Background
Prior to independence, irrigation system operation and maintenance was relatively effective throughout Kyrgyzstan. At the State level, the Ministry of Reclamation and Water Resources was responsible for O&M of the inter-farm irrigation systems from the source to the hydro-posts serving the Kolkhoz/Sovkhoz. Below the hydro-posts O&M, and sometimes rehabilitation of the on-farm irrigation and drainage systems, was managed by irrigation brigades of the Kolkhoz and Sovkhoz.

After independence, institutions and organizations previously responsible for O&M of irrigation systems fell victim to the political, institutional, and economic reforms introduced in Kyrgyzstan. At the State level, the Department of Water Resources (DWR) has had to contend with the inadequate availability of Government funds for inter-farm irrigation system O&M for the last decade. As a result, significant deterioration in the inter-farm irrigation infrastructure has occurred. In an attempt to alleviate this problem, the government issued a decree in 1995 requiring farmers to pay irrigation service fees. While the overall response to this program has been positive, contributions from water users is limited as the fees (30 Soms per 1,000 m3) only partially covers inter-farm irrigation system operational costs. Furthermore, collection has become a major problem for the DWR. Of the fees collected from individual water users, 80% or more are paid with in-kind farm products. DWR's O&M budget for 2000 provides a clear indication of the seriousness of the problem. The International Development Association (IDA) estimated that the approved O&M budget for DWR in 2000 was only about half of the amount required for normal O&M of the Republic's irrigation systems. Furthermore, of the total estimated budget, only 14% was derived from State funds. The other 86% came from a grant from the European Union (38%) and from water fees, including riparian water user contributions (48%).

The situation at the on-farm level is even more serious. Agricultural reforms resulted in the dissolution of the Kolkhoz and Sovkhoz into numerous, smaller irrigation units (cooperative farms, joint-stock companies, joint peasant farms and individual private farms), each of which required it's own delivery point. The breakup of the Kolkhoz/Sovkhoz, also resulted in the loss of the irrigation brigades, creating a vacuum in the responsibility for O&M of on-farm irrigation and drainage systems that has yet to be filled. Initially O&M responsibilities of the on-farm irrigation and drainage systems were given to the village governments, but the already over-burdened village governments were not provided with any funding for O&M. Furthermore, they had neither the interest nor the expertise to manage the on-farm irrigation system. In some areas, the Raivodkhoz also attempted to fill this management vacuum by contracting to supply irrigation water to the individual farms. However, given that the Raivodkhoz staffing and budgets are insufficient for O&M of inter-farm irrigation and drainage systems, it has not been a viable solution. As a consequence, on-farm irrigation and drainage systems are rapidly deteriorating, conveyance system loss rates have increased dramatically, water deliveries have become increasingly undependable, and the yields of irrigated crops have stagnated or decreased.

During the early to mid-90's the Government of Kyrgyzstan began to examine the potential of solving these problems through the development of WUAs. Between 1993 and 1998, three separate grants from ADB, FAO, and the Japanese Government were used to develop a number of pilot WUAs, send Government officials, officers, and selected farmers on WUA study tours to Spain and Turkey, and develop the preliminary design of the On-Farm Irrigation Project. Initial results of these pilot projects also convinced the Government that it would be possible to develop WUAs that have a legal authority to contract water delivery from the Raivodkhoz and the ability to take over O&M responsibilities of the on-farm irrigation system.

Project Objective and Rationale
The main objective of the OIP is to achieve increased crop production, through equitable and sustainable water distribution on about 160,000 ha of irrigated land across the seven Oblasts. To achieve this objective, the OIP is closely linked with the on-going Irrigation Rehabilitation Project (IRP). The IRP finances rehabilitation of inter-farm irrigation networks in order to provide adequate and timely water deliveries to the hydro-posts of the former Kolkhoz and Sovkhoz. The OIP will finance rehabilitation of the on-farm irrigation infrastructures, primarily within the command areas that have benefited from the IRP, to ensure more reliable and efficient use of supplied water.

However, it is also apparent that the benefits from the irrigation system rehabilitation will be minimal and short-lived without corresponding, viable inter-farm and on-farm O&M programs. The Government now recognizes that this can only be achieved through the development of sustainable WUAs that have legal authority to contract water delivery from the Raivodkhoz and the ability to take over the O&M responsibilities of the on-farm irrigation system. Consequently, a major emphasis of the OIP is the promotion, development, and strengthening of WUAs. Along with this is a corresponding strengthening of the DWR's capacity to develop and service WUAs. Finally, the Government is firm in its desire for a country-wide project. Therefore it was agreed that the OIP would cover all seven Oblasts and up to 19 Raions.

Project Components
The main components of the OIP include a WUA Development and Strengthening component and an Infrastructure Rehabilitation and O&M component. A brief description of the two components follows:

WUA Development and Strengthening Component
The Project will establish and train a WUA Support Unit at the DWR office, seven Oblvodkhoz WUA Support Units in the Republic's seven Oblasts, and up to 19 Raivodkhoz WUA Support Units in 19 of the Republic's 42 Raions. This effort will be supported by the provision of technical assistance and through international study tours to countries with experience in WUA development and management transfer. Over a four-year period, all WUA Support Units will be regularized in their respective departments; thus providing the Department with a permanent capacity to establish, support, and strengthen WUAs. Finally, it is expected that during the project period WUA Support Units will be able to utilize the training they receive to develop and strengthen a minimum of 160 WUAs throughout the country.

Infrastructure Rehabilitation and O&M
The Project will support selective rehabilitation of a minimum of 160,000 ha of the on-farm irrigation systems, under the management of WUAs that have met certain requirements. While the needs will be specific for each WUA, they would include rehabilitation of lined canals, cleaning of earthen canals and drains, rehabilitation and construction of structures, installation of permanent water measuring devices, and repair of night storage reservoirs and scheme roads.
While priority will be given to selection of on-farm irrigation systems within the command area of inter-farm systems rehabilitated by the IRP, it is also anticipated that a number of WUAs outside of the IRP command areas may qualify for on-farm irrigation system rehabilitation. Therefore, a limited amount of project funds are available to finance the rehabilitation of inter-farm systems on a case-by-case basis. This would include canal cleaning, lining and installation of structures.

Raivodkhoz WUA Support Units, under the guidance of the Oblvodkhos WUA Support Units, will be responsible for most of the survey, design and supervision work required to rehabilitate on-farm irrigation systems. For works beyond the capacity of the WUA Support Units, the project will finance small contracts with private consulting firms.

Finally, participating WUAs must develop a financial plan that includes incremental increases in user contributions to achieve long-term financial viability. In other words, the user contributions must eventually reach a level that covers all O&M costs of the WUA.

On-Farm Irrigation System Rehabilitation Requirements
The OIP will provide technical guidance and loans for the rehabilitation of on-farm irrigation systems of selected WUAs. The loan agreement will require the WUA to repay 25% of the investment costs with an interest rate not to exceed the rate of inflation and a repayment period of 7-years. The repayment period also includes a 4-year grace period.

Before a WUA can obtain an OIP loan to finance rehabilitation of the on-farm irrigation system, it will have to pass seven milestones. The seven milestones are described below.

1. Formal establishment of the WUA, including proof of legal registration and bank account opening.
2. WUA Directorate staff is hired, paid, and training of the WUA board and directorate has been initiated.
3. The General Assembly has approved a long-term O&M plan, which includes an ISF development plan to achieve long-term financial viability through a gradual increase in the ISF.
4. At least 80% of the WUA members have paid the agreed upon ISF, which includes payments to the Raivodkhoz, for the period since WUA establishment. If this milestone is reached in one-year, the ISF should be sufficient to cover full payment to the Raivodkhoz and at least 30% of the required O&M costs of the WUA.
5. Oblavodkhos and Raivodkhos WUA Support Units, assisted by the PIU and DWR staff must developed alternative rehabilitation plans for the on-farm irrigation system rehabilitation, including associated costs. The alternative plans must be based upon perceived rehabilitation needs expressed by WUA members during formal and informal meetings. Furthermore, the rehabilitation alternatives must be technically, economically (financial internal rate of return of at least 12%) and environmentally sound.
6. The WUA General Assembly has formally selected one of the alternative rehabilitation plans.
7. The WUA General Assembly has voted to borrow funds for irrigation system rehabilitation under the agreed upon repayment terms and the WUA Council has formally requested the PIU to implement the agreed upon rehabilitation works.