Nepal - Road Maintenance and Rehabilitation Project

Document of The World Bank FOR OFFICLAL USE ONLY Repa No. 12192-NEP STAFF APPRAISAL REPORT NEPAL ROAD MAINTENANCE AND REHABILITATION PROJECT FBRUARY 18, 1994 MICROGRAPHICS Report No: 12192 NEP Type: SAR Energy and Infrastructure Operations Division Country Department I South Asia Region This document has a restricted distribution and may be uwed by reipiens only in the performnce of their offcdal dudes. Its contents may not otherwise be disckosed without World BDank authorization.  CURRENCY EOUIVALENTS US$ I = NRs 50.0 NEPALESE FISCAL YEAR July 16 - July 15 Nepalese Fiscal Year Equivalent Calendar Year 2047/48 1990/91 1991 2048/49 1991/92 1992 2049/50 1992/93 1993 2050/51 1993/94 1994 2051/52 1994/95 1995 2052/53 1995/96 1996 2053/54 1996/97 1997 2054/55 1997/98 1998 LIST OF ABBREVIATIONS AND ACRONYMS USED ADB Asian Development Bank AADT Annual Average Daily Traffic DCA Department of Civil Aviation DDC District Development Committees DOR Department of Roads DOTM Department of Transport Management DRSDU District Road Services Development Unit DTO District Treasury Officer EFYP Eighth Five Year Plan (1993-97) EROM Eastern Region Road Maintenance Project (ODA) ERR Economic Rate of Return FCGO Financial Comptroller General's Office FY Fiscal Year GDP Gross Domestic Product HMG/N His Majesty's Government of Nepal Km Kilometer IBRD International Bank for Reconstruction and Development IDA International Development Association IDU Institutional Development Unit IRI International Roughness Index MOF Ministry of Finance MOGA Ministry of General Administration MOWT Ministry of Works and Transport MRCU Maintenance Rehabilitation Coordination Unit MLD Ministry of Local Development NCCN National Construction Company of Nepal NPC National Planning Commission NRB Nepal Rastra Bank NRs Nepalese Rupees ODA Unit Kingdom Overseas Development Administration RNAC Royal Nepal Airways Corporation RSSDU Road Sector Skills Development Unit SBD Sample Bidding Documents SDC Swiss Development Cooperation SPYP Seventh Five Year Plan (1985-1990) SMD Strengthened Maintenance Division VPD Vehicles per Day  FOR OMCI4L USE ONLY ROAD MAINTENANCE AND REM ABILITATIO CREDIT AND PROJECT SUMMARY .................................. i I. INTRODUCTON 1 I H. THE TRANSPORT SECROR .I A. The Transport Sector and the Economy ............................. B. RoadSector. 2 C. Aviation Sector.2 D. Trails and Suspension Bridges. 3 E. The Institutional and Policy Framework. 3 F. IDA's Sector Experience and Strtg.4 mI. THE ROAD SUB-SECTOR. 4 A. Road Transport and the Ecunony .. 4 B. Road Sub-Sector Institutional Framework and Policies . . 5 C. IDA',. Road Sub-Sector Experience and Strategy .. 6 D. The Road Networks, Mai ance Condition and Policies . . 7 E. Road Financing ................................ 9 F. Road Planning and Budgeng.................................... 9 G. Road Maintenance Operations and Management .... ................... 11 H. Personnel and Traiing ...................................... 11 I. Environmental Safeguards ..................................... 12 J. Sector Strategy ...... 12 IV. THE PROJECT .13 A. Project Origin, Objectives and Rationale .13 B. Projec Description .14 C. Project Cost and Financing .19 D. Project Enviromenl Impact. 21 E. Economic Evaluation and Sensitivity Analysis .21 F. Project Riks2 4.......................... 24 V. PROJECT MLEMENTATION. .. 23 A. Status of Project Prepaion .23 B. Organizational Arrangermes .23 C. Policy and Instiutional Development Component .24 D. Maintenance Progrars ........................ ............. 25 E. Procurement Arrangements ............ 26 F. Disburment, Account and Audit Arrangements ............ 28 0. Monitoring and Supervision Plan ............ 29 VI. AGREEMENTS AND RECOMMENDATION ............ 30 TIs tcpoc i bed on dh findin of an aVWrsal mIsin h hh Ved NaJ durg May.Jus t993. Mm min owmpdsd M=. Jum a (asffk -w, SAMnt). Ricturd Sheme ( e gineet . ASM). Jiang z (Hihway Ennr. ComuN0. TSmi Arm* (antda DeoIW Coun. Eddy Bynem (bUor4d CoU. ConW= Na=n D. DShamnra amMJ_ SAIWM. md Fhdot Templ (fome Oi SAtED. MUm. Tha Pn (Pft IIpal Twa pt?SWl SAIB a Kned (Hwa wEg. Conui C an), Rhurd Lamd (Hgway Enie. Comlt. Wiiam Lane Engineer. Cmulz and Joes Vwio so, Comamo pd*"W drg prquaon and coubed w th rpott Putewerw Hw,a Levy (RAUM, Wimw P* . ( ,Jun abcqum aRsl (ARVP). Mm. Marie G*A,Zr and Am 0. }lmllo ame t Dison Ci and D_co. rsetvey fdor opruo M srs.a Pt SOC. Bt). Patr Rob= ad I. Gm (UJ. ODA) partipad t upPr atos ad duig appail. This document has a mtstrted distribution and may, be used by reipients only in the perfonnance of thtti official duties. Its contents may not otherwise be discldW wkthout World lknk authofiaon.  Contents (Cont"'d) TABLES 1. RoadCeonitionEstimates(inkms)1992 ................................ 8 2. Estimated Summary Costs ................................ 19 3. Proumet Arangemens ................................ 27 1. The Constuction-Maitenam Trade-Off. 2. situtdonal Strmgthenin and Training FinacOd by IDA 3. Periodic Maintenae ComponaM 4. Rehabilitadon Componet 5. Rouine Mintenan ComponM 6. Pilot Labor-Based District Road Rabiaon onent 7. Prorty Investmt Plan (Road Master Plan) 8. Project Costs 9. Mainc Fding Targets 10. Impletion Schedule 11. Economic Evahlaon 12. Euipment 13. Implementation of the Environmentl Assessment 14. Terms of Reference for Operationd Audit of Mainten Practices 1S. IDA Sueviion Input into Key Activities 16. Road Construction and Maintenance Mers Study 17. Selected Douments in the Project File M,A_PS IBRD 24777 - Road Rebabilitation and Overlays of Highways and Feeder Roads IBRD 24778 - Pilot Labor-Based District Road Project IBRD 24779 - Resealing and gravelling of Strategic Network  NEPAL ROAD MAINlT A-lCE AND REHABILITATON PROJECT Credit and Protect Summarv Botrmwer. tHis Majesty's Governmen of Nepal (HMG) w : Department of Roads (DOR) AMgJMi: SDR 36.6 million (US$ 50.5 million) Temr: Standard, with 40 years matrity. PSer The Project would include policy and institutional development components and DescrJQzii: maintenance and rehabilitation programs. The policy components Include introduction of new mainenance funding mechanisms to ensure timely, adequate fundig for maintenance, and improvement of sectoral planning. The institutional development component includes: institutional stregthenng of the regional and divisional capacities of the Department of Roads (DOR) and 4 District Development Committees (DDCs) to implement maintence and rehabilitation on contract; taining of DOR and 4 DDCs; speciaist inputs for supervision of works; and studies. The maintenamce and rehabilitation programs to be financed by IDA include: (a) spport for a backdog peiodic maintenance program of roads and bridges of the strategic road network in the Central, Westem, Mid-Western and Far-Western regions including about 500 km of resedling, 150 km of gravelling and sealing, and minor bridge repairs; (b) rehabilitation and overlays of 300 km of selected highways and 130 kn of feeder roads of the strategic road network; and (c) a pilot labor-based district road rehabilitation and mantance omnponent to rehabilitate and maintain 140 km of roads in 4 selected districts and promotion of appropriate rural transport technology to encourage community participation in road manteam and related activities. The Govenment would firw the ral development of a mpehenve roiuine maace program by contract. :ene: The Project's main benefit would be more efficient, cost effective administration of the road tansport system, pnoritinztion of sector expendit and reduction of transport costs. Strengthening DOR would create a focal point which wil offer technical support and assistmce to local authorites in the future. The benefits of road rehabilitation and mai ace under the Project consist of savings in vehicle operatig costs and cost savmgs in mantena. The economic benefits of the Project indicate that the overall economic rate of ren;rn, as well as that of individual components, would exceed the oppomnity cost of capital. The benefits for the institutional strengthening and traning compoents are high but non fiable. Bi: At the policy level, the main risks are that the Govemment will bow to political pressures in developing it's Priority Investment Plan (PIP) and the related three year rolling sectoral funding programs. To counter this possibility, the PIP must be satisfactory to IDA (and to the other Donors in the sector), with annal agreement on the updated rolling investment/maintenance programs and maitenac allocations. Additionally, the Government must establish a mechanism for funding perodic emergency and routine maintenance of the road network. The main risks for the infrastructural components of the project are delays in implementation and a failure to implement opdmal comprehensive maintenance programs. To mitigate against these risks, supervising consultants, key advisors and counpart staff will be appointed in May 1994. Additionally, the sprvisg consultants wi work losely with DOR's staff in prepaing, tendering and implemeting the annuat work programs. Relevant specialists wil also be available under the instiutional development component to provide assistace, parularly on strategic aspects of the rolling programs. On the institutional aspects of the project, the main riks are the Government's reluctamce to give DOR the autonomy to reorgaize it's operations to focus only on trunk roads, overdependence upon the consultants' providing technical assistame and a lack of accountability and motivation on the part of DOR staff. To promote the development of local capabilities, DOR staff will be integral memoers of the varous technical assistamce teams and one of the first task of consultants and advisors will be to prepare detailed plans for the training of countpart staff and the gradual transfer of reponbities from the stat to the counterpart staff. Varous safuards, includingteria for counterpart selei target andover dates for key responsibilities, operational audits and planmed periodic reviews have been incorporated into the institutional development programs in an  effort to monitor oveUall impl[enttion. Conimued close oopeatin among donors in the sectr and carefid mot by IMA through prect supervision and an idepth mid-term prject review with HMGIDOR in October 1995 will furthe help to minimize the riss. EtmtdCogsts1 (US$ Mion) eLa ;ai otal 1. Road Rehabilitation 9.6 11.1 20.7 2. Periodic Maintenan 9.5 15.8 25.3 3. Pilot Labor-Based District Road Rehabilitation 2.1 2.1 4.2 4. Project Prpation & plementation Spo 0.45 0.29 0.74 Technical Assistance; 5. Itiutiona Development TeH1ical Aisce 2.5 8.2 10.8 6. Routne maintenance 6.; 1.2 7.4 Sub-Toui l 30.5 38.6 69.1 Physical Contingeacles 2.4 3.2 5.6 Price Conngcie 2.4 6.3 Ebmidag ~ :3T 3S.3ng Jmia foird Total IDA 19.7 30.8 50.5 ODA 0.8 11.6 12.4 SDC 1.0 1.8 2.8 UNDP 0.1 0.9 1.0 HMG/N 16 08 5.4 T-ITAL 81S1 Esi ted ID)A ibnm US$ mitlion IDA FY 94 95 96 97 98 99 Amnual 2.3 10.7 15.6 11.9 7.3 2.7 Cumulave 2.3 13.0 28.6 40.5 47.8 50.5 E&mnok Rate of Retrm 21 % Pove=v Catexont: Not Applicable l lhe total cost net of laxes and duties (USS 3.5 million) is US$ 77.6 million. ki The estimaed gant amount from the United Kingdom is