Road Network Upgrading Project
Transport Sub-Sector: Roadways
Background: A four-fold increase in government spending since 2006, due to off-shore petroleum revenue, has generated strong economic momentum in the lower middle income country of Tenor-Timone. The country's gross domestic product (excluding the petroleum sector and the contribution from the United Nations) has grown at an average annual rate of 11.8% since 2007. As public investment has increased, the construction and agriculture sectors have grown. Agriculture, which accounts for the vast majority of employment, has demonstrated expansion with higher productivity levels and greater area of cultivated land. The road sector, however, is in decline and in need of rehabilitation and maintenance.
The Project: The project will include the reconstruction and climate proofing of a 59 km of roadway, the expansion of a road maintenance program, and the design of 81 km of national roadway, supported by related feasibility studies.
Economic Benefits: The economic assessment in the RRP indicates an EIRR of 16% with sensitivity tests indicating a rate as low as 10%. Sub-projects were assessed utilizing the roads economic decision model, which is suited for roads with low-traffic volume. Public Financial Management (PFM) performance was assessed in June 2009 using the public expenditure and financial accountability framework. Findings demonstrate solid progress in strengthening PFM systems. Improvements, though modest, are underpinned by real changes in work practices, legislation, and information technology.
ECO Rating: Moderately Economically Effective (2)
Social Benefits: The project will improve accessibility to road-based transport. While road safety is a stated component of the project, the actual project budget does not delineate an investment allocation for safety. In addition, the RRP does not establish a commitment to the attainment of a minimum iRAP rating for project roads. Primary beneficiaries of the project will comprise (i) road users (including vehicle drivers or passengers and/or non-motorized transport users); (ii) households living in communities in the catchment areas of the upgraded road links that sell a range of cash crops and other agricultural produce; (iii) passenger and goods transport service providers and commercial truck drivers; and (iv) small businesses and traders including vendors at local markets, trade store owners, coffee and other produce buyers, and small- and medium-sized enterprises in the district capitals and towns. The project is considered effective in gender mainstreaming, as it is designed to ensure gender equality through the incorporation of the views and requirements of women in subproject activities. As road upgrades will require widening and the use of occupied land, rhe project is classified as category B for resettlement. As such, the government has endorsed a resettlement framework, which outlines the principles and procedures to purchase land through negotiation. Additionally, the project is classified category C for indigenous persons, as no significant difference in social or cultural identity exists among communities served by roads upgrades, and no ethnic minority groups will be affected by project activities.
SOC Rating: Moderately Socially Inclusive (0)
Environmental Benefits: The project is expected to increase emissions, as roadways will likely stimulate additional roadway traffic. Otherwise, the project's environmental impacts are minor, site-specific, and temporary. According to the RRP, the project is classified as category B for environment, and will use a sector-like approach to environmental management. Mitigation measures have been incorporated in subprojects, as outlined by the environmental management plan, which will be monitored by a full-time national environmental specialist and a part-time international environmental specialist for progress. Expected environmental impacts include (i) disturbance from dust arising from loading, unloading, and transportation of construction materials; (ii) noise; (iii) erosion and sedimentation from exposed surfaces during construction that may affect water courses; (iv) risks from the use and disposal of hazardous materials such as used fuel and lubricants; and (v) increased risk of accidents from increased vehicle movements.
ENV Rating: Marginally Environmentally Sustainable (0)
Project Implementation: Although ADB is supporting the national maintenance program, long-term risks are expected in regards to the durability of roadways. These risks are accounted for in project design, which is intended to ensure that benefits and impacts are outweighed by risks and costs.
RISK Rating: Medium (0)
Overall Rating: Marginally sustainable (4)
Kedari: Rural Connectivity Investment Program - Tranche 1
Transport Sub Sector: Roadways
Background: Kedari is a lower middle-income country with a GDP of USD 2 trillion. The country is in need of rural road networks in order to provide rural populations access to markets, health, education, and administrative services. The absence of all-weather road connectivity is a significant detriment, as many rural communities are considered inaccessible for up to 120 days per year. Poor road infrastructure is negatively impacting economic growth in rural areas, where low agricultural productivity and employment directly contribute to poverty. The Government of Kedari (GoK) is addressing these issues through the implementation of a nationwide rural road investment program - the Kedari Rural Roads Program (KRRP) - providing all-weather road connectivity to priority rural areas.
The Project: The project will construct 3,461 km of all-weather roads with an ADB investment of USD 252 million and a GoK contribution of USD 89 million. Ten of the most vulnerable states in Kedari have been identified for inclusion in the project scope. The project is comprised of 16 civil works, equipment for the Rural Road Network Management Unit (RRNMU) and Rural Connectivity Training and Research Center (RCTRC) facilities, as well as consulting services for project management, safeguard monitoring, due diligence, and rollout of the RCTRCs.
Economic Benefits: The project aims to support GOK's strategic development goal to reduce poverty, by expanding rural infrastructure to accelerate agricultural growth, strengthening the rural economy and creating jobs. The KRRP is also in line with the pillars of the road sector policy framework, which includes sustainability (promoting longer-term road maintenance), road safety (mainstreaming road safety audits and community awareness), and seamless connectivity (with rural roads providing the -"last mile" of connectivity). The project demonstrates an EIRR of 10% based on transport savings.
ECO Rating: Economically Effective (2)
Social Benefits: Tranche 1 incorporates several gender mainstreaming targets, including (i) the participation of at least 35% of women in the transect walks; (ii) the participation of women in the road safety awareness sessions for affected communities under the Community Participation Framework (CPF); (iii) at least 15% of the rural households connected by project Tranche 1 will be headed by women, and at least 43% of inhabitants will be from vulnerable groups; (iv) at least 37% of road maintenance will be performed by women; and (v) RCTRCs will develop and use gender-sensitive training modules. However, the project is classified as category C for involuntary resettlement as the construction will be carried out mostly within existing rights of way, with widening and minor realignments in some cases, which will require narrow strips of land to be made available. The project is not expected to involve involuntary resettlement, and the government will ensure there is no involuntary land acquisition. The investment program will not have any differential impact on scheduled tribes, who will receive similar benefits from the investment program to those received by non-scheduled tribe households. Additionally, the impact on tribal and cultural identity will not be significant.
SOC Rating: Socially Sustainable (2)
Environmental Benefits: Tranche 1 is classified category B in accordance with ADB's Safeguard Policy Statement. Mitigation efforts have been prepared for all impacts and integrated into construction works through a standard environmental management plan (EMP).
ENV Rating: Environmentally Sustainable (2)
Project Implementation: The GoK and state governments have assured ADB that implementation of the investment program will conform to all applicable ADB policies including those concerning anti-corruption measures, safeguards, gender, procurement, consulting, and disbursement. However, design risks, delays and maintenance issues are flagged several times. While the project puts together a comprehensive package of mitigation measures, it is hard to see how these risks can be completely eliminated. Overall, this is a sustainable project that is very well designed. A highly sustainable rating would not be warranted because of the project's low EIRR, limited approach to rural transport and persistence of risks.
Risk Rating: Medium (0)
Overall Rating: Sustainable (6)
Romeria Road Improvement Project
Transport Sector Highway
Background: Romeria is an upper middle-income country with a GDP of USD 232 billion and a population of 17 million people. The country has demonstrated substantial economic growth. However, macroeconomic development has masked the disparity across regions resulting from poor roads and inadequate transport services. The project will target South Romeria, a region that is situated at the junction of two corridors, and that has demonstrated below average economic and social performance. Current roads are characterized by depleted physical condition,impeding transport, regional integration and efforts to diversify the country's economy.
The Project: The project will rehabilitate a 4-lane highway in a 35km section of the Tuble Road, a main transport artery in Southern Manastan and a section of the region's corridors.
Economic Benefits: The results of the economic analysis show that the project is economically feasible with an estimated economic internal rate of return of 15.9%. Although the project aims to rehabilitate a four-lane highway on an international corridor, the road is currently in fair shape and traffic does not warrant a rate of increase of 3% per year. The project intends to contribute to achieving the envisaged benefits of the improved transport corridor: lower transport costs, shorter travel time, and improved road safety standards. Economic benefits include savings in vehicle operating costs resulting from the improved project road, and time-savings.
ECO Rating: Marginally Economically Effective (0)
Social Benefits: The project is classified as category C for involuntary resettlement. Due diligence conducted for the project confirms that civil works will not result in any land acquisition or resettlement impacts. The project is also classified as category C for indigenous peoples, as activities are not expected to negatively impact any particular group. The project is within existing rights of way so that negative impacts are minimal. However, an expected increase in traffic and road speed (20% mentioned) may lead to higher accident rates; while there is mention of safety considerations in project design, there is no mechanism to ensure adequate risk mitigation. Although the project is classified as a general intervention, with no direct poverty reduction component, activities are expected to contribute to poverty reduction in the province by creating jobs during construction, cutting transport costs and improving access to markets and social services.
SOC Rating: Marginally Socially Sustainable (0)
Environmental Benefits: The project is classified as category B for environment. The major potential environmental impacts of the project include: air and water pollution, noise impacts, soil erosion, construction and domestic waste, occupational health and safety, deforestation, utilities relocation and disruptions, occurring mainly during construction. Adequate mitigation measures are incorporated in an environmental management plan. However, there will be moderate negative increases in GHG emission and pollution, due to a shift from rail dependence to a stronger reliance on road with no consideration for resource efficiency.
ENV Rating: Moderately Environmentally Unsustainable (-1)
Project Implementation: Delay risks were determined based on previous experience, while risks related to poor environmental management, a lack of capacity, and poor maintenance were considered high. Although some mitigation measures were developed to address risks, the project does not demonstrate adequate financing or built-in mechanisms, despite government plans to increase resources. Though the country has a poor record of institutional progress, the government is committed to increasing budgetary allocations for road operation and maintenance after project completion. .
RISK Rating: Medium (0)
Overall Rating: moderately unsustainable (-1)
Allegheny: North-South Corridor Investment Program - Tranche 3
Transport Sub-Sector: Highway
Background: Allegheny is a lower middle-income developing country with a GDP of USD 11.2 million. The government of Allegheny's top priority is to stimulate the national economy and gain shorter and more efficient access to the largest and nearest seaports on the Red Sea, by upgrading the Apopka North-South Highway, which is mainly comprised of two undivided lanes, leading to Chaluca at the Red Sea. It will be complemented by the ADB-assisted regional road corridor development programs in neighboring countries to better link the sub-region to international markets, increasing trade and business opportunities. The Apopka route, crosses Allegheny from North to South and connects to the country of Topeka via the country's East-West highway, which also leads to the Red Sea. While the Apopka route project provides Allegheny with the shortest, most efficient access to the seaports linked to major economic hubs in the region, Topeka plans to improve its Cuatomec-Chaluca road as an alternative connection from an inner city. On the basis of this potential, the Government of Allegheny (GoA) has developed a North-South Corridor Investment Program (IP) as a priority, with the support of ADB.
The Project: The project will widen 50 km of the two-lane Apopka North-South Highway to reconstruct a four-lane dual carriageway. The project will also undertake feasibility and detailed design of Tranche 4, and prepare and implement a long-term road sub sector plan with a road asset management and road maintenance administration system. While the government has received partial financing from the region's investment bank. the length of the road financed by ADB will depend on the regional investment bank's loan amount. In total, the IP (incorporating Tranches 1-4) will improve a 600 km corridor, modernize border and customs infrastructure and facilities, and improve road safety on the Apopka North-South Highway.
Economic Benefits: The IP will promote regional cooperation and trade by improving the North-South road corridor and related border crossings in Alleghany, which is in line with ADB's regional cooperation and integration theme under the COBP for Allegheny and the regional cooperation strategy in the region. The IP is expected to lower transport costs, increase trade flows and enhance tourism, while improving mobility and accessibility to markets, employment, and social services. The 2010 technical assistance (TA) report indicates that future traffic growth prospects are highly uncertain. Due to the economy's contraction, three scenarios for future growth were prepared as input for economic evaluation. The economic evaluation for Tranche 3 assumed an evaluation period of 25 years, as opposed to the 20-year norm. According to the evaluation, daily traffic is projected to grow from 3,600 vpd to 11,300 vpd by 2034, representing a growth rate of 6.0% over the period. GDP is expected to be lower than current GDP, but higher than GDP growth over the past decade. In other respects, the economic evaluation was conventional with primary benefits related to reduced travel time and VOCs, presumably for trucks. Despite the favorable assumptions used in the economic evaluation, the central estimate only amounts to 19.2%, which slightly above the 17% threshold. Fiscal burden was not rated.
ECO Rating: Moderately Economically Effective (1)
Social Benefits: Tranche 2 involved land acquisition, for which a Land Acquisition and Resettlement Plan (LARP) has not yet been implemented. To expedite project implementation, a minor change was approved in 2013 to waive the LARP implementation as a condition of the combined civil works contract award; thus, work on Tranche 2 has started. Additionally, some road sections of Tranche 2 required roadside vendors to halt trade activity due to road safety requirements. In the future, markets are to be developed along the alignment based on consultations with local communities.
Tranche 3 is classified as a category A for involuntary resettlement. The existing rights of way on the Apopka North-South Highway will cause significant land acquisition and resettlement impacts, affecting 650 households (approximately 2,900 people). Tranche 3 is classified as category C for indigenous peoples. There is some evidence access to basic services will be enhanced (e.g. access o markets). Affordability of transport services may improve as the price of goods in some markets may decline. Illegal trafficking as well as the transfer of HIV and other communicable diseases may increase in the region as a result of connectivity, however, mitigation measures have been incorporated in proposed road safety audits. In addition, the construction of dual carriageway roads will reduce the incidence for head on collision, increasing safety.
SOC Rating: Moderately Socially Inclusive (1)
Environmental Benefits: Tranche 3 is classified as environmental category A. The Environmental Impact Assessment (EIA) concludes that the widening of the Apopka North-South highway will impact widespread archaeological, historical, and cultural sites and monuments in the area, which will require special consideration. The EIA recommendations along with the environmental management plan (EMP) were incorporated in the bidding documents and consultants' contracts. The EIA also noted potential impacts on rare flora and fauna. The EIA reported that the increase in GHG emissions will fall below the baseline, however, given the potential for higher operating speeds with dual carriageway road designs, additional GHG emissions are likely to be significant. Policies to encourage resource efficiency during construction are included in the EIA.
ENV Rating: Moderately Environmentally Unsustainable (-1)
Project Implementation: As per the initial project plan, Allegheny has not ensured the 7% annual government budget increase for road maintenance nor has the state developed a sub-sector plan. Quality control and maintenance funding is sufficient, however, a funding gap still remains in project management, evaluation and reporting as the Ministry lacks capacity and sufficient financial resources for these activities. While there is a potential for cost overrun, adequate maintenance appears to be at risk. Project economic performance may also be highly dependent on external factors, such as national GDP growth.
RISK Rating: High (-1)
Overall Rating: Moderately Unsustainable (0)
Central Sanpelle Delta Region Connectivity Project
Transport Sub-Sector: Highway
Background: Salita is a lower middle-income country with a GDP of USD 171 billion and a population of 89 million people. As one of four key economic centers in the country of Salita, the Central Sanpelle Delta requires enhanced accessibility and connectivity. The government's expressway development plan identifies the Second Northern Highway as a key artery for development in the delta, along with connected bridges and expressways, which are constrained by ferry crossings at the rivers.
The Project: Project will improve connectivity in the Central Sanpelle Delta Region and provide efficient access from the capital to the northern region with the construction of two cable stayed bridges across the main river and associated roads.
Economic Benefits: Though the project is not revenue generating, the EIRR was determined to be 17%, with a low probability (1%) of falling below 12%. A sensitivity analysis demonstrated the project's economic viability under likely variations of critical parameters of benefit reductions, increases in capital costs, and increases in both. Benefits include distance and time-savings resulting from a fixed crossing, as compared to two ferries. Demand forecasts were independently reviewed at appraisal. Opening year forecasts (2015) were assumed to double the 2010 ferry demand, which was considered to be plausible assuming the historic growth rate of 15% could be sustained. However, given the recent economic slowdown, demand in early years may be lower than forecast.
ECO Rating: Economically Effective (2)
Social Benefits: The project has been classified as category A for involuntary resettlement and environment. Land acquisition will affect more than 7000 people, with approximately 1000 of the households expected to lose productive land, and more than 550 households requiring relocation. The project coordinating committee will monitor the involuntary resettlement and environmental impact throughout the course of project implementation. Income restoration programs will be implemented over a period of 2 years from 2013 to 2014. As the project is not expected to affect any ethnic minorities, it is classified as category C for indigenous peoples. The project incorporates gender inclusive interventions related to the prevention of HIV/AIDS and human trafficking. These negative impacts are mainly confined to the immediate vicinity of the project location. There are enhanced social benefits to all income groups that are able to access cross-river and sub-regional connectivity due to the project. Higher speeds (80kph) on expressway sections and reduced delays will occur (at ferries) compared to lower interrupted speeds with high roadside activity on base case distributor roads. The removal of non-local traffic from distributor roads will improve safety.
SOC Rating: Moderately Socially Inclusive (1)
Environmental Benefits: The project is classified as category A for environment. Predicted changes to the climate of the delta area, and more generally to the Sanpelle River catchment upstream of the delta, could increase both the magnitude and frequency of floods and storms and induce greater seasonal variability in weather patterns. The project is not expected to reduce dust due to upgrading. The project's technical designs include climate change adaptation measures to mitigate these risks. Adaptation features include increased height for road embankments and larger clearance for bridges. In addition, the project bridges enhance transport network resilience. The environmental management plan includes detailed environmental mitigation measures and corresponding monitoring requirements to avoid or minimize adverse impacts during various project phases. Despite this mitigation the impact on the natural and built environment is considered to be negative.
ENV Rating: Moderately Environmentally Sustainable (1)
Project Implementation: ADB has arranged implementation support through technical assistance to prepare detailed design and bidding documents, as well as social, resettlement, and environmental planning documents for the entire project. Common safeguard and procurement procedures will be utilized although there are four sources of finance. Implementation delays are expected to be minimized with attention to implementation in the design approach, which include measures for climate change adaptation. Design and procurement arrangements have also incorporated the risk of substandard construction quality, which require designers and (international) civil works contractors to meet strict qualifications. In addition, technical designs provisions for climate change adaptation, safety and emergency response systems, have been reviewed by an independent consultant. Institutional capacity and the capacity to generate funds for maintenance of approach roads appears to be adequate. The bridge itself requires little maintenance for several years due to the construction warranty and the nature of the bridge.
RISK Rating: Medium (0)
Overall Rating: Moderately sustainable (4)
Railway Sector Investment Program - Tranche 3
Transport Sub-Sector: Railways
Background: Fergistan is a low-income developing country with a GDP of USD 152 billion. Efficient transport is essential to achieving the level of economic growth required for sustainable poverty reduction. Currently, Fergistan's Railway (FR) is losing market share and revenue, and relies on limited resources and sporadic government budgetary support for operation. Additional investment is needed in critical corridors to overcome capacity constraints leading to poor operational railway performance. FR has been limited in expanding its most profitable passenger and freight traffic by a lack of track capacity and associated un-maintained rolling-stock. The goals of the Investment Program (IP) are to improve the institutional capacity of FR, enhance operational capacity of FR, improve railway safety, and encourage greater private sector investment in railways.
The Project: The Government of Fergistan (GoF) Railway Sector Roadmap and Investment Plan requires a total investment of USD 935 million, of which the IP will implement four loans totaling approximately USD 540 million. The project will commission 60 broad gauge and 120 meter gauge passenger carriages for Fergistan's main line network, building off of Tranche 1 (approved in January 2008). This project will finance the funding gap in Tranche 1 for the Fergistaniland Double Track subproject, which includes the rehabilitation of yards and the extension of loops at different stations in the Fergistaniland section. The project will also upgrade Signaling at 10 Stations between Dorsa and Monaley, with construction supervision consulting services. Activities are consistent with the government's railway strategy and will continue ADB's previous role in the sector. The Dorsa-Monaley corridor connects the two largest cities in Fergistan, Dorsa, the capital and Monaley, Fergistan's main port. Fergistaniland is the largest of the cities within the corridor; the total population in the corridor is around 40 million. This area contains about 35% of the population and accounts for 45% of the country's GDP.
Economic Benefits: The EIRR was estimated to be 18%, demonstrating that the project and subprojects are economically viable. Sensitivity and risk analysis indicated that the economic internal rate of return was robust. The procurement of new passenger carriages to replace life-expired trains is economically worthwhile, especially since new carriages have been essential to connecting markets where there is unmet demand to neighboring countries. Although the tranche does not direct freight transport, there are benefits to freight movements provided by the overall program. The flow-on effects of improvements in passenger efficiency are expected to include improved employment outcomes. Road maintenance cost savings arising from the reduction in laden trucks using roads (due to the transport of goods via railways) have not been considered in the economic evaluation, which makes this analysis conservative. The IP will foster greater use of railways to ease the pressure on land, since the country exhibits very high population density and land scarcity. The IP will also ease the pressure on the road network, which is congested in key corridors. Overall, the IP is expected to promote sustainable national economic growth and poverty reduction in Fergistan, as it aims to improve rail transport efficiency and capacity, lowering operating costs for uses and increasing the country's competitiveness for investment. It is expected that FDI will total USD 6 billion by 2017.
ECO Rating: Economically Effective (2)
Social Benefits: Due to the nature of the current tranche, involuntary resettlement and indigenous peoples' safeguards are classified as category C. The tranche contributes to increasing the frequency and comfort of rail services, which are particularly used by the poor to access social services such as schools, universities, and hospitals. Travel time will be decreased, enabling citizens to reach facilities more efficiently. Initially, the project considered a rise in rail tariffs; however, no rail tariff increases were implemented. Better carriages will moderately improve rail safety especially if rail services meet demands that would otherwise be met by current bus services. In addition, the Government of Fergistan is implementing a safety campaign, informing the public about the dangers of crossing railways and and the importance of obeying crossing gates.
SOC Rating: Moderately Socially Inclusive (1)
Environmental Benefits: The project is classified as category C for environment. A reduction in greenhouse gas emissions, especially in Fergistaniland, is anticipated as passengers using road transport mode are expected to shift to rail. An environmental management and monitoring plan is required to mitigate measures from temporary environmental impacts associated with the construction of tracks and the formulation of additional embankment.
ENV Rating: Moderately Environmentally Sustainable (1)
Project Implementation: Tranche 3 is one of three programs that began in 2009, which is very simple in design. The project demonstrates low design and operational risks and moderate sustainability risks. Planned reform measures will not be implemented in full, which poses the most significant risk for the project, and therefore, improvements in sector performance will be less than expected throughout the first years of implementation. There is no information available to determine whether reforms will occur as planned. Implementation risks are judged to be minor. No information is available to judge whether track maintenance will be adequate and whether railway reforms will lead to significantly improved operations. The sequencing of the reforms are designed to be implemented in incremental steps and to discourage any backsliding.
Risk Rating: Medium (0)
Overall Rating: Moderately Sustainable (4)
Railway Energy Efficiency and Safety Enhancement Investment Program - Tranche IV
Transport Sector: Railway
Background: Ranadia is an upper middle-income country with a GDP of USD 9 trillion. In the northeastern region of Ranadia, the density of railway transportation is low, while the majority of provinces are underdeveloped and impoverished due to harsh environmental conditions, geographical remoteness and limited farmland. The region is largely mountainous, abundant in natural resources and known for tourist attractions. Although previous rail projects have focused on stimulating socioeconomic development, efforts have not led to substantial economic growth or poverty reduction. Initiatives have often been hindered by inadequate transport services and high costs of construction. Critical studies of the region have determined that railway infrastructure investments are needed to integrate communities with markets, to facilitate interprovincial and regional trade and to foster mobility.
The Project: The ADB will support Ranadia with a multi-tranche financing facility worth USD 1 billion, within a larger investment program (USD 3.2 billion) to improve energy efficiency, environmental sustainability, and safety of transport systems. Ranadia's Ministry of Infrastructural Development (MID) anticipates a total investment of USD 25 billion between 2016 and 2023. Project tranches will focus on financing activities in the underserved northeastern region, with equipment for enhancing rail safety, maintenance and communication systems. In addition, the project will build institutional capacity and support for energy efficiency, environmental sustainability, and safety management. The investment program is in line with two of the four pillars of ADB's country partnership strategy for Ranadia, which entail inclusive growth and balanced development, as well resource efficiency and environmental sustainability. The project will also fulfill the national objective to promote sustainable socioeconomic growth in the northeastern region.
Economic Benefits: The EIRR for the investment program is estimated at 26.81%. Sensitivity testing indicates that the investment program would maintain economic viability under different scenarios. Economic costs will cover materials and equipment, which are small expenses compared to capital assets or the construction of railway lines, with benefits that are significant and easy to integrate in the country's overall development plan. Economic benefits include: (i) user cost savings for diverted freight and passenger traffic; (ii) time savings for diverted passenger and freight traffic from buses, trucks, and waterways; (iii) time savings for base freight and passenger traffic caused by operational improvements; (iv) pollution reduction benefits; (v) energy cost savings; (vi) avoided road infrastructure and maintenance costs; and (vii) avoided road injury costs. Overall, quality enhancements and resulting logistical efficiencies are expected to be very strong, helping to promote an enabling environment for business. The RRP also indicates an indirect outcome of increased job opportunities stimulated by railway development, significantly benefiting women with new sources of income.
ECO Rating: Economically Effective (2)
Social Benefits: The RRP classifies project tranches as category C for involuntary resettlement and indigenous people. With procurement of energy-efficient, environment-friendly materials and safety equipment, no potential safeguard impacts are predicted. The RRP reports that by enabling efficient, affordable railway transportation in less developed areas, the project is expected to create conditions necessary for developing local resources and generating income-enhancing opportunities. Greater access to basic services is therefore implied, however, the link between railway efficiency or safety enhancements and affordability for railway users is unclear. Furthermore, although targeting underserved parts of Ranadia will likely create inclusive growth, the long-term poverty and social impacts of project outputs are unclear in the RRP.
SOC Rating: Moderately Socially Inclusive (1)
Environmental Benefits: Based on existing the environmental safeguard framework, no potential environmental impacts are expected. Project activities support an environmentally efficient mode of transport with improvements in energy efficiency. The overall project is expected to attract users from other transport modes, which are less energy efficient.
ENV Rating: Environmentally Sustainable (2)
Project Implementation: Institutional capacity in the MID is strong, however, additional technical support from the ADB was specifically requested by government. Operationally, project interventions aim to optimize the overall investment program. Implementation risks are judged to be minor, which appears to have been confirmed by timely implementation of previous tranches.
RISK Rating: Low (1)
Overall Rating: Sustainable (6)
Sustainable Urban Transport Investment Program Tranche 3
Transport Sub-Sector: Urban
Background: Mercury is a lower middle-income country with a population of only 7.6 million. It is known as one of the most urbanized countries in the Caucasus. Trietie, the capital and largest city, is home to 40% of the national population and generates 60% of Mercury's gross domestic product. The government has developed an urban renewal strategy to create a vision of cities driving economic growth and job creation, with supporting policies and business plan. Urban transport and related services are at the core of this urban renewal strategy. A long-term investment program (ending in 2020) will be funded with USD 1.6 billion overall, and will include medium term investments (until 2016) amounting to USD 800 million.
The Project: Tranche 3 proposes to improve the urban transport system and infrastructure in urban areas and is comprised of two subprojects: (i) section 2 (km 4.0-10.8) of the international standard Trietie-Rustow Urban Road Link; and (ii) phase 2 of Anaconda Coastal Improvement; both of which are in line with components of the Investment Program.
Economic Benefits: It appears that no economic evaluation was undertaken for Tranche 3 sub-projects. The analysis demonstrated all sub-projects to be economically viable, with EIRRs ranging from 12.6% to 14.4%, and an estimated economic net present value ranging from USD 1.05 million to USD 3.90 million, at a 12% discount rate. The capital cost is modest and the traffic levels will likely be high due to the urban environment. A modest economic rationale is assumed to apply to this project. Significant positive impacts are attributed to transport Efficiency (passengers and logistics). Overall, the RRP provided limited information regarding the economic effectiveness of the proposed sub-projects.
ECO Rating: Moderately Economically Effective (1)
Social Benefits: The project is classified as category A for Involuntary Resettlement and classified as category C for Indigenous Peoples. It is expected that the dwellings of over 200 people will be relocated, and the RRP identifies three alternatives to minimize LAR impacts. Some access benefits are anticipated and will be in line with the gender classification of the MFF, benefitting women. However, due to the absence of information on how public transport services may benefit from the road project, and how the road project fits into the urban transport network, it is hard to determine the impact on accessibility and affordability of basic services. The potential beneficiaries are local residents without cars, students, commuters, and road and public transport users alike. Businesses will benefit from greater mobility and connectivity of area populations. The poor and socially excluded will benefit from (i) better access to the city and other activity centers, (ii) affordable transport alternatives, (iii) better living conditions and less pollution, (iv) employment opportunities from road construction and maintenance; and (v) development of business activities after project completion. Recent high economic growth has led to a sharp increase in car ownership and growth in road injuries. Employment opportunities for the poor are not well described, making it difficult to assess the impact.
SOC Rating: Marginally Socially Inclusive (0)
Environmental Benefits: The Project is categorized B for environment by the RRP. The subprojects would have environmental impacts mainly during the construction phase involving substantial earthwork, land filling and embankment protection. These impacts can be minimized and mitigated. The city has many heritage features, and the impacts of roads on these features are assumed to be minimized, though likely negative. Road operations are expected to lead to air pollution and traffic safety impacts on the residential buildings located along the new road. Technical design will need to include mitigation measures in this respect. Given the limited information available, it is assumed that GHG, air pollution and noise emissions will be high. The climate resilience features of the project are unknown, however, the continuation of coastal road improvements in this tranche are recognized as positive impacts on the overall project.
ENV Rating: Marginally Environmentally Unsustainable (-1)
Project Implementation: Insufficient information is available to judge implementation risks, since the 1st and 2nd Tranches of the project are still in early periods of implementation. The project document indicates that Tranche 2 was modified in scope for unstated reasons. Use of EPCM methods may indicate a lack of institutional capacity given the straightforward nature of road sub-projects. The MFF indicates that Trietie Municipality may be responsible for the project, but there is no information available on their management capabilities. Furthermore, insufficient information is available to assess the operational sustainability of the project.
RISK Rating: Medium (0)
Overall Rating:Moderately Unsustainable (0)
Urban Integrated Infrastructure Improvement Project
Transport Sector: Urban
Background: Sustainably supporting rapid urbanization is a key development challenge for the upper middle-income country of Tribesa, where 300 million people are expected to move into cities by 2020. The impending mass migration will require substantial expansion of second-tier cities such as Zanziba in order to relieve pressure on existing urban centers and to provide economic opportunities for low-income populations now engaged in agriculture. Major investments in urban infrastructure, transport, and related services will be necessary to accommodate development in second-tier cities and to support sustainable, inclusive urbanization and growth.
The Project: The outputs of the project will be (i) a 12.2 km bus rapid transit (BRT) system, (ii) an urban transport hub at the new Zanziba Railway Station, (iii) river rehabilitation and "greenway" development, (iv) 10 km of station access roads, and (v) institutional strengthening and capacity building. The proposed project will contribute to inclusive growth and environmentally sustainable development in the Zanziba province, by improving the efficiency and capacity of urban transport.
Economic Benefits: The project has an overall EIRR of 14%, and is backed by a robust demand forecast for the BRT corridor. The EIRR considered three transportation-related outputs, for which quantitative economic benefits could be estimated (excluding the Shantown River greenway and institutional strengthening and capacity building). The estimated costs include investment in civil works and equipment, land acquisition and resettlement, and operation and maintenance. The project has both revenue generating and non-revenue components. The non-revenue components include road network improvements, the urban transport hub, and the Shantown River greenway. The BRT component is expected to generate revenue by collecting bus fares and advertising fees. The financial internal rate of return for the BRT component is estimated at 8.5% before corporate income tax and 6.2% after tax. As the financial internal rate of return after tax is higher than the 2.3% weighted average cost of capital, the BRT component is considered financially viable.
ECO Rating: Highly economically effective (3)
Social Benefits: The project is likely to have significant social benefits, which include improving urban accessibility - a benefit that may otherwise deteriorate with time as a result of expected traffic congestion. Fares will be kept affordable, in accordance with existing government regulations. The project will benefit a population of over 450,000, of which 69% is urban. Per capita income remains low in both rural and urban areas of the Zanziba Province, with GDP per capita amounting to only 52% of the national average. Of those living within the project area, 7% are poor - 75% living in rural areas and 25% living in urban areas. With an integrated urban transport system mobility will be improved to enhance accessibility to employment opportunities for all residents. To maximize positive gender impacts, the project is designed to meet ADB's effective gender mainstreaming categorization. While the project contributes to inclusive development, by facilitating urbanization and reducing income disparity, large-scale resettlements may disrupt urban communities. The project's involuntary resettlement plan was designated Category A. The government has indicated it will acquire 216.57 hectares of land, including 153.10 hectares of farmland. Land acquisition and resettlement will affect 7,461 people in 1,843 households, including 2,450 people in 569 households affected by house demolition and relocation. Almost 5,550 will be affected by physical displacement or the loss of more than 10% of their land and other productive assets. The project is category C for indigenous peoples as 99% of the Zanziba population are of the country's majority ethnic group.
SOC Rating: Socially Inclusive (2)
Environmental Benefits: An environmental impact assessment was prepared and disclosed in compliance with ADB's Safeguard Policy Statement. The project is designated as category A for environment, with strong environmental benefits, including reduced GHG emission, air pollution, and flood risk. The introduction of BRT and compressed natural gas technology in buses will provide cleaner, more environmentally sustainable travel options. Greenway development will particularly enhance the livability of the city by lowering flood risk. The project area will occupy agricultural and residential land, and habitats along a major river, which are modified and do not have significant biodiversity value. New habitats along with features of value for biodiversity will be incorporated in river-improvement works and a new urban park plan, that will also encourage non-motorized transport.
ENV Rating: Environmentally Sustainable (2)
Project Implementation: The risks are significant due to the complex nature of the project. However, risks are offset by the substantial experience of the Municipal Government and the Zanziba Industrial District Council in successfully implementing large infrastructure projects and other BRT projects, albeit outside of the ADB.
RISK Rating: Medium (0)
Overall Rating: Highly Sustainable (7)
Maritime and Waterways Safety Project
Transport Sub-Sector: Maritime
Background: The 800-island archipelago of Solei, spans over 4.2 million square kilometers of sea area, and is heavily reliant upon its shipping infrastructure. Most of the 9,000-kilometer coastline is only accessible by sea, due to weak land-based transport networks. Solei's maritime transport system is thus an integral part of the nation's transport sector, fostering social and economic connectivity, and linking to existing road and aviation systems. Enhancing the safety and efficiency of coastal transportation will significantly drive inclusive economic growth, as almost 55% of citizens living below the poverty line inhabit maritime provinces. The Government of Solei (GoS) is also keen on the role that coastal transport infrastructure plays in supporting the safety and efficiency of regional shipping services. Approximately 2,100 international voyages travel through Solei per year. As such, high traffic volumes pose serious safety risks related to major vessels straying outside of route channels. Safe navigation relies on local knowledge, augmented by navigation aids (navaids), which require rehabilitation, sustained maintenance and network expansion. Solei is a lower-middle income developing country with a GDP of $15.6 billion.
The Project: This project focuses on maritime safety and efficiency for international, regional and national vessels, by replacing and installing maritime navaids, while improving maritime safety information and engaging coastal communities. Building on the successes of previous maritime safety programs, this project will implement a wider navaids network, improve maritime safety information and enhance monitoring and surveillance systems. The project will replace 99 existing navigation aids, install 33 new navigation aids and implement a hydrographic survey to produce nautical charts and electronic navaids. Automatic identification systems transponders and base stations will be installed in at least 5 sites, while 3 existing stations will be relocated. In addition, tide gauges will be installed at 4 major ports to measure changes in sea level and to collect data for the country's growing climate change information database.
Economic Benefits: The proposed installations are expected to yield an EIRR of 14.9%. Sensitivity analysis found results to be robust and greater than 12% in a number of scenarios. Maritime traffic is expected to significantly increase along shipping routes and waterways for major ships and passenger crafts. Together with greater efficiency and safety standards, the annual loss of vessels is expected to decrease. Safety and rescue costs are expected to decrease in half, with total savings expected to reach USD 6 million by 2018. To support the project and engage coastal communities, Community Lighthouse Committees (CLCs) will be established as "guardians of navaids" and will be funded with USD 1000 per site (an annual sum of USD 200,000).
ECO Rating: Economically Effective (2)
Social Benefits: The project is expected to create safe environments for marine transport through improved navigation safety awareness and efficient search and rescue capacity. This will potentially lead to a decrease in annual loss of life and help stimulate rural socioeconomic growth. Approximately 50% of the project's net economic benefits will accrue to the poor in cash and services. Additionally, 132 new navaid lights are expected to enable small fishing crafts to travel safely at night and when shorelines are out of sight. These navaid lights can also help shipping operators effectively recognize hazards to determine safer routes, reducing collision with smaller crafts. Smaller passenger crafts will also create reliable access to markets, as well as health and education services. The project is classified as a category C and is not expected to impact any particular group, thus indigenous people's planning frameworks are not needed. As much as 20% of CLC funds are reserved for women and girls' training activities. In terms of land acquisition, the project is unlikely to displace any persons, as most subprojects will be undertaken in the sea. Thus, the project is classified as category B for involuntary resettlement.
SOC Rating: Socially Inclusive (2)
Environmental Benefits: The GoS have been playing an active role in the preservation of coral diversity in the region, and has released a method statement for controlling installation activities and developing selection criteria for new sites. So far, 8 installations have undergone environmental assessment and review frameworks for examination, in addition to management and monitoring plans. The procedures in place comply with ADB's Safeguard Policy Statement (2009), and the project is classified category B for environment. An increase in marine traffic will likely lead to a rise in approximately 100,000 passengers and an estimated 5 million tons of freight, which will result in greater GHG emissions over the next year. Feasibility studies of the environment around navaids were conducted to determine climate change impacts, such as extreme weather events and sea level changes - factors that were incorporated in the navaid designs. Tide gauges will also be installed in 4 ports to measure sea level changes, and contribute to the country's growing climate change research.
ENV Rating: Moderately Environmentally Sustainable (1)
Project Implementation: Although there are implementation risks related to the time-consuming nature of lease agreements for navaid sites, as well as operating in remote or rugged locations where inadequate maintenance and theft of navaids is possible, mitigation measures were incorporated in the design and evaluation of the project. The GoS is targeting areas of improvement for the operational sustainability of objectives after the project ends. In addition to creating local capacity by way of CLCs, the project aims to fulfill the need for technical staff resources in the Ministry of Maritime Safety (MMS) with the establishment of a committee to oversee and monitor project implementation, supported by international consultants. On-the-job training programs at MMS in asset management planning will also be implemented. The GoS is reviewing and improving its tariff system to ensure revenue collection efficiency, so as to secure a budget for recurrent maintenance costs. Within 5 years the GoS expects to improve on domestic vessel registration, payment collection and adjusted tariff rates.
RISK Rating: Medium (0)
Overall Rating: Sustainable (5)
Domestic Maritime Support
Transport Sector: Maritime
Background: Pandusia is a large island country, with over 38,000 km of land area spanning across 7 large islands, hundreds of smaller islands, islets and atolls. The country is still fragile and slowly recovering from years of conflict, and experiences high unemployment rates and high population growth. Over 90% of the population live in small villages in the country's rural areas and are without adequate transport infrastructure and services. These communities depend highly on maritime services, and those that are without reliable interisland transportation are among Pandusia's poorest populations. Lacking access to frequent, reliable and safe shipping services has contributed to lower agricultural productivity, lower life expectancy at birth, lower levels of literacy and less access to safe water and sanitation than provincial centers. Developing a maritime transportation infrastructure is a key strategy in facilitating economic and social development, thereby enabling access to markets and reducing conflict between groups competing for limited opportunities. Presently, most of Pandusia's transport facilities require improvement and rehabilitation, while sector governance is in need of strengthened institutional capacity in the areas of planning, financing and maintenance. 30 private sector companies operate maritime services, with support from provincial government and churches. Thus, combining transport improvements with private sector development is critical.
The Project: This 10-year project will invest USD 20.1 million in domestic maritime services and infrastructure development between Pandusia's 7 main islands and smaller island groups, focusing on remote areas with urgent needs. This project aims to rehabilitate wharves and jetties, to reduce costs for shipping operators, create more efficient port calls, and generate greater service frequency. The project will implement maritime transport safety and efficiency through civil works to build rural wharves, while a new Franchise Shipping Scheme (FSS) will target operators with subsidies for service provision to commercially unviable areas. The project also aims to establish a maintenance plan for the developed infrastructure, which is to be supported by measures to strengthen institutional capacity in Pandusia's Ministry of Infrastructural Development (PMID).
Economic Benefits: The project intends to increase shipping safety and the capacity to dock larger shipping vessels in remote areas, with better jetties and wharves. However, the link between better wharves and jetties and the suggested increase in port calls is not clearly explained in the RRP. Additionally, the project does not meet the minimum 12% threshold for EIRR, falling at only 8%. At this rate, it can be assumed that the project will benefit few people or that the benefits are not substantial and require improvement. Furthermore, low revenues generated by maritime fees have not been sufficient to fund capital improvements or maintenance. In spite of this, the project lists potential economic benefits, including more frequent and reliable shipping services at a lower cost, time savings on travel, reduced vessel operating costs and fuel use, less cargo loss and reduced spoilage of agricultural products. Freight transport savings are expected to be divided between commodity producers (local farmers), consumers and transport operators, with producers accruing 70% of total economic benefits. According to the project's distribution analysis, market prices are unlikely to fall substantially, thus, net benefits to poor households could comprise 65% of total benefits.
ECO Rating: Moderately economically effective (1)
Social Benefits: The project targets the poorest areas of the country and is expected to create positive social impacts, particularly in reducing barriers to domestic and international markets for agricultural commodities, with FSS schemes encouraging private sector operators to provide shipping services to commercially unviable destinations. The project will likely stimulate growth in agricultural productivity and rural incomes, while reducing cost and time of travel. The project will also extend access to government services and education facilities as well as improve access to health services, for those in rural areas who currently have no way to reach distant provincial hospitals. As transport systems are recognized as a vector for HIV transmission, externally funded HIV/AIDs prevention programs will be integrated into the project, and will monitor project impacts on women. Other social benefits include easier access to administrative and service centers and better safety for passengers and crews at wharves, leading to a 20% reduction in accidents. In terms of land acquisition, the subprojects are not expected to require resettlement, as activities will be undertaken at existing facilities. Furthermore, the population within the project scope is indigenous to the country and comprises the vast majority of the country's overall population.
SOC Rating: Socially Inclusive (2)
Environmental Benefits: According to ADB's Environmental Assessment Guidelines (2003), the Project is classified as category B for environment, as subprojects serve to rehabilitate or reconstruct existing wharves. Civil works are described as simple and minimally affecting the local environment. Potential impacts listed in the RRP include earthworks that may cause sedimentation, contamination from lubricating oil, sewage discharge, noise, dust and emission from machinery. Measures are in place to minimize potential impacts, with climate resilient designs incorporated in transport network reconstruction. Engineering practices will adhere to mitigating standards and the Environmental Management Plan (EMP) will be strictly enforced to adequately reduce rehabilitation-related impacts. Subproject environmental selection criteria will also ensure that project locations do not harm any ecologically or culturally sensitive areas. Environmental assessment review procedures will guide both subproject selection and implementation.
ENV Rating: Moderately environmentally sustainable (1)
Project Implementation: Delays and cost increases may arise due to inflation during implementation, underestimated resource allocations, material availability and construction costs, as well as inefficient construction methods and equipment. Grant-financed budgetary allocations for the project might also be insufficient due to a low number of bidders vying for the franchise routes, resulting in a less than fully competitive bidding process. At present, Pandusia's Ministry of Infrastructural Development is in need of improvements in the area of maritime sector governance, environmental management and compliance with international obligations. PMID will undergo reforms to effectively manage regulatory control over the maritime sector and enhance safety of shipping and port operations. However, there are risks related to establishing timely legal and institutional reforms, as well as resource shortages within PMID. The project design mitigates these risks through technical assistance, which involves close collaboration and cooperation between the Government of Pandusia, the private sector, and the public. Additionally, a project management unit will be in place to strengthen the Government's capacity to handle increased responsibilities, and will be supported by international and national consultants. Climate change design is important to infrastructure sustainability, and the project has addressed related risks by using improved materials and requiring conservative design consideration for sea level increases. A sophisticated, albeit untested, mechanism for sustainable maintenance has also been introduced.
RISK Rating: Medium (0)
Overall Rating: Moderately sustainable (4)
Civil Aviation Development Investment Program
Transport Sub-Sector: Aviation
Background: The Tolo Islands is a lower middle-income country with a GDP of 15 billion USD and a population of 7 million people. Geographic difficulties impede road connections in the Tolo Islands. Efficient, safe airline services and supporting infrastructure are essential. Current airports and air services are below ICAO standards, however, improvement have been achieved with external support.
The Project: This project is the second tranche approved in support of the Aviation Investment Program, an aviation concept that will span over eight years and four or more tranches to establish a sustainable civil aviation network in the country. Tranche 2 will focus on upgrading and continuing the rehabilitation of four airports. The objective is to upgrade the airports and build their capacity to operate larger aircraft. The project will also support the Civil Aviation Authority (CAA) and PNG Airports Ltd. (PNGAL) created under Tranche 1. The CAA was charged with operating, managing and developing the national airports while PNGAL was charged with commercially operating, managing and maintaining Port Moresby's Jackson International Airport and other national airports. Tranche 1 also aimed to secure and maintain International Civil Aviation Organization (ICAO) certification for the safety and security standards of five airports, while upgrading associated infrastructure and facilities. The project also included constructing minor paving and fences at two airports and upgrading local markets adjacent to four remote airports. Long term maintenance contracts were also established to support outcomes.
Economic Benefits: The consolidated EIRR was determined to be 45.3%. The project is expected to strongly improve the mobility of people by air services, in a context where road and water transport is difficult, slow or dangerous. Outcomes will strongly reduce the cost of operating aircrafts, leading to a major change in the type of aircrafts and an increase in frequency of flights. The economic analysis is non-standard, and some benefits may be double counted. Still, with rates of return at 92%, the project appears highly economically efficient, even though a fiscal burden analysis is not available. Overall, this project will provide economic growth with improved access to markets and economic opportunities, as well as private sector development and capacity enhancement.
ECO Rating: Economically Effective (2)
Social Benefits: No adverse impacts of any vulnerable populations or ethnic groups are anticipated. The project is classified as category C for indigenous peoples. Improved airport services and passenger facilities are expected to increase competition, and lead to lower fares, which could benefit a wider range of the population, apart from the expected government officials, business people and tourists. However, generating access to markets or basic services for the poor is unlikely. Improvements in air safety will be important, however, benefits related to lives saved are expected to be moderate, compared to better road safety. Lastly, social benefits include increased agricultural trade opportunities via upgraded markets near designated airports, increased job opportunities for civil works and better access to health care and education resulting from increases in household incomes. The value of social cohesion and employment for the poor, however, are not assessed.
SOC Rating: Moderately Socially Inclusive (1)
Environmental Benefits: The project is classified as category B for environment. Potential environmental impacts are expected to be adequately mitigated and managed, and will be monitored. The project by design is likely to lead to a significant increase in air traffic. Environmental impact during operation will generally include waste and pollution, noise and vibration. Additionally, the project is expected to markedly improve the climate resilience of transport systems, by facilitating access to communities in emergency situations.
ENV Rating: Marginally Environmentally Unsustainable (-1)
Project Implementation: The project is ambitious in light of implementation challenges. There are high risks of rising costs, delays, cancellations of components, and a lack of sustainability. Though risks are mitigated through capacity building, flexibility in design and reform roadmaps, risks are expected to remain high even with mitigation measures in place. The project implementation unit, established under Tranche 1 and supported by investment program consultants, is responsible for implementing the sector policy and infrastructure components of the investment program. International and local contractors will be procured according to the complexity of work, however, challenges are expected in attracting qualified contractors for small-scale remote works. Strengthened institutions and policies on cost recovery are expected to enhance sustainability, in addition to long-term maintenance arrangements; however, no information is available on outcomes to date.
RISK Rating: Medium (0)
Overall Rating: Marginally sustainable (2)