Philippines - First National Roads Improvement and Management Program Project (NRIMP)

Report No. PID6896 Project Name Philippines-National Roads Improvement... and Management Program (NRIMP) Region East Asia and Pacific Region Sector Transport Project ID PHPE39019 Borrower Government of the Philippines through the Department of Finance Implementing Agency Department of Public Works and Highways Bonifacio Drive, Port Area Manila, Philippines Tel: 632-527-2604 Fax: 632-527-2607 Date PID Prepared September 24, 1998 (Revised June 28, 1999) Projected Appraisal September 15, 1999 Projected Board Date November 23, 1999 Background The archipelago nature of Philippines makes the transportation system critical for integration and development of the national economy. The Philippines transport sector is essentially bi-modal: road transport and inter-island shipping. Together, they account for almost all freight and passenger traffic. The sector responsibilities are highly compartmentalized. There is no single agency which has responsibility for the overall monitoring and management of the sector and multi-modal planning/integration is not fully effective. National Economic Development Authority (NEDA), with its role as the head of Infrastructure Inter-Agency Coordination Committee (INFRACOM), has mainly taken the lead in investment planning decisions. The Department of Public Works and Highways (DPWH) is responsible for the national road network while the bulk of the road network (provincial, barangay and municipal roads) is managed by respective Local Government Units (LGU). The Department of Transport and Communication (DOTC) has overall responsibility for the transport sector as well as for railways, port and shipping and civil aviation. The road network of the Philippines is not well defined due to lack of a good road classification system. The current network of about 161,000 km, which consists of National, Provincial, Municipal, City, and Barangay roads, has not changed much in size over the last decade. In terms of road intensity (km/sq.km), the present network compares favorably with other East Asian countries and is considered adequate for the present needs. However, in terms of road standards and quality of maintenance, the system is inadequate. Only about 17 percent of the total network is paved; the balance is gravel or earth. Except in Metropolitan Manila and other rapidly growing urban areas where new road construction is needed, upgrading, rehabilitation and improved maintenance are the main challenges for the road sector.  The road sector stakeholders in the Philippines have recognized the need to develop a sustainable road development and management program for the national network. Though this has been the main focus of the donor community in the past, the objective is not achieved yet. The Government indicated that institutional reforms and process re-engineering are its main priorities. The underlying objectives are to commercialize the road management activities, insulate the management from undue intervention, and, to the extent possible, make it responsive to the needs of the user-groups. Given that the Government of Philippines is embarking on a major institutional reform program for DPWH and an ambitious national roads investment program under the Medium-Term Development Plan (MTDP): 1999-2004, the Adaptable Program Loan (APL) approach is proposed to help achieve these objectives. Under this Program approach, the Program would include three successive Operations over nine years are proposed (NRIMP-1, -2 and -3). The Program would provide a logical framework for the Bank to provide sustained support in meeting the GOP objectives for the long term development and maintenance of its road sector. Objectives The over-arching goal of the Program is to help the Philippines economy as good transportation systems is necessary for a country to be competitive in the world markets. Actually, with their poor transportation facilities, many developing countries are not capable of participating in world markets because they cannot get to the market those goods with which they might have. Therefore, the Program will benefit the Filipino population as a whole. It will support economic growth and higher economic efficiency. It will generate money and time savings through better riding quality and more efficient use of human and financial resources, thereby promoting production and trade. The Program will also assist the development of the contracting and consulting industry thereby promoting job creation on a sustainable basis. The purpose of NRIMP would consist of: Achieving effective management and financing of the national road network; and Assisting the completion of the national arterial road network to all weather standards and the preservation of the national road network to sustainable operating conditions. The proposed first of three operations, NRIMP-1, will partially achieve a portion of the Program over-arching goal through the following outputs: Develop and adopt new/improved organizational structures for more effective management and financing of the national road network; Develop and implement priority road information and management tools; Implement priority road upgrading, rehabilitation and maintenance works; and Enable for an increase of the quality and capacity of the road construction and consulting industry. Description The first phase of the Program, NRIMP-1, would include the three following main components: A. Institutional Strengthening. Support the formulation, adoption and -2 -  implementation of capacity building measures in the public management of the national road network, through: Implementation of priority core and support business processes in DPWH for achieving the DPWH vision statement. Adoption of Better Roads Philippines (BRP) Initiative. Implement the steps needed to gain authorization and establishment of the new or improved organizational structures and financing mechanisms for commercializing the management of the national roads network. Strengthening of Environmental and Social Management in DPWH. NRIMP-1 would strengthen the environmental and social capabilities of the Environmental Impact Assessment Section of DPWH-Planning Services Division. B. Civil Works. The Program would finance priority road upgrading, rehabilitation and maintenance works. Maintenance of the national road network. The Program would include the annual preventive maintenance work programs carried out on the national road network. The World Bank would finance a slice of the annual preventive maintenance programs procured through National Competitive Bidding (NCB) outsourcing arrangements. The program would be prepared in accordance with pre-established criteria including sound engineering and economic practices. Rehabilitation/upgrading of the national arterial road network to all-weather standard. The Program would finance the rehabilitation and upgrading of about 2,200 km of the national arterial road network procured through International Competitive Bidding (ICB) procedures. The Bank would finance a slice of the annual rehabilitation/upgrading program. NRIMP-1 would focus on the preparation of such a program which will be financed by following operations while financing specifics investment projects already prepared and ready for implementation. Introduction of new maintenance practices. The Program would also introduce the utilization of innovative maintenance practices including multi-year routine maintenance performance contracts in two pilot provinces. C. Strengthening of the Road Construction and Consulting Industry. Under the first phase of the Program, NRIMP-1, a development strategy for the industry would be developed. Under the second and third phase of the Program, the strategy would be implemented. Financing The cost of the first operation of the Program, NRIMP-1, is estimated at about US$280 million which would be financed by a WB-IBRD loan of US$150 million and GOP counterpart funding of US$130 million. Implementation The program NRIMP would be implemented over a period of nine years from the year 2000. The first operation, NRIMP-1, would be implemented over a period of three years. The Department of Public Works and Highways (DPWH) would be the executing agency. -3-  Sustainability The proposed Program would address the sustainability issue with road investments. The institutional reforms will be implemented progressively during the program. Given the reform-oriented Government and DPWH leadership, the likelihood of sustainability of the program is high. If pursued, the reforms will introduce institutional and financing arrangements ensuring efficient development and maintenance of the assets. Lessons Learned from Past Operations in the Country/Sector From 1985 to the present, seven transport projects --including one structural adjustment operation with a substantial transport reform component-- were under implementation (five were completed and two are ongoing). The Bank's strategy for these projects focused on the removal of the financial, institutional and policy constraints through deregulation, private sector participation, institution building and higher O&M expenditures. For the investment components, the judgment is satisfactory overall, both for the Bank's and Borrower's role as well as for the outcome of the Bank's assistance. However, the ongoing IBRD-financed Highway Management Project reveals that priority attention should be given by the implementing agency and the Bank to contracts preparation and procurement processes. For the institutional and the policy reform components, however, the outcome of the Bank's assistance has been less successful mainly due to a lack of ownership. It is believed that, in this case, GOP is highly committed to the proposed Program as the reforms have been suggested by its main players (NEDA, DBM and DPWH), indicating strong ownership. Environmental and Social Aspects The Category of the proposed operation is rated "A/B". With the exception of few projects under the first phase, this Program loan will not finance specific investment, rather it will finance a time-slice of the national investment program, thus a conventional EIA is not feasible as per the requirements of an "A" rated project. The Program loan will help DPWH strengthen its environmental and social assessment capacity to prepare EIA for specific investments to be financed under subsequent phases of this operation. Accordingly, a Policy Frameworks for Environmental Impact Assessment including Land Acquisition Resettlement and Rehabilitation and for Public Consultation and Information Dissemination are being developed for the program. This framework will contain procedures acceptable to the Bank for the upgrading and rehabilitation of roads requiring additional land, including the principles for land acquisition, resettlement and rehabilitation, the institutional and legal framework, entitlement policies, implementation arrangements, rules for local participation in implementation, grievance redressal mechanisms, and provisions for internal and external monitoring. Where the majority of affected people on a road link are indigenous peoples, a RAP will be developed within the framework of the Bank's operational directive on indigenous peoples. Under the first phase of the Program, EIA and RAPs are being developed for specific investments. Contact Points -4-  The InfoShop The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 458-5454 Fax: (202) 522-1500 and/or Mr. Denis Robitaille Highway Engineer, Task Team Leader East Asia and Pacific Region Transport Sector Unit Telephone: (202) 458-7130 Fax: (202) 522-3573 and/or Mr. Toru Hashimoto Infrastructure Coordinator Philippines Country Management Unit 23rd Floor, The Taipan Place Building Emerald Avenue, Ortigas Center, Pasig City, Manila, Philippines Telephone: (632) 637-5855-64 Fax: (632) 917-3050 Processed by the InfoShop week ending July 2, 1999. Note: This is information on an evolving project. Certain components may not be necessarily included in the final project. - 5 -