India - States Road Infrastructure Development Tehcnical Assistance Project (Formerly listed as Technical Assistance for States' Road)

Report No. PIC4001 Project Name India-States Road Infrastructure Development... Technical Assistance Project Region South Asia Sector Infrastructure Product ID INPA45600 Borrower India, acting by its President Contact: Department of Economic Affairs (DEA) New Delhi 110 001 India Date this PID Prepared October 17, 1996 Project Board Date November 21, 1996 Country and sector background. A major factor in the long-term prospects for economic growth and social development in India is the inadequate, under-financed and deteriorating road transport infrastructure in the country. Amid the reality of severe road congestion and poor pavement conditions along most major routes and corridors, the demand for intercity road freight transport in India is expected to double every 12 years while the demand for passenger road transport is expected to double every 8-9 years. Substantial improvements in the mobilization of finance and in the effective facilitation and management of road infrastructure assets are urgently required if India's economic liberalization program is to continue unimpeded from this quarter. However, public funding levels for major road maintenance and rehabilitation have been decreasing steadily, and the extent of private sector investment in roads is likely to stay relatively minor in India. Compounding the physical road infrastructure problems, is the related need for major institutional reforms and capacity building in the roads sector. While pursuing major investments in the National Highways network with external assistance, GOI has since mid-1994 also extended its explicit support to the States for their preparation of major state-level road infrastructure investment proposals aimed at qualifying for external financing assistance. This has resulted in several States' proposals, aimed directly at satisfying World Bank conditions for appraisal based on an initial state-financed network-wide study of the objective road conditions, traffic densities and road improvement priorities in their major road network, termed a Strategic Options Study (SOS). However, a stronger focus on enactment of parallel sector financing and institutional reforms is essential to achieve the sustainability of road project investments and to ensure effective ongoing state-level capacity for road infrastructure provision, financing and maintenance. Project objectives. The overall objective of this project is to strengthen policy-based efforts by states in India towards effective reforms in the provision, financing and maintenance of road infrastructure. In particular, through the financing of targeted Technical Assistance (TA), the project aims to: (a) help states comprehensively prepare quality civil works components for possible Bank lending and/or financing from other external assistance sources; (b)  strengthen the state-level road agencies' capacity for road infrastructure project planning and management; (c) assist the states to prepare and implement appropriate reform strategies for sustainable strengthening of their capacity for the planning, financing, maintenance and management functions of the roads sector; and (d) assist the states to implement effective policies for increased private sector road infrastructure investment. Bank support for follow-up investments will materialize to the extent that States undertake comprehensive sectoral reforms. Project Description. The proposed project will mainly finance TA activities under two project categories. The first, Project Preparation and Implementation Support, will cover: (i) techno-economic feasibility, design, all preliminary engineering and initial final engineering, procurement and works bidding preparations for proposed road infrastructure investments; (ii) assistance with upgrading of the project management and implementation capacities and resources of the states' roads authorities; and (iii) support for appropriate workshops, training, trial/demonstration projects and/or pilot studies. The second, Policy Support and Institutional Development, will provide assistance in parallel with the State's roads investments operations for early substantive action on reform measures for key aspects of sector institutional strengthening and capacity-building. Project financing. The project cost will be approximately US$53 million (net of taxes, duties, etc.), which will be divided between the two main (abovementioned) project components at approximately US$ 40.5 and US$ 12.5 million, respectively. Project implementation. The project coordinating agency will be GOI's Department of Economic Affairs (DEA). However, most of the project's TA activities will be implemented and executed by the PWD/road agency of each participating state. Sustainability. The TA activities are all aimed at increasing the sustainability of states' ongoing capacities in road infrastructure planning, investments, financing, implementation and maintenance. The quality of the future road projects resulting from TA-supported investment preparations should themselves ensure road performance and durability considerably beyond current norms. Longer-term sustainability of this project's sectoral benefits will come through substantive improvements to the states' capacities for effective road infrastructure management, road maintenance and financing. Lessons from previous Bank involvement. From past experience, it is crucial that proposed investments be prepared much more comprehensively prior to project appraisal, particularly in relation to environmental and social impact aspects, and that all clearances etc., for the proposed civil works be fully resolved for the letting of contracts, etc., by project effectiveness to the greatest extent possible. Poor project implementation and contract management capacities in the PWD/road agencies have been among the major factors in slow and problematical progress with Bank-assisted road infrastructure projects in India to date. The Bank's strategy in this sector will emphasize policy-based TA and investment lending, requiring comprehensive - 2-  application of international-standard technical expertise for the major techno-economic, social and environmental aspects of investment preparations, and parallel action on key reform/strengthening measures in sector financing and institutional capacity aspects. Poverty category. Not directly applicable. However, successful roads sector performance enhancements achieved through TA-supported interventions should result in improved road infrastructure provision and road maintenance by the states, which will have broad state-wide economic and financial benefits. Environmental and social aspects. Since the project will finance TA only, there are no significant direct environmental impacts in this project. However, the project will inter alia fund TA to individual states' PWD/road agencies for (a) preparation of appropriate Environmental Assessments and Resettlement Action Plans for future road infrastructure investments planned for Bank and/or other external financing, and (b) the enhancement of state-level institutional capacities to henceforth manage these aspects of road infrastructure more effectively. Program objectives category. On the basis of the project's dual focus on comprehensive assistance for preparation of planned road infrastructure investments in compliance with the Bank OD on Environmental Assessment, and on engendering major, genuine and sustainable institutional and financing improvements in the states' roads sector, the project's categorization in this context is both Economic Management (EA) and Environmentally Sustainable Development (EN). Benefits. The proposed project would enable GOI, in accordance with its major current emphasis on achieving road transport infrastructure improvements, to assist the states individually to more effectively prepare sound road infrastructure investment proposals likely to meet Bank lending requirements, and in parallel to assist these states to implement considerable improvements in their capacity for road infrastructure development, management and financing. This should lead to considerable economic gains to India's road transport sector, through improved road network conditions, management and maintenance, resulting in improved road transport efficiency with reductions in vehicle operating costs, journey times and operational safety, as well as financial gains to the states through greater cost-effectiveness from available public resources for road infrastructure provision and maintenance. Risks. The main risks to effective performance of this TA project will arise from (a) an insufficient number of states accepting participation under the proposed conditions; (b) the possible weakening of some states' commitment to the planned sectoral reforms in the absence of firm prospects of eventual Bank financing of their proposed road infrastructure investment; (c) the limited experience of most states' PWD/road agencies with the engaging and effective management of external consultants on project development and implementation; and (d) the states' limited assimilation of Bank project preparation, procurement and contract management requirements. The GOI has committed itself to directly minimizing the first two of these risks with the states, - 3 -  individually and collectively. The latter two risk areas will be addressed from the outset of any TA-supported activities, as an integral part of any investment preparations and within specific per-state/per- agency "capacity-building" Note: The Environmental Data Sheet is available at the Public Information Center upon request. Contact Point Ernst Huning, Task Manager The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202) 473-5884 Note: This is information on an evolving project. Certain components may not necessarily be included in the final project. Processed by The Public Information Center week ending October , 1996. - 4 -