Cambodia - Road Rehabilitation Project

Report No. PID6711 Project Name Cambodia-Road Rehabilitation Project (@+#) Region East Asia and Pacific Sector Transport Project ID KHPE4030 Borrower Royal Government of Cambodia Implementing Agency Ministry of Public Works and Transport (MPWT) Contact: Mr. Tauch Chankosal Director, Project Implementation Unit 200 Norodom Blvd Phnom Penh, Cambodia Tel/Fax: 855 23 723 515 Date this PID Prepared March 4, 1999 Projected Appraisal Date May 25, 1998 Projected Board Date March 23, 1999 1. Background Country Background and Sector Background. Cambodia is a relatively small country, with a population in mid-1995 of about 10.2 million and a total area of about 181,000 square kilometers. Approximately 85 percent of the population live in rural areas. With about 56 persons per square kilometer, the country is less densely populated than its main neighbors, Vietnam and Thailand. The per capita GNP in 1995 was about $260, placing Cambodia among the poorest countries in the world. This is below the level of the late 1960s, indicating that the Cambodian economy still suffers the legacy of decades of war and internal strife. Agriculture sector accounts for about 45 percent of GDP and 80 percent of the labor force. Economic Performance. In the late 1980s Cambodia embarked on a transition to a market economy and has since achieved significant success in stabilizing the economy and in structural reform. Inflation has been reduced from an average of 140 percent over the period from 1990-92 to 3.5 percent in 1995. The balance of payments situation has been marked by large external aid disbursements, significant foreign direct investment inflows and a consequent increase in imports. Foreign aid now accounts for about 40 percent of the national budget. The recent growth in the Cambodian economy has been fairly satisfactory given the difficult circumstances, with GDP growing at an annual rate of about 6 percent over the period from 1991 to 1995. Political Situation. Given Cambodia's recent history and current situation, the Government's first priority is to address political and social issues. Until the political situation is stabilized, the Government is likely to continue its ad hoc, piecemeal approach to the transport sector, focusing on physical works. The challenge for the Bank and other donors is to assist with essential physical investments while supporting the development and elaboration of a policy framework.  The Transport System. The main elements of the inland transport system are the roads, railways and inland waterways. Most of the road network was constructed during the first quarter of this century and was designed for light traffic and small vehicles. At the end of 1995 there were estimated to be approximately 7,800 kilometers of National and Provincial roads, plus a rough estimate of about 28,000 kilometers of other roads. Many of the other roads are essentially trails, with only about 4,000 kilometers considered to be "trafficable". There are two railway lines with a total of about 650 kilometers. The main inland waterways are the Mekong, Bassac and Tonle Sap Rivers and Lake. All international port activities are handled in Sihanoukville and Phnom Penh. In general, apart from a few sections of the system which have benefited from some relatively recent rehabilitation efforts, the transport system of Cambodia, after decades of wars and neglected maintenance has deteriorated to a state where the high costs of transport are a serious barrier to economic and social development and large parts of the country are virtually isolated. Road Transport. Road transportation is estimated to account for over 90 percent of the nation's passenger and cargo volumes and is clearly the predominant means of transportation in Cambodia. The vehicle fleet at the end of 1995 was estimated at about 430,000 motorized vehicles. About 379,000 of these, or almost 90 percent, were motorcycles. There were about 9,000 "heavy" (gross weights between 5 and 20 tons) trucks, 400 articulated vehicles or larger trucks with gross weights of more than 20 tons and fewer than 300 buses. 2. Objectives The project development objectives are to improve access to rural areas and build the framework for future sector reform. 3. Description The project will be financed by the World Bank, with a contribution from the Government of Japan (GOJ) for the rehabilitation of NR6. It comprises the following components: - Rehabilitation of 89.3 km of NR6, including restoration of ten ancient bridges; 21.5 km of NR 3, including culvert replacement or repair. Rehabilitation works include 52 bridges and sub-components for mine and UXO clearance and protection of cultural heritage; - Rehabilitation of 4.4 km of urban streets in Phnom Penh and Sihanoukville to serve as on-the-job training for small-scale contractors; - Procurement of minor equipment for use in road maintenance training; - Technical Assistance for construction supervision of the civil works on NR3 and NR6; - Technical Assistance for support to MPWT in institutional and capacity building, including transport sector policy and Master Plan Development, and financial and accounting management of project implementation; - Training courses, workshops, seminars, and consulting services for studies, progress monitoring, and preparation of a future project. 4. Financing Government of Japan (GOJ) had expressed an interest in contributing to the project -2-  by undertaking the rehabilitation of 17.5km of NR6 from the eastern outskirts of Siem Reap to approximately the junction of the Roluos Temple, representing a cost of about US$5.3 million. The final decision on the financing cannot be confirmed, however, before December 1999, by which time the project is expected to be under implementation. To bridge the time gap and cover a possible, although unlikely, withdrawal of GOJ, the IDA credit has been increased by US$5.04 million equiv. representing 95t of the cost. An understanding was reached at negotiations that as soon as the Japan Investment Grant would become effective, the above amount would be cancelled from the IDA credit, reducing it to US$40.27 million equiv. in compliance with the ceiling set at the Project Concept Review Meeting. Likewise, Royal Government of Cambodia (RGC) counterpart would be reduced to US$2.02 million equiv. from US$2.29 million. The deadline for RGC to confirm the Grant Agreement is July 1, 2000. The procurement of both supervision and works of NR6 have been structured with an optional component for the rehabilitation of the 17.5km section that will be exercised after July 1, 2000 if the Japan Investment Grant has not materialized. 5. Implementation The engineering design documents for the first year's activities were completed by end of May 1998. The procurement documents for the first year's activities are complete and general and specific procurement notices have been advertised. The Project Implementation Plan has been appraised and found to be realistic and of satisfactory quality. 6. Sustainability Two factors are essential to ensure the successful performance of the project roads over their design life: the capability to plan and execute routine and periodic maintenance in a professional manner, and the availability of sufficient funds at the proper time. The project addresses the first factor directly through technical assistance and training in road maintenance operations and management, thereby strengthening ongoing efforts by the Asian Development Bank (ADB) and GOJ. It addresses the second factor indirectly through technical assistance in the highway management field, including planning, programming and budgeting. Further, through the development of a Transport Sector Policy, the project supports the identification of operational, regulatory, and financial reforms needed to establish a sustainable basis for the transport sector. 7. Lessons Learned from Past Operations in the Country/Sector The Government's ability to mobilize sufficient local resources to meet requirements for counterpart funding is extremely limited. Requirements for local funding have been kept to a minimum, and the policy discussions to be conducted during project implementation will include possible means of raising such funds. Coordination between donors must be improved to avoid duplication of efforts and to generate synergies. The creation of a road subsector database as part of project technical assistance, including works carried out by other donors, aims to help bridge communication gaps. Capacity development and sector reform are long-term processes; expectations must be kept realistic in a country dealing with political instability and weak foundations of skills and experience. The scope of the project has -3 -  therefore been limited so that the current policy and institutional framework will support its implementation--no policy or institutional changes are required to successfully implement the physical components of the project. Technical assistance has been included in the project to help MPWT begin this long-term sector policy development process. Finally, although security along NR6 has improved recently, vigilance must be maintained in monitoring the situation. A mine-clearing sub-component has been included to ensure that civil works are not carried out in an environment of undue risk. 8. Poverty Category The project does not include a specific program of targeted interventions to reduce poverty. However, it has indirect impact on poverty alleviation through the reduction of transport costs, improve access and mobility, integration of remote areas with its capital and through the creation of additional jobs for semi-skilled and unskilled labor on construction contracts during implementation. 9. Environment and Social Aspects The project will bring improved access to goods and services to virtually everyone living in proximity to improved roads. Because the project entails no new road construction, there is no need for land acquisition. Nonetheless, road widening is expected to affect about 1818 households using space within the right-of-way. More than 95t of the people affected can be accommodated by "shifting back" within the right-of-way. About 71 houses or small shops cannot be accommodated within the right-of-way and owners have no other land. The government has agreed to provide replacement land in these cases. Owners of houses and shops required to move back will be compensated, and each affected household will receive a transition allowance. Fruit trees, crops, and ponds will be compensated or replaced. Households shifting back within the right-of-way will obtain formal permission to continue use of unaffected areas for at least 10 years. Full details are provided in a separate Resettlement Action Plan. The environmental assessment (EA) was carried out as part of the preparation study of this project. As a Category B project, it does not require a full EA. During the EA work, local government and other concerned bodies were consulted. The final report of environmental analysis, prepared as a part of the study report, was submitted to the Bank on May 29, 1998 and found satisfactory. Formal clearance was given on June 16, 1998. Since most of the project components are rehabilitation works within the existing right-of -way and the projected increase in traffic volume is not environmentally significant, no significant impacts on physical environment are envisaged during either the construction or operation phases. The project could have an impact on noise and air pollution during the construction phase (all provinces), and on historical bridges and trees along the alignment (Siem Reap Province). The environmental management action plan (EMAP) specifies appropriate mitigation measures, including adequate selection of engineering design, watering to prevent dust during the construction phase, appropriate maintenance of vehicles and machinery, and strict control of noisy construction works at environmentally sensitive sites. The EMAP also specifies the environmental management and monitoring, institutional - 4 -  arrangements, and training needed to implement the EMAP, and environmental cost estimates. The EA confirmed that no environmentally protected areas exist in the project area. The entire province of Siem Reap has been designated a culturally protected zone, and ten archeologically significant bridges lie along the section of NR6 to be rehabilitated. These bridges will be reinforced and restored, and the current road alignment maintained (see Section B.4). The Government established a Steering Committee on Cultural Property in March 1998 to deal with cultural property issues related to the project. The committee's responsibilities include establishing a protocol and an action plan for protection of concerned cultural property and adequate guidance to contractors. 10. Program Objective Category The primary objectives category are environmentally sustainable development, public sector development and economic growth. Contact Point The InfoShop The World Bank 1818 H Street, N.W. Washington, D.C. 20433 Telephone No. (202)458 5454 Fax No. (202) 522 1500 Note: This is information on an evolving project. Certain activities and/or components may not be included in the final project. Processed by the InfoShop week ending March 19, 1999. - 5-