Cambodia - Provincial and Rural Infrastructure Project (PRIP)

Document of The World Bank ReportNo: 25594-KH FOR OFFICIAL.USEONLY PROJECT APPRAISAL DOCUMENT ONA PROPOSEDCREDIT INTHEAMOUNT OFSDR14.18 MILLION(US$20 MILLIONEQUIVALENT) TO THE KINGDOMOF CAMBODIA FOR THE PROVINCIAL AND RURALINFRASTRUCTUREPROJECT (PRP) August 13,2003 EastAsia andPacificRegion Infrastructure Department - TransportUnit This document has a restricteddistribution andmay be usedby recipientsonly inthe performanceof their official duties. Its contents may not otherwise be disclosedwithout World Bank authorization.  CURRENCY EQUIVALENTS (Exchange Rate Effective June 13,2003) Currency Unit = Cambodian Riel KHR 1 = US$0.000261 US$1 = KHR3,835 FISCAL, YEAR January 1 -- December 31 ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank CAS Country Assistance Strategy DRR Department of Rural Roads ERR Economic Rate of Return FRMR Fundfor the Repair and Maintenance of Roads GDTA General Department for Technical Affairs HIV/AIDS Human Immunodeficiency VirudAcquired LmmunoDeficiency Syndrome ICB International Competitive Bidding IDA International DevelopmentAssociation IFAPER Integrated Fiduciary Assessment and Public Expenditure Review L O International Labor Organisation IRRPP ImplementingRules and Regulations Governing Public Procurement JFPR JapanFundfor Poverty Reduction JICA Japan International CooperationAgency LBAT Labor-based appropriate technology MEF Ministry of Economy and Finance MPWT Ministry of Public Works and Transport MRD Ministry of Rural Development NGO Non-GovernmentalOrganization NPRS NationalPoverty Reduction Strategy PDPWT Provincial Department of Public Works and Transport PDRD Provincial Department of Rural Development PRDC Provincial Rural Development Committee PRIP Provincial and Rural Infrastructure Project RID Road InfrastructureDepartment RIP Rural Infrastructure Improvement Project RGC Royal Government of Cambodia SEDP11 SecondFive Year Socio-Economic Development Plan 2001-2005 UnexplodedOrdnance voc UXO Vehicle Operating Cost Vice President: Jemal-ud-din-Kassum Country Managermirector: Ian C. Porter Sector ManagerAIirector: Jitendra N.Bajpai Task TeamLeader/Task Manager: Sally L.Burningham  FOROFFICIAL USEONLY CAMBODIA PROVINCIALAND RURALINFRASTRUCTURE PROJECT (PRIP) CONTENTS A. Project Development Objective Page 1. Project development objective 2 2. Key performanceindicators 2 B. Strategic Context 1. Sector-related Country Assistance Strategy (CAS) goal supportedby the project 2 2. Main sector issues and Government strategy 3 3. Sector issues to be addressedby the project and strategic choices 7 C. Project Description Summary 1. Projectcomponents 9 2. Key policy and institutional reforms supported by the project 10 3. Benefits and target population 11 4. Institutional and implementation arrangements 12 D.ProjectRationale 1. Project alternatives considered andreasonsfor rejection 13 2. Major related projects financed by the Bank and/or other development agencies 14 3. Lessons learned and reflected in the project design 16 4. Indications of borrower commitment and ownership 16 5. Value added of Bank support inthis project 16 E.Summary Project Analysis 1. Economic 17 2. Financial 18 3. Technical 18 4. Institutional 19 5. Environmental 22 6. Social 24 7. Safeguard Policies 27 F.Sustainability and Risks 1. Sustainability 27 2. Critical risks 28 This document has a restricteddistribution and may beused by recipients only in the performance of their official duties. I t s contents may not be otherwise disclosed lwithout World Bank authorization.  3. Possible controversial aspects 28 G. Main Conditions 1. Effectiveness Condition 29 2. Other 29 H. Readinessfor Implementation 30 I.CompliancewithBankPolicies 30 Annexes Annex 1: Project Design Summary 31 Annex 2: DetailedProject Description 35 Annex 3: Estimated Project Costs 46 Annex 4: Cost Benefit Analysis Summary, or Cost-Effectiveness Analysis Summary 47 Annex 5: Financial Summary for Revenue-Earning Project Entities, or Financial Summary 56 Annex 6: (A) Procurement Arrangements 57 (B)Financial Management andDisbursement Arrangements 70 Annex 7: Project Processing Schedule 79 Annex 8: Documents inthe Project File 81 Annex 9: Statement of Loans and Credits 82 Annex 10: Country at a Glance 83 Annex 11:Executive Summary of the Environmental Assessment 85 Annex 12: Resettlement Policy Framework 96 Annex 13: IndigenousPeoples Development Framework 108 MAP(S) IBRD - 32153 IBRD- 31517  CAMBODIA ProvincialandRuralInfrastructure Project(PRIP) Project Appraisal Document East Asia andPacific Region EASTR BORROWER 3.00 I 0.32 I 3.32 Responsibleagency: MINISTRY OFPUBLICWORKS AND TRANSPORT Address: Comer NorodomBoulevardand Street #106, PhnomPenh, Cambodia Contact Person: Mr.LimSidenine, Director Tel: (855-12) 805-040 Fax: (855-23)724-279 Email: WB-PIU2@bigpond.com.kh Other Agency(ies): MINISTRY OFRURAL DEVELOPMENT Address: Comer RussianBoulevardand Street #169, PhnomPenh, Cambodia Contact Person: Mr.Mour Kimsan,DeputyDirector Generalfor TechnicalAffairs Tel: (855-12) 938 072 Fax: (855-23)426-823 or 844-160 Email: 012938072@mobitel.com.khor ksan-mrd @forum.org.kh EstimatedDisbursements( Bank FY/US$m): Project implementationperiod: 4 years Expectedeffectivenessdate: 10/30/2003 Expected closing date: 09/30/2007  A. Project DevelopmentObjective 1. Projectdevelopment objective: (seeAnnex 1) The development objective of the Provincial and Rural InfrastructureProject (PRIP) i s to assist the Kingdom of Cambodia to enhance the livelihood of the peoples residing inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap by providing sustainable access to markets and essential services through (i) a program of roadrehabilitation and maintenance; (ii)program of capacity a buildingand training; and (iii) development of improvedpublic policies and strategies. 2. Key performance indicators: (see Annex 1) Achievement of the project development objective will primarily be assessed by monitoring the following leading indicators at mid-term review along the rehabilitatedroads inthe PRIP provinces: i)increaseintrafficlevelsincludingvolumeofgoodsandpassengertraffic; ii)reductionintraveltimealongtheprojectroadsbetweenmajorprovincialcentersinthefour provinces and increase innumber of villages linked to higher level roads ingood condition; iii)reductionintransportcosts;and iv) increase inkilometers of roads under the Ministryof Public Works and Transport and the Ministry of Rural Developmentreceivingregular routine maintenance. 8. Strategic Context 1.Sector-related Country AssistanceStrategy (CAS) goal supported by the project: (see Annex 1) Document number: ID"2000-15 [IFC/R2000-23] Date of latest CAS discussion: February 29, 2000 The main objective of the World Banks CAS i s to help the authorities buildthe foundations for sustainable development and poverty reduction for the mediumto long term. These foundations are: (i) good governance, includingan efficient and accountable public administration and a credible legal and judicial framework that safeguardsbasic human and property rights; (ii) greater access for the poor to basic social services and economic opportunities; and (iii) a policy environment that encouragesprivate investment and entrepreneurship. Since about 85 percent of the population and 90 percent of the poor reside inrural areas, the CAS and the recent National Poverty Reduction Strategy 2003-2005accord special focus to rural infrastructure services and rural development. Donor coordination and partnerships are also accorded a highpriority inbothdocuments. The Provincial and Rural InfrastructureProject (PRIP) development objective, outputs, and activities are consistent with the CAS since they aim to facilitate sustainable development and reduce ruralpoverty by: (i)improving governance through capacity buildingand road sector reforms aimed at strengthening provincial management of secondary and tertiary roads, localparticipation inroad selection, and transparency incontract management; (ii) rehabilitating physical infrastructure to improve access to markets and essential services, and stimulate growth; and (iii) facilitating private sector development by creating opportunities for development of the local contracting and consulting industry, for small businesses, for non-farmemployment, for ruraltransport services, and for the emergence of a market for small and petty contractors for maintenance works. The project will, inaddition, facilitate the physical integration of severely war-affected people and war-affected areas into the national economy by creating opportunities for employment inrural areas and a sustained livelihood. The PRIP will address key CAS monitoring indicators including the percentage increase inkilometers of rural all-weather access roads and an increased coordination between Ministry of Public Works and Transport and Ministry of Rural Development. - 2 -  The project design further addresses issues raised in analytical work and preparationof the National Poverty Reduction Strategy 2003-2005, including the Integration and Competitiveness Study (Part C - sector studies of rice, diversified agriculture, handicrafts, garments, tourism, labor services), prepared under the IntegratedFrameworkfor TechnicalAssistance Program(200l), the PPIAFPrivate Solutions for Infrastructure in Cambodia report (2002), the Asian Development Bank (ADB) supported Transport Sector Study (June 2002), and the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER)August 2003 background paper on the roads sector (June 2003). The first two studies, which focus on competitiveness, highlightedthe lack of an adequatenetwork of roads inthe rural areas as a significant constraint affecting economic development and thus livelihood's of residents of these areas. The second two address sector-specific issues, among these the need to introduce local participation in the selection of roads to be restored in these areas; the importance of buildingcapacity at the local level; and the need for open and transparent selection, financing and contracting of roads. 2. Mainsector issues and Government strategy: As with muchof the economic infrastructure, the transport sector was severely damagedbythe war. Since the mid 1990s, a concerted effort by the Government, supported by the donor community, has been made to reestablishthe Kingdom's main transport infrastructure. Success has been achieved ina number of areas however much remains to be done. Cambodia's National Poverty Reduction Strategy 2003-2005 cites the lack of all-weather access to transport infrastructure and services inrural areas as an impediment to improvement inthe quality of life and reduction of poverty of people inrural areas. The Second Five Year Socio-Economic Development Plan 2001-2005 (SEDP 11)further evidences the lack of strategic positioning of the sector to effectively contribute to the country's poverty reduction strategy. ITheNational Poverty Reduction Strategy (NPRS) 2003-2005 identifies the following actions as priorities for the road sector: 1. A reliable, steady and adequate source of fundingfor roads, 2. Transparent management of all public funds to the transport sector by the official transport agencies, 3. Upgrading and repair of rural, provincial, and national roads, 4. Competitive biddingfor all government and donor funded contracts, coupled with public outreach to the localprivate sector and civil society, 5. A program for institutional strengthening and capacity buildingat all levels inthe public transport agencies, 6. Adoption of clear sector policies and strategies insupport of the NPRS, 7. Encouragement of public transit services using low cost methods, and I8. Development and strengthening of regional links to facilitate the border trade with Vietnam and Thailand. The key issues and current impediments specific to the road sector are presented below. Needfor improved planning and management of the road network and afocus on maintenance through a steady source offunding. Cambodia's roadnetwork measures approximately of 38,257 kilometers (km) including4,757 kmof national roads and 5,700 kmof provincial roads under the responsibility of the Ministry of Public Works and Transport (MPWT), and 27,800 kmof tertiary roads under the responsibility of the Ministryof Rural Development (MRD).This network i s inpoor shape, notwithstanding a major effort at rehabilitation since the mid 1990s.Road condition surveys in 2003 indicate that 40 percent of the network i s ingood and fair condition, 52 percent inpoor condition, and 8 percent inbad condition. Approximately 5 percent of this network i s currently under reconstructionor rehabilitation. During the reconstructionperiod, approximately 1,500 k m s of national roads and 11,000 kms ofruralroads were rehabilitated and reconstructed. There is aconcern however that these newly - 3 -  rehabilitated roads, especially those built to gravel or laterite standard, are deteriorating prematurely due to lack of maintenance, thereby puttingthe sustainability of these recreated road assets injeopardy. This lack of maintenance is attributable both to ineffectiveroad managementand to insufficient allocation of reliable and adequate funds. Length I Good and fair I Poor .Bad, Under National -MPWT 4,757 1,186 2,439 1,132 1,124 Provincial -MPWT 5,700 1,291 2,426 1,983 436 Tertiary -MRD 27,800 12,943 14,857 nla 200 Total 38,257 15,420 19,722 3,115 1,760 Percentage 40% 52% 8% 5% Source: Road ConditionSurvey, 2003, Ministry of Public Works andTransport RoadInfrastructureDepartment - Rural Road Inventoryfor Rural Road, Ministry of Rural Development, December 2002 There i s a need to shift from the current focus on reconstructionand repair, to one based on prioritized plans for road maintenance and rehabilitation interventions inaccordance with economic principles. Although MPWT carries formal responsibility for overall management and development of the roads and transport sector, it has been sidelined by the Ministryof Economy and Finance (MEF) and the Office of the Prime Minister(OPM) through funding and contractingprocedures that bypass the central ministry. MPWT thus has been unable to meet the challenges of planning and preparing an integratedprogramof rehabilitation and maintenance; it also cannot, under the circumstances, be heldaccountable. MRD,with responsibility for the development and maintenance of rural roads, has been more successful inpreparing and submittingbudgets to MEF,and has received allocations under the Priority Action Plan for some maintenance and repairs. Needfor transparentmanagement of all publicfunds. Government recognized the issue of the needfor maintenance funds and in2000 established the Fundfor the Repair and Maintenance of Roads (FRMR) under Prakas 399 and SubDecree 39, which is underthe authority of the Prime Minister and managedby the MEF. While the Fundwas clearly intendedto tackle the maintenance problem, the governing arrangements for the Fundare not well established. This lack of clarity results inthe Fundbeing used for rehabilitation of roads and non-road infrastructure, with allocation decisions made by the OPM on the basis of proposals made by provincial governors or channeled through MEF. Funds are disbursed in three ways: (i) awards contracts to private contractors and the Military Corps of Engineers without MEF involvement of the concerned line ministries and their provincial departments; (ii) MRDreceives project-specific allocations inaccordance with its budget proposals, to be implemented by its provincial departments; and (iii) allocations are made directly to the provinces, which then provide funds to the respective provincial department of MPWT and MRD. Notwithstandingthe fact that MRDreceived funds for routine maintenance for the last few years, the internalpressure and needs were such that these funds were divertedto rehabilitation. Thus, while bothMPWT and MRDand their provincial (deconcentrated) agencies are well aware of the need for maintenance, routine and periodic maintenance are rarely performed, and at most substituted by emergency interventions. The lack of implementing rules, auditing, disclosure and transparency of the Fundmeans that it i s currently not achieving its intended purpose. MEFi s currently reviewing this situation inconjunction with the sector ministries. Needfor continued upgrading and repair of roads with afocus on decentralization and the "missing middle". The focus duringthe emergency reconstructionphase has been on the primary network and some of the mainurbanroads. Some attention also has been given, through the now closed ADB-supported Rural Infrastructure Improvement Project (RIIP)to tertiary roads in six provinces inthe - 4 -  south-east part of the country, and through the SEILA program and others, to community-based infrastructure. Attention mustnow be given to the secondary and tertiary network in order to link effectively the primary and community level network. The MPWT is a centralizedministry carrying out most of its non-donor funded works through machine-intensive force account units. Its Provincial Departments of Public Works and Transport (PDPWTs) have little authority and most havenever let a contract. Infact, many PDPWTs act as contractors and bid for works incompetition with private firms. Incontrast, the MRDSecond Five Year Socio-Economic Development Plan (2001-2005) explicitly recognizes the need for institution buildingat the provincial and lower levels and assigns strategic importance to the development of infrastructureto reduce ruralpoverty. MRDhas formulated a Policy for RuralRoads which adopts labor-based appropriate technology (LBAT) as its preferred technical strategy. LBAT implies optimal use of local resources such as labor, materials and skills. MRDi s undertakinga pronouncedeffort to assign (deconcentrate) management and implementationresponsibilitiesfor ruralroads to the provincial level, and has developed detailedcontract managementprocedures for provincial management of rehabilitation and maintenance works. These procedures are currently inplace in six provinces inthe south-east and will be introduced inthree additional provinces under other ADB supported projects. Needfor competitive biddingfor all Government and donorfunded contracts. There is a concern that within the road sector that while donor funded contracts are typically competitively bid due to the required guidelines of the donor agencies, there is wide use under Government funded works of non-competitively bid and non-transparent arrangementsmany of which are sometimes beyondthe MPWT and the MRD.Government has recognised this concern and as of January 2003, successfully introduced "open" bidding, in line with the 1995 Procurement Sub-Decree (AnukretN0.60)in all ministries (except the ministries of Defense, Interior and the Royal Palace) inline with the objectives in the NPRS. However, concerns remainthat the Procurement Sub-Decree (i)s only interpretedto address i projects that draw from the national budget, thus a toll road, a concession, a license, a Build-Operate-and-Transfer agreement, infact any public-private contract inwhich there i s a flow of funds to the Government or noflow of funds except fromthe revenue streamof users'fees, are not covered; (ii) allows for the relevant Government agency to define a procurementneed as "urgent" and bypass the Sub-Decree altogether; and (iii) the Military Core of Engineers is executing a significant volume of road works for which the cost effectiveness i s unknown. Needfor a program of institutional strengthening and capacity building at all levels in Government agencies and theprivate sector. The shortage of qualified staff i s a problem for all Government agencies. While MPWThas more than 1,400 staff intwo of its central roads departments inPhnom Penh, and between 100 and 300 staff ineach of the 24 PDPWTs, there are provinces without any qualified engineer. Given the significant demand for private sector involvement inrural infrastructure construction and maintenance, the capacity of the private sector to respondand the capacity of government agencies to manage contracts may present a bottleneck inthe near future. A number of small scale contractors have been recently trained by the International Labor Organisationunder the now closed UpstreamProject, however substantially more will be required. The technical constraints are even more critical inMRD and its provincial agencies. Nonetheless, MRD i s successfully pursuinga model which relies heavily on the contracting out of works to the private sector and has so far, through various projects, trained 22 local contractors inlabor-based appropriate technology for road construction and maintenance. - 5 -  Needfor adoption of clear sector policies and strategies in support of the NPRS. The Government's goals for transport inthe period 2001-2005 emphasizeefficiency, competition and the contribution of transport services to economic growth and regional cooperation. This i s to be accomplished by: (i) rehabilitating, maintaining and expanding transport infrastructure to facilitate market integration and trade, giving priority to rural development, domestic and international trade routes and tourism; (ii) improving the efficiency of use of existing infrastructureand institutional performance; (iii) increasing transport sector revenues to cover an increasing share of maintenance and development costs; (iv) strengthening institutional capacity in sector planning and management; and (v) promoting increased private sector participation infinancing transport infrastructure. For roads, the focus i s on rehabilitating and reconstructing the national roads, building road links to neighboring countries and developing a sustainable road maintenance program. The Policy for Rural Roads, April 2002 of the MRDemphasizes the establishment of a strategic tertiary network linking district centers and improving access to isolated communities. These broad goals, however, are not supported by any formal clarification of the most important policy issues facing the sector and the manner by which the goals are to be achieved. A draft Transport Sector Policy Statement was prepared along with the ADB supported 2002 Transport Sector Study (TSS), but has not yet been formally adopted. There remains a need to develop a consensus around a policy and strategy for the sector. Needfor public outreach to the local private sector and civil society through increased transparency. The involvement of communities and their representatives i s often overlooked inthe transport sector. MPWT, inparticular, has no experience inoutreach and does not have a public communications strategy or procedures inplace for provincial level planning and prioritization. This means that there i s very little local knowledge of budgets and plans with regard to national and provincial roads, and there are no established mechanisms for recourse. Increased transparency inbudgets and planning would improve the Ministries' ability to respond to priorities at both the national and provincial levels. Communities, provincial level agencies, and nongovernmental agencies are currently by and large an untapped resource to improve local road safety and to prevent the spread of HIV/AIDS which can result from improved transport services. There are local programs inplace for mine accident prevention and awareness, and these, coupled with on-going efforts to reduce the spread of HIV/AIDS, can successfully be built on for the benefit of the transport agencies' community communication and awareness strategies. Needfor development and strengthening of regional links tofacilitate border trade with Vietnam and Thailand. The key national road linksto these countries has been a major focus of the Government program. The nationalroad No 6 from PhnomPenhthrough Siem Reap to the Thai border i s under construction through numerous projects. The national road to the east to Ho Chi MinhCity inVietnam i s also under construction on both sides of the border. - 6 -  3. Sector issuesto be addressed by the project and strategic choices: This Provincial and Rural InfrastructureProject (PRIP) will directly address concerns raised inthe National Poverty Reduction Strategy (NPRS), as well as sector issues of importanceto the attainment of the Country Assistance Strategy and of strategic importance to the transport sector. These issues are discussed below. There are, however, some critical issues that influence the sector but which the project i s not directly addressing since these are addressed in the country macroeconomic dialogue with the World Bank and other donors, and also inthe Bank's Structural Adjustment Credit and the Economic and Public Sector Capacity BuildingProject, and the RGC's Governance Action Plan and Civil Service Reform. With regardto the need for competitive bidding for all Government and donor funded contracts, continued discussions are ongoing through the mechanism of the Country Procurement Assessment Review. The PRIPproject also includes a conditionality related to transparency of any non-competitively awarded contracts inthe sector inthe four project provinces. With regard to the encouragement of public transit services this i s an area which still needs focus. With regard to the regional links,the PRIPproject does not focus on these since these areas are being well supported under other programs (including the ongoing World Bank supported RoadRehabilitation Project and the support of many other donor supported projects). The PRIPis specifically designedto complement and enhance the many ongoing initiatives inthe sector. The following sector issues are beingaddressedby the PRIPproject. Maintenance management andfinancing. Given the current lack of attentionto road maintenance, a key focus of the project will be to put inplaceproper maintenance management systems and beginto builda maintenance culture inthe four PRIP provinces. Some work has been done to establish road maintenance management systems (RMMS)inMPWT and MRD;however, these systems are not yet operational. Key data, including the inventory of road assets and the condition of the network have not been entered into the systems. The project thus will build on the work done to date and provide for the installation and operationof an RMMS inboth MPWT and MRDand intheir provincial departments inthe PRIP provinces. The decision to focus on the four provinces was made to demonstrate that maintenance i s bothcost-effective and manageable. The systems that will be put inplace can easily be scaled up to cover the whole network. Inaddition to providing the analytical tools for improvedroad management, the project will assist the Government inpreparing annual maintenance programs and ensuring they are carried out as planned. As part of the PRIP, the Government will agree to the financing and execution of routine maintenance on all roads in good and fair condition ineach of the four provinces. The maintenance needs will grow as the network is brought into maintainable condition. The larger issues of governance and administration of the Fundfor the Repair and Maintenanceof Roads and other public expenditure management issues are being addressed as part of the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) and the NPRS. Improving roads and management of roads at theprovincial levelfocussing on the "missing middle". As one of the first projects inCambodia to focus on a network approach addressing secondary, provincial and tertiary roads, the PRIPwill initiate an explicit, coordinated reconstructionand rehabilitation effort of the secondary and tertiary road network infour provinces. Inso doing, it will set a precedent in establishing sound processes and systems for provincial management at this level of the road network. The project will provide an opportunity to influence businesspractices and how the MPWT interacts with Provincial authorities on the planning and implementation of rehabilitation and maintenance of secondary roads. It will assist MPWT to implement the Government's deconcentration policy by building provincial capacity to plan ina participatory manner and manage contracts in a transparent fashion. The project will also strengthen capacity at the center inbothMPWT and MRDfor the requiredplanning and coordinating support and monitoring functions. Participatory planning methods involving a range of - 7 -  stakeholders including the Provincial Rural Development Committees will enhance local involvement in decisions that affect their lives, and increase transparency and accountability (ref. E.6.2). With regard to tertiary roads, the project will extend and further strengthen existing MRDprocesses for provincial management to the four project provinces, and contribute to mainstream MRD's policy of local responsibility for ruralroad management. Capacity building of thepublic sector andfacilitating the emergenceof aprivate sector in the road industry. An assessment of the capacity and constraints of the national and provincial staffs of MPWT and MRD, as well as the private sector consulting and contractingindustry, was carried out as part of project preparation. This assessment has shown that the demand for road works will soon exceedthe capacity of the private sector to respond. Instead of developing a capacity building component that i s project-specific, the focus will be on expanding past efforts directedtowards the institutionalizationof a training and capacity buildingprogram. The intention i s that the program will become an integral part of a continuous development of human resources for the roads and transport sector. The benefits of the programare expected to be significant. By strengthening domestic training institutes, the ad hoc nature of many past projects inthis area will give way to a continuous domestic training capacity inthe road sector. By training MPWTPDPWT and MRDPDRD staff inroad planning and contract management, roadmaintenance will be accorded higher priority and the quality of works will increase. By training local contractors in businessmanagement and labor-based appropriate technology, the PRIP will stimulate the emergence of a market for private enterprise inroad rehabilitation and maintenance. Job opportunities will be created on the roads in areas where unemployment and demobilization of soldiers are a concern. Additional employment will be created inthe localnon-farm sector, for example, through increased provision of ruraltransport services along the roads inpoor areas. These services are often operated by poor people for poor people. Development of a policy and strategic framework. The PRIP will seek to improve boththe management and condition of the secondary, provincial and tertiary road network infour provinces. These improvements can only be achieved within a larger framework of road sector policy reforms governing the organization, structure, financing and managementof the sector. Although the TSS culminatedina draft policy statement, a consensus around this statement has not yet been forthcoming. However, the Government has agreed to prepare a draft letter of sector policy that clearly states the Government's objectives for the road sector (drawing on the NPRS, the Policy RuralRoads), articulates some guiding principles, clarifies the responsibilities of Government and other players, and presents a time bound actionable programfor a three to five year period. The project will be implemented at the provincial level in support of the Government policy to deconcentrate implementation to the provincial level as articulated intheir NPRS. The PRIP will also support implementation of some of the key recommendations of the ZFAPER such as strengthening management of the Fundfor the Repair and Maintenance of Roads by establishing a formula-based allocation mechanismfor maintenance funds and providing for regular financial and performance audits of the Fund. Public outreach, information dissemination and increased transparency.Community awareness programs will be carried out inthe project areas to: (a) mitigate the risks of increased traffic accidents on the rural population, as pedestrians (predominantly children, women andpoor people) and users of public transport and low cost vehicles are particularly exposed; (b) reduce the risk of spreading HIV/AIDS along the improved roads; (c) help ensure that the general public i s aware of the project and the procedures for road selection and management, and mechanisms for recourse if and when required; and (d) reduce the riskof mine accidents inthe areas surroundingthe improvedroads (voluntary migrants and retumees are especially vulnerable inthis regard). - a -  C. Project DescriptionSummary 1. Project components(see Annex 2 for adetailed descriptionandAnnex 3 for adetailedcost breakdown): Inorder to attainitsdevelopment objective, thefollowingwillbeimplementedundertheProvincialand Rural Infrastructure Project (PRIP) inthe four northwestprovinces of Kampong Thom, Oddar Meanchey, PreahVihear and SiemReap provinces by the Ministry of Public Works and Transport (MPWT) and the Ministry of Rural Development (MRD). The PRIPwill draw on, and scale up, the successful experience of earlier similar projects such as the MRD-implemented Rural InfrastructureImprovement Project (RIIP) and LO-assisted UpstreamProject, and complement various Asian DevelopmentBank (ADB) supported projects. Sustainable maintenance of the secondary, provincial and tertiary roads presents significant challenges that the proposed project intends to address. Component 1. Maintenance management (US$l.Omillion). The project will support (a) the installation and operation of road maintenance management systems at the national level inMPWT and MRDand in their respective provincial departments of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap and (b) the carrying out of annual programs of routine maintenance on all roads ingood and fair condition inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The funds for routine maintenance are includedinthe cost of the project to be funded from Government annual budget allocations. Component2. Rehabilitation andperiodic maintenance of secondary-national, provincial and tertiary roads (US$18.65million). The project will support the carrying out, inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and SiemReap, of a programof rehabilitation and periodic maintenance of (a) approximately 300 kmof strategic secondary-national and provincial roads under the Ministry of Public Works and Transport; and (b) approximately 300 kmof tertiary roads under the Ministry of Rural Development. The works will be contracted out and a programto develop qualified private contractors will be runconcurrently, increasing private sector involvement inthe road sector. Works will be carried out using labor-based appropriate technology to maximize local employment. Component3. Capacity buildingprogram (US$2.60million). The project will support the carrying out of a program of institutional capacity strengthening for MPWT and MRDat the national level and its departments inthe provinces of Kampong Thom, Oddar Meanchey, PreahVihear and Siem Reap. The project will thus support the on-going deconcentration efforts inMRD,and seek to replicate these efforts inMPWT, where applicable. Component4. Policy and strategy development(US$0.20million). The project will support carrying out of a programto improve MPWT and MRDpolicy and strategy development inthe areas of (a) integrated planning and budgetingof roads; (b) least cost life-cycle standards; (c) use of appropriate technology; (d) mainstreaming of road maintenance; and (e) institutional reform. This component will support on-going policy development inthe transport sector, primarily supporting initiatives that are already underway. Component5. Community awareness programs (US$0.55million). The project will support the carrying out through MPWT and MRD of a community awarenessprogramaimed at increased awareness by transport agencies and residents of relatedrisks inroad safety; HIV/AIDS; people's participation in road planning, and access to public information; and mine and UnexplodedOrdnance risksand clearance programs. - 9 -  1.Maintenance management MPWT-secondary and provincial roads 0.75 3.2 0.09 0.5 MRD-tertiary roads 0.25 1.1 0.09 0.5 2. Rehabilitationand periodic maintenance MPWT - secondary and provincial roads 13.35 57.2 12.21 61.1 MRD- tertiary roads 5.30 22.7 4.40 22.0 3. Capacity buildingprogram 2.60 11.1 2.21 11.1 4. Policy and strategy development 0.20 0.9 0.18 0.9 5. Community awarenessprograms 0.55 2.4 0.50 2.5 Refunding of Project Preparation Facility Advances 0.32 1.4 0.32 1.6 Total Project Costs 23.32 I 100.0 I 20.00 I 100.0 Total Financing Required I 23.32 I 100.0 I 20.00 I 100.0 2. Key policy and institutional reforms supported by the project: The proposed project supports the following key policy and institutional reforms as described inAnnex 2. (a) Zntegratedplanning and budgeting of roads. The project supports adoption of an explicit policy for transparent planning and budgeting inthe road Ministries and a requirement for public disclosure of any non-competitively bid contract awards; (b) Least cost &-cycle standards.The project supports the useof alternative construction standards; (c) Use of appropriate technology. The project supports the use of labor-based appropriate technology in the implementation of the works and the training of contractors; (d)Mainstreaming of road maintenance.The project supports the implementation of routine and periodic maintenance and the relatedmaintenance management systems. Government i s considering various approaches to improved management of the FRMR and support for this may be funded from the project; (e) Institutional reform. The move towards contracting out of maintenance services will shift the roles of MPWT and the PDPWT's from direct works implementation to planning, budgeting, contracts management and monitoring. To assist staff incarrying out the new functions and minimize negative impacts, there i s need for capacity buildingand a well thought out programfor human resource development. As a part of this, MPWT has informally requested the World Banks possible future assistanceto advise on a possible programof reorientation and commercialization of the force account units.The MPWT is also reviewing options for the possible restructuringof the Ministry inother areas. - 10-  3. Benefits and target population: Benefits. Economic and social benefits will stemfrom an improved transportation system inthe four project provinces. The improved road network will stimulate the provision of transport services, and reduce travel times and transport costs. This will inturnpromote development of areas where agriculture and off-farm activities have been constrained due to lack of reliable all-weather road access andor high transport costs. The rehabilitatedroads will provide better access from previously isolated areas to markets and sources of supply for many small-scale farmers and other producers inthe provinces. They will also facilitate access to essential healthand education services and other public and financial services. The project will also provide employment opportunities to previous conflict areas indire need to reintegrate displaced people and demobilized soldiers inthe social mainstream. It will enhance the impact of numerous grass-root efforts at the village and commune level as these will now be able to access district and provincial facilities and services beyondtheir own communities. Targetpopulation. The beneficiary population comprises all those living and/or working, and who will settle, inthe project areas inthe provinces of KampongThom, Oddar Meanchey, PreahVihear and Siem Reap, the rural home to 1.5 million people (out of a total Cambodian population of 12.3 million). -rich and poor farmers (subsistence and surplus), employees inthe non-farmsector such as teachers, health attendants and civil servants inthe districts and communities along the roads, traders and businesspeople (petty, small, medium, and large), transport providers (bus and bicycle and motor-cycle trailer operators and truckers) and other road users. The beneficiary population also includes consumers inthe small and provincial towns, localcontractors and consultants, and those who will be employed inthe rehabilitation and maintenance of the roads. The latter includes significant numbers of unskilled laborers, of which, in Cambodia, 40 percent are commonly women, from the project provinces. Over time, project benefits will extend to rural people inother parts of the country, especially when new road programs come on stream and follow the Government's policy for transparent planning and budgetingand the participatory decision-making processes established inthe PRIP provinces. There i s ample evidence inCambodia of the close linkbetween ruralroads improvementsand increased trade and rural development. MRDmonitoring along improved tertiary roads indicates a doubling of road traffic (of which an increase inmotorized traffic of 10percent), a decreaseintravel time of 43 percent, a decreaseintransport fares of 38 percent, a 103 percent increase in goods transported, and a 600 percent increase intrips fromrural areas to community centers and intrade activities inrural markets. It i s expected that, over time, indirect benefits such as more qualified teachers and health staff inrural areas and improved connectivity to the rest of the country will stemfrom the processesintroduced by the project. Additional indirect benefits will likely include: Zncreased demand responsiveness: Well-informed local participation inplanning will result in interventions which are well-received and needed by the stakeholders inthe provinces. This will also contribute to break inthe culture of top-down decision-makinginMPWT and sensitize the transport agencies, MPWT inparticular, to the importance of becoming more efficient road infrastructure providers that take account of public views and priorities and facilitate mobility and access by poor people to affordable, reliable, and safe transport services. Increased transparency: An allocation of public expenditures inthe road sector accordingto agreed upon plans at the national level and inthe PRIPprovinces will reduce discretionary and ad hoc decisions, and contribute to improved sector governance. It will also increase efficiency inroad sector expenditures and free up significant resources for road maintenance financing. -11 -  Relateddividends would stemfrom the establishment of systems and technologies for capacity building and maintenance management and implementationat the provincial level. The adoption of least-cost life-cycle standards and labor-based appropriate technology for secondary and tertiary roads by MPWT and MRDwill further increase value for money of road sector expenditures and stretch existing resources, thus enabling improved and sustainedaccess to more communities. 4. Institutionalandimplementationarrangements: The institutional responsibilitieswithin the road sector are divided between the Ministry of Public Works and Transport (MPWT) and the Ministryof RuralDevelopment (MRD).To reflect this the implementation responsibility for the PRIPproject will be with bothMPWT and MRD.MPWT i s the lead agency which i s ultimately responsible for overseeing the PRIPproject, reporting overall project implementation to the Government representedby the Ministry of Economy and Finance (MEF), and fulfilling World Bankrequirements. As executing agencies, MPWT andMRDwill cooperate according to the provisions of the Project Implementation Plan and the Memorandumof Understandingon implementation. Any matters arising from the Memorandumof Understandingwill be resolvedthrough the Steering Committee for the project. The MEFhas a role in Cambodia of reviewing contracts as describedinthe Memorandum. The executingresponsibility inMPWT i s with its RoadInfrastructureDepartment (RID); and inMRD with its General Department for Technical Affairs (GDTA) through its Department of Rural Roads (DRR).Both offices will be staffed with the required competencies for the duration of the implementation of the project. These offices will be responsible for all goods and consultants' services contracts and for works contracts above US$500,000 inthe case of MPWT and US$lOO,OOO inthe case of MRD; the development and implementation of the training programs; the management of the participatory process for the selection of the subsequent years works; the management of and reporting on any resettlement and environmental issues; and the quality control and clearance of the works implementedby the Provincial Departments. The Provincial Departments of Public Works and Transport (PDPWT) and ProvincialDepartments of RuralDevelopment (PDRD) will be responsible for the contracting and management of works below US$500,000 inthe case of MPWT and US$lOO,OOO inthe case of MRD,inaccordance with the agreed Project Implementation Plan. These offices will be staffed with the required competencies for the duration of the implementation of the project. The agreed staffing for these existing departments and agreedterms of reference for their staff is reflected inthe agreed Project Implementation Plan. There are no special units being set up for the PRIP. -12-  Implementing structure for the Provincialand Rural Infrastructure Project (PRIP) ' Ministry of Economy andFinance ` Ministry of Public Steering Ministry of Works and Transport Committee RuralDevelopment GeneralDepartmentof Memorandumof GeneralDepartment Public Works Understandingon W implementation of Technical Affairs Provincial Departments Provincial Departments of Public Works & Transport Provincial of RuralDevelopment (KampongThom, Oddar Meanchey, RuralDevelopment (KampongThom, Oddar Meanchey, PreahVihear, SiemReap) Committees (PRDC) PreahVihear, SiemReap) D. Project Rationale 1. Projectalternatives considered and reasonsfor rejection: Thefour proposedprovinces or another area. The PRIP focuses on the four contiguous northwest provinces of Kampong Thom, Oddar Meanchey, PreahVihear and Siem Reap. As per the 2000 poverty mapping of the World FoodProgram, these four provinces are home to the most vulnerable population in Cambodia-more than 40 percent of the households inthese provinces are poor, higher than the national average of 36 percent. Of Cambodia's 24 provinces, Kampong Thom, Preah Vihear and SiemReap, contain the highest percentage of poor households, the situation i s slightly better inOddar Meanchey but this is anew province and the census is therefore incomplete. These four provinces were particularly markedby the civil war and contain large numbers of displaced people; movingto other areas would serve the Bank overarching mission less well. Working incontiguous provinces will likely enhance the project benefits since road networks establish connectivity. Project impacts will be enhanced further by the ongoingrehabilitationof the primary national roadNo. 6 connecting PhnomPenhto Kampong Thom, Siem Reap and the Thai border. Eventhough there are environmental challenges inthe four project provinces, since about 20 percent of the country i s protected, selecting other provinces would bring little relief inthis regard. All levels of the road network or afocus on the secondary and tertiary levels. The Government opted not to include all levels of the road network inthe PRIP, but rather to focus on the "missing middle" which consists of secondary and tertiary roads. Over the last decade, an intense effort to repair the main arteries - 1 3 -  of the national road network has been made and is on-going. There are also numerous on-going and plannedefforts to improve village and commune level access. The PRIP will complement and enhance the impact of these efforts. Many of the entities consulted, e.g., the members of the ProvincialRural Development Committees inSiem Reap and Kampong Thom, the chiefs of Pouk and Angkor Thom districts, and numerous NGOs, spontaneously mentioned that they would welcome the proposed investments becausethese would enhance the impact of their own development efforts. They also stated that improvement of secondary and tertiary roads is either beyondtheir mandate and/or command more resourcesthan they have at their disposal. Single or multi sector approach. It was decided to focus on roads for two reasons: (i) issues are sector many and complex and require focus; and (ii) recent commitment of IDA support and fundingby other donors to the peri-urban rural water sector, local governmentkommunity level infrastructure, and forthcoming support to rural electricity. Oneor two executing agencies. The project has two executing agencies-MPWT and MRD. Inthe interest of simplicity, the project could have opted to focus on MPWT and the secondary network only. Given the desire, however, to ensure maximumnetwork impacts inthe project area, and to capitalize on the potential for cross-fertilization between the road agencies at bothprovincial and central levels, it was decided that the project would have two implementing agencies. Yet another alternative would have been to addressboth secondary and tertiary roads but to have MPWT as the sole executing agency although inclose collaboration with MRD. This alternative was rejectedbecauseof an overarching concern for the continued ownership by bothMinistries.Cross-fertilization betweenthe Ministries has been successful duringproject preparation and will be encouraged duringimplementation through the Steering Committee, the Provincial Rural Development Committees, joint field trips during supervision, joint mission wrap-up sessions, andjoint meetings with the provincial agencies. National or Provincial. It was decided to reject centralprocurement of all civil works contracts as this would further cement the already centralized structure inMPWT. Instead, the PRIPwill build on the positive experience of the MRDimplementedRural Infrastructure Improvement Project and involve provincial procurement of civil works up to US$500,000 inMPWT and US$lOO,OOO inMRD. Close monitoring from central authorities will be coupled with local monitoring and transparent processes. Upgrade or maintain. It was agreedthat roads ingood to fair condition inthe project provinces would not be upgraded, even when built below standards, but maintained. Roads inpoor condition will be rehabilitated or upgraded. 2. Major related projectsfinanced by the Bank and/or other development agencies(completed, ongoing and planned). LatestSI lervision Sector Issue Project PSR) stings (Bank-finance projectsonly) Implementation Development Bank-financed Progress (IP) Objective (DO) Projects includingroad and bridge Rural Investment and Local S S infrastructure Governance (Cr. 37470) FloodEmergency S S Rehabilitation (Cr. 34720) - 1 4 -  RoadRehabilitation(Cr. S 31810) Social Fund11Supplemental S Credit (Cr. 31791) Social Fund11(Cr. 31790) S Northeast Village (Cr. 32160) S Xelatedprojects Health Sector Support (Cr. S 37280) Provincial and Peri-Urban S Water Supply and Sanitation (Cr. 37460) Agriculture Productivity U Improvement (Cr.N0110) dacro-economic operations Economic and Public Sector S Capacity Building (Cr. 36780) Structural Adjustment Credit U (Cr. 33230) [elated projects under preparation RuralElectrification and Transmission Ither development agencies lapan International Cooperation NR6A, 7 Rehabilitation 4gency (JICA): Project 4USAID: Bridge Rehabilitationon NR5 and 6 4SIAN DEVELOPMENT BANK JFPR-Mainstreaming :ADB): Labor-BasedRoad Maintenanceto the National Roads Network, US$2.2 million, to be approved ADB 1945-CAM(SF) GMS: Cambodia RoadImprovement Project, November 2002 US$50million ADB 1862-CAM(SF) Northwestern Rural Development, November 2001 US$27.2 million ADB 1824-CAM(SF) Emergency Flood Rehabilitation, December 2000, US$55 million ADB 1697-CAM(SF) Primary Roads Restoration, September 1999, US$68 million ZUROPEAN UNION: RuralDevelopment Project JNDP/Sida/DFID: SEILA 1(1996-2000) m: I TRIP Rural Transport Project Hiahlv Unsatisi - 1 5 -  3. Lessonslearnedand reflectedinthe projectdesign: Engender client ownership. Successful projects require local ownership, clear objectives and strong commitment. The project was designed by Government to build on existing structures, to be implementedby the provincial offices, to have a participatory planning and decision making approach which included all relevant structures of Government bothat national and provincial levels, and to foster cooperation of different Government departments. Civil society involvement builds ownership and requires outreach. The initial investments inthe project have been selected usinga participatory planning and decision-making approach which i s described in Section 6.2. This same approach will be usedto determine future investments. The implementing agencies will contract selected nongovernment organizations to design and implement public awareness campaigns for road safety, HIV/AIDS prevention, dissemination of project information, and mine/Unexploded Ordnance security. Good governancefosters sustainable and equitable development. The project will promote good governance through the development and implementationof transparent participatory planning and decision making processes. Transparency and good governance i s also included inthe procurement processes and their subsequent technical and financial auditing and the disclosure of information. Capacity development of the in-country institutions requires well-tailored programs especially at the provincial level. The project includes a series of combined class-room and practical on-the-job training sessions of boththe public and private sector to be dispensedon a continuous basis (Refer to Annex 2). Coordination of development efforts is necessary to reduce transaction costs on client agencies, and avoid duplication of efSorts. The project will scale up and draw extensively on the experience gained from the Ministry of Rural Development implementedRural Infrastructure InvestmentProject, the UpstreamProject and others. It will also support existing initiatives inpolicy dialogue and assist the Government to build cooperation between its technical assistance supported by the Asian Development Bank, Japan, the World Bank and others inthe transport sector. 4. Indications of borrower commitment and ownership: Government collaboration, between Ministry of Public Works and Transport (MPWT) and Ministry of Rural Development (MRD),at central and provincial levels, has been highly satisfactory during project identification and preparation. There has been full involvement of staff from MPWT and MRDduring missions and field trips. A participatory workshop was organized early duringproject preparationaround the logical framework to define and buildconsensusaround the project development objectives and outputs. The Ministers of MPWT and MRDmade all the necessaryresources promptly available for project preparation, such as assigning staff to the PRIP preparation team, and providing the necessary office and logistics support; two Project Preparation Facilities were used for project preparation. The provincial teams have been directly trained and involved inthe field surveys of the roads, and have participatedextensively inthe participatory planning and decision making processes.The Ministry of Economy and Finance (MEF)has also beenproactive indiscussions on the financing of the sector. 5. Value added of Bank support inthis project: The World Bank contribution of the US$20.0 million credit supporting the RoyalGovernment of Cambodia's programinthe road sector represents significant financial support to the sector. The targeting to the part of the road network which has not attracted externalfinance will support greater impact of the - 1 6 -  investment on the other parts of the road network. The Bank has, through its support duringproject preparation, assistedMPWT and MRDto undertake an extensive outreach and public participationinthe selection of investments. Through the Banks encouragement of increasedtransparency, there will be public disclosure of information on all roads contracts inthe project provinces whether funded by the credit or fundedby the Government itself. Through work with the Government on its public procurement, the Bank has supported the move towards wider competitive bidding and through the involvement inthis project towards capacity building inthe use of government public procurement provisions. The Bank will also contribute to set a precedent inthe sector by taking on board existing systems for provincial management of tertiary roads inMRD, established under projects supported by the ADB and E O . Inthis way, the Bank will signal the importance of contributing to mainstreaming and scaling up and reducing the proliferation of project specific requirements and transactions costs on the client. E. Summary ProjectAnalysis (Detailed assessmentsare inthe project file, see Annex 8) 0 Costbenefit 1. Economic (see Annex 4): NPV=US$14 million; ERR = 35 % (see Annex 4) 0 Cost effectiveness 0 Other (specify) All candidate roads for rehabilitation, upgrading, andperiodic maintenance are subject to economic analysis either using cost-benefit analysis or cost-effectiveness analysis. The costs include the cost of works, and design and supervision of such works. The main benefits are directly related to traffic including (i) savings invehicle operating costs, (ii) in vehicle and passenger time costs. savings Additional non-quantifiable benefits include social benefits arising from better access to schools, medical facilities, and other social services. For the first years work program, traffic counts have beenundertaken indicating motorized traffic, excluding motorcycles, to range from 4 AADT to 630 AADT. Given the growing network of trafficable roads, the increasing number of motor vehicles inthe country, and the robust growth of Cambodia's economy, traffic i s developingrapidly. Recent counts near SiemReap indicate annual average growth rates of 16 percent for motorbikes, 40 percent for light vehicles, and 195 percent for heavy vehicles between 1998 and 2000. For rehabilitation andperiodic maintenanceworks, a cost-benefit analysis was used, applying the Highway Development and Management Model (HDM-4),which compares life cycle road costs and vehicle operating cost and passengertime savings. The net present value (NPV) of the project first year rehabilitation and improvement works amounts to US$14 million with a corresponding economic internal rate of return (IRR) of 35 percent. The NPV of the project first year periodic maintenance works amount to US$0.42 million with a corresponding IRR of 28 percent. The NPV of all first year works, which represent 46 percent of the project civil work costs, amount to US$14.2 million with a corresponding IRR of 35 percent. For periodic maintenanceworks,the cost-benefit analysis was complemented by a cost-effectiveness analysis, comparing the financial investment costs of the road intervention with the population served on eachroad. The cost-effectiveness of the investments was computed due to the nature of the traffic on these roads, which i s mostly low local traffic serving the localpopulation, and the project objective of maximizing the provision of all weather access to as many persons as possibleper available resources. All roadsections have a cost-effectiveness ratio less thanUS$11per person, which is reasonable consideringthat a) the average GDP per capita i s US$280 in Cambodia and US$11represents 4 percent of the GDP per capita; and b) the investments will ensure an all-weather access to the social and economic centers. For routine maintenance works,economic analysis was not applied since the premise is that the asset -17-  should be maintainedand traditionally economic rates of returnfor this type of intervention are extremely high. 2. Financial (see Annex 4 and Annex 5): NPV=US$ million; FRR = % (see Annex 4) The fiscal sustainability of the project relies on success indevelopment of the systems and incentives to ensure financing and implementation of maintenance. To improve the likelihood of success the project itself includes a maintenance component and support to policy development focused on maintenance funding.Parallelactivities of the Government on this issue are ongoing. The funds needed for such routine maintenance are available inthe current sectoral budget of the Government. Donor agencies active inthe sector including ADB and JICA are emphasizing the needfor maintenance. Fiscal Impact: The fiscal impact of the project is likely to be modest inthe sector and marginal on the overall public budget (Source of data: Integrated Fiduciary Assessment and Public Expenditure Review, August 2003). Sectorfiscal impact. Of the US$23.32 millionproject, the Royal Government of Cambodia counterpart fundcontribution of US$3.32 million spread over four years representsapproximately three percent of the annual Government budget spent on roads. Total annual Treasury-executed expenditure (that is, excluding external project-related assistance) on roadrehabilitationand maintenance (excluding expenditures funded from the Fundfor the Repair and Maintenance of Roads (FRMR))i s estimated at Cambodian Riel 106 million, equivalent to about US$28 million, in 2001. External project-related assistance to the transport sector i s estimated at US$59.7 million in2001. Accumulated revenue inthe FRMR reportedly is estimated at US$3.5 million inMay 2002. Overall public budgetfiscal impact. The total revenue of the Government i s projected at US$450 million in2003 (based onthe new national accounts). Reportedexternal assistanceflows are estimated at US$472 million. Inrelation to other sectors, (domestically resourced spendingon education i s expected to increase to US$75 million, on health to US$45 million in 2002 and on the Commune/Sangat fund to about US$12 million), although the total expenditure on roads has increased significantly in the past several years, and are likely to increase further as resources become available from the FRMR, the total expenditure in2001 of US$28 millionrepresents only 6 percent of total domestically sourced expenditure. Given the focus on maintenance and rehabilitation of secondary and tertiary roads infour target provinces, the future recurrent cost implications will be positive however relatively small and readily funded from the FRMR. By reinforcingthe concept of regular maintenance to preserve the road asset base, the project will help to reduce the need for rehabilitation expenditures inthe future and enhance the efficiency and effectiveness of the use of funds. 3. Technical: The specific technical issues considered inthe project design are summarized below: Mines and Unexploded Ordnance (UXO). The entire project area has not been cleared of mines and UnexplodedOrdnances. "Pathfinding" (i.e. marking of the location of the mines and the Unexploded Ordnance to 50mof either side of the center-line of the road) has been undertaken as part of project preparationwith the support of an international charity. All the roads for the first year have been addressed. De-mining i s the responsibility of the Government and shall be undertaken as part of the road works contract to a strip of 10mon either side of the centerline of the road. Improved access will reopen land to agriculture and ease pressure elsewhere, however mines will prevent people from returning to - 18-  their land. Subsequently, further mine clearance would have to be considered inpotentially contaminated areas made accessible by the rehabilitatedroads. Labor-based appropriate technology (LBAT). Inthe Policy for Rural Roads of the MRD,LBAT is identified as the preferred technology for rural roads. The MPWT and the PDPWTs recognize the merits of LBAT for the construction and maintenance of secondaryroads, and MPWT has sought the technical assistanceof L O inthis regard. Inseveral places, however, LBAT might not be an appropriate option due to unsuitable local soils, lack of available labor, or other technical considerations that would imply that an equipment based approach be followed. Government has committed US$2.4 milliontowards the "Mainstreaming Labor-BasedRoadMaintenance to the National Roads Network" inthree provinces including two of the PRIP provinces, namely Oddar Meanchey and SiemReap. This i s complemented by a JapanFundfor Poverty Reduction grant of US$2.2 million executed by the Asian DevelopmentBank. This is focussed on replicatingthe successful experience inMRDto relevant projects inthe MPWT. The PRIP project will support such mainstreaming and implementation, including training arrangements which will be the same for both the "Mainstreaming" initiative and PRIP-supported works. Standardizationof Roads and Bridges Design. Multiple designs are usedfor the construction of structures and roads inCambodia. While the MPWT has adopted standard specifications these are not uniformly applied through the various donor supported programs making capacity building less sustainable. The PRP adopts the MPWT standardspecifications with specific provisions for labor-based appropriate technology which are being mainstreamed into MPWT and MRDworks. Alternative Road Surfaces.Though laterite is apreferredmaterial for the wearing course on unpaved secondary and tertiary roads, there are not many sources of good laterite inthe project area and many of the roads are prone to rapid gravel loss and require frequentregravelling. Thus the project supports various options of inexpensive pavements which have been field tested inCambodia. TrafsicSafety. Improvedroads will result inhigher speed leading to an increase inroad accidents. Apart from the human costs, accidents represent a significant drain on the country's health system. All designs will pay due considerationto safety concerns and the RGC has sought the assistanceof a local NGO to design and implement an effective community basedroad safety awareness campaign. Market Place Design. The project will assist inthe re-design of markets on a case-by-case basis where road safety concerns warrant. The district centers and markets are the interface betweenthe rural and the provincial economies and often found at roadjunctions. 4. Institutional: Overarching institutional concerns include governance and public sector expenditure management and procurement, an entrenched centralizedculture inMPWT, and capacity constraints inboththe public and private sectors. Additional challenges include overstaffing and low salaries. MPWT, inparticular, i s overstaffed and salaries are low. The majority of the 900 PhnomPenh-based staff on the payroll of the RIDperformexternal jobs to make ends meet. Whenever the RIDreceives funds to execute a specific task on a force account basis, mostly emergency works, staff travel expenses and per diem are budgeted so as to constitute requiredcompensation. This situation i s mirrored in other departments of the central Ministries and inthe provinces where the Director of the PDPWT, at times, acts as a contractor gathering staff and renting equipment when she "gets a project." - 1 9 -  4.1 Executing agencies: There are two designated executing agencies for the project reflecting the fact that there are two ministries responsible for the roadnetwork. The Ministryof Public Works and Transport (MPWT)is responsible for the national, secondary-national and provincial road network, managing all roads that are numbered and carry a daily traffic volume of more than 50 motorizedvehicles (two axle, four wheels). The Ministry of RuralDevelopment (MRD) i s responsible for tertiary roads. A signedjoint declaration between MPWT and MRDfrom March 10,2000, confirms the allocation of responsibilitiesbetween the two ministries with regard to the road sector. Both ministries execute their responsibilities to a greater or lesser extent through their provincial departments. Within MPWT, the three departments most directly concerned with roads are the RoadInfrastructure Department (RID), the Heavy Equipment or Road Construction Center (RCC), and the Technical Research Center (TRC). The RID i s responsible for coordinating road inventories and maintenance and has been designated as the MPWTexecuting department for the PRIP. The RCC i s responsible for road construction, mostly emergency interventions. The TRC sets standards. The RID, established under the Declaration on Conduction and Procedures of Department of Road Infrastructure, dated 16 August 1999 i s managed by the Director and four Deputy Directors who are in charge of two offices and two units (Le. Planning and Technical Office; Administrative and Accountant Office; Bridge Construction Unit; and Road Construction Unit). Within MRD,the Department of Rural Roads (DRR)was established under the Prakas No. 151 PrK.MRDon the OrganizationandFunctioningof the DRRinJuly 2002. DRRis underthe General Department for Technical Affairs (GDTA) inthe MRDand manages all ruralroads inthe Kingdomof Cambodia. The DRR carries out its duties incompliance with the Policy for Rural Roads. The DRR i s headedby the Director and two Deputy Directors who are incharge of five Offices, as follows General Affairs Office, Planning and Statistics Office, MaintenanceManagement Office, Monitoring and Evaluation Office, and Researchand Development Office. The functions of the national DRR includes policy and technical advice, sub-sector coordination, preparationof systems and technical guidelines, facilitation of training, and advocacy. The GDTA inconjunction with its DRR has been designated as the MRDexecuting department for the PRIP. 4.2 Project management: The MPWT and the MRDboth have experience with executing World Bank supported projects. Their provincial departments, however, do not have such experience and, to date, have had little experience with contracting since this has typically been undertaken by the national offices. Local consultant services will be provided directly to the provincial departments to assist with the preparation of bid documents, the bidprocess, and supervision of the works. A Project Implementation Plan has been developed with common procurement and financial management arrangements. 4.3 Procurement issues: The Country Procurement Assessment Report (CPAR)is currently under preparation. There i s no current CPAR.The Country Portfolio Performance Review (CPPR)of 10August 2000 concluded that "procurement i s still a major impediment to efficient project implementation and disbursements." The CPPR identifiedthe need for training and the need to amend "complex and outmoded government processes and procedures." An effort to develop standardized biddingdocuments for both Government-funded and donor-funded projects i s underway inconjunction with the CPAR. Governance - 20 -  issues are a serious concern and hence provisions have been made inthe procurement design. See Annex 6(A) of this document for further details. Inaddition, a technical and financial audit, includingreview of the procurement procedures will be carried out every financial year by an independent auditor to be appointed under the project. World Bank staff undertook aprocurement capacity assessment (see project file) of the executing agenciesMinistry of Public Works and Transport (MPWT), Ministry of Rural Development (MRD), and Provincial Departments of Public Works and Transport (PDPWTs) and the Provincial Departments of RuralDevelopment (PDRDs) of the four project provinces Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap. See Annex 6(A) of this document for further details. One of the key objectives of the project i s to encourage the reduced centralization of operations by supporting the development of capacity of the provincial departments of the project executing agencies, the Ministry of Public Works and Transport (MPWT) and the Ministry of RuralDevelopment (MRD). The responsibilities are as follows: For all goods and consultants' services contracts, the Director of the MPWT-RIDand the Director of the MRD-GDTA-DRRwill be responsible for procurement of their contracts. The Directors will seek clearance from MEFand the World Bank as appropriate. For works below US$500,000 inMPWT and below US$lOO,OOO inMRD: 0 the Director of the relevant ProvincialDepartments of Public Works and Transport (PDPWTs)/the relevant Provincial Departments of Rural Development (PDRDs) will be responsible to prepare biddingdocuments, advertise for bids,conduct bidopenings inthe provincial offices, prepare the bid evaluationreports, sign the contracts and supervise such works. A consultant will be assignedto the PDPWTPDRDto provide advice to the PDPWTPDRDon the steps of implementation. The Director of the PDPWTPDRDi s required to seek clearance for the draft biddingdocuments and the bidevaluation report from the Director of MPWT-RIDDirector of MRD-GDTA-DRR.Inturnthe Director of MPWT-RIDDirector of MRD-GDTA-DRR,after hisher review of such documents, will seek clearance of MEFand the World Bank as appropriate. The Director of the Provincial Departments will be the "Employer" for the works contracts. A member of staff of the PDPWTPDRDwill be the "Engineer" for the works contracts. For works contracts above US$500,000 inMPWT and above US$lOO,OOO inMRD 0 the Director of the MPWT-RIDMRD-GDTA-DRRwill be responsible to prepare bidding documents, advertise for bids, conduct bid openings, prepare the bidevaluation reports, sign the contracts and supervise such works. The Director of MPWT-RIDMRD-GDTA-DRRwill seek clearance of MEFand the World Bank as appropriate for the draft biddingdocuments and the bid evaluationreport. The Director of MPWT-RIDMRD-GDTA-DRRwill conduct the bid openings in the relevant project province, and the Director of the PDPWTPDRD will be included on the bid evaluation committee. The Director of the MPWT-RIDMRD-GDTA-DRRwill be the "Employer" for the contract. A member of staff of the MPWT-RIDMRD-GDTA-DRRwill be the "Engineer"for the works contracts, alternatively the Director of the MPWT-RIDMRD-GDTA-DRR may contract out to a consultant to be the "Engineer". A member of staff of the PDPWTPDRDwill also be assignedto the Employer's supervisionteam. -21 -  4.4 Financial management issues: World Bank staff undertook afinancial management assessment (see project file) of the executing agencies Ministry of Public Works and Transport (MPWT), Ministry of RuralDevelopment (MRD)and Provincial Departments of Public Works and Transport (PDPWTs) and the Provincial Departments of Rural Development (PDRDs) of the four project provinces Kampong Thom, Oddar Meanchey, Preah Vihear, and SiemReap. EachMPWT and MRDwill have their own Special Accounts (to receive IDA funds) and Counterpart FundAccounts andbe responsible for their own Financial Management Reports inaccordancewith the requirements of the World Bank. Eachwill submit their ownWithdrawal Applications to the MEFand World Bank. Both agencies have experience of implementingWorld Bank supported projects and satisfying the financial managementrequirements. See Annex 6(B) of this document for further details. 5. Environmental: Environmental Category: A (FullAssessment) 5.1 Summarize the steps undertaken for environmental assessment and EMPpreparation(including consultation and disclosure) and the significant issues and their treatment emergingfrom this analysis. Environmental Assessment (Operational Policy 4.01). Duringproject preparation, an Environmental Assessment (EA), the executive summary of which i s found inAnnex 11, was prepared by an independent consultant inaccordance with OP 4.01. The main findings are that, since the project will support rehabilitationof existing roads along their presentalignments and within existing rights-of-way, any environmentalimpact of the project i s expected to be limited to the construction effects associatedwith the rehabilitation and maintenance road works. The impacts may result from dust and noise, use of bitumen on sections selected for surface treatment, disposal of solid wastes, erosion control, siting and operationof borrow areas and quarries, labor camp management, etc. These impacts are common inroad works and can be mitigatedwith provenmanagementtechniques. On the positive side, the project will achieve important environmentalbenefits through tree planting to reduce erosion and improve aesthetics, improved access and mobility for the motorizedand non-motorized traffic, and improved drainage reducing erosion and flooding. As a precaution, an Environmental Assessment has been carried out for the project and for the first year roads even though most of the anticipated roads to be rehabilitated and maintained would be classified as environment category "B".The roads to be implementedinthe first year have been definedusing a participatory approach complemented by multiplecriteria analysis (economic, technical, environment, social, beneficiary consultation, etc.) and represent about US$lO.O million of the total US$23.0 million project. A similar approach will be employed for future roads to be rehabilitated under the project. An Environmental ManagementPlan has been developed to mitigate environmental impacts during implementation. Natural Habitats (OP 4.04).Some of the roads proposed for rehabilitation adjoin protectedlandscapes, national parks, or wildlife sanctuaries and are therefore subject to OP 4.04 on Natural Habitats. National road 66, the east-west highway adjoining the BengPer Wildlife Sanctuary, will be rehabilitated under the project. For future roads impacting national parks or other protectedareas, an environmental impact assessment (EIA) would need to be conducted and submittedto the Bank for review. The EIA for such subprojects include consultations with park management authorities, confirmation that the proposed subproject would be consistent with the park management plan, and the endorsement of the Ministry of Public Works and Transport and the Ministry of RuralDevelopment that the road i s beneficial to the park and its inhabitants. - 22 -  Forestry (OP 4.36). Community forestry is an expanding form of land use inthe project area and i s expected to increase even faster when the draft Community Forestry Sub-Decree i s approved by the RGC. Under community forestry arrangements, local communities receive long term tenure and rightsto forest products in exchange for managerial efforts undertaken incooperation with the concerned Government agencies -- Department of Forestry and Wildlife, APSARA (National Authority for the Protection and Management of Angkor and the Region of Siem Reap), or Ministry of Environment, depending on territorialjurisdiction. The project authorities will ensure that land acquisition under the project takes due regard of the recognized authority of community forestry associations and that quarries, borrow pits and drainages do not adversely affect these areas. Project activities will not involve conversionor degradation of critical forest areas or relatedcritical natural habitats as definedunder the policy. Illegal logging i s of concern inCambodia and being addressedthrough other country wide initiatives. Pest Management (OP 4.09).The project will use mechanical or manual work for clearing areas for road rehabilitation. N o pesticides will be used. OP 4.09 on Pest Management i s therefore not applicable. Cultural Property (OPN 21.03)Given the potential for cultural relics inthe project area, particularly in Siem Reap province, OP 4.11 on Cultural Property i s applicable. Provisionsfor dealing with cultural property finds during construction are included inthe EMP. Future sections of National road 66 cross at least three Angkor bridges which would require preservation or even restorationif it i s determined that those bridges should remain on the road alignment. The implementing agencies are familiar with dealing with such issues.For example under the Nationalroad 6 currently being rehabilitated under a World Bank supported project there are Angkor era ancient bridges. The WorldBank Policy on Disclosure of Information (2002). Inline with the World Bank disclosure policy, the Ministry of Public Works and Transport and the Ministry of Rural Development formally disclosed on March 31,2003 the final drafts of the Environmental Assessment,the ResettlementPolicy Framework and the Indigenous Peoples' Development Framework to the public. These documents are available inEnglishat the offices of the MPWT-RIDand the MRD-GDTAinPhnomPenh. MPWT and MRDalso authorizeddisclosure of the documents at the WorldBank office Public InformationCenter in PhnomPenh, and through the World Bank Infoshop inWashington on March 31,2003. Khmer language versions of the documents were made available at the above locations as well as at the Provincial Offices of the MPWT and MRD, and the offices of the Provincial Rural Development Committee (PRDC) in Kampong Thom, Oddar Meanchey, Preah Vihear and SiemReap. 5.2 What are the mainfeatures of the EMPand are they adequate? The recommendations of the Environmental Assessment are reflected inthe project design. An Environmental Management Plan (EMP) has been agreedwhich defines the prevention and mitigation measures for all potential adverse impacts that might arise from the roads and bridges rehabilitation works and the maintenance program (see Annex 11). The EMPwill be included inthe works contracts for each road. Mitigation measures are included inthe General Specifications of the works contracts. Provision is made ineach contract for the financing of trees to be planted along the sides of the roads. The compliance of the contractors incarrying out the provisions set forth inthe contract documents will be supervised duringconstruction as part of the work supervision system established under the Project and monitored by the World Bank duringthe regular supervision missions. Financing of the mitigation measures is covered inthe works contracts and supervisioncontracts. The Development Credit Agreement includes a requirement that the Borrower shall carry out the Project in accordance with the Environmental Management Plan. The MPWT and MRDwill be responsible for ensuringthe compliance with the environmentalrequirements of the project. - 23 -  5.3 For Category A and B projects, timeline and status of EA: Date of receipt of final draft: March 30,2003 5.4 How have stakeholders beenconsulted at the stage of (a) environmental screening and (b) draft EA report on the environmentalimpacts and proposed environment management plan? Describe mechanisms of consultation that were usedand which groups were consulted? The participationprocess for the selection of the investments and those who participated i s described in Section 6.1 below and documented inthe project files. With the help of maps showing the location of protected areas like national parks, wildlife sanctuaries, protectedlandscapes and biodiversity areas participants inthe workshops were able to determine if roads would pass through or be close to suchan area. Roads inor close to such an areareceived lower scores inthe selection process. The results are discussed inthe Environmental Assessment. The Environmental Management Plan (EMP) was prepared on the basis of these findings.A Khmer language EMP will be widely distributed along the project roads chosen for rehabilitation. 5.5 What mechanisms have been established to monitor and evaluate the impact of the project on the environment? Do the indicators reflect the objectives and results of the EMP? The Environmental Management Plan (EMP) contains detailed environmental compliance monitoring requirements including parameters and indicators for all activities relating to the recommended mitigation measures. Implementation of these measureswould be supervised by a localconsultant or NGOengagedby MPWT and MRD. The technical audit will review implementationof the works in accordance with the contract provisions. 6. Social: 6.1 Summarize key social issues relevant to the project objectives, and specify the project's social development outcomes. A Social Assessment has beencarried out during the project preparationwith specific objectives that included: (i) assessment of potential social impacts of the project, with particular attention to gender, and poor, vulnerable, indigenous and ethnic minority groups; (ii) as a first step, an overall assessment of the social and economic conditions of the people living inthe proposed project provinces by gender, income, and ethnicity, and as a second step, consultation with beneficiaries about their needs and priorities and a more in-depth assessment of the population along the roads to be improved to establish a baseline for social monitoring and evaluation; (iii) identification of other key stakeholders, including civil society groups and locally active NGOs with interest and some capacity to participate inproject implementation and monitoring; (iv) identification of any social risks; and (v) formulation of appropriate measuresto mitigate potential adverse impacts and risks. The Social Assessment describes the socioeconomic situationof households in29 villages (out of 81 villages) situated along the roads to be rehabilitated inthe first year of the project. The villagers interviewed are almost all (97 percent) below the poverty line, indicating that the project area i s indeed one of the poorer areas of the country. The mainsources of income i s from paddy farming (60 percent), and casual wage labor (20 percent). 15 percent are engaged insmall scale trading or vegetable selling. The Social Assessment confirmed that generally people welcome the rehabilitation of roads, and that communication and transport i s a constraint inthe daily life. Most villages are fairly isolated and roads in disrepair. People had great difficulty travelling, particularly inthe rainy season. People walked notjust in the local community but over long distances. The most frequently used transport mode was the bicycle (85 percent) - usedthroughout the year. Motorcycles were used on a daily basis by only 6 percent of - 24 -  respondents and on a monthly basis by 33 percent. Cars, buses and pick-uptrucks were usedinfrequently, usually on a yearly base, however 65 percent of respondents hadnever travelled in a car, 65 percent had never travelled ina pick-up truck and 32 percent had never used a motorcycle. Rehabilitationof roads are expected by villagers to benefit themprimarily for better market and business opportunities, and for easier access to health care facilities. However, villagers also fear an increase inroad accidents, involving children and cattle. Indigenous Peoples (Operational Directive 4.20). No reliable figures exist about the presenceof indigenous peoples inCambodia. Indigenous Peoples, as described in OD 4.20, are often referred to as Highlands Peoples, and are mainly found inthe north easternprovinces but are also found in villages in other provinces. Preliminary information suggests that indigenous minorities mostly live inforested areas away from the existing roads; no adverse impacts on these groups are foreseen. Other ethnic minority groups live inthe villages and are likely to benefit from the project interms of improved access to markets and new opportunities for income generation. At least one of the project provinces, Preah Vihear i s knownto have some indigenous communities. The Ministry of Public Works and Transport and the Ministryof RuralDevelopmenthave adoptedanIndigenous Peoples' Development Framework (IPDF) (June 2003) (see Annex 13) inaccordancewith OD 4.20, and guidelines for screening and implementation are included inthe agreedProject Implementation Plan (July 2003). Indigenous Peoples will be determined based on five characteristics specified inthe OperationalDirective 4.20. For the first year roads, one indigenous community (a village of the Kuoy ethnic group inPreah Vihear) i s affected and a stand alone Indigenous Peoples Development Plan has been adopted by the Government. Once the remaining roads are identified duringproject implementation, Indigenous Peoples Development Plans would be prepared, as needed, followingthe provisions of the Indigenous Peoples' Development Framework. Involuntary Resettlement (Operational Policy 4.12). Since the project will support rehabilitation of existingroads, there will be limited acquisition of private assets and resettlement of people. The Ministry of Public Works and Transport and the Ministry of RuralDevelopment have adopted a ResettlementPolicy Framework (June 2003) (see Annex 12) inaccordance with OP 4.12 and guidelines for screening and implementation are included inthe agreedProject Implementation Plan (July 2003). For the first year roads, there i s no land acquisition or resettlement of people required. Once the remaining roads are identified during project implementation, ResettlementPlans would be prepared, as needed, following the provisions of the Resettlement Policy Framework. Provisionsand principles adopted inthese Frameworks for the project supersedethe provisions of relevant decrees and laws currently inforce in Cambodia, wherever differences exist. Labor laws. The MPWT and MRDwill ensure that the civil works contractors: (i) with all comply applicable labor laws; (ii) apply equal remunerationfor menand women for work of equal value without gender differentiated wages; (iii) do not employ child labor below age 18; and (iv) seek to maximize the level of female participation in appropriate construction works. Suchprovisions are included in all works contracts. 6.2 Participatory Approach: How are key stakeholders participating inthe project? The Ministries took a very proactive approach to the participatory process and their national and provincial offices actively led the process. A ProvincialTransport Infrastructure Planning (PTIP) tool was developed, based on the requirement of the Ministries, emphasizing a process that would be able to prioritize future investments and that would provide ample opportunity for residents to ensure investments were prioritized accordingto their needs. The tool essentially identifies the road network, - 25 -  evaluates existing public assets and prioritizes investments according to maximumneed and impact. The planningprocess screens roads by comparingaccessibility rankings with population served, environmental impact and economic potential. The responsibility for preparingthe Provincial Transport InfrastructurePlans was with the Provincial Rural Development Committees (PRDCs). The committees were presided over by the Provincial Governors and includedofficials from all technical departments at the provincial level (Rural Development, Public Works, Planning, Health, Education, etc), District Representatives plus a selection of key constituents. The local "experts" includedteachers, health workers, traders, transporters, women's group representatives, and other stakeholders. The selection of the workshop participants attempted to reach a real cross section of the community. Duringthe planningprocess more than 5,500 people were consulted and took part inthe planning and decision making. Planning activities took place from September to December 2002. Initialprovincial workshops were heldinKampong Thom on 28 August 2002, in Oddar Meanchey on 12 September 2002, and inPreah Vihear on 16 September 2002 (no initial workshop was held in SiemReap), a series of district workshops followed and then a secondround of provincial workshops were held from November to December 2002. This mechanism was usedto finally develop the first year work program. The mechanismwill again be employed to develop the programfor further years and guidelines on how to conduct the participatory process for the selection of future roads are included inthe agreedProject ImplementationPlan. In addition, the Social Assessment provided an opportunity for systematic feed back from local residents, both through the structured interviews with more than 800 households, and the focus group discussions in29 villages along the first year roads to berehabilitated. 6.3 How does the project involve consultations or collaboration with NGOs or other civil society organizations? Consultation with NGOs and civil society organizations active inthe project area was included inthe project preparation through the participatory planningprocess. The collaboration with local NGOs i s ensured through their participation inthe PRDC. NGOs will provide support to Government inthe implementation of the HIV/AIDS awareness and mitigation program, the road safety campaign, and the mine awareness campaign and mine path finding requirements. 6.4 What institutional arrangements have been provided to ensure the project achieves its social development outcomes? It is proposed to raise awareness of and buildcapacity for social and environmental management within the MPWT and MRDat provincial and central levels. Identified staff of the MPWT and MRDhave been assignedresponsibility for social aspects. 6.5 How will the project monitor performance interms of social development outcomes? The Social Assessment carried out duringthe project preparation includes a socio-economic baseline that provides information on the project beneficiariesand their current situation. The baseline will be used for monitoring the social changes that the project may induce and for post-implementation evaluation of the project impacts. - 26 -  7. Safeguard Policies: NaturalHabitats(OP 4.04, BP4.04, GP 4.04) Forestry (OP4.36, GP4.36) 0Yes 0No PestManagement(OP 4.09) 0Yes 0 NO CulturalProperty (OPN 11.03) 0Yes 0 NO IndigenousPeoples(OD 4.20) 0Yes 0 NO InvoluntaryResettlement(OP/BP4.12) 0 0NO Yes Safety ofDams(OP4.37, BP4.37) 0Yes 0No ProjectsinInternationalWaters (OP7.50, BP7.50, GP7.50) 0Yes 0 NO inDisputedAreas (OP7.60, BP7.60, GP 7.60)" I 0 0 Yes NO I 7.2 Describeprovisions made by the project to ensure compliance with applicable safeguardpolicies. Implementation of environmental assessment will be ensured through inclusion of discussion of the Environmental Management Plan (EMP) provisions at the pre-bid meetings, inclusion of environmental requirements and the EMPinthe constructioncontracts, and environment and social impact mitigation management training for bothconstructioncontractors and MPWTMRD supervisors and project personnel. All contracts will contain clauses that define the environmental requirements to be met during roadconstruction. Compliance will be monitoredthrough the supervision arrangements. Natural habitats will be protectedthrough selection criteria and design. Roads selected for the first year do not cross any known heritage sites, and the EMPincludes procedures to be followed to protect known or chance find of cultural property. All safeguard policies compliance will be closely monitored duringWorld Bank supervision and mid-termreview. F. Sustainability and Risks 1. Sustainability: The project i s specifically designed to support sustainability by: (a) working through the existing units and structures of the implementingMinistries inline with their designated responsibilities and supporting enhancementof their capacity; (b) implementingthrough the existing provincial departments of these Ministries to further enhance their long term capacity; (c) strengthening on-going efforts inpolicy development to ensure the requiredmanagement and budgetingcapacity for sustainable maintenance; (d) usingprocurement systems inline with localprocurement rules; (e) supporting the development of the local contracting and consulting industryby designing the project to be accessible to them in addition to the planned training program; and (f) introducingparticipatory planning methods and transparent decision making processes to last and potentially be replicated inother areas/sectors as well, particularly at the provincial level. - 27 -  2. CriticalRisks (reflecting the failure of critical assumptions found inthe fourth column of Annex 1): Risk Risk Rating Risk Mitigation Measure From Outputsto Objective Roadmaintenance policy including H Close follow up on the ADB-financed technical sustainable maintenance financing assistance and the IDA-supportedRoad mechanism established through ongoing RehabilitationProject projects by year 3 and adopted by RGC. Mines and UXOs cleared inthe M While costs are substantial, it i s a Government surrounding areas. priority to demine these provinces to encourage settlement of returnees and internally displaced population, and promote tourism development. Affordable transport services respond to N A study on ruraltransport services assessed the demand. that there were no institutional, legal, financial or technical constraints that would hamper a supply response. Public information campaigns of the PRIP are likely to result in increasedmarket confidence by local transport providers. Security and rule of law enforced and M No action possible, relatedto internalpolitics politicaltensions inRGC reduced. andforeign policy. Ruralhealth and education services N Informthe Ministries of Health and Education, expanded and improved; increased small and the public, through regular campaigns, of business start-ups and localinvestment; the PRIP. Coordinate with other development and other complementary rural programs. development projects achieved as planned. Transparent competitive tendering S The Credit includes a conditionality that if any processes of all public road works in non-competitively bidcontracts are awarded Cambodia. inthe PRIPprovincesinthe road sector, the information will be publically disclosed. From Componentsto Outputs MEFpromptly clears feasibility reports, N Close collaboration with World Bank country commitments, contracts and payments, team and use of macro dialogue. and requests for replenishment of Special Accounts. MEFreleasescounterpart funds M Regular follow up of funds release and accordingto predetermined schedule. incorporated as a covenant inthe Credit Agreement. MEFreleasesfunds for routine S Incorporatedas a covenant inthe Credit maintenance. Agreement for the funds to be released up front quarterly. Overall Risk Rating S Risk Rating H (High Risk), S (Substantial Ris - M (Modest Risk), N degligibleor Low Risk) 3. Possible Controversial Aspects: No controversial aspects identified. - 28 -  G. Main Credit Agreement Conditions 1. Effectiveness Condition The standard condition of effectiveness of the legal opinion from the Royal Government of Cambodia applies. The following are specified as additional matters, within the meaning of Section 12.02(b) of the General Conditions, to be included inthe opinion or opinions to be furnished to the Association, namely that the Environmental Management Plan, the Resettlement Policy Framework and the Indigenous Peoples Development Framework have been duly authorized or ratified by, and are legally bindingupon, the Borrower. Project specific conditions of effectiveness include: (a) the Borrower shall have made the initial deposits into the Counterpart Funds Accounts out of its own resources as follows (A) deposit into the MPWT Counterpart Funds Account an initial amount equivalent to Sixty Thousand Dollars ($60,000) and (B) deposit into the MRD Counterpart Funds Account an initial amount equivalent to Sixty Thousand Dollars ($60,000); (b) the Borrower shall have established a financial management system, acceptable to the Association, including: (i) adoption of a financial management manual acceptable to the Association, and (ii) completion of appropriate training for staff of MPWT, MRDand their respective departments inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and SiemReap; (c) the Borrower shall have adopted the Project ImplementationPlan; and (d) the Borrower shall have allocated adequateresources in support of a Project staffing planacceptable to the Association. 2. Other [classify accordingto covenant types used inthe Legal Agreements.] Inadditionto the standard legalcovenants requiringthe Borrower to carry out the project withdue diligence and efficiency and inconformity with appropriate administrative, construction, financial, engineering, environmental and public utility practices, and social and environmental standards, and supplying as neededthe funds, facilities and services and other resources requiredfor the project, the following project specific covenants apply: (a) the Borrower shall cause adequate funds for routine road maintenance inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and SiemReap to be placedinthe Counterpart FundAccount semi-annually to cover maintenance needs for the subsequent six month period; (b) the Borrower shall, with respect to any contracts for works onroads inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap that are pre-financed or awarded on a non-competitively bidbasis and not financed out of the proceeds of the Credit, disclose publicly all pertinent contract information, including the contractor, contract terms, and such other information as the Association may from time to time require (public disclosure means disclosure within 30 days on the website for aperiod of at least 60 days of MPWT or MRD,as appropriate and that the following information will be disclosed: (a) name of the party to whom the contract i s awarded; (b) value of the contract; (c) location of the works; (d) length of the road works; (e) duration of the contract; and (f) any non-standard financing arrangements); and (c) the Borrower shall cause MEF, MPWT and MRDto enter into a Memorandum of Understandingby December 31, 2003 and thereafter, throughout the period of implementation of the project, maintain such Memorandumof Understandinginfull force and effect; (d) incarrying out components 1and 2 of the Project, the Borrower shall engage independent auditors to conduct technical assessments of Project implementation; and (e) the Borrower shall carry out the Project inaccordance with, and shall implement all measures requiredunder, the Environmental Management Plan, the ResettlementPolicy Framework and the Indigenous Peoples Development Framework. - 29 -  H. Readiness for Implementation 1.a) The engineering design documents for the first year's activities are complete andready for the start of project implementation. c] 1.b)Notapplicable. 2. The procurement documents for the first year's activities are complete and ready for the start of project implementation. 3. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 4. The following items are lacking and are discussedunder loan conditions (Section G): 1.Compliancewith Bank Policies 1.This project complies with all applicable Bank policies. 02.The following exceptions to Bank policies are recommendedfor approval. The project complies with all other applicable Bank policies. Acting for Sally L.Burningham Jitendra N.Bajpai IanC. Porter Team Leader Sector ManageVDirector Country ManagedDirector - 30 -  Annex 1: Project Design Summary CAMBODIA: Provincial and Rural InfrastructureProject (PRIP) Sector Indicators: iector/ country reports: from Goal to Bank Mission) I.Ruralpovertyreducedand 1. Educational and literacy xonomic & social status (by gender, group). ievelopment expanded. 2. Health status (infant and 2. National re-integration of maternal mortality, etc.). xoject provinces. 3. Nutritional status (by gender, group). 4. Income and employment status (by gender, group). 5. Increasedparticipation in civil society and decision making (by gender, group). Project Development Outcome/ Impact Voject reports: [fromObjectiveto Goal) Objective: Indicators: Enhanced livelihood of the 1. Increaseduse of health As markets expand, farmers peoplesresiding inKampong services (# clinic visits by will increase production rhom, Oddar Meanchey, groups, gender). levels. PreahVihear and Siem Reap Food availability increased. by providing sustainable 2. Increaseduse of education sccess to markets and essentiaservices (enrollment rates by Agricultural marketing, services. gender, group). storage and distribution 3. Increased volume and facilities will complement revenue of tourism (WY). PRIP efforts. There are no adverse 4. Increased flow of unmitigated environmental or information inrural areas social impacts from the PRIP (agricultural markedretail initiatives. prices, credit, provincial budgets, et al). Continued political stability. 5. Increased # of non-farm :mployment opportunities. LeadingIndicators in PRIP vrovinces (3 years): 1. Increased # of NGOs active nthe project area. 2. Increased number of villages linked to higher level .oads ingood condition (WY). 3. Increased volume of goods -31 -  transported (WY). 4. Increased volume of rural passenger traffic (WY). 5. Transport costsreduced (m). 6. Increased kmof MPWT and MRD roads receiving regular maintenance. htput from each Output Indicators: 'roject reports: lromOutputsto Objective) 2omponent: I, Maintenance management Maintenance management Load maintenance policy iystem established and established and implemented icluding sustainable Iperational. for secondary and tertiary iaintenance financing roads inMPWT and MRD. iechanism established Maintenance program lrough ongoing projects by established inPRIPprovinces: ear 3 and adopted by RGC. 0 300 kmsecondary roads 4ines and UXOs cleared in and 300 kmtertiary roads i e surrounding areas. maintainedto Z standard with year-round access Lffordable transport services financed by government espond to the demand. project counterpart fund; lecurity and rule of law 0 Sustainable financing plar nforced and political tensions established by year 3. n RGC reduced. L. Roads rehabilitated. 300 kmof secondary-national iura1health and education and provincial roads ervices expanded and rehabilitated mproved; increased small iusiness start-ups and local 300 kmof tertiary roads nvestment; and other rehabilitated omplementary rural levelopment projects achieved 2.3 # Contractors and s planned. consultants prequalified for road works (WY). 'ransparent competitive 2.4 # Contracts let. endering processes of all iublic road works. 2.5 Private contractor and consultant data base established and maintained Adr performance records. 5 .Capacity building program 3.1 National level capacity :stablished and implemented. building program implementec and training/TA support providedbased on training needs assessment: X # potentialroad sector contractors and -32-  consultants trained in business management, rehabilitation and maintenance; 0 X#MF'WTandMRD staff trained inpolicy design, strategy development, public involvement methods, decentralized program management, and contract management and monitoring. 1.2 Provincial level capacity uilding program established md trainingITA support wovided basedon a training ieeds assessment: 0 X # provincial officers trained inplanning, contract management, public involvement methods, decentralized contract management, and monitoring; 0 X # of technicians trained inLBAT, managementof maintenance contracts anc supervision. 3.3 # ITC trainers trained in ,BAT roadrehabilitation and naintenance. 3.4 Capacity inMF'WT and URDat central andprovincial eve1to manage social and 3nvironmental mitigation Aans established: # staff trained in social and environmental management; 0 compliance in implementation of RAPS and EMPs; 0 time to implement RAP (differentiated by number of PAPS). and strategies 4.1 Integratedplanning & and implemented. budgeting for roads adopted ir MPWT & MRDat national level and inPRIP provinces 4.2 Least-cost life-cycle standards for secondary and -33-  rtiary roads adopted by PWT andh4RD. 3 Labor-based appropriate chnology policy adopted by PWT. 4 Sustainable funding for lad maintenance including )thperiodic androutine :cured. 5 Institutional reform. . Community awareness 1 Road safety awareness lrograms implemented. 'ogram established. 2 HIV/AIDS public vareness and mitigation 'ogram established to .emote protection/ .evention. 3 Participatory road anning processes involving Jblic stakeholders Stablishedand implemented. 4 Mine andUXO awareness rogram implemented in -oject areas. JrojectComponents/ )puts: (budgetfor each Projectreports: (from Componentsto Sub-components: omponent) Outputs) Zomponent 1: Maintenance 'S$l.O million Annual works plans MEFpromptly clears nanagement. feasibility reports, Annual training plans commitments, contract and Zomponent 2: Rehabilitation tB18.65 million payments, and requests for md periodic maintenance of Quarterly Financial replenishment of Special ,econdary-national, provincial MonitoringReports (FMRs) Account. md tertiary roads. Annual technical audits MEFreleasescounterpart funds ina timely manner. Zomponent 3: Capacity W2.60 million milding program. Annual financial audits MEFreleasesfunds for routine maintenance ina Zomponent 4: Policy and timely manner. itrategy development. rS$0.20million Zomponent 5: Community rS$0.55 million iwarenessprograms -34-  Annex 2: Detailed Project Description CAMBODIA Provincialand Rural InfrastructureProject (PRIP) Thedemographic context. Of the 24 provinces inCambodia, the PRIPproject targets the four northwestern provinces of Kampong Thom, Oddar Meanchey, Preah Vihear, and Siem Reap. These four contiguous provinces are home to 1.5 million of the 12.3 millionpeople inCambodia and the percentage of poor inthe provinces is 40 percent compared to a national average of 36 percent. (Source: World Food Program2000 Poverty mapping). . h Total in Indicator Kampong Oddar Preah SiemReap PRIP Total in Thom Meanchey Vihear Provinces Cambodia Population Size (000) I 569.0 I 68.2 119.2 696.1 1,500 12,300 % of Total Population* I 4.97 0.57 1.03 6.04 12.2 Est. No. of Poor People (OOO)* 158.9 24.5 32.9 356.8 573.1 3,03 1.5 Poverty Share (%) * 5.24 .81 1.08 11.77 18.91 Population Density 41 11 9 68 32 (Per sq Land Area (sq km) 13,814 6,158 13,788 10,299 44,059 181,035 Unemdovment Rate 8.2 4.5 2.6 4.6 4.6 I , Labor Force ParticipationRate 51.9 56.2 61.9 58.2 54.3 Literacy Rate 56.4 41.1 48.7 48.2 47.3 Female Literacy Rate 50.1 29.9 40.5 41.1 39.4 Firewood as Main Source of 95.6 97.4 98.4 96.1 95.8 Cooking Fuel (% of Hhs) Grid-Connected Electricity 5.3 1.8 1.7 7.6 4.2 (% of Hhs) PipedWater (% of Hhs) 1.7 0.3 1.3 0.6 0.9 - 35 -  The condition of the road network. Cambodia's roadnetwork of 38,257 kilometers (km)-including approximately 4,757 kmof nationalroads and 5,700 kmof provincial roads under the responsibility of the Ministry of Public Works and Transport (MPWT), and 27,800 kmof tertiary roads under the responsibility of the Ministry of Rural Development (MRD)-i s inpoor shape, notwithstanding a major effort at rehabilitation since the mid 1990s.The network inthe four provinces has an extent of 2,445 km, with on average 44 percent being passable all year round, with 29 kilometers sealed. The provincial roads are inthe poorest condition with only 25 percent being passableall year round. Efforts by the Military Engineersparticularly inOddar Meanchey mean that the network is inreasonable condition. There i s a concern however that no maintenance plan i s inplace for such roads. Table 2.2 Characteristics of the road network inthe four target project provinces I Total I All I Dry I Provincialarea I All weather Province Network Length Weather Season Km2 Km/K" KT Secondary NationalRoads 52 52 0 ProvincialRoads 137 26 112 TertiaryRoad 202 44 158 Subtotal 391 122 270 13.814 0.01 ISubtotal 941 I 168 774I 13,788 I 0.01 SRP ISecondaryNationalRoads 261 I 239 1I 29I (TertiaryRoad 252 I 1151 137 ISubtotal 665 430 235 10,299 0.04 Total inPRIPprovinces 2,445 II 1,070II 1,375III 44,059 II 0.02 Total inCambodia I 38,2571 181,035 I Inorder toattainitsdevelopment objective, theproposedUS$23.0millionprojecthasbeendesignedto deliver the following components: Component 1. Maintenancemanagement (US$l.O million) Component 2. Rehabilitation and periodic maintenance of secondary-national, provincial and tertiary roads (US$18.65 million). Component 3. Capacity buildingprogram(US$2.60 million) Component 4. Policy and strategy development (US$0.20 million) Component 5. Community awarenessprograms (US$0.55 million) -36 -  By Component: Project Component 1 US$1.OO million - Maintenance management. The project will support: (a) the installationand operation of road maintenance management systems at the national level inthe Ministryof Public Works and Transport and the Ministry of Rural Development and intheir respective provincial departments of Kampong Thom, Oddar Meanchey, Preah Vihear and SiemReap; and (b) the carrying out of annual programs of routine maintenance on all roads ingood and fair condition inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The funds for routine maintenance are included inthe cost of the project to be funded from Government annual budget allocations. The component includes the following: 1.1 Works for routine maintenance - US$778,000 (fully funded by Government at about US$400/km) 1.2 Consulting services for Maintenance Planning - US$150,000 (MPWT - US$435,000 andMRD- US$343,000). 1.3 Government staff incrementaloperating costs for transportation and accommodation - US$72,000 The installation of the road maintenance management systems (RMMSs) will be financed by IDA, including the cost of equipment, training and consultant services. Such system will consistent with and complement other ongoing initiatives. Both MPWT and MRDhave recently engaged consultants to develop RMMSs. MPWT has piloted a RMMS inKandall province and has prepared for its replicationin six additional provinces. At the same time, efforts are underway to inventory and survey the MPWT roads under the IDA financed RRP. The RMMS inMRDconsists of three components: (i) Planning; (ii)Contract management; and (iii) Financial management. It has four categories (tertiary, sub-tertiary 1, 2 ,and 3) and relies on an inventory of road assets (rural roads, bridges, culverts, road signs, and so on), a road condition survey, and prioritization criteria. The full ruralroad network will be surveyed under the PRIP and all rural roads entered into the system. MRDhas already installedthe RMMS inthe Department of Rural Roads and will pilot it inthe six RIP provinces. It foresees the installationof the system inthree of the four PDRD-DRRsinthe PRIPprovinces under on-going and forth-coming projects financed by the ADB. This meansthat only PreahVihear province will require the equipment and system software to be financed under PRIP. Assuming that the MRD-GDTA-DRRand three PDRDs will already be equipped with the RMMSs by the time of PRIP start, the PRIPdesign will make provision to: a) install the MRDRMMS inPreahVihear Province (PDRD-DRR); and b) install and operate a RMMS inMPWT-RIDand the four PDPWTs. Annual programs of routine maintenance on all roads ingood and fair condition will be implementedin the provinces of Kampong Thom, Oddar Meanchey, PreahVihear and SiemReap. The JFPR-ADB-RGC supported proposed project "Mainstreaming of Labor-based RoadMaintenanceto the National Roads Network" will also support implementation of routine maintenance works and thus implementation modalities will be harmonised between PRIPand the Mainstreaming project, including but not limitedto aspects such as harmonised biddingdocuments, implementation procedures, formats of submission to MEFinrequestfor financing, andprovisionof training to the labor-based contractors. The funds for routine maintenance are included in the cost of the project to be funded from Government annual budget allocations. An inventory and condition survey of the tertiary, provincial and secondary national roads in the four PRPprovinces hasbeenundertaken and roads priortisedfor maintenance basedon their condition (see Tables 2.2). Targets for the first year include about 177 kilometers (km)under MPWT - 37 -  responsibility and about 109 kmunder MRD (see Table 2.3). The network of roads receiving regular routine maintenance is planned to increase annually to reach maintenance of about 400 kmof secondary national roads and provincial roads and 300 kmof tertiary roads inthe third year (as shown inTable 2.4) covering about a third of the network of 2,445 kminthese four provinces. The maintenance needs and plan will be updated annually. The cost during the first year i s estimated at US$108,834 to be funded by Government counterpart funds. Cost estimated at a general US$400per kilometer for works (or US$500 per kilometer including supervision and other costs). Appropriate standards and guidelines will be applied by PDPWTs and PDRDs inthe RMMSto determine treatments, programming and cost estimates to establish maintenance programs ineachPRIPprovince. They will then contract and supervise the routine and periodic maintenance works. Province Description ILength(km) I CostUS$ Ministryof PublicWorks and Transport (MPWT) SiemReap NR67 18.80I 7,520 SiemReaD IINR201 16.00 I 6,400 SiemReap NR202 8.79 3,516 Oddar Meanchey NR183 8.OO 3,200 Oddar Meanchey NR171 52.97 21,186 Oddar Meanchey NR174 29.98 11,992 KampngThom NR220 12.60 3,780 PreahVihear NR210 30.00 12,000 Subtotal 177.14 69.594 - 38 -  Project Component 2 US$18.65 million - Rehabilitation and periodic maintenance of secondary-national, provincial and tertiary roads. The project will support the carrying out, inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap, of aprogramof rehabilitationand periodic maintenance of (a) approximately 300 kmof strategic secondary-national andprovincialroads under the Ministry of Public Works and Transport; and (b) approximately 300 kmof tertiary roads under the Ministry of Rural Development. Annual planning process. MPWT and MRDwill carry out the works inaccordance with annual plans acceptable to the World Bank. Such annual work plans shall be submittedprior to any expenditure and only items on the agreed work plan shall be eligible for disbursement. Such plans shall include information on (i) the environmentaland social assessment, (ii) description, (iii) of works, (iv) road type road length, (v) expected cost, (vi) economic rate of return, (vii) traffic count data, (ix) number of beneficiaries, (x) mine and UXO clearance arrangements, and (xi) procurement plan. Details are outlined inthe Project ImplementationPlan. Road selectionprocess. The roads for the first year works planhave been selected on the basis of a participatory process. One of the criteria influencing the final selection of roads for the first year work plan was the need to meet the general consensus that each province and each provincial department should have works inthe first year, since the key objective of the project i s the development of provincial capacity. Further roads will be selected on the basis of the participatory procedures as outlined inProject Implementation Plan. Implementation of road works. Works will be contracted out inline with the procurement procedures set out inAnnex 6 (A) and a training programto develop qualified private contractors will be run concurrently, increasingprivate sector involvement inthe road sector. Works will be carried out using labor-based appropriate technology (LBAT) to maximize local employment. Works will be implemented inline withthe requirements of the Environmental ManagementPlan which will be includedinall contracts and in line with the requirements of the ResettlementPolicy Framework and the Indigenous Peoples Development Framework. The JFPR-ADB-RGC supported project "Mainstreaming of labor basedRoad Maintenance" will also support implementation of periodic maintenance works and thus implementation modalities between PRIP and the Mainstreaming project will be harmonised including butnot limitedto aspects suchas harmonised biddingdocuments, implementationprocedures, formats of submission to MEFinrequest for financing, and provision of training to the labor-based contractors. Mines and UXO clearance process. The MPWT and MRDare responsible to ensure that all mine/UXO clearance activities are carried out in accordance with UNGuidelines. Provisions will be included inall contracts for the contractor to subcontract to a certified mine clearance party and deminingcontractor as certified by CambodianMine Action Center (CMAC), a Government body. Inaddition, the implementing agencies will contract with a certified de-miningexpert to verify the program of the contractor and the demining contractor. Alternatively, if the road has already been cleared, then MPWT and MRD shall provide certification of such clearance from CMAC or the relevant Provincial Rural Development Committee. Scope of road works. Civil works comprise rehabilitation and periodic maintenance of roads, culverts, bridges and market access arrangements and include traffic signs and localized safety improvements in particular the crossings inbuilt-upareas. All works contracts will include tree planting along the roads with trees being selected on advise from the relevant provincial department. - 39 -  The component consists of the following: 2.1 Works US$17.138 million (MPWT - US$12.456 million and MRD - US$4.032 million) 2.2 Supervisionconsultants for works component US$918,000 representing approximately 5 percent of the cost of the works (MPWT - US$480,000 and MRDUS$438,000) 2.3 Detailed design consultants for additional roads and bridges works US$522,000 representing approximately 5 percent of the cost of the works (MPWT - US$366,000 and MRD- US$156,000) 2.4 Government staff incrementaloperating costs for transportation and accommodation - US$72,000. Design specifications. The design standards adopted for this project are the Ministry of Public Works and Transport national standards for roads and bridges (CAM PW-03-101-99). A review of Roadworks Standardsand Design Criteria was undertaken duringproject preparation, the results of which are incorporated into the designs. There have been a number of alternative surfacing trials ongoing including handpacked stone roads and the project will support implementationof some of the successfully tested alternatives. Inmany cases the roads will be upgraded to surfaced standards, given the rate of deterioration of gravel surfaces in Cambodia, and where justified on an economic basis. Traffic surveys carried out for the project plus those by L O around the Puok Market (on bothmain and secondary roads) (Refi Trafsic Characteristics around Puok Market, Socio-economicSeries February 2002 Ministry of Rural Developmentand International Labor Organisation),indicate a very large proportion of bicycles inthe traffic onPRProads, representing upto 60percent of the traffic. Stabilizedshoulders (with lime/cement/pozzalan, and usinga bituminous sand seal) that appear not to be paved, yet are smooth enough for bicycle traffic are included inthe designs. The shoulder will also be strong enough to resist the very aggressive steel rimmed ox car wheels. Further, consideringthe available resources, road standards have been somewhat relaxed interms of width (but not load carrying capacity or safety, and so more route kilometers can be constructed with a fixed amount of funding). RoadCategory Secondary National;R4 Provincial; R3 Tertiary road; R2 Carriageway width 6.5 m 6.0 m 4.0 m (2 lanes+0.25m marginal (2 lanes+0.25m marginal (1lane without margin) with white line marking) with white line marking) Shoulders (of suitable Rural & hilly area = 0.75 m Rural & hilly area = 0.75 m Rural & hilly area = 0.50 construction strength and m preferably sand sealed) Urban area = 1.OO m Urban area = 1.00 m Urban area = 1.OO m Roadway (shoulder edge to Rural & hilly = 8.0m Rural & hilly = 7.5m Rural & hilly = 5.0m shoulder edge) Urban= 8.5 m Urban = 8.0 m Urban = 6.0 m Side drains Rural area = continuous Rural area = continuous Rural area = continuous road side channel road side channel road side channel Urban area = masonry side Urban area = masonry side Urban area = masonry drain drain side drain Hilly area = "V" gutter and Hilly area = "V" gutter and Hilly area = "V" gutter gabion walls gabion walls and gabion walls Lateral clearancesor berm Minimum: 6.0 meter Minimum:4.0 meter Minimum:2.0 meter Batter Clayey soil: 1V : 2 H Clayey soil: 1V : 2 H Clayey soil: 1V :2H Sandy silt: 1V : 3 H Sandy silt: 1V :3 H Sandy silt: 1V : 3 H Endedging Dressed stone block: 0.20 Dressed stone block: 0.20 None -40 -  wide x 0.30 thick wide x 0.30 thick Soil Verge width 0.0 m 0.0 m (outside of shoulder) PavedCrossfall 3 % 3 % UnpavedCrossfall(gravel) 5 % (Shoulder) 5 % (Shoulder) Minimum heightof roadsurface 0.5 meter 0.5 meter 0.5 meter above highest flood levelin P meters (20 years returnperiod) PavedTraffic Capacity 3,000 - 10,000 1,000 - 3,000 150- 1,000 ADT (24 hrs) inPCUfor 30 vears DroiectedADT I Labor laws. The MPWT and MRDwill ensure that the civil works contractors: (i) with all comply applicable labor laws; (ii) apply equal remuneration for menand women for work of equal value without gender differentiated wages; (iii) do not employ child labor below age 18; and (iv) seek to maximize the level of female participation inappropriate constructionworks. Cambodia i s signatory to the provisions of the International Labor Organisation. Specific labor clauses are included in all works contracts. The first year annual work programcomprises (see procurement plan inAnnex 6(A)), I ($)I Table 2.6 Component 2 FirstYear Work Programfor Rehabilitation - RoadNo. Location Length I Starting Point End Point (km) ($1 Structures ($1ITotal Cost Of Soutr NikumDistrict #65 Centre Junction with road 66 19.855 1,621,778 67,590 1,689,368 SiemReap #66 Junction with road 66 BeungMealea (ch 8+427) 11 556,144 53,000 609,144 I I I #207 DamDaek KampongKleang 11.796 955,842 0 955,842 #181-1 Samrong & Bos Sbov Communes 8+913 13.55 583,463 215,300 798,763 I #181-3 IKok SOW I Cbone KalDistrict - I 15.15I 588.083I 121.875I 709.958 subtotall 28.71 1,171,5461 337,1751 1,508,721 -41 -  ProjectComponent3 US$2.60 million - Capacity building program. The project will support the carrying out of a programof institutional capacity strengthening for MPWT and MRDat the national level and its departments inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The project will thus support the on-going deconcentration efforts inMRD,and seek to replicate these efforts inMPWT, where applicable. Annual planning process. MPWT and MRDwill carry out the training under this component in accordance with annual plans acceptable to the World Bank. Such annual training plans shall be submittedprior to any expenditure and only items on the agreedtraining plan shall be eligible for disbursement. Annual training plans shall include details on (i)proposed date and duration of training; (ii) oftraining;(iii) breakdownofexpectedcost;(iv)numberofparticipants;(v)methodof location full procurement and delivery of such training services. The training delivered shall be reported inthe quarterly progress reports. Similarly for any incremental operating costs MPWT and MRDwill incur expenditures in accordance with annual plans acceptable to the World Bank. Such annual plans for incremental operating costs shall be submitted prior to any expenditure and only items on the agreedplan shall be eligible for disbursement. The expenditures shall be reportedinthe quarterly progress reports. The component consists of the following: 3.1 Training program - US$457,800 covering items such as materials, venue, and contracted consultant services. 3.2 Englishlanguage training US$lSO,OOO - 3.3 Computer training - US$30,000 3.4 Financial management and accounting services - US$72,000 (MPWT - US$36,000 and MRD- External financial auditing - US$18,000 3.5 US$36,000) - 42 -  3.6 External technical auditing and monitoring - US$128,000 3.7 Office renovation costs - US$135,000 (MPWT - US$24,000 and MRD- US$111,000) IntegratedRural Accessibility Program - US$200,000 3.8 3.9 Vehicles and office equipment - US$l,OOO,OOO (MPWT - US$500,000 and MRD - US$500,000) 3.10 Incremental operating costs for office runningcosts such as office supplies and consumables, communications and printing costs, web-site maintenance costs- US$157,200 (MPWT- US$78,000 and MRD - US$79,200) 3.11 Incremental operating costs for operation and maintenance of the project vehicles - US$192,000 (MPWT - US$96,000 and MRD- US$96,000) 3.12 Incremental operating costs for transportation and accommodations for project staff incarrying out monitoring and supervision - US$60,000 (MPWT-US$36,000 and MRD -US$24,000). IDA fundingexcludes salaries or salary supplements The identified training needs of the national and provincial staffs of MPWT and MRDand the private sector consulting and contracting industry and the ITC form the basis of the PRIPcapacity building program. The guiding principle for the programi s to avoid, to the extent possible, project specific training and buildon existing material and past efforts (e.g., MRD-RIIP-ADB; MRD-LO-Upstream-SIDA) to contribute to the institutionalizationof a training and capacity building programthat will become an integralpart of a continuous development of human resources for the roads and transport sector. The capacity buildingprogramhas identified eight types of courses, seminars, and study tours. The targeted groups can in some cases usefully participate inthe same training events, for example contract supervisors (department staff or private consultants) and contractors can usefully both attend the site supervision training. ProjectComponent 4 US$0.20 million - Policy and strategy development. The project will support the carrying out of a programto improve MPWT and MRDpolicy and strategy development inthe areas of (a) integratedplanning and budgeting of roads; (b) least cost life-cycle standards; (c) use of appropriate technology; (d) mainstreaming of road maintenance; and (e) institutional reform. This component will support on-going policy development inthe transport sector, primarily supporting initiatives that are already underway, including buildingon the recommendations of the Integrated Fiduciary Assessment and Public Expenditure Review (IFAPER) (August 2003),and the National Poverty Reduction Strategy Paper (NPRS). It will further assist with specific actions identified as priorities inthe Letter of Sector Policy being developed by MPWT and MRD. The purpose of this component is, thus, to ensure funds are available to pursue specific aspects of policy development, participatory approaches, analyses leading to legislative change, institutional strengthening and implementation support. Many of these areas are currently receiving support from various sources; this component will focus on gaps inthis support, and on the integration and rationalization of activities as required. Some of the initiatives that are underway but which may need additional support include: (a) Integratedplanning and budgeting of roads. As highlighted inthe IFAPER, there is currently no reliable or consolidated information on planned andor actual expenditures on roads, nor i s there information on total road expenditures by source (government, donor, private financing). It further is not clear how much of this money i s released, as MEFmakes many decisions over the budget - 43 -  allocation process and disburses funds directly to implementers, whether provincial, military or private contractor. Fundingdecisions are not always made ina transparent manner and contracts often are not awarded competitively. This arrangement not only undercuts MPWT's role as the technical ministry responsible for the primary and secondary roads, but also destroys accountability and transparency inthe use of funds. While MRDhas prepared annual programs and budgets since its inception in 2000, MPWT has not submitted a budget to MEF for expenditure of the national budget for the last two years. An important starting point for improving the management of the sector therefore will be to put inplace a coherent and clear process for developing prioritized plans and programs. Such a process will buildon the participatory planningprocess being usedby MRD, as well as the inventories and planningtools (maintenance management systems) being established in the two roads ministries with donor (including IDA) support. Based on these plans, realistic and appropriately prioritizedbudgets can be prepared and submitted to MEFfor approval. Provided funds are releasedon atimely basis and according to the agreedplan, the efficiency and effectiveness of the sector should be greatly enhanced. This is particularly true as estimates of expenditure inthe road sector suggest that the problem is not the amount of money available to the sector, but rather the ineffective use of that money. Finally, as roads and transport are to be included inthe MediumTerm Expenditure Framework inthe next round, timely assistancemay be required to develop the necessary inputs. (b) Least cost life-cycle standards. Inplanningand prioritizing roads, it i s important to take into account boththe capital cost (construction, rehabilitation) and the recurrent cost (routine and periodic maintenance) over the life of the road. For higher volume roads, cost benefit analysis considers the cost of the road over its total life of, say, 15 years versus the benefits expected to accrue over the same period. For low volume roads, where the objective i s to provide basic access, the roads selected would be constructed to a standard that minimizes the cost over the life of the road. (c) Use of appropriate technology. The Policy for RuralRoads of the MRDidentifies labor-based appropriate technology (LBAT) as the preferredtechnology for ruralroads. The MPWT and PDPWTs recognize the merits of LBAT for the construction and maintenance of secondary roads, and MPWT has sought the technical assistanceof L O inthis regard. Insome circumstances an equipment based approach may be the most suitable, depending on the type of road, terrain and available materials. Assistance to further develop and extend this approach could be a candidate for PRIPassistance. MPWT may be awarded a JFPR grant of US$2.2millionto mainstream labor-based works inthat ministry. (d) Mainstreaming of road maintenance. Ensuringsustainable funding for roadmaintenance including bothperiodic and routine maintenance. The ZFAPER estimates that in 2001, capital expenditures made up about 78 percent of the total spent on roads in 2001, and of the 22 percent from the recurrent budget, most was spent on emergency repairs, leaving little for routine maintenance. The Fundfor the Repair andMaintenanceof Roads was established in2000 to ensurethe availability of fundingfor roadmaintenance. However, at present the FRMRis being usedto finance capital expenditures notjust for roads, but also for irrigation, water supply, and other development projects, and there are serious problems of transparency and accountability. Government i s considering various approachesto improved management of the Fund, including procedures that would enable allocation and disbursement of funds against maintenance plans prepared by the technical ministries, and verification of how the funds were used through a system of technical and financial audits. Assistance could be made available under this component to help, for example, with the development of maintenance standards, guidelines, allocationprocedures, and implementation of the technical and financial audits. - 44 -  (e) Institutional Reform. The move towards contracting out of maintenance services, already underway inMRD,will have consequencesfor the staff of MPWT, many of whom areemployedto carry out maintenance activities. As more works are contracted out, MPWT and PDPWT's roles will shift from direct implementationto planning, budgeting, contracts management and monitoring. To assist staff incarrying out the new functions and minimize negative impacts, there i s need for capacity buildingand a well thought out programfor human resource development. As a part of this, MPWT has informally requested the World Banks possible future assistanceto advise on a possible program of reorientation and commercialization of the force account units.The MPWT i s also reviewing options for the possible restructuringof the Ministry inother areas. Project Component 5 US$0.55 million - Communityawareness programs.The project will support the carrying out through MPWT and MRD of a community awarenessprogram aimed at increased awarenessby transport agencies and residents of relatedrisks inroad safety; HIV/AIDS; people's participationinroad planning, and access to public information; and mine and unexploded ordnance risks and clearance programs. (a) Road Safety awarenessprogram (US$250,000) The RGCi s developing a national road safety - campaign. MPWT will be implementing aspects of this including public information campaigns, streamlining road safety into the design of their road works. (b) HIWAIDS awarenessprogram (US$125,000) MPWT and MRDplanto target key road sections - with an AIDS awarenessprogramfollowing the UnitedNations DevelopmentProgramincluding use of standard contractual clauses inthe works contracts for the target roads to address boththe road workers and the surrounding residents. The HIV/AIDS protection programwill be developed with assistance of the NationalAids Authority and the Ministry of Health. (e) People'sparticipation in roadplanning, and access topublic information (US$75,000) a successful - planning process was undertaken for the development of the first year work programinvolving extensive public participation, the same model will be used for future selection of roads. A model will also be developed for providing public information during implementation of the road works. (d) Mines and Unexploded Ordnance risk and clearance awarenessprogram (US$lOO,OOO) - MPWT and MRDhave been working closely with HALO Trust for mine path finding duringproject preparation. - 45 -  Annex 3: EstimatedProject Costs CAMBODIA: Provincialand Rural InfrastructureProject (PRIP) 1.Maintenancemanagement for MPWTPDPWT 0.25 0.25 0.50 1.Maintenancemanagement for MRDPDRD 0.25 0.25 0.50 2. Rehabilitation and periodic maintenance of 300 kmof 8.98 3.12 12.10 secondary and provincial roads under MPWT 2. Rehabilitation and periodic maintenance 300 kmof tertiary 3.35 1.20 4.55 roads under MRD. 3. Capacity buildingprogram inMPWT 1.oo 0.60 1.60 3. Capacity buildingprogram inMRD 0.50 0.50 1.oo 4. Policy and strategy development 0.05 0.15 0.20 5. Community awareness programs 0.25 0.30 0.55 Refund of Project Preparation Facility Advances 0.00 0.32 0.32 Total BaselineCost 14.63 6.69 21.32 PhysicalContingencies 0.75 0.25 1.00 Price Contingencies v. 13 n Tr U.LJ n m c I i 1.VU nn Total ProjectCost2 16.13 7.19 23.32 Total Financing Required 16.13 7.19 23.32 Works 12.68 4.72 17.40 Goods 0.40 0.80 1.20 Consultant Services 1.oo 1.10 2.10 Training 0.70 0.00 0.70 IncrementalOperating Costs 0.60 0.00 0.60 Refund of Project PreparationAdvances 0.00 0.32 0.32 Unallocated 0.75 . - 0.25 ~~ 1.oo Total ProjectCost2 16.13 7.19 23.32 Total FinancingRequired 16.13 7.19 23.32 Details of the breakdown of costs for each component are included inAnnex 2. Inaddition the following apply: 1. The physical contingency is estimatedat five percentand applied only to works and included inthe works category. 2. The price contingency is estimatedusing foreign inflation estimatedat 2 percentper annum(basedon the World Bank'sDevelopmentEC Planning Assumptions Note) and local inflation rate is estimated at 3 percentper annumbased on the local CPI data and applied only to works. 3. Government to provide a minimum 10percentallocation for counterpartfunds net of taxes (to comply with IDA requirementsapplicable to all countries and projects BP6.30September 1993). 4. Government will finance all taxes (thetaxes are to be financedper category of items, the 10percentVAT i s included in the cost estimate for works) and will finance all staff allowances. 5. A nominal cost has beenallocated to land acquisition and resettlement. Should any such costs arise these will be fully fundedby Government. 1 Identifiabletaxes and duties are 0 (US$m)and the total project cost, net of taxes, i s 23.32 (US$m). Therefore, the project cost sharingratio i s 85.76% of total project cost net of taxes. - 46 -  Annex 4: Cost Benefit Analysis Summary CAMBODIA Provincialand Rural Infrastructure Project (PRIP) The objective of the project i s to reduce road transport costs and preserve the road network in an efficient and sustainable manner. The proposed investments will reduce road user transport costs by lowering vehicle operating and travel time costs. An economic evaluation was done for the Phase 1of the project, consisting of rehabilitation and improvement works (162.0 km) and periodic maintenance works (96.2 km),corresponding to an investment of US$10million (46 percent of the project civilworks costs). The evaluationwas done with the HighwayDevelopmentand Management Model (HDM-4), which compares life cycle road costs and vehicle operating cost and passengerstime savings. The table below summarizes the results of the analysis, which was done usinga 12percent discount rate. The overall Net Present Value (NPV) is US$14.2 million and the overall Internal Rate of Return (IRR) i s 35 percent [For projectswith benefitsthat are measured in monetaryterms] FinancialAnalysis Rehabilitation Periodic 21.53 maintenance 0.82 Total 22.35 costs: Rehabilitation Periodic 7.74 Maintenance 0.40 Total 8.14 Net Benefits: Rehabilitation Periodic 13.79 maintenance 0.42 14.21 Rehabilitation Periodic 35% maintenance 28% Total 35% Summary of Benefits and Costs: MainAssumptions: Under the PRIP project three road categories are taken into consideration: Secondary National Roads (two digits), Provincial (three digits) and Tertiary Roads (connecting district centers). The result of a Transport InfrastructureInventory i s summarized inthe following table: indicating road condition and existing surface. - 47 -  All Weather DrySeasonOnly Earth Lateritic Bitumen Earth Lateritic Surface Surface Surface Surface Surface Total Percent SecondaryNationalRoads 11.4 549.8 28.8 76.1 11.0 677.1 28% ProvincialRoads 22.6 217.1 0.3 721.5 0.0 961.5 39% Tertiary Road 20.4 219.6 0.0 558.6 7.5 806.1 33% Total 54.4 986.5 29.1 1356.2 18.5 2444.7 100% Percent 2% 40% 1% 55% 1% 100% To identify which roads are to be included into the PRIP project a screening and prioritization methodology was developed basedupon consultation to ensure solid participation inthe planning process. Duringprovincial workshops, the participants have screened all roads on the basis of the following criteria: accessibility, population served, environmental impact, economic impact, availability of local resources, and tourism potential. At an inter-provincial workshop, a tentative Phase 1program was selected and on the basis of this plan the detailed engineering surveys and economic analysis were initiated. Phase 1comprises 162.0 kmof rehabilitation and improvement works, 96.2 kmof periodic maintenance works and 285.7 kmof routine maintenance works. The table below presents a summary of Phase 1road works costs. Table 4.2 I Phase 1S u m " Der Works Activity I Length m) cost cost/km (US$) (US$/km) RoutineMaintenance 285.7 108,834 381 PeriodicMaintenance 96.2 388,521 4,039 Rehabilitationand Improvement 162.0 9,263,152 57,180 Total 543.9 9,760,507 Roadworks costs were estimated infinancial and economic terms (net of taxes), economic costs being on average 85 percent of financial costs. Average unit maintenance costs estimates are given on the table below. - 48 -  Table 4.3 I Tvpical Maintenance Costs IMaintenanceWork I Unit Cost II Pothole patching 15.00 $lm2 Double surface dressing resurfacing 1.87 $lm2 Routine Maintenance 350 $ h - y ReeravellinP 6.000 Skm The L O UpstreamProject conducted a survey on road user costs in2001and this data was updated in SiemReap province inDecember 2002 for the PRIP Project. Vehicle fleet characteristics and economic vehicle unit costs were defined for ten motorized vehicle and two non-motorized vehicles. The following table presents the average vehicle fleet characteristics. Annual Annual Service Private Number Work Number Operating Loading Vehicle Utilization Utilization Life Use Passengers Trips Wheels Weight Factor Type I (km) (hours) (years) (%) (#) (%) (#) (tons) (ESA) Motorcycle 10000 400 10 100 1 75 2 0.2 0.000 Motorcycle w Trailer 7700 400 10 100 1 75 2 0.7 0.000 MediumCar 24000 550 10 100 1 75 4 1.2 0.000 4wD 30000 1300 8 0 1 75 4 1.8 0.020 Light Goods Vehicle 16000 1300 8 0 0 0 4 3.0 0.010 Mini-bus 20000 750 8 0 12 75 4 1.5 0.010 Medium Bus 54000 1750 7 0 40 100 6 6.0 0.700 Light Truck 10500 1300 8 0 0 0 4 7.0 0.100 Heavy truck 86000 2050 14 0 0 0 10 13.0 2.280 Articulated Truck I 86000 2050 14 0 0 0 18 28.0 4.630 Bicycle 5390 150 10 0 1 0 2 0.1 0.000 oxcart I 3620 1300 3 0 0 0 2 1.2 o.ooo] The following table presentsaverage fleet economic costs. Table 4.5 New New Fuel Lub.Oil Labor Crew Overhead Interest Work Non-Work Cargo Vehicle Vehicle Tire Cost Cost Cost Cost Cost Rate Time Time Time Type ($/veh) ($/tire) Motorcycle 1200 14 Motorcycle w Trailer 1250 10 0.30 1.90 0.50 0.00 100 12 0.45 0.25 MediumCar 14000 35 0.30 2.00 1.50 0.00 400 12 1.00 0.25 4wD 12000 40 0.40 1.80 1.50 0.00 500 12 1.00 0.25 Light Goods Vehicle 4500 51 0.30 1.90 1.50 0.50 500 12 0.00 0.00 Mini-bus 14200 28 0.30 2.00 1.50 1.00 500 12 0.00 0.00 MediumBus 42000 145 0.30 1.80 1.50 1.00 1200 12 1.25 0.15 Light Truck 5500 105 0.30 1.90 1.50 1.00 800 12 0.00 0.00 Heavytruck 42000 200 0.40 2.00 1.50 1.00 1500 12 0.75 0.25 Articulated Truck 80000 215 0.30 1.80 2.50 1.00 2000 12 0.35 0.25 0.10 Bicycle 35 0 0.00 0.00 0.00 0.00 0 12 0.00 0.00 0.00 ox cart 436 0 0.00 0.00 0.00 0.10 0 12 0.00 0.00 0.01 - 49 -  The following table presents typical economic unit road user costs, in$ per 1000vehicle-km, for a * roughness equal to 4.0 IRI. L Table 4.6 TypicalRoadUser Costsfor Roughness= 4.0 IRI($/lOOOvehicle-km) Vehicle I Lub. Spare Maint. Depr.& Work Non-Work Cargo Fuel Oil Tires Parts Labor Interest Crew Overhead Time Time Time Total Motorcycle 12 1 1 1 1 12 0 0 4 1 0 33 Motorcyclew Trailer 14 1 0 1 1 16 0 0 4 1 0 37 MediumCar 28 1 2 32 4 66 0 0 8 1 0 142 40 2 3 18 3 48 0 4 8 1 0 127 Light Goods Vehicle 40 2 3 8 4 31 6 4 0 0 3 101 Mini-bus 35 2 1 28 4 88 11 7 0 0 0 177 MediumBus 53 4 9 37 11 110 12 8 589 0 0 834 Light Truck 47 4 6 5 10 55 12 8 0 0 1 148 Heavytruck 155 8 21 137 23 43 12 9 0 0 4 410 ArticulatedTruck 178 8 40 282 40 80 11 11 0 0 1 652 Bicycle 7 0 0 0 3 2 0 0 1 0 0 12 oxcart I 1 1 0 0 0 12 40 30 0 0 0 3 97 The following table presents typical total economic unit road user costs, in$ per vehicle-km, for different roughness levels. Table 4.7 TypicalUnit RoadUser Costs ($/vehicle-km) Vehicle Roughness(IRI) Type 2 4 6 8 10 12 14 16 18 Motorcycle 0.03 0.03 0.03 0.04 0.04 0.04 0.04 0.05 0.05 Motorcyclew Trailer 0.04 0.04 0.04 0.04 0.05 0.05 0.05 0.06 0.07 MediumCar 0.14 0.14 0.15 0.17 0.19 0.21 0.23 0.25 0.28 4 w D 0.12 0.13 0.14 0.15 0.16 0.18 0.20 0.21 0.24 Light Goods Vehicle 0.10 0.10 0.11 0.11 0.12 0.13 0.14 0.15 0.18 Mini-bus 0.17 0.18 0.19 0.21 0.24 0.26 0.29 0.31 0.34 MediumBus 0.82 0.83 0.89 1.01 1.17 1.36 1.55 1.74 1.95 Light Truck 0.14 0.15 0.16 0.17 0.19 0.20 0.22 0.23 0.25 Heavytruck 0.39 0.41 0.44 0.47 0.50 0.54 0.59 0.64 0.73 ArticulatedTruck 0.61 0.65 0.70 0.76 0.83 0.90 0.98 1.07 1.22 Bicycle 0.01 0.01 0.01 0.01 0.02 0.02 0.02 0.02 0.04 oxcart 0.09 0.10 0.11 0.12 0.13 0.14 0.16 0.18 0.34 For the Phase 1roads under consideration for rehabilitation or improvement, a one-week traffic count and origiddestination survey has been carried out on Secondary National and Provincial roads and a traffic count survey was conducted for only three days inthe case of Tertiary roads. Inaddition to the daytime traffic count survey, a night traffic count surveys was carried out on road number 65, indicating that the averagenight traffic i s around 10percent of the average annual daily traffic volume (AADT). Traffic volumes on SiemReap and Kampong Thom provinces were found to be higher than on Oddar Meanchey and PreahVihear provinces, which i s explained by the relatively higher population density and economic development of Siem Reap and Kampong Thomprovinces. The table below presents the average traffic volumes on the Phase 1rehabilitation and improvement programroads. - 50 -  Table 4.8 MotorizedTraffic Non-Motorized Total Provinces 4-WheelPlus1 Motorcycles1 Total Traffic Traffic Siem Reap & KampongThom 266 I 13081 1574 2023 3597 Otdder Meanchey & Praey Vihear I 811 3101 3981 7361 1134 All PRIP Provinces 1771 8091 9861 13801 2366 The table below presents the typical daily traffic composition on the Phase 1rehabilitation and improvementprogramroads. Typic ITraffic Composition(%) Vehicle Siem Reap & Oddar Meanchey & %e Kampong Thom PreahViheat Motorcycle 35.4% 37.9% Motorcycle w Trailer 0.4% 0.0% Medium Car 1.6% 0.8% 4wD 1.3% 2.8% Light GoodsVehicle 5.5% 2.3% Mini-bus 0.1% 0.1% Medium Bus 0.0% 0.0% Light Truck 0.9% 0.3% Heavy truck 0.6% 1.8% Articulated Truck 0.0% 0.0% Bicycle 45.4% 45.4% ox cart 8.6% 8.6% Total 100.0% 100.0% Given the growing network of trafficable roads, the increasing number of motor vehicles inthe country, and the robust growth of Cambodia's economy, traffic has developed rapidly. Recent counts near Siem Reap indicate annual average growth rates of 16 percent for motorbikes, 40 percent for light vehicles, and 195 percent for heavy vehicles between 1998 and 2000. Conservatively, for the economic evaluation, on Siem Reap and Kampong Thomprovinces, the traffic growth rate was considered to vary per vehicle type between 5 and 7 percent for the first 5 years; 3 to 5 percent from years 6 to 10; and thereafter decrease to 2 to 3 percent. On Oddar Meanchey and PreahVihear provinces, the traffic growthrate was considered to vary per vehicle type between 2 and 6 percent for the first 5 years and thereafter decrease to 1to 3 percent. For discounting future costs and benefits to compute net present value and as a cut off point for IRR,a discount rate of 12percent has been used; the evaluationperiod used was 15 years; and the construction period used was 1year. -51 -  Rehabilitation and Improvement Works: The table below presents the mainroad characteristics of the Phase 1rehabilitation and improvement program. Table 4.10 1 ~~ qamRoadCharacteristics Road Road Starting End Width a Length MotorizedTraffic Non-Motorized Rov. Elass No. Point Point - (m) (km) 4-Wheel Motorcycles Total Traffic Percent SRP SN 65 Soutr NikomDist.Cen. Junctionwith road66 6.5 19.9 491 1731 2222 2564 46% SRP SN 66 Junctionwith road66 BeungMealeaTemple 6.5 11.0 95 335 430 503 46% P 207 Sou@NikomDist. Cen. KampongKhleang 6.0 11.8 409 1441 1850 2208 46% T Varin Angkor Chum 4.0 17.8 334 1177 1511 2778 35% P 181 Samrong& Bos Sbov ChongKalDistrict 4.0 8.9 96 450 546 940 37% P 181 KrasangCommune ChongKalDistrict 4.0 18.2 19 90 109 188 37% T Kouk Mon #56B 4.0 12.7 52 241 293 492 37% ~ SN 71 KampongThmor ch5+700 6.5 5.7 625 2205 2830 2492 53% SN 71 ch5+700 KampongChamBorder 6.5 10.1 625 2205 2830 2492 53% T Stoung SalaVisai 5.0 16.7 161 568 729 1503 33% P 213 RoVengBridge KampongSalau 4.0 18.4 58 270 328 149 69% Ipv T Svaypat(#&I) sdao - 4.0 10.8 22 103 125 95 57% All roads are unpaved roads and are currently inpoor to very poor condition. The economic evaluation compared up to three rehabilitation or improvement project-alternatives with a without-project alternative that consisted of keeping the roads unpaved but with a proper level of maintenance according to the functional classification and traffic. The table below presentsthe selected project-alternativeper road T and the corresponding investment costs. T,a - Phase 1Rehabilitation p mInvestmentCosts Starting End Selected Works Costkml Structures1 Total Cost1 Total Cos% Point Point Alternative (US$) Soutr NikomDist. Cen. Junction with road 66 UpgradeDSD 96,000 1,627,186 Junction with road 66 BeungMealeaTemple UpgradeDS 47,243 60,200 579,873 52,716 Soutr NikomDist. Cen. Kampong Khleang Upgrade SSD 78,279 923,692 78,279 Varin Angkor Chum Upgrade SSD 32,859 584,890 32,859 Samrong & Bos Sbov Chong Kal District Upgrade SSD 28,325 337,500 589,593 66,246 KrasangCommune Chong Kal District Upgrade SSD 36,259 638,438 1,298,352 71,338 Kouk Mon #56B Upgrade SSD 23,955 115,875 420,104 33,079 Kampong Thmor ch 5+700 UpgradeDSD 92,858 529,291 92,858 ch 5+700 KampongChamBorder UpgradeDSD 85,337 861,904 85,337 Stoung SalaVisai Rehabilitate LS 21,721 362,741 21,721 213 Ro Veng Bridge Kampong Salau Upgrade SSD 54,496 89,250 1,091,976 59,347 Svaypat (#64) Sdao Upgrade SSD 36,4401 01 393,5521 36,440 Total I 1,337,2631 9,263,1521 DSD louble SurfaceDressing, SSD - - SingleSurfaceDressing. -52 -  j The following table presents the results of the economic evaluation. - Table 4.12 Road Road Starting I End NPV IRRl Prov. - Class No. Point Point SRP SN 65 Soutr NikomDist.Cen. Junction with road 66 SRP SN Junction with road 66 Beung Mealea Temple 0.89 33% SRP P Soutr NikomDist.Cen. Kampong Khleang 2.43 52% SRP T Varin Angkor Chum 2.78 91% OMC P Samrong & Bos Sbov Chong Kal District 0.34 22% OMC P Krasang Commune Chong Kal District -0.38 7% OMC T Kouk Mon #56B 0.63 31% KT SN Kampong Thmor ch 5+700 0.87 40% KT SN ch 5+700 Kampong ChamBorder 1.60 43% KT T Stoung SalaVisai 1.55 62% PV P 213 Ro Veng Bridge Kampong Salau 0.30 17% PV -T Svaypat (#64) Sdao 0.26 20% Total II 13.79 35% The NPV of the rehabilitation and improvementprogrami s US$ 13.79million and the IRR i s 35 percent. Most roads obtained a satisfactory rate of return due to the relatively hightraffic for unpaved roads and the low investment costs per kmof the upgrading options. The exception was the road between Krasang Commune and Chong Kal District, with a 7 percent IRR,which has 19 vehicles per day of 4-wheel plus motorizedvehicles and a proposed investment of US$71,338 per km.Options of reducing the standards and investment costs of this road are being reviewed. Periodic Maintenance Works: The periodic maintenance works consist typically of regravelling 96.2 kmof roads that are inpoor condition, with an average cost of US$4,000 per km. No traffic surveys were done specifically for the Phase 1periodic maintenance roads due to the extend of the network and the relatively low traffic on the network. Thus, the economic evaluationwas done consideringtypical road classes with different traffic levels, which are presented on the table below. Table 4.13 Motorized Traffic Non-Motorized Road Class 4-Wheel Plus Motorcycles Total Traffic Road with 100AADT Motorized Traffic 18 82 100 30 Road with 150 AADT MotorizedTraffic 26 124 150 46 Road with 200 AADT Motorized Traffic 35 165 200 61 Roadwith 250 AADT Motorized Traffic 44 206 250 76 The economic evaluation was done with the HDM-4 Model and consisted on comparing a with-project alternative, representing regravellingthe road and bringingit to good to fair condition (12 IRIaverage roughness), with a without-project alternative, representing leaving the road inpoor condition (18 IRI average roughness). The table below presents the results of the economic evaluation of each road class. - 53 -  I Table 4.14 Economic Evaluation of UnDavedRoad Classes I Roadwith 150AADT Motorized Traffic 4.37 28% Roadwith 200 AADT Motorized Traffic 8.87 43% Roadwith 250 AADT Motorized Traffic 13.38 58% Conservatively, consideringthat the Phase 1roads have an average traffic of 150AADT of total motorized traffic (26 AADT 4-wheel plus motorized traffic) and that there are 96.2 kmof road works, the NPV of the periodic maintenance programis US$0.42 million and the IRRis 28 percent. The evaluationof the Phase 1periodic maintenance works was complemented using the cost-effectiveness method, which compares the financial investment costs of the road intervention with the population served on each road. The cost-effectiveness of the investments was computed due to the nature of the traffic on these roads, which i s mostly low local traffic serving the localpopulation, and the project objective of maximizing the provision of all weather access to as many person as possible per available resources. The table below presents the Phase 1periodic maintenance program and the corresponding cost-effectiveness ratios, which expresses the amount of U S dollars that the periodic maintenance will cost per population served. All road sections have a cost-effectiveness ratio less than US$ 11per person, which i s reasonable consideringthat a) the average GDP per capita i s US$280 in Cambodia and US$ 11represents 4 percent of the GDPper capita; and b) the investments will ensure an all-weather access to the social and economic centers. Road Road Starting End Length Cost/km Total Cost Population CE Prov. Class No. Point Point oun) US$^) (US$) Serve* Ratio SRP P 202 PoukDistrict Center Reul 8.5 4,750 40,328 2817 1.7 SRP T SiemReap Puok 10.0 3,800 38,000 3771 1.0 SRP T SiemReap Rolous 8.0 3,800 30,400 4670 0.8 SRP T SiemReap PeakSneang 5.0 3,800 19,000 1048 3.6 SRP T Peak Sneang Wat Prei 4.2 3,800 15,960 548 6.9 SRP T Chi Kraeng Khvav 23.4 3,800 88,958 755 5.0 OMC P 181 Somrong& Bos Sbov ChongKal District 9.0 4,500 40500 642 7.0 OMC P 183 Somron & BansayReak KoukMon#56B 10.0 4,500 45,000 1021 4.4 OMC P 171 # 68 Kirivom Village #67 AnlongVeng District 1.o 5,250 5,250 12613 0.4 OMC P 174 Anlong Veng District C. Trapeang Prasat 0.1 5,250 525 7369 0.7 OMC T KokPhoas BantaeyAmpil 17.0 3,800 64,600 358 10.6 Total 96.2 4,039 388,521 370 10.9 Sensitivity analysis / Switching values of critical items: The sensitivity analysis of the results show that most works will continue to show rates of return above the cutoff of 12percent inthe event of a 20 percent increase inthe investment costs, a 20 percent decrease inthe benefits or a combination of the two. Inthe latter event, the overall project IRRresults to be 24.4 percent. The following table summarizes the results of the sensitivity analysis. -54 -  F- Table 4.16 Phase 1SensitivityAn2 toad RoadIStarting I End :lass1 NO. lpoint Point -A-Cost Base +20% B-Benefits- 20% A & B SN I65 ISoutrNikom Dist.Cen. Junctionwith road66 38.2% 32.1% 30.9% 25.8% SN 66 Junctionwith road66 BeungMealeaTemple 32.8% 28.3% 27.3% 23.4% P 207 Soutr NikomDist.Cen. KampongKhleang 52.3% 44.4% 42.8% 36.2% T Varin Angkor Chum 90.7% 76.2% 73.3% 61.7% P 181 Samrong& BosSbov ChongKalDistrict 22.1% 18.2% 17.4% 14.0% ~ P 181 KrasangCommune ChongKalDistrict 6.5% 4.4% 4.0% 2.0% T Kouk Mon #56B 30.9% 26.7% 25.9% 22.2% SN 71 KampongThmor ch 5+700 39.7% 33.4% 32.1% 26.8% SN 71 ch5+700 KampongChamBorder 43.1% 36.3% 34.9% 29.2% T Stoung SalaVisai 62.0% 53.7% 52.0% 45.1% PV P 213 RoVeng Bridge KampongSalau 16.8% 13.7% 13.0% 10.2% IPV T Svaypat (#64) Sdao -20.2% 17.4% 16.8% 14.3% TotalRe -35.4% 30.0% 28.9% 24.2% Periodic -28.2% 28.2% 28.2% 28.2% TotalPhase 1 -35.1% 29.9% 28.8% 24.4% - 55 -  Annex 5: Financial Summary CAMBODIA: Provincialand Rural infrastructureProject (PRIP) December the financialyear of the RoyalGovernmentof Cambodia - Years Ending I Year1 I Year2 I Year3 I Year4 I year5 I Year6 IYear 7 Total Financing Required ProjectCosts InvestmentCosts 5.9 5.8 5.8 5.8 0.0 0.0 0.0 RecurrentCosts 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total ProjectCosts 5.9 5.8 5.8 5.8 0.0 0.0 0.0 Total Financing 5.9 5.8 5.8 5.8 0.0 0.0 0.0 Financing IBRDADA 5.0 5.0 5.0 5.0 0.0 0.0 0.0 Government 0.9 0.8 0.8 0.8 0.0 0.0 0.0 Central 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Provincial 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Co-financiers 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Total Project Financing 5.9 5.8 5.8 5.8 0.0 0.0 0.0 Mainassumptions: Costs are assumedto cover a four year period althoughthe executing agencies will be aiming to implement within a possible three year period. Total project cost i s US$23.32 million; Royal Government of Cambodia financing i s US$3.32 million and IDA supported fundingis US$20.00millionequivalent. - 56 -  Annex 6(A): Procurement Arrangements CAMBODIA: Provincialand Rural Infrastructure Project (PRIP) Procurement Summary of the Assessment of Agency's Capacity to Implement Procurement and Measuresfor Strengthening 1. World Bank procurement accredited staff carried out a procurement assessment in October 2002 of the implementing agencies, Ministry of Public Works and Transport (MPWT) and the Ministry of Rural Development (MRD) and their relevant provincial departments inthe four project provinces, Kampong Thom, Oddar Meanchey, Preah Vihear and Siem Reap. The assessment was discussed with the implementingagencies. The assessment indicates the riskto be "high".The reason i s that the procurement of works by National Competitive Biddingi s intended to be carried out by the provincial departments with clearances and support from the national offices. These provincial departments do not have experience incarrying out IDA funded or other donor funded procurement, although the provincial departments of Rural Development inSiemReap and Kampong Thom have some experience inhandling procurement of small works with other donors i.e. the UnitedNations Development Programand the World Health Organisation. The use of the provincial departments i s integral to the objective of the project to develop provincial capacity. The national offices, which will carry out the procurement of all goods, services and International Competitively Bidworks plus have a clearance function for the provincial National Competitively Bidprocurement of works, do have experience with World Bank funded projects and have shown satisfactory performance inthis regard. There will be no special Project ImplementingUnitscreated and the project will be implementeddirectly by the responsible departments. The strengths of other provincial departments havebeendeveloped under other donor supported projects and the Ministries plan to rotate staff from stronger provinces with experience to the less experienced ones to share experiences. 2. Inorder tomitigatetherisk,thefollowingprocurement actionplanhasbeenagreedwith Government and is incorporatedinto the design of the project as follows. 0 Ensure that the MPWT, MRDand their provincial offices infour provinces are being assisted by a procurement consultant with excellent procurement knowledge and experience for at least the first year. 0 Provide training of staffs inthe MPWT,MRDand their provincial offices inWorld Bank procurement procedures. 0 Project Implementation Plan (PIP) shall be finalized and translated into local language and distributed to all participatingprovinces. 0 Conduct procurement supervision missions by one every four months for the first two years and one every six month for the year after. 0 An annex to the procurement schedule inthe DevelopmentCredit Agreement is includedfor National Competitively Bid (NCB) procedures containing the provisions requirements to ensure consistency inprocurement procedures with World Bank's Guidelines. 3. The procurement rules and regulations of the Royal Government of Cambodia, i.e. the Sub-Decree Governing Public Procurement no. 60 dated July 31, 1995 and the ImplementingRules and Regulations Governing Public Procurement (IRRPP) dated August 31, 1995 and the Amendment in 1998, are generally consistent with the World Bank's Guidelines. The exceptions are: - 57 -  (1) Domestic Competition Bidding(DCB), which is similar to the World Bank's NCB, is mainly designed for local bidders although "foreign firms doing business inCambodia may be permittedto submit bids (IRRPP 1998 -Article 6.1.3). Thisprovision limits the bidding to onlyforeign firms doing business in Cambodia. The WorldBank's procedures have no such limitation. (2) Pre-qualification Scoring System (PSS) i s usedfor evaluation of Pre-qualification Applications (IRRPP 1998 -Annex 3). The WorldBank requires passgail criteria. (3) The only available methodfor employment of consulting firmi s similar to the World Bank's Quality-Based Selection Method (QBS) (IRRPP 1998 - Annex 5). Under the WorldBank's procedures, thepreferred methodfor the selection of consultants is Quality and CostBased Selection (QCBS)and other methods of selection such as Least-Cost Selection and Consultants Qualificationare available. (4) Bids receivedmust be openedpublicly at the stipulated date, time, and place of opening as mentionedinthe biddingdocuments. The bidopening time shouldnot be more than one hour from the deadline for submission of bids. (IRRPP 1998 -Article 8.1.5). For reason of transparency, the WorldBank's procedures do not permit any time gap betweenbid closing and bid opening. (5) Ifthere i s obvious lack of competition, (unexpectedly low turn-out of bidders) or if all the bidprices substantially exceedthe cost estimates, or if none of the bids conform to the specifications, all the bid may be rejected. Thereafter, a re-biddingmay be done but only after measures have been taken to remedy the causes of the failure of bidding.Ifall the bid prices exceed the cost estimates, negotiations with the lowest -priced evaluated responsive bidder to bringdown the price may be resorted to instead of calling for new bids. A reductioninprice may be basedon reductionin scope of the contract or reduction of responsibilities or obligations. (IRRPP 1998 - Article 8.1.11). The last sentence was added in the IRRPP 1998.Withthe 1998addition, the only major diference with the WorldBank's procedures is that negotiation is still permitted when the lowest complying bid exceeds the Govemment's cost. 4. With the above exceptions, the procurement practices inthe IRRPP 1998 are consistent with international practice and the World Banks guidelines. Inconsistent procedures are addressed inthe Development Credit Agreement as discussedbelow. Procurement variances inan annex to the procurement schedule inthe Development Credit Agreement 5. As normally done for World Bank financedprojects inthe country, procurement variances are includedin an annex to the procurement schedule inthe Development Credit Agreement. The Government's sub-decree on public procurement and related procedures are acceptable and will be used for the project, subject to the following provisions inrespect of contracts for goods and works financed under the Project and procured according to national competitive biddingprocedures. (1) Foreign suppliers and contractors fromeligible countries shall, ifthey are interested, be allowed to participate without being required to associate or formjoint ventures with local suppliers or contractors. (2) Prior registrationshall not be a requirement to participate inbidding procedures; but it may be requiredinthe case of a selectedbidder as a condition of signing a contract. (3) Pre-qualificationof contractors shall be required for competitive biddinginthe case of large or complex works; in all other cases, pre-qualification shall only be requiredinjustifiable cases and with the prior approval of the Association. - 58 -  (4) When pre-qualification is required, the evaluation methodology shall be basedon pasdfail criteria relating to the firm's experience, technical, financial, physical and human resource capacities. (5) A public bid opening ceremony shall take place immediately after the deadline for presentation of bids, and without any intervening time lag, and, during such public bid opening ceremony, bids shall be openedand read out inpublic, and inthe presenceof bidders' representatives who wish to attend. (6) Inall cases, the award shall be made to the lowest evaluated responsive and complying bid and, except with the prior approvalof the Association, no negotiations shall take place with any bidder prior to the award, even when all bids exceed the cost estimates. (7) Inthe case of all contracts with a duration inexcess of 18 months, biddingdocuments shall allow for price adjustment formulae. (8) Bidders,who disagree with arithmetic corrections made by the evaluating committee during the evaluation stage, shall not be allowed to withdraw their bids without forfeiting their bid security. (9) The Association reservesthe rightto require that all contracts under national competitive biddingprocedures financed by the Association, include a provisionrequiring suppliers and contractors to permit the Association to inspect their accounts and records relating the performance of the contracts and to have themaudited by auditors appointedby the Association. ProcurementGuidelines 6. The procurement of goods and works will be carried out inaccordance with the World Bank's Guidelines Procurement under IBRD Loans and IDA credits (January 1995, revised January and August 1996, September 1997, and January 1999). The procurement of services will be carried out inaccordance with the World Bank's Guidelines Selection and Employment of Consultants by World Bank Borrowers (January 1997, revised September 1997, and January 1999 and May 2002). 7. As providedinthe Guidelines, the procurement of works according to National Competitive Bidding(NCB) will be carried out accordingto the 1995 Sub-Decree GoverningPublic Procurement in the Kingdomof Cambodia No. 60, which i s the legal basis for procurement inthe country, and as supplemented by ImplementingRules and Regulations governingPublic Procurement of 1995 (IRRPPs) and as amended 1998, except where such are not consistent with the World Bank relevant procurement the provisions of the loan or aid agreement..............should there be any inconsistency or conflict Guidelines. The IRRPPallows that "contracts financed by external lending agencies shall be governed by between these IRRPPand the methods and procedures of these foreign institutions, the latter will prevail. Inthe absenceof such conflicts the IRRPPmay likewise be appliedto foreign-funded contracts". With a few exceptions that are agreedinthe annex to the procurement schedule inthe Development Credit Agreement, the Sub-Decree and the IRRPPs are consistent with the World Banks procurement Guidelines. Any procurement not financed by the World Bank will be carried out inaccordance with the IRRPPs. - 59 -  Standard BiddingDocuments 8. The latest World Bank standard biddingdocuments for goods and works and standardbid evaluationreports will be used. The Standard Bidding Document - Smaller Contracts January 1995 revisedJune 2002 and March 2003 (or any update thereto) will be used for International Competitive Biddingand adaptedfor National Competitive Bidding.For consulting services, the World Banks standardRequest For Proposals dated July 1997, revised 1998, July 1999 and March 2002, sample evaluation report October 1999, and sample contracts will be used. Advertisement 9. A General Procurement Notice (GPN) was publishedinthe UnitedNations Development Business online (UNDB online) and inthe Development Gateway Market (dgMarket)after appraisal, announcing all procurement of goods and works on the basis of International Competitive Bidding (ICB) and major consulting services to be procuredunder the project. The GPNwill be updated annually for all outstanding procurement over the life time of the project. For InternationalCompetitive Bidding, invitations to bid shall be advertised as Specific Procurement Notices inthe "Cambodian Daily" and 'I Remsey Kampuchea", newspapers of national circulation, and will appear twice in accordance with the IRRPPand shall also be published inUnitedNationsDevelopmentBusiness online (UNDBonline) and in the Development GatewayMarket (dgMarket).For NationalCompetitive Bidding, invitations to bid shall be advertised as Specific Procurement Notices inthe "Cambodian Daily" and "Remsey Kampuchea", newspapers of national circulation, and will appear twice inaccordance with the IRRPP. All adverts will also be placedon the MPWT and MRDweb sites. Implementation Arrangements 10. The project will be implementedby the Ministryof Public Works and Transport (MPWT) and the Ministry of Rural Development (MRD)including the Provincial Departments of Public Works and Transport (PDPWT) and the Provincial Departments of Rural Development (PDRD) inthe project provinces of Kampong Thom, Oddar Meanchey, Preah Vihear, and SiemReap. Within MPWT, the Road InfrastructureDepartment will be directly responsible and within MRD, the General Department for Technical Affairs (GDTA) inconjunction with the Department of RuralRoads will be directly responsible. The PDPWTs and PDRDs will handle National Competitive Biddingprocurement of all road works with a clearance function from the national offices. Good governanceprovisions 11. Specific lessons learned from other projects inthe region have been explicitly incorporatedinto the Project Implementation Plan including but not limited to the following. 0 Standard form of advertisement required and included inthe Project Implementation Plan. 0 All adverts will be placedinthe "CambodianDaily" (inEnglish) and "Remsey Kampuchea" IRRPPs. (inKhmer),newspapers of national circulation, and will appear twice inaccordance with the 0 The source of funding for the adverts i s defined and the responsible agency to actually place the adverts i s defined. 0 A requirement that all contracts mustbe awarded within the 90 days bidvalidity period. There will be no extensions of bidvalidity periods. 0 A provisionthat no changes to the biddocuments are allowed once they havebeenapproved. Any need for changes require new approvals. - 60 -  0 A specific detailed terms of reference for the field consultants providing support to the provincial departments i s included so that the provincial project staff know what i s expected of the consultant. 0 Annual independent audit of adherence to the procurement procedures and of technical standards. At the end of eachquarter, the implementing agency, MPWT-RIDand MRD-DRRwill publishinthe"CambodianDaily" and "RemseyKampuchea",for all contracts awarded to date, the following information: (i)name of all bidderswho submitteda bid; (ii) prices as bid read out at bid opening; (iii)name and evaluated prices of all bids that had been evaluated; (iv) name of bidders that were disqualified and the reasons for their disqualification; and (v) name of the bidderrecommended for award and reason for recommendation, price, duration and summary scope of the contract in a format to be agreed. For ICB contracts, this will be done within 2 weeks of the World Banks no objection and published inUnitedNations DevelopmentBusiness online (UNDB online) and inthe Development GatewayMarket (dgMarket). 0 Anonymous calls can be madeto the World Bank fraud hotline at 1-800-831-0463, alternatively collect calls can be made to USA-704-556-7046.Information i s also available at www.worldbank.org and includedinthe Project ImplementationPlan. Procurementmethods(TableA) ProcurementMethods(Table A) A total of US$23.00million of works, goods, consultant services, training and incrementaloperating costs i s expected to be financed under the project, usingthe following procedures: Procurementof Works (US$18.42 million) 12. Intemational CompetitiveBidding (ICB): (US$2.42million) Rehabilitationandperiodic maintenance of roads with contracts at and above US$l,OOO,OOO per contract will follow ICB procedures. No pre-qualification of bidders i s proposed for any of the ICB works procurement. Where international competitive biddingi s applied, a margin of preference of 7.5 percent will be granted to domestic contractors andjoint ventures between domestic and foreign firms with no more than 10percent subcontracting to foreign firms. Two or three such contracts are expected. 13. National CompetitiveBidding (NCB): (US$15.00million) Rehabilitation and periodic maintenance of roads with contracts below US$1,000,000 per contract will follow NCB procedures. Foreign contractors from eligible countries shall, if they are interested, be allowed to participate without being required to associate or formjoint ventures with local contractors. Where national competitive biddingis applied, nomargin of preference is granted. 30 suchcontracts are expected. 14. Non-Bank Financed (N.B.F): (US$l.Omillion). Routinemaintenance works. Procurementof Goods(US$1.18 million) 15. Goods including office equipment (such as computers, printers,faxes etc), office furniture and office supplies and vehicles will be procured under the following procedures: 16. National CompetitiveBidding (NCB): (US$0.2 million) Procurement of goods such as equipment, below US$200,000 per contract will follow NCB procedures which are acceptable to the -61 -  Bank and where any interested international suppliers shallbe allowed to participate. 17. International Shopping (IS):(US$O.15million) Procurement of goods, e.g. office equipment including computers and printers,below US$lOO,OOO per contract will follow International Shopping procedures where three quotations from at least three suppliers intwo different countries shall be obtained as stated inArticles 3.5 and 3.6 of the Guidelines Procurement under IBRD Loans and IDA Credits. 18. National Shopping (NS): (US$O.04 million) Procurement of some simple office equipment, office supplies and furniture, indifferent provinces would be carried through National Shopping. National shopping may be usedwhere the desired goods are ordinarily available from more than one source inthe country at competitive prices. The estimated cost will be around US$20,000 per contract. National Shopping will be conducted on the basis of a comparison of at least three written price quotations as stated inArticles 3.5 and 3.6 of the Guidelines on Procurement under IBRD Loans and IDA Credits. 19. Procurement through United Nations Inter-Agency Procurement Services Ofice: (US$O.8 million) Procurement of motorcycles and vehicles will be done through the UnitedNations Inter-Agency Procurement Services Office. There i s a wide range of specifications of vehicles to choose from at standard advertised prices. Procurement of Consultant Services (US$2.10 million) 20. Quality- and Cost-Based Selection (QCBS): (US$1,I million) Consulting services for constructiondesign and supervision, contract management, quality assurance, contracting for roads, and capacity buildingof the Ministry of Public Works and Transport and the Ministryof RuralDevelopment will follow QCBS method. 21. Least-CostSelection (LCS): (US$O.Imillion) This method will be used for selection of audit firms for project audits. 22. Consultant Qualifications (CQ): (US$0.5million) These are small contracts estimated to cost less than US$lOO,OOO per contract. 23. Single Source(SS): (US$O.I million) Because of their involvement and knowledge of local issues, community needs, and participatory approaches some consultants may be procured on a single source basis. These are small contracts estimated to cost less than US$lOO,OOO per contract. 24. Selectionof Individual Consultants (SIC): (US$0.3million) Individual consultants for project implementation including procurement, financial management, coordinators, civil works engineers, and technical specialists to prepare major biddingdocuments and technical specifications, will be contracted through SIC procedures as inclauses 5.1 to 5.4 of the Guidelines wherein it i s stated that individual consultants are selected on the basis of their qualifications for the assignment. However, inexceptional cases where sole source selection i s justified, the Borrower could select the consultant on sole source basis with Banks prior approval. Training (US$0.7 million) 25. Expensesfor training and workshops will be procuredand disbursed with prior approval of the World Bank based on an annual implementation plan. Cost of training materials (printing),rental - 62 -  facilities, transportation, food and board, and tuition for trainees will follow Statement of Expenditures (SOE) procedures. Incremental operatingcosts (US$0.6 million) 26. This includes US$0.3 million to be funded under the credit and includes the funding of 50 percent of such costs as office supplies and consumables, communications and printingcosts, web-site maintenance costs, operation and maintenance of the project vehicles, costs for transportation and accommodations for project staff incarrying out monitoring and supervision. US$0.3million i s funded by the Government and covers the 50 percent counterpart for the items discussed above. Any proposed staff salary supplements are separately and fully funded by Government. Table A: Project Costs by ProcurementArrangements (US$ million equivalent) (0.00) (0.00) (0.30) (0.00) (0.30) 6. Refundingof Project 0.00 0.00 0.32 0.00 0.32 PreparationAdvance (0.00) (0.00) (0.32) (0.00) (0.32) Total 3.52 15.20 3.30 1.30 23.32 (3.23) (13.62) (3.15) (0.00) (20.00) "Figures inparentheses are the amountsto be financedby the IDA Credit. All costs includecontingencies. 2'Includescivil works and goods to be procuredthrough nationalshopping, consultingservices, services of contracted staff of the projectmanagement office, training, technical assistance services, and incrementaloperating costs related to (i) managingthe project, and (ii) re-lendingprojectfunds to local government units and procurement of vehicles from UNIAPSO. - 63 -  Table A1: ConsultantSelection Arrangements (optional) (US$ millionequivalent) 1 I (0.95) I (0.00) I (0.00) I (0.09) I (0.77) I (0.09) I (0.00) 1 (1.90) I Includingcontingencies Note:QCBS = Quality- and Cost-BasedSelection QBS = Quality-basedSelection SFB = Selection under a Fixed Budget LCS = Least-CostSelection CQ = Selection Based on Consultants'Qualifications Other = Selection of individualconsultants (per SectionV of Consultants Guidelines),Commercial Practices,etc. N.B.F. = Not Bank-financed Figures in parenthesesare the amounts to be financed by the Bank Credit. - 64 -  Table B indicates the thresholds for prior review. The Bank will conduct prior review of procurement documents and actions inaccordance with procedures set forth inparagraph 2 of Appendix 1to the procurement Guidelines. The following will be subject to World Bank prior review: Works: All ICB contracts and the first NCB contracts of each province for bothMPWT and MRDof each year. Goods: All ICB and the first NCB and IS contracts. Consultants' Services: Contracts equal to or greater than US$lOO,OOO for firms and those equal to or greater than US$50,000 for individual. All single source contracts for firms. Proposed post review ratio: One out of four contracts. Table B: Thresholds for Procurement Methods and Prior Review 1. Works equal to and greater than ICB 3.00 US$1 million less than US$1million NCB 7.50 2. Goods National Shopping 0.4 all contracts I UNIAPSO I 0.71 3. Services equal to or above us$loo,ooo equal Total value of contracts subject to prior review: Overall ProcurementRisk Assessment: High Frequency of procurement supervision missions proposed: One every 6 months (includes special procurement supervision for post-review/audits) - 65 -  The Procurement Plan shall be reviewed and approved annually by the project team of the World Bank and it shall be monitored and implementedinaccordance with the Banks guidelines and the project legal agreement. Should there be a need to change the procurement method or the aggregated amount for a particular contract or method before the annual review of the procurement plan duringproject implementation, the Borrower shall seek the World Banks prior approval. ExpectedProcurement Plan for Year 1i s given inthe table below. The first batchof civil works contracts i s expected to be bid out according to the following schedule with more details available inthe Microsoft Project procurement schedule. Procurement Plan for works for Year 1(2003) of MPWT Contract number I Ministry 1Province code 1 Description I Length of Procurement Advertisement Starts Complete Road(Km)l Method I Date I Works I Works 1 I I I I I I I I I I Note: ICB-InternationalCompetitiveBidding NCB -National CompetitiveBidding - 66 -  Procurement Planfor works for Year 1(2003) of MRD Contractnumber Ministry Province code Description Lengthof Procurement Advertisement Starts Complete Road (Km) Method Date Works Works I ISub-Total: 66.208 MRD FirstYear Works Program PRIPOI/SRP-RWRD06 I MRD - PeriodicI I Maintenance SRP lSRP to Pouk & SRP Rolous 18 NCB 1-Aug-03 25-Sep-03 25-Sep-04 PRIPOl/SRP-RWRD07 MRD SRP SRP to Peak Sneng to Wat Prei 9.2 NCB I-Aug-03 25-Sep-03 25-Sep-04 Note: NCB -NationalCompetitiveBidding - 67 -  ProcurementPlan for goods to be done Nationally by MPWT and MRD I Province Estimated Procurement Advertisement Starts Complete Contract Number I MinistryI Code I Description I cost (US.$)I Method 1 Date 1Works I Works I Total MPWT & MRDl 1,228,2401 Note: Ofice equipment is computers,printers,faxes, etc I S - International Shopping NS - National Shopping UNIAPSO - United Nations Inter-Agency ProcurementServices Office - 68 -  Procurement Plan for Consultant Servicesby MPWT and MRD Note: QCBS - Quality Cost Based Selection LCS- Least Cost Selection SS - Sole Source - 69 -  Annex 6(B): Financial Managementand DisbursementArrangements CAMBODIA: Provincialand Rural Infrastructure Project (PRIP) Financial Management 1. Summary of the FinancialManagement Assessment The Countly Financial Accountability Assessment (CFAA)was carried out by the World Bank and the report was delivered to the Government inMay 2003. It was noted that the legislative and regulatory framework governing public finances inCambodia i s generally acceptable, with the exception of the control function, which requires a complete overhaul. However, the implementation of public expenditure i s very weak, resulting ina lack of transparency and a highlevel of riskconcerningthe reliability of public expenditure management. Inaddition, the financial management systems and procedures cannot be relied upon to provide any assurancethat the public funds are used for authorized purposes. Local government accounting and budget management remain undeveloped. The system i s all incashbasedandmostreceipts and almost all payments do not pass through bank accounts. Sucha systemprovides many opportunities for corruption and misuse of public funds. The overall country fiduciary risk inCambodia i s considered to be high.Inspite of the multiplicity of controls and the centralized nature of the Public Expenditure Management system, weak financial management practices pose serious fiduciary risks. The fundamental problems result from a weak control environment, severe weaknesses in NationalTreasury operations, especially inthe area of cash management, inadequacies inthe public accounting system, and weak internal and external auditing capacity. These problems are so serious that the Government's budget and reporting systems cannot be relied upon to expend resources inan accountable manner. These systemic weaknesses thus raise serious concerns about fiduciary risks and possible corruption. However, such fiduciary risks are expected to be mitigated through the proposed system. These risks are considered as manageable due to the risk-mitigation measuresto be taken as outlined inthe financial management action plan. To assess the existing capacity at the implementingagencies a financial management (FM) assessment was carried out of the various implementing units, a summary of which i s stated below. The detailed financial management assessment i s available on project files. Financial management assessments were conducted at Ministry of Public Works and Transport (MPWT), Ministry of RuralDevelopment (MRD) and Provincial Departments of Public Works and Transport (PDPWTs) of the four project provinces and the ProvincialDepartments of Rural Development (PDRDs) of Kampong Thom, Oddar Meanchey, Preah Vihear, and SiemReap. MPWThas an existingFMunit at the RoadInfrastructureDepartment (RID) which currently manages the IDA financed National Roads component of the FloodEmergency Rehabilitation Project (FEW- Credit 3472 KH) and the Project Preparation FacilityAdvances and the PHRDgrant funds of the proposed Provincial and Rural InfrastructureProject. As a result this FMunit i s conversant on accounting software, contract payments, accounting procedures including IDA disbursement procedures and IDA Financial MonitoringReportingrequirements. Since the staff at this FMunit at RIDposses adequate skills inproject financial management, the Government has assigned the same staff for the financial management of the PRIP subject to training on management of provincial Project Accounts and refresher training on a computerized accounting system. RID has agreedfor this training to be provided by the consultant firmhiredto establish a financial management system for the project. MRDhasinoperation two FMunitsfor ongoingADB andIDAfundedprojects andbothunitsmaintain satisfactory project accounts and a financial management systemfor the purpose of assessingF M S for OPBP 10.02. However, the project management of the MRDcomponent of PRIPwill be at the General - 70 -  Department for Technical Affairs (GDTA)through its Department of Rural Roads (DRR) which was only recently established inJune 2002. As a result capacity of DRR for managing the finances of PRIP needs to be developed. GDTADRRwill be responsible for all aspects of project financial management of the MRDcomponent by installing a dedicated project accounting system and the hiring and training of staff inaccounting software, procedures and reporting. There i s no established double entry basedFMS nor i s there any other accounting/financial system in the any of the eight PDPWTs or PDRDs at present which maintains Project accounts for the purpose of accessingF M S for OPBP 10.02. Some of the target provinces are allocated donor funds but these are managedby the donors or by MRD or MPWT directly from PhnomPenh through project implementation units or Provincialproject implementing unitswhich by-pass the PDRDPDPWTstructure. The funds allocated underthe SEILA program, a rural development fund inCambodia, are also not managedby PDRDs or PDPWTs as these were formerly managedby the PRDCs of each province and are now being managedby the Commune Councils. All of the PDPWTs and PDRDs lack adequatecapacity for its financial activities and none manageany bank accounts. Present accounting staff of these departments carry out very basic functions and their skills are very limited in these areas. Before eachPDRDPDPWT can function as a fully fledged financial management unit, the staff will have to be trained on the recording and submission of appropriate documentationto PhnomPenh for paymentheplenishment and staff trained on the responsibility of management of aprovincial Project Accounts. Inaddition, the system installed at PhnomPenh needs to be integrated into the financial units of PDPWTsPDRDand staff trained on the procedures before the provincial level financial units can function as fully fledged units. The overall assessment i s that the MPWT's Road InfrastructureDepartmenthas the capacity to manage project financial activities while the capacity at the of MRD's GDTAJDRRneeds to be developed. MRD has decided to assign an accountant to the GDTAJDRR who has been working on the IDA funded Northeast Village Development Project which i s due to close and for which the FMwas satisfactorily handled. Also the capacity at the provincial level at bothMPWT and MRDneeds to established for project financial management at the provincial level. 2. Audit Arrangements Annual project financial statements for each component will be producedby bothMPWT-RIDand MRD-GDTA-DRRfor the respective project components. These shall be consolidated by RIDof MPWTinto project annual financial statements and auditedby an independent auditor appointed under terms of reference satisfactory to IDA. The ProvincialProject Bank Accounts, if any, shall also be audited by auditors acceptable to IDA as part of the annual financial audit. The auditor will be required to express opinions on: (i) the annual Financial Statements; (ii)whether the Special Account(s) funds have been correctly accounted for and used inaccordance with the Credit agreement; and (iii) the adequacy of documents and controls surrounding the use of the Statements of Expendituresas a basis for disbursements.The audited financial statements will be submitted to IDA within six months of the year-end. -71 -  3. DisbursementArrangements Disbursement of the proceeds of the Credit would be made against expenditure categories as shown in Table C. Allocation of credit proceeds (Table C) It is expected that the proposedIDA credit of US$ 20.0 millionwould be disbursed over aperiod of approximately 4 years. The closing date i s September 30,2007. The allocation of credit and grants proceeds according to expenditure category i s outlined inTable C. Table C: Allocation of Credit Proceeds (1)Works (a) MPWT Rehabilitation and periodic 11.68 90 percent maintenance (b)MRDRehabilitationandperiodic 3.00 90 percent Imaintenance I 100% of foreign expenditures, 100% of local expenditures (ex-factory cost), and 85% of local expenditures for other items procuredlocally. (b)MRDGoods 0.40 100%of foreign expenditures, 100%of local expenditures (ex-factory cost), and 85% of local expenditures for other items procured locally. l(3) Consultants' services I (a) MPWT Consultants' services 1.25 95 percent (b) MRDConsultants' services 0.75 95 Dercent (4) Training 0.42 100percent (a) MPWT training. (b)MRDtraining 0.28 100percent (5) Incremental operating costs 0.18 50 percent (a) MPWT Incremental operating costs (b)MRDIncrementaloperating costs 0.12 50 percent (6) Refunding of Project Preparation 0.32 Amount due pursuant to Section 2.02 (c) Advances of the Credit Agreement (7) Unallocated 1-00 ITotal Project Costs with Bank Financing1 20.00 botai I 20.00 -72 -  Use of statementsof expenditures(SOEs): Reimbursement will be made on the basis of Statement of Expenditures for the following: (a) works under contracts each costing less than US$l,OOO,OOO equivalent; (b) all goods contracts regardless of the cost; (c) consultants' services under contracts awarded to consulting firms each costing less than US$100,000 equivalent; (d) consultants' services under contracts awarded to individual consultants each costing less than US$50,000 equivalent; (e) training, regardless of the cost; and (f)incrementaloperating costs, regardlessof the cost. The documentation will be made available for the requiredaudits as well as to the World Bank supervisionmissions, and will be retainedby MPWT, MRDand inthe Provincial Departments for at least four years after receipt by the Bank of the audit report for the year inwhich the last disbursement was made. For contracts above these amounts, Withdrawal Applications would be supported by full documentation and signed contracts. Special account: To receive IDA credit funds, MPWT and MRD shall eachmaintain a separatedollar Special Account at the NationalBank of Cambodia or ina commercial bank acceptable to IDA on terms and conditions satisfactory to IDA, including appropriate protection against set off, seizure and attachments. The Special Accounts will cover the IDA shares of eligible foreign and local expenditures inall disbursement categories. The MPWT Special Account will have an authorized allocation of US$1.5 million with an initial deposit of US$0.5 millionequivalent to be withdrawn from the credit account and deposited inthe Special Account. When the amount withdrawn from the credit account totals SDR 2.0 million equivalent, the initial allocation will be increased to the authorized allocation. The MRD Special Account will have an authorized allocation of US$0.5 million with an initial deposit of US$0.2 million equivalent to be withdrawn from the credit account and deposited inthe Special Account. When the amount withdrawn from the credit account totals SDR 0.5 million equivalent, the initial allocation will be increased to the authorized allocation. Withdrawal Applications for replenishment of the Special Account would be submitted regularly, preferably monthly or whenever the Account has been drawn down by about 20 percent of the initial deposit, whichever occurs first. FinancialManagementArrangements Accounts andfundsflow i) National level. At the national level inPhnomPenh, each executing agency, MPWT-RID and MRD-GDTALDRR,shall maintain a Counterpart FundsAccount to receive RGC counterpart funds and a Special Account to receive IDA credit funds. The MPWT and MRDCounterpart Funds Accounts shall - 73 -  eachreceive an initial deposit of US$60,000 from MEF. ii) Provincial level. EachPDPWT and PDRD may maintain a provincial Project Account to ensure that funds are readily available for payment to small contractors. The provincial Project Accounts will be maintainedinUS$ and shall be opened at a commercialbank inthe four provinces on terms and conditions satisfactory to IDA.Given the current lack of banking facilities inPreah Vihear and Oddar Meanchey the Project Accounts for these provinces may be maintained in a commercial Bank acceptable to IDA inKampong Thom, SiemReap, or Banteay Meanchey. These provincial Project Accounts will be opened with a initial advance of US$lOO,OOO per account funded by the Government and flowing through the Counterpart Funds Accounts. The provincial Project Accounts will be periodically reimbursed through a funds transfer fromthe Special Accounts to the Counterpart Funds Accounts (IDA funds shallnot be advanced to the provincial Project Accounts). Reimbursement will be basedon submission of duly certified proof of payment by PDPWT or PDRD as appropriate. Applications to replenishthe provincial Project Accounts supported by appropriate documentation shall be submitted at least 30 days from the date of the last cash advance or whenever expenditures reach 1/3 of the advance, whichever comes first. All contract payments can be made from the Special Accounts and Counterpart Funds Accounts in PhnomPenh. Alternatively, if the Government wishes, contract payments up to US$lO,OOO may be made from the provincial Project Accounts. Contract payments above US$lO,OOO shall be requested by the PDPWTs and PDRDs to be paid directly to the contractor from the Special Accounts and Counterpart FundsAccounts. All contract payments will be by check drawn on the name of the contractor or by electronic bank transfer to the account of the contractor. For the purpose of facilitating payments contractors will be required, at the time of contract signing, to open a bank account in abank of their choice, which i s readily done inCambodia. Financial Management unit set up and stafSing IDA will review the capacity of staff at all Financial Management unitsas the project progress and make recommendations if further staffing and training i s needed. i) National Level: at MPWT-RID and MRD-GDTMDRR.. At the national level, MPWT-RIDand MRD-GDTADRRwill eachestablish aFinancialManagement (FM)unit.EachFMunit shallbe staffed with one full time Project Accountant and at least one Assistant Accountant. Staff shall possess qualifications and experience to the satisfaction of IDA. The Ministries have already appointed the Assistant Accountants and are inthe process of appointing the Project Accountants. Terms of reference are inthe FinancialManagement Manual. The accountants will report to the respective Project Director of MPWT-RID and MRD-GDTADRR.Duringimplementation MPWT-RIDand MRD-GDTADRRwill hire additional Assistant Accountants to supplement the capacity of the existing staff if the volume of work necessitatessuch. MPWT-RIDSassigneewill be from within staff of the existing FMunit at MPWT-RIDand who has thus gained experience inproject accounting, Englishlanguage, computer skills and inprocessing documentationand coordinating with IDA on replenishment applications. MRD-GDTADRRwill appoint a suitable staff from within its ministrycadre, a staff who has gained experience on a donor funded project. The FMstaff of MPWT-RIDand MRD-GDTADRRwill be given introductory training by the consulting firmon the software package and related accounting procedures. Inaddition, training will beprovidedonIDAdisbursement procedures by MEF. ii) Provincial Level: at PDPWTs and PDRDs. At the provincial level, each PDPWTand PDRD will utilize existing staff inexisting Financial Management (FM)units subject to capacity enhancement - 74 -  and training. EachFMunit will be staffed with an Accounting Officer, and at least one Accounting ClerWCashier. Staff shall possess qualifications and experience to the satisfaction of IDA.Terms of reference are inthe Financial Management Manual. MPWT-RIDand MRD-GDTA/DRRwill give introductory training to the FMstaff of PDPWTs and PDRDs on managing and replenishment of a provincial Project Account, invoice processing and basic recordkeeping and provide follow-up on the job training duringproject implementation. Financial Management responsibilities The financial management responsibilitiesfor the Project at the national and provincial level are described below. A Financial Management Manual describing indetail, the planning, budgeting, expenditure authorization, payment, recording and reporting has been produced. i) National Level: at MPWT-RID and MRD-GDTNDRR. The staff at eachFinancial Management unitat MPWT-RIDandMRD-GDTA/DRRshall be responsible inter alia for: 0 ensuring that World Bank guidelines and procedures are followed on disbursements, auditing and overall financial management. 0 maintainingbooks of accounts and recording transactions of the Special Accounts, Counterpart FundsAccounts and the provincialProject Accounts 0 preparingWithdrawal Applications and dealing directly with MEFand IDA on replenishments. 0 verifying that for all transactions the supportingdocumentation and authorizations are adequate 0 obtaining authorisationfor payments from the Special Accounts/Counterpart Funds Accounts from the head of MPWT-RIDor MRD-GDTA/DRRrespectively. 0 ensuring all expenditures follow intemal approvalprocedures at MPWTMRD and the payment procedures stated inthe Financial Management Manual. 0 effecting payments through check payments or fund transfers, on satisfaction of necessaryapprovals. 0 preparingtheir quarterly Financial MonitoringReports (FMRs).MPWT-RID shall consolidate these FMRinto an overall project FMR. 0 preparingthe annual project budget for their respective project components incoordination with the respective PDRDs and PDPWTs. MPWT-RID shall consolidate these budgets into an overall project budget. 0 preparing annual project financial statementsand ensuring auditing by independant auditors and submission to IDA 0 coordinating with MEFon counterpart fund requirements 0 coordinating on direct contract payment requests from the provinces and effecting such payments 0 replenishment and monitoring of the provincial Project Accounts 0 training financial staff at the PDPWTs and PDRDs The Project Directors at MPWT-RID and MRD-GDTA/DRRshall beresponsible for 0 ensuring adequateperformance and staffing of the FMunit and FMstaff authorization of payments after verification by the Financial Management staff. ii) Provincial Level: at PDPWTs and PDRDs. The staff at the Financial Management units at each PDPWTand PDRD shallberesponsible for inter alia: 0 initiating and approving contracts/invoices 0 requesting direct payments from MPWT-RIDor MRD-GDTA/DRRto contractors 0 maintainingrecords - 75 -  Ifthe provincehasaprovincialProjectAccount, the staff at the FinancialManagement unitsat each PDPWT and PDRDshall also be responsible for inter alia: 0 maintainingcash book and expenditure records 0 preparingbank reconciliation statements and on a monthly basis (at least 30 days from the receipt of the last cash advance or when expenditures reach 1/3 of the advance, whichever comes first) 0 submittingreports with supportingdocumentation to MPWT-RIDand MRD-GDTA/DRRfor review and replenishment of the provincial Project Account. 0 forwarding information on expenditures to MPWT-RID or MRD-GDTA/DRRfor inclusion inthe overall project financial statements and for initiating replenishment 0 effect payments from provincial Project Accounts through check payments or a fund transfers, on satisfaction of necessaryapprovals 0 ensuring all expenditures follow internal approval procedures and the payment procedures statedin the Financial Management Manual. The head of the respective PDPWTPDRDshall be responsible for 0 ensuring adequateperformance and staffing of the FMunit and FMstaff 0 authorization of any payments after the verifications by the Financial Management staff Financial managementsystem. The financial managementsystem operational at MPWT for the IDA- supported Road Rehabilitationproject will be adopted subject to modification of the chart of accounts to generate IDArequired Financial MonitoringReports (FMRs) for PRIP. The computerizedaccounting system with have a chart of accounts which will separately identify the disbursements of the components by eachprovincial and central level and will facilitate financial management and consolidation of financial statements. The computerizedaccounting system will be established at bothMPWT-RIDand MRD-GDTA/DRRto capture the transactions of the respective accounts. The proposed accounting system contains the following features: (a) application of consistent principles of accounting for documenting, recording, and reporting financial transactions; (b) use of the cash method of accounting; (c) a double entry accounting system; (d) a chart of accounts and a coding system that allows meaningful reportingto IDA and the Government; and (e) the production of quarterly financial statements acceptable to IDA. A consulting firmhas been hired to assist the project inthe above process. The consulting firm will design the chart of accounts taking into account the decentralizedcentralized fund flow arrangementsand the centralized recordingand reporting arrangements of PRIP. The Financial Management Manual i s guided by the existingFinancial Management Manuals of RRP and FEWand the internal invoice processing procedures inoperationat the central and decentralized levels at MPWT, MRDandeachPDRDandPDPWT. Appropriate procedures havebeenestablished for provincialfund flows and a single entry based manual accounting system operationalized inthe provincial unitsgiven the lack of capacity inFinancial Management knowledge and Englishinthe provinces. Withdrawalof the IDA creditfinds. Disbursement of IDA funds will be based on Statements of Expenditures, Withdrawal Applications or Direct Payment Applications. MPWT-RIDand MRD-GDTA/DRRshall eachprepare Withdrawal Applications to be submitted to IDA for their respective Special Accounts and through MEFdeal with IDA on replenishments. Signatories on the IDA Withdrawal Applications shall be the Minister of Finance and Economy or hisker designee and the Ministerof Public Works and Transport/Minister of RuralDevelopmentor hisker designee. Financial Monitoring Reports. Each MPWT-RIDand MRD-GDTA/DRRshall prepare quarterly Financial MonitoringReports (FMRs)which shall include at a minimum,the following documents: 1. 1-AProject Uses and Sources of Fundsby IDA Disbursement Category 2. 1-B Project Uses of Fundsby Project Activity 3. Contract Expenditure reports (Goods, Works and Consulting Services) - 76 -  4. Contract Monitoringreport (Goods, Works and Consulting Services) MPWT-RIDwill consolidate 1A (Project Uses and Sources of Fundsby IDA Disbursement Category) and 1B (Project Uses of Fundsby Project Activity) preparedby MPWT-RIDand MRD-GDTA/DRR into one project-wide report 1A and 1B.The Contract Expenditure and Contract Monitoringreports may be presented for each individual executing agency and be attached without consolidation. MPWT-RID will submit the consolidated FMRs to IDA on a quarterly basis within 45 days of the quarter end starting the first quarter following project first disbursement. Additional output monitoringreports will be developed, if appropriate, duringimplementation. Strengthening of Financial Management. It has been agreedthat the MPWT-RID,MRD-GDTA/DRR and the PDPWTs and PDRDs shall carry out a time-bound action plan as stated below for strengthening of their financial management system. As a condition of credit effectiveness, the Borrower shall have established a financial management system, acceptable to the Association, including: (i) adoption of a financial management manual acceptable to the Association, and (ii) completion of appropriate training for staff of MPWT, MRDand their respective departments inthe provinces of Kampong Thom, Oddar Meanchey, Preah Vihear and SiemReap. When installation of the accounting system i s complete IDA will review and approve the system. PRIPFinancialManagement ImprovementAction Plan Action Item Resuonsibilitv Complete Date 1.As apilot and training exercise for PRIP, MPWT-RIDwith assistance Completed. install Peachtree Accounting Software at from RRP. MPWT-RID to recordtransactions of the PPF. 2. Agreement on format Financial Completed at negotiations MonitoringReports (FMRs). 3. Establisha computerised financial MPWT; MRDwith Effectiveness management system, including the chart of assistance of a consulting (status - ongoing) accounts, capable of providing Financial firm MonitoringReports (FMRs) acceptable to IDA. 4.1 Design accounting procedures for the MPWT and MRD 4.1 Effectiveness (status - provincial and central levels and finalize the completed) Financial Management Manual. 4.2 Adopt the Financial Management 4.2 Effectiveness Manual. 5. Training o f i)staffatMPWT-RIDand i) andMRDwith MPWT Effectiveness. MRD-GDTA/DRRon the accounting system assistance of a consulting and procedures firm ii)staffatMPWT-RIDand MRD-GDTA/DRRon IDA disbursement ii)MEF procedures. iii)provincialstaffatPDPWTsandPDRDs. iii', andMRD MPWT - 77 -  FundsFlow Arrangementsfor PRIP(applies both to MPWT andMRD) j i Special Counterpart Funds 1 Account Account j II / / I / I / I / I / I Provincial Project Accounts IIII / for PDPWTPDRD / / KampongThom, Oddar Meancheay, / I / II / Financial Management Unit at / ................................................................................... 4.................................................................................... PDPWTs/PDR& ineach province I / I I 1 I +I +I v/ I Payments < $10,000 Payment of Contractors ............b Initial advance from Counterpart Funds Account to provincial Project Accounts -) ReimbursementofeligibleIDAexpenditurestoCounterpartFundsAccount ---+ Paymentsto .............b --3 contractors Request direct payments to contractors from MpWT/MRD Report all provincial payments to MpWT/MRD - 78 -  Annex 7: Project Processing Schedule CAMBODIA: Provincialand Rural Infrastructure Project (PRIP) /Timetaken to preparethe project (months) I 26 I 27 I First Bank mission (identification) 02/28/2001 02/28/2001 Appraisal mission departure 05/05/2003 06/02/2003 Negotiations 05/12/2003 06/13/2003 Planned Date of Effectiveness 10/30/2003 Prepared by: The Ministryof Public Works and Transport and the Ministry of Rural Development of the Royal Government of Cambodia. Preparationassistance: A Japanese Policy and HumanResourcesDevelopment (PHRD)grant for US$731,000 (TF026422- Recipient executed) was receivedand used for project preparationby the Government to contract consulting services for the following preparation activities (including a contract with the International Labor Organisationinan amount of US$409,000): (a) improve the coverage, coherence and sustainability of rural infrastructure provision in Cambodia through policy and strategy formulation; (b) strengthen the institutional framework for ruralroads and transport; (c) identify rural access needs and solutions at the provincial and district levels; (d) promote small businessesinthe delivery of Infrastructure services (e) assist inthe Preparation of the Project ImplementationPlan; (f) carry out abaseline socio-economic impactassessmentandprepare anEnvironmental Assessment and an EnvironmentalManagement Plan; and (g) strengthen project management and monitoring capacity. Grant Implementation and Results. The grant was successfully executed. All planned outputs were completed. Both the Government and stakeholders benefitedfrom training programs and consultative workshops carried out, as well as gaining experience inprogrammanagement and administration, the establishment of separateproject financial management systems, and international procurement. The Government also utilized two Project Preparation Facilities inamounts of US$206,230 (Q2790) and US$114,000 (42791). These were usedfor a provincial staff training series, vehicles and survey equipment, and mine path finding by The Halo Trust (US$76,584). - 79 -  Bank staff who worked on the I Name Speciality Alain L.Labeau LeadTransport Specialist Sally L.Burningham Task TeamLeader, Senior Engineer Christina Malmberg Calvo LeadEconomist Imogene R.Jensen Senior Economist Jitendra J. Shah Senior EnvironmentEngineer Lars L.Lund Senior Social Scientist Mei Wang Counsel Clifford Garstang Legal Consultant Lingzhi Xu Senior Procurement Specialist Chinnakorn Chantra Procurement Specialist PreethiK.Wijeratne Financial Management Specialist Rodrigo Archondo-Calla0 Technical Specialist, Transport Sector Christopher De Serio ProgramAssistant Dieter Schelling Peer Reviewer ZhiLiu Peer Reviewer Jennie Litvack Peer Reviewer at project concept stage - 80 -  Annex 8: Documentsin the Project File* CAMBODIA: Provincialand Rural InfrastructureProject (PRIP) A. Project ImplementationPlan Project ImplementationPlan, August 2003 ProcurementPlan, August 2003 B. Bank Staff Assessments Aide-memoire of identificationmission,February2001 Aide-memoire of preparationmission, April 2002 Aide-memoireof pre-appraisalmission,December4 to 18, 2002 Aide-memoireof appraisal mission,June 2003 Financial Management Assessmentfor the PRIPproject, October 2002 Procurement Capacity Assessment for the PRIPproject, October 2002 Integrated Fiduciary Assessment and Public ExpenditureReview (IFAPER)Cambodia Enhancing Service Delivery ThroughImprovedResourceAllocation andInstitutionalReform, ReportNo. 25611 KH,World Bank,August2003 includingthe Country Financial Accountability Assessment (CFAA) Draft of the Country ProcurementAssessment Review (CPAR),World Bank, July 2003 Country Portfolio Performance Review (CPPR),World Bank, August 2000 C. Other SocialAssessment, May 2003, Ministry of Public Works andTransportandMinistry of Rural Developmentfor the PRIPproject,RoyalGovernment of Cambodia Environmental Assessment, June 10,2003, Ministry of Public Works andTransport and Ministry of RuralDevelopmentfor the PRIPproject,RoyalGovernment of Cambodia ResettlementPolicy Framework, June 2003, Ministry of Public Works andTransport and Ministry of RuralDevelopmentfor the PRIPproject, RoyalGovernment of Cambodia Indigenous Peoples Development Framework, June 2003, Ministry of PublicWorks and Transport and Ministry of RuralDevelopmentfor the PRIPproject,RoyalGovernment of Cambodia Main TechnicalReport,July 2003, producedby the InternationalLabor Organisationfor the PRIP project Policyfor Rural Roads,April 2002, Royal Government of Cambodia, Ministry of RuralDevelopment Road Condition Survey, 2003, Ministry of Public Works andTransport RoadInfrastructureDepartment - Rural Road Inventoryfor Rural Road, Ministry of RuralDevelopment,December 2002 *Includingelectronic files -81-  Annex 9: Statement of Loans and Credits CAMBODIA: Provincialand Rural InfrastructureProject (PRIP) July -2003 Differencebetweenexpected and actual OriginalAmount in US$ Millions disbursements' Project ID FY Purpose IBRD IDA GEF Cancel. Undisb. Orig Frm Rev'd PO70542 2003 KH-Health Sector Suppolt Project 0.00 17.20 0.00 0.00 29.02 0.00 0.00 PO73311 2003 KH-Prov& Peri-urbanWater Supply 0.00 16.90 0.00 0.00 20.61 0.00 0.00 PO71146 2003 KH- Rural Investmentand Local Governance 0.00 22.00 0.00 0.00 22.57 0.00 0.00 P070875 2002 KH-LandManagementand Administration 0.00 24.30 0.00 0.00 25.00 1.02 0.00 PO71247 2002 KH Eco. & PS Capacity Building Project 0.00 5.50 0.00 0.00 6.07 0.92 0.00 PO71445 2002 KH Demobilization and Reintegration .. 0.00 18.40 0.00 0.00 16.40 -3.95 0.00 PO73394 2001 KH-Flood EmergencyRehabilitation Proj 0.00 35.00 0.00 0.00 20.28 3.20 0.00 P065798 2000 KH-BIO& PROTECAREAS M 0.00 1.91 0.00 0.00 1.37 0.87 0.86 PO52006 2000 KH 810 & PROT AREA M 0.00 0.00 2.75 0.00 2.08 3.73 1.39 PO58544 2000 KH- Cambodia SAC 0.00 30.00 0.00 0.00 15.42 26.89 0.00 P060003 2000 KH-ForestConcession Mgt & Control Pilot 0.00 4.82 0.00 0.00 3.53 3.39 0.00 PO59971 2000 KH-EDUCATIONQUALITY IMPROVEMENT 0.00 5.00 0.00 0.00 0.35 0.32 0.00 P004030 1999 KH-RoadRehab. 0.00 45.31 0.00 0.00 24.88 25.59 0.00 PO50601 1999 KH-SOCIALFUND II 0.00 25.00 0.00 0.00 3.01 -5.97 0.00 PO58841 1999 KH-NORTHEASTVILLAGE 0.00 5.00 0.00 0.00 1.11 1.25 1.27 PO45629 1998 KH-URBANWATER SUPPLY 0.00 30.96 0.00 0.00 4.47 5.44 1.83 PO04033 1997 KH-AGRICULTURALPRODUCTIVITYIMPROVE 0.00 27.00 0.00 0.00 14.69 15.83 14.08 Total: 0.00 314.30 2.75 0.00 210.85 78.54 19.43 CAMBODIA STATEMENTOF FC's HeldandDisbursedPortfolio July - 2003 InMillions USDollars Committed Disbursed IFC IFC FY Approval Company Loan Equity Quasi Partic Loan Equity Quasi Partic 2003 Amanresort 1.20 0.00 0.00 0.00 1.20 0.00 0.00 0.00 2000 SEFACLEDA Bank 0.00 0.49 0.00 0.00 0.00 0.49 0.00 0.00 Total Portfolio: 1.20 0.49 0.00 0.00 1.20 0.49 0.00 0.00 Approvals PendingCommitment FY Approval Company Loan Equity Quasi Partic 2000 SEFACLEDA Bank 1.00 0.00 0.00 0.00 Total PendingCommitment: 1.00 0.00 0.00 0.00 - 82 -  Annex 10: Country at a Glance CAMBODIA: Provincial and Rural Infrastructure Project (PRIP) East POVERTYand SOCIAL Asia & Cambodia Pacific income Developmentdlamond* 2001 I Population,mid-year(millions) 123 1,826 2511 Lifeexpectancy GNI percapita (Atlas method, US$) 270 900 430 GNI (Aflas method, US$billions) 3 3 1,649 1,069 7- Average annual growth, 1995-01 I I Population (%) 2 3 1 1 Laborforce (%) 2 6 1 3 Most recent estimate (latest year available, 1995-01) Poverty (% ofpopulationbelownationalpoverty line) 36 Urbanpopulation("A of totalpopulation) 16 37 Life expectancy at birth (years) 54 69 5931 1 ~ Infant mortality(per 1,000livebirths) 88 36 Child malnutrition(% of childrenunder5) 47 12 Access to improvedwater source Access to an improvedwater source (% ofpopulation) 30 74 Illiteracy("A ofpopulation age 15+) 32 14 Gross primaryenrollment (% of school-agepopulation) 119 107 96 ----Cambodia Male 128 106 103 Low-incomegroup Female 110 108 88 KEY ECONOMICRATIOS and LONG-TERM TRENDS 1981 1991 2000 2001 Economlcratlor` GDP (US$ bilhons) 1 6 3 4 3.4 Gross domesticInvestmenUGDP 9 4 135 179 Exportsof goods and services/GDP 119 504 53 2 Trade Gross domesticsavings/GDP 7 8 4 3 9 8 Gross nationalsavings/GDP 8 2 Currentaccountbalance/GDP -1 5 -94 -9 4 Interestpayments/GDP 0 9 0 4 0 1 Total debt/GDP 1134 783 79 4 Total debt service/exports 1 9 1 2 Presentvalue of debt/GDP 58 3 1 Presentvalue of debt/exports 1223 Indebtedness 1981-91 1991-01 2000 2001 2001-05 (average annualgrowth) GDP 48 7 7 6 3 4 5 -*m* Cambodia GDP Der caoita -~ 21 5 3 41 2 6 Low-incomegroup Exporis of goods and services . 190 365 146 100 STRUCTURE of the ECONOMY 1981 1991 2000 2001 Growth of investmentand GDP (%) ("A of GDP) I Agriculture 49.9 38.2 36.9 Industry .... 12.1 20.8 21.9 20 Manufacturing 5.3 Services .. 38.0 41.0 41.2 0 Privateconsumption .. 84.8 90.0 84.2 -20 1 Generalgovernment consumption 7.4 5.7 6.0 Importsof goods and services .. 13.6 59.6 61.3 *MW*GDI " I O I G D P I 1981-91 1991-01 2000 2001 (average annualgrowth) Growth of exports and imports (%) Agriculture 1.6 -0.3 3.9 Industry .. 10.1 34.6 15.5 Manufacturing 8.6 Services 6.2 5.8 2.7 Privateconsumption 1.7 2.3 2.2 Generalgovernment consumption 3.1 15.5 13.1 Gross domestic investment 10.5 -10.7 25.5 lmoortsof aoods and services .... 12.2 17.5 12.6 Note: 2001 data are preliminary estimates. *The diamondsshow four key indicators in the country (in bold) compared with its income-groupaverage. If data are missing, the diamond will be incomplete - 83 -  Cambodia PRICES and GOVERNMENT FINANCE 1981 1991 2000 2001 Domesticprices ("A change) Consumerprices -0.8 -0.6 Implicit GDP deflator 107.4 4.7 -2.8 Government finance ("A of GDP,includescurrent grants) Current revenue 4.5 10.7 12.2 Current budget balance -2.9 1.5 1.5 Overall surplus/deficit -3.3 -5.2 -6.0 ------GDP deflator -CPI I TRADE 1981 1991 2000 2001 (US5millions) Export and import levels (US$ mlll.) Total exports (fob) 213 1,383 1,451 ~2,500 T Rubber 19 49 Logs and sawntimber 25 11 2 000 Manufactures 1 500 Total imports (cif) 245 1,881 1,950 1 000 Food Fuel and energy 500 I Capital goods 0 Export price index (1995=100) 95 96 97 96 99 00 01 Importprice index (1995=100) E3 Exports Imports Terms of trade (1995=100) BALANCE of PAYMENTS 1981 1991 2000 2001 1 (US$ millions) Current account balance to GDP (%) Exportsof goods and services 227 1,587 1,681 Importsof goods and services 258 1,927 2,006 Resourcebalance -31 Net income 0 -82 -118 Net currenttransfers 7 70 78 Current account balance -25 -318 -320 Financingitems (net) 381 386 Changesin net reserves -63 -66 1.20 1 Memo: Reservesincludinggold (US$ millions) 485 548 Conversionrate (DC, /oca//US$) 818.0 3,840.8 3,924.0 EXTERNAL DEBT and RESOURCE FLOWS 1981 1991 2000 2001 (US5 millions) :omposltlon of 2001 debt (US$ mill.) Total debt outstandingand disbursed 1 1,852 2,635 2,704 IBRD 0 0 0 0 IDA 0 0 207 238 Total debt service 0 16 31 21 IBRD 0 0 0 0 IDA 0 0 1 1 Compositionof net resourceflows Official grants 34 41 201 Official creditors 0 0 72 91 Privatecreditors 0 0 0 0 Foreigndirect investment 0 0 126 Portfolioequity 0 0 0 World Bank program Commitments 0 0 37 63 A. IBRD E . Bilateral Disbursements 0 0 37 40 B. IDA D Other multilateral - F Private Principalrepayments 0 0 0 0 C IMF . G Short-term -- Net flows 0 0 37 40 Interestpayments 0 0 1 1 Net transfers 0 0 35 38 - 84 -  Additional Annex 11: ExecutiveSummaryof the Environmental Assessment CAMBODIA: Provincialand Rural Infrastructure Project (PRIP) The Executive Summary of the Environmental Assessment June 10,2003 is presented here. The full report i s available separately on request or can be found on the World Bank web-site. 1.0 EXECUTIVESUMMARY 1.1 Purpose of Environmental Assessment Followingthe World Bank Operational Directive (OD) 4.01, this EnvironmentalAssessment (EA) was prepared to ensure that the Provincial and Rural InfrastructureProject (PRIP)i s environmentally sound and sustainable by recognizing environmental consequencesand identifying ways to prevent, minimize or mitigate adverse effects. The first purpose of the EA was to determine the characteristics of the existing bio-physical and built environments that may be impactedby the PRIP. The secondpurpose was to provide the basis for the EnvironmentalManagement Plan (EMP), designed to prevent or mitigate potentialnegative impacts that may be causedby the project. The specific objectives of the E A are to: 0 Describe and assess the existing environments that would be affectedor impactedby the proposed road rehabilitation and maintenance project; 0 Identify and assess the types and magnitude of potential environmental impacts and identify issues or important areas of impact requiring additional, in-depthassessment; 0 Identify and describe measures to prevent or mitigate potential environmental impacts; and 0 Prepare an EnvironmentalManagement Plan (EMP) of impact prevention and mitigation actions to be taken and a monitoring programto ensure compliance with the plan. This EA is basedupon the review of available documents, field inspections of the road sections to be rehabilitatedand the environmental and social characteristics of areas through which the roads pass, and consideration of the construction methods and quantities that will be involved on eachroad section. 1.2 Project Description The PRIPis a 5-year project to be implemented by the Ministry of Public Works and Transport (MPWT), responsible for secondary and provincial roads, and the Ministryof RuralDevelopment (MRD), responsible for ruralroads. Located infour provinces north of Tonle Sap, the project has the long-range goal to alleviate poverty. The project area and the road sections selected for the PRIP Year-1 programare shown on Exhibit 1. The PRIP i s designed to rehabilitate 300 to 4 0 0 h of existing national-secondary (2-digit roads), provincial (3-digit roads), and tertiary-1 (rural roads) along their present alignments and within their existing rights-of-way (ROW). All existing roads are dirt roads. They are to be made all-season roads. Most will be bitumen coated. Many bridges and culverts, particularly along ruralroads, are deteriorated or lacking but a number of bridges along provincial roads have beenrecently upgraded under Cambodia's Social Fund. The type and magnitude of planned works varies by road section. Works involve completion and minor  raising of embankments, the sealing of completed roads with either a single or double coat of bitumen, the repair or replacement of damagedor under-strengthbridges and culverts, and the periodic and routine maintenance of maintainable roads inthe PRIP area. Completed road sections will be 5-8mwide, with shoulders of 50-100cm. They will be constructed on existingbut improved embankments of lateriteklay designed to be above the 10-year flood level. This means that the final grades will be an average of about 50cm higher than their present grades. Labour BasedAssisted Technology (LBAT) constructiontechniques will be employed. Exhibit 1:ProjectArea and PRIP Year-1Roads Where possible, embankment construction material will be obtained from borrow pits within the ROW, alongside the existing roads. However, on four road sections, it will be necessary to obtain materials from outside the ROW. Inthese cases, laterite or clay material will be bought from land owners at agreed prices per cubic metre extracted and be transported by truck to eachroad section. Gravel will also be transported by truck from quarries nearby. Embankment material and gravel will be spread by hand. Borrow pits will be approximately 20cm deep (laterite i s located inthis soil zone). After materials extraction from pits within the ROW, the pits will be finishedas wide ditches to drain the completed roads or as ponds to retain water for local use and aquaculture. Borrow pits outside the ROW will be graded and stabilized or, when requested by local communities, made into ponds. Information on the road sections selectedfor PRIPyear-1 and the plannedworks programi s summarized inExhibit2. Examples of the roadcross-sections designedbythe InternationalLabour Organization (KO) are shown inANNEX A.1.1 ProjectDescription.  Exhibit2: Summary Information onPRIPYear-1 Roads RoadSection Approx Works Summary Length I Approx (W cost SiemReap NR-65 22 Roadwidth 8m 25cm gravel base Soutr NikumNR-6N?-66 Double-coat bitumen seal course 1.9 Some embankment material 44,000 cu.m. gravel from outside the ROW NR-66 9 Road width 8m 25cm gravel base NR-65A3 Mealia Double-coat bitumen seal course 1.o 18,000 cu.m. gravel VaridA. Chum 21 Road width 5.25m 20cm gravel base Tertiaryroad Single-coat bitumen seal course 0.5 22,000 cu.m. gravel KampongThom NR-71 15 Road width 8m 25cm gravel base K.ThmorK. Chamborder Double-coat bitumen seal course 1.2 Some embankment material 30,000 cu.m. gravel from outside the ROW Stoung NR-6lSala Visai 21 west Road width 5.25m 20cm gravel base NR-64 Single-coat bitumen seal course 0.9 Tertian road 28,000 cu.m. gravel Oddar Meanchey PR-181 I10 north Road width 8m SamrongJChangkal districts Single-coat bitumen seal course Some embankment material 36,000 cum. gravel from outside the ROW Kouk Mon, NR-56PR-183 12 Road width 5.25m Tertiary road Single-coat bitumen seal course 13.000 cu.m. gravel PreahVihear PR-213 24 Road width 8m 25cm gravel base PhnomDeik NR-64/Rik Reav Single-coat bitumen seal course 2.7 commune Some embankment material 40,000 cum. gravel from outside the ROW Svaypat NR-64lSdao 24 Road width 5.25m 20cm gravel base Tertiaryroad Single-coat bitumen seal course 0.5 25,000 cu.m. gravel Total (approximate) 158km ~ Notes: 1. Severalroadsections are expectedto take more than 1-yearto complete. 2. No road in the Year-1 works programpasses through or close to an important wetland, forest area, river, or archaeological site. 3. Costsprovidedby ILOare statedto be indicativeonly. 4. Constructionwill be similar on all roads. Differences lie in the number of bitumencoats, the gravel base course and the road width. Roads will have lateriteor clay base overlainby gravel compactedby vibrating compactor. Bitumen will be heated in-situ and applied to all roads, 2-coats for national and provincial roads, 1-coat for provincial and rural roads. Gravel and laterite embankment material (for the 4 road sections where there i s insufficient material within the ROW) will be transported by truck. Embankment material and gravel will be spreadby hand. - 87 -  1.3 Rights-of-way National highway rights-of-way (ROW) are 50m, 25m each side of the road centreline. Provincialroad ROW are 40m, 20m each side of the road centreline, and for ruralroads, the ROW are 30m, 15meach side of the centre line. But Cambodian practice i s to "take" a "clear zone" considerably less inwidth than the legal ROW. Clear zones of 8-10m, sufficient for all PRIP roads, are vacant along all roads selected for PRP Year-1. There will be no resettlement, no acquisition of assets and, therefore, no need for compensation payments. However, asset acquisition may be requiredinPRIPYears 2 to 5 shouldpart of a required clear zone be used by villagers. For example, if it were used for farming or contain fruit-bearing trees, residences, commercial buildings,or other structures that would need to be removed. In such a case, compensation would be paid to users and owners according to the MPWT and MRDpolicies on Involuntary Resettlement. Rights-of-way (ROW)in the Kingdom of Cambodiaare governed by the Prime Ministerial Edict: Measures to Eliminate Anarchical Land Grabbing (1999),declaring public land on the verge of roads that must not be occupiedper the ROW determinedfor each type of road. 1.4 Environmental Baseline Information on the environmentalbaseline i s set out inExhibit3. Exhibit 4 shows PRIP Year-1 roads inrelation to national reserves and sanctuaries and that no PRIP Year-1 road enters or crosses a reserve or sanctuary. Exhibit3: Summarj EnvironmentalBaseline Information PRIPYear-1 Roads - RoadSection EnvironmentalBaseline SiemReap: Road "clear-zones'' are adequate for all planned works and no resettlement is necessarv. NR-65 Over the 22km of roadthere are 18 different villages and a high population Soutr Nikum, NR-6 to NR-66 density. Land i s very productive with much of it inpaddy rice and mixed agriculture. The existing road of laterite carries a high volume of traffic compared to other PRIProads. The "clear-zone'' i s adequate and no resettlement is necessary. NR-66 No pictures were taken over this particular 9km stretch with 3 villages. The FromNR 65 to Boeng Mealia environmental setting is very similar to that on the northern part of NR-65 and the western part of NR-66 ('justwest of NR-65) and parts of the Koul to Varin road. The land is sandy soil with patches of rice paddy and scrubland. The population density and traffic volume are much lower than along NR-65. Koul (A, Chum) to Varin The area around the first part o f this roadfrom Angkor Chum to about km13 i s Tertiary or rural road productive rice paddy. After that, proceeding north, the soil becomes sandy and of low productivity except inscattered cleared areas among scrubland. Inthe area of sandy soil, the setting i s similar to that along NR-66 (above) but the ROW is surrounded inpartsby land mines that are currently being cleared. - 88 -  I RoadSection EnvironmentalBaseline KampongThom: Road "clear-zones" are adequatefor all planned works and no resettlement is necessary. NR-71 The land traversed by the road for the first 6km i s very productive and reflected K.Thmor to K.Chamborder inthe populationdensity. After about km6, the landdeteriorates to dry scrubland on dry sandy soil with only occasional patches of rice inlower lying areas (e.g., around Sralau Toung - k m l 0 to kmll).There are two abandoned factories at km9. Stoung NR-6 to Salavisai on There are two road sections: approximately 21km ina west section and -64 approximately 6km inthe east section. The two sections are different. Only the Tertiary or rural road west section i s included inPRIP Year-1. There are 19 villages along the western 21km, indicating high population density. Also there are many trees along this section of road and inseveral villages -- but away from the road the areahas Two road sections been logged and cleared for agriculture. The east 6km section passes through land of sandy soil of low productivity and the road and bridges are extensively damaged. The road runs E-W crossing a large number o f small seasonalstreams. Extensive seasonalfloods imDedeaccess severely. Oddar Meanchey:Road "clear-zones" are adequatefor all planned works and no resettlement i s necessary. PR-181 There are two road sections: approximately 12kmon the northern section and SamronglChangkal districts 6km on the southern section. Both are located inan area of sandy soil. Only the northern section i s included inPRIPYear-1. There are patches rice land of low Two road sections productivity inlogged and partlycleared forest and scrubland. The northern section has more extensive rice paddy lands and a higher population density than the southern section but both are invery similar environmental settings. Kouk Mon, NR-56 to PR-183 The 12kmroadconnects two E-W road sections of very poor condition. The Tertiary or rural road areas of sandy soil and lensesof loam support patches of rice paddy amongst logged forest and scrubland. There is only one bridge over a seasonally wet ditch. There are no streams. PreahVihear: Road "clear-zones" are adequatefor all planned works and no resettlement i s necessary. PR-213 The roadrunspartly along the north side o f Boeng Per Wildlife Reserve. Srae PhnomDek, NR-64 to RikReav Thnong, near NR-64, is an indigenous community. FromNR-64 to about Rik Commune Reav Commune, there are large rice paddy areas and smaller patches of rice amongst scattered logged forest and scrubland. The 24km section of road included inthe PRIP Year-1 program crosses two small rivers. North of RikReav almost to the SaenRiver crossed by a broken high viaduct bridge, the land is sandy for some 15km. There are no houses, no rice paddy and only poor quality logged forest and scrubland. Svaypat, NR-64 to Sdao This tertiary road, 27km inlength traverses 14 small bridges, areas with many Tertiary or rural road trees, and large stretches of sandy soil. There are few areas of rice paddy and low population density (3 villages along 27km of road). - 89 -  1.5 Summary of Likely Impacts Negative environmental impacts will relate principally to construction activities. Impacts include those resulting from short-termconstruction traffic, dust, noise and other nuisance, potential erosion, and damage to small ponds and wetlands. Because constructionactivities usingLBAT methods use human labour rather than heavy equipment, many of the impacts normally causedby road rehabilitation activities will be less significant than those causedby mechanized construction methods. For example, the noise, dust, air pollutionand traffic problems created by many thousands of truck movements transporting earthworks materials will be much reduced as will the use of graders. Embankment material will be spread by hand. Borrow pits will be shallow and dug by hand. Hence, the land will be easy to stabilize and restore or the pits made into ponds. The LBAT constructionmethod will employ many local people from villages along the roads. They will return home at night but to cope with day-time sewage and domestic waste, latrines and domestic waste disposal pits will be constructed at suitable locations adjacent to worksites. The Social Assessment (SA) of communities along PRIP Year-1 roads identified the social baseline, addressedpotential impacts including those on Indigenous Peoples, and found Srae Thnong on PR-213 -90 -  (Preah Vihear province) to be an ethnic-minority community. For this reason, an Indigenous Peoples Development Plan (IPDP) was prepared for Srae Thnong. Both the SA and IPDP are under separate covers. Long-termnegative impacts will be confinedto those arising from increased traffic and travel speeds along the roads and the potential for long-term damage to reservesdue to the increased access provided by the roads. One road selectedfor rehabilitation inPRIPYear-1 (PR-213) abuts a short, 7km stretch of the northernboundary of BoengPer Wildlife Sanctuary. The current road i s wide and graveled and the section alongside the sanctuary easily accessibleby car. The proposed treatment will upgrade the base of the road, bituminize its surface and improve drainage and culverts. Positive socio-economic impacts will include reduced travel time and cost, improved access to health and education facilities, services and cultural activities, improved access to markets and employment opportunities, short-termjobs created duringthe constructionperiod, and improved access to heritage sites (to improve tourism income generation). Benefits will also derive from improved flood control through the drainage facilities to be installedas part of the road designs. The improved drainage will result inbetter year-round access, particularly duringthe wet season when road sections often flood. Whenroads have beenrehabilitated, cars and 4-wheel drive vehicles usedby Police and other Government authorities, as well as NGOs, will have easier and faster access to areas served by PRIP roads (compared to the current easy access only by heavy trucks). 1.6 Impact Mitigation Impact mitigation measures identified below relate to the above issues and to the need for the management of travel speed, truck axle loadings, and the dissemination of road safety information to villages locatedalong the alignments. This EA only addresses potentialimpacts that may be created duringPRIP Year-1. However, the EMP and Environmental Impact Checklist will guide EA in all PRIP years when candidate roads are considered for inclusion inannual works programs. 1.7 Conclusionsfrom the EA The existing or baseline environment and potential project-caused environmental impacts have been identified for all road sections includedin the PRIPYear-1 Works Program. These are typical, well understood, and can be either readily avoided or easily mitigated, for example, by adopting good engineering practices. Impacts will be addressed by implementing standard impact prevention or mitigation measures, for example, by adopting normal engineering practices, to ensure that: 0 Adequate temporary and permanent drainage i s constructed; 0 The faces of embankments and waste materials piles are stabilized and plantedto prevent erosion; Borrow pits are stabilized or finished to become fish-ponds or wide drainage ditches; 0 Tree planting and landscaping and the design treatment of bridges, enhance the road-scapes and increase the benefits accruing from the project. Involuntary resettlement i s not required for PRIPYear-1 roads and not expected to become a major issue insubsequent years. The EMPset out below will be included inthe Contract Documents for eachroad section. -91 -  1.8 PRIPEnvironmental Management Plan Activity or Impact Impact Description and Mitigation Measures to Location and Implementation & be taken Timeframe Monitoring IUST, ODOR,AIR and NOISE Refer to MPMk Specification :ction 1.10 lust, odor and dry materials Dry material handling and transport produce large Throughout corridor Contractor/ iandling amounts of dust. During construction MPWT-RID ES The Contractor shall prepare a dust control program. Water shall be sprayed where dry materials are handled, crushedand transported. Vehicles transportingmaterials will be covered to reduce spills and dust. Mixing and crushing plants will be equipped with filters or water sprays. Operators should wear dust masks and ear protection. )ust from road works Regular road user vehicles and construction vehicles houghout corridor Sontractor create large amounts of dust. 3uring 3s Water shall be sprayed during construction, :onstruction particularly in towns and villages, to ensure that dust is minimized throughout the construction zone. iir pollution and noise Vehicle and equipment emissions cause air rhroughout corridor ?ontractor pollution and noise. During construction HOE Vehicles and equipment will be maintained to 3 meet Cambodian emissionand noise standards (or Thailand's standards if these are acceptable to MOE). Construction within lOOm of a village or town will be limited to daylight hours. WATER and WATER RESC JRCES Refer to MPWT Specification :ction 1.10 ~ )amage to wetlands ponds & Wetlands and ponds are valuable natural habitats Wherever encountered Contractor vaterways and resourcesfor human use. During construction RIDIDGTA Wetlands and ponds are to be retained wherever Environmental staff (ES) possible or replaced. Where appropriate the design of culverts will incorporate slotsfor inserting wood or sheet metal to form water-gates behind which water could be retainedfor dry-seasonuse. Extra care will be taken to prevent runoff from works sites entering water bodies, wetlands, rivers or other sensitive areas by providing and maintaining sediment controls such as silt traps, rice-straw bales and plant cover within and around work sites. Stockpilesand materials wastepiles will be located awayfrom wetlands and water-courses. ilteration of drainage The quality of water in water bodies and the flow of Wherever encountered Contractor water in watercourses are important for natural During construction ES habitats and human use of natural resources (e.g., water and fish). Materials will be properly disposed of so as not to block streams and watercourses or damage water quality. Dry streambeds will be kept unobstructedand are not to be altered. Materials are not to be borrowed from streambeds. Tater Contamination h e most severe water quality impact would be from See site plans Contractor ,pilled bitumen, diesel or waste oil. These MOE - 92 -  substances are toxic to livingorganisms. uring construction ES Bitumen, diesel and waste oil will be handled and stored carefully to prevent leakage or spill. Waste oil will be collected, stored in drums and disposed at a site approved by the Engineer (according to MOE advice). Waste oil storage will be in drums, raised off the ground, covered to keep rain out and surrounded by a bund to contain any spills and simplib clean UP. The Contractor shall prepare a Spill Contingency Plan (including measures to be taken and equipment to be used)to ensure adequate clean up of any spills. tagnant water and Standing waters often lead to the spread of 'herever encountered Contractor sect-bome disease vectors insect-bome diseases such as malaria, dengue fever uring construction ES and schistosomiasis. Contractors will minimize standing waters by removing used tires and storage drums and ensuring adequate temporary drainage. ,ilting Silting of water bodies causes deterioration in water ee site plans Contractor quality, loss of use for human consumption and bringconstruction ES damages habitats. Sediment traps or ponds will be built and maintained to intercept drainage waters and capture sediment before it reachesany water body. PROTECTIONof CULTUR L SITES,NATIONALPARKSand CONSERVAT INAREAS 'rotection of culturalheritage Road construction can damage cultural and heritage Wherevernecessary Contractor sites and artifacts luringconstruction RID and DGTA When an archaeological s& isfound, work will be ES stopped immediately and the Project Manager be APSARA Authority notified. Then the Contractor will take the following steps: J Isolate the location, then call the Apsara Authority to assess the site and determine whether and how it should bepreserved; J Document andphotograph the site and area immediately around it; J Stop construction until advised by the When an archaeological artifact isfound, work is, Apsara Authority toproceed. again, stopped immediately and the Project Manager and Apsara Authority notified to assess the artifact and determine whether and how it should be excavated and moved. The Contractor: J Documents andphotographs the artifact and the area immediately around it; J Does notproceed with construction until advisedby the Apsara Authority. 'rotection of national parks & Roads provide access to protected areas and so can Wherever necessary Contractor onservation areas contribute to damage to forests, to poaching of flora luringconstruction RID and DGTA and fauna and to trade inendangeredspecies ES The MPWT/MRD will advise the Ministry of MOE Environment (MOE) when a road is to be rehabilitated within 5km of a national park, conservationarea or wildlife reserve. The MPWT, in concert with the M O E will design facilities to be built along the road to control access and to accommodate officers involved in enforcement of park access, anti-poaching and CITES regulations. oil Erosion Eroded material from embankments, waste disposal Primarily at water Contractor sites and borrow pits can block ditches and culverts, crossings ES damage adjacent land and cause deterioration in During construction water quality. - 93 -  Slopes will be drained adequately, graded and :onsolidatedand thenplanted. idequate temporary andpermanent drainage will $econstructed and maintained. Culverts will be cleared regularly toprevent sbstructionof runoff andflood-water. Constructionwill be undertaken in the dry season zs much aspossible. Workssites will be cleared in stages to meet :onstruetion needs andplanted immediately after :onstruetion so as to minimize the area of land :learedor disturbed at any one time. Loss of arable land and topsoil diminishes farm and 'hroughout corridor Contractor agriculturalland and .ncomesand wastes natural resources. )uringconstruction RID and DGTA restoration of borrow pits irable lands should not be used as borrow or ES rtorage sites but where unavoidable, the topsoil d lbe removedandreplaced after excavation. 4fter materials extraction, borrow pits will be :raded andplanted or made intoponds. Solid Waste Disposalfrom Solid waste can create nuisance, encourage disease :onstruction camp and Contractor work camps & works sites iectors (such as flies and rats) and block drainage iorks sites ES :hannels. lefore and during hfficient garbage containers will be provided in onstruction :onstruetion camps and at works sites, and be "tied daily, the waste being disposed of in a bndfill approved by the Engineer. ILoss of trees Frees along the edges of the ROW provide valuable Jear trees along ROW Contractor Tree planting and ;hade, landscapefeatures and improve air quality in see EA) Forest Dep't environmental enhancement iillages by trapping dust. luringclearing RID and DGTA rrees will not be clearedfrom the ROW without prior approval by the Engineer. Tree planting will be carried out where ippropriate in order to enhance the ambiance of he immediate environs around the road. A total budget of $US200,000 is set aside to purchase 10,000 seedlings of indigenous tree species, 100 to be plantedkm along the road as advised by local :ommunities. Fach Contract will be allocated $500 for tree ilantingper km in the Contract. Payment for tree planting will be by lump sum for 111materials, labour, equipment and other expenses he Contractor may incur as follows: 9 25% of the lump sum when 50% of the Contract price has beenpaid. 9 25% of the lump sum upon issue of the Taking-Over Certificate. 9 50% of the lump sum uponissue of the Defects-LiabilityCertificate. MPWT/MRD will work with the local authorities, oca1communities and the Department of Forestry o prepare and implement an appropriate ree-planting program. TRAFFIC, PUBLIC CONVE Maintenance of traffic flow b e existing road serves many users and contributes 'hroughout comdor Contractor and Road safety o localand nationalincomes. luring construction RID and DGTA Vormal traffic flow will be maintained by ES :ooperation among the Contractor, the Provincial bansportation Department, and the Police. rhe Contractor will: 9 Control construction vehiclespeed through clear instructions, road safety education andfines. 9 Providefor adequate traffic flow around construction areas. 9 Provide adequatesignage and barriers - 94 -  to control traffic. 9 Communicateto thepublic through newspaper and village notices regarding the scope and timeframe of works and access restrictions. lamage to roads usedas haul Road construction traffic often damages rural roads Contractor 'outes used as materials haul routes. RIDand DGTA Trucks used for hauling construction materials ES are to be restricted in size to 5 cu. m. capacity in order to reduce damage to rural roads during the constructionperiod. Contractors shall restore roads damaged during construction. toad usemonitoring - Traffic speedand truck overloading can damage All rehabilitated roads RID and DGTA Iperationalphase road surfaces and cause accidents. During operations Police Road use and axle loads will be monitored. 4 traffic safety awarenessprogram will be implemented to raise awarenessof potential dangers caused by increasedmotorizedtraffic and travel speeds and theparticular problems caused by the mix of slow-moving andfaster moving LOCAL PARTICIPATION n a l employment IMany unskilledjob opportunities will be createdin Wherever possible Contractor digging and placingembankment material, in Duringconstruction RID and DGTA checking its quality, in digging and maintaining temporary and permanent drainage, incompacting slopes, spreading soil, and so on. Local villagers will be employedwherever possible. 'ublic information Locally affected people require information about All works areas Contractor the road works and potential impacts. Before and during RID and DGTA Meetings will be held with community construction ES representativesto discuss theproject, its impacts, and community issues. Signs and information sheets areposted on and around construction sites toprovide information about theproject. Provide opportunities for local residents to communicate with the Engineer. Maintain a register of complaints and how they werefollowed up. Stepsto ensureimplementationof the EMP 1. The two ministries will include the EMPinthe Contract Documents for each works package. 2. At the Pre-Bid Meetings, the two ministries will explain the EMP, the impact mitigation requirements and the associated cost implications, to short-listed contractors. 3. The MPWT and MRDwill engage the services of a suitable Environmental Consultant sub-contractor to deliver basic environmental training to contractors, supervisors, engineers and ministry staff and to monitor environmental managementperformance duringconstruction. 4. Soon after the appointment of contractors, the EnvironmentalConsultant will deliver seminars to the contractors, supervisors, engineers and ministry staff. The seminars will explain the causes of environmentalimpacts causedby road works, the prevention and mitigation of those impacts by implementing the EMPand by following the Specifications, and the environmental management monitoring to be undertaken during the constructionperiod. 5. The Environmental Consultant will prepare for the Supervising Engineer, monthly environmental monitoring reports with respect to compliance with the EMPand the Specifications (detail on monitoring i s provided in section 5.2). - 95 -  Additional Annex 12: Resettlement Policy Framework CAMBODIA: Provincialand Rural Infrastructure Project (PRIP) The overall goals of the proposed Provincial and Rural InfrastructureProject (PRIP) are to reduce rural poverty and expand economic and social development, and to contribute to the national re-integrationof the project provinces into the mainstreamnational development. The development objective of the project is to provide sustainable, year-round, and safe improvements inrural accessibility to markets and essential services inthe four provinces of KampongThom, Oddar Meanchey, Preah Vihear and Siem Reap. The PRIPwill rehabilitate and maintainstrategic secondary and tertiary roads inthe four northwest provinces covered by the project. Since the project will rehabilitate existingroads, no significant acquisition of private assets and displacement of population are foreseen. It is, however, possible that rehabilitation of some road sections and development of market areas may require acquisition of land or people may need to be resettled. This could result inloss of private assets, including loss of incomes or place of residence. The Resettlement Policy Framework, presentedbelow, addresses adverse social impacts that may result due to involuntary acquisition of assets and changes inland use and includes provision for compensation and rehabilitation assistance. 1. DEFINITIONS Compensationmeanspayment incashor inkindfor an asset to be acquired or affected by aproject at replacement cost. Cut-offDateis the date prior to which the occupation or use of the project areamakes residentshersof the project area eligible to be categorized as affectedpersons. The cut-off date coincides with the date of the census of affected persons within the project area boundaries. Personsnot covered inthe census, becausethey were not residing, having assets, or deriving an income from the project area, are not eligible for compensation and other entitlements. Eligiblelandholdersare affectedpersonswho (a) holdtitle to land; or (b) do not holdtitlebut whose possessionof land can be legalized with a title pursuant to the LandLaw of Cambodia. Entitlementmeans arange of measurescomprising compensation, incomerestorationsupport, transfer assistance, income substitution, and relocation support which are due to affected people, depending on the nature of their losses, to restore their economic and social base. ProjectAuthoritiesare the Ministryof Public Works andTransport through its RoadInfrastructure Department and the Ministry of Rural Development through its Directorate General of Technical Affairs. ProjectAffected Persons(PAPS)includes any person or persons, households, afirm, or private or public institution who, inthe context of acquisition of assets and change inlandusage, as of the cut-off date, on account of the execution of the project, or any of its subcomponents or part, would have their: (a) Standard of living adversely affected; (b) Right, title, or interest inany house, land (including residential, commercial, agricultural and grazing land) or any other moveable or fixed assets acquired or possessed, in full or inpart, - 96 -  permanently or temporarily adversely affected; or (c) Business, occupation, places of work or residence or habitat adversely affected, with or without displacement. PAPincludes persons and affected household and consists of all members of a household residing under one roof and operating as a single economic unit, who are adversely affectedby a project or any of its components. For resettlement purposes, affectedpersons will be considered as members of affected households. Rehabilitationmeans assistanceprovided to project affectedpersonsseriously affecteddue to the loss of productive assets, incomes, employment or sources of living, to supplement payment of compensation for acquired assets, inorder to achieve, at a minimum,full restoration of living standards and quality of life. Replacementcost. With regard to land and structures, replacementcostis defined as follows: For agricultural land, it i s the pre-project or pre-displacement, whichever i s higher, market value of land of equal productive potential or use located inthe vicinity of the affected land, plus the cost of preparingthe land to levels similar to those of the affected land, plus the cost of any registration and transfer taxes. For land inurban areas, it is the pre-displacement market value of land of equal size and use, with similar or improved public infrastructure facilities and services and locatedin the vicinity of the affected land, plus the cost of any registration and transfer taxes. For houses and other structures, it i s the market cost of the materials to builda replacement structure with an area and quality similar to or better than those of the affected structure, or to repair a partially affected structure, plus the cost of transportingbuilding materials to the construction site, plusthe cost of any labor and contractors' fees, plus the cost of any registration and transfer taxes. Indetermining the replacement cost, depreciationof the asset and the value of salvage materials are not taken into account, nor i s the value of benefits to be derived from the project deducted from the valuation of an affected asset. Resettlementmeansall measurestaken to mitigate any and all adverse impacts of a project onPAP property and/or livelihood's, including compensation, relocation (where relevant) and rehabilitation as needed. Vulnerablegroup are distinct groups of peoplewho might suffer disproportionately or face the riskof being marginalized from the effects of resettlement and specifically include: (i) female headed households with dependents, (ii) disabled household heads, (iii) households falling under the generally accepted indicator for poverty, (iv) elderly households with no means of support and landlessness, and (v) indigenous minorities. 2. CAMBODIANLEGALPROVISIONS The Constitution of Cambodia provides for land acquisition for public purposes. InArticle 20 it states that "Nobody shall be forced to transfer his or her ownership, if forcing i s necessary inpublic interest Constitution states that ". .The rightto confiscate (land) possessionfrom any person shall be exercised and if no proper andjust indemnity has been paid to owner". Regardingcompensation, Article 40 of the only inthe public interest as provided for under law and shall require fair andjust compensation." Some protection for vulnerable groups i s also specified inthe Constitution in Article 73: "The State shall give full consideration to children and mothers. The State shall establish nurseries, and help support women and children who have inadequate support" and Article 74: "The State shall assist the disabled and the families of combatants who sacrificed their lives for the nation". -97-  The new 2001 LandLaw provides that no person shall be "deprived of their ownership unless this action i s for the public interest consistent with formalities and procedures provided by laws and regulations, and after just and fair compensation" there are currently no such "laws and regulations" and there continues to be an absence of definition for "just compensation". Inaddition, a person holding illegally possessed property cannot claimcompensation, even if there i s a title (Article 19). Further, any "illegal and intentional or deceitful acquisition of the public domain of the State or public legal entity shall be punished" with a fine and/or imprisonment. This penalty can be doubled if the landholder is held to damage or delay work infavor of the common interest, especially the possession of land necessarily reserved for maintainingroads. Under the new LandLaw, those who have occupied a right of way or public properties may not be entitled to any compensation or social support, regardless of their being an affected person or a member of a vulnerable group. Although individual rights to ownership and compensation are protected by present laws, there are no clearly defined specific provisions or a mechanismfor land acquisition by the State through expropriation. The expropriation of immovable properties i s basedon decisions of government staff and implementation inan ad-hoc manner varying from one project to another. Traditional private land ownership was abolished duringthe Khmer Rouge period (1975-1979) and was not re-introduceduntilthe late 1980s. Determining ownership and obtaining documentation to prove ownership i s a cumbersome and time consuming process which many landholders have not utilized. The boundaries of public land still remain unclearly defined and it can be difficult to distinguishbetween public and private land. This blurringbetween public and private land i s particularly acute with regard to rightsof ways for roads, irrigation channels andthe like. There was no specific law or regulationon rightsof way until 1999 when a Government of Cambodia Decree identified a 50-meter right of way for some specified national roads and 60 meters for other national roads. The width of other rights of way varies depending on the type of road. No efforts were made to publicize the claimed rights of way and no physical demarcations have been made for these rights of way. Presently, the Government's Inter-ministerialResettlement Committee (IRC) i s charged with determining entitlements, valuation of affected assets and infixing of compensation rates. Current legal provisions governing land acquisition, compensation and resettlement in Cambodia do not meet the objectives and principles of World Bank`s OperationalPolicy (O.P.) 4.12 on Involuntary Resettlement. This policy framework conforms to the objectives and principles of the World Bank's O.P. 4.12. Inthe case of any inconsistency betweenthe provisions of the Cambodian legal framework and this policy framework, the Cambodianlaw shall be waived to the extent necessary. 3. OBJECTIVESAND PRINCIPLESOF THE POLICY 3.1 Overall Objectives This Policy framework seeks to address the inadequacy of the existing legal provisions discussedinthe previous section. This policy i s based on the philosophy that the project must serve the needs of society and ensure that PAPSare at least as well off due to the project. This can be ensured through the followingbasic objectives: (i)Avoidinvoluntaryresettlementwherefeasibleandminimizeresettlementwherepopulation displacement i s unavoidable, - 98 -  (ii) thatdisplacedpeoplereceivecompensation,assistanceandrehabilitationsothatthey Ensure would be at least as well off as they would have been inthe absence of the project, (iii)PAPs will benefit from the project, and (iv) Project stakeholders (which includes PAPs) are consulted and given the opportunity to participate, as practicable, inthe design, implementation, and operation of the project. (v) Appropriate assistance and compensation, incash or inkind, provided to adversely affected people, including indigenous groups, ethnic minorities and pastoralists who may have usageor customary rightsto the land or other resourcestaken for the project. Three important elements of involuntary resettlement are: (i) compensation for loss of assets, loss of livelihood and income, (ii) assistancefor relocation, including provision of relocation sites with appropriate facilities and services, and (iii)assistancefor rehabilitation to improve, or at least restoration of incomes and living standards to the pre-project level. 3.2 Principleson CompensationandEntitlements The overriding principle for all development projects i s that people unavoidably affected shouldbe compensated and assisted, so that their economic and social future would be at least as favorable as it would have been inthe absence of the project. This will be accomplished usingthe following specific principles. (1) Acquisition of land and other assets and shiftingof people will be avoided and minimized as much as possible. (2) Only PAPs who are found to be living in, doing business, or cultivating land, or having rights over resources within, the project area as the date of the census (cut-off date) are eligible for compensation for loss of assets, other assistance and rehabilitation for social and economic losses. PAPs will be compensated for affected land, either through receiving replacement land or replacement cost for their land or by receiving special assistance' inlieu of compensation for land located on public rightsof way. Iflandlessnessresults from this taking of land for public purposes, then suitable replacement land shallbe provided for landless PAPs. (3) All compensation for affected land, structures, and other fixed assets shall bepaid at replacement cost. (4) The resettlement transition period will be minimized and the acquisition of assets, compensation, resettlement and rehabilitation for a segmenthection or phase (except where long-tem rehabilitation measures such as vocational training) will be completed at least one (1) month prior to the initiation of construction work under the respective segmenthection or phase thereof. (5) PAPs losing all of their assets (farmland, house or business), or incase of partial loss when the remaining assets are determined as un-viable for continued use, will be entitled for compensation for the entire assets at replacement cost. (6) Inthe case of apartial impact onthe assets, Le., partialloss of landor structures andthe remainingassets remain viable for continued use, compensation for the affected assets will be paid in cash. (7) Other types of landholders who are on a right of way or public land as of the cut-off date will be -99 -  compensated for affected structures, other fixed assets and other lossesbut not for land. However, such affectedpersons shall receive special assistance such that they are not made worse off by the project taking the land on which they were located. (8) Incaseoflandfor landfor arableland, thereplacement landshouldbeintheformoflandof equivalent productive value and/or characteristics at a location acceptable to PAPs. Ifreplacement land at a location acceptable to PAPs i s not available, cashrepresenting replacement cost of land should be compensated. (9) Incaseoflandfor landfor residentialandcommercialsites, theImplementingAgency shall provide PAPs the appropriate plot of land with basic services such as electricity, water, drainage, emergency sanitation service, and access at least at the pre-project level. (10) For resettlement site land, the plot owner of the proposed relocation site will also be entitled to compensation for hisher land, and depending on hisher choice, the compensation may be incash or in the form of a replacement land within or outside the relocation site. (11) The project authorities will provide resettlement assistanceand the following minimum allowances to eligible PAPs: (a) Disruption allowance shall be given to PAPs whose business income i s temporarily lost due to the project. The independent shops on a right of way that temporarily lose business during construction are eligible for this allowance. The allowance shouldbe provided incashbased on the temporary projected business income lost, (b) Vulnerable group assistance shall beprovidedfor vulnerable families, such as female-headed household, poor families, and disabled headedhouseholds inan amount that shall assist them to become economically viable. Inaddition to any specific allowances to which members of vulnerable groups may be entitled, they shall also receive rehabilitation assistancebased on their priorities and needs. (c) Rental allowance shall be given to house tenants of affected main structures who will be forced to find a new place to live, at an amount equivalent to three months rent. It shall also be given to affectedpersons forced to lease premises untilreplacement land and housing i s available to them upto a maximumperiodof three months. (d) Transportation allowance (incash or inkindaccording to mutualagreement of the PAPand the project authorities) to relocatingPAPs.When the allowance i s incash, it shall be an amount equivalent to actual transportation costs. (e) Repair allowance i s given to PAPs affectedby a partial loss of structures and those affected duringmoving locations basedon cost of repairs. (12) Rehabilitationassistance i s a form of special skills training or other development support to PAPSseverely affected due to the loss of productiveassets and/or their only source of income and which will require themto engage in some other income-earning activities. The project authorities, by consulting with stakeholders, will coordinate closely with concerned agencies (local authorities and independent assignedNGOs) that have the mandate and the expertise to undertake the needed rehabilitation assistance. - 100-  (13) The project authorities will provide vulnerable PAPs the rehabilitation assistanceneededto cope with a new environment and to improve their status. This assistance shall be based on the needs and priorities of the vulnerable groups. (14) Any PAPs'loss due to any acquisitionor restriction on access to common resources as a common property will be mitigatedby arrangementsof suchproperty that will ensure, as a first option, that new access of those PAPSto an equivalent resource will occur on a continuing basis, if feasible. If it i s not feasible, then other alternatives shallbe identified inconsultation with the PAPs. (15) Resettlement programs will include adequate institutional arrangements to ensure effective and timely design, planning, consultationand implementationof compensation and resettlement. The project authorities will ensure effective coordination with relevant agencies for the implementation of the Resettlement Plan (RP). (16) Adequate arrangements will be made for the timely conduct of social assessments, inventory of affected assets, socioeconomic survey, and the preparation and implementation of RPs, including the timely conduct of internal and externalmonitoring of RP implementation. General entitlements for compensation and rehabilitationassistance for different categories of PAPs are shown inthe Entitlement Matrix below but the relevant Resettlement Plan may provide for more specific or additional allowances. Type of Loss Application EntitledPerson Compensation 1 Arable land Loss of arable Eligible landholder 0 Land for land or cash compensation land. for lost land at replacement cost according to AP choice. "Land for land" will be provided interms of a new parcel of land of equivalent productivity and free of taxes, registration and transfer cost; at a location acceptable to PAP; and with long-term security of tenure. 0 Eligible for economic rehabilitation assistanceand other allowances, as applicable. Non-titledbut possessory 0 N o compensation but additional landholder1 assistancegiven so that they are not Agricultural laborer worse off due to the project and to enable them to replace affected assets. Cash compensation for agricultural laborer equivalent to three months salary and assistanceingetting alternative employment. Lease holder Cash compensation equivalent to replacement cost of gross harvest for one vear. Temporary Eligible landholder 0 Cash compensation based on acquisition or opportunity lost during the period. easement -101 -  Residential land Loss of Eligible landholder Compensation incash at replacement residential land cost or, at PAP choice, replacement land of minimumplot of acceptable size or a plot of equivalent size, whichever i s larger, ina nearby resettlement area with adequate physical and social infrastructure. 0 Replacement landto be free from taxes, registration and transfer costs. 0 Eligible for relocation assistance and other allowances as applicable. Non-titled but possessory No compensation but additional landholder assistanceprovided so that they are not worse off due to the project and enable them to redace affected assets. Lessee Eligible for relocation assistanceand other allowances, as applicable. Temporary Eligible landholder Cash compensation for the net loss of accluisition income and damaged assets. Non-titledbut possessory Assistance provided so that they are landholder not worse off due to the project. Lessee 0 Cash compensation and other allowances. as auulicable. Commercial Plots used for Eligible landholder Compensation incash at replacement land business cost for the affected portion or, at PAP affected option, replacement land of sufficient size for business continuation in market area of resettlement area or at location comparable to previous site. When the affected premises are larger than the relocation plot, cash compensation at replacement cost to cover the difference in area. 0 Eligible for relocation assistance and other allowances, as applicable. Eligible for economic rehabilitation assistance. Non-titledbut possessory 0 No compensation but additional landholder assistanceprovided so that they are not worse off due to the project and the assistance enables them to replace affected assets. This includes replacement land of sufficient size for business continuation inmarket area of resettlement area or at location comparable to previous site. Eligible for relocation assistance and other allowances, as applicable. Eligible for economic rehabilitation assistance. Lessee 0 Assistance for finding new commercial place. 0 Eligible for relocation assistanceand other allowances, as applicable. - 102 -  0 Eligible for economic rehabilitation assistance A Structures Structures Owner Compensation incashfor affected affected portion of the structure and other fixed assets at replacement cost, without depreciation and without deductions for salvaged material. 0 Assistance inrestorationof any remaining structure, if applicable. Eligible for relocation assistanceand other allowance. Tenant Three months rent allowance and other - allowances as applicable. 5 Loss of business Loss of business Affected APs Cash compensation for the loss of I incomes or I incomes I business, incomes and wages. employment employment Assistance during the transition period. Eligible for rehabilitation assistance and other allowances, as auulicable. 6 Standing crops, Crops or trees Owner of crops or trees 0 Compensationincash calculated on trees affected by land the basis of type, age and productive acquisition or value of affected crops or trees. temporary Other allowances as applicable. acquisition/ - easement 7 Common Loss of access A P S 0 Arrangement for new resource or resources rehabilitation assistance. 8 Electric andor Loss of, or A P S Replacement or compensation to cover water damage to, cost o f restoring the facilities. connection affected assets, partially or - entirely. 9 Public facilities Loss of, or Concerned agencies 0 Replacement or compensation incash damage to, at replacement cost to respective public agencies. - infrastructure 10 Special Special Vulnerable groups and 0 Vulnerable group and indigenous assistance assistance to indigenous1 peopleslethnic minorities assistanceI vulnerable ethnic minorities allowance based on identified needs group and and priorities. indigenoust ethnic minorities 4. Public Participation and Consultation The project authorities would be responsible for public consultation and public information dissemination. Consultations and public participation would be carried out as an ongoing process throughout project planning, design and implementation stages. Preparation of appropriate documents and planning and implementation for the acquisition of land and other assets will be carried out in consultation with the PAPs and the PAPs will receive prior information of the compensation, relocation and other assistance available to them including: - 103 -  The relevant details of the project; The resettlement plan and various degrees of project impact; Details of entitlements under the resettlement plan and what i s required of PAPSin order to claim their entitlements; Compensation process and compensation rates; Relocation and resettlement site development operation in order to obtain agreement and support of affectedpeople inparticipatinginthese operations; and Implementation schedule with a timetable for the delivery of entitlements. Informationconcerninggrievance procedures and how to use them. The project authorities would also provide a detailed explanationof the grievance process and enlist the help of village leaders and other influential community officials inencouraging the participationof the PAPs inresettlement activities. Finally, the project authorities shall attempt to ensure that all vulnerable groups including indigenous peoples/ethnic minorities understand the process and that their needs are specifically taken into consideration. Public participation i s performed and information i s made available duringbothpreparationand implementation of the Resettlement Plan and should include, at a minimum,public informationbooklet, community meetings and television and radio reports. 5. GrievanceRedressmechanism Grievances related to any aspect of a project will be handled through negotiations and are aimed at achieving consensus. All complaints received inwriting (or written when received verbally) from the PAPswill be documented by eachlevel grievance committee, established by the project authorities at varying governance levels, Le., commune, district and/or provincial levels. PAPs will be exempted from all administrative and legal fees incurred inpursuant to the grievance redress procedures. Grievance committees would comprise of representatives of PAPs, community leaders and independent assigned NGOs, inaddition to the representatives of commune and district officials, and project authorities. IfPAPsdo notreceiveany responsefromanestablished grievance redressbody (at whatever level) within 20 (twenty) days from the filing of the complaint, or if the decision of grievance redressbody i s not satisfactory, the PAPwill have the right to submit the complaint to the next higher level of the grievance redress mechanism. Ifthe matter still remains unresolved after all levels of grievance redresshave beenutilized, the complainant may then forward hisher case to a court of law. Inprojects where indigenous minoritiesareaffected, allcomplaintsshallbediscussedandnegotiations shall be carried out inthe community where the affected indigenous minorities live. Where necessary, the project proponents will provide assistance so that the rights of the indigenous minorities are protected. Inadditiontothe abovemechanisms, andattheoptionofthe PAPs, grievances maybetakento other mediating bodies, such as a council of village elders, monks at a local pagoda, or any other dispute resolution mechanismas may be decided by the PAPs. - 104-  6. Monitoring and Evaluation 6.1. InternalMonitoring The WB-PIU2 would appoint adequatefull time staff to monitor the process of resettlement. Inorder to assist with this monitoring, the authorities shall obtain and maintain appropriate baseline data prior to the resettlement impacts. The monitoring staff will submit periodic progress reports to the involved authorities for inclusion inthe progress report. The main objective of the reports is to determine whether the resettlement i s effective and to make the neededrecommendations for change. The monitoring staff will be present inthe field as well as at every meetingrelatedto resettlement. 6.2. External Monitoring Intheproject, sub-project oranycomponent thereof, withsignificantresettlement, anexternalagency will be contracted to monitor the process of resettlement. The external monitoring agency would be provided full access to project documents and database to facilitate monitoring process. The external monitoring agency will prepare periodic monitoringreports for submission to the WB-PIU2 of MPWT as well as to the World Bank. Intheeventmonitoringbyeither theinternalorexternalmonitor showsthatPAPsarenotreceiving entitlements due to them, or there are other problems in implementation inaccordance with the Resettlement Plan, then the project authorities will take, on apriority basis, all steps necessaryto rectify the situation and ensure compliance with a Resettlement Plan. 6.3 Evaluation Six months to one year after the completion of resettlement inthe project, the project authorities will contract a competent external agency for ex-post evaluationof resettlement implementation to determine whether the objectives of the policy have been achieved and severely affectedPAPs have been able to restore their incomes and livelihood to the pre-project levels. Where necessary, and based on the outcome of the evaluation, additional assistance would be provided by the project authorities to achieve the objectives of the policy framework. 7. Reportingand Documentation 7.1. Initial Social Assessment The project authorities will carry our initial social assessment to determine potential social issues and likely adverse impacts at the sub-project identification stage. Based on the initial social assessment decision can be taken on the types of detailed studies and field investigations requiredand necessary documentation. 7.2 Abbreviated Resettlement Plan Where ina sub-project less than 200 people are affecteddue to the loss of assets, incomes, employment or businesses, project authorities would carry out field surveys covering full census of affected people and inventory of affected assets, and prepare an abbreviated Resettlement Plan. The abbreviated Resettlement Plan would include: (i) brief description of the sub-project, location and its impacts; (ii) consultation with project affected people; (iii) baseline information of affectedpeople; (iv) category the - 105-  of PAPs by degree and type of impacts; (v) entitlement to compensation, allowances, and rehabilitation assistanceby category of impacts ina compensation matrix; (vi) information on relocation site, where applicable; (vii) institutional responsibilitiesfor implementationand monitoring; (viii) grievance redress procedures; (ix) estimated cost of resettlement and yearly budget; and (x) a time-bound action plan for implementation. 7.3 ResettlementPlan Where in a sub-project more than 200 people are affected, project authorities would be required to conduct detailed field investigations including census, inventory of affected assets and socio-economic baseline surveys of severely affectedpersons and prepare a Resettlement Plan for submission to the Bank. The Resettlement Plan (RP) would include: (i) description of the sub-project, location and brief i t s impacts; (ii) principles and objectives governingresettlement preparation and implementation; (iii) Legal framework; (iv) the baseline information of affected people; (v) category of PAPs by degree and type of impacts; (vi) entitlement to compensation, allowances, and rehabilitation assistance by category of impacts in a compensation matrix; (vii) information on relocation site together with socio-economic conditions on the secondary PAPs and host communities; (viii) institutional arrangement for planning and implementation; (ix) participatory procedures duringplanning and implementation; (x) grievance redress procedures; (xi) estimated cost of resettlement and yearly budget; (xii) a time-bound action plan for implementation; and (xiii) internal and externalmonitoring procedures, including the TORfor external monitoring and evaluation. 8. LEGALAND INSTITUTIONALREQUIREMENTS The Ministry of Public Works and Transport (MPWT) and Ministryof RuralDevelopment (MRD)are jointly responsible for planning and implementation of the PRIP. As the project proponent, both the ministries will be responsible for, at a minimum,the following resettlement activities: (a) Carry out all necessary surveys and field investigations and preparation of necessarydocuments; (b) With assistancefrom other relevant agencies and local authorities, implementation of resettlement activities inaccordance with the approved RPs; (c) Address all deficiencies identified inresettlement implementation; (d) Ensure timely allocation of resources and budgetary provisions, and process compensation claims of PAPs to ensure that the same are paid intime as planned; and (e) Supervise and monitor RP implementation. 9. CostsandBudget Necessaryfunds for planning and implementation of Resettlement Plan / IPDPwill be provided by the project authorities. The project authorities will also provide for all costs related to mitigating adverse social impacts basedon budgetary requirements established inthe RP. All of these costs are to be a part of the total project cost. EachRP will detail cost estimates for compensation and relocation (if applicable) of PAPs with a - 106 -  breakdown by category of PAPs and by type of asset affected, such as agricultural, residential, and commercial land; affected house, structures and other fixed assets; and type of assistance, such as transport allowance, disruption allowance, etc. The cost estimates will include adequateprovisions for contingencies. Incaseofoverruns duetounforeseencircumstancesor delays, theproject authorities willallocate additional funds as necessary. 1/ "Special assistance" can includeprovision of suitable land., rentalallowances, disruption allowance, etc., as well as a vulnerable group allowance. The mainpoint i s that affectedpersons are not made worse off than they would have been had the development project not taken place. 2/ Where significantly large or entire landholdings are affectedby the project or incases where only partial land i s affectedbut the remaining land becomes economically non-viable, the general mechanism for compensation of lost agricultural land will be through provision of "land for suitable land" arrangements of equivalent productivity and at a location acceptable to the PAP. Where the PAPs stand to lose are losingresidential land with structures that exist in a closely locatedgroup exceeding 20 households, the project authorities, inconsultationwith affectedhouseholds, may offer a relocation option to fully developed resettlement sites, or alternative facilities to housing projects. If suitable residential / agricultural replacement land i s not available, and at the informedrequest of the PAPs, cash compensation at replacement cost will be provided. - 107-  Additional Annex 13: IndigenousPeoples Development Framework CAMBODIA: Provincial and Rural Infrastructure Project (PRIP) I.Introduction 1. The overall goals of the proposed Provincial and Rural InfrastructureProject (PRIP) are to reduce rural poverty and expand economic and social development, and to contribute to the national re-integration of the project provinces into the mainstream national development. The development objective of the project i s to provide sustainable, year-round, and safe improvements inrural accessibility to markets and essential services inthe four provinces of SiemReap, Oddar Meanchey, Kampong Thom, and Preah Vihear. 2. The PRIP will rehabilitate and maintain strategic secondary and tertiary roads inthe four northwestprovinces covered by the project. Since the project will rehabilitate existing roads, no significant acquisition of private assets and displacement of population are foreseen. Three of the project provinces are known to have some indigenous ethnic minorities. Preliminary information suggests that several indigenous minorities live inthe forest areas, some distance away from the existing roads. Some indigenous minority communities live close to the provincial roads or villages and are likely to benefit from the project interms of improved access to markets and new opportunities for income generation. No significant adverse impacts on indigenous minority groups are foreseen but in some cases their access to community resources may be affected. It i s also possible that rehabilitation of some road sections and development of market areas may result inincreased in-migration, creatingpressure on the land. The Indigenous Peoples DevelopmentFramework, presented below, addresses the principles and procedures for sub-projects inareas where indigenous ethnic minorities reside. 11.PRIPandOperational Directive 4.20 3. As a prerequisite to World Bank support, PRIPmustmeet the requirements of Operational Directive 4.20 (Indigenous Peoples). This policy directive requires that special measuresbe established to protect the interests of ethnic minorities, i.e. social groups with a social and cultural identity distinct from the dominant society that makes them vulnerable to being disadvantaged inthe development process. Indigenous peoples can be identified inparticular geographical areas by the presence in varying degrees of the following characteristics: (a) a close attachment to ancestral territories and to the natural resources inthese areas; (b) self-identificationand identification by others as members of a distinct cultural group; (c) an indigenous language, often different from the national language; (d) presenceof customary social and political institutions; and (e) primarily subsistence-oriented production. 4. The largest ethnic minority groups in Cambodia include people of Vietnamese and Chinese descent, MuslimChams and ethnic Lao, all of whom, although (b), (c), and (d) above are present, are generally not considered to be indigenous to the area where they live inCambodia, and therefore not covered under the OD 4.20. However, the Bank has determined that OD 4.20 applies with reference to indigenous minorities, often referred to as "Highland Peoples", becausethese groups are indigenous to the area where they reside, and maintain cultural and socioeconomic practices different than those practicedby the Khmer national majority. Though their numbers are relatively small inproportion to the national population, the Highland Peoples are estimated to represent a majority of the population in Ratanakiri and Mondolkiriprovinces, both inthe northeast. They represent much smaller proportions in other provinces. These groups, among them the Tampuan, Kuy, Jarai, Phnong, Kreung, Kavaet, Brou, - 108 -  Stieng, Lunand others, are estimated to total about 120,000people, or about one percent of the national population. 5. It i s estimated that indigenous communities are present inthree of the four PRIPProvinces: PreahVihear (Kuy), Kampong Thom (Pear and Kuy), and Siem Reap (Kuy). PRIP activities will not affect land tenure or otherwise cause any direct adverse impacts. However `Highland Peoples' lifestyles and livelihoods are under pressure in some areas becauseof in-migration by others, forestry concession programs, and discouragement of shifting cultivation practices. PRIP-related improvements of roads and infrastructurecould well induce future in-migration and pressure on access to resources. For these reasons, the Highland Peoples are considered potentially vulnerable to being disadvantaged inthe development process, and this planreviews actions taken, or to be taken, to safeguard their interests. 6. Inthe context of this project, it is importantto note that the OD4.20refersto social groups and not to individual families. The identification of ethnic minorities inthe project area will therefore be triggered by the identification of groups of ethnic minority families and individuals. 7. The primary objectives of OD 4.20 are: 0 to ensure that such groups are afforded meaningful opportunities to participate inplanning that affects them; to ensure that opportunities to provide such groups with culturally appropriate benefits are considered; and 0 to ensure that any project impacts that adversely affect them are avoided or otherwise minimized and mitigated. 8. The following general principles andprocedures will be applied duringproject preparation and implementation, if ethnic minorities are identified in any of the project areas. For the purpose of this Framework, the project areas are defined as the area influenced by the upgrading of the road (approximately within 3 kmfrom the road). Inthe PRIPproject the purpose of the Framework i s to ensure culturally appropriate consultation with indigenous minorities (where present), an opportunity to participate inthe project, and additional support neededfor coping with the impact of improved access. 111.The Cambodian Legal Context 9. Under the Cambodianconstitution, the HighlandPeoples are afforded Cambodiancitizenship. However, at present there i s no comprehensive legislationor regulationrelating specifically to protection of Highland Peoples rights or interests. 10. In 1997,a special Inter-ministerialCommittee for Highland Peoples Development releaseda draft "General Policy for Highland Peoples Development." The draft, culminating from a long process of consultations among local groups, NGOs, international development agencies and government, has never been formally adopted by the government. The policy statement would provide a number of protections for Highland Peoples, many relating to land rightsand access to resources. Of particular importance in the context of RILGPare these provisions inthe general policy statement: 0 the government "shall promote understanding and respect of cultural diversity and ensure that Highland Peoples can practice their own cultures" (para. 1); 0 "Highland Peoples shall have the rightto be fully informed about, determine the priorities for and to exercise control over their economic, social and cultural development" (para. 6); - 109 -  and this provision inthe policy guidelines section of the document: 0 "Highland Peoples' communities shall be given the opportunity to participate and take responsibility inall decisions regardinginfrastructureprojects that affect them. The affected community and persons must have agreed, after being fully informed in a language that they clearly understand, of the project and all its consequences for them and their natural environment, before any development project may proceed" (para. 7.2). 11. For the purposes of PRIP, the above policy provisions have guided project design and implementation arrangements. Specific measuresto ensure adequate opportunities to participate inboth village and commune decision-making processes are explained inthe sections that follow. IV. Framework for identifying and assistingindigenous minority communities under the project 12. After the overall prioritization of roads to be rehabilitated has been done in a participatory process of stakeholders at the provincial level, and the next years roads identified, the detailed planning starts. The road-by-road social assessmenti s one of the activities incorporatedinto the detailed planning of works to be carried out on individual roads. This will follow the Project Implementation Plan, which specifies the technical, environmentaland social procedures and standards. With regardto social aspects, the major areas of activities are (i)Information dissemination and consultation, (ii) identification of the need for land acquisition, after minimization (alternatives) has beenconsidered, and (iii) the identification of indigenous minorities for whom special measures would have to be taken. 13. For each subproject with indigenous minorities, the project authorities will prepare a standalone Indigenous Peoples DevelopmentPlan, basedon extensive consultations, and will be part of the annual work program to be approved by the project authorities and submitted to IDA for review. 14. A social impact assessment and consultations would be carriedout inpreparationof the IndigenousPeople Development Plan (IPDP). The impact assessment will include the following information: (a) Household ownership of economic and productive assets; (b) Annual income fromprimary and secondary opportunities; (c) Economic information on the community (e.g., brief information on economic and natural resources, productive and livelihood systems, tenure systems); (d) Social informationon the community (briefdescription of kinship,value system, type of social organizations of formal and informal groups, farming groups, etc., especially those that can help the group in adjusting to the potential impacts of the project and including an assessment of the degree of inclusiveness and representativeness of those groups, particularly with regardto vulnerable, marginal, and poor groups); (e) Potential impact on basic services (e.g., water supply, health center, and school); and (0 Potentialimpact of the project on socialand economic livelihood. 15. Inorder for meaningfulconsultationandparticipationto take place, specific steps will include: a) information disseminationconducted inthe local language; b) an indigenous minority representativeAeader and an independent assignedNGO representative or a social scientist knowledgeable in indigenous peoples history and tradition are present in all discussions with clusters of - 110-  indigenous peoples; and c) all meetings are properly documented and shared with the concerned indigenous peoples. Ifthepreliminary social assessmentindicatesthat thepotential impactof theproposed sub-projectwill be significantly adverse, the sub-project will not goforward. V. IndigenousPeople Development Plan(IPDP) 16. Ifthe indigenouspeople conclude that the project will bebeneficial, measuresand assistancewill be developed inconsultation with tribal elders, community groups, and independent assigned NGOs, and the planned activities will be documented inan IPDP inaddition to the information described above. The assistanceshould include institutional strengthening and capacity building of tribal elders and community groups working on activities (e.g. resettlement if any) within the project. 17. Where indigenous people are adversely affected by a sub-project, either by land acquisition or by other inducednegative impacts, the IPDP, a standalonedocument, would have to, inaddition to support mentioned above, include measures to mitigate adverse impacts. Acquisition of land and other assets will be governed by the Resettlement Policy Framework. 18. The implementation of the IPDP will be carried out by the community, assistedby appropriate staff from MRDand Commune Council, facilitated by an NGO, where available and appropriate. Costs and Budget 19. Necessary funds for planning and implementationof IPDP will be provided by the project authorities. The project authorities will also provide for all costs related to mitigating adverse social impacts basedon budgetary requirements established in the Resettlement Plans. All of these costs are to be a part of the total sub-project cost. MonitoringArrangements 20. InPRIP, responsibilityfor project monitoringis divided amongnational, provincial, and commune authorities. For most activities, monitoring includes recording of attendance and minutes of proceedings. Opportunities are also provided for participatory monitoring at the village level during implementation. Each year, the Commune Council will disseminate a report on the status of program implementation. Each village may review this report for general accuracy. Additionally, each year the village chief will review project activities within its boundaries, to confirm whether construction, contracting arrangements, and other aspects have been implementedappropriately. The project authorities will regularly inspect and monitor the implementation of all IPDPs. Conflict Resolution Procedures 21, Ingeneral, HighlandPeoples resort to traditional leadership and institutionalarrangementsto resolve conflicts arising from within the village. PRIP views these arrangements as the most appropriate venue for initial airing of project-relatedconflicts. If mediationfails, disputes relating to sub-projects will be addressedby the Commune Council prior to sub-project approval. Disputes arising inthe course of implementation of the IPDP will be addressedby the village chief/elders for submission to the project authorities and other relevant authorities. -111 -   MAP SECTION