Nepal - Third Highway Project

Document of The World Bank FOR OFFICIAL USE ONLY Report No. 15861 IMPLEMENTATION COMPLETION REPORT NEPAL THIRD HIGHWAY PROJECT (CREDIT 1515-NEP) June 26, 1996 Energy and Infrastructure Operations Division Country Department II South Asia Region This document has a restricted 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 authorization.  CURRENCY EQUIVALENTS Currency Unit = Nepalese Rupee (NRs.) $ 1.00 = NRs. 15.80 - May 1984 $ 1.00 = NRs. 20.00 - May 1986 $1.00 = NRs. 46.00 - Feb. 1994 $1.00 = NRs 49.00 - Sept. 1994 $ 1.00 = NRs. 51.00 - June 1995 $ 1.00 = NRs. 55.75 - Dec. 1995 IRs 1.00 = NRs. 1.40 - Dec. 1986 IRs 1.00 = NRs. 1.60 - June 1995 IRs 1.00 = NRs. 1.60 - Dec. 1995 SDR 1.00 = $ 1.06 - Dec. 1987 SDR 1.00 = S 1.46 - June 1995 WEIGHTS AND MEASURES Metric British/US Equivalent I kilometer (kim) 0.62 miles (mi) ABBREVIATIONS AND ACRONYMS ADB Asian Development Bank DOR Departmenit of Roads ERR Economic Rate of Retuni HMG Ilis Majesty's Govenmnent of Nepal GOI Government of India MOWT Ministry of Works and Transport ODA Overseas Development Administration (United Kingdom) SDC Swiss Development Cooperation SFD Saudi Fund for Development UNDP United Nations Development Program RMRP Road Maintenance & Rehabilitationi Project SMD Strengthened Maintenance Division MRCU Maintenance & Rehabilitation Coordination Unit FINANCIAL YEAR Mid-July to Mid-July  FOR OFFICIAL USE ONLY NEPAL THIRD HIGHWAY PROJECT (Credit 1515-NEP) IMPLEMENTATION COMPLETION REPORT Table of Contents Preface .......................................................i Evaluation Summary .......................................................i Part I: Project Implementation Assessment A. Statement and Evaluation of Objectives .........................................................1 B. Achievement of Objectives .......................................................2 C. Major Factors Affecting the Project ........................................................3 D. Project Sustainability ........................................................5 E. Bank Performance ........................................................7 F. Borrower's Performance ........................................................7 G. Assessment of Outcome .........................................................8 H. Future Operations .......................................................9 I. Key Lessons Learned ........................................................9 Part II: Statistical Tables Table 1: Summary of Assessments ....................................................... 12 Table 2: Related Bank Credits ........................................................ 13 Table 3: Project Timetable ........................................................ 14 Table 4: Credit Disbursements - Cumulative ....................................................... 14 Table 5: Key Indicators for Project Implementation ...................................................... 15 Table 6: Key Indicators for Project Operation ........................................................ 15 Table 7: Studies Included in Project ....................................................... 15 Table 8a: Project Costs ....................................................... 15 Table 8b: Project Financing ....................................................... 16 Table 9a: Economic Re-evaluation: Naubise-Malekhu Road ......................................... 17 Table 9b: Economic Re-evaluation: 2 Bridges Thankot-Naubise ................. ................. 18 Table 9c: Economic Re-evaluation: Five Bridges Hetauda-Birganj ............... ................ 19 Table 10: Status of Legal Covenants ........................................................ 20 Table 11: Bank Resources: Staff Inputs ....................................................... 21 Table 12: Bank Resources - Mission ....................................................... 22 Appendices Appendix A: Mission's Aide Memoire ....................................................... 23 Appendix B: Borrower's Contribution to the ICR ....................................................... 27 Appendix C: Borrower's Plan of Operation for the Project ............................................. 35 This document has a restricted distribution and may be used by recipients only in the perfornance of their official duties. Its contents may not otherwise be disclosed wiLhout World Bank authorization. l   IMPLEMENTATION COMPLETION REPORT NEPAL THIRD HIGHWAY PROJECT (Credit 1515-NEP) PREFACE This is the Implementation Completion Report for the Third Highway Project in Nepal, for which Credit 1515-NEP in the amount of SDR 44.7 million ($ 47.5 million equivalent) was approved on August 28, 1984, made effective on January 31, 1986, and amended on May 6, 1986. The Credit was closed on June 30, 1995, compared with the original closing date of June 30, 1990. Final disbursement took place on November 22, 1995, at which time a balance of SDR 3,462,584.69 was canceled. Co-financing for the project was provided by the Government of India with a grant of IR 500,000,000 and the United Kingdom, through its Overseas Development Administration (ODA), with a grant of UKP 7,702,000. This Report was prepared by Brendan Kennedy, Consultant and Chris Hoban, Task Manager, SA2EI of the South Asia Region, and reviewed by Jean-Fran,ois Bauer, Chief, SA2EI and Kazuko Uchimura, Project Adviser, SA2DR. The Borrower prepared a separate Implementation Completion Report which is on the project file, and a Completion Report Summary and Plan of Operation which are attached as Appendixes B and C. This Implementation Completion Report is based on IDA's final supervision mission of May 1995, a follow-up mission in February 1996 and on the records maintained in the project files. The Borrower contributed extensively and positively to the preparation of the ICR through views reflected in the mission's aide-memoire, preparing its own evaluation, and providing comments on the draft ICR.   IMPLEMENTATION COMPLETION REPORT NEPAL THIRD HIGHWAY PROJECT (Credit 1515-NEP) EVALUATION SUMMARY Introduction 1. Nepal had a very limited road network up to the early 1970s, and its construction and maintenance have been difficult because of unstable mountain terrain and high rainfall. IDA has supported this sector with three previous projects. Credit 223-NEP ($2.5 million), satisfactorily completed in June 1977 after some delays, dealt the replacement of substandard bridges, construction of suspension bridges for porter traffic, preparation of a road maintenance program and technical assistance. Credit 730-NEP ($17.0 million) provided for the upgrading of about 18 km of the main road link from Kathmandu to India, equipment for feeder road construction, feasibility studies on potential future road investments and a training program for mechanics. A Road Flood Rehabilitation Project, Credit 1922-NEP (SDR 11.2 million), completed in June 1995, assisted in the repair of the damage to roads and bridges by the severe monsoon floods of 1987. The ongoing Road Maintenance and Rehabilitation Project, Credit 2578-NEP (SDR 36.6 million), which became effective in September 1994, is dealing with the maintenance and rehabilitation of important road links and substantial institutional strengthening. Prject Objctives 2. The objectives of the project were to: (a) integrate the Far Western Region of the country into the national economy by completing an all-weather East-West Highway; (b) improve traffic conditions between Kathmandu and the Indian border at Birganj; and (c) improve the Department of Roads' (DOR) capacity to implement and monitor road maintenance and the project components. The objectives were clear, realistic and achievable. However the components included to strengthen DOR capacity were not particularly demanding with regard to institutional reform and strengthening. Implementation Experience and Results 3. The physical objectives were almost entirely met after some delays. The Far Western Region has been connected to the national road network and largely integrated into the national economy. The quality and reliability of the road connection between  ii Kathmandu and Birganj has been substantially improved. Project savings were used to finance emergency repairs following severe flood damage on this road towards the end of the project. The notable exception is that the full benefits of the East-West Highway can not be realized until the remaining 18 bridges are completed under separate bilateral financing. These are due to commence in 1996 and be completed in 1998. 4. The institutional components were implemented successfully as intended, including a large training program, support for private sector development and the purchase of road maintenance equipment. These have strengthened the skills and capacity of both the public and private sector, but much remains to be done. 5. At the end of the project, maintenance outputs of the DOR were still far short of desirable, resulting in declining condition of the road network not currently under rehabilitation, and accelerated deterioration of existing assets. These issues are being addressed by an ambitious program of technical assistance and reforms under the ongoing Road Maintenance and Rehabilitation Project, which is beginning to show some promising results. Long-term improvement of maintenance delivery will require sustained implementation of these programs, with high-level commitment to a major shift towards results-oriented maintenance management. It is likely to require continued support for institutional strengthening over 5-10 years. In the meantime, sustainability of project investments is rated as uncertain. 6. Credit effectiveness was delayed by one year, and implementation took 9 years instead of the expected 5. The Credit closed with all major items completed and SDR 3.5 million undisbursed, reflecting savings in project costs, appreciation of the SDR and some reallocation of works to GOI financing. The main IDA-financed components had actual ERRs of 27%, 29% and 16%, compared with appraisal estimates of 18%, 21-23% and 14- 16% respectively. In each case, increased benefits arose from higher-than-expected traffic growth. No re-assessment was possible for the East-West Highway and Kamali Bridge, but the works were cost-effective. 7. Some of the causes of delay were not fully within the control of the Borrower, implementing agency or IDA: bilateral negotiations on aid restructuring, major flood damage, and a Trade and Transit dispute with India. Other aspects of delay reflected lack of implementation capacity and experience on the part of both the Borrower and the private sector. These have improved under the project but further reforms are needed to ensure timely completion of road projects. 8. The overall project outcome is rated as satisfactory, and the performance of IDA and the Borrower are also rated satisfactory. Future projects should be integrated with ongoing projects, to give momentum to institutional development and physical development, and continuity in the macro objectives of sustainability of road assets and reduced transport costs.  iii Findings and Key Lessons Learned 9. The project met its immediate objectives, and made some progress towards strengthening the institutional capacity of the Borrower and the private sector. Full realization of the benefits of the East-West Highway investment will depend on completion of the missing bridges and approach roads, and would be substantially enhanced by completion of a new road link to India via the Tanakpur Barrage on the Mahakali River, some 12 km north of the current highway terminal. The government in its comments on this report indicated that this could be the subject of future bilateral discussion 10. The key lessons learned from the project are: (a) Maintenance effectiveness needs to be dramatically improved to ensure sustainability of road improvements. While there may be a need to increase maintenance budgets, the most critical immediate challenge is to ensure that available maintenance resources are effectively and systematically used for highest-priority needs. This requires strong government commitment to improved maintenance management and results-orientated maintenance spending. (b) Particular attention to drain clearing, river training works and road repairs before and during the monsoon season could reduce the susceptibility to flood damage. This can be addressed through improved maintenance management. (c) There is a need to improve procurement processing, customs clearance and inter-ministerial coordination in DOR and HMGN, to permit timely and effective response to road improvement needs and reduce the costs of works implementation (d) The successful involvement of DOR staff in implementation was a particular highlight of the project. This involvement of DOR staff in project preparation could be expanded and should be encouraged in future for effective implementation. 11. The Borrower's Plan of Operation for the Project is included in Appendix C. Particular attention will be needed for routine and periodic maintenance, flood protection measures, environmental management and systematic maintenance of the Kamali Bridge.   IMPLEMENTATION COMPLETION REPORT NEPAL THIRD HIGHWAY PROJECT (Credit 1515-NEP) PART I - PROJECT IMPLEMENTATION ASSESSMENT A. STATEMENT AND EVALUATION OF OBJECTIVES Objectives The objectives of the project were to: (a) provide a dependable means of integrating the Far West of the country into the national economy by completing an all-weather East-West Highway; b) improve traffic conditions between Kathmandu and the Indian border at Birganj by selective rehabilitation of bridges and road pavements; and (c) strengthen the operation and administration of the Department of Roads (DOR), in particular to improve their capability to implement and monitor both road maintenance and project components by providing technical assistance, equipment and training. 2. To achieve these objectives the project comprised: (a) the completion of the East-West Highway by constructing to all-weather standards about 204 km of the last section remaining between Kohalpur and the Indian border, including the construction of a major bridge over the Karnali River; (b) construction of about 60 km of feeder roads linking main areas of agricultural production south of the project road; (c) rehabilitation and maintenance of about 82 kmn of the Kathmandu-Birganj Road, including selected bridges; (d) equipment for road maintenance, materials testing and site inspection; and (e) technical assistance and training.  2 3. These components were significantly modified in the project amendment of May 6, 1986, shortly after Credit effectiveness. The East-West Highway and feeder road construction were taken over by Indian co-financing under the project, with supervision and Karnali Bridge construction financed by IDA, and the deletion of Saudi Fund co-financing (para 10). During implementation, the scope of the project was further modified, and the closing date further extended, to utilize project savings for flood damage rehabilitation works on project roads. The project did not include any environmental objectives, but included a legal covenant and training activities to mitigate possible impacts of a 15 km road section passing through Royal Bardia National Park. Evaluation of Objectives 4. The project reflects high priority given in Nepal's Sixth Plan (1980/81-1984/85) for the development of agriculture, national integration, optimizing the use of existing infrastructure and the development of human resources. The objectives were clear, realistic and achievable. The physical components included in the project were appropriate means of achieving the objectives. The project appraisal recognized the inadequacy of past maintenance and the need for improvements, but perhaps did not fully address this need in the design of institutional strengthening components, which were not particularly demanding with regard to maintenance reform. The approach taken was typical of similar Bank projects at the time. B. ACHIEVEMENT OF OBJECTIVES 5. The physical objectives of the project were almost entirely met after some delays. The 204 km Kohalpur-Mahakali section of the East-West Highway was substantially completed, including the Kamali River bridge and 52 km of gravel-surfaced feeder roads. As a result, the Far Western Region has been linked to the national road network and largely integrated into the national economy, and nearby agricultural areas have been better linked to the new highway. The quality and reliability of the main road connection between Kathmandu and Birganj has been substantially improved. In addition, major flood damage repairs were undertaken on the Naubise-Mugling section of the Prithvi Highway following severe floods in 1993. 6. However the full benefits of the East-West Highway improvement are constrained by the remaining need for construction of 18 bridges and associated approach roads. These missing sections arose from the inadequacy of floodways originally included in the project, and delays in negotiating bilateral assistance for replacement bridges. Until they are completed (under Indian assistance commencing in 1996), traffic is using temporary detours and river crossings which are not always passable in the rainy season. 7. The institutional components were implemented successfully as intended. The project included substantial local and overseas training and on-the-job secondments for DOR engineers. Small contracts were let and assistance was provided to local contractors and consultants to strengthen their capacity in the road sector. Road maintenance equipment with a total value of $4.6 million was purchased under the project and located at divisional and regional offices throughout Nepal. The benefits of this training are still  3 obvious within the Department and the private sector, and the equipment has been valuable for use in emergency maintenance and flood damage repairs. There was clearly an improvement in the capability of DOR to implement and monitor road maintenance and project components, as specified in the project objectives. However this improvement was limited. At the end of the project, road maintenance remained inadequate and maintenance equipment was not utilized to its full potential. 8. The main constraint on maintenance effectiveness appears to be a lack of systematic management of resources (equipment, staff and budgets) and outputs. While there may be a need to increase maintenance budgets, the most critical immediate challenge is to ensure that available resources are effectively used for highest-priority maintenance needs, and not diverted to lower-priority tasks. C. MAJOR FACTORS AFFECTING THE PROJECT 9. The main factors affecting project completion were (a) significant delays to the start, (b) slow contract implementation and, (c) when the project was substantially completed in mid-1993, the repair of damages caused by the devastating floods of that year. The start of the project was stalled by delays in Credit Effectiveness. The Credit was expected to be effective in March 1985, but eventually became effective in January 1986 after three extensions. Effectiveness was initially delayed by conditions of effectiveness (Project Implementation Unit, environmental training and regulations). Major delays then arose over restructuring of the project to include GOI financing. 10. Procurement for the Kohalpur-Mahakali road contracts had been completed with a HMGN Letter of Intent to award the contracts to the lowest evaluated bidder, China Road & Bridge Construction Co. However, in July 1985, before the contracts were signed, GOI offered a grant of IR 500 million ($40 million equivalent) to finance this road and associated feeder roads using Indian and Nepali contractors. HMGN indicated to IDA its intention to accept the GOI grant. IDA initially considered that such an arrangement would constitute misprocurement, but later concluded that there were special extenuating circumstances. In September 1985, HMGN signed an agreement with the GOI accepting the grant and requested the Saudi Fund to cancel their financing. In May 1986, IDA issued a Letter of Amendment to Credit 151 5-NEP revising the financing plan. 11. Project implementation was seriously delayed by the expiry of the Trade and Transit Treaty between Nepal and India in March 1989. All the civil works components suffered severe shortages of fuel and other material which lasted until the treaty came back into operation in July 1990. Progress during this period was limited. 12. There was also slow progress because of contractual and technical difficulties. The lack of experience of the contractors in executing large road contracts to international standards was apparent on the Kohalpur-Mahakali and Naubise-Malekhu contracts. Typical problems included a lack of serviceable plant and equipment and experienced site staff and a lack of on-site management for some contracts. On the Kamali bridge contract there were various technical problems related to foundation concrete cracks, high stresses in the truss and cable vibrations, which led to implementation delays and substantial increases in  4 supervision cost. The logistics problems on large contracts in the remote Far Western Region without proper all-weather access also contributed to the contract delays. 13. The original design for the Kohalpur-Mahakali road called for 14 floodways. However flooding in 1991 extensively damaged five of the six floodways already built, and DOR proposed replacement of all floodways with bridges. IDA financed the feasibility study and bridge design. The available GOI funds would not cover the cost of bridge construction, but the possibility of further GOI grant assistance for this purpose was discussed over several years. HMGN and GOI concluded an agreement in January 1996 under which the GOI will finance the construction of the missing bridges and approach roads. 14. The project was substantially completed by mid 1993. Credit Closing was then delayed by severe monsoon floods of July and August of 1993 which carried away three bridges, built earlier with Chinese aid, and damaged the road works on the Naubise- Mugling road. Additional repair works were substantially completed at the new Credit Closing on June 30, 1995 but financing of the remaining bridge works and some minor road works have been carried forward to Credit 2578. Implementation Record and Economic Re-Analysis 15. Construction periods for four GOI-financed contracts for the East-West Highway between Kohalpur and Mahakali (including 52 km of feeder roads) ranged from 64 to 86 months, compared with a contract period of 48 months, and substantial completion was achieved by April 1993. Construction cost was NR 1,015 million, compared with the appraisal cost estimate of NR 1,039 million. IDA financed a major bridge over the Karnali River. The 42 month contract period was twice extended by a total of 31 months to June 1993. Final costs were NR 360 million compared with the bid price of NR 255 million and the appraisal estimate of NR 237 million. 16. At appraisal the economic analysis feasibility of this road investment included the costs and benefits of planned irrigation, agriculture and other development projects in the influence area of the road, and benefits from tourism and cost savings in avoiding airlifting food and fuel. The ERR on the entire package of investments was estimated at 14%. It has not been possible to recalculate the ERR for the road investment since the data on the benefits from the major irrigation, agriculture and other investments are not available. Furthermore, the full impact of the road has not yet been realized due to the missing bridges. Nevertheless there are clear signs of new economic activity along the route, and the 1995 average daily traffic of 200 veh/day is well above that on the pre-existing track. The per-kilometer cost of NR 5.0 million or about $100,000/kn is cost-effective for new construction of a two-lane road on embankment in this region. 17. The 44 km Naubise-Malekhu road upgrading financed by IDA started in December 1987 and was scheduled for completion in 24 months. The works were substantially completed in December 1992 following contract extensions mainly related to supply difficulties resulting from the expiry of the Trade and Transit Treaty. The cost to this point was NR 213 million, and about 80% over the appraisal cost estimate of NR 170 million.  5 The cost per kilometer was cost effective at NR 7.0 million or about $142,000 equivalent, for road widening to two lanes and rehabilitation in mountainous terrain. Table 9a shows a revised ERR of 30% compared with the appraisal estimate of 18%. This is primarily due to the high annual traffic growth of 13.2% to 1995, leading to more than double the traffic expected under the predicted 6.5% growth rate. The contract was subsequently extended to include flood repair works in the amount of NRs 110 million. A separate contract paid NR 50.00 million towards the replacement of the three bridges. It was not possible to calculate a rate of return which incorporated the additional costs and benefits of these works. 18. The 38 km Malekhu-Mugling road section, financed by ODA, was built under a contract management arrangement under which all the resources of plant, equipment, materials and skilled manpower for the construction and management were provided. The final cost including flood damage repairs is estimated at about $24.0 million, more than 163% over the appraisal estimate of $9.12 million. The cost per kilometer is approximately 180% higher than for the adjacent section financed by IDA. However, this cost includes substantial technical assistance on project management and slope stability, and plant, equipment, transport and housing handed over to HMGN after the completion of the roadworks. 19. The seven new bridges constructed on the Tribhuvan Rajpath were substantially completed in April 1989, six months beyond the original 24 month contract period. The final cost was NR 54.2 million, the same as the bid amount. This represents NR 35.7 million in 1983/84 prices, compared with the appraisal estimate of NR 58.5 million. For the two bridges between Thankot and Naubise, Table 9b shows a revised ERR of 47% compared with appraisal estimates of 23% and 21 %. This is primarily due to lower real costs and an annual traffic growth of 12.5% to 1995, compared with the appraisal estimate of 6.5%. Similarly, for the five bridges between Hetauda and Birganj, Table 9c shows a revised ERR of 29%, compared with appraisal estimates of 14-16%. Actual traffic growth in this case was 8.3% to 1995, compared with the original 6.5% estimated. 20. In the final year, project savings financed completion of unfinished rehabilitation works on the Mugling-Marsyangdi section of the Prithvi Highway, which was previously financed under Credit 1478-NEP. D. PROJECT SUSTAINABILITY 21. Sustainability of the project is rated as uncertain. Sustainability of physical works depends primarily on the probability of timely and effective maintenance to preserve the value of road assets. At the closing date of the project, there is considerable evidence that such maintenance is not being systematically provided. Recent data on road network condition show a considerable proportion of the road system in poor condition, and when sections currently under rehabilitation are excluded, it appears that overall condition of the remaining highway network is deteriorating. On those sections programmed for rehabilitation and periodic maintenance, procurement delays and lack of preventative maintenance have frequently resulted in accelerated deterioration prior to works commencement, typically leading to more expensive emergency maintenance and/or additional works costs. While routine maintenance budgets have been increasing, the  6 achievement of effective maintenance has been limited by a lack of systematic management of work programming and results. The need for institutional strengthening in this area, to preserve road assets and make best use of maintenance resources, was not fully foreseen in project preparation. 22. These issues were identified in the preparation of the ongoing Road Maintenance and Rehabilitation Project (Credit 2578-NEP), and an ambitious program of institutional strengthening was developed with support of ODA, SDC and UNDP. This includes a assistance for a Maintenance and Rehabilitation Coordination Unit, Strengthened Maintenance Divisions, Field Implementation Advisers, Plant Management, Bridge Management, Road Safety, Bio-engineering, a Priority Investment Plan and a Pilot District Labor-Based Rehabilitation and Maintenance component. The ongoing project also focused on increased budget allocations for maintenance and the establishment of a Road Maintenance Fund. Many of these initiatives are beginning to show very positive results in improved road maintenance planning, management and execution. In particular, DOR is beginning to identify changes in management practices which place more emphasis on setting and achieving maintenance targets. Continued pursuit of these programs over five to ten years is likely to lead to sustainable road maintenance for the strategic network and increasingly efficient management of traffic flow, but this will require considerable focus and commitment on the part of HMGN. In the meantime, sustainability of physical works under the project must be rated as uncertain. 23. Because of its unique characteristics and remote location the maintenance of the Kamali Bridge requires special attention. Apart from an inspection in 1994 and current provisions for security and minor maintenance, the recommended inspection and maintenance program has not been implemented since bridge completion. This is now receiving further attention from HMGN, and further IDA assistance is provided for under the ongoing Credit 2578. 24. Training provided under the project provided substantial ongoing benefits in skill development in DOR. However the DOR Training Center has not yet demonstrated sustainable success of its continuing programs, and is receiving further assistance under Credit 2578. Equipment provided under the project is still being utilized by DOR, and was very effectively employed in the massive and well organized emergency repairs to maintain road access to Kathmandu after the 1993 floods. However utilization rates and equipment maintenance are well below the standards which would be expected of an efficient private sector equipment operator. Assistance provided by ODA under the Road Maintenance and Rehabilitation Project is working towards a more commercial approach to equipment management. 25. Site visits indicate that the measures taken under the project to minimize the environmental effects of the road passing through the Royal Bardia National Park are continuing and are effective.  7 E. BANK PERFORMANCE Identification/Preparation 26. Preparation of the project was supported by feasibility studies and design done under the Second Highway Project (Credit 730-NEP). Feasibility and design for the Kohalpur-Mahakali road was jointly financed by IDA and UNDP. In planning for this road, IDA emphasized the need for appropriate regulations to protect the Royal Bardia National Park. This eventually led to conservation regulations being adopted nationally and in a proposal to increase the size of the park by including a buffer zone. IDA worked closely with DOR in reviewing and monitoring the studies' findings and designs, and in mobilizing cofinancing through ODA and the Saudi Fund. Appraisal 27. The main issues at appraisal in January/February 1983 concerned a financing gap of about $ 30.0 million, whether the Kohalpur-Mahakali road should be bid as part of the Babai Irrigation Project, and early prequalification of contractors. It was decided that additional financing be sought, the road project be bid separately if the irrigation project was delayed (which it was), and that the prequalification be a condition of negotiations. The Decision Memo of April 1983 also emphasized that road network maintenance was the major sector policy matter. Sunervision 28. IDA's progress reporting was adequate and the performance ratings were appropriate. While advice was provided on implementation problems experienced on the GOI-financed Kohalpur-Mahakali road contracts, these were largely outside the control of IDA and DOR. The prompt and flexible responses to the many unforeseen circumstances which arose were a commendable feature of IDA's supervision performance. Following the 1993 flood which isolated Kathmandu by cutting the vital road link to India, an IDA Flood Emergency Mission mobilized quickly in Nepal to advise HMGN on dealing with the widespread infrastructure damage. IDA agreed to have all the repair works financed from savings under the Credit, and worked quickly to process the procurement arrangements. Similar support was provided by ODA for the Malekhu-Mugling road section, and for the deployment of three temporary Bailey bridges to re-open road access. F. BORROWER'S PERFORMANCE Project Preparation 29. The borrower's performance in project preparation was satisfactory. Even with its resource constraints, DOR's role in monitoring the preparatory studies, contract documentation and procurement with IDA and other donors was significant. However there  8 was evidence of a lack of coordination with other government agencies particularly in regard to the environmental issues in the Royal Bardia National Park. Project Implementation 30. The start of the project was delayed by the borrower's slow compliance with the conditions of effectiveness. Several IDA post-appraisal missions were needed to expedite these matters and enable the credit to be declared effective. At DOR's request, it was agreed early in the project that DOR staff would be actively involved in implementing the project. DOR engineers were also seconded to work on the sites with the technical assistance consultants responsible for design and supervision of construction. This on-the-job training has been effective in enabling DOR staff to acquire new project management skills and to improve their ability to supervise projects and to implement quality control procedures. DOR also appointed senior engineers as Project Managers for each works component. 31. The borrower complied fully with IDA guidelines on procurement and generally complied with the Credit covenants although there were some long delay in submitting audit reports. G. ASSESSMENT OF OUTCOME 32. The overall project outcome is rated as satisfactory. The physical objectives were almost entirely met, after substantial delays, many of which were beyond the control of the implementing agency, HMGN or IDA. Additional flood damage repairs were financed from project savings. Economic benefits of the works on the Prithvi Highway and Tribhuvan RajPath are substantially higher than expected, largely due to sustained high traffic growth over the project period. The East-West Highway between Kohalpur and Mahakali, including the large Kamali Bridge, provides a greatly improved link between the far Western Region and the rest of Nepal, which has resulted in increased economic activity in the region. However the full benefits of this link have not yet been realized due to the absence of a number of bridges and approach roads. 33. A number of implementation problems arose from institutional weaknesses within DOR, the contracting and consulting industry, and HMGN procedures, such as customs. Both public and private sector capacity were substantially improved under the project. Nevertheless implementation problems need to be further reduced in more recent contracts under the ongoing Credit 2578. 34. The project training component strengthened DOR and HMGN staff skills and capabilities, but did not substantially address institutional arrangements and practices which limit the ability to manage contracts and implement effective maintenance. These are important to DOR's macro objective of reducing transport costs by developing sustainable maintenance management.  9 H. FUTURE OPERATIONS 35. The Borrower's Plan of Operations for future management of project roads is included in Appendix C. Routine and periodic maintenance of the road network is of the highest priority in Nepal and vital to maintaining road assets. Particular attention is needed for timely maintenance of roadside drainage. The ongoing Credit 2578 is helping DOR reorganize and fund road maintenance on a more efficient and cost effective basis. 36. Construction of the missing bridges on the Kohalpur-Mahakali section of the East- West Highway is expected to commence in 1996 under bilateral GOI financing. The impact of this road could also be greatly enhanced by the completion of a road link to India at the western border on the Mahakali River. This will require coordination with GOI on the opening of the Tanakpur Barrage to road traffic, and the construction of an approach road on Indian territory. A feasibility study is required to define a 12 km link road from the East-West Highway to Brahmadev on the Nepal side. 37. Environmental protection will remain an important issue for future road construction, maintenance and operation. Drainage, slope stability, roadside planting and river protection works are important features of responsible environmental management, requiring close planning and control of construction and maintenance operations. Measures should be incorporated in road planning and management to mitigate social impacts and to protect wildlife, sensitive natural environments and cultural heritage. The low survival rate of the trees planted along some project roads highlights the need for a robust approach to this important environmental action. Arrangements for selection, planting and care of roadside planting should involve expert advice and may utilize maintenance lengthmen and local villagers. Planting and plant maintenance by contractors should be carefully specified and monitored, with appropriate penalty clauses. 1. KEY LESSONS LEARNED 38. Maintenance management needs to be strengthened to ensure sustainability of road improvements. This requires substantial changes in procedures for planning and executing maintenance works, and for monitoring and reporting results achieved. While there may be a need to increase maintenance budgets, the most critical immediate challenge is to ensure that available resources (equipment, staff and budgets) are effectively and systematically used for highest-priority maintenance needs. New procedures and capabilities are being developed under the ongoing Credit, but their success will depend on strong leadership and commitment from senior officials to improved management and results orientation for maintenance spending. This can be assisted by strong donor support. 39. Particular attention to drain clearing, river training works and road repairs before and during the monsoon season could reduce the susceptibility to flood damage. 40. While a number of project delays were outside the full control of either HMGN or IDA (e.g. bilateral grant negotiations, the Trade and Transit dispute, extreme floods), others  l0 could have been avoided, through high-level inter-ministerial coordination and decisive actions to meet the conditions of credit effectiveness and expedite project execution. While implementation procedures have improved, substantial and costly delays remain and need further reform. There is a need to improve procurement processing, customs clearance and contract management in DOR and HMGN, to permit timely and effective response to road improvement needs and reduce the costs of works implementation. Time consuming and lengthy procedures need to be simplified by HMGN, and concurrence from IDA should be expedited where possible. 41. The successful involvement of DOR staff in implementation was a particular highlight of the project. This involvement of DOR engineers should be continued in future operations and expanded in the project preparation process. DOR capacity to supervise and review consultant feasibility and design work also requires strengthening. 42. There is some debate in the engineering profession as to whether floodways were appropriate for the river crossings on the Kohalpur-Mahakali Road. However it seems likely that their viability could have been substantially improved by better design and implementation. Following the failure of some floodways and the subsequent long delays in provision of replacement bridges, more speedy actions could have been taken to provide temporary crossings in order to more fully utilize benefits of the completed road construction works. 43. The technically complex design of the Karnali Bridge may not have been appropriate for construction in a remote area of Western Nepal, given the limited capacity of the DOR to oversee its construction, retain skilled personnel and ensure effective maintenance over the life of the bridge.  II IMPLEMENTATION COMPLETION REPORT NEPAL THIRD HIGHWAY PROJECT (Credit 1515-NEP) PART II: STATISTICAL TABLES  12 Table 1: Summary of Assessments A. Achievement of Objectives Substantial Partial Negligible Not applicable Macro Policies 0 Sector Policies 0 - Financial Objectives 0 Institutional Development E Physical Objectives E Poverty Reduction Gender Issues . Other Social Objectives Environmental Objectives E Public Sector Management 0 Private Sector Development 0 Other (specify) .0 B. Proiect Sustainabliti Likely Unlikely Uncertain HighIv satisfactory Satisfactory Deficient C. Bank Performance Identification 0 Preparation Assistance 0 Appraisal 0 Supervision 0 satisfactory Satisfactory Deficient D. Borrower Performance Preparation 0 Implementation 0 Covenant Compliance 0l Operation (if applicable) Hizhl Highly E. Assessment of Outcome satisfactory Satisfactorv Unsatisfactory unsatisfactorv  13 Table 2: Related Bank Loans/Credits Loan/credit title Purpose Year of Status approval Preceding operations Credit 223-NEP (a) Replacement of substandard bridges. 197- Complete (b) Construction of suspension bridges for porter traffic. (c) Preparation of a road maintenance program. (d) Consulting services and technical assistance. Credit 730-NEP (a) Upgrading 18 km of the main road between 1977 Complete Kathmandu and Indian border. (b) Construction equipment for feeder road construction. (c) Consulting services for feasibility studies. (d) Training of mechanics. Following operations Credit 1922-NEP To deliver immediate assistance to rehabilitate, rebuild or 1988 Completed replace priority elements of flood-damaged roads and structures in Eastern and Central Regions. Credit 2578-NEP To develop road maintenance capabilities and support 1994 Ongoing maintenance and rehabilitation activities by: (a) ensuring adequate funding for maintenance; (b) strengthening sectoral planning; (c) improve public sector implementation capacity; and (d) support and enhance private sector capabilities to do contract road maintenance.  14 Table 3: Project Timetable Steps in Project Cycle | Date Planned | Date Actual/ Latest Estimate Pre-Project Brief n/a Nov 1981 Preappraisal n/a Nov/Dec 1981 Identification (Project) n/a May 1982 Preparation n/a Feb 1982 Appraisal Apr 1982 Feb 1983 Negotiations Apr 17, 1984 Apr 17, 1984 Letter of Development Policy (if applicable) n/a n/a Board Presentation Aug 28, 1984 Aug 28. 1984 Signing Dec 17, 1984 Dec 17, 1984 Effectiveness Mar 19, 1985 Jan 31, 1986 First Tranche Release (if applicable) n/a n/a Midterm review (if applicable) n/a n/a Second (and Third) Tranche Release (if applicable) n/a n/a Project Completion Jun 30, 1995 Loan Closing Jun 30, 1995 Table 4: Credit Disbursements: Cumulative Estimated and Actual (S thousands) FY85 FY86 FY87 FY88 FY89 FY90 FY91 FY92 FY93 FY94 FY95 FY96 Appraisal Estimate 3980 11360 24500 37850 47500 47500 47500 47500 47500 47500 47500 47500 Actual 0 0 5177 11026 19096 24828 28163 34692 41126 47993 51721 56340 (SDRs) (0) (0) (4166) (8462) (14658) (19052) (21462) (26223) (30753) (35669) (38181) (41237) Actual as%of Estimate 0 0 2 29 40 52 59 73 86 101 108 119 Date of Final Disbursement November 22, 1995  15 Table 5: Key Indicators for Project Implementation Key Implementation Indicators in SAR/ President's Report Estimated Actual I . Completion of the East-West Highway between 204 km* 154 km Kohalpur and Mahakali 2. Rehabilitation of the Naubise- Mugling Road 82 km 82 km 3. Feeder Roads 60 km 52 km 4. Thankot-Naubise Bridges (No.) 2 2 5. Hetauda-Birganj Bridges (No.) 5 5 * Note: 43 km at the Western end of this road - built 15 years previously by HMGN - were reviewed after appraisal and considered to be in satisfactory condition. The remaining 8 km are now being taken up under GOI financing. Table 6: Key Indicators for Project Operation (See Borrower's Plan of Operation - Appendix C) Table 7: Studies Included in Project (Not applicable) Table 8A: Project Costs Appraisal Estimate ($M) Actual/Latest Estimate($M) Local Foreign Total Local Foreign Total Item Costs Costs Costs Costs I East-West Highway 15.3 42.6 57.9 8.2 37.4 45.7 2. Road Rehabilitation 3.8 10.7 14.4 16.8 27.3 44.1 3. Institution Bid. & 0.1 4.8 4.8 2.8 21.0 23.6 Road Maintenance 4. Physical & Price 10.0 28.9 38.9 - - - Contingencies TOTAL 29.1 86.9 116.0 27.8 85.6 113.4  16 Table 8B: Project Financing Appraisal Estimate ($M) Revised Estimate Actual/Latest Estimate ($M) ($M) May 1986 Source Local Foreign Total Total Local Foreign Total Costs Costs Costs Costs IDA 2.2 45.3 47.5 47.5 6.1 50.5 56.6 ODA (UK) 5.2 14.5 19.7 10.9 11.4 12.7 24.1 SaudiFund 3.7 27.1 30.8 _ _ __ __ _ Govt. of India - - -40.0 2.0 21.5 23.5 HMGN 18.0 - 18.0 16.2 8.2 1.0 9.2 Total 29.1 86.9 116.0 114.6 27.8 85.6 113.4  17 Table 9a. Economic Re-Evaluation: Naubise-Malekhu Road Year SAR cost SAR traffic Benefits Actual cost Actual traffic Benefits NR (veh/day) NR NR million (veh/day) NR million 1 1983 85.0 435 435 2 1984 85.0 463 28.8 493 3 1985 493 30.7 558 4 1986 525 32.7 632 5 1987 560 34.8 715 6 1988 596 37.1 810 7 1989 635 39.5 917 8 1990 676 42.0 47.7 1039 9 1991 720 44.8 47.7 1176 10 1992 767 47.7 47.7 1332 82.8 11 1993 817 50.8 1508 46.9 1 2 1994 857 53.3 1708 53.1 13 1995 900 56.0 1934 60.2 14 1996 945 58.8 2190 136.2 15 1997 993 61.7 2480 154.3 16 1998 1042 64.8 2809 174.7 17 1999 1094 68.1 3180 197.8 18 2000 1149 71.5 3602 224.0 19 2001 1206 75.0 3782 235.2 20 2002 1267 78.8 3971 247.0 21 2003 1'30 4169 259.3 22 2004 1397 4378 272.3 23 2005 1466 4597 285.9 24 2006 1540 4826 300.2 25 2007 1617 5068 315.2 26 2008 5321 331.0 27 2009 5587 347.5 28 2010 5867 364.9 Initial cost = NR 170 million over two years 1983-84 Actual cost = NR 312 million over three years 1990-92; deflates to NR 143 million in 83/84 prices Expected traffic grow,th = 6.5%/yr to 1993. then 5%/yr Actual growth = 13.2%/yr to 1995, assume reduce to 5% after 10 yrs Back-calculated user cost saving to give initial ERR of 18% (NR / AADT) = 0.0622 = NR 0.52 per veh.km Assume same user cost saving; i.e. same deterioration, maintenance & unit vehicle op costs Actual ERR = 32% for 20-year benefit stream from year of opening, discounted back to 1983 Assume benefits halved in 1993-95 due to flood damage delays and repair works Revised ERR = 30% allowing lor these lost benefits Note: additional costs & benefits of flood damage and repair works not considered in the analysis  18 Table 9b. Economic Re-evaluation: 2 Bridges Thankot-Naubise Year SAR SAR traffic Benefits Actual cost Actual traffic Benefits cost NR '000 veh/day NR '000 NR '000 veh/day NR '000 1 1983 5,596 640 640 2 1984 5,596 682 2,384 720 3 1985 726 2,539 810 4 1986 773 2,704 911 5 1987 823 2,880 3,420 1,025 6 1988 877 3,067 3,420 1,154 4,035 7 1989 934 3,266 1,298 4,540 8 1990 995 3,478 1,460 5,108 9 1991 1,059 3,704 1,643 5,746 10 1992 1,128 3,945 1,849 6,465 11 1993 1,201 4,202 2,080 7,274 12 1994 1,261 4,412 2,340 8,184 13 1995 1,325 4,632 2,632 9,205 14 1996 1,391 4,864 2,961 10,357 15 1997 1,460 5,107 3,332 11,652 16 1998 1,533 5,363 3,498 12,235 17 1999 1,610 5,631 3,673 12,846 18 2000 1,690 5,912 3,857 13,489 19 2001 1,775 6,208 4,050 14,163 20 2002 1,864 6,518 4,252 14,871 21 2003 1,957 4,465 15,615 22 2004 2,055 4,688 16,395 23 2005 2,157 4,922 17,215 24 2006 2,265 5,168 18,076 25 2007 2,379 5,427 18,980 Initial cost = NR 11.19 million over two years 1983-84 Actual cost = NR 10.39 million over 1987-88; deflates to NR 6.8 m in 83/84 prices Expected traffic growth = 6.5%/yr to 1993, then 5%/yr Actual growth = 12.5%/yr to 1995, assume reduce to 5% after 10 yrs Back-calculated user cost savings to give initial ERR of 23% (NR / vehicle) = 1.28 Assumes same user cost saving per vehicle, i.e. same delays, repair costs and probabilities Actual ERR = 47% for 20-year benefit stream from year of opening, discounted back to 1983  19 Table 9c. Economic Re-evaluation: Five Bridges Hetauda-Birganj Year SAR SAR Benefits Actual cost Actual Benefits cost traffic traffic NR '000 veh/day NR '000 NR '000 veh/day NR '000 1 1983 23,599 565 565 2 1984 23,599 602 5,820 612 3 1985 641 6,198 663 4 1986 682 6,601 718 5 1987 727 7,030 14,423 777 6 1988 774 7,487 14,423 842 8,142 7 1989 824 7,974 912 8,817 8 1990 878 8,492 987 9,549 9 1991 935 9,044 1,069 10,342 10 1992 996 9,632 1,158 11,200 11 1993 1,061 10,258 1,254 12,130 12 1994 1,114 10,771 1,358 13,137 13 1995 1,169 11,310 1,470 14,218 14 1996 1,228 11,875 1,592 15,398 15 1997 1,289 12,469 1,724 16,676 16 1998 1,354 13,092 1,810 17,510 17 1999 1,421 13,747 1,901 18,385 18 2000 1,492 14,434 1,996 19,305 19 2001 1,567 15,156 2,096 20,270 20 2002 1,645 15,914 2,200 21,283 21 2003 1,728 2,311 22,348 22 2004 1,814 2,426 23,465 23 2005 1,905 2,547 24,638 24 2006 2,000 2,675 25,870 25 2007 2,100 2,808 27,164 Initial cost NR 47.2 million in 1983-84 Actual cost = NR 43.847 million in 1987-88; deflates to NR 28.8 m in 83/84 prices Expected traffic growth = 6.5%/yr to 1993, then 5%/yr Actual traffic growth = 8.3%/yr to 1995, assume reduce to 5% after 10 years Back-calculated user cost savings to give initial ERR of 14-16% (NR / vehicle) = 3.5 Assumes same user cost saving per vehicle, i.e. same delays, repair costs and probabilities Actual ERR = 29% for 20-year benefit stream from year of opening, discounted back to 1983  20 Table 10: Status of Legal Covenants Agree Section Covenant Present Original Revised Description of Commenit muent type status fulfill date fulfill date covenant DCA 3.02 5 C n/a - Appoint consultants to assist DOR in executing the civil Delayed due to delayed works and training components credit effectiveness. 3.03 10 C Before - C'ompletion of'Rapti Bridge on East-West Highway. Completed. completion of E-W highway. 3.05(d) 9 NC September Prepare and fumish to IDA the Project Completioni Report. Completed 30, 1995. 3.06 9 CD/CP Annually & Varied Prepare quarterly & aninual progress reports for submissioni Consultants' progress quarterly to IDA. reports regularly sent but annual repons not sent. 3.07 5 CD Condition of Establish the project Implementation Unit. Delays resulted in slow Effectivenes start to project S. implementation. 3.08 5 CP n/a Empower the Development Board with responsibility and Complied with initially but authlority to undertake overall supervision of the project. was superseded when the 0OI participated in the projcct. 3.09 5 C n/a Acquire all land needed for the project. Complied with. 3.10 6 C Condition of Minimize environmental impact of road construction in the Complied with. Follow-up effectivenes Royal Bardia Wildlife Reserve and entrust National Parks actions planned under the s. and Wildlife Conservation Office with responsibility for ongoing Cr. 2578. enforcement. 3.11 5 C n/a Maintain NCCN with necessary authority, staff & funds to NC'CN completed complete its section of the East-West Highway. Contracts 3 & 4, using a subcontractor for the feeder roads component. DCA 4.01 1 & 3 CD within 6-12 NMaintain project records & accounts and submit audited and Usually sent to IDA late months of unaudited accounts to IDA. and after some prodding. year end. 4.02 10 CP n/a Adequately maintain all roads, maintenance equipment & P'artially complied with. workshops and provide adequate funds 4.03(a) & 2 & 4 C March 31 Inform IDA of proposed allocations for road maintenance C'omplied with. (b) each year. and take into account IDA's comments. 4.04 12 NC nia Limit size arid weight of vehicles consistenit with desigin Not complied with. standards of national roads. 4.05 5 C'P n/a Promptly issue import licenses for goods needed for the lPartially complied with and project, make available the necessary foreign funds and consequently the allocate sufficient materials for caryinig out the project. contractors often complained. Covenant types: 1. = Accounts/audits 8. Indigenous people 2. = Financial perfonmance/revenue generation from beneticiaries 9. = Monitoring. review, and reporting 3. = Flow and utilization of project funds 10. Project implementation not covered by categories 1-9 4. = Counterpart funding 11. = Sectoral or cross-sectoral budgetary or other resource allocation 5. = Management aspects of the project or executing agency 12. = Sectoral or cross-sectoral pol icy/ regulatory/institutional action 6. = Environmental covenants 13. = Other 7. = Involuntary resettlement Present Status: C = covenant complied with: CD = complicd with after delay; CP = complied with partially; NC' = not complied with  21 Table 11: Bank Resources: Staff Inputs Stage of Planned Actual Project Cycle l Weeks $000 Weeks $000 Through Appraisal N/A N/A 14.1 35.3 Appraisal-Board N/A N/A 52.8 120.3 Board-Effectiveness N/A N/A 4.8 11.5 Supervision N/A N/A 131.2 330.4 Completion N/A N/A 7.0 15.2 TOTAL N/A N/A 209.9 512.7  22 Table 12: Bank Resources - Missions Performance rating Specialized Implemen- Develop- Stage of Project Month/ No. of Days in skills tation ment Types of Cycle Year Persons Field represented Status Impact problems Through 1/81 1 n/a HE Appraisal 4/82 1 6 EC 2/83 2 19 HE,EC Appraisal 4/83 1 5 HE M through Board Approval 10/83 1 10* EC M 10/83 1 n/a HE M,T 2/84 1 4 HE T,F,M 3/84 1 12* EC M Board approval 11/84 1 - EC M through 7/85 2 I1* HE,L M effectiveness 7/85 1 EC M 9/85 1 ME T 10/85 1 HE M 12/85 1 11* EC M Supervision 1 3/86 1 6 HE 3 1 M,F 2 6/86 1 8 EC M,T 3 7/86 1 11 HE 2 1 M,T 4 9/86 1 2 HE 2 1 T 5 1/87 1 11 HE 2 1 M,T 6 4/87 1 8 EC 2 1 M 7 6/87 1 7 HE 2 2 T 8 1/88 2 9 HE,EC 2 2 M 9 5/89 2 18* EC,PE 2 2 M,T,F 10 1/90 2 10* HE,PE 2 2 M,F,T 11 5/90 1 PE 2 2 M 12 7/90 1 - PE 2 2 M 13 12/90 2 16* HE,PE 2 2 M 14 3/91 2 15* HE,PE 2 2 M 15 10/91 2 18* HE,EC 2 2 M 16 2/92 2 29* EC,HE 2 2 M 17 5/92 2 15* EC,EL 2 2 M,T 18 9/92 1 20* EC 2 2 M 19 11/92 2 14* EC,HE 2 2 M 20 3/93 1 - EC 2 2 M 21 5/93 2 22* HE,EC 2 2 M,T 22 2/94 1 - EC 2 2 M,T 23 5/94 1 19* HE 2 2 M,T 24 12/94 2 10* HE(2) 2 2 M,T 25 4/95 3 14* HE(3) S S ICR *Combined with other work such as sector work, project preparation and other supervision. - HE-Highway Engineer; EC-Economist; EL-Ecologist; PE-Planning Engineer; L-Lawyer - M-Managerial; T-Technical; F-Financial; L-Legal; E- Ecological or Environmental - I-Problem free; 2-Moderate Problems; 3- Serious Problems; S-Satisfactory.  23 APPENDIX A Extract from Mission's Aide-Memoire, April 2 - 19,1995 1. The mission had detailed discussions with the Deputy Director General, the Project Manager for the Road Flood Rehabilitation Project and the two Project Managers for the Third Highway Project (one for the Kohalpur-Mahakali Road and Karnali Bridge components and one for the Naubise-Malekhu Road component) on the guidelines for the Borrower's Project Evaluation Reports/Summary. Copies of the guidelines for the preparation of the report were given to the Deputy Director General and to the Project Managers. 2. There was considerable discussion on the details to be included in the Report/Summary on the plan for the operational phase of the project. The mission pointed out that objective of such operational plan was to sustain the flow of economic benefits accruing from the investments made under the projects. Accordingly, for completed road projects the operational plan would include details of the preparation, funding and implementation of a routine and periodic maintenance program. 3. The particular problems concerning the operational plan for the Government of India (GOI) funded Kohalpur-Mahakali Road was discussed. The 18 bridges and approach roads, west of Kamali Bridge, which were deleted from the project and the lack of a connection to the new barrage at the Indian border have resulted in the traffic flow along the Kohalpur-Mahakali road and on the Kamali bridge being much less than anticipated. As a consequence, the expected benefits from the road investment have not yet been fully realized. The mission was informed that discussions were progressing with the Government of India (GOI) regarding the financing of the 18 bridges and remaining works. Therefore, it was agreed that, in addition to the road and bridge inspection and maintenance plan, the operational plan for the Kohalpur-Mahakali Road would include a detailed schedule for the completion of the remaining road and bridge works so that the benefits from the investments on the road and bridge can be fully realized. 4. The Deputy Director General queried whether an economic reevaluation of the road investment at this time would be meaningful. He also told the mission that DOR did not have the expertise in agronomics to replicate the type of economic analysis done in the SAR for this road and asked for IDA's assistance. 5. Following a request from the Borrower in a letter dated January 3, 1995, IDA has approved an amendment to Credit 151 5-NEP to include i) the rehabilitation of the Mugling- Marsyangdi Road and ii) technical assistance for the supervision of the rehabilitation works. The Amendment Letter dated March 21, 1995, and signed and returned to IDA by the Borrower on April 16, 1995, covered the inclusion of this work in Credit 151 5-NEP and gave allocation amounts in SDR based on the request for $ 700,000. The mission was told that the amount required for this work has now increased from $700,000 to $ 900,000 and  24 informed DOR that the additional funds needed could be provided by reallocating the amounts between the categories of Credit 1515-NEP. Naubise - Malekhu Road Component 6. The final cost including the cost of flood repair and the three new bridges is estimated as: Naubise-Malekhu Road Contracts - NRs. 312.86 m. Repair of Flood Damages (V.O.s 22 & 23) - NRs. 126.16 m. Reconstruction of Three bridges - NRs. 155.63 m. 7. The bridge contract will not be completed before June 30, 1995, the Closing Date for Credit 1515-NEP, and the total value of the work remaining to be completed is estimated at NRs. 92.43 million. Therefore, with IDA's financing of 77% of civil works, an estimated amount of $ 1.45 million for civil works plus an additional amount of about $ 234,000 for consultant services on supervision, amounting to a total of $ 1.68 million will need to be financed from the Road Maintenance and Rehabilitation Project, Credit 2578- NEP. The mission and DOR agreed that the Borrower would promptly ask IDA to issue a Letter of Amendment to Credit 2578-NEP to include the remaining bridge construction and supervision and their financing in the Road Maintenance and Rehabilitation Project. The Borrower would also send to IDA an Implementation Schedule with costs for the bridge works. Kohalpur-Mahakali Road Component. 8. All four road contracts have been completed. The original contracts periods were 48 months, from March 1, 1986 to February 28, 1990. Time extensions were granted to all contracts on February 26, 1991: an additional 36 months for Contract No.1, 38 months for Contract no. 2, 24 months for Contract No. 3 and 15.5 months for Contract no. 4. All the contracts have now been completed with the last maintenance Certificate issued for Contract No 1. on May 31, 1994. The four contracts have completed 153.5 km out of the total project length of 204 km. The 18 bridges and their approaches with a combined length of about 8 km are yet to be built but the mission was told that HMG has reached an understanding with GOI who would provide a grant for their construction. About 43 km of the most westerly section was built some 15 years ago by DOR. Of this length, 12 km needing complete rehabilitation and 31 km needing maintenance are included in the Road Maintenance and Rehabilitation Project. The mission strongly recommends that a link road to the new Tanakpur barrage be built to connect the highway to the Indian road network  25 9. The original and current estimated costs of the Kohalpur-Mahakali Road contracts are: Corrected Contract Amount Final Contract Amount (NRs.m.) (NRs.m.) Contract No. 1 148.49 149.92 Contract No. 2 214.12 188.31 Contract No. 3 218.10 224.59 Contract No. 4 248.46 231.25 829.17 794.07 10. Total costs are estimated at NRs. 794.07 million plus claims estimated at NRs. 192.65, giving a total of 986.72 million, about 29% above the original contract amount. The claims submitted by the four contractors are mostly related to the expiration of the Trade and Transit Treaty between Nepal and India and the mission was informed that the claims have been negotiated between HMG's Negotiating Committee and the contractors. Karnali Bridge Component 11. The total cost of the contract is NRs. 353.068 million an increase of about 23% over the original contract amount of NRs. 287.800 million. The last outstanding Claims Nos. 18 and 30 have been reviewed by the Claims Committee who recommended payment of NRs. 7.16 million and IDA has given its no objection to the payment of these claims. Summary of Agreements and Understandings Reached. 1. DOR agreed to send to IDA by September 30, 1995, the Borrower's Report on the Third Highway Project (Credit 1515-NEP) 2. The mission and DOR agreed that the Borrower would promptly ask IDA to issue a Letter of Amendment to Credit 2578-NEP to include the construction and supervision of the remaining bridge civil works on the Mahadevbesi, Belkhu and Malekhu bridges on the Naubise-Malekhu Road to done after June 30, 1995, and their financing in the Road Maintenance and Rehabilitation project. The Borrower would also send to IDA an Implementation Schedule with costs for the completion of the bridge works.  26 Extract from Mission's Aide-Memoire, October 31-Nov 8, 1995 Third Highway Project and Road Flood Rehabilitation Project: Preparation of Implementation Completion Reports (ICRs) 1. The remaining tasks for the preparation of these ICRs were discussed. For the Road Flood Rehabilitation Project, DOR provided detailed comments on IDA's draft completion report, and agreed to prepare a summary of not more than three pages from its borrower's completion report, for inclusion in the final ICR. DOR also agreed to prepare an action plan for the operational phase of the project. 2. For the Third Highway Project, preparation of the government's report was delayed because of uncertainties about a possible further extension of the project, which did not eventuate. DOR agreed to finalize this report by the end of December 1995, including project performance indicators, indicators for the operational phase of the project, and details of current traffic flows and expected traffic growth on each of the project roads. 3. The mission discussed the sustainability of road works undertaken in the course of these two projects. It is clear from a number of indicators that HMGN budgeting, programming and implementation of routine and periodic maintenance works are not currently adequate to preserve existing road assets, so that substantial premature deterioration is taking place on many sections even while other sections are being improved. This was evident at a number of sites observed in the field, and is reflected in the road condition data collected by MRCU. On the other hand, the Department of Roads has embarked on an ambitious program of reform of road maintenance planning, management and execution, which is showing excellent results in a number of areas such as the SMDs. It was agreed that the continued pursuit of these programs over five to ten years will lead to sustainable road maintenance for the strategic network, but that this will require considerable focus and commitment on the part of HMGN. 4. Following previous correspondence on this matter, the mission informed DOR and MOF that it was not possible for IDA to extend the disbursement period for the Third Highway Project (Cr. 1515) beyond the October 31 deadline. HMGN endeavored to finalize a large proportion of the outstanding claims and forward these to IDA before the deadline. DOR informed the mission that there remained some outstanding claims related to the Mugling-Marsyangdi road section which could not be finalized within this period. 5. IDA expressed concern about the lack of routine maintenance on the Mugling- Marsyandgi section of the Prithvi Highway, which was completed in March, 1995. Further information was also requested on the current arrangements and future plans for maintenance of the Kamali Bridge.  27 APPENDIX B DEPARTMENT OF ROADS THIRD HIGHWAY PROJECT - CREDIT 1515-NEP BORROWER'S COMPLETION REPORT - SUMMARY Introduction 1. Due to the young geological age of Nepal's Himalayas Mountains and Terai with numerous rivers cris-crossing the country, its terrain has always been fragile and ecologically sensitive, the construction of highway proved to be most challenging, difficult and costly from the technical and environmental point of view. 2. Nepal is building roads in order to integrate the country physically and economically. Nepal had accorded highest priority in transport sector. Still some 20 district headquarters out of 75 are still to be provided with road transport facilities. IDA has assisted Nepal with two previous transport projects since two and half decades. 3. The Third Highway Project is the subject of this report and is described below. The fourth credit Road Maintenance and Rehabilitation project (RMRP), IDA's Cr. 2578-NEP amounting 50 million US $ (SDR 36.6 million) is currently running with a view to maintain and rehabilitate some of the important road links of the country. 4. The IDA has also approved to finance the outstanding works of three major bridges and some of Road repair works of Prithvi Highway (PHW) from RMRP IDA's Cr. No. 2578-NEP after the expiry of the loan period of Third Highway Project IDA's Cr. No. 1515-NEP on 30 June 1995. The IDA's Cr. No. 1515 NEP also partially financed the remaining works of Mugling - Marsyangdi Road Rehabilitation Project leading to the scenic tourist spot of Pokhara Valley after the expiry of the loan period of the Marsyangdi Hydroelectric Power Project IDA's Cr. No. 1478-NEP on 31st December 1994. 5. The assistance from IDA in carrying out the transport Projects have been commendable and instrumental in the development of this vital transport infrastructural facilities which prove to be catalytic agents for other sectors of development. Furthermore the decision of the World Bank to finance some of the projects such as the Replacement of Flood Damaged Bridges and Road Repairs Works on Naubise-Malekhu section of PHW and the remaining works of Mugling-Marsyangdi section which are not conceived in the original DCA of IDA's Cr. No. 1515-NEP has helped in restoring the severed link to the capital with the rest of the country.  28 Objectives 6. The main objectives of the Third Highway Project were: (a) To integrate the far western region of the country physically and economically by completing the construction of East-West Highway from Kohalpur to Mahakali in western Indian border. (b) To improve the Traffic conditions between Kathmandu and Indian border at Raxaul by the selective rehabilitation of bridges and Road pavements and (c) To strengthen the operations and administration of the Departments of Roads (DOR) in particular to improve their capability to implement and monitor both Road Maintenance and the Project components by providing them with technical assistance, equipment and training. 7. These objectives mentioned above were achieved to a great extent. These objectives as well as the means of achieving them under the project are described in detail below. A. STATEMENT AND EVALUATION OF OBJECTIVES 8. In order to achieve the above mentioned objectives, the Third highway Project comprised the following components: (a) Construction of 204 km of East-West Highway including a major bridge over Kamali River at Chisapani. (b) Construction of about 60 km of feeder roads linking main areas of agricultural production in the influence areas of the Karnali River northwards to the Project Road. (c) The rehabilitation/maintenance of about 82 km of the Road of Naubise- Mugling Section of Prithvi Highway between Kathmandu and Birgunj including the selective bridges. (d) The procurement of equipment for Road Maintenance and materials laboratory, office equipment and inspection vehicles. (e) Technical assistance and training. Objectives 9.. East-West Highway Construction (approx. 204 km Kohalpur - Mahakali. This last section of East-West Highway, when completed, will integrate the whole country economically and physically. Thus early completion is considered a basic need of the country and HMG/N has accorded it top priority. Road traverses about 16 km of the  29 Bardiya wild life National Park (Kamali Wild Life Reserve), an area of about 90,000 Ha. Environmental action plan to conserve and protect the wild life in this area had been agreed between DOR and National Park and Wild Life conservation office during and after construction of the Road. 10. The construction of this highway section had been co-financed by Government of India with a grant assistance of IRs 500,000.000 (Indian Rupees five hundred million). The construction of two sections was awarded to two Indian contractors viz. UPSBC & NBCC and two packages were awarded to NCCN with KONECO as sub-contractor. The construction supervision had been carried out by a Canadian Consulting firm, N. D. Lea & Associates. NCCN has been provided technical assistance to reinforce their management capability in their construction works by Crown Agent's Construction Management Group. 11. The construction of the bridge over Karnali River was awarded to a Japanese construction firm Kawasaki Heavy Industries, Ltd. The design and construction supervision of the bridge was carried by an American Consulting firm named Steinman, Boyton Gronquist & Birdsall Inc., New York. Feeder Road Construction 12. From the West of the Karnali River, the Road travels through the foot of Churiya Hills North of fertile Terai of Tikapur. In order to provide road access to this fertile fan of the Karnali Delta approx. 60 km. of feeder roads with gravel wearing course has been envisaged to be constructed at relatively low cost. 13. Rehabilitation/Improvement of the Kathmandu Birgunj Road and Bridges 14. The worst part of the road between Kathmandu and Birgunj is the Naubise Mugling Section (about 82 km of Prithvi Highway) which is only and most important link to Kathmandu with the rest of the country. 15. The bridge between Hetauda and Birgunj and two bridges between Thankot and Naubise was awarded to the IRCON and the design and supervision was carried by N. D. Lea International. 16. The contract to Rehabilitation Naubise - Malekhu Section was awarded to CCECC and supervised by Scott Wilson Kirkpatrick (SWK) UK. 17. The section of the road from Malekhu to Mugling was rehabilitated with the grant assistance of Sterling Pds. 16.00 Mil. from ODA UK and the contract was managed by Crown Agents/Kier JV and supervised by the SWK. 18. Procurement of Equipment, Material Laboratory, Office Equipment and Inspection Vehicles (a) 6 Nos. wheel dozer, 3 Nos. Motor graders & 4 No. Mobile cranes other plant & tools had been procured to strengthen the maintenance capacity of DoR.  30 (b) Central laboratory had been established at Lalitpur and material testing are being conducted satisfactorily. All section of DoR had been supplied with computers & photocopy machine and other office equipment. 19.. Training Training had been provided in the following various fields: (a) Highway Project Management (b) Quality Control Techniques (c) Bridge & foundation design (d) Traffic Engineering (e) Transport Planning (f) Workshop Management (g) Remote Sensing Evaluation of Objectives 20. Nepal's Seventh Plan (1985/86-1990/91) had accorded highest priority to complete the remaining far western part of Mahendra Highway - the main trunk road running from East to West throughout the country. Also the seventh plan envisaged that the existing manpower would be made skillful and efficient to carry out their job and various types of training programmes would be given to promote manpower productivity and expertise. B. ACHIEVEMENT OF OBJECTIVES 21. The objectives of the Third Highway Project have been fulfilled to the greatest possible extent. The Far Western and Mid Western region of the country have been brought together into the National Economy by completing the construction of Kohalpur-Mahakali Road and the bridge across the Karnali River. 18 Causeways have yet to be replaced by permanent river bridges. These are promised to be constructed with the grant assistance from GOI. 22. Traffic conditions between Naubise & Mugling have greatly improved with the construction of five new bridges on Hetauda - Raxaul. Also the construction of two more double lane bridges between Thankot to Naubise at Khatri Pauwa and Naubise greatly improved the traffic bottleneck at these locations. The previous bridges build in mid-fifties by GOI were of one lane width. Also the procurement of the heavy machines greatly enhanced the maintenance capability of DOR and the opening the traffic throughout year by deploying them in regions susceptible to landslides. In-house technical enhancement has been greatly fulfilled in Roads sector as most of the engineers and technicians had been seconded to SWK to man various key jobs in technical field in respective project components. Also the training and further specialized studies in Highway related disciplines greatly improved the technical capability of the DOR and offered the knowledge  31 in emerging trend in technology in the Highway sector. As expected the completion of the East-West Highway and the construction of about 52 km of feeder road links from the Highway to the major agricultural production areas of the Karnali delta region has greatly increased the agricultural productivity with the ease of providing inputs like improved seeds, fertilizer, agricultural plants and tools and trade activities. 23. The involvement of DOR technical staff as project managers for each project components and the secondment to consulting Engineers for survey, design, material testing, quality control has not only reduced the need of expatriate staff but also helped on the job training and transfer of technology with such acquired knowledge now the DOR can carry out the implementation of major Civil Works. C. MAJOR FACTORS AFFECTING THE PROJECT 24. The following are the main factors delaying the Project implementation and the completion. (a) Delay in Credit effectiveness caused delays in the procurement of consulting services. (b) The award of the contract to a Chinese Construction Company for the Construction of the Kohalpur-Mahakali Highway (KMHP) had to be withdrawn following the acceptance by HMGN of a grant assistance from the GOI thereby necessitating an amendment to the DCA of IDA's Credit No. 1515 -NEP to reflect the co-financing arrangement and replacing the loan assistance from SFD. (c) Trade and Transit impasse between Nepal and India in March 1989. (d) Political changes in March 1990. (e) Shortage of fuel due to Gulf War in August - December 1990. (f) Floods in July 1993. (g) Delay in acquisition of land, removal of trees, delay in customs clearances delay in procurement of explosives, occasional labor disputes, procurement of natural construction materials such as sands, boulders and aggregates freely. (h) The contractor's own inability to organize and manage the project efficiently in Naubise - Malekhu Projects. (i) The contractor's inability to deploy enough plant and equipment in KMHP. (j) The lack of participation for DOR's seconded staff in the decision making process in the ODA (UK) financed project of Malekhu - Mugling did not  32 materialize the much needed establishment of PHU as envisaged in the objectives of the Malekhu - Mugling Project. Furthermore, dependence on too many expatriate staff and lesser number of seconded staff inflated the project costs on the ODA (UK) financed Malekhu -Mugling Road Project. D. PROJECT SUSTAINABILITY 25. Plan of operation is attached which gives details for maintaining the assets provided under the Project and thereby ensuring the sustainability of the project. E. BANK'S PERFORMANCE (a) The Bank's performances in identifying the projects, studies of the projects taking into account the economic rate of return have been excellent. (b) The Bank's policy in further investing in flood damaged bridges and road repair works and the remaining works of the Mugling - Marsyangdi section of PHW is praiseworthy and testifies to its continued effort in the development of Nepal. (c) The Bank's performances in coordinating the various donor agencies have been quite good. (d) The resident office based in Kathmandu through its consultants and other officials has been providing cooperation, assistance and necessary information from time to time for the successful completion of the projects. (e) The resident office based in Kathmandu is quite prompt in processing withdrawal application for early payment. (f) The Bank's mission visit for monitoring the project has been quite good in providing suggestion and advice for the successful completion of the projects. F. BORROWER'S PERFORMANCE (a) Coordination and accountability should be improved in order to avoid the delay among the various offices of the Ministries of HMGN and in order to avoid the delay in the submission of Audit Reports. (b) The IDA's guidelines on the procurement of civil works, goods and consulting services have been fully followed by the borrower. (c) DOR's posting of project managers in each project component helped to expedite the decision making process in vital matters.  33 (d) Disparity of salary in DOR Projects office staff and seconded staff to the consulting engineers created friction and division. (e) The Project managers from each of the component always provided latest status of the project pertaining to its physical and financial progress. G. ASSESSMENT OF OUTCOME (a) Despite the delays and constraints as mentioned above, the Third Highway Project was successful in achieving its goals. The objectives set by the Project were realistic, achievable and reflected the national needs of the country as envisaged in the development plans of the country. (b) The unforeseen situations evolved during project execution was handled effectively both by IDA and Borrower and the Consultants. The IDA during their visiting missions to Nepal with their blend of experiences displayed enthusiasm, flexibility and sympathy towards the needs and aspirations of a developing country. H. KEY LESSONS LEARNED (a) Coordination among different offices should be improved (b) Decentralized system of procurement of explosives in all regions should start in order to minimize the delay. (c) Start the construction work only after the acquisition of lands (d) Maximize number of DOR staff's participation to man the project. (e) Pay difference to be narrowed between HMG/N Projects office and seconded staff. (f) Labor liaison office to be established to minimize the labor disputes. (g) Ways and means of quick customs clearances should be explored. (h) Price adjustment should be submitted by the Engineer in every applicable interim statement in order to minimize the financial burden at the end of the project necessitating the need for decision from higher authorities. (i) The Engineer and the contractor are required to submit the lists of the construction materials and equipment required for the project well before the start of the project so that approval for the custom clearances could be obtained in time.  34 (I) The Engineer should submit the detail property acquisition and removal of forest cover during and after survey and process for the acquisition should start before the start of the project. (k) Specifications of the works should be suited to the local conditions. (1) Central Unit and existing maintenance divisions should protect the right of way of the highways and prevent encroachments. (in) Measures should be taken to minimize the accidents in highways. (n) Community participation should be encouraged in greening the areas adjacent the highways. (o) Local contractors can perform fairly good at low cost as seen in the case of ODA financed Malekhu - Mugling Section. Therefore LCB should be encouraged. (p) The duties and responsibilities of Management Contractor could be entrusted to the consulting engineers with greater participation from DOR's seconded staff, thereby reducing the cost of management and supervision considerably and duplication work on supervision and control on works could be avoided. (q) Capacity of HMG/N to expend the credit should be increased so that allocated credit is fully and effectively used.  35 APPENDIX C DEPARTMENT OF ROADS THIRD HIGHWAY PROJECT COMPLETION REPORT PLAN OF OPERATION BACKGROUND Introduction 1. Nepal has a total road network of around 10,000 krm of roads. It comprises 2734 km of National Highways, 1520 Km of Feeder Roads, 3941 km District Roads and 1339 km Urban Roads. Operation and maintenance of National Highways and Feeder roads, and some important district and urban roads is carried out by the Department of Roads under the Ministry of Works & Transport Organization 2.. The Department of Roads (DOR) is headed by Director General, who is assisted by five Deputy Director Generals looking after Planning, Design, Maintenance, Mechanical and Foreign Cooperation Branches at the Kathmandu Head Office. Besides these, there are several other units involved in specific fields, i.e., Bridge Unit, Geo-environmental Unit, Traffic Engineering & Safety Unit, Maintenance & Rehabilitation Coordination Unit, etc. Regional Offices and Divisions 3.. Apart from the head office in Kathmandu, DOR has six regional offices, one each in Eastern, Western, Mid-western and Far-Western regions and two in the central region. Under these regional offices there are 25 Divisional Units, which are directly involved in the operation and maintenance of roads. Each Divisional Unit is headed by a Division Chief, who is a senior engineer. In general, the unit includes three assistant engineers and nine technicians along with account and administrative personnel. For the operation and maintenance of Road Maintenance equipment, six Heavy Equipment Divisions have been established, one for each regional office. Budgeting 4.. The works performed by DOR is financed by HMG and bilateral as well as multilateral donor and loan agencies. The budget allocated for Fiscal Year 1995/96 is as follows in NRs. Xl06):_ General Administration 120 Routine Maintenance 39 Periodic Maintenance 602  36 Rehabilitation & Improvement 1584 New Construction 1556 Studies & Design 144 Total 4045 5. It represents about 10% of annual national budget for 1995/96. The contribution of HMG/N amounts to NR 1725 million or 43% of the total annual budget. OPERATION AND MAINTENANCE Description of Works 6. The following works have been completed under the Third Highway Project IDA Credit 1515-NEP: (a) Construction of 204 km Kohalpur - Mahakali Highway except remaining 22 bridges and its approaches totaling approximately 8 km. in length. (b) Construction of 500 m long Karnali Bridge (c) Rehabilitation of 82 km Naubise - Mugling Highway (d) Reconstruction of 7 Bridges on the Tribhuvan Highway PLAN OF OPERATION Kohalpur - Mahakali Highway 7. This has been divided into two sections: Kohalpur - Karnali 77 km and Karnali - Mahakali: 127 km. The first section lies in the mid-western region and is operated and maintained by the maintenance division in Nepalganj. One assistant Engineer and two technicians have been assigned to this road. Two stretches with total 16 km road is located inside the Royal Bardiya National Park, which is wild life reserve area. Maintenance on these stretches is done with close coordination with the park authorities. The second section is located in the far western region and is operated and maintained by the maintenance division in Mahendranagar. On this section 22 bridges and their approaches remain to be constructed, and at present traffic is being operated trough diversions. These are disrupted during rainy season for hours and sometimes for days. Gabion mattresses are being laid o these diversions to minimize the delay. An agreement between HMG and GOI has recently been concluded for the construction of the bridges and approaches. The westerly 43 km stretch on this section was constructed with HMG resources about 15 years before and now is included in the road rehabilitation programme under IDA's Credit 2578-NEP. Traffic on this road is nominal at present with ADT of 140 and it is expected to increase after the construction of these remaining bridges.  37 Karnali Bridge 8. At present this Karnali Bridge is being looked after by the Division in Nepalganj. This is a 500 m long single tower cable - stayed bridge with an asymmetric span arrangement of 325 m main span and 175 m side span. the bridge was designed and supervised by an America Consultancy firm Steinman, New York and constructed by a Japanese Construction Company Kawasaki Heavy Industries. This, being a very sophisticated engineering structure, needs special consideration for its operation and maintenance. The manual for inspection and maintenance prepared by the Consultant states general inspection of the Bridge on annual basis and in-depth inspection every five years. Accordingly, general inspection has been carried out in November, 1994. No defect was observed in any part of the structure. Need for security of the Bridge has been felt and necessary arrangement for it is being worked out in DOR. A building has been planned for construction near the Bridge site and 24 - hour watchmen/guards will be stationed at the Bridge. The bridge, being only recently completed, does not require any significant maintenance except clearing of the deck surface and removing dust and stone particles from the expansion joints. However, more rigorous inspection and maintenance will have to be carried out in the future. For this, necessary expertise has yet to be developed in DOR and overseas as well as in-house training programmes are being planned, and IDA's or other international assistance will be sought for this. In spite of this, for such a technically sophisticated Bridge, the local technical manpower alone may not be able to handle the in- depth inspection and maintenance of vital components like cables. Truss, bearings, etc. Hence, DOR will have to employ from time to time expatriate consultants as well as maintenance crew. The ongoing IDA's Credit 2578-NEP includes a component for specialist assistance in maintenance of Karnali Bridge and this is expected to be implemented. Naubise - Mugling Highway 9 This road lies in the central region and is operated and maintained by DOR Maintenance Division located in Bharatpur. Traffic 10. AADT (Annual Average Daily Traffic) survey carried out in 1983 showed 435 vehicles, 80% being heavy vehicles. After the completion of the rehabilitation of Naubise - Mugling, the traffic has increased to 1935 in 1995, 83% being heavy vehicles, consisting of Buses and Trucks even surpassing our traffic prediction of 1738 vehicles. Using a 1986 baseline AADT value of 1000 vehicles and average annual compound growth rates of: 6.5% p.a. - 1986 - 1994 5.5% p.a. - 1996 - 2010 11. ADT forecast for 1995 was 1738 vehicles as against actual count of 1935 showing an increase of 25%. Based on the traffic forecast the design period of 10 years and 15 years  38 have been evaluated beginning from 1990, assuming that 50% of road surfacing works would be complete. These evaluations give growth factor of: 10 years - Growth Factor:- 1.648 15 years Growth Factor:- 1.936 12. The different loading cases have been considered assuming that these will occur on Naubise - Mugling Section of the Prithvi Highway during alternative pavement design period of 10 and 15 years. 13. The first case assumed that the current prevailing traffic will continue. The second case considered the effects that the opening of new road link between Sindhuli and Kathmandu in mid 1995 would have effects on the traffic loading on this Naubise - Mugling Section. 14. The third case examined the consequential effects of containerization of goods imported to Nepal. In each case examined the Cumulative Equivalent Standard Axle (CESA) loading for both 10 and 15 year design period were evaluated. The CESA is the cumulative number of 8200 kg Standard Axle Loads which it is estimated will be carried by the pavement of the mot heavily trafficked road land during its design life. The traffic loadings on Naubise - Mugling Section of the Prithvi Highway for the normal pattern of traffic for the design period of 10 years and 15 years are estimated to be 9.5 million and 16.7 million respectively. As the pavement is designed for 10 million Standard Equivalent Axle Loading, which is expected to be reached after 10 years overlaying of pavement will be necessary after that period. Road Safety 15. After the completion of the Naubise - Mugling Rehabilitation Work traffic accidents are on the increase. DOR is taking necessary safety measures to minimize traffic accidents. A Traffic Engineering & Safety Unit (TESU) has been established in DOR with the assistance of ODA (UK). TESU has prepared accidents documentation formats. Safety Audit of Naubise - Mugling is being conducted by this unit and at present 20 chevron traffic signs are planned to be installed at hazardous bends. These and other safety measures will be continued in the future. Moreover TESU holds regular seminars with participation from engineers from divisional offices and the traffic police. 7 Bridges on the Tribhuvan Highway 16. The name and location of the bridges is as follows:- (a) Khatripauwa on Thankot - Nabise road (b) Naubise on Thankot - Naubise road (c) Karra on Hetauda - Birgunj road (d) Chure on Hetauda - Birgunj road  39 (e) Amlekhganj No. 3 on Hetauda - Birgunj road (f) Amlekhganj No. 4 on Hetauda - Birgunj road (g) Jitpur on Hetauda - Birgunj road 17. The first two bridges Khatripauwa and Naubise on Thankot - Naubise road is being looked after by the Division in Bharatpurand the other five bridges on Hetauda - Birgunj road by the Division in Pathlaiya. 18. With the assistance of ODA (UK) a Bridge Unit has been established in DOR. The unit has prepared bridge inventory for the whole road network and is conducting bridge condition survey. All bridges are being numbered in accordance with a national system. Maintenance of regular nature is done by the divisions and maintenance requiring special technical skills, i.e., replacing bearings and expansion joints, repair of vital components like truss members, cables/suspenders, etc. will be conducted with close coordination with the bridge unit. Inspection forms have been prepared and are now in use. Mainteanc 19. Two types of maintenance works are carried out on a regular basis, i.e. Routine Maintenance and Periodic Maintenance. Routine Maintenance 20. Routine maintenance is carried out throughout the year on a force account basis by employing a gang of 10 - 12 labor and a supervisor for about 25 - 30 km of road. The works under routine maintenance include clearing the road surface by hand brooms, clearance of side drains and culvert openings of soil and debris, removal of grass encroaching on the shoulders, repair of denuded shoulders and embankments, patch repairs of isolated pot holes on the pavement, etc. Besides the mentioned works of regular nature, emergency works are also carried out under routine maintenance. The type of works depend upon the nature of emergency and hence, is difficult to specify. However, some of them include: removal of damaged vehicles from the road and clear it for traffic especially following an accident, clearance of slides, removal of felled trees after severe storrn, protection of endangered embankment slopes by placing gabions and filling with boulders, construction of temporary diversions, etc. For such emergency works necessary labor is engaged temporarily and also available equipment like cranes, loaders, trucks, etc. are used. Strengthened Maintenance Divisions (SMD) 21. In order to improve Maintenance and Rehabilitation Programme of DOR and agreement between HMG/N and SDC had been signed on 3rd December 1993. SMD concept has been adopted first in two Division offices namely Chitwan and Lalitpur Division. During in initial phases and later on extended to six divisions till 1995. DOR has plan to extend to all 25 divisions. The aim of the SMD concept is to improve the  40 routine/recurrent, periodic and emergency maintenance works, its management, planning, monitoring and budgeting. The SMD concept has the following objectives:- (a) Decentralize the administration of the network. (b) Establish a network planning capability in DOR. (c) Establish a self-sustaining fund for Road Maintenance covering Routine, Periodic and Emergency activities. (d) Improve Routine Maintenance Operations in the Districts. (e) Improve Periodic Maintenance of Strategic Network. (f) Improve Budget Maintenance on the Strategic Network. (g) Improve Road side Support Maintenance. (h) Establish the concept of National Standards. (i) Improve DOR Plant Management and Utilization in the Medium Term. Periodic Maintenance 22. Periodic maintenance, in general is carried out on a contract basis. The contracts are relatively small amounting from NRs. 0.2 million to NRs. 2 million with contract periods ranging from 3 months to 6 months. The contract works are supervised by the existing organization of the Division. Periodic maintenance include works, which are beyond the scope of routine maintenance, such as, stretches of damaged road pavement and shoulders, rehabilitation of culverts and construction of additional culverts, if required, construction of additional retaining structures, river training works, etc. Inspection 23. Inspection of the road and ongoing maintenance works is done as follows:- (a) Technician is at the work site daily except during no work days. (b) Assistant Engineer inspects the road and the works twice a week and more, if necessary. (c) Division chief inspects the road and the road works on a fortnightly basis or more, if required. (d) Regional Director inspects the road and the works at least once a month. (e) Deputy Director General inspects the road generally every quarter and the Director General on a half yearly basis. Traffic Studie-s 24. DOR through its Maintenance & Rehabilitation Coordination Unit (MRCU) conducts traffic surveys and has recently conducted Axle - Load Survey in eastern Nepal. Overloaded vehicles have been noted. At present no load restrictions have been applied in Nepal. In view of the damage potential of overloaded vehicles resulting in premature deterioration of the pavement, HMG is considering to apply load restrictions in the future.  41 FINANCING Routine and Periodic Maintenance 25. For routine and periodic maintenance the funds allocated for the Fiscal Year 1995/96 is as follows: Road Section Periodic Routine Total NRs (000) NRs (000) NRs (000) Kohalpur - Kamali (77 Km) 2,160 5,400 7,560 Kamali - Mahakali (127 Km) 1,310 7,100 8,410 Naubise - Mugling (82 Krn) 1,200 12,000 13,200 Road Improvement Fund 26. Since last three years soon after the completion of Rehabilitation of Naubise - Mugling Highway, Toll Tax is being collected on this road. Recently Public Road Improvement Fund Act, 1995 has been approved. This fund will be utilized for maintenance and necessary improvement of the roads. Others 27. In addition to the above regular maintenance fund of HMG the western 43 km of Kohalpur - Mahakali Highway constructed about 15 years before through HMGN resources has been included in the ongoing Road Maintenance and Rehabilitation Programme of IDA credit 2578-NEP. 28. For the construction of the remaining 22 bridges and approaches totaling about 8 km. in the Kohalpur - Mahakali Highway an agreement between HMG and GOI has recently been concluded. 28. Remaining construction works of the flood damaged three bridges on Naubise - Mugling road is in progress, which is financed under IDA's Credit 2578-NEP      J H- AGI N'i t(ep r t cN: Ii. 861 Ty p , : I'' P