The feasibility study for the Norera Dam project in Kenya was assigned to a consortium of international consultants with international aid financing. OMIKRON undertook the financial and economic appraisal based on estimates of project costs and expected impact on local agriculture and local settlements provided by other parts of the consortium.
The Borenga dam project had four components:
- The dam itself, which could be evaluated as a standalone project
- The irrigation network that will bring the benefits of the dam’s increased water availability to the farm gate
- The provision of increased drinking water quantities
- The hydroelectric power production
OMIKON’s study chose to approach the appraisal both by project component and for the overall project. This approach covers both the need to asses the project as a whole, but, at the same time, it allows disaggregating the overall result by component.
The following conclusions were reached:
The project is financially feasible and socially strongly advisable. The strong element contributing to the advisability of the project is its impact on the farming economy. Gains in profitability in the farming economy are very significant. In order for these gains to be realized, the analysis has incorporated two provisions:
- It internalized extension services and their cost so as to provide considerable assistance and transfer of knowhow to the famers of the region, in order for them to take advantage of the new crops and cultivation methods that are made possible through the realization of the project.
- It has considered water pricing policies that do not cover the full cost of irrigation water produced via the project. This has been decided on the basis of considerations that the local farmers are not used to paying high water prices and could be discouraged if a narrow minded full cost recovery water pricing policy were adopted. Such discouragement could have detrimental effects to the whole exercise.