India - Gujarat Rural Roads Project (Credit 1757-IN) : March 1991 supervision mission

 73075 INDIA GUJARAT RURAL ROADS PROJECT - (Credit 1757-IN) March 1991 Supervision Mission AIDE-MEMO IRE 1. Introduction 1.1 An International Development Association (IDA) mission compr~s~ng Messrs. A.J. Cittati (Highway Engineer) and R. Schulz (Senior Economist) visited Gujarat from March 16 through 31 to carry out a supervision of the above project. The mission held meetings and discussions with the Secretary and officials of the Roads and Buildings Department (R&BD) and visited road works in six of the dis- tricts included in the project. During its stay the mission was received by the Han. Mr. Chimanbhai Patel, Chief Minister of the State, met the Han. Mr. Dinsha Patel, Minister of Roads and Buildings and Mr. V. Sharma, Addl. Chief Secretary of the Finance Department. 1.2 This Aide-Memoire summarizes the mission's findings and recommenda- tions as discussed during the wrap-up meeting held with officials of the Govern- ment of Gujarat, and the Departments of Economic Affairs (MOF) and of Rural Development (MOA) of the Government of India. 1.3 The mission records its appreciation for the assistance and kind reception received from all concerned, in particular for the arrangements made to visit work sites. A list of officials met is enclosed as Attachment 1. 2. Background 2.1 Credit 1757-IN for 101 million SDR (US$ 119.6 million equivalent) was signed on May 12, 1987, and provided for: (i) the construction, reconstruction or improvement of about 4,040 km of village roads in seven districts of Gujarat where the dairy industry predominates; (ii) the procurement of road construction equipment to facilitate the implementation of (i) above; (iii) the construction of offices, workshops and other project accommoda- tions; (iv) technical assistance and engineering services for project management and training; and (v) a Maintenance Planning Study and a Road Safety Program.  2 2.2 The Credit became effective on August 27, 1987, but financial con- straints, caused by three consecutive drought years, delayed initiation of the project until November 1988. Only limited financial resources were made avail- able (a total of about Rs. 290 million) until the end of FY 1989-90 (March 1990). During the slow initial period some District Panchayats completed some of the 1025 jobs (roads) included in the project, reducing its scope to 909 jobs total- ling about 3,600 km. However, with the beginning of the 8th Five-Year Plan (1990-1995) GOG seized the opportunity to express its renewed interest for the project and provided sufficient funds to exceed the pace of implementation planned at appraisal. For FY 1990-91 funding is more than Rs. 430 million, and for FY 1991-92 funds are planned to be about Rs. 500 million. 3. Civil Works Progress of the Works 3.1 The speed of implementation increased substantially in the last year, as already reported in August 1990. About 310 roads, a total of more than 1,600 km, are expected to be completed by the end of March 1991 (see Table 1). Close monitoring of this progress is carried out in the field and at central level by the Rural Roads Cell (RRC) of R&BD and contractors are being effectively directed to comply with the proper sequencing of operations and with the schedules of progress. At the present pace 3,600 km of roadworks could be completed by December 1994. Situation of A.A., T.S. and Procurement 3.2 Administrative Approval" was granted for all 909 roads (j obs) remain- ing in the project, a length of 3,623 km. Technical Sanctions for the last 6 jobs not yet sanctioned are expected by end of March 1991. Procurement of civil works contracts is completed for 205 packages, corresponding to 750 jobs, 3,130 km; procurement of the remaining 31 packages (159 jobs) is expected to be com- pleted by the end of April 1991. As the contract period is normally 36 months, all civil works would be finished by the end of 1994. Following the recommenda- tions of previous missions, jobs have been arranged in packages large enough to attract larger, contractors. Of the 24 packages recently put to tender, 18 were close to, or above the recommended minimum value of US$ 500,000 equivalent. As- sociation Guidelines are being followed, and recent bids ranging 30% to 60% above the Schedule of Rates (SOR) have been accepted by GOG without objections. Quality of works inspected 3.3 The mission visited twelve work sites at different stages of advance- ment and was impressed by the commendable effort of R&BD to ensure that works are of an adequate quality. A well equipped field laboratory has been established on each contract site, and staff and vehicles were in place to carry out quality control tests. In addition, three mobile laboratories routinely provide assis- tance and on-the-job training to field staff for periods of one week at each site. Works are carried out in the proper sequence, benching and extra width of earthworks are generally carried out to allow adequate compaction of widening works, and compaction equipment is widely used to achieve the specified densities of earthworks and pavement layers. These efforts need to be pursued further and the mission was pleased to learn that R&BD intends to achieve higher levels of 'r 3 quality through improved procedures. intensive training of field staff and equipment operators. and larger deployment of construction equipment. Prequalification of Contractors 3.4 Prequalification procedures for contractors are being strictly and consistently applied. Some shortcomings that occurred in previous years are thus. being avoided. R&BD is taking an active role in providing contractors with advice on the proper organization of works. and in encouraging better performance by granting higher marks at prequalification to fully satisfactory contractors. To promote higher quality of works. prequalification criteria are being revised. and contractors are being mandated to have 2-ton vibratory rollers in sufficient quantities, in addition to the other equipment normally required. 4. Equipment 4.1 The overall status of equipment procurement under the project is summarized in Table 2. Agreements reached with previous missions are fully reflected there. In particular, fewer pieces than in the SAR estimates would be procured. because R&BD is now granting equipment advances. in the amount of 10% of contract value at a nominal annual interest rate of 12%. This is to encourage the contractors to adopt the use of modern construction equipment in their works. However. the relatively small scale of the' works does not allow the direct transfer of equipment intensive construction techniques normally used on larger scale works. The most appropriate mix of manual labor and equipment that ensures satisfactory quality will have to be developed by trial and error under the project. To achieve this objective R&BD will need some equipment for demonstra- tion purposes and to initially complement the contractors' fleet. The actual equipment needs, therefore, will be somewhat different from those indicated in Table 2 and will probably consist of smaller, more flexible types of equipment. GOG has agreed to review its requirements in the forthcoming months and to discuss with the Association the final list of equipment to be procured by October 1991. In the meantime, given the proven effectiveness of the 2-ton ride- on vibratory rollers (10 of which have been already procured), R&BD has requested to procure another 20 rollers of the same type through international shopping. The mission had no objection to the proposal. It was further agreed that equip- ment rental fees to contractors would be satisfactory to the Association, and would fully reflect ownership, depreciation, maintenance, repair and operation costs. 4.2 To accelerate the introduction of sound construction practices and efficient use of equipment, R&BD has proposed, and the mission agreed, to estab- lish in the next project year (1991-92) demonstration contracts in each district. These would be used for on-the-job training of Department staff and for other contractors to visit and assess the level of workmanship expected under the project. 5. Land Acquisition 5.1 Three land acquisition cells have started operating, as planned, but difficul ties are still being experienced by the Revenue Department in manning the surveyor positions. GOG intends to overcome this difficulty by grouping recon- struction and improvement subprojects (which generally do not need additional land) into separate packages from those for new construction. Also, GOG intends  4 to get construction materials from borrow areas on state lands away from, rather than adjacent to, or in the rather narrow right-of-way. This should avoid land disputes andlor deep pits at the toe of the embankments. GOG also proposes to hire consultants to prepare land plans and schedules necessary to issue notifica- tions under Section 4 of the Land Acquisition Act. The mission agreed with all these proposals. The draft tender document to procure the consulting services will be sent shortly for the Association's review. 6. Studies 6.1 Financial negotiations with the joint venture RITESIScott, Wilson Kirkpatrick to do the Road Maintenance Study were completed. Draft contract documents will be sent shortly to the Association for review. 7. Staffing and Training 7.1 Remarkable progress has been achieved in this area. All the field establishment (1 CE, 3 SEs, 17 EEs, 68 DEs) has been sanctioned and is in place. Efforts are being made at the highest levels of the Department (the Secretary and the Minister) to minimize turnover and achieve a high degree of competence and motivation. These efforts are commendable and need to be continued in the future. 7.2 In view of the hard conditions imposed by the execution of the works, often far away from urban centers and in areas of difficult access, the mission recommended, and GOG agreed to consider, providing a hardship allowance or some other financial incentive to project staff. In addition, GOG is considering to hire consultants to support their staff in the supervision of some contracts. Tender document are being prepared and will be submitted to the Association for review and comment. 7.2 Domestic training programs are proceeding satisfactorily and details of completed and future training courses are given in Table 3. Overseas train- ing, although considered useful by all parties concerned, is still under discus- sion between GOG and DEA. The difficult economic situation of the country may still jeopardize this training; firmer decisions on this are expected in the next three to four months. 8. Financing and Disbursements 8.1 The initial delay in starting the project and its subsequent slow implementation, compounded by a progressive devaluation of the Rupee against the SDR, resulted in slow disbursement of the Credit. By the end of February 1991 about 16 million SDR (about US$ 22 million equivalent), 30% of appraisal expecta- tions, had been disbursed. However, expenditures already committed amount to about Rs. 413 million and, at the present accelerated pace of implementation and given the higher disbursement rate, another 12 million SDR are expected to be disbursed by the end of March 1991. 8.2 Because of the reduced volume of works remaining in the project (about 3,600 km, para 2.2) and given the expected decline in the value of the Rupee against the SDR, the project is not likely to use, as presently defined, more than about 50 million SDR of the total 101 million SDR in the Credit. This would happen even taking into account the faster World Bank disbursement rate  5 allowed under the Gulf Initiative. Thus, GOG has requested the Association to adjust the project to pennit using fully the available credit. This would require expanding the program in the districts already in the project and to include other districts. The mission was presented a detailed and very well prepared proposal in support of this request. The mission reviewed the proposal and considered it fully in line with the content and original objectives of the project. The proposal is focused on developing the rural population of the State, on alleviating poverty in rural areas, and on supporting directly dairy activities, which are traditionally carried out by women. The mission, there- fore, had no objection to adjusting the project as proposed, subject to Bank management approval and as long as the additional roads to be included confonn to the same economic tests as the rest of the roads in the project (as outlined in the SAR) , and as long as the project remains within the limits of the original credit. acittati/rschulz:mc/rs grnnar91.am  ATTACHMENT 1 INDIA GUJARAT RURAL ROADS PROJECT (Credit 1757-IN) March 1991 Supervision Mission List of Principal Officials Met Gor MOF (DEA) Mr. H. Singh, Director MOA (DRD) Mr. R. Gopalkrishnan, Deputy Secretary GOG Mr. Chimanbhai Patel, Hon. Chief Minister Mr. Chabildas Mehta, Hon. Minister of Finance FD Mr. V. Sharma, Addl. Chief Secretary R&BD Mr. Dinsha Patel, Hon. Minister of Roads and Buildings Mr. Vinubhai Patel, P.A. to the Minister R&BD Mr. D.C. Shah, Secretary, R&BD Mr. A.T. Doshi, Officer on Special Duty, R&BD RRP Mr. R.H. Patel, Chief Engineer Mr. Ambalia, Superintending Engineer (Mechanical) Mr. V.J. Barot Mr. S.G. Desai Mr. P.R. Shah