On February 26, 2024, the Ministry of Agriculture and Agrarian Reform issued Decision No. 35, establishing the Fund to Finance the National Project for Transition to Modern Irrigation (FFNPTMI). This comes eight months after the issuance of Law No. 10 of 2023, which stipulated the establishment of the fund, with the aim of regulating the mandatory transition plan to modern irrigation in irrigated agricultural lands.

It is not clear why Law No. 10 of 2023 and Decision No. 35 include the term “establishment” of the fund as if it were a new matter. The national project for transitioning to modern irrigation predates Law No. 10 of 2023. The FFNPTMI was established by Decree No. 91 of 2005, amended by Law No. 20 of 2010, aimed at organising and implementing the prescribed plan for transitioning to modern irrigation. The national project work has been suspended since 2012 due to the Syrian conflict and was only resumed in 2021.

Although Decision No. 35  seems to be executive instructions for Law No. 10 due to its procedural and executive applications, article 6 of Decision No. 35 stipulated that the Minister of Agriculture, based on a proposal from the fund’s board of directors, issues the internal and financial regulations of the FFNPTMI in coordination with the Ministry of Finance.

Law No. 10 of 2023 stipulated the subordination of the FFNPTMI to the Ministry of Agriculture, with its headquarters in Damascus, and the possibility of establishing branches in other governorates, with a special account in the Agricultural Cooperative Bank. The fund’s capital is determined at SYP 150 billion, payable over 10 years. Its revenues are determined from the allocations given to it in the state general budget, grants, donations, interest on current accounts of the fund, amounts paid by the beneficiaries, fines, and late payment interest on the beneficiaries’ loans.

According to Article 9 of Law No. 10, money in the fund is allocated firstly as grants and loans to beneficiaries to finance the equipment and expenses of transitioning to modern irrigation; and secondly, to cover the expenses of the fund. A “beneficiary” of modern irrigation includes anyone involved in agricultural investment, whether as an owner, beneficiary, lessee, or farmer.

Law No. 10 considers the transition to modern irrigation a mandatory process in areas approved by the High Committee of the FFNPTMI, while it is optional in areas not approved. Law No. 10 imposes on anyone whose land falls within the areas subject to mandatory transition to modern irrigation and who refuses to fulfil the obligations imposed on them, gradual fines starting from SYP 5,000 per hectare in the first year, up to SYP 500,000 in the fifth year.

The new addition introduced by Decision No. 35 is what its seventh article included, which is the inclusion of all loans for projects transitioning to modern irrigation within the interest rate support programme. The Ministry of Economy launched the interest rate support program in 2019, whereby the state budget bears seven percent of the interest on loans granted by public banks on specific projects prioritised by the government.

According to the seventh article, a farmer benefiting from the transition to modern irrigation is entitled to financing for the costs of the irrigation network in two instalments: the first as a loan from the Agricultural Cooperative Bank covering 70 percent of the costs, and the second as a grant from the FFNPTMI covering 30 percent of the costs. The beneficiary repays only the loan in equal instalments over a period of five years. The beneficiary pays an interest rate of eight percent of the loan amount, while the interest rate support programme covers seven percent of the loan amount.

Notably, the beneficiary does not receive the loan and grant in cash. Instead, the fund contracts with private companies to provide the beneficiary with equipment, carry out the implementation, and cover the costs from the Agricultural Cooperative Bank. There is limited information available about these companies and the nature of their work. These companies must be accredited by the Directorate of the National Project for Transition to Modern Irrigation.

Those interested in obtaining financing from the FFNPTMI for their land must submit an application accompanied by a set of documents and guarantees, including an official document about the water source for irrigation and a licence allowing pumping water from it. Also they must include a real estate record, or a land lease contract, or a farming contract. A technical study of the irrigation network prepared at the branch of the National Project for Transition to Modern Irrigation or one of the accredited companies is required.

Those seeking financing must provide personal, banking, or real estate guarantees if the financing amount is less than SYP 1.5 million (The dollar exchange rate is SYP 14,700 on the black market, and 13,500 on the official market). The guarantee must be exclusively real estate if the required financing amount is more than that. In case the applicant fails to secure these guarantees, they must deposit 40 percent of the cost to the Agricultural Cooperative Bank and receive in return a loan amounting to 60 percent of the estimated irrigation network cost.

These loans are subject to a system called Loan Investment Control applied by the Agricultural Cooperative Bank to ensure that the financing is used for its specified purposes. If the beneficiary misuses or fails to renew the irrigation network when needed, the funding amount is reclaimed, although it is not clear how the retrieval mechanism works.

There is no specific ceiling for financing, and the implementation costs of the irrigation network often exceed SYP 50 million, according to official press reports.

According to figures published by the state-run SANA news agency, the annual plan for 2024 for the transition to modern irrigation aims to irrigate 2,400 hectares of land distributed across all Syrian governorates, with an additional 3,000 hectares in southern Aleppo. In 2023, 1,000 additional hectares were irrigated across all governorates, and 600 hectares in 2022.

According to official press reports, some beneficiaries of the transition to modern irrigation complain about the rising cost of irrigation networks and the impact of soil salinity on the operational lifespan, which typically does not exceed seven years. Often, poor implementation and low-quality materials used result in the actual lifespan of networks being between four to five years.