Local currency          45.8             36.4             31.9              19.4               3.6           136.0
5.51      In terms of the estimated cost in 1980/81 prices the major single component would be in the complete irrigation system at Birr 44 millions (27%), followed by the hydro electric power station at Birr 21.8 millions (13%); access and internal roads at Birr 19.8 millions (12%); infrastructure and accommodation at Birr 18.9 millions (12%); agro industrial development at Birr 11.9 millions (7%). Design and supervision is estimated al 6.8% and technical assistance 3.4%.
1    Including Birr 5 I millions during the pre-construction phase
2    From Table 5
1 includes pre-construction costs capitalised into year I and price contingenciesPage 30
F. FINANCING AND DISBURSEMENTS
5.52        With the overall foreign exchange requirements, including price contingencies, of US$ 86.4 millions, it is expected that GOE would seek international funding for the project. Counterpart funds in local currency would be Bin 136,0 millions, though it is possible (hat
some local costs might also be included in an international loan. The disbursements of the necessary funds have been estimated under para 5.50 above.
G PROCUREMENT
5.53       Virtually all the plant and manufactured goods required for the project would
need to be imported. The main items would comprise: the plant for the hydro-electric 
power station and the materials and equipment for its transmission; the irrigation pumps 
and pressure mains, the irrigation equipment; the agro-mdustries plant and buildings; and
the agricultural equipment, maintenance plant and vehicles. Under a multilateral financing agreement it would probably be necessary to procure these items under international competitive bidding. Other items such as structural steel, workshop tools and materials and minor electric fittings could be obtained on the basis of quotations from regular suppliers.
One aspect of imports, particularly of small items for contractors use in the construction
(eg electricals) is the definition of import procedures. In the past, these procedures have proved complex and have caused delays. It is understood that quotations from local con tractors might be reduced if it were made clear in the tender documents (hat GOE would appoint its own agency to handle the necessary authorisations and port clearances for such items.
5.54         Under  a  multilateral  financing  agreement,  it  is  probable  that  both  engineering design and supervision and the technical assistance contract would also need to go out to international competitive bidding.
5.55       The construction and land clearing would be earned out by national contractors, bidding competitively for the project works. In preparing the cost estimates, contractors'
job rates have been broken down to identify the foreign exchange component of the rates which include plant replacement. The foreign exchange requirement to do this has there
fore been included m the project costs and GOE would therefore be able to allocate the necessary foreign exchange entitlement to the contractor for replacement of his plant,
as required.
5.56        The present shortage of cement should have been overcome when the new factories come on stream by 1984. before the commencement of the project. Other basic materials such as sand, gravel and aggregate would be won locally, though at a foreign exchange cost in fuel, spares and plant replacement.Page 31 K ENVIRONMENTAL IMPACT (ANNEX IV)
5.57       The project itself would bring considerable development benefits to the area. Locally, lhe impact on the present environment would be massive Seen in the context of Wetega region as a whole, the direct impact would be small. The surrounding ureas, and neighbouring valleys of the Blue Nile's tributaries are, in lhe environmental context, similar, and no unique natural features have been identified. which would be Jost as a result of (he implementation of the project.
5.58       The amount of irrigation water abstracted from the river during the lowest flow
3
periods would be only 12-14% (2.4 out of 7.0m /sec in March, and 1.8 out of 14.0m’
1 */
1
would, for reasons given before in the report, mainly fall to the commercial corporal ions of the Ministry of Stale Farms Development (MSFDl. This responsibility would also cover the agro-industrial components1 and, under recent direction from GOE, the marketing of new
1                   though (lie direct involvement of the Ethiopian Sugar Corporation (Ministry of Industries), and the Horticultural Development Department (Ministry of Agriculture MQA), and other specialist agencies of government would also be essential.
sec in April). The three sugar processing units (about 260 tons cane per day) arc very small and would not create an effluent problem. Water requirements for other agro-industrial activities would be negligible.
5.59       In spite of the opportunities presented by the project for local employment, it is expected That there would be some negative implications for the indigenous people. This judgement is based on their reaction, first to the Hoha Settlement Scheme, where many failed to take up land offered to them under lhe scheme, but moved away (some into the Dabus basin), and secondly on their reaction to the presence of the study team during [980/81 when they showed little interest in working for wages. However, this judgement is necessarily subjective, and it is the study team’s view that the range of employment, and the facilities and services (including medical and educational) offered would encourage the more active to join in the scheme. These would be much greater and more flexible than under the settlement scheme. For those who fell unable to live with the development, there is ample space in Lhe neighbouring areas for independent resettlement, and continuation of their present way of life under near survival conditions.
VI ORGANISATION AND MANAGEMENT ( ANNEX XII)
A.   GENERAL ASPECTS
6.01 The Dabus project composes several major components which would fall under the responsibility of different mmislnes and agencies under the existing government structure. By its charter (Proclamation 118/1977), the main development responsibilities for the river valleys is given to the Valleys Agricultural Development Authority (VADA), within the Ministry  of Mines, Energy and Water Resources (MMEWR). The agricultural developmentPage 32
products. The marketing of traditional products, such as food grains, oil and oil seeds and sugar would be undertaken by existing agencies. The hydropower component would require the participation of the Ethiopian Electric Light and Power Authority (EELPA), also within
the MMEWR.
6.02 These are the main agencies which would be directly concerned, but many others would also need to be involved both in the construction phase, and in the operation of the scheme. During the construction phase, the Ministry oi Finance would need to involve both the Commercial Bank of Ethiopia (foreign exchange dealings) and the Agricultural and Industrial Development Bank idevelopment credit for contractor* and for the state farm's operations). Port clearances, transport and fuel supplies would involve rhe appropriate ministries and departments.
6,03 During the operational development, aparl from health and education, numbers of
staff would need to be recruited from existing organisations through the Civil Service Commission, and the specialised agencies indicated above would be required to assist with the technical implementation.
B. SPECIFIC ASPECTS
6.04 Overall Management. VADA would he the main executing agency for the project,
and would be responsible to the GQE through the Supreme Council for the negotiation of finance and the management of the project. VADA would be responsible to a supervisory board chaired by a nominee of the Supreme Council < probably either the Head; Mines, Energy and Water Resources, or the Head: Agricultural Department or one of their
deputies), and comprising senior executives from the main ministries and agencies concerned directly with the implementation (MSEC, EELPA. MO A, Ministry of Finance. Ministry of Industries, and the Civil Service Commission I.
6.05 Finance. Initially, funds would be channelled through VADA, which would also
be responsible to the Ministry of Finance for the recovery of the loan. Having no funds of its own (other (han its budget allocation), it would be necessary for VADA to recover as income rhe amortization of the loans. These loans would be made available by the Ministry of Finance in national currency, but would provide for access to foreign exchange to make payment for the goods and services purchased from abroad. Loan recovery' would be made through a land development charge, which would have to be met by the agency responsible for the agricultural and agro-industrial activities.
6,06 Operational Management of the Scheme. The main beneficiary of the project facilities would be rhe MSFD’s Western Agricultural Development Corporation (WADC). Although the WADC has considerable experience in farming in the far west, ils rainfed farm near Asosa experienced problems which made it react cautiously to proposals for the Dabus project. Although MSFD has irrigation schemes elsewhere in the country , WADC' presently has none, and it would be necessary to transfer some experienced staff from these areas. However, there arc almost no staff with first hand knowledge of overhead irrigation, andPage 33
few with experience In commercial production of the crops proposed. It would therefore
be necessary to provide technical assistance from both national < specialists) and interna tional sources (para 6J 51 In rhe operation of the project, and the associated responsibility of Finding the income to repay the cast of the project, WADC would need rhe active assistance, cooperation and support of the other agencies involved. This would particularly be true if policy decisions regarding product values were to fall out of line with production costs.
6.07 A supplementary development to the management of the scheme would be tor
WADC to let out parts of The project either on management contract or on a direct invest’ merit basis. Although both alternatives are practical, there is too Little known about the conditions which would govern external investment of this nature. Certainly private
investors would require a detailed profit analysis of the relevant enterprise, and would require some assurances regarding costs, prices, input availability and a good deal of freedom in (he management of labour and resources. Since activities of this nature would be a new policy development, no quick solutions are likely.
6.0« Hand-over of Land. Contractual agreements would need to be drawn up regarding
the hand-over of land from VADA to WADC on completion of sections of the project.
Such agreements should cover the phasing of development, the water availability, parallel infrastructure and agro-industrial activity, and the provision of housing.
Projeci Offices and Staffing
6.09 It is anticipated that VADA would supply the Executive Project Director from
staff, and that he would operate out of VADA's office in Addis Ababa with the dose
support of a senior co-ordinator attached by MSFD. VADA would recruit a full time
project manager for the duration of the project, who would be supported by a higher state farm manager from WADC On completion of the project, the place of the project manager would be taken by WADC's enterprise development general manager, and the executive director's post would lapse.
6.10       During the project, VADA would supply the counterpart professional staff from budget. The counterpart team would require some six engineers, two surveyors and two draughtsmen on site drawn from VADA staff, and work directly with the consulting engineers.
6.11       Organisation of the agricultural production would follow the pattern already established on other state farms, although the supporting services would need to be stronger in keeping with the more complex nature of the project. Ln particular, technical assistance would be provided to assist with the production, processing and marketing of the produce, and also with machinery maintenance. The mechanisation and vehicle allocation would be greater to facilitate timely cultivations and supervision, and a substantial workshop is included.
6.12       It is anticipated that a new Enterprise would be created to manage the project. Under the enterprise would be the farms and the agro-industrial development. In keepingPage 34
with the cunent pattern, two farms would be required. Farm 'A would comprise the 5,100 ha irrigation area, and Farm ‘B* would comprise the 5,5Q0ha rainfed area. These would both be sub-divided into three farm units, each with its own unit manager The farms would fulfill the planning, administrative and supervisory roles, whereas the units would earn1 the labour, tractor driver force, and would comprise the six main settlement areas. Except lor the irrigation unit based on Farm *A\ technical assistance would be provided irom the project HQ. Each of the agro-industrial units would have its own manager, responsible to the state farms enterprise manager, and have its own allocation ol staff housing, workshops and vehicles.
6.13       The project workshop is a feature of critical importance. It would undertake most repairs for the vehicles, agricultural machinery and equipment, and for the irrigation pumps and equipment It would be located as part of the project HQ and be the responsibility of
a lull time workshop manager. Minor workshops would be located on each of the units, but would be expected lo carry out only routine maintenance and minor repairs.
6.14       Social Infrastructure. The project would justify the construction of a health centre (40 beds) at the project HQ, and other health stations located at the farm centres. These would be constructed to the ministry standards and would be staffed by the Ministry of Health. The capital cost is included in the project. Similarly, schools would be included, though the Ministry  of Education would be expected lo provide the staff.
1
Technical Assistance
6.15       In view of th? new techniques of land use, the critical mechanisation component, and the specialist nature of some of the crops anticipated, a strong technical assistance (TA) component is envisaged. This TA team would act as counterparts and specialist advisers to the national team and would be based on site.The team proposed would comprise a leader and co-ordinator (5 years), a cotton production adviser/entomologist (3Vi yearsi. a workshop trainer (4 years) a mechanical and electrical engineer (2 years I and an irrigation engineer (2 years). In addition to this basic team of five short term inputs would be included for other specialists: crop specialists particularly for vines, raisin production, and ginger production and marketing, a marketing adviser, and □ monitoring and evaluation specialist, totalling a Further six man years. The inputs schedule for I he TA team is given in Table 10.
Training
6 16 During the development phase of the project it would be appropriate to draw in some of the experienced Ethiopian engineers from on-going projects (Annex XU), These could themselves undertake the training of the majority of the counterpart staff, who could be appointed from comparatively recent graduates. These Eraining activities could be con centrated on the practical work ol surveying and mechanical engineering. Development of managerial and organisational functions would be acquired through experience in "line" positions, working under the senior Ethiopian staff and working closely with the internationally recruited staff.Page 35
6.17 During the operational phase, the agricultural .ippointements would be Irom
WADC staff. These would be closely supported by rhe technical assistance team, which would he charged with the development of the organisational andtcchnical qualities ot their counterparts.
6. J 8 The counterparts themselves would be responsible for extending their knowledge of the organisational and practical nature of their jobs and their subordinates. These activities would be coordinated by the projects Training Officer, who would be assigned durtng the first year, and remain full time on the project's staff
VII PRODUCTION. MARKETING AND FINANCIAL RESULTS
A. AGRICULTURAL DEVELOPMENT
Development of the ?krea
7.01 The present situation regarding crop production has been discussed m Chapter
III. In the team's view it is likely that many of the indigenous population would wish to migrate to new areas in the region* rather than participate in the project. There arc pre* cedents for this. There is no reason to suppose that existing agricultural practices would be spontaneously improved in the foreseeable future in this area, which, without intervention from rhe outside, is likely to remain depressed. It is therefore likely that no significant present production would be lost as a result of the project. For the purposes of measuring the incremental benefits of the project, present production is therefore ignored, 1
7.02 It is programmed to develop both the irrigated area (Farm 'A') and the rainfed area (Farm B') simultaneously. Initially, the irrigation area would be developed under rainfed conditions to start a small grapevine nursery in year 1. to transplant the first vine plantsand to plant some cotton in year 2, Thereafter, development would proceed under irrigation until year 6, by when the first plantings would be completed. On Farm B' a first crop of maize is planned for year 1. Tie progressive development of the area would be completed by year 4.
Cumulative Development of Net Cropped Areas
Year 1
Year 2
Year 3
Year 4
Year 5
Year 6
........... ha
Farm 'A1
35
885
2.215
3.565
4,930
5.080
Farm B'
480
2,325
4,045
5.540
5.540
5,540
Total
515
3,210
6,250
9.105
10,470
10,620
...............
...........%
Completion
5
30
59
86
98
100
Source; Tabic 6
1  Annex XII. para 71. However, project management, (he project training Officer and the local administration should encourage die participation of the indigenous people in the project us tuny as possibleP> re .16
- 03 Crop * wkh hrw Swn pn^drd c*fl ibr b*w< of experience m Ethiopia, research at focalicm crkrani te the donate rod sktilrn. rod on the consultant** experience in isniiiU/ itrw riicwhrrt ta thr wvHJ Thw have hern diKiiwd in Annex X and arc ottBawUrd brlc*
1 irM Projrcttom it Full Drrelopmmi
Irrigated
Yield              Trmc to
Ram fed
VicW Time to
thi
develop
yean
l ha
develop yean
Seed Cotten
2.9
5
i.9
5
Katuro
2.0
5
Peppers
. for rffKrsunir
L8
5
1.2
3
• rc;«ii
0.2
02
Guijrr
-green
200
•
♦
- saleable dry
3.5
5
■
Sugar Cane
(J’c yw)
87 0
6 year cycle
-
■
Maize grain
-
*
20
3
Nt<cr wed
-
-
1.0
3
Source Annex X
'.04 Crop Production. Ai experience increases under the project, both yields and product quality are expected to improve, reaching full development for all crops by year J I I 1995 in the programme). Sy this point production is expected Io have reached the following levels;
.Annual Production at Full Development
Irrigated
Rd in fed
Total
Farm ‘A1
Fann ’S’
.... tonnes per year.
Seed Cotton
6,032
2.660
8.692
Raisins
2.800
«
2,800
Sundricd Pcppcn
1.200
1,932
3.132
Dry Gingtr
1.400
*
I.-J00
Sugar Cane
52.200
•
52,200
Maize
-
2,760
2,760
Niger Seed
-
1.380
1,380
Source: Annex XItoff 37 B MARKETING AND PRICES i ANNEX XHh
05 Marketing Seed cotton would be ginned on nte The *ortd market a itrenuhen-
mg. and dihough production from Dabus would probably be used internally* if would release ocher production from the lower Awash Volley for direct export. The «<d would
be crushed and the oil neutralized and bleached on site The expeOer should achieve 18*1 ad from seed. Approximately 1.000 tonnes of oil would be produced jnnujJb/. .tn trnount which could easily be sold within Welega as it amounts fa only one half litre per bead of population In in lira where cooking oil is scarce. Rabins would be prepared for the export market* which could absorb this supply with no significant reduction in prwe* provided
the product were clean and well packed. Sun dred pepper* would be shipped to Addis Ababa where the ole o-min extraction plant is working below capacity it present and could absorb the new production, especially from the earlier harrested irritated art*. Dry 
ginger would be exported* presently lo Europe or USA. though new markets are believed to be opening up in the Middle East Sugar (plantation white grade) would be dbtnbuted mostly within the region for local consumption to overcome the prcvnt shortage of
supply Maize would be reserved for local consumption, a precaution considered necessary in view of recurrent shortages in the area* even though there is a surplus in some yean. An excellent market exists for niger seed in Europe, though in all probability, much of the crop would be diverted for domestic consumption.
7.06 Prices. Produce planned is principally forexport, cotton lint* raisins* oleo-restn
from peppers, dry ginger and niger seed all fail into these categories. Availability of both cooking oil and sugar Lt scarce enough lo justify the use of import parity values for these products. Consequently, all products except moire. have been valued at border prices m international values. For maize, the alternating deficit-surplus situation creates a problem of valuation. It must be assumed that, under these conditions, the project would supply 
its own basic needs, which would be incremental to the existing demands an the area's food resources. For this reason, lhe product has been valued nt its cost of production, which w rather above AMC purchasing price.
7.07 International valurs have been calculated for other products using price projections made by the international agencies. In order to reflect anticipated changes m real values of the products relative to oihenntcroationally traded commodities, the prices have been based on projections to 1985, expressed in constant currency values. Projected pnees have therefore been quoted in constant J980 US dollars, which enables them to be used with other 1980 price estimates. The derived border prices have then been taken back co the farm gate, after allowance for costs cn route
Irrigated Crops
Farmgate Value
Birr per tonne
Seed cotton
Rawins 
1.653
3.660
Sun dried peppers
Dry ginger
Sugar cane
IJSO
3.030 105r>te Aft
RjintaJ Crops
Need GrtlW
1,633
Sun dnrd prrr*r»
LI 13
Mauc
Niger wrd (nnig*
394
LS91
Swvr T*bk *
’  OS  The  annual  value  of  production  ex-project  ha*  been  calculated  I  Anne  x  XI)  for  the yean foifowwg full determent (Year 11) as
(mailed
Rarnfed .. Brrr 900 .
Total
.
Seed colton
9.953
4.389
14,342
Ramm
10.248
*
10.248
SundneJ pepptn
1,548
1,970
3.513
Ginger (dry)
4.242
-
4.242
Sugar cane
5,220
-
5.220
Maize
•
1,076
1.076
Niger seed
-
2,194
2,194
Total Annual Production
31.211
9.629
40.840
Source Annex XI*
7 Q9 PnxJuction costs have been calculated (Annex XI) Tor each of the project crops. The milenals have been included at current cotes for local inputs, allowing for recently proposed increases m the price of seed, and charging inputs nt their full cost, delivered to Dabus. Fertilizer costs have been projected to 1985. to reflect the relative increases anticipated in the pnee of these commodities, the actual price charged has been calculated tn the same manner « for crop values (para. 7.07). Labour Ims been costed at a basic Birr 3.0 per man day. a premium over present rales of Birr 2,0 per man day to reflect the actual rates being paid in outlying areas and to allow for some relative increase Labour has been costed on a piece work basis, wilh rates of up to Birr 7.0 per man day for special jobs (eg pruning grape vines).
7 10 The actual running costs of tractors and lheir implements has been calculated, covering fuel and lubricants, spare parts and materials. Replacement costs have been dlowed for in the operating and maintenance expenditure, and tractor driven have been charged full time under the project staff The basic rate for a tractor has worked out at Birr 12.0 per hour, or Birr 15,0 for a tractor and trader. The use of other implements is more costly, rising to Bin 25 0 per hour with a rotovaior.
1 Figures drawn from summary of production in Annex XI. Tables 2 and 3 in which values have been rounded. There arc therefore slight differences between these and the multiplication of production by unit pnee.1.  11  Allowance  has  been  made  (or  the  payment  of  interest  on  woriumt  uptal.  and  also i 10% contingency has been built into ill production cost estimates
7.12       Taking account of the direct costs, gross manuns have been calculated Gross Margins per ha at Full Development
Irriiptal
2.496 4.799 1,171 3,451 7,184
*■
Ram fed
..Bin per Ful.....
Cotton
Grapevines
Sun dried peppers Ginger Sugar cane (average per year)
Maize
Niger seed Source: Table 8
IJ29
*
454
»
-
su
1.100
7.13       At lull development, these direct costs total:
Im gated siren Roinfcd area Whole areu
Birr WO
11.182
S.658
16.840
C,  FINANCIAL RETURNS
7,14       The gross agricultural benefits (value of agricultural production less direct production costs) would therefore stabilise at Birr 24.0 millions per year (Bin 2.236 per
ha). From this amount must be deducted the annual operating and maintenance costs of Birr 4.332,000 (Birr407/ha), annual replacement costs for project machinery, plant and equipment at Birr 3.638,000 (Birr 342/ha), and an amortization charge for the recovery of
the investment in the project Based on an investment of Bin 180 millions, the annual amortization charge!at 10% interest) over a 40 year period would be Bin 18.4 millions per year I Bin 1.730 per ha).
7.15      There arc two other factors for consideration:
x             Taxes: although capital goods for the project would be exempted from tax under the Investment Proclamation 242; 1966. GOE would receiver>r
:>tc* twitted ptc*diact HraiUMtiM tat 2% and Sumover tax 2%L
J!
TNrrr n afoo ihtcf Hui 0 DM <oM r>lel per litre on *<* fad. The two
f
tasr* bvoM bcoefil GO!*. by abouS Rirr 1. millions p.a.
h Hralarr the new accro nrute would shorten transport distance from
tad to thr jwjrti by I00 km. th err by reducing the estimated costs by 
about Bm 4| gJXX) pi This future has been calculated on an estimated
haukd tonnage of 22.000 at a rate of Bm 0.19 per ton km I Birr 0 14 per
1
tonne km and 33 % empty return)
7 It* Fiuoi the pemi of view of a government project, ihe annual costs are estimated at
B^rr 8 0 milbons. plui the amortization charge of Bitt IS 4 millions Against thisGOE's 
gtvvs mevme wvutd be Birr 26 I millions A* costed. ihe project would therefore show jn
annual financial deficit of Birr 300,000 < Birr 28 per ha • However, rhe calculation of cost
his tnvhaded the additional cfcpcmr caused by Ihe remoteness of the project This is 
reflected m terras of the burden of transport on all products in and out. salary supplements 
fur >utl and most of the labour, the pravtuon of access roads and a hydro-electric power
station.
’ 17 Table *> shows the NPV at 10% discount rale over 25 years will provide But 45 7$
million with a financial rate of return of 21%. This net surplus is made up of Two major
elements
ti) primary production
(u) processing
7 IS Scniitiriry of the Financial Results: The project would breakeven with a 1%
increase in returns (pnees or yields), or a 2% reduction in the direct costs of production,
or a 4% reduction in annual operating and maintenance costs. On the capital tide, transfer
of the cost of the access road and Dabus bridge would reduce the annual amortization
charge to Birr 17.2 millions and. were housing for the project labour charged as a social
cote [relief and rehabilitation} at well ihe annual amortization churge would fall to Birr
16J millions This would enable the project to show a small annual surplus of Birr 2
millions alter finance charges
VUJ BENEFITS AND JUSTIFICATION
A. GENERAL
Quantified Benefits
8,01 The quantified bend it of the project would comprise increased production of
crops and products mainly designed for export In addition, some sugar would be proTafe 4
duced for local consumption within the region. and food miiw to feed the protect stiff
and labour. The farm cate value of this production, which »otald dl effective ly be incre mental production, would be Birr 40.8 millions per year it full development. and
LfSJ 22.5 millions annually at the border
Un quantified Benefits
8.02 Re-set dement Opportunities and New Jobs. Jobs would be provided for some
2.600 famdes. who would mostly be drawn from those arcus of the country pmerrtly suffering from overcrowding and often from drough t. The project would provide tn upper* (unity for these settlers to become members of a community relying on modem technique
to establish commercially orientated agricultural systems The settlers would rectne
training rn the new techniques and would be able to participate in j wider range of work than would previously have been open to them. Opportunities would also be created for
a casual labour force of some 2,700 man months, mostly concentrated into a peak require- ment in December of 2.200 man months. Opportunities would be provided for the
m chitinous population to join the project if they wished.
8.0J Jn addition to the new labour opportunities, jobs would be created for a permanent project staff of some 570 persons.
Regional Development
8.W The regional road network would be improved by the construction of tome I02km
of all-weather access road and 12-Jkm of internal roads; road distance between Mcndi and Asosa would also be reduced slightly by a new bridge over the Dabus river. Six new communities would be created providing housing for some 3,200 families and shelter for 2JOO casual labourers with medical, educational and service facilities, including water supply and sanitation. Agricultural processing industries would be established in an area previously devoted to subsistence agriculture Surplus power (averaging 4 MW) would be available for further local development for most of the year. The increase in economic activity in thia hitherto undeveloped area would result in higher employment opportunities in the surrounding area, including A.sosa and the Hoha settlement. The improved infrastructure and services would bene tit the existing population whether or not they chose to join the project
8,05 The development of the full hydropower potential of the Dabus over, by 
regulation of the Dabu, swamp would not only help satisfy Ethiopia's increasing demand for electric power bur would aJso provide a power and infrastructure base for further developments m Western Ethiopia,
Increase in Scope of the Agencies
8.06 The implementation of the project would entail an expansion both in staff and in
the fields of operating experience of both the main agencies involved, the Valleys Agricultural Development Authority and the Western Agricultural Development Corporation. It would also enable the Ministry of State Farms to further develop its new responsibilities for agro-industrial activities and product marketing overseas.8 07 The ioqtaraiUiK’ii of the rtwt xko require fhc involwnent of other
rnirmmcni HmUt* in pMlrcvlu EELTA IcJcdhcity supplies I; ETCA (mid imslrvction).
EBCA AbuiW^rt ircwinKtkmL the Fomin md Wildlife Coroervaticm and Development Authority and the Mina Inc* ol Health ind Education. The successful coordination of these input* frvtn other gx’vrrnmrnt bodies would require conudeTable linon effort md ’■cuid be fundamc’ul to the expedient »nd ukccwTuI implementation of the project.
D ECONOMIC EVALUATION
General Cnlma
S.OS Ln keeping with method* used by the international funding agencies. cost com porn enb hire been broken denm Io obtain relative component! of forrign exchange. unskilled labour and other icrncrt and matenak The degree of disaggregation has been determined by identifying project cost* which would directly increase foreign exchange expenditure. Where the increase ji indirect (such a* in the manufacture of corrugated sheet) no dis- axxregaucm h» been made. Costs hast a 1980/81 base, and physical contingencies have been included
8,0*? The Development Project! Study Agency of the Supreme Council has given guidelines on the genera] criteria Io be applied in economic evaluations for projects in Ethiopia. Foreign exchange u converted at a “ shadow” or "accounting" rate of IJ3 equivalent to a standard conversion factor of 0.75, Unskilled labour is given an accounting value of 50%. The discount rale is 10%. In ihis evaluation the ’OECD* method has been used, foreign exchange coils are valued al the official rate and the accounting factors referred to above, ire applied io non-1 rad cd local costs.
8.10 The incremental production has been valued at international parity prices on pro jected 1985 international values which have been expressed in 1980 US dollars for compel* ability with other cost etumaics (Annex XV). These prices have been converted into Birr
al the border using accounting rates, which have also been applied to the costs between project and border. In this manner, farmpte (or factory pie) prices have been expressed tn accounting values. Project cost! hive been broken down in the method given in para 8.08. Hie revalued project cost and benefit sircams are scl out in Annex XVI*
The Basic .Analysis 
8.1 I The basic analysis of (he project as costed including the external access road, all housing for staff and labour, and the hydropower station, has been tamed out over 25 years. Using a discount rate of 10%, tire net present value (NPV) of die scheme is Birr -1.04 millions and the economic rate of return (ERR) is 10% (9.92%).
Sensitivities
8J2 Sensitivity analyses have been earned oui as scl out overleaf:Plgtf 4 J
3 IJ The economic viability of the project would therefor? be most jowitrv* to either
x  i  delay  m  achieving  agricultural  production  after  the  commencement  of :he investment programme, or
b            j fall m prices for products or a failure to u:hi«*e the projected output.
Pie project is lew sensitive to timihr variations in either the investment' cowtf or the total costs budgeted.
Where it is decided not to burden the Project with the costs of providing the mam access to the Project Area* the NPV discounted at 10% over 25 years would rise to Birr 5 52 rriExons and Che ERR by half of one percent from just under ro just over tO (1(M3) percent
Sensitivity Analyses
ERR
%
delay in agricultural production
One year delay in bene fits/direct costs 
5
Two year delay in bene Iles
capital cents
10% increase in capital costs 
1
10% reduction in capital costs 
11
product prices
10% increase in product prices 
12
10% reduction in product prices 
3
total costs
10% increase in total costs 
8
10% reduction in total costs 
12
relative changes in bene fits .costs
10% increase in benefits; 10% reduction in total costs 14
[0% reduction in benefits; 10% increase in total costs 5
exclusion of costs of main access to Project Area
10
switching values
percentage changes in values to bring
the NPV io zero (ERR * 10%)
%
- investment costs
-0.8
- total costs
• 0.6
- benefits (prices on yields)
XT 4Dble I
ETHIOPIA
DA8US IRRIGATION PROJECT
Field Inputs by Cmwufiant'i Staff
Title
Name
Start
Firrisb
Feld Team Leader
R.M.G Hrwett
195.80
12.7 30
Senior Irription
23 2.3!
Engineer
Senior Agriculturalist;
G W J. Almond
19.5 ,40
13.6 30
Project
Economist
1.12.80
5.3.31
n      ui
21J.31
Agricultural Seth
K, KI in ken berg
n 5.80
23 6-30
Specialist
1 10.80
I’ 12.30
Agricultural Soils
1’. Ash worth
[o 5 30
23 6.80
Surveyor
1.10.30
26.1280
Field Engineer
J, Ralscy
2X9.30
19.2.3 J
Chief Topographic
M R. Hands
1.10.80
3.2.31
Surveyor
23 2.81
2.3 3!
Organisation and
J R. Dorrell
12.1.81
10X31
Management
Specialist
Irrigation Agrono
J M, Beeny
27.10.30
22.1X30
mist
Design Engineer
A.R. Key
1.12.30
20.12 MO
Senior Hydrologist
MR. Hasan
29,10.80
14 11.30
Hydroelectric Power
Specialist
N.A. Hill
22.11.30
5.1130
Study Director
R.F. Camacho
14.10.30
31.10.30
Director’ Soils 
D J. Moffo!
24.10.80
31.10.30
and Land Evaluation
Su pervta'on-i n-Ch le f
P J. Goddard
30-1 1.80
3.1X30
and Co-ordination
Ecology Adviser
E.B. Worthington
1.10.30
22.10.80
Social Development
P.Wass
10.11.80
6.12.SO
Adviser7*Mf 2
ETHIOPIA
IMBUS IRRIGATION PROJECT
Summer* kp-K-ullunl ta« and rrrxhjctwn rn Ethiopia
(1976.771
ha 000
kgrxAiItural Are*
LncvtUvk Sumt-erv
Cattle Sheep
Goal, 
Annual imp*
Permanent crop*
Filh-n* land i included in pmatc hold me I
Paitorai land dnehrded m pnvate holding)
Other land < ineluded in private holding!
TOTAL
27 2H 000
h 441 000
' *46 000
5.650
451
943
628
274
7,946 or 6.5™' of total area
Agricultural production tma/or craps*
Area
Yields 
Production
OOOha
lonnes/ha
tonnes 000
Teff
1.553.6
0 720
1.121 4
Barley
849.2
1 120
947 7
Wheat
551.7
1 070
592,1
Maize
700.9
1 450
1.015 3
Sorghum-millet
1,018.0
1.170
t.lSn 5
Oil Seeds
176.)
0.270
47 2
Pubes
691 2
5,540.7
Other .innujl crops
0,920
<>33 9
72.0
*
Cotton
32.2
2.100
70.9
Coffee
400 0
0.500
200 0
Sugar cane
10.1
514.3
108.00
1.081.3
TOTAL
6.055 0Oi l kul AMC Prke*
19794S0
Delivered
AMC
(Nekemte)
1779 HU
triiiopiA
DABUS IKkKiAIION PROJK'J
Cunent Market Pru.cs
Um.i1 open Market'
Juiy/Auguu 1980
W hotesde
lu merchants
(Addis)
Ad di* .Abu ba
July. 198IP
Wholesale
Hcluil
Dev |98U Open Market
Hifr/tUUkK
Maize
Sorghum
Harian
Sesame
Niger Seed (Neugr
22-20                       38                                             39
17
33-37                       51
-
34-42
-
52*
-
so
too
140
69
38 
bl
45
77
-
81
■
lu** 
UM
loo
‘ Avenge of open nurkel pme> obtained in nurkei spot chcsk by VADA in July’August Hau «| a»w». Kurniuk Nckciute 2 Elhropiu Gram Agency Hcpori fur July. I95U
> E:lhx>pu Oilseed Products Export <'urpuMltunI llllOHA
DAIIUS IRRIGATION IWlt < I
Gru» *nJ Nrl Arca« fuf Irirpfnl IUi«(ril l»ocUfncft(
riimfrd writ |hi|
lrf<ddc arwitv (lM|
Location
Fann UiiH
Total Area
Grata Anblr
Nd Arabic
(hum luipUt
Pwi IrfifpAU
Lcll Bank vl Lhbub
( Al
3980
2J3O
1980
2210
1770
(
( a2
2720
1770
1500
1660
1JW
RtfcjiI Bank of Dabus
A3
5600
27bO
2360
2470
I’WI
SubTol-ii                              12100
bAbO                                  5840                                            6340
sow
North al Slugs
< Bl
<
( B2
3340
3240
22oO                                  1920                                              590                                         470
1920
IbJO
1 390
1
( b3 5020 2330 1990 950
Sub I u|al
TOTAL
TilUl JU'J
“ Tuljl jicj
lloOO                            6510                                   5540
29iu
1 1 10
JhO
2 140
2 3900
133*10
Noici          Gnu jtjbk* su*s * Giuu impbk jrea
Ruuilrd Aicji
1i jh;j1cJ Aicj
Source: Annex IX Table 2
hid wilh dupci >10 5 all Liuj |«j>1 hi
KJMO                                           9270                                        7420
driuiiu. Iiilli
-   bid higlur iluu 10>U wUfitaui kmjiIi or Slugs (1020 «Mitvur uaiih ul* Slugs>
-    hud uiili ilapfe-s >5 , all land km hi gdltcv hicjiuk liblli. «k Ktfl uics taken ai 0 aS v gr uu ji j til i;
Nel jjcj uken ji 11 A0 < £fim nubble
r Wj■ < «
I.Turmj wnirMwii Qiwvn
vurmiii
J
z
*
■1      < «5 • J*
“■
*»
fW2
*+    afc
r
!
—i W W
-*■      • « 3
*     -■            ■#■
- ■<
J            • Hi
1
•*
*£
-
z
:rik'' ■*»■
3FV
■F'
5     *15* 5
*
—r    i
■P,
■*•
sys   5        1z 2-■ft*      5  wft    1
1
jhi
4> ?• -»
5 555
«
J?
“i
w
-
?
s
J
mi
**
y=£         P 2||
5
•—
-• «
*■”,
2
*»
J
*3
••     S
*- -J d —
J5ws
♦-      32£
3
i
w
*ti «« n
«
M
-*-■
3.
■-<
Jt
-* ?
£
*#
-•
3^53
f4
-=» — ■ -I *-W      “• •— 
‘
'-■, *L 'RL
*?
F"i 1
H«l “
n      i      5.
”■
i      ■■“■■
iJ
w w W ■* * 12
—  4< *■ a■*t -« W
X£
R
ft
*w
—.
'■«
*
r«
rt
F
£
}
1
3*
I
I
I*
M
I
J -
■
■
II
H
I I
■T.bk6
Ethiopia
IRRIGATION PROJECT Cuniabtnr Dm'lopmcnt o( Net Cropped Arras
Crop
Year 1 Year
2 Year J
Year 4 Year
5 Year 6
(19851
......................
................
.................. ha.
..,TT................
......................
..........
tmiaikjn Area - Farm 'A'
Vine n uncr*
35
35
35
35
-
*
Grape unri
350
700
1050
H00
MOO
Peppm
Gtrsfer
Cotton
«
200
400
600
606
-
100
250
400
500
1080
1580
2080
2080
Su<jr vine
-
200
400
600
600
TOTAL *A‘
35*
885’
2215
3565
4930
5080
Rjmled Am * Firm *B*
Peppen
-
480
885
1380
1380
1380
Cottort
-
480
895
1400
1400
1400
Maize
460
885
1380
1380
1380
(380
Niger Seed (neugj
■
480
885
1380
1380
1380
TOTAL B’
480
2325
4045
5540
5540
5540
Tarsi for Project
515
3210
6250
0] 05
IO42O
10620
i          planted under rainfed conditionsETHIOPIA
DABUS IRRIGATION PROTECT
Product Prices and Values'
(Full Development)
Product
Seed cotton
Cotton lint
Cotton wed oil
Rd i5i ns
Sun dried peppers
• irrigated
- rain fed
Dry ginger
Sugar cane
Sugar
Maize
Niger wed
Source : Annex XV
Border Value
fob or c+f
USS per tonne
-
2,290
1,127
2.06O
75O3
2.060
-
49!
25!
1.1 IB
Farmtate
value
Birr per tonne
1.653
-
4.025"
3.660
t .380
1.113
3.030
105
1.397
394*
1,591
expressed in 1980 constanl value*
value al Addis Ababa
ipproximale value of peppers as oleo-resin laminate value at cost of productionTiMr *
I nonriA
□A BUS IRRIGATION PROJECT
Anneal tural Corti and Return* at FuH Development
Yteld
Revenue
Dhrcl Costs
Gm Margin
1 Farmpici
nf Frndne rhn
1 ha .. .
. Birr per ha . . .
Irrigated Crop*
Cotton
2.9
4.794
2,298
2.496
Grape vitro i rarnn*»
20
7, J 20
2.521
4.799
Ferpen
:.o
2484
1.407
J.171
Ginger
3.5
10.598
2.147
8.451
Sugar cane (annual)
87,0
9,13$
1.951
7.1 $4'
Rjmfcd Crops
Cotten
1.9
3.141
i.812
1J29
Peppers
1.4
1.428
974
454
Matre
2.0
788
788
.
Niger seed
1.0
1,591
491
i.roo
Suu rue : Annex XI
Difference with Annex XI. Tabic 10 Birr 7 2O2/hti is due to averaging cycle of
e
production over 6 yean.*»* D |
14*
kiworu
MA H4 MMjJ I bUM nuM 1
iJ♦1A1At
te W
10           II
II          H         14             H           14           H                    14 M
I HM ■MdlfcM
lJ >UI<* Ml
$A«* ul cmiimi wJ wd
Su*U4d
kv p-I.MM *CTd tttKfl
GROSS ACmciiflVHM
bl MU 11
riocnttW^
l\rikw
thkrcJ IndUiig i“ll
I luU d<M4M*p
Suk |,>«J ptiKCWM MAHGiNuviftumuiiMGrusrs
Xl/H          l-'M-'l  H FT2>   l< IUUI
(IJIII     *J*i     J3.IT1    i t ns    h>J»       21 AM    HjWA     W tai     19,4*4    I’ljMA     I'l.MA        I'MM
|7»4       I'l kM   10 MjA
XVMP
XMU» -
>.$0J     4jO2
li Jm       I1M3      u hi      12.FM      11,1*2   11.141   11.1*3    1 IJ*3    11.1*2    11142      41.1*1      t2 142      HIM       I1I4J     11,1*1
1 l<J        2.M5     3.712      2.W5        :.*rt     2.%rt          MM      J.Xrt        i.xn       W»       J.'Art       i.*rt          l.w$         J.'krt    3.1KH      2 Mil      J/Art
(2.M1J |3.W>         I. ISO       4.1*4    JU4M    17JF»    J2-MJ    M.WF      *.W         b4>H      MJH      M.HJ     H, TH      MJH         M.rn        MJ 15     MJH     14 J H     M HI
IVltfl
-
I !»•       $>7»             Wl       IJ Ml      WJ*1     li.MA     *4 kA      H kA      I4JAA    14.kA     14 IM     14 kA      KJM        14 >M          1 IM   14 144   1 4.1*4     MM
[1.1*21    («JKH   I4JJH        (42 7J   7 011     I2JD      II U<    20.011      22 M7   2O.MJ3    3i.Hr     -'0.1*1   20. K J   20. H7      MJ. lol   .Ml, Ml J     ftj. 2      2UJ*I     HMM
xviin M III
XMU ui 2*0
AVU IJ
A vi Li
lit              M >         *M         *12         *12          ill            *13           ill          Ml        *12          *IJ         Ml             Ml             6H
Ml          Ml
M         JTF        HA          HI        J 21             m          V*          sn          in            in          Hi            HA             irt           in         HA          m
M          kA          Mi        744
w*          Ml         IM
**♦            4¥*           441         M'J
lr>
*4            HI           i*r         141         I4J        147          147          HI        142        142        142          Ilf
III              Hi           HI        141         H>
511         Ml         1.401      151*        1 l«      I.WI       I.M                         J.4M*      2 iM*      JjM*        HIM      J 04*         : in*          I IM*      1JH4      3tHo       IOM
U.dHI (MJIJ
|2 2f*|      1 frf|        II IH      t4 Hl    HJMJ
1**21        II.W    J4J21     14 ijl      (4 Hi       11.431     14 111      IMJI     14 JI 1     M ill
I tp4«|
U ImmI H-i*-1
ld«W)
IMm>« J *MU 1 i«*< ibtkMM
4 A         MU 11
UH          d.*H       J lul      U«*           1*13         e*4        1 Ik
Ilk             47H           Wl     4 213       UH          1 M      1 IM           1 M          1 M        1 IM       1 M        > M
XYltfl t 1*3 4JJ4
UU* M3 2 IX
Uli JI
Ultfl>
*
■•
KJ          20
IM             m
Hl          41                                                                                      141           M
J ** l«M MO
X*
-■            !«Z           Hi         HJ
*
•                                            111
rt
2H4 W 414
12*
5.J. Mai W»«Mw*H hH ( Mill l<>*
< h.huMU.T I’P* H‘«
►M*          Hli        till              MH      J 101       1 IM      ! AW                        ♦ «l         MW        ♦ m      * 4M        1 IM       1 IM             » M             M*l        1 ill     1              ! M
Ivl.tiKlMlJkWjaj
(0 *.-bd .UbOMtU
0.IMI I.M        * Ml     It.hM     14 All        iMU     11.421     i >.wi    1*441      14 *H    14‘iH       14 M4         H Mi      Hl 10    14 Hl     H H 1
>4*1^11 NJ| 4 IM       AlOn    1JJM4   4c 101   *1.412    14 AU    MI'lH       ill 2 kri
til no 11« 4.'ll HI Hi  IM HMETHIOPIA
DABUS IRRIGATION PROJECT
Technical Assistance
Project Year: 1 2 3
...........'
4
Man Months . . . .
5               Total
Team Leader (Agricultural management and Production)                12               12                  12                12                12                  60
Cotton production
-
12
12
12
6
42
Workshop Trainer
6
12
12
12
6
48
M echan i cal/electrical Engl nee r
-
-
12
12
-
24
Irrigation Engineer
-
-
12
12
-
24
Marketing Adviser
-
*
3
2
1
6
Monitoring and Evaluation Specialist
3
1
3
1
4
12
Other Specialists as required
-
6
6
6
-
18
Crop Specialists ■ Grapes & Raisins
6
2
4
8
4
24
• Ginger
-
*
-
8
4
12
TOTAL
27
45
76
85
37
270
Table 10DABUS
ETHIOPIA IRRIGATION PROJECT
FIGURE 1
Location Mop
55*00 £
35°3O'E
DABUS IRRIGATION PROJECT
10*00' N Upper Milo
s'/ a
4jQ ------------
Ta M • k tm t a Add ! Aba pa
LEGEND
s=»y-
In1 ■rnaPiQnt) I Boundary
Majn Acctit Road so Rr-ojecl Area
Other Raadi
Rt¥«ri
o Pffijtcl Area
■o
HaiC raw-UL0-LH-ETHIOPIA
DABUS IRRIGATION PROJECT
FIGURE 2
Farm Boundaries and Access
Boundary    of
Project Area
Ta Asoso
LEGEND
k E mill in q road
- Proposed 6 m oU weather rood
- Proposed 4m QU weaiher read
-    Farm 1 r a c fc
-    Ri* er
Q
Ferm unit
power station
□   Farm centre
s   Project cenlre
Farm untF boundary 3 r i a gt
Drift
Culvert
7k*ETHIOPIA
DABUS IRRIGATION PROJECT
DEVELOPMENT PROGRAMME
ACTIVITY
mat
1982
1083
1984
Year 1
1985
Year 2
1980
Year 3
VJ8J
Year 4
IUM8
Year 5
I08J
IJecilluri to prineud
Pro|uCI .iiipran.il dud ri^jubdIilhi uf lirianeu
i  Phil  denyii  LcimIhi    ikxmnuiiu  lor  Mvndi  HEP  >|1u  DjIhji    access  iuail IuillJui puna! *md eualualHiiHoi ad;e» HMd
Moll III Mt ion and coi nil in-turn nl Meudi HI P ide access load Geotechnical Iiiv«nudiium lor liydio power iiltf
Financial Reappraisal and final mJioiHe approval
Fiiidl deoyii, turidtir ducuinenu lor projeci
I funder period and uuahialiun far project
Award ut canlraCIi
MdIilIjs jIiOU
Cujnplele access road IO Dabus
Udlius Lh idye
Hydro power transmission system civil woiks construdiun
- rnanufocture and delivury ul £ & M equipmuni
Project hausniy and buildings
I and development
Piojeci roads and road stnjctun.s
ft iver pump stations
Sprinkitf Imgaliun system
Surface irriyatmn system
Aijricullui al cropped diitf dcuulupmiml
•
c=
c
36%
39%
23%
“%
«%
.      17%
29%
Jl.%
2 5°/
II
39%
31%
25%
r?v
41%
Ai’-C
28%
i!%
«7%
2%
5%
25%
39%
3B%
13%
A
CcxTunencerneot - a! cotisiiuutiun
Cuiimiisiion     ul HEP nation
FIGURE JETHIOPIA
DABUS IRRIGATION PROJECT
Location of Hydro Electric Power Site
figure jETHIOPIA
DABUS IRRIGATION PROJECT
ANNEX I STATEMENT OF WORK, SERVICES AND SPFCIHCA DONSContract No. DP/ETh/78/013-Z'AGOA
STATEMENT OF dORK, SERVICES A SPECIFICATIONS
ANNEX J - Page 1
1. SUMMARY OF PROPOSAL
6,1 ,L The rteouirgnent
The object of the study is to establish the technical and economic feasibility of an integrated agricultural development project based on. but not limited to, irrigation in the Dabous sub-basin of the Blue Nile
in Ethiopia, The study would be based on the project identified by the USSR Blue Nile Basin Study but alternative schemes would oe examined before recommending a preferred option.
6,1,2, Method of Approach
The proposal outlines how the various technical aspects of the studies required in the background paper would be undertaken. The consultants are aware of the importance which the Ethiopian Authorities attach to
the time factor in the implementation of this study and have interpreted
the main objective as the rapid completion of the studies in order to proceed with implementation as soon as possible. Provision has teen made for a start before the onset of the rainy season in Hay. assuming that
the necessary contract formalities can be completed in time.
The field work would be carried out in two phases, and assuring a start in mid-May, it. would be completed by February 1981, with submission of the Draft Final Report by mid-April, 1981,ANNEX I - Page 2
B.1.3. Organization and Staffing
Tne consultants propose that the field studies should be undertaken by
a stuay team resident in Ethiopia, supplemented by short visits from the
Study Director and Director of Soils and Land Evaluation and with Head
Office back-up.
The preparation of preliminary designs and cost estimates would be carried out in our Head Office in U.K. A total of 58.25 man-months of consultancy tine is offered.
The proposed study programme is realistic but intensive and close liaison will be required between the Ethiopian authorities, FAD and ourselves
to ensure that the various study targets are achieved on time. It is
therefore proposed that the study headquarters should be located in Addis Ababa, In this way, the Team Leader would be available throughout his assignment for consultations with the Client.
Subsequent Studies
In planning the method of approach to the Dabous Project Feasibility Study the consultants have also considered the possibility of co-ordinating sequential consultancy inputs for the Hoi to and/or Lower Qmo studies wnich are expected to follow.
Savings in mobilisation and data collection time would be affected if
the first study can be phased in with the others towards the end of I960. Further advantage would accrue if some or all of the same personnel can be used. Provided there are no unforseen delays, the soils survey (semi- oetailed) for the Woito and/or Lower Omo selected areas could follow on directly from the Dabous survey. Although this would mean working through some of the wetter months, the rainfall is unlikely to be so heavy as to cause a serious problem to the surveyors. If this prograrmne is followed it should be possible to complete the second study by August 1931.AMEX I - Page 3
METHOD OF APPROACH FOB FEASIBILITY STUDY
E. 2.1 . Genera 1
This section of the proposal describes the work to be carried out by
the consultants on the various aspects of the study, as outlined in
the background paper.-1
We believe that our visit to the project area and our association with
VADA in the past, together with our experience of other irrigated develop
ments in Ethiopia, have given us a clear appreciation of the require
ments for the study. The project identified by the USSR Blue Nile Basin
Study was for the development of irrigated agriculture an uh to 13,500 ha.
(net). However, reconnaissance level information indicated that a further
8 *      12,DOO ha. of good araole land is also available in the area and the
development of this under rainfed conditions could add a significant
economic dimension to the project. An integrated approach to the study
would therefore be adopted.
The USSR concept of the irrigation infrastructure was the result of
brief reconnaissance work, and the layout considered included some
expensive (at today's prices) features. In addition, areas of uneven
topography and slope were included which might well be uneconomic to
develop for surface irrigation, bearing in mind the present day high
costs of land preparation. Our approach would therefore be flexible in
nature; the various alternatives would be examined and compared on technical,
financial and economic grounds with the USBR proposals before a particular
layout was recommended.
The study would be carried out in accordance with the FAO/IBRD guide-
2/
lines— as described below.
V      "Background      Pater      and      General      Specification      for      a      Feasibility     Stuay Dabous Irrigation Project" - FAO/VADA February 1980,
1! "Guideline for the PreDaratiun of Feasibility Studies for Irrigation and Drainage Projects" FAO/IBRD 0o-ODerative Programme Rome 1970.ANNEX I - Page 4
B 2.2. Study Programme
A programme showing the proposed Study activities and anticipated' duration is given at Figure 1, and Figure 2 shows the Critical Patn
Network for the study. It can be seen that fieldwork could be carried
out in 2 phases: a first phase of field reconnaissance and reconnais
sance soil survey, followed by a second phase in which the detailed
field studies would be carried out. In view of the importance which
VADA and the FAO attach to early commencement of the study, we have allowed for mobilisation of staff in 2 weeks following an instruction
to proceed at the beginning of May, so that field work can commence
before the expected onset of the heavy rains in June.
Following a study of all available data, mapping and aerial photography,
field work would commence with an aerial and ground reconnaissance wnich would be carried out by the Team Leader/Senior Irrigation Engineer, the Senior Agricultural 1st/£conomist -
Simultaneously, the reconnaissance soil survey would be put in hand.
On completion of the reconnaissance soil survey, the Inception Report (see B.2.11) wuld be prepared, giving the Dreliminary conclusions on
the soil survey and the consultants' initial impressions of tne project.
This would then be discussed with FAO/VADA in Addis Ababa.
With the onset of the main rainy season, field work would be suspended until September. The study would however continue in the Home Office during the intervening period, with an examination of the US3R proposals and the alternatives, including the possibility of increasing the dry
season flows from the swamp. Outline layouts would be prepared with cost estimates, for comparison. The results of this stage of the study would
be summarised in an Interim Report which would be submitted in the first half of September, This would be discussed with FAO/VADA in Addis Ababa in early October ano meetings would be attended by the Study Director. Following these discussions the study would then focus on the preferred scheme.ANNEX I - Page 5
The second phase of the fieldwork would comprise the semi-detai led
soil survey, agricultural marketing studies and engineering studies
of preferred scheme, social and ecological studies and topograohic
Surveys, At the conclusion of field studies, an outline of a develop
ment plan and the Final Report would be prepared and submitted to
FAD/VADA, The discussion of these would oe at trended by the Study
Director, the Team Leader, and the Organisation and ?4anagement Specialist.
Preliminary designs and cost estimates for the chosen option and drafting
of the Draft Final Report, would preferably be carried DUt in the Home
Office for reasons of availability of back-up, technical facilities and
economy.
B.2.3. Hydrometeorology’
2.3.1, Data Review - A critical review would be made of all available hydrometeorogical data and published studies relevant to the
study area. If necessary, these data would be updated by
gathering additional data from the climatological and river
gauging stations in Asosa and the study area. Use would be made
of an in-house suite of computer programmes, which HalcrDw has
*
developed, to deal with hydrological data validating and proces
sing, infilling of missing data and data synthesis to extend
available records.
Recommendations would be made for further data collection to be carried out in subsequent stages of development.
2.3.2. Proposed New Agrometeorogical 5tation - If possible, before
the start of the rainy season, a new Class 1 agrometeorolocical
station should be set up on site by Government.
It is envisaged that this would comprise equipment for measurement of daily rainfall and its intensity, temperatures,sunshine hours, evaporation, and soil temperature. Rainfall, relative humidity and temperature would be measured on recording instruments.ANNEX I - Dage 6
2 3 3, Hydrological Studies - An assessment would be made of the design low flows, extreme flood flows and average flows, for determining irrigation water availability and des'gn floods, A realistic tine series of snort-term {5 aay or 10 day} flows, representative of floods and droughts,would be oerived as a model for design. Critical floods at the proposed river diver
sion and headworks site would be estimated using three dif ferent methods in order to arrive at realistic design flood magnitudes and frequencies as described below:
1) Rational/empirical: based on catchment characteristics
using the modified B.D. Richards method for which Halcrow nave developed a computer programme.
ii)
Deterministic: by aggregating unit hydrographs from
recoraed or synthesised rainfall intensities, using the
method developed by the U.S, Bureau of Reclamation.
iii)
Statistical: by fitting such extreme value distributions
as the £>umbel or Log-Pearson Type HI to recoraed flood
maxima.
Frequencies (or return periods) for design would be selected in
relation to an assessment of risks and cost of their mitigation.
2.3.4,        Regulation of Swamp Levels - From a study of the available aerial photography, existing hydrological data and field visits, the
behaviour of the Dabous Swamp would be examined. A brief basic study would be made of the possibility of enhancing the dry season
flows by modification of the assumed existing barrier at the
outlet of the swamp.
2.3.5.          Evaporation and Crop Water Requirements - A comparative study of measured and computed evaporation would be made using availableANNEX . - Page 7
data from similar areas elsewhere in Ethiopia, to assist in predicting croc water reouirements and to estimate evaporation losses from the swamp. Methods such as Penman, Hargreaves- Christiansen, and Sianey->iddle would he used as found aooro-
priate .
2.3,6.        Irrigation Hater Quality - The available data Dn river water quality would be augmented by collection of further water sam ples which would be analysed in Ethiopia and/or in the UK as appropriate. The suitability of river water for the proposed crops would be assessed on the basis of their salt tolerance levels and other factorsdescribed in the FAD Irrigation and Drainage Paper, No.29 (Water Quality for Agriculture).
The results of chemical analyses of water samples would also indicate any possible deleterious effect the chemical consti tuents might have on the chosen construction materials.
B.2.4 Agricultural Soils and Land Evaluation
The agricultural soils survey would be carried out in two phases; a reconnaissance level survey of 30,000 ha.,“and - following at the end
of the rainy season - a semi-detailed survey of those areas judged suitable for irrigation.
2,4,1. Reconnaissance Soil Survey - Under the supervision of the Director - Soils and Land Evaluation, all available mapping
and aerial photography, including the USBR soil mapping and the new 1:10,000 scale orthophoto mapping would be studied. A preliminary air photo interpretation of the new 1:20,000
aerial photography of the area would be carried out and this would oe followed by a rapid aerial and ground reconnaissance.ANNEX I - Page 8
As s result of this work a preliminary Tand unit map would be prepared, probably on the 1:1(^000 scale orthophoto mapping,
and the procedures to be adopted for the field work {i.e.
traverse or free survey, further pnoto interpretation etc.)
would be decided.
Field observations would be carried out at an overall obser-
2
vation density of one per 2km of the area to be mapped, consis tent witn the required mapping scale of 1:100,000. At least
255 of observations would be pits at least 2m deep. The
remainder would be auger borings to a minimum depth of 1.2m. At selected model sites there would be detailed descriptions and sampling of a deep profile for full physical and chemical analysis.
It is understood that the Government soils laboratory in Addis Ababa is temporarily out of action and it is assumed at this stage that samples (probably no more than about 120 in all)
would be sent to Europe or U.K, for testing in an approved laboratory.
The field team would be equipped with portable equipment to enable tnem to make a preliminary screening of chemical characteristies in terms of soil reaction and salinity levels so tnat,on comple tion of field work, a map would be produced at a scale of 1:100,000 showing the major land maoping units and potential suitability
for rainfed and/or irrigated cropping. From this, in consultation with the Senior Irrigation Engineer and Senior Agriculturalist, and following discussion with FA0/VADA, the area(s) for semi detailed investigation would be selected.
2.A.2. Semi-Detailed Soil Survey - The semi-detailed Survey of the area judged as potentially suitable for irrigation would again be based on the airphoto interpretation, which would have been refined by the first stage survey. Field observations would be carried out to produce an overall density of 1 per 50 ha. ,ANNEX I - Page 9
compatible with the reauired mapping scale of 1:50,000. As
ir. the reconnaissance survey, at least 25* of the observations would be pits excavated to a depth of not less than 2m, so located as adequately to represent the major soil units. The remainder would he routine auger borings to a minimum depth oi 1.2m, located where necessary in sample blocks to investigate within-unit variability and to determine soil boundaries.
Representative model sites would be described in detail and sampled for physical/chemi cal analysis, which it is assumed
for this phase of the work could be carried out at the Government soil laboratory in Addis Ababa. Soil-moisture relationships would be investigated by testing of infi-1 tration rates and hydraulic conductivity in each of the major soil units. Laboratory testing
to determine available water capacity would have to be carried out in Europe or U.K. Should there be any indication of impeded internal drainage, or high water table conditions, selected
sites would be investigated to a greater depth than the speci fied 2m, in consultation with the Senior Irrigation Engineer.
Land Evaluation - The land evaluation would be undertaken in consultation with rhe Senior Agri culturalist/ Project Economist and the Senior irrigation Engineer and would be reviewed by the Director - Soils Survey and Land Evaluation. Land classi fication maps would be prepared to suitability sub-class level at the required 1:50,000 scale, for each of the agricultural options identified, in accordance with the FAO framework.—
Further Surveys - Should the field work indicate areas where
the proposed mapping scale and level of observation would
be inadequate, the consultants would prepare recommendations for the additional survey which might be required, for discussion with FAO/VADA.
A Framework for Land Evaluation” Soils Bulletin No.32,FAO Rome 1976.ANNEX I - Page ID B.2.5. Agriculture and Agricultural Economics
The collection of data for assessment of tne various agriculture;
development options would commence ir the first phase of the field work 
and would be considered in the selection of the irrigable area and in
the land evaluation arising from the semi-detailed soil survey. Current agricultural practice in the area would be studied and all existing
information concerning the production, processing and disposal of the main crops grown in Wollega (Kefle Hager) would be analysed. This infor mation would be supplemented by information on crops grown in other compa rable parts of Ethiopia.
Various potential crops, cropping patterns and rotations would be considered for rainfed and irrigated development, and particular attention would be
given to the possibility of double cropping on at least a part of the
irrigable area. However, it is noted that little if any crop research
work has been carried out in the area and there is no climatic data for this specific area. (Records are available from a Class 2 station at
Asosa, but this is some 40km to the east and 500m higher in altitude).
Caution would therefore be exercised in making reconmendations" for cropping the rainfed area of the project, and '-ecommendations would be made for a trials programme for both rainfed and irrigated crops, and possibly for
the establishment of a permanent Experimental Station to serve Western Ethiopia.
»
A careful study would be made of the market prospects for the likely 
project production in terms of national demand and supply forecasts. An assessment would be made of how the produce could be marketed efficiently, ana projections of likely future prices expected for project produce and
for inputs would be made, with all assumptions stated clearly.
Using the available data, estimates would, be made of input reouirements, productions costs arid yields for the agro-economic assessment of each of the crop options and farming systems (e.g. large scale mechanised farming and smallholder settlements) being considered. The assessment would be be subject to sensitivity study within a range of limits to be agreed withANNEX I - Page 11
In consultation with the Senior Irrigation Engineer, seasonal water requirements far the aptians would be estimated, and the likely effect
of water shortages on yields would be submitted for analysis in order
to optimize planted area against an acceptable risk of failure.
The possibility of integrating livestock into the project, utilising
non-arable land and crop residues, would also be considered.
From the above studies, recommendations would be made on crooning patterns and faming systems for discussion with FAO/VADA. Taking
into account the Government's objectives of import substitution and employment creation, a Development Plan would be prepared. This would be included in the Draft Final Report, and would be phased in conjunction with the capital works programme. It would include the
’■ecui rements of the project for management, staff, labour, vehicles, farm machinery, offices and buildings.
B.Z.6. Engineering Studies
2.6.1. Irrigation - The scheme identified by the USSR Blue Nile Basin Study was for the surface irrigation of up to 13,500 ha. (net)
by diversion of run of river flows by means of a low dam or
weir, via a main canal and siphon arrangement to the fields.
A basic feature of the engineering approach to the study would
be a review of these proposals and a comparison with other possible alternatives, including a consideration of the possi
bility of pump lift and of overhead irrigation. This comparison
of the alternatives would be discussed with FAO/VADA and a recommendation would be made on a preferred scheme. Attention would then be focussed on the chosen option.ANNEX I - Page 12
Although not specified by the terms of reference, the available aerial photography and mapping would be examined and a brief field reconnaissance woulc be carried out to establish whether
or not there is any possibility of providing inexpensive
reservoir storage for regulation of flows.
The irrigation studies would then, in parallel with hydro
logical and agronomic studies, be directed towards optimisation of the area for irrigation development, both by diversion of run
of river flows and by any passible regulation of the river.
For each agricultural option, water balances would be prepared and irrigation schedules drawn up. The total and seasonal
water requirements for the alternative cropping patterns in
the area would be calculated, taking into account seeoage losses, ootential management efficiency, distribution losses 
and conveyance losses, as well as effective rainfall. The prevailing efficiency and loss rates on other irrigation projects 
in Ethiopia would be evaluated for comparative purposes, and in this respect we would draw on our experience of the first years operation of the Ami bara Irrigation Project.
Irrigation layouts would be planned to utilise the available
water resources efficiently whilst offering the required degree
of control and flexibility. Particular attention would be paid
in simplifying control and management requirements and also to standardising the design of structures to the maximum, consistent with minimising construction costs.
The results of topographic surveys (see B.3.7.) on representative samples of the major land units and levelling cost estimates would be taken into consideration in deciding upon the method of irrigation (i.e. furrow, basin furrow, border strip, overhead
etc.)AKNEX I - Page 13
Designs and layouts to feasibility level —• would be produced
for the irrigation and drainage network and structures, with a typical layout for a sample area, applicable, to each of the irrigation systems selected.
2.£.2. Dra mage - Should the agricultural soils survey indicate the possibility of any internal drainage problems or high water
tables, recommendations would be made for the installation of
a network of piezometers to monitor groundwater table conditions and for any further investigations considered necessary, “he design of the irrigation and drainage network would take full account of these problems.
With regard to surface drainage, drainage coefficients would be computed, in consultation with the Senior Agriculturalist and Hydrologist, fo each of the agricultural options, on the basis 
r
of acceptable rainfall probabilities and tolerance to water
logging of the crops involved. Particular attention would be
paid to the problems associated with cross drainage required
for streams entering the project area and for flows concentrated
by gully erosion.
2.6.3.     Diversion Works and Siphon - The diversion weir site identified
by the USSR Blue Nile Basin Study would be compared with other suitable alternatives and a recommendation made on the preferred siting. Various types of construction would be considered for
the design of this structure, including mass and reinforced concrete, gabions and tipped rock (as designed by Hal crow for the Amibara Irrigation Project). The design would take account of the possible need for sediment excluders and we would draw on our recent research experience at Southampton University, U.K. on this aspect of irrigation design.
In the comparison of alternative schemes referred to in 2.6.1, above, the USSR proposed siphon across the Dabous River would
□e critically examined with a view to obviating the need if possible for this expensive structure.
V As per "Guidelines for the Preparation of Feasibility Studies ’for Irri gation and Drainage Projects" FA3/IBP.0 Co-operative Programme Rome 1970ANNEX I - Page 14
2.6.4.
Land Preparation - In conjunction with.-the Agricultural Sails 
Specialist, following air photo interpretation, the project
area would be broken down into a number of land levelling and
bush clearance types. Close (10cm) contour interval surveys 
and bush/tree counts would be carried out on sample areas to
provide typical data for cost estimating purposes,
2.6.5.
Geotechnical Investigations - At this stage we assume that a
rigorous geotechnical investigation for the scheme is not
warranted, as this could be left until the design and construc
tion phase. FuthermDre, drilling to prove bedrock at the
structure sites wouId probably be unnecessary as it was observed
during the site visit that the bedrock is often exposed.
We therefore consider that the site investigations programme
should be limited to the main canal alignments and major
structures, wnere necessary using trial pits and hand augers.
Soil samples would be tested in Ethiopia or sent to a labora
tory in U.K.
Laboratory tests would be required to establish an eng'neering
classification of the major soil types, but not to carry-out
strength tests. The information thus gathered would be used
to establish general design criteria for:
-    allowable bearing capacities
-    design of retaining walls
-    design of filters
-    prevention of piping under structures
stability of canal banks and excavated slopes
' backfill and fill material
-    design of stable slopes,
Tne collection of samples and: classification of materials 
would be undertaken by the Field Engineer, with assis
tance vrom the counterpart staff. If, curing the course of the
study, evidence is found of any ’problem* soils (from an
engineering paint of view) or of wide variation in the soils of
the area, or should the nature of the works proposed warrant it.AWiEX I - Page 15 detailed reconriendations would be made for further geotechnical investigations under a separate contract. We assume that engineering
soil tests would be carried out at the Government Laboratories 
in Addis Ababa.
2.6.6.     Soil Erosion and Conservation - The new 1:20,000 scale photo graphy, together with toe new 1:10,000 scale of orthoohoto mapoinc would be studied and a reconnaissance carried out in and around the project ares ter identify erosion hazards. Previous aerial photography cover of the area would be compared with the recent photography and an estimate made of erosion rates. Conservation measures would be considered, including gully control structures land management practices and afforestation. Recommendations would be prepared for remedial/control measures with cost estimates, for a typical hazard location. These studies would
cover possible instability and the need for stabilization of river channels.
2.6.7.     Environmental Health - The consultants are fully aware of the importance of adopting satisfactory standards of environmental health in the planning of the irrigation and drainage layouts,
the design of channels and the location of living and office accommodation. Particular attention will be given to minimi
sing any possible spread of malaria and schistosomiasis.
W
2.6.8.     Access. Roads and Other Infrastructure - In consultation with
the Senior Agriculturalist and the Organisation and Management Specialist, the requirements for roads to and within tne project and for farm access, buildings, workshops, stores, power and water supplies etc. would be assessed and recommendations made for both the rainfed and irrigated developments. Costs would be estimated for the purpose of project appraisal. These would include an allowance for anti-termite measures.
2.6.9.     Cost Estimates fcr Engineering Clarks - Preliminary quantities would be calculated for the scheme identified by the USBR Blue Nile Basin Study, and also for the alternative arrangements which would be identified during the course of the study. These
y Subsequent addition to paran^-h b.2.6.8. Amendment No.3. is 
• reproduced on Page 20.ANNEX I - Page 16
would be priced for comparison, using rates tendered *or similar conditions, with any necessary adjustments for updating ano
local conditions.
For the prefer'-ed scheme quantities would be prepared generally 
in accordance with the guidelines produced by the FAO/1 BRO
Co-operative Programs in 1973^-' priced £S a&ove.
B.2.7. Topographic Surveys
The new 1:10,000 scale orthophoto mapping woulc be adequate for the
-econnaissance work and overall planning, but for design and cost
estimating purposes this would have to be augmented by manual survey.
Site surveys would have to be carried out for the diversion and head
works structure and at other major structure sites. The scale af survey 
would vary according to the magnitude of the structure involved, but is 
likely to he in the order of 1 :500 or 1 :1 DOO with D.5r contours or spot heights. Depending on the topography of the alignment selected, it
would probably also be necessary to survey cross sections for the main canal(s), at intervals of one cross section per 200-300 metres. Longi
tudinal profiles would be plotted at a scale of 1:10,000 horizontally and
1:100 vertically and cross sections at a scale of 1:100.
In addition to, or in conjunction with, the sample surveys for land level ling requirements referred to in 2,6,4., a close (10cm) contour interval
survey would be carried out or. a representative sample area, to permit planning and cost estimating for the on-farm works. This might be concen trated on one area, or if there is major topographic variation between land units, -esulting in different farm layouts, the survey would be divided
up to represent these adequately. The scale would be of the order of
1:2:500 and the total area surveyed would be about 300 ha.
Survey information for major earthworks would be fed into a computer programme developed by Halcrow for the computation of cut and fill quantities
£/ Guideline for the Preparation of Feasibility Studies 'or Irrigation and Drainage Projects. FAO/IBRD Co-operative Programme, Rome Dec. 1970.ANNEX I - Page 17
All the above work would be carried out by our nominated Chief Topograohic Surveyor, but ne would require full time assistance ^rom an Ethiopian with a diDioma 1n surveying, who would receive training in this aspect of the work.
5.2.8. Organisation ano Management
2.8.1.     General - Through their association with VADA and the Amibara
Irrigation ?r
j t the consultants have up-to-date Ethiopian
O ec
experience of the planning ano operation of project authorities, farming organisations for project implementation, water manage ment, and production activities. This experience and knowledge
of local conditions ano policies, combined with experience on
other large irrigation projects elsewhere in the world, would
be brought to bear when analysing the requirements of the Daoous irrigation Project.
2.3.2.     Institutions - The final composition of the project would influence the institutional framework .to te recommended. “he
project responsibilities of VADA, the Ministry of State Farms Development, the Settlement Agency of the Relief and Rehabili tation Conwission, the Ministry of Agriculture and Ministry of
Mines, Energy ano Water Resources would be studied and discussed. The terms of reference for an authority/management body to implement the project would be considered and recommendations made which would provide the necessary administrative structure
for successful implementation in a manner acceptable to Government.
2.3.3.     Project Implementation - The consultants are familiar with the requirements of the international funding agencies with regardANNEX J - Page 18
to provision of supervision expertise during the construction
phase, and fully appreciate the need to keep exoatriate contrac
ting and technical assistance to a minimum to ensure maximum national involvement in the project.
The staffing, form of contract and rate of development recom mended would therefore take into account the trained manpower and contractor resources which are likely to be available by 
the predicted construction start-date. Organisational proposals 
for the implementation phase would be given in a chart illus
trating the proposed linkages and lines of responsibility from Ministerial level to supervisory staff.
’.8.4, Project and Farm Management - Recommendations for the operation and management of the various project components would be made in the light of past and present experience in Ethiopia. Consi deration would be given to the creation of a Valley Development Agency to monitor and control water distribution and useaae or alternatively to place full control and responsibility with
the farm-ing organisation.
The creation of a co-ordinating committee tD integrate all the activities generated by the project (including provision of
health and educational facilities, traae and commerce, power and water supplies, township development and communications) would be given due consideration when estimating the organisational and infrastructural requirements.
The opportunities for settlement farming along coverment- approved lines on a collective or smallholder group farming basis, with the integration of co-operative societies and peasant farmer associations would be investigated. Recommendations as to farm development structure, holding size, support services, extension and farmer training would be made.
The possibilities for combining the output from settler farmersANNEX I - Page 19
with that from la-ge state farm units, for centralised
processing and/or marketing, would be examined.
Recoraendations on the qualifications and experience necessary for the key executive and management positions would be included.
B.2,9, Social and Ecological Aspects
The nature of the project and the substantial in-migration which it will involve, togetner with the present lack of modem facilities in the area, all suggest that a number of social issues ana problems should be anticipated. These should include inter alia: impact of the project on existing inhabitants and arrangements for their participation in the project; identification of potential in-migrant groups and assessment oftneirsuitability and special requirements; and provision for meeting basic needs sucn as water supply, fuel and power, housing, education and health care.
The construction of the diversion structure and the proposed off-take of water for irrigation will inevitably affect the Dabous river
regime. The likely effects of these changes on wildlife and plant populations and environment would be considered.ANNEX I - Page 20
5.2,10. Economic and Financial Appraisal
Trie finalisation of the economics and financial appraisal work would
be carried out in tne UK by the Project Economist using data collected
and prepared in Ethiopia and the cost estimates prepared as a result
of preliminary designs for the irrigation infrastructure (which would
also be prepared in tne Home Office).
To provioe an indication of the project's worth to the Ethiopian economy, an economic analysis would be undertaken for the whole project (including
the rainfed development). This would involve the tabulation of total benefits and costs (shaoow priced where appropriate), so that estimates cf the economic internal rate of return (EJRR) and Net Present Value (NPV)
could be obtained, A sensitivity analysis embracing those key variables 
t
which could affect the economic viability of the project would be included.
A clear exposition of all assumptions, especially those used in estimating
the snadow price of labour and economic and financial prices produced -
would be provided. Operational budgets would be drawn up to both estate
and smallholder models, to estimate their respective capacities for
recoupment of project costs. Each budget would detail expected ingoings 
and outgoings both in physical and financial terms.
A financial cash flow analysis would be prepared, illustrating where
appropriate, the effects on the Government's budget and debt position.
Outline financial forecasts would be prepared for large scale state farm development and farm budgets for smallholders.
Amendment No,3. Dated December 23 I960
in Annex I, paragraph B.2.6.8. is modified by adding the following two sentances at the end of such para:
B.2.6.8. .... The energy requirements of the Dabus Irrigation Scheme call
for a study of the alternatives of local generation of import of electrical
energy from Finchaa. The study should obtain the best available cost estimates for the latter from EELPA and should investigate the technical feasibility 
a power station on the Dabus".

Summery

Summary: Dabus Irrigation Project Feasibility Study

Dabus Irrigation Project Feasibility Study - Summary

Project Overview

The Dabus Irrigation Project is a comprehensive feasibility study conducted by Halcrow-ULG Limited in February 1982 for the Water Resources Development Authority (formerly Valleys Agricultural Development Authority) of Ethiopia. The project proposes a mixed irrigation and rainfed agricultural development scheme in the Dabus river basin, western Ethiopia.

Key Components:

5,100 hectares under pumped irrigation
5,500 hectares of rainfed agriculture
Hydroelectric power station (9MW capacity)
New access roads and infrastructure
Agro-industrial processing facilities

Project Location

The project area is located on both sides of the Dabus river, a tributary of the Blue Nile, approximately:

55km northeast of Asosa (population 2,400)
430km west of Nekemte (population 24,000)
760km from Addis Ababa by road

Technical Details

Land and Water Resources:

Resource	Details
Gross arable area	13,390 ha (rainfed), 9,270 ha (irrigable)
Net potential area	11,380 ha (rainfed), 7,420 ha (irrigable)
River flow (Dabus)	Sufficient to irrigate 12,000-14,000 ha
Hydropower potential	9MW (immediate), up to 100MW with swamp regulation

Proposed Crops:

Irrigated Area	Rainfed Area
Grapevines (raisins) - 1,400ha Cotton Ginger Peppers Sugar cane	Cotton Peppers Maize Niger seed (neug)

Financial and Economic Analysis

Item	Value (1980/81 prices)
Total project cost	Birr 178 million (US$86.4 million with contingencies)
Foreign exchange component	61% (US$53 million)
Annual production value at full development	Birr 40.8 million
Economic rate of return	10%
Financial rate of return	21%

Implementation Plan

Phases:

Pre-construction (1981-1984):
- Geotechnical studies
- Access road construction
- Pilot farm establishment
Construction (1985-1989):
- Hydropower station
- Irrigation infrastructure
- Agricultural development

Management:

The project would be implemented by the Water Resources Development Authority with operational management by the Ministry of State Farms Development through its Western Agricultural Development Corporation.

Key Benefits

Creation of approximately 2,600 jobs for resettled families
Improved regional infrastructure (102km all-weather roads)
New communities with housing and services
Agricultural processing industries
Surplus power for regional development
Foreign exchange earnings from export crops

Challenges and Considerations

Remote location with high transport costs
Need to import most labor and staff
Potential environmental and social impacts
Sensitivity to production delays or price fluctuations
Dependence on international funding