Nepal - Road Flood Rehabilitation Project

Document of The World Bank FOR OFFICIAL USE ONLY C4Z 44 - asp Report No. P-4785-NEP AND R _ a OF THE PRESIDENT OF THE INtERNATIONAL DEVELOPMT ASSOCIATION TO THR EXECUTIVE DIRECTORS ON A PROPOSED CREDIT OF SI) 11.2 MILLION TO THE KINGDOM OF NEPAL FOR A ROAD FLOOD REHABILITATION PROJECT Nay 20, 1988 This document has a restricted distri'ution and may be used by recipients only in the performance of their official duties. Its contents ma3 not otherwise be disclosed without World Bank authorization.  SURICY L (As of February 29, 1988) Currency Unit Nepalese Rupee (NR) US$1.00 NRs 21.9 NR 1.00 US$0.046 NRs 1 million US$45,662 EIGIITS ARD MIEASURES Netric British/US EXWdvalent 1 meter (m) 3.28 feet (ft) 1 kilometer (km) 0.62 miles (mi) 1 hectare (ha) 2.47 acres (ac) 1 square kilometer (km2) 247 acres (ac) AM NEYIATIORS AND ACRum $ ADB - Asian Development Bank CE = Chief Engineer DOR Department of Roads HNG - His Majesty's Government of Nepal MWT - Ministry of Works and Transport ODA - Overseas Development Administration (UK) PEM Program Engineering Manager SATA - Swiss Association for Technical Assistance SDC - Swiss Development Cooperation UNDP - United Nations Development Program aOVERIGUM FISCAL YhAR July 16 to July 15  FOR OFFICIAL USE ONLY ROAD FLOOD REHABILITATION PROJECT Credit and Prolect Sumary The Kingdom of Nepal SDR 11.2 million (US$15.5 million equival Terms: Standard, with 40 years maturity Financing Plan: Government US$ 2.5 million UNDP - US$ 0.5 million IDA US$15.5 million Total - US$18.5 million Economic Rate of Return: Not applicable Staff Appraisal Report: None. Technical Annex attached in lieu. No. 20801 This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  AND OF THE PRESIDECT OF THE INTERNTIMOAL DEVEilPMENT ASSOCIATION TO THR EKECUTIVE DIRECTORS OM A PROPOSED CREDIT TO TEE KIRGDGK OF NEPlL FOR A ROAD FLOOD REHABILITATION PROJT 1. The following memorandum and recommendation on a proposed development credit to the Kingdom of Nepal for SDR 11.2 million (US$15.5 million equivalent) is submitted for approval. The proposed credit would be on standard IDA terms with a maturity of 40 years. It would help finance the priority requirements of rehabilitation and reconstruction of damages to road infrastructure during the flood disaster of July-August 1987. 2. Bac4round. Nepal is bordered by China to the north, and India, her main trading partner, to the east, south and west. The country's land area of 141,000 square kilometers is divided into three distinct physical regions which run in almost parallel bands from east to west across the couuitry: (i) the relatively fertile Terai (23%) in the south, which produces the country's agricultural output; (ii) the Hills (61%) including the important Kathman4j Valley in the center; and (iii) the Himalayas (16%), the world's highest mountains, in the north. The central and northern regions are dissected by deep valleys running generally from north to south. 3. The population of Nepal is now estimated at about 17.0 million. With an average of more than 120 persons per square kilometer, Nepal is one of the most densely populated mountainous countries in the world. About 34% of the population lives in the Terai, while 58% live in the Hills and 8% in the Himalayan region. About 90% of Nepal's population live in rural areas and for nearly all of them agriculture is the main source of livelihood. Nepal is one of the poorest and least developed countries in the world. Per capita income is estimated at US$160 (1986) and health and education standards are below the average for South Asia: life expectancy at birth is only about 47 years; infant mortality about 135 per thousand; and adult literacy only 19%. Between 1965 and 1985, GDP grew at an annual rate of 2.6%, barely exceeding population growth at 2.4%. 4. Nepal's daunting topography and climate are the major impediments to inexpensive and reliable road transport. They create a set of adverse conditions that are unequalled in the world. In addition, the many streams and rivers are seasonally swollen by the monsoon rains and make conditions for road transport even more difficult, and road construction and maintenance exceptionally trying.  -2- 5. Periods of intensive rainfall result in flash flooding of the sraller rivers and general flooding due to the inability of natural drainage systems to cope with the excess water. Particularly destructive floods are most likely in July and August when rainfall coincides with snowmelt in the Himalayas. The 1987 flood was the worst in 20 years, as flood peaks from snowmelt and rainfall coincided with glacial effects in China and the Himalayas. Flooding affected the road network and irrigation structures extensively. The greatest damage was in the Central and Eastern Development Regions and in the Kathmandu Valley. Road transport cane to a halt along the East-West Highway in the Terai and along the Arniko Highway from Kathmandu to China. 6. Damage to Roads and Ancillary Structures. The main damages to the road infrastructure occurred due to the failure of river channelization, protection and river bank stabilization works at approaches to bridges and road embankments, and other cross-drainage structures, due to heavy scour and changes in the river courses in the Terai. In the Hills, heavy floods and landslides resulted in successive damming up and breaking through of rivers, which caused damage to br'dges, washout of road sections, and failure of protection works at approaches. About 350 km of roads at 37 different locations, mainly in the Eastern and Central Development Regions, and 106 bridges and cross-drainage structures were damaged to varying degrees of severity. 7. Response by Government and Donors. His Majesty's Government of Nepal (HMG), supported by international donors, responded quickly and effectively by providing immediate relief to the affected population. H11K also carried out a detailed flood damage assessment. The U.K. Government (ODA) has assisted HMG to assess damages along the East-West Highway, and the Swiss Development Cooperation (SDC) has provided technical assistance for geological investigations along the Arniko Highway. HMG's major flood-related efforts now focus on rehabilitation and reconstruction of the road and irrigation infrastructure for which it requested IDA's assistance in January 1988. IDA's strategy has been to: (i) help H1MG to prepare an emergency road rehabilitation program; (ii) coordinate with major multilateral and bilateral agencies (UNDP, ADB, ODA, SDC); and (iii) ensure that priority is given to repairs which are needed to re- establish economic activities and those that facilitate resumption of the flow of goods and services. 8. Rationale for IDA's Involvement. Given IDA's long-standing development role in Nepal, it is well placed to assist HMG in rebuilding the roads and irrigation infrastructure, as it has already financed three highway and eight irrigation projects. The proposed project focusses on road rehabilitation; the irrigation rehabilitation needs are being handled under a separate project (proposed Mahakali Irrigation II). As the lead donor, IDA would help coordinate the road sub-sector reconstruction, and assist in financing about one half of HMG's program. Other donors are discussing with HMG additional support to help with the remainder of the program.  -3- 9. Project Objectives. The proposed project aims to dieliver immediate assistance to HMG to carry out its program to rehabilitate, rebuild or replace priority elements of flood-damaged roads and ancillary structures in the Eastern and Central Development Regions and the Kathmandu Valley. It would also accelerate the start of selected top priority works, to protect investments in road infrastructure that survived the 1987 flood. 10. The Proposed Proiect. The proposed project (US$18.5 million in June 1988 prices), would comprise priority components of HMG's emergency program to rehabilitate flood-damaged road infrastructure. It would be executed by the Department of Roads (DOR), which would also be executing agency for the UNDP component. The credit would finance the first three years of the program, and would include: (a) flood protection works (US$2.4 million), bridges, culverts and causeways (US$3.8 million) and roads (US$11.0 million); and (b) technical assistance for consulting services, by local and foreign consultants, and equipment (US$1.3 million). Works comprise repair, reconstruction, strengthening and upgrading and limited new construction of flood protection schemes, bridges, culverts, causeways and roads damaged during the 1987 floods. The limited new flood protection works would entail no changes to the new courses taken by rivers. They would protect structures that survived the flood and the ones to be built under the project. These works will not cause any appreciable harm to riparians since they will be confined to che existing river channels and would not adversely affect the quality and quantity of water downstream. In view of this, no notification to downstream riparians is required. 11. Designs for works to be implemented in the remainder of the current dry season (March-June 1988) have been prepared by DOR. These have been reviewed by and are being implemented under the supervision of consultants, who have been employed on a sole source basis. Sub-projects to be implemented in subsequent construction seasons will be designed and supervised by consultants to be retained under terms and conditions satisfactory to IDA. These sub-projects will be selected on the basis of criteria discussed and agreed with HMG at negotiations and will include, inter alia, (a) repair of only 1987 flood-damaged works; (b) no deferred maintenance; and (c) new construction works limited to protection of structures that survived the flood and those requiring rebuilding as a result of the flood. 12. A breakdown of costs and the financing plan are shown in Schedule A. The proposed IDA credit of SDR 11.2 million (US$15.5 million equivalent) would finance about 84% of the total project cost, net of taxes and duties. HMG will provide US$2.5 million as counterpart funds and UNDP US$0.5 million for technical assistance for one expatriate advisor (Program Engineering Manager). HMG would pass on the proceeds of the credit to DOR as budgetary allocations for sub-projects meeting eligibility criteria. Retroactive financing in an amount not exceeding US$1.5 million equivalent, is proposed for expenditures incurred on capital works and consultant services after March 1, 1988.  -4- 13. The Guidelines for Procurement under IBRD Loans and IDA Credits would be followed for procurement of works and goods. The Guidelines for Use of Consultants by World Bank Borrowers anid by World Bank as Executing Agency would be followed for retaining consultants. Amounts and methods of procurement and of disbursements, and the disbursement schedule are shown in Schedule B. A timetable of key project processing events and the status of Bank Group operations in Nepal are given in Schedules C and D, respectively. A map and a Technical Annex in lieu of the Staff Appraisal Report are also attached. 14. Agreements Reached. The following principal agreements were reached at negotiations: (a) IDA's total road flood rehabilitation project is expected to last three years; (b) DOR would employ consultants to design and supervise the works to be implemented in subsequent years; (c) the rehabilitation works to be undertaken under the project will be selected and carried out according to criteria agreed between HMG and IDA; (d) HMG will ensure that adequate funds will be allocated for implementation and maintenance of all project works; and (e) HMG will advise IDA annually on specific funding arrangements for flood rehabilitation works by other donors prior to presentation to IDA of each year's priority work program. 15. Credit effectiveness conditions would be that: (i) all effectiveness conditions for cofinancing arrangements for the provision of the Program Engineering Manager (PEN), other than the effectiveness of the DCA have been met; (ii) the PEM has been employed; and (iii) an adequate number of qualified staff have been assigned by DOR to work with the PEN. 16. Benefits. Although the Nepalese are resilient to natural disasters, they have been unable to maintain normal levels of economic activity after the 1987 floods. The proposed project would hasten the return to normalcy and improve the flow of goods and services including imports/exports to dhina and India, movement of perishables to markets and resumption of passenger traffic. The economic benefits, although not calculated, are likely to be substantial. The project would also help HNG plan for and improve its response to natural disasters. 17. Risks. The main risk relates to further damages that might occur due to unpredictable geologicel events or floods, and the difficulty of finding cost-effective permanent solutions. This issue will be addressed at the final design stage and reasonable and pragmatic trade-offs will be developed by the consultants. Another risk would be DOR's capacity to implement the project within the agreed implementation period. This has been addressed through the provision of adequate inputs of technical assistance by expatriate and local consultants and the PEM.  -5- 18. Recommendatio. I am satisfied that the proposed credit would comply with the Articles of Agreement of the Association and recommend that the Executive Directors approve the proposed credit. Barber B. Conable President Attachments: Washington, D.C May 20, 1988  -6- Schedule A NEPA ROAD FLOOD REHABILITATION PROJECT Estimated Costs and FiUancing Plan Estimated- Costs: