India - Grand Trunk Road Project

Report No. PID9891 Project Name India-Grand Trunk Road Project Region South Asia Regional Office Sector Institutional Development; Privatization; Highways Project ID INPE71244 Borrower(s) GOVERNMENT OF INDIA Implementing Agency Address NATIONAL HIGHWAY AUTHORITY OF INDIA NHAI National Highway Authority of India, 1, Eastern Avenue, Maharani Bagh, New Delhi, 110065 Contact Person: Subhash Patel, Chief General Manager (World Bank Projects) Tel: 91-11-682-4974 Fax: 91-11-692-4383 Email: nhai@vcnl.com Environment Category A Date PID Prepared February 12, 2001 Projected Appraisal Date January 15, 2001 Projected Board Date August 30, 2001 1. Country and Sector Background The national highway (NH) network has a total length of 52,000 km, which accounts for about 1.6 percent of the total road network of 3.3 million km but carries over 40 percent of the road traffic. Over 95t of the NH network are two-lane roads or narrower, and a significant proportion of the network is in poor condition. The poor condition of the road network is a result of inadequate allocation of resources to the core highway system and largely ineffective delivery of transport infrastructure services by the public sector. During the market liberalization in the 1990s, steady economic growth has driven the demand for road transport to grow rapidly; traffic on the NHs has grown at about 8-10w per annum, and the NH trunk roads are highly congested. The level of services is further worsened by the mixed traffic of fast and slow vehicles, highly congested and unsafe urban crossings, and state border inspections/check points (for the purposes of tax collection and commodity permits) that often hold up truck traffic for many hours. It often takes four to five days for a truck to travel one way between Delhi and Calcutta (about 1,300 km). The poor driving conditions in mixed traffic on the two-lane NHs are a major contributing factor to road traffic accidents. India is among the few nations with the highest road accident rate, and 38t of the accidents occur on NHs. Where both vehicle insurance system and health care are less developed, the economic and health impacts of traffic accidents on poor households are especially severe. Improving the level of services on the NH corridors requires both capacity investment and traffic efficiency and safety enhancement. The financial requirement for increasing trunk highway capacity (4-laning, 6-laning, and expressway) is expected to be  beyond the level that the public sector alone will be able to meet in the near future. Due to the weak enabling environment, however, private sector financing is yet to be mobilized to the extent that it would provide significant additionality to public investments. To summarize, India's road sector is facing the following main issues: (a) serious road capacity constraint on the NH network; (b) worsening road safety amid of growing motorization; (c) ineffective delivery of road infrastructure services by the public road agencies; and (d) weak enabling environment for private sector participation in road financing. Government strategy. The Government of India (GoI) recognizes that the poor performance of the NH network has been a major drag on the growth of national economy and is determined to upgrade the NH system through an ambitious National Highway Development Program (NHDP). The program was based on the government strategy outlined in the 1996 India Infrastructure Report. It includes the four-laning of a 6,000 km "golden quadrilateral" between Delhi, Calcutta, Chennai and Mumbai, the North-South and East-West corridors, and the trunk roads to key ports, totaling 13,000 km. It also includes the planning and construction of expressways where feasible. The program has an estimated total cost of $12 billion over ten years, with funding from government grants, fuel levies, tolls, bonds, private investments and international development banks, including the on-going Third National Highway Project (3NHP) funded by the World Bank. Budget allocations for construction and maintenance of trunk highway network have significantly been increased. Additional road user charges are being collected through fuel levies and tolls on improved roads, and private financing is being mobilized on a modest scale for selected bridges and short bypasses with improved policies and regulations. Institutional reforms to improve the effectiveness of public road agencies is also part of the government strategy. The Ministry of Surface Transport (MoST) had long been responsible for the development and management of the NHs. With close oversight, MoST delegated considerable responsibilities to the NH branches in the state Public Works Departments (PWDs). In 1995, NHAI took charge of major works programs on the NH network, with a high degree of outsourcing of services, works, and financing to the private sector. NHAI has now assumed full responsibility for the implementation of the NHDP, including the implementation of externally-aided projects financed by the Asian Development Bank (ADB), the Japan Overseas Economic Cooperation Fund (OECF), and the World Bank. As part of this program, NHAI has taken significant steps to develop and strengthen its institutional capacity for the development, maintenance, and operation of the NH system in response to the needs of road users and other stakeholders. Both MoST and NHAI are interested in attracting private sector funding to increase the NH capacity. The two agencies have signed concessions for the development of nearly 20 bridges and bypass projects, and NHAI is developing several other projects for private financing. In short, NHAI is developing into a leading agency for the commercial management and financing of India's national highways. 2. Objectives Poverty reduction in India depends crucially on sustained economic growth and private sector development. The development objectives of this project are to reduce transport constraints on national economic activity and to improve institutional capabilities of NHAI to manage its road program, assets, and service. The project will support the achievement of the above development objectives by (a) adding capacity to the heavily -2 -  congested parts of the national highway (NH) network; (b) improving road safety and traffic efficiency; (c) promoting private sector participation in road financing; and (d) enhancing institutional capacity for the effective delivery and management of NH assets and services. 3. Rationale for Bank's Involvement The most important contribution of the Bank in this sector is knowledge of effective institutions, policies, financing and implementation mechanisms in other parts of the world, and experience with analysis of economic, social, environmental and poverty impacts of alternative approaches. This has helped focus attention on the strengths and weaknesses of current practices in the sector, and to mobilize technical expertise in examining new approaches. Many of the procedures which have been put in place during project preparation are now being adopted by NHAI for all of its project preparation activities, with substantial changes in procurement, engineering, environment, land acquisition, resettlement, construction supervision and dispute resolution practices. Institutional development of NHAI, construction industry development and exchange of information between central government, states and the private sector have been supported by relationships with the Bank. Continued involvement of the Bank will facilitate institutional reform in sound business management, accountability and responsiveness to external stakeholders, improved management of road assets and traffic flow efficiency and safety, and better planning, policy and regulatory capacity. The Bank is a key partner of the Global Road Safety Partnership, and has comparative advantage in providing technical assistance for road safety.The Bank's financial participation is important for the implementation of India's NHDP, not only for providing needed funding but also helping mobilize other financial sources. 4. Description Highway upgrading: The NH sections proposed for upgrading under the project are located along the 1,000 km of National Highway 2 from Agra, Uttar Pradesh to Barwa Adda, Bihar. The entire stretch is divided into 5 construction packages which are further divided into 16 construction sections. Eight sections were chosen for financing under the 3NHP on the basis of implementation readiness. The sections proposed by NHAI for financing under the current project are all remaining sections except one where land acquisition would not be ready by the expected time of project implementation. While the implementation of the remaining section will be financed either through subsequent Bank loan or NHAI funding, the current project will consider supporting traffic enhancement measures for this section.Road safety: The component aims to enhance NHAI's capabilities in road safety. It is likely to support (a) safety audit and accident blackspot improvement works on existing NHs, which are heavily used but will not receive major improvement works under the project; and (b) implementation of a comprehensive road safety action plan on a pilot basis. This component will likely be prepared in collaboration with and supported by the Global Road Safety Partnership (GRSP).Public-private participation in road concessioning: This component aims to support NHAI's initiatives for encouraging private sector participation in road financing and O&M concessioning. It is likely to support (a) NHAI's capital grant program for BOT projects; (b) physical improvement of Vadodra-Surat National Highway in Gujurat; and (c) technical assistance for a public-private partnership options study. Institutional -3 -  strengthening: An institutional development study was undertaken by international consultants to review NHAI's organizational structure and core functions. The long term vision is to keep NHAI lean by out-sourcing all major activities to the private sector, thus enabling NHAI to function along commercial principles. An institutional strengthening and corridor management action plan has been agreed with NHAI under the 3NHP with actions that will lead to reorganizing NHAI's management structure along its core functions; improving operation and maintenance of NH system using largely the private sector; developing in-house capability to manage social and environmental issues; improved financial and management reporting systems; and better quality in project preparation, supervision and administration. Under the 3NHP, the institutional development component focused mainly on technical assistance to NHAI to develop and implement the institutional strengthening program, setting up of a road information system, establishment of two pilot Corridor Management Units, and implementation of a program of minor road improvements to increase operational efficiency and reduce accidents. In addition to strengthening NHAI and MOST's capacity to manage road safety and enhancing NHAI's capacity to promote and manage public-private partnership for road financing, the institutional strengthening component under this project aims to further support the implementation of the agreed action plan to strengthen NHAI's capabilities in the provision and management of NH assets. It will support (a) NHAI's organizational transition plan; (b) expansion of NH corridor management units to include more NH corridors; (c) strengthening of NHAI's environmental and social unit; (d) aerial survey and mapping of the NHs including computerization of road assets; and (e) carrying out of an inter-state road transport efficiency study. 1. Highway upgrading of 420 km to four or six lanes including works, supervision, land acquisition and resettlement, and environmental management 2. Road safety actions, including safety audit and accident blackspot improvement works on existing national highways, and implementation of a comprehensive road safety action plan on a pilot basis 3. Public-private road financing, including technical assistance, funding NHAI's share of public-private financing of pilot BOT projects, and physical improvement of a 150 km national highway for O&M concession 4. Institutional strengthening, including support to NHAI restructuring, expansion of Corridor Management Units, aerial survey and mapping of national highway network, and an national highway transport efficiency study 5. Financing Total ( US$m) GOVERNMENT 210 IBRD 500 IDA Total Project Cost 710 6. Implementation The project is being prepared and will be implemented by NHAI with extensive outsourcing to the private sector and close coordination with the states of UP and Bihar. Within NHAI, implementation of the major works components is under the direct responsibility of a Chief General Manager (World Bank project), who is supported by 5 on-site Project Directors in charge of specific construction packages. High-level State Project -4 -  Steering Committees have been established in each of the two states to facilitate land acquisition, resettlement, utility shifting, forestry, and other issues which may require coordination between NHAI and the States. Responsibility for land acquisition and resettlement and financing of all project-related costs will remain with NHAI. NHAI has hired state PWD engineers on deputation as well as specialists in environment, land acquisition, social and financial management to assist with project implementation.Although the road safety component will involve MoST, NHAI, and the States where the project roads are located, NHAI will remain responsible for coordinating the implementation of the component. The institutional strengthening component will mainly target the effectiveness and user-responsiveness of the NHAI Board and all of its branches, but the regulatory reform aiming to clear unnecessary cross-border freight delays will also involve MoST and the relevant States. Accounting and Internal Control Arrangements: NHAI has decentralized accounting arrangements. Its on site project management teams prepare monthly trial balances which are sent to the headquarters. All projects are supervised by independent professional construction supervision consultants. The contractor's bills are checked by the consultants in addition to ensuring quality control. Bills are also checked by NHAI technical and accounts staff before making payments to contractors. 7. Sustainability Benefits of the project are likely to be sustained over time as the traffic volumes increase. Nevertheless, a key factor of the project's sustainability will be NHAI's capacity to maintain and efficiently operate the newly improved road assets. The project will enhance this capacity through institutional strengthening, promotion of private sector involvement, and assured funding mechanisms. Key issues are (a) clarifying roles of NHAI, MoST and the states in managing the NH network; (b) establishing an overall strategy for national highway spending; and (c) adequate funding for maintenance. The implementation of the recommendations of the Institutional Strengthening study and Corridor Management study will be critical for the project's long term sustainability. Recent increases in NHAI revenues from levies on petrol and diesel fuel are also an important step. 8. Lessons learned from past operations in the country/sector To varying degrees all projects initiated before the mid-1990s have suffered from (a) poor quality at entry and, in one case, start-up delays; (b) weak institutional capacities for project management, and contract and consultant services administration; (c) inexperience in Bank's procurement methods; (d) inadequate inter-agency coordination; (e) inordinate delays in handing over project sites; (f) weak contractor capabilities and inadequate consultant capacity; (g) excessive delays due to weak dispute resolution and decision mechanisms and also due to belated payments to contractors; and (h) lack of awareness and low degree of acceptance towards integration of environment and social issues in technical design. The above issues have been addressed during the preparation and implementation of the 3NHP. For the current project, key aspects of the preparation process have included:Substantial attention to the implementation progress for 3NHP. Much stronger engineering preparation using international consultants, larger construction packages, and more thorough contractor prequalification. A very high degree of readiness for implementation will - 5 -  be achieved prior to loan approval, with all engineering designs completed and bids invited. Much stronger processes for environmental assessment, stakeholder consultation, land acquisition and resettlement, and government clearances. Full site readiness of substantial reaches of each package (sections to be handed over to the contractor on mobilization) will be a condition of contract award. Support to NHAI's efforts to attract international road construction contractors to work in India in order to promote competition and technological improvement of India's construction industry. 9. Program of Targeted Intervention (PTI) N 10. Environment Aspects (including any public consultation) Issues The project comprises 7 contract sections from Packages I (A, B and C), II (B), IV (A and C) and V (B). Package I-A traverses the Taj Trapezium Zone which is declared as a protected area, although the highway is about 10 kms away from the Taj Mahal itself. Two sections in Package V pass through the Gaya and Hazaribagh Reserved Forest areas, which includes approximately 18 kms of the Gautam Buddha Wild Life Sanctuary, in all covering approximately 27 kms of forest area (no forest land is proposed to be acquired for the widening). There are about 11 bypasses (short and long) proposed, with the major one being at Sasaram (approximately 20 kms) in IV-C. There will also be substantial tree loss along the entire stretch. Most of the widening / upgrading of the proposed highway is restricted to the existing right-of-way, except in the case of bypasses. Civil works mainly consist of realigning, widening and strengthening of the carriage way; replacing and/or installing culverts and improving cross-drainage; strengthening/rehabilitating existing bridges and construction of new bridges; improving vertical and horizontal geometry; and construction of service roads near urban areas. The use of concrete for some of the pavement construction will result in large volume of material transport, potable water usage, substantial amount of borrow material with associated impacts from excavation and transport of materials, setting up of crushers and concrete batch plants, transport and round-the-clock laying of concrete, etc. Additional impacts will result from spills of oil, fuel, lubricants and bitumen, and operation of borrow areas, quarries and construction camps. The project may also lead to potential impacts of induced development specially along the bypasses. These impacts are proposed to be managed by development and implementation of good environmental management and mitigation plans and a substantial tree plantation programme. In addition, a Corridor Management Study is being carried out as part of the project, and appropriate linkage with the environment assessment (EA) process will further help in forming mitigation plans to look at these aspects.Detailed EA of the entire 1000 km of the National Highway corridor from Agra to Dhanbad has been carried out for all five Packages (I - V) as part of the preparation of the 3NHP. The approach was a reiterative one in which potential environmental issues were examined in successive levels of detail and feedback from the stakeholders and public consultation process was incorporated. Public consultation and stakeholder involvement was carried out in conjunction with the social surveys. The EA has been carried out keeping in view the overall objective of the proposed project which is to widen, rehabilitate and improve the carriage ways to four lane cross-section with paved shoulders and berms. At one location in Package I, 6-laning has been - 6 -  proposed, the implications of which will also be considered in the EA. In the case of the bypass proposals, the EA will focus on analysis of alternatives, public opinions from the consultative processes and the rationales from the SA and the Engineering point of view.The highway rehabilitation activities will expand transport activity and improve surface conditions, travel speeds, highway safety and drainage patterns. The Project will facilitate development, provide improved access and lead to a reduction in traffic congestion; bypasses will be incorporated at appropriate places where not only will they reduce engineering constraints and improve traffic flow, but also reduce the number of Project Affected Persons (PAPs), enhance road safety, reduce congestion, retain the continuity of existing townships, and reduce noise and air pollution impacts. These aspects have been considered in the analysis of alternatives and finalizing the alignment, as part of the EA process. A consolidated EA for all contract sections of GTRP, along with Environmental Management Plans (EMPs) per contract section, will be prepared based on the outcome of these base EAs. As part of the EMP, additional mitigation measures are being proposed for Package I-A that traverses the Taj Trapezium Zone. In addition, a comprehensive tree plantation plan will be prepared for all packages. This would cover all the plantation regimes (compensatory, roadside, median, and enhancements, and possibility of transplantation), phases of plantation, adequacies of nurseries, seedlings / saplings, co-ordination of NHAI with the Forest department including management of funds, etc. Proposal to involve communities and NGOs in maintenance of plantations is also being looked as part of the EA and SA process. The EA process for the project has evolved since its commencement with 3NHP and is also addressing issues such as the use of fly ash as an alternate material in road construction that would generate and enormous environment benefit ; the safe disposal of garbage and industrial waste which is found to be accumulated in the right-of-ways; further co-ordination with the SA process will also address issues such as gender in construction management and health issues such as the spread of AIDS - which has been found highly prevalent in the trucker community. The EA would aim to provide such recommendations that are in the purview of the project and can be facilitated or co-ordinated by NHAI. 11. Contact Point: Task Manager Zhi Liu The World Bank 1818 H Street, NW Washington D.C. 20433 Telephone: 202-458-2811 Fax: 202-522-3708 12. For information on other project related documents contact: The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 Web: http:// www.worldbank.org/infoshop - 7-  Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. This PID was processed by the InfoShop during the week ending February 16, 2001. - 8 -