Nepal - Arun III Access Road Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 7461-NEP STAFF APPRAISAL REPORT NEPAL ARUN III ACCESS ROAD PROJECT MAY 12, 1989 Infrastructure Operations Division Country Department I Asia Regional Office This document has a resthicted distribution and may be used by recipients only in the perfonnance of their official duties. Its contents may not otherwise be disclosed without World Bank authorizatlon.  CURRENCY AND EQUIVALENTS UNITS (As of May 1, 1988) Currency Unit = Nepalese Rupee (NR) Nepalese Rupee - 100 paisa US$1.00 = NRs 24.4 WEIGHTS AND MEASURES 1 meter (m) - 3.28 feet (ft) 1 kilometer (km) = 0.62 mile (mi) 1 hectare (ha) = 2.47 acres (ac) 1 square kilometer (km2) 247 acres (ac) 1 megawatt (MW) = 1,000 kilowatts (103kW) 1 gigawatt (Gw) 1,000,000 kilowatts (106kW) 1 gigawatt-hour (GWh) 1,000,000 kilowatt hours (lO6kWh) 1 kilowatt-hour (kWh) 1,000 watt-hours 1 ropani = 5.400 square feet PRINCIPAL ABBREVIATIONS AND ACRONYMS ACRP - Acquisition, Compensation and Rehabilitation Plan ARC - Acquisition and Rehabilitation Committee CIDA - Canadian International Development Agency DOR - Department of Roads HMG - His Majesty's Government IRR - Internal Rate of Return LCGEP - Least Cost Generation Expansion Plan MFSC - Ministry of Forests and Soil Conservation MWR - Ministry of Water Resources NEA - Nepal Electricity Authority PPAR - Project Performance Audit Report GOVERNMENT FISCAL YEAR FY89 = July 16 to July 15  FOR OFFICIL USE ONLY NEPAL ARUN III ACCESS ROAD PROJECT STAFF APPRAISAL REPORT Table of Contents Page No. CREDIT AND PROJECT SUMMARY ....................................-i I. INTRODUCTION ............................................. II. SECTORAL BACKGROUND ...................................... 2 A The Energy Sector ..................................... 2 B. Transport Sector ...................................... 8 III. THE PROJECT ...... .... .................................... 12 A. Background ........ ................................... 12 B. Objectives ...... ... .................................. 12 C. Socio-Economic Profile of the Project Area .... ........ 12 D. Description ............. ......... 13 E. Cost Estimates ........................................ 14 F. Financing ............................................. 16 G. Procurement ........................................... 16 H. Disbursement .......................................... 17 I. Project Execution and Supervision ..................... 18 J. Environmental Protection and Conservation .... ......... 19 K. Project Reporting ..................................... 21 L. Accounts and Audits ................................... 21 IV. ECONOMIC EVALUATION AND RISKS ............................. 22 A. Background ............................................ 22 B. Future Electricity Demand ............................. 22 C. Base Case Scenario .................................... 23 D. Sensitivity Analysis .................................. 25 V. AGREEMENTS AND RECOMMENDATION .25 This report is based on the findings of an appraisal mission to Nepal in February 1988 and the post appraisal mission in May 1988. Mission members included Mrs. Inai Bradfield (Sr. Economist, Mission Leader), Messrs. Donal O'Leary (Systems Planner/Engineer), David Williams (Environmental Specialist), and Richard Leonard (Highway Engineer, Consultant). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Page No. TEXT TABLES 5.1 Project Cost Summary .................. .......... ........ 15 3.2 Financing Plan .16 3.3 Procurement Arrangements .16 ANNEXES 1 Design Standards .................................... 27 2 Estimated Disbursement Schedule .30 3 Arun III Project Monitoring Committee . 31 4 Supervision of Construction, Terms of Reference .32 5 Environment Management Unit, Staffing and Work Program 37 6 Management of Environmental Impacts .41 7 Land Acquisition Guidelines 2045 .43 8 Acquisition, Compensation and Rehabilitation Plan ... ...... 48 9 Economic Evaluation Methodology .56 to Selected Documents and Data Available in the Project File 64 CHART Chart 1 Organization of Project Implement%tion .65 Chart 2 Project Implementation Schedule .66 MAP: IBRD No. 21127  NEPAL ARUN III ACCESS ROA) PROJECT Credit and Project Summary Borrower: The Kiagdom of Nepal Beneficiaries: Nepal Electricity Authority, Ministry of Water Resources and Department of Roads. Ministry of Works and Transport Amount: SDR 24.4 million (US$32.8 million equivalent) Terms: Standard, with 40 years maturity Project Description: The project would include construction of an access road, 192 km long, to the site of the proposed Arun III hydroelectric development scheme, a road mairtenance depot at Tumlingtar, and consultancy services for construction supervision, training and for the preparation and supervision of implementation of a land acquisition, compensation ard rehabilitation plan. Benefits and Risks: The project's benefits are in large measure related to those of the proposed Arun III hydroelectric development aeme, which is to fulfill Nepal's total power demands to 2010 at least cost. Tt would also provide developmental access to an area presently served only by porterage trails and inhabited by some half million people. The main risks are delayed implementation of the hydroelectric scheme, and its increased cost. However, adequate safeguards are being provided to minimize such risks. Local Foreign Total -----(US$ million)- Project Costs: a/ Road Construction 6.6 19.9 26.5 Maintenance Depot 0.1 0.1 0.2 Land Acquisition for ACRP 1.2 0.0 1.2 Consultancy Services for: Construction Supervision 0.6 2.4 3.0 Training 0.0 0.1 0.1 Preparation/ Implementa- tion Supervision of ACRP 0.5 0.4 0.9 Base Costs 9.0 22.9 31.9 Physical Contingencies 1.3 3.4 4.7 Price Contingencies 1.3 2.1 3.4 Total Project Cost 11.6 28.4 40.0 a/ Including taxes and duties of US$3.5 million.  - il - Financing Plan: Local Foreign Total -------(US$ million)--- Government 7.2 - 7.2 IDA 4.4 28.4 32.8 Total 11.6 28.4 40.0 Estimated Disbursements: IDA Fiscal Year 90 91 92 93 94 ---------------(US$ million)---------