FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No: PAD3455
INTERNATIONAL DEVELOPMENT ASSOCIATION
PROJECT APPRAISAL DOCUMENT
ON A PROPOSED GRANT
IN THE AMOUNT OF SDR 95.5 MILLION
(US$131 MILLION EQUIVALENT) Public Disclosure Authorized
AND A PROPOSED GRANT
FROM THE PROGRAM FOR ASIA CONNECTIVITY AND TRADE MULTI-DONOR TRUST FUND
IN THE AMOUNT OF US$1 MILLION
TO THE
REPUBLIC OF TAJIKISTAN Public Disclosure Authorized FOR A
FOURTH PHASE OF THE CENTRAL ASIA REGIONAL LINKS PROGRAM
July 6, 2020
Transport Global Practice Europe And Central Asia Region
Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.
CURRENCY EQUIVALENTS
(Exchange Rate Effective May 31, 2020)
Currency Unit = TJS TJS 10.27 = US$1 US$ 1.372020 = SDR 1
FISCAL YEAR January 1 - December 31
Regional Vice President: Anna M. Bjerde Country Director: Lilia Burunciuc Regional Director: Lucio Monari Practice Manager: Binyam Reja Task Team Leader(s): Jung Eun Oh, Paul Vallely
ABBREVIATIONS AND ACRONYMS
ADB Asian Development Bank IFR Interim unaudited financial reports AEO Authorized Economic Operator IRI International Roughness Index ASA Analytical and Advisory Services IsDB Islamic Development Bank ASEAN Association of Southeast Asian Nations ITC International Trade Centre ASYCUDA Automated System for Customs Data JICA Japan International Cooperation Agency BCP Border Crossing Point KTAI Iran, Afghanistan, Tajikistan and the Kyrgyz republic BRI Belt and Road Initiative LFP Labor Force Participation CAREC Central Asia Regional Economic Cooperation LMP Labor Management Procedures CARs Central Asia Regional Links Program LPI Logistics Performance Index CASA the Central Asia – South Asia M&E Monitoring and evaluation CE Citizen engagement MEDT Ministry of Economic Development and Trade CEM Country Economic Memorandum MoF Ministry of Finance CIS Commonwealth of Independent States MoT Ministry of transport CITA The CAREC Integrated Trade Agenda MTDP Medium-Term Development Plan CO2 Carbon Dioxide NAWBT National Association for Women Business Owners CPF Country Partnership Framework of Tajikistan CRI Corporate Required Indicator NDS National Development Strategy CS Customs Service NPV Net Present Value CSO Civil Society Organization ODA Official Development Assistance DB Doing Business OECD Organization for Economic Cooperation and Development DFIL Disbursement and Financial Information Letter PACT Program for Asia Connectivity and Trade DRM Disaster risk management PDO Project Development Objective EAEU The Eurasian Economic Union PIG Project Implementation Group EBRD European Bank for Reconstruction and POM Project Operational Manual Development PPSD Project Procurement Strategy for Development ECA Europe and Central Asia PRC Peoples’ Republic of China EEU Eurasian Economic Union PrDO Program Development Objective EIRR Economic Internal Rate of Return RAMS Road Asset Management System EPD Electronic Pre-Arrival Declaration RAP Resettlement Action Plan ESCP Environmental and Social Commitment Plan RPF Resettlement Policy Framework ESF Environmental and Social Framework RSSAT the Road Safety Screening and Appraisal ESIA Environment and Social Impact Assessment SDG Sustainable Development Goals ESMP Environment and Social Management Plan SEP Stakeholder Engagement Plan ESS Environmental and Social Standards SIMC Social Impact Monitoring Committees FCV Fragility, Violence and Conflict SOP A series of project FM Financial Management SPS Sanitary and Phytosanitary GBAO Gorno-Badakhshan Autonomous Region SSA Smart Supervision Application GBV Gender-Based Violence TF Trust Fund GDP Gross Domestic Product TIR Transports Internationaux Routiers (International GHG Greenhouse Gas Road Transports) GNI Gross National Income TSCC the Transport Sector Coordinating Committee GoT Government of Tajikistan UAIS Unified Automated Information System GPG Gender Pay Gap UNCTAD United Nations Conference on Trade and GRM Grievance Redress Mechanism Development GRS Grievance Redress Service VOC Vehicle Operating Cost HDM-4 Highway Development and Management 4 WCO World Customs Organization IA Implementing Agency WHO World Health Organization ICT Information and communication technology WIM Weight-in-motion IDA International Development Associations WTO the World Trade Organization IFC International Finance Corporation
The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
TABLE OF CONTENTS
DATASHEET ...... 1 I. STRATEGIC CONTEXT ...... 6 A. Country Context...... 6 B. Sectoral and Institutional Context ...... 9 C. Relevance to Higher Level Objectives ...... 14 II. PROJECT DESCRIPTION ...... 16 A. Project Development Objective ...... 16 B. Project Components ...... 16 C. Project Beneficiaries ...... 19 D. Results Chain ...... 20 E. Rationale for Bank Involvement and Role of Partners ...... 21 F. Lessons Learned and Reflected in the Project Design ...... 22 III. IMPLEMENTATION ARRANGEMENTS ...... 23 A. Institutional and Implementation Arrangements ...... 23 B. Results Monitoring and Evaluation Arrangements...... 24 C. Sustainability ...... 25 IV. PROJECT APPRAISAL SUMMARY ...... 25 A. Technical and Economic Analysis ...... 25 B. Fiduciary ...... 31 C. Legal Operational Policies ...... 33 D. Environmental and Social ...... 33 V. GRIEVANCE REDRESS SERVICES ...... 36 VI. KEY RISKS ...... 36 VII. RESULTS FRAMEWORK AND MONITORING ...... 40 ANNEX 1: Implementation Arrangements and Support Plan ...... 52 ANNEX 2: Economic Analysis ...... 55 ANNEX 3: Institutional Infrastructure for Trade: National and Regional Initiatives ...... 62 ANNEX 4: Maps ...... 65
The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
DATASHEET
BASIC INFORMATION BASIC_INFO_TABLE Country(ies) Project Name
Tajikistan Fourth Phase of the Central Asia Regional Links Program
Project ID Financing Instrument Environmental and Social Risk Classification
Investment Project P166820 Substantial Financing
Financing & Implementation Modalities
[ ] Multiphase Programmatic Approach (MPA) [✓] Contingent Emergency Response Component (CERC)
[✓] Series of Projects (SOP) [ ] Fragile State(s) [ ] Performance-Based Conditions (PBCs) [ ] Small State(s)
[ ] Financial Intermediaries (FI) [✓] Fragile within a non-fragile Country [ ] Project-Based Guarantee [ ] Conflict
[ ] Deferred Drawdown [✓] Responding to Natural or Man-made Disaster [ ] Alternate Procurement Arrangements (APA) [ ] Hands-on Enhanced Implementation Support (HEIS)
Expected Approval Date Expected Closing Date
27-Jul-2020 31-Oct-2026
Bank/IFC Collaboration
No
Proposed Development Objective(s)
The Project development objectives of the Fourth Phase of the Central Asia Regional Links Program are to enhance the efficiency of cross-border trade for participants of the regional economy and to improve the resilience and safety of regional connectivity infrastructure in Sughd region and Gorno-Badakhshan Autonomous region.
The project contributes to the Central Asia Regional Links Programs higher-level development objectives of increasing cross-border connectivity and enhancing integrated regional development to revitalize historically active
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
economic exchanges in Central Asia and beyond along the Silk Route.
Components
Component Name Cost (US$, millions)
Improve regional connections in Sughd and GBAO regions 90.00
Improve road asset preservation and road safety 20.00
Facilitate cross-border movement of goods 20.00
Support project implementation, coordination and management 2.00
Contingent Emergency Response 0.00
Organizations
Borrower: Ministry of Finance Implementing Agency: Ministry of Transport Customs Service
PROJECT FINANCING DATA (US$, Millions)
SUMMARY-NewFin1
Total Project Cost 132.00
Total Financing 132.00
of which IBRD/IDA 131.00
Financing Gap 0.00
DETAILS-NewFinEnh1
World Bank Group Financing
International Development Association (IDA) 131.00
IDA Grant 131.00
Non-World Bank Group Financing
Trust Funds 1.00
South Asia Regional Integration Partnership 1.00
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
IDA Resources (in US$, Millions)
Credit Amount Grant Amount Guarantee Amount Total Amount Tajikistan 0.00 131.00 0.00 131.00
National PBA 0.00 46.00 0.00 46.00
Regional 0.00 85.00 0.00 85.00
Total 0.00 131.00 0.00 131.00
Expected Disbursements (in US$, Millions)
WB Fiscal Year 2021 2022 2023 2024 2025 2026 2027
Annual 2.00 5.00 20.00 30.00 35.00 28.00 11.00
Cumulative 2.00 7.00 27.00 57.00 92.00 120.00 131.00
INSTITUTIONAL DATA
Practice Area (Lead) Contributing Practice Areas Transport Macroeconomics, Trade and Investment
Climate Change and Disaster Screening This operation has been screened for short and long-term climate change and disaster risks
SYSTEMATIC OPERATIONS RISK-RATING TOOL (SORT)
Risk Category Rating
1. Political and Governance ⚫ Moderate
2. Macroeconomic ⚫ Moderate
3. Sector Strategies and Policies ⚫ Low
4. Technical Design of Project or Program ⚫ Low
5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial
6. Fiduciary ⚫ Moderate
7. Environment and Social ⚫ Substantial
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
8. Stakeholders ⚫ Low
9. Other ⚫ Moderate
10. Overall ⚫ Moderate
COMPLIANCE
Policy Does the project depart from the CPF in content or in other significant respects? [ ] Yes [✓] No
Does the project require any waivers of Bank policies? [ ] Yes [✓] No
Environmental and Social Standards Relevance Given its Context at the Time of Appraisal
E & S Standards Relevance
Assessment and Management of Environmental and Social Risks and Impacts Relevant
Stakeholder Engagement and Information Disclosure Relevant
Labor and Working Conditions Relevant
Resource Efficiency and Pollution Prevention and Management Relevant
Community Health and Safety Relevant
Land Acquisition, Restrictions on Land Use and Involuntary Resettlement Relevant
Biodiversity Conservation and Sustainable Management of Living Natural Relevant Resources
Indigenous Peoples/Sub-Saharan African Historically Underserved Traditional Not Currently Relevant Local Communities
Cultural Heritage Relevant
Financial Intermediaries Not Currently Relevant
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
NOTE: For further information regarding the World Bank’s due diligence assessment of the Project’s potential environmental and social risks and impacts, please refer to the Project’s Appraisal Environmental and Social Review Summary (ESRS).
Legal Covenants
Sections and Description Article V, 5.01: The Additional Conditions of Effectiveness consist of the following: (a) the Recipient, through MOT and PIE, has adopted the POM satisfactory to the Association; (b) the Recipient has established MOT-PIG and CS- PIG with composition, resources and terms of reference acceptable to the Association; and (c) the MOF, MOT, Department of State Automobile Inspection and PIE have concluded a Project Cooperation Agreement satisfactory to the Association.
Sections and Description Schedule 2, Section I.A.1: The Recipient shall establish not later than two (2) months after Effective Date and thereafter maintain during the Project implementation, a Steering Committee at the level of the office of the Deputy Prime Minister responsible for infrastructure to provide overall direction and oversee the activities of the involved agencies and their coordination.
Conditions
Type Description Effectiveness The Recipient, through the Ministry of Transport and Customs Service, has adopted the Project Operations Manual satisfactory to the Association.
Type Description Effectiveness The Recipient has established two Project Implementation Groups, each under the Ministry of Transport (MOT-PIG) and Customs Service (CS-PIG), with composition, resources and terms of reference acceptable to the Association.
Type Description Effectiveness The Ministry of Finance, Ministry of Transport, Department of State Automobile Inspection and the Customs Service have concluded a Project Cooperation Agreement satisfactory to the Association.
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
I. STRATEGIC CONTEXT
A. Country Context 1. Historical crossroads for the movement of people, goods and ideas along the Silk Route, the Central Asia region1 is yet to fully capitalize on its natural, human and cultural resources. With over 70 million population, the aggregate regional GDP of USD$236 billion (in current price) is similar to that of Vietnam or Romania2. Since the early 2000s, economic growth in the five republics has been fueled by strong export in response to robust global commodity demand and prices as well as remittances reflecting strong growth in Russia. Significant reserves of mineral resources, potential of water and hydropower resources, and rich natural and cultural resources are seen to be competitive assets of the countries which could be better utilized to drive long-term growth in a sustainable manner. 2. The regions’ continentality and the landlockedness have had unfavorable impact on the region’s economic development, leaving the region isolated from international trade and global value chain. Currently, international trade is often diverted to different routes circumventing Central Asia due to formidable geographic, infrastructure as well as institutional (procedural) barriers. Lack of cost-efficient sea-borne transport and transit tariffs to reach seaports cause disproportionally higher transport costs for the central Asian countries to access markets and opportunities and to integrate with international value chains. Under these circumstances, regional integration is an important catalyst for the Central Asian countries to reduce trade costs and increase participation in regional and global value chains, offering opportunities for economic transformation. This is particularly true for landlocked countries as their continentality has impact on their economic development3. 3. The ongoing COVID-19 situation has further exposed the vulnerability of these countries as supply chains are broken and movements of people are restricted around the world. The region is disproportionately affected by the disruption of the movement of essential goods and lack of mobility of their migrant workers. In an effort to prevent or slow the transmission of the virus, Tajikistan has limited import cargo to enter through only seven checkpoints: three checkpoints on the Tajik-Uzbek border, two on the Tajik-Kyrgyz border, and one each on the Tajik-Afghan and Tajik- Chinese borders.4 Moreover, the authorities have put in place domestic travel restrictions both between and within regions by limiting transportation options. These physical restrictions, disruption to supply chains, and barriers to cross- border trade of essential and emergency goods, both pre-existing and newly imposed during the pandemic, are causing negative impacts on the health of population and the economy. For instance, with air transport suspended, supply of medicines for chronic conditions is being delayed, as the cargo travels over land and through land borders from Russia. A significant number of migrant workers have lost not only their jobs but also mobility means amidst the lockdowns. 4. After decades of fragmentation, Central Asian leaders are beginning to forge a regional mindset. Renewed efforts focus, among others, on cross-border cooperation and trade. However, intra-regional trade is relatively small, representing only about 7.4 percent (by value) of overall trade, while trade with China and Russia seem to dominate most of Central Asia’s trade. While the Eurasian Economic Union (EAEU) as well as China’s Belt and Road Initiative (BRI) may open further possibilities of increased trade flows, changes in sectoral composition of trade may also trigger further reform at the regional level, with a view to increase the comparative advantage of specific products, e.g. time- sensitive agricultural products. Border closures and restrictions on trade that are currently imposed during the ongoing COVID-19 are expected to test the strengths and sustainability of these regional efforts.
1 Consisting of five republics: Kazakhstan, Kyrgyz Republic, Republic of Tajikistan, Turkmenistan and Uzbekistan. 2 World Bank Data. Romania’s GDP as of 2018 is 239 Billion; Vietnam’s GDP is 245 Billion 3 Estimated to be in the magnitude of a 30 percent decrease in trade and a 1.5 percent decline in economic growth compared to littoral countries. 4 USAID (2020), Central Asia Transport and Logistics Situation Report
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
5. For the Republic of Tajikistan, a smaller economy in the region, further integrating regionally and tapping into external demand is key to ensuring sustainable and inclusive growth. With a population of 9.1 million and a GNI per capita of US$1,030 as of 2019, Tajikistan is the poorest country in the Europe and Central Asia (ECA) Region. Following the end of the civil war (1992-97), the Tajik economy bounced back strongly, growing at an average rate of 7-8 percent a year, according to official statistics. Despite the impressive growth performance, Tajikistan’s current development model has not achieved dynamic rates of sustainable and inclusive growth, lacking a productive, profitable or employment-generating private sector and a diversification strategy based on market-principles. In addition, capabilities in information communication technology (ICT), a precondition for investment, innovation and market creation are low with internet use being limited and expensive by international comparison. The economic gap among the five republics in the region, which was already significant in 1990, has widened further: Tajikistan’s GDP per capita fell from around 30 percent of that of Kazakhstan in 1990 to 8 percent in 2018; its GDP as a share of the region’s GDP dropped from 5.7 to 3 percent during the same period. 6. Structural reforms would support the needed transition to a private investment-led and export-oriented growth path, away from the current private consumption-driven (with remittances) and public investment-led (with ODA) growth.5 Tajikistan managed to reduce its trade deficit by more than half from 55 percent of GDP in 2008 to about 25 percent by 2017 and the main contribution, according to the Bank’s Country Economic Memorandum (CEM), came from import substitution. By both regional and international standards, however, the country’s export performance remains weak, as exports of key commodities are heavily dependent on the volatile price dynamics in international markets. Trade in services also remains small and concentrated on the tourism industry on the export side and on the transport and construction on the import side. Tourism was declared as a priority sector by the government, but proper infrastructure and logistics are lacking to expand and offset the overall deficit of trade in services. This points to a need to address infrastructure gaps, coordinate investments across borders at regional scale, and facilitate cross-border flows through reforming customs and other non-tariff measures. 7. Within this context, Sughd region and Gorno-Badakhshan Autonomous (GBAO) region play a strategically important role as they serve as the country’s entry and exit points for trade and travel to neighboring countries as well as transit, including Uzbekistan, Kyrgyz Republic, Afghanistan and China6. Sughd region is located in the densely populated Ferghana Valley, which is considered as the backbone of the Central Asian agriculture and is a key industrial production center for Tajikistan. The region is a major producer of cotton, wheat, fruits, and raw silk. While the population density of Central Asia as a whole is 40.8 people per square mile, in the Fergana Valley it is 1,600 people per square mile. It is also one of the fastest-growing regions within Central Asia, experiencing a population growth of 32% in the last 10 years. Agriculture, including arable farming and livestock rearing, represents the major source of income and food security for the households in the region. About 80 percent of the Sughd region’s population is engaged in agriculture, and women are the majority of those employed in this sector. Although labor participation is high, wages are low for both women and men in Sughd region. Sughd is also home to one of the five Free Economic Zones established by the Government of Tajikistan (GoT), with preferential tax treatment and reduced customs fees. However, overall poor transport infrastructure and inefficient border crossing between the three countries located in the Ferghana Valley and with its neighbors pose to be key bottlenecks for producers in the valley to effectively participate in global value chains and promote trade and tourism in the region.
5 World Bank, Country Economic Memorandum (CEM), 2018. 6 While trade with China has reached US$2.1 billion in 2013 (and expected to reach US$3 billion in 2020)6, the greater development and expansion of trade and economic cooperation within the Belt and Road Initiative is seen by the Government of Tajikistan as an important opportunity for the further development.
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
8. Gorno-Badakhshan Autonomous (GBAO) region is the most popular tourist destination in Tajikistan, with large unrealized potentials. In contrast to Sughd region, is home to the heart of Pamir Mountains which stretch across Afghanistan, China, Kyrgyz Republic, Pakistan and Tajikistan, where over 85% of its territory has no productive agropastoral potential7. Only approximately 12.5% of GBAO territory is pastureland, and the has very little arable land. Endowed with its unique mountainous landscape, GBAO has since recently become a niche tourism destination for mountaineers, trekkers, and wildlife admirers. GBAO is now the most popular tourist region in Tajikistan, both in terms of tourist volume and length of stay8. Lack of productive opportunities in GBAO has long caused GBAO to heavily rely on subsidies from the Soviet Union before the 1990s, and on Official Development Assistance (ODA) since the collapse of the Soviet Union. While poverty rates have fallen nationwide (29.5 percent in 2017), compared to other parts of the country, poverty is substantially higher in GBAO region. GBAO is also characterized by decaying infrastructure. The Pamir Highway along the Pamir Mountains serve as the only regional level land transport mode linking Tajikistan with China and connecting GBAO residents to the capital of Dushanbe. 9. Tajikistan is highly vulnerable to natural hazard and climate change risks, and therefore Tajikistan’s efforts to unlock sustainable economic growth potentials needs to be complemented with resilience building in its infrastructure and services. Tajikistan ranks first among countries in the Europe and Central Asia Region in terms of vulnerability to climate change, a situation exacerbated by the country’s lack of adaptive capacity to respond to frequent shocks.9 Its unique terrain and geological and hydrological features make it prone to many natural hazards, such as floods, earthquakes, landslides, mudflows, avalanches, droughts, and heavy snowfall. Impacts from climate change are expected to increase the occurrence of events related to hydrometeorological conditions, such as rising temperatures causing massive glacial flooding and mudflows. Avalanche prone areas occupy nearly 75 percent of the country’s territory and an estimated 36 percent of the country’s territory is under threat from landslides10. 10. The ongoing pandemic of coronavirus (COVID-19) is expected to have significant impacts on the health and livelihoods of the population, imposing heavy economic and social costs. Since Tajikistan’s Ministry of Health confirmed its first COVID-19 cases on April 30, 2020, the number of cases has been sharply increasing and reached 4,100 cases (and 47 fatalities) by June 2, 2020. The Government has taken preventative measures that include the temporary closure of public facilities while other public services (food markets, public transport, or banks) remain open. As the result of many young Tajiks not having been able to go to Russia for work, which is also hard hit by the pandemic, remittances will fail to provide the principal pillar of financial support to the country’s most vulnerable families. With widespread poverty, the Government has recently rolled out the nationwide targeted social assistance (TSA) instrument of social policy, and for a policy focus on food production, storage, and processing. The interruption of import supply chains risks shortages in the market, including for food, and correspondingly accelerating rates of inflation and exchange rate depreciation. In addition, significant decreases in tax revenues, paired with increasing expenditure requirements, risks considerable budgetary imbalances. 11. Tajikistan will require considerable financial, medical, and technical support from development partners, including the World Bank, to be able to provide a minimal degree of medical services to the population. In April the Bank approved the US$11.3 million Tajikistan Emergency COVID-19 Project (TEC) with the Government having requested Additional Finance in FY21, Q1. On May 6, 2020, the IMF approved a US$190-million Rapid Credit Facility (80
7 Breu, Maseli and Hurni. 2005. Knowledge for Sustainable Development in the Tajik Pamir Mountains. Mountain Research and Development. Vol 25 No 2. 8 World Bank Group. 2019. Tourism in Tajikistan as seen by tour operators. 9 The World Bank, Adapting to Climate Change in Europe and Central Asia, 2009 10 UNDP, Guidelines on regional disaster risk assessment for the territory of Tajikistan, 2011
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percent of quota), following US$30 million in immediate debt relief under the Catastrophe Containment and Relief Trust (CCRT). The Asian Development Bank (ADB), through its Countercyclical Facility, a COVID-linked instrument of budget support, has approved a package of US$50 million on June 18, 2020 and a follow-up standard US$50 million Financial Sector and Fiscal Management Implementation Program. Under the ongoing CARs-2 Project, the Government and the Bank are discussing the use of project cost savings (approximately in the amount of $2 million) for supply and distribution of personal protective equipment and disinfectant chemicals for front line workers in transport and logistics sector and essential transport/transit facilities such as public transport vehicles, stations/depots, border crossing points, and other logistics facilities. 12. Even after the pandemic is managed, Tajikistan will face new challenges to rebooting the economy of which structural shortcomings and vulnerabilities have been exacerbated by COVID-19. Tajikistan’s GDP growth is expected to fall from 7.5 percent per annum in 2019 to 1.7 percent or lower in 2020, reflecting the impacts of the outbreak and the slowdown in Russia and China. Key contributing factors are sharp decline of trade and lower commodity prices, a likely large drop in remittances, and worsened prospects for transport and tourism industries. Many Tajik migrant workers who make significant contribution to the economy through remittances have lost the prospect to return to their jobs mostly in Russia, with continued global lockdown, restrictions on international travels, and economic recession in many countries. In this context, reviving the economy post-pandemic would require a mix of various measures including economic stimulus through public investments in infrastructure. Civil works and construction of productive infrastructures would partly substitute the expected sharp decline in investment and absorb excess labor of the returning migrant workers. Such impacts would be amplified if domestic construction materials are sourced and domestic producers are mobilized, as they create positive turnover dynamism. In addition to the short-term stimulus, these investments in infrastructure would improve overall productivity of the economy in the long-term; in case of transport infrastructure, by fostering connectivity, agglomeration and integration with regional and global markets.
B. Sectoral and Institutional Context Physical Connectivity: Transport and Road Sector Development 13. Mountainous and landlocked, the Republic of Tajikistan has one of the least developed transport sectors and the highest transport costs in Central Asia. Of the country’s total road network of 26,366 km, 14,220 km is under the jurisdiction of the MoT comprising international (2,128 km), national (3,348 km) and local (8,743 km) roads. The rest are rural and industrial access roads previously owned by public entities and currently with no definitive legal status. Paved roads account for 28 percent, bitumen-treated gravel roads for 45 percent, and gravel roads without bitumen treatment for 27 percent of the entire road network. Most of the road network was constructed before 1970 and is largely inadequate for present traffic volumes and loads. Currently, about 80 percent of the nation’s roads are in poor or very poor condition, mainly because of inadequate maintenance and severe damage during the civil conflict, which was barely repaired. Road rehabilitation, maintenance and repairs are insufficient primarily due to lack of funding. During the period of 2014 and 2019, an average of 6.2 million dollars was budgeted for road maintenance and repairs11. In this context, the current road capacity is mostly inadequate for present traffic volumes and roads. 14. The Government of Tajikistan puts highest priority towards ending the “communications deadlock” at the national and regional level to improve access to markets and increase its competitiveness as a transit country through reduction in transport costs. The National Development Strategy, the Transport Sector Masterplan (currently being updated), and the Export Promotion Strategy spell out the overarching country and sector development program
11 Task Team data collected from the Ministry of Transport
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with a view to take full advantage of the country’s strategic location at the intersection of trade and travel routes as well as transform peripheral regions into the core of new economic neighborhoods. Tajikistan has one of the highest transport costs in the world which discourages potential trade and transit traffic. The high transport cost is due to the country’s remoteness from seaports and degrading transport infrastructure and facilities. Tajikistan borders Afghanistan for 1,206 kilometers (km), the People’s Republic of China (PRC) for 414 km, the Kyrgyz Republic for 870 km, and Uzbekistan for 1,161 km, making regional cooperation a necessity to achieve sustainable economic growth. 15. The ongoing COVID-19 situation has revealed the weaknesses of transport connectivity in the country. The borders have been closed in fear of transmission of the virus, causing disruptions to the regional trade and supply chains. It has become critical for transport sector to be equipped with the abilities to address these paramount challenges of ensuring essential services such as food supplies and movement of medical equipment, while protecting health and safety of frontline workers and transport users. As the country starts to impose stricter lockdown, reforming of the sector for long-term resilience and preparedness in providing connectivity will become increasingly important. 16. The Ministry of Transport (MoT) is the lead policy-making and regulatory agency in charge of land transportation in Tajikistan, planning for investment and operations of road and railway transportation. The Ministry is led by the Minister and three Deputy Ministers each in charge of (i) maintenance, planning and evaluation of road, (ii) road construction and road safety, and (iii) road and railway transport policy. The government’s budget decision for the transport sector is made at the Ministry of Finance (MoF), and MoT develops and implements public expenditure budgets for construction, repair, and maintenance of national roads and railways. The Road repair and maintenance is carried out by MoT’s local repair and maintenance units. 17. The country’s investments in transport infrastructure has mostly been financed by ODA funds from various sources, supported by the framework for coordination among government bodies and development partners. Since 1992, approximately 2,830 km of new roads were constructed, of which over 85% was financed with ODA. 12 Approximately US$1.6 billion dollars has been provided by development partners to finance investments on road rehabilitation projects, with technical assistance mainly focusing on capacity development and institutional support, including through the World Bank Central Asia Regional Links Program (CARs, a series of projects in multiple countries, see further relationship to CPF). Assistance from the Asian Development Bank alone, mainly supporting Central Asia Regional Economic Cooperation (CAREC) corridors 2, 5 and 6 has supported some 28 transport projects with loans, grants and technical assistance totaling US$600 million (1998-2020)13. Other main development partners in the sector are the Islamic Development Bank (IsDB), the Japan International Cooperation Agency (JICA), the Government of the People’s Republic of China, European Bank for Reconstruction and Development (EBRD) as well as other bilateral and international development partners. ODA funded activities have made contributions to the country’s connectivity with Uzbekistan to the east (Dushanbe – Tursunzoda); with Kyrgyz Republic to the north (Guliston and Madaniyat; Khujand - Chanok); with Afghanistan to the south (Dangara-Qurghonteppa); and with China to the east (Murgab - Kulma Pass). Sustainability, Resilience and Safety of Physical Connectivity 18. Notwithstanding the recent and ongoing investments, infrastructure condition needs further improvement, especially in GBAO region, and underserves the rising demand for road transport. Tajikistan’s vehicle ownership has been rising steadily from 33 registered vehicles per 1,000 people in 2008 to 51 in 201914. In addition to the increasing road demand overall nationwide, Tajikistan serves as a transit route between China and Europe, and South Asia and
12 MoT Statistics 13 Asian Development Bank Tajikistan fact sheet 14 Based on MoT Statistics on car ownership and total population
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Europe for certain commodity groups. Heavy overloading of trucks that travel through Tajikistan, sometimes up to 80 tons per truck, is an added problem to the country’s already poor condition road network due to its climate and deferred maintenance. The overloading is caused by weak enforcement of trucking companies that seek to reduce transport costs for goods shipped. Particularly vulnerable to overloading are Sughd and GBAO regions which serve as main industrial production area and transit corridors respectively. Development of an axle load control strategy along with pilot program to install automated system to record the axle weights and gross vehicle weights is being implemented in Sughd region under the ongoing CARs-2 operation. 19. Good governance and efficient asset management in the transport sector is therefore equally critical to ensure provision of sustainable, resilient and safety transportation services to users. Despite the country’s laudable achievements and progress in improving transport infrastructure reliability in recent years, the investments have not always reached full potential of further market integration and economic development at the regional level. At the same time, to keep such investments sustainable as well as to ensure safe and reliable transport services, necessary policy actions in sector governance, asset preservation and management are critical. The ongoing CARs-2 operation has laid foundation for a road asset management system (RAMS) including through supply of key equipment and software system. Based on this foundation, full functionality of the RAMS requires regular data collection at the network level, institutionalized and technical capacity, integration with budgeting and planning processes, and monitoring. Continued support for completion of the RAMS would need to be closely coordinated with other development partners that are providing related support to MOT.15 20. When compared to countries at a similar level of development, road accident fatalities and injuries in Tajikistan are very high. The World Health Organization’s (WHO) estimated that in 2017 there were 1,577 fatalities caused by road accidents, equivalent to a 18.1 fatality rate per 100,000 population.16,17 This compares to 6.4 in North Macedonia, the best performer in the Europe and Central Asia Region, and 2.74 in Switzerland, the best global performer. The WHO estimates that in 2016 the cost of road accident deaths and injuries in Tajikistan was equivalent to 6.0 percent of GDP. The lead agency for Road Safety Management is the Department of State Automobile Inspection (DSAI), at the Ministry of Internal Affairs. This agency has been assigned the functions that include coordination, legislation and monitoring and evaluation of road safety strategies. However, the country does not have a Road Safety Strategy and has no known road safety targets. Moreover, interventions to reduce the impact of road crashes are limited, as is enforcement of Traffic Laws. In Dushanbe the City has been rolling out its Safe City initiative since 2014. This initiative includes enforcement of traffic laws through video monitoring at 74 major road intersections. As a result of this initiative violations of traffic laws at intersections has reduced by 50 percent but throughout the city violation of speeding, lane and use of safety belt remain common. 21. Tajikistan’s ongoing efforts in enhancing legal and institutional framework for disaster risk management (DRM), with support from the World Bank and other development partners, need to continue. Damaged infrastructure systems can leave large parts of the population without access to the rest of the country and restoring access may require major reconstruction works. Several road sections in GBAO pass through a mountainous and
15 JICA is funding the design, development, installation and commissioning of a comprehensive Bridge Maintenance Management System, under their recently approved Project for Capacity Development for Bridge Management, which could be extended to maintenance of tunnels in a future intervention. The ADB is proposing to provide funding for a baseline condition survey of the road network and upgrading of road condition survey equipment. 16 Based on the Road Safety Country Profile for Tajikistan as published in ‘World Bank (2019). Guide for Road Safety Opportunities and Challenges: Low- and Middle-Income Countries Country Profiles. Washington, DC., USA 17 The Government of Tajikistan disputes the WHO estimates for fatalities and injuries. GoT estimates that the WHO figures are a factor of 3 times larger than actual figures. In their estimates, the WHO takes into account the results of an assessment of the reliability of data collection.
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geological complex region where various types of hazards such as floods, landslides, mud/debris flow and avalanches occur regularly, damaging road infrastructure and blocking roads for extended periods. The unfinished agenda of DRM include the following: (a) a need for systematic disaster risk reduction and risk-informed investments for critical infrastructure; (b) a need to increase the country’s response capacity by modernizing its crisis management systems to respond to emergencies more efficiently and by putting in place financial protection mechanisms; (c) a need to produce and share disaster risk information to inform planning and investments in various development sectors; and, (d) a need on the part of DRM stakeholders for further capacity. Under the World Bank’s Strengthening Critical Infrastructure Against Natural Hazards Project, approved in 2017, a foundation is being established to address these significant needs but beyond this project the need for long-term support remains. Institutional Connectivity: Trade Facilitation and Customs 22. In addition to the improvement of physical connectivity, important institutional reforms on trade and transport facilitation remain to be addressed to unleash the full growth potential of the Tajik economy. Tajikistan stood at the 134th position out of 160 countries studied under the World Bank's 2018 report on Logistics Performance Index (LPI), which considers a variety of cross-cutting issues that impact logistics, including infrastructure connectivity infrastructure, regulation of services, sustainability, resilience and trade facilitation. It is well below other countries in Central Asian region, namely Turkmenistan (126) Uzbekistan (99), Kyrgyz Republic (108), Kazakhstan (71) and Russian Federation (75). Tajikistan’s export competitiveness is being impeded by high trade costs. According to the World Bank’s Ease of Doing Business (DB) 2020, Tajikistan is overall ranked at 106 (out of 190 countries), having risen 20 steps since 2019. However, its ranking is uneven across the ten categories of the DB indicator and particularly lower in the “trading across borders” category, ranked at 141 (improved 7 steps from 148 in 2019). The data shows that it takes five times longer to import in Tajikistan (107 hours for border compliance) than Europe and Central Asia average (20.7 hours for border compliance). This implies that, even though the overall performance of the country has significantly and steadily improved, customs and trade facilitation reforms are behind the rest of the other indicators for Tajikistan. 23. As a member of the World Trade Organization (WTO) and participant in the CIS Free Trade Agreement, Tajikistan needs to further its effort to enhance trade competitiveness and increase market opportunities. Tajikistan will need to address its cumbersome regulatory and business environment, gaps in physical infrastructure, as well as align standards to international practices and modernize procedures of cross-border movement of goods and people. The government has expressed interest in developing a comprehensive institutional reform program, including upgrade of equipment, IT systems and human resources development, not only to facilitate trade and travel, but also focus on the potential to develop the country’s transit potential. These efforts are expected to help the country capitalizing on the business enabling environment, utilizing public infrastructure for reaching out to domestic and external markets as well as integrating in regional and global value chains. Despite a historically small and narrow export base, there seems to be high and relatively inelastic demand by neighboring countries to import food products, minerals and metals, and energy, all products, for which Tajikistan has a comparative advantage. For example, during 2018, Tajikistan’s total export of goods have increased by more than 9 percent, with exports to Uzbekistan having tripled, compared to the previous year; total export continued growing by 4 percent in 2019.18 24. The Customs Service under the Government of the Republic of Tajikistan (herein “Customs Service”) is a state body performing statutory functions related to customs clearance and controls. It comprises approximately 1,160 staff spread around 70 Customs offices and processed approximately 250,000 declarations in 2018. The Customs Service is plagued with high level of inefficiencies, low productivity, and low control over movement of goods. Modern
18 International Trade Center. Trade map https://www.trademap.org/Index.aspx
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Customs practices based on risk and compliance management have not been introduced effectively, due to mix of reasons such as inadequate staffing, training, or persistence with reform endeavors. The lack of a reliable automated customs system is also cited as an important factor behind the lack of overall progress. Attempts to modernize were previously made through the help of various donors, but these were piecemeal, and automation of processes have not yielded the desired results. Customs automation was carried out and a processing system, called Unified Automated Information System (UAIS) was developed through financing from the Asian Development Bank and with the help of a private sector firm, and started functioning in January 2012. This system has a number of shortcomings, and further development and improvement stopped after the firm’s support contract expired. 25. Currently the customs processing through UAIS remains, at most, semiautomated with limited integration and interaction with internal and external systems. A number of steps required for clearance e.g. valuation, exchange rate input etc. are done manually. The system has practically no time controls i.e. automatic notifications, and also does not allow to upload supporting documents; the ICT hardware (servers, computers etc.) has also outlived its lifecycle. The Customs infrastructure including border posts, and inland offices are also not geared up for modern operations. Being landlocked, Tajikistan also requires high level of integration with its neighbors for seamless movement of goods, which is also lacking. Overall the current operations cannot support any improvement in Customs performance, and to correct this, the Customs Service should update its operating model, organization, and staff employment policies. 26. Apart from Customs, there are other agencies whose performance will impact the efficiency of trade flows. The current regulatory regime remains cumbersome, and the clearance process is administratively complex. Even if Customs become efficient and fully automated, traders will still need to carry out burdensome paperwork with several government agencies that continue to process manual documentation. To address this, Tajikistan has introduced the principles of a single window, providing a single system of liaison with importers and exporters, submission of documents and full-cycle handling applications for customs clearance and transit. This system has, however, not yet been fully adopted. Despite the significant role of agribusiness in the economy and the size and potential for agricultural exports, Sanitary and Phytosanitary (SPS) measures have not yet been considered as strategic priority in the government. SPS capacities are at an early stage development in the context of trade facilitation initiatives. Areas for improvement include legislation, laboratory capacity, coordination among border agencies. There is also role for improved border enforcement in addressing vulnerability to transboundary pests and diseases that could damage agricultural productivity and resilience. Gender 27. Tajikistan exhibits large gender gaps in many areas, such as, educational and health endowments, economic opportunities, and inequality in the voice and agency that women hold in society compared to men. Only 33% of females participate in the labor force compared to 53% for their male counterparts19. The low female labor force participation (LFP) in absolute terms as well as the 20-percentage point gender gap in LFP indicates a significant disparity in economic opportunity for women compared to men and illustrates the magnitude of the economic potential that bridging this gap represents for the country. Women are concentrated mainly in agriculture, health and education sectors while men dominate other sectors, such as industry, construction and transport, which tend to be better remunerated. Alongside traditional gender norms, occupational segregation contributes to a high gender pay gap (GPG) in the labor market20: on average, in 2017 men earned 40.6% more than women in Tajikistan when their
19 World Bank Gender Statistics, 2019. 15 years and above 20 Tajikistan Country Gender Assessment, Asian Development Bank 2016
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median monthly earnings were compared, 21 which is one of the highest GPG in ECA. There are fewer women entrepreneurs than men entrepreneurs in the country. Women entrepreneurs in Tajikistan are reported to be facing disproportionate challenges compared to their male counterparts to start or grow their businesses due to their weak application of property rights, which limits their ability to pledge property as collateral to access finance, and lack of knowledge of customs regulations and taxes, just to name a few 22,23. 28. Evidence, albeit limited24, as well as the discussions with key interlocuters in the country show that women traders experience disproportionate challenges when it comes to cross-border trade. One of these challenges is the limited knowledge about taxes and customs regulations and the concerns about fines and confiscation of goods. According to the World Bank’s Enterprise Surveys, 6.4% of the surveyed firms in Tajikistan headed by females identified customs and trade regulations as a major constraint compared to 2.3% of those managed by males25. Discussions with a number of stakeholders including the Customs Service and the National Association for Women Business Owners of Tajikistan (NAWBT) confirmed the lack of knowledge of customs regulations among women traders to be indeed a significant barrier. These observations are also in line with the global evidence 26 indicating that since women are more likely to operate outside mainstream business circles and have more limited business networks, accurate trade information on customs requirements does not often reach them. Furthermore, discussions with some stakeholders in Tajikistan suggest that customer-service in border agencies is not necessarily gender-sensitive, which is likely further exacerbated by the largely male-dominated workforce: only about 10% of the 1, 108 employees in customs are female27
C. Relevance to Higher Level Objectives 29. The CARs-4 Project is the Fourth Phase of the Central Asia Regional Links (CARs) program, a series of projects (SOP) in multiple countries (borrowers). The Central Asia Regional Links SOP is the result of a collaborative effort initiated by client governments in the Central Asia region and is financed by IDA with parallel financing from several development partners. The overall objective of the SOP is to increase cross-border connectivity and enhance integrated regional development to revitalize historically active economic exchanges in Central Asia and beyond along the Silk Route. To bring transformational impact in the region, the SOP builds synergies with other regional initiatives by multilateral and/or bilateral development partners, e.g., the CAREC program led by the ADB, the Eurasian Economic Union (EEU), and China’s Belt and Road Initiative. 30. The CARs program has evolved from having a single focus on cross-border transport connectivity towards a multi-sector agenda to pursue integrated regional development, improve regional connectivity and create market opportunities. The objectives of Phase 1 (CARs‐1 Project for Kyrgyz Republic, US$45 million equivalent, completed) and Phase 2 (CARs‐2 Project for Tajikistan, US$45 million equivalent, to close in mid-2020) were to increase transport connectivity between Tajikistan and Kyrgyz Republic along priority cross‐border road links in the populated Fergana Valley, and to support harmonization and improvements in road operations and asset management practices in the countries. Phase 3 (CARs-3 Project for Kyrgyz Republic, US$55 million equivalent) is now under implementation with a PDO to increase regional connectivity and support sustainable tourism development in Issyk‐Kul Oblast, Kyrgyz
21 Agency on Statistics under the President of the Republic of Tajikistan (TAJSTAT) 22 “Gender-responsive climate investment assessment in Tajikistan”. European Bank for Reconstruction and Development (EBRD) 2019 23 “Barriers to Female Entrepreneurship in Tajikistan”. UNDP and the Ministry of Foreign Affairs of Finland https://www.undp.org/content/dam/tajikistan/docs/Poverty%20Reduction/Barriers%20to%20Female%20Entrepreneurship%20report_ENG.pdf 24 Ibid, EBRD 25 World Bank’s Enterprise Surveys https://www.enterprisesurveys.org/ 26 “Gender Dimensions of Trade Facilitation and Logistics”, World Bank 2012 27 Data obtained from Customs Service on 06/05/2020
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Republic. Phase 3 was the first of a new generation of projects that strive to address regional integration in a more comprehensive approach encompassing both physical and economic connectivity among neighboring countries. As such, Phase 3 and the proposed Phase 4 aim to increase the physical cross‐border links of regional importance in the region, while reducing operational constraints and creating market opportunities for the development of trade and tourism at the regional level to reap the benefits of the full development potential of the oblast. This is expected to revitalize the historically active economic exchanges in Central Asia and beyond along the Silk Route. 31. The CARs-4 Project has been designed to respond to the needs of Tajikistan during the post-COVID economic recovery phase. First, the Project will address constraints to supply chains for the movement of goods. By doing so the Project will not only reduce the overall cost of moving goods but will also remove bottlenecks, both internally and at borders, to the movement of essential medicines and food necessary to combat COVID. Second, the Project will fund public works that can be implemented using labor-based techniques and thereby provide low-skilled jobs under contracts that will be ready for award early in calendar 2021, and thereby contribute to the economic recovery phase. And finally, the Project will strengthen the emergency preparedness of the country both by building resilient infrastructure and by supporting border crossing and customs system that can handle relieve consignment during emergency in a transparent and efficient manner. 32. CARs-4 is aligned well with objectives and three pillars of the FY19-23 World Bank Group Country Partnership Framework (CPF) for Tajikistan, endorsed by the Board of Executive Directors in May 2019 (Report No. 135875‐TJ). The CPF has three development priorities: (i) Building human capital and strengthening social resilience, (ii) improving public institutions and fiscal/environmental sustainability, and (iii) fostering private-sector growth and market creation. The proposed CARs-4 Project is not only a transformative investment that is expected to foster trade for greater market opportunities but will also contribute to supporting regional development as well as building the foundations for efficient public-sector institutions with the aim of reducing extreme poverty and promote shared prosperity. 33. CARs-4 will contribute to the achievement of key priorities of Tajikistan’s National Development Strategy until 2030, including its ambitious public-infrastructure investments to (i) ensure highest-possible development impact; (ii) allow the country to take full advantage of emerging commercial opportunities; and (iii) avoid potential risks of macro- fiscal sustainability. The proposed CARs-4 Project responds to two out of four strategic development goals of the country as set out in the NDS 2030, MTDP 2020 and SDGs, namely (i) exiting from the communication deadlock and turning the country into a transit path (SDG9) and (ii) expanding productive employment (SDG8). The proposed project also addresses other themes, including climate resilience and vulnerability, shared infrastructure as well as skill development for small scale business operating across borders. Taking advantage of the country’s strategic location is at the forefront of its development endeavor and the government of Tajikistan sees the proposed CARs-4 project as a multi-phase program to address long-term development challenges through an adaptive and programmatic approach within the existing regional connectivity program. 34. The CARs-4 Project and broader CARs program are aligned with the World Bank Group’s twin goals of reducing poverty and promoting shared prosperity. They will contribute towards enhancing conditions for accelerated private sector and economic growth, boosting employment and improving the business environment in the region. The program will enable increased private sector-led job creation and improved access to new economic opportunities. By increasing regional connectivity, it will contribute to meaningful convergence towards greater regional integration in Central Asia and along the Ancient Silk Route.
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II. PROJECT DESCRIPTION
A. Project Development Objective PDO Statement 35. The Project development objectives of the Fourth Phase of the Central Asia Regional Links Program are to enhance the efficiency of cross-border trade for participants of the regional economy and to improve the resilience and safety of regional connectivity infrastructure in Sughd region and Gorno-Badakhshan Autonomous region. The project contributes to the Central Asia Regional Links Program’s higher-level development objectives to increase cross- border connectivity and enhance integrated regional development to revitalize historically active economic exchanges in Central Asia and beyond along the Silk Route. PDO Level Indicators 36. The achievement of the PDO will be measured through (i) time efficiency of cross-border trade in Sughd region with Uzbekistan, (ii) access to markets and trade opportunities for the population in the project areas, (iii) resilience and safety of connectivity in project roads and institutional foundation to scale. Wherever possible, gender disaggregated data will be collected, with an aim to narrow the existing gender gaps, which will be established during appraisal through consultation, surveys and focus groups. a. Time efficiency of cross-border trade, measured by i. Travel time between Kannibodam and Bekobod BCPs, measuring the improvement of regional connectivity along the trade corridor connecting with Kyrgyz Republic and Uzbekistan; and ii. Average time spent for customs clearance, separately for import and export and accounting for time spent at border crossing point and at clearance terminals, measuring time-efficiency of trade across borders resulting from improved customs processes b. Access to markets and trade opportunities, measured by i. Market accessibility index of Sughd region, measuring trade opportunities resulting from efficiency improvement due to reduced time and cost for customs and improved reduced transport cost c. Resilience and safety of transport and trade, measured by i. Number of hours of road closures in Barsem caused by natural hazards, significant enough to necessitate public announcement, measuring the resilience of transport and trade; and ii. Road fatalities along the main routes in Khorog, measuring the safety of transport and trade
B. Project Components 37. The CARs-4 Project is structured around four components: preliminary costs and financing sources are shown in Table 1 and each component is described in detail below: Table 1 Cost Estimates and Financing Sources by Component IDA – National IDA - Regional Trust Fund Total Component (in US$ million) 1: Improve regional connection in Sughd and GBAO regions 30 59 1 90 2: Improve road assets preservation and road safety 7 13 20
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3: Facilitate cross-border movement of goods 7 13 20 4: Support project implementation, coordination and management 2 2 Total 46 85 1 132
38. Component 1: Improve regional connections in Sughd and GBAO regions (US$89 million equivalent from IDA; US$1 million from PACT Trust Fund). Activities to be financed under this component include: (i) rehabilitation of a 50.5 km long, Category I and III roads in Sughd in four sections (estimated at US$37.0 million); (ii) construction of Khorog bridge and tunnels/galleries and bridges around Barsem Village in GBAO to enhance the resilience of the road connectivity from climate hazards such as mudslides and avalanches (estimated US$46.7 million); (iii) construction supervision services for road construction and rehabilitation works (estimated US$4.3 million); and (iv) preparation of feasibility studies, to be partially financed by Program for Asia Connectivity and Trade (PACT) Trust Fund, for improvement of regional road connectivity for Sughd, Khatlon and GBAO regions as the basis for potential lending operation (tentatively titled CARs-5) (estimated US$2.0 million). The four road sections under activity (i) above include, from west to east, Bek Abad (Uzbek Border) – Kurkat (12.3 km), Dehmoi – Gafurov (21.9 km), Gafurov – Kistevarz (6.3 km), and Kuchkak – Kanibodom (10.0 km), as presented in the maps in Annex 4. The preliminary cost estimates presented in Annex 2 will be updated when the ongoing Feasibility Study is completed, expected in June 2020. 39. This component aims to improve connectivity and road infrastructure resilience along the priority trade and travel routes for Sughd and GBAO regions, selected on the basis of the government priorities, available financing envelope as well as sequencing of construction works. Improved road infrastructure will provide better access to markets and economic opportunities for the residents in the two regions. In designing and construction of the above transport infrastructure, high standards for safety and resilience will be applied, based on global experiences and considering the local conditions. Cost-effective engineering solutions that ensure safety and resilience of the infrastructure will be fully incorporated in the final design. 40. In order to support the economic recovery post-COVID, construction techniques would incorporate use of labor wherever possible and appropriate, to maximize the number of construction jobs to be created under the Project, and contractors would be required to source local materials and suppliers to the extent possible, to generate positive impacts on the local economy. propose the local economy. These requirements will be stipulated in the bidding documents and works contracts. Road construction jobs created for local communities will be measured as one of the intermediate results indicators. 41. The above listed activity (iv), to be funded both by IDA Grant and PACT Trust Fund, would focus on key regional economic corridors: unrehabilitated sections of Khujand-Kanibadam corridor in Sughd, Guliston-Kulab section in Khatlon, and Khorog to Kulma Pass section of the Dushanbe to Kashgar (in China) Highway in GBAO. The initial viability of these key corridors will be assessed through survey of initial road conditions, identification of natural disaster risks and mitigation measures, identification and assessment of measures to maximize wider economic benefits of corridor development, and assessment of technical, economic, financial, social and environmental feasibility. The results of this activity would inform future operations of the Program. IDA financing (US$1 million equivalent) will be used for the assessment for Khatlon region; PACT Trust Fund (US$1 million) for Sughd and GBAO regions. 42. Component 2. Improve road asset preservation and road safety (US$20 million equivalent) will aim to strengthen the road asset management system for long-term sustainability and climate resilience of the country’s road network, and to create the institutional foundation to systematically address road traffic safety issues, and comprises two sub-components, described below.
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43. Sub-Component 2a Improve road asset preservation (US$8 million equivalent) will finance (i) supply and installation of weigh-in-motion (WIM) systems to preserve road assets, (ii) installation and commission of software packages for recording, storage and analysis of road network condition, traffic volumes, and natural hazard exposure data, development of prioritized maintenance planning, optimized to allow for budget constraints, and annual maintenance plans, and (iii) training on the installed systems. Activities under this component have been carefully coordinated with other development partners. 44. Sub-Component 2b Improve Road Safety (US$12 million equivalent) will finance three activities. (i) Support the Department of State Automobile Inspection to increase use of 4-wheel vehicle safety belts, through carrying out a legal and regulatory review, publicity campaign to promote use of safety belts, and design of working procedures and capacity-building to raise compliance. (ii) Retrofit or construct safety barriers along selected road sections in severe mountainous terrains as a demonstration pilot. (iii) Support DSAI, the lead agency for road safety, to develop a Road Safety Strategy and to establish a Road Safety Observatory through provision of technical assistance, equipment, support for the design installation, commissioning and training of staff for a road accident reporting and analysis database, training of key staff in the management and operation of a Road Safety Observatory, and operating costs. 45. Component 3. Facilitate cross-border movement of goods (US$20 million equivalent). Two groups of activities will be financed under this component. (i) Upgrading of the Customs information and communication technology (ICT) platform (estimated at US$12.8 million) would include equipment and facilities (computers, networking equipment, data center, end-use terminals), customs automation software suitably adapted and tested to be compatible with local requirements and including a module to facilitate relief consignment in the event of natural disasters and other emergencies, and implementation support up to 2025. (ii) Strengthening of institutional capacity and human resources in Customs Service (estimated at US$1.3 million) would comprise integration of the newly upgraded Customs ICT platform with other governmental ICT systems28, technical assistance for development of a detailed implementation plan for customs modernization, implementation of time release studies, assessment of implementation of measures under the WTO Trade Facilitation Agreement including capacity building support in select areas, increasing the share of female employees within Customs offices, and training of staff on the revised code of ethics and gender-sensitive service delivery. (iii) Support for the border inspection of cargo and passenger traffic through provision of technical equipment (estimated at US$5.9 million). The list of technical equipment to be procured under the project will be drawn-up after carrying out an assessment of the current inventory of technical equipment, traffic volumes and capacity gaps. 46. Through the above activities, this component will help streamline and rationalize processes and procedures at the border and provide a platform for the application of a range of internationally agreed norms and standards, many of which are incorporated in the Government of Tajikistan’s Medium-Term Program for Customs Development. In particular, the detailed implementation plan for customs automation would encompass institutional, technical and operational elements to make full use of the ICT system to be put in place: (i) governance and operational framework, (ii) technical and functional requirements of the proposed solution, (iii) identification of legal, regulatory and procedural gaps, (iii) technology architecture and procurement elements, (iv) implementation schedule, including activities, timelines and milestones, (v) benefits profile, including the expected benefits mapped to milestones, (vi) risks and mitigation strategies, and (vii) change management strategy. It would also aim to provide more equal employment and promotion opportunities among female and male staff and quality services for both female and male users through ensuring gender-sensitive service delivery. The capacity of the Customs staff related to their ICT proficiency is assessed
28 Possibly including the National Single Window system that is under development and is expected to become functional during the life of the CARs-4 Project, if needed.
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to be very low, and thus, this component will provide a comprehensive capacity-building program to address this shortcoming sustainably. 47. Modern Customs practices rely on the extensive use of Non-Intrusive Inspection (NII) equipment. NII technologies facilitate rapid inspection and release while enabling the Customs service detect materials that pose a threat to the society or the economy. Using specialized technical (imaging) equipment, Customs inspectors can examine cargo, trucks, containers, rail cars, as well as privately owned vehicles for the presence of contraband without physically opening or unloading them. The World Customs Organization ‘SAFE Framework of Standards’ recognizes the usefulness of NII technology for trade facilitation and recommends to Customs administrations that non-intrusive inspection equipment should be available and used for conducting inspections, where available and in accordance with risk assessment. Detection equipment such as radiological and chemical detection and imaging equipment that can be deployed ‘in line’ to enable the Customs Service to screen or examine a larger portion incoming and outgoing traffic. Hand-held technical equipment, such as videoscopes can also assist in improving the effectiveness of inspection of inaccessible ports of vehicles and containers. Portable trace detection equipment is designed to detect the presence of trace amounts of bomb, explosive, drug or narcotic chemical substances. Trace detection equipment also help intercept people who have handled dangerous or illegal materials and are used by Customs officers to screen passengers and crews at border control points. 48. Component 4. Support project implementation, coordination and management (US$2 million equivalent). This component will support project implementation, coordination and management including provision of goods, consultants’ services and training, operating costs and financial audit. 49. Component 5: Contingent Emergency Response (US$0). This zero-dollar component is designed to provide swift response in the event of an eligible crisis or emergency, by enabling Tajikistan to request the World Bank to reallocate project funds to support emergency response, and reconstruction, where needed. A Contingent Emergency Response Component (CERC) annex will be included in the Project Operations Manual (POM), specifying the implementation arrangements for the component, including its activation process, roles and responsibilities of implementing agencies, positive list of activities that may be financed, environmental and social aspects, and fiduciary arrangements. When the Government has determined that an eligible crisis or emergency has occurred, it can request and seek agreement of the Bank to include relevant activities under the Project. In such situations, all environmental and social instruments as may be required for the added activities need to be prepared, disclosed and approved by the Bank.
C. Project Beneficiaries 50. The direct beneficiaries of the project include the residents of the project areas in Sughd and Khorog/Barsem areas, as well as travelers, traders, transit traffic, and population at large in the communities located along the corridors, who would have access to better quality, more resilient and safer transport infrastructure. Moreover, improved connectivity—both physical and institutional—would improve opportunities for trade and linkage to global value chains for local producers, and will also lower the prices for consumers, improving their welfare. Additionally, the project would also benefit the public administrations responsible for infrastructure development and management and for customs and trade facilitation, who would expand their knowledge and enhance capacity to perform their roles and responsibilities. The indirect beneficiaries of the project will be the residents of Sughd region (2.6 million) and of GBAO region (227,000) who are expected to be regular road users travelling along the road sections, traders both within and cross borders, as well as consumers to benefit from lower prices of traded goods.29
29 Statistics Office under the President of Tajikistan, “Population of Republic of Tajikistan January 1, 2019 Report”. 2019
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51. The project aims to promote gender equality as part of the project development outcomes through integration of gender equality considerations in the design of project interventions. During appraisal, the project explored common and gender-specific barriers and enabling factors to the mobility and participation of residents of Sughd and GBAO regions in productive activities through stakeholder consultations and focus group discussions. According to the participants of the focus groups, poor quality roads and insufficient transport links pose a significant obstacle to accessing markets and various essential services, such as health and education facilities. Road safety was highlighted as one of the serious concerns. The project also explored gender-disproportionate challenges that women traders are facing with cross-border trade. Whilst information on this aspect is not readily available, some barriers were identified, such as the limited knowledge about taxes and customs regulations among female traders and the male-dominated workforce in customs offices which likely influences gender in/sensitive customer service. The findings are being incorporated in the project design.
D. Results Chain 52. The theory of change is structured around the following key elements:
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E. Rationale for Bank Involvement and Role of Partners 53. The World Bank has a unique role to play as convening power in supporting regional connectivity and integrated regional development in Tajikistan and the region as a whole. The World Bank has a trusted engagement on transport with Tajikistan as well as its neighboring countries through support to the on-going CARs-2 Project and analytical activities, in particular in the aviation sector. This deep engagement stretches to active cooperation with the main development partners active in Tajikistan and the region at large. The World Bank Group is uniquely placed to ensure commonalities of interest and complementarities of program with development partners, including attracting additional financing. The support from the World Bank Group through this proposed program will be crucial in assisting Tajikistan leveraging resources from development partners as well as the private sector alike. 54. Eligibility for the IDA Regional Program. The project would further extend the results from the CARs-1 and CARs- 2 operations in improving the regional connectivity. Specifically, the road sections to be financed under Component 1 in Sughd region constitute a critical east-west trade corridor, connecting Uzbekistan and Kyrgyz Republic, and those in GBAO makes a start to improving international links to the southeast to China. The locations of these sections are shown on the map included with this PAD (Annex 5). As discussed above, the roads will improve the key trade corridors connecting the three countries, as a viable alternative to the routes going through more difficult terrains. Improvement of the institutional connectivity under Component 3 would mitigate one of the critical bottlenecks to the regional trade, by improving border-crossing efficiency along this corridor. Under Component 2a the activities to improve road asset preservation will directly impact on travel costs on regional roads as improved maintenance of the roads will reduce vehicle operating costs. Further, activities under Component 2b will reduce losses for the movement of goods on regional roads by reducing costs associated with road traffic accidents. 55. The proposed activities under CARs-4 are consistent with, and closely aligned to existing regional platforms for regional connectivity. The Central Asia Regional Economic Cooperation Program, with a secretariat based in the ADB, is partnered with six multilateral institutions30 to assist and further the economic potential of the CAREC region and mainstream regional cooperation in the areas of transport, trade, and energy. The key objectives the CAREC Transport Strategy 2030 are connectivity and sustainability with a focus on prioritizing and implementing transport infrastructure development projects along the CAREC corridors. The CAREC program provides a communication and coordination platform for the CAREC countries and development partners to present and discuss new projects and transport initiatives. The CAREC Integrated Trade Agenda (CITA) 2030 comprises three pillars: (i) Trade expansion from increased market access; (ii) Greater diversification; and (iii) Stronger institutions for trade. CITA includes measures for collaborative policy formulation and implementation, alignment of national and regional planning, and regulatory convergence in the region. The Bank is an active member of the CAREC Transport and Trade Facilitation Clusters. 56. The first meeting of the Central Asia – South Asia (CASA) Regional Transport Connectivity Platform was held on February 26, 2020, in Tashkent, with participation of delegations from Afghanistan, Pakistan, Tajikistan, and Uzbekistan. The CASA Platform is designed to promote regional economic integration in Central Asia and South Asia by improving transport connectivity, consistent with the CAREC Program 2030 strategy framework, and complement the work of CAREC’s Transport Sector Strategy 2030. The CASA Platform intends to create a shared space for stakeholders to deliver transport corridors and facilitate cross-border trade, under a two-tiered framework with a ministerial-level CASA Coordination Council and Working Group(s), with the World Bank serving as de facto CASA Secretariat.
30 These are: ADB, European Bank for Reconstruction and Development (EBRD), International Monetary Fund (IMF), Islamic Development Bank (IsDB), United Nations Development Programme (UNDP), and the World Bank.
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57. The CARs-4 will aim to complement several initiatives that aim to support Tajikistan and other Central Asian and South Asian countries to take advantage of the regional markets, especially their large neighboring economies such as China, Turkey and the EAEU. While the lingering legacy of the soviet-era economic linkages has caused the sluggish change in the composition and direction of trade, there is a possibility for Tajikistan to further expand trade into these regional economies with gradual increase in variety and volume of exports. Regional projects under the BRI are expected to create a new dynamic for trade flow and enhancements to existing connectivity infrastructure. The political dialogue on Tajikistan’s membership of the Eurasian Economic Union is ongoing. If Tajikistan joins the EAEU during the life of the project and carries out changes in its Customs and other border legislation, then suitable adjustments will have to be made in order to make corresponding changes in the automated systems. There is a World Bank regional analytical and advisory activity that is expected to provide diagnostics on trade and investment opportunities for Central Asian traders to expand in new and traditional markets, commonalities and inconsistencies in major trade agreements (WTO, EAEU), and soft barriers to supply-chain connectivity. The diagnostic findings will inform and motivate a high-level policy dialogue on trade modernization agenda in the regional framework, to which the CARs-4 will contribute. 58. A successful TIR31 pilot operation from Bandar Abbas (Iran) to Tajikistan via Afghanistan has opened new possibilities for Tajikistan to anchor trade in what is being called the Kyrgyzstan-Tajikistan-Afghanistan-Iran (KTAI) corridor and could usher in greater possibilities for Tajikistan as a transit country, overcoming the significant time and costs before and during border crossings due to opaque fee structures and infrastructure constraints. The TIR Pilot, supported by the International Road Transport Union (IRU), helped demonstrate a 5-day reduction on the usual transit time, offering the shortest possible maritime route to Dushanbe. In order to take advantage of this possibility, Tajikistan should prepare to implement the modern TIR facilities under Component 3, including electronic TIR (eTIR) based on the UN standards, TIR EPD (electronic pre-declaration) and IRU’s Real-Time SafeTIR to digitalize the TIR implementation. The stakeholders such as Customs, freight forwarders and transport operators will need to be trained to benefit from significant cost and time savings when transporting goods.
F. Lessons Learned and Reflected in the Project Design 59. To ensure sustainability of investments, the project includes activities to build on existing operational and institutional capacity of relevant agencies, as well as on the retention of trained staff. During the preparation of CARs- 2, an assessment was made of various implementation options. The option chosen was to establish a Project Implementation Group (PIG) in MOT, with a Deputy Minister appointed as the PIG Director and the Head of International Department of MOT as Deputy Director. Routine management of the PIG was assigned as Project Coordinator. The experience from CARs-2 with the above arrangement proven to be effective throughout implementation, with PIG staff demonstrating strong ownership and dedication. In particular, the PIG demonstrated strong ownership of the policy and capacity building activities under CARs-2 and ensured that there was close coordination of these activities with relevant units of MOT. Given the above experience, the implementation arrangements for CARs-4 have been designed so as to reflect the experience under CARs-2. 60. For economies to fully gain the benefits from regional transport corridors improvements must address ‘hard’ and ‘soft’ investments. A recently completed analytical study of the BRI demonstrated that significant benefits are to be gained for economies in Eastern Europe and Central Asia regions due to the construction of “hard” infrastructure. However, the main benefits are expected to come from the adjustment of institutional, legal, and market framework.
31 The Convention on International Transport of Goods Under Cover of TIR Carnets is a multilateral treaty supporting efficient fulfilment of administrative formalities for transit of goods.
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Thus, the major gains from BRI are not primarily from infrastructure development, but rather from structural reforms that will allow for an increase in overall trade arising from reductions in border delays and reduced tariffs. To take account of this finding, the design of CARs-4 includes a component to address impediments to trade facilitation. This component includes activities to facilitate the process of cross-border movement of goods and people, including support towards the implementation of policy and institutional reforms. 61. The design of the project takes into account activities of other donors and reflects agreements on areas of responsibility allocated to each donor, as agreed with government. There is an active donor coordination group for the transport sector in Tajikistan, in addition to the Bank the Asian Development Bank, European Bank for Reconstruction and Development have significant programs in addition to bilateral donors such as the UK Department for International Development, Japan International Cooperation Agency, Kreditanstalt für Wiederaufbau (Germany) etc. Agreements between donors include a division of responsibility for upgrading of transport corridors and capacity building at the Ministry of Transport. An example of cooperation on capacity building is that for road maintenance, where the commissioning of road maintenance systems, training, and purchase of specialist equipment has been closely coordinated. 62. The remoteness of GBAO region may present various challenges during project preparation and implementation. In order to ensure sustainable project design, quality and timeliness of implementation, and cost- effectiveness of interventions, the team will work closely with other project teams whose project covers the region, including Rural Economy Development Project (P168326) and Socio-Economic Resilience Strengthening Project (P168052), during upcoming appraisal and incorporate relevant lessons to the implementation arrangement. In support of efficient preparation and implementation support in remote areas, applicability of new technologies such as Smart Supervision Application (SSA) recently developed by the World Bank will be assessed during pre-appraisal and adopted if deemed appropriate.
III. IMPLEMENTATION ARRANGEMENTS
A. Institutional and Implementation Arrangements 63. The participating countries of the CARs program have agreed to use the existing regional coordination mechanism of CAREC in order to ensure the achievement of the PrDO. Regional coordination would be exercised at (i) policy level; and (ii) the operational level. At the policy level, the Transport Sector Coordinating Committee (TSCC) within CAREC would be the platform to discuss policy-related issues, such as the harmonization of standards, norms, and parameters on vehicle (truck) weight and axle load limits and the application of tariffs. At the project’s operational level, interactions between respective implementing agencies of the projects would be expected and supported through financing provided by the Bank on project management and implementation. These interactions would include regular meetings between the implementing agencies to report on progress of physical investments. 64. The Ministry of Finance represents the Government of Tajikistan as the signatory of legal agreements; the Project will have two Implementing Agencies, the Ministry of Transport and one in the Customs Service. The IAs will implement project activities under their respective components (Components 1 and 2 by MoT and Component 3 by CS) through their respective project implementation groups (PIGs). The PIG under MoT (MoT-PIG) is in place and currently implementing the ongoing CARs-2 Project and has accumulated experience with implementing IDA-financed projects, although there has been some staff turnover. Under the Customs Service, there is an existing Project Implementation Unit, implementing an ADB-financed project, which is due to close in December 2020; this PIU will be built into a PIG under CS (CS-PIG). In order to ensure close coordination among MoF, MoT, CS, and their PIGs, signing of a Cooperation
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Agreement will be made an Effectiveness Condition for the IDA Grant. This agreement will specify the roles and responsibilities of each agency and specific mechanisms for coordination. A steering/coordinating committee at the level of the office of the Prime Minister, or Executive Office of the President, is expected to provide overall direction and oversee the activities of the involved agencies and their coordination. The National Traffic Police (Ministry of Internal Affairs) will be involved in project implementation through coordination with MoF, MoT and project implementation groups, but will not have fiduciary responsibilities (see Annex 1 for more details). 65. As a general requirement under the Bank-financed project a Project Operational Manual is being prepared and will be finalized before effectiveness. This document summarizes key aspects of the project and determines the responsibilities as well as the tools to be applied during the project implementation and will be followed by both MoT- PIG and CS-PIG for their respective components. The POM is intended to ensure consistency, transparency, and accountability in the application of the project management procedures and will apply during the entire project implementation period. As described above, the POM will include a CERC annex that specifies the implementation arrangements for the component.
B. Results Monitoring and Evaluation Arrangements 66. MoT and Customs Services will have overall responsibilities for monitoring and evaluation of project outcomes of their respective components and through their respective PIGs, which will have dedicated staff to monitor results. MoT-PIG and CS-PIG will prepare semi‐annual progress reports with contributions from other stakeholders and forward these to IDA within 45 days from the end of the reporting period. These reports will detail physical progress and progress in respect of the monitoring indicators from the Results Framework. They will also contain a summary of the status of implementation of all ESF safeguards instruments. 67. Annual work plans will be prepared and furnished to the Bank no later than December 1 of each calendar year during the implementation of the project. MoT-PIG will prepare work plans for Components 1 and 2 and CS-PIG will prepare a work plan for Component 3. These annual work plans will include: (i) a detailed timetable for the sequencing and implementation of proposed project activities; (ii) types of expenditures required for such activities and a proposed financing plan; (iii) training activities that may be required under the project; and (iv) reference to each safeguard document applicable and the proposed approach to ensure their timely preparation and implementation. 68. Project monitoring will utilize appropriate technologies for digital data collection and analysis, namely Geo- Enabling Initiative for Monitoring and Supervision (GEMS). 32 Using the GEMS platform, PIG-affiliated project monitoring officers will collect structured digital data from the project sides, using tailor-made forms and including any appropriate types of data, such as photos, audios, videos, time and date stamps, and GPS coordinates, which would allow for automated geo-mapping of the information. The digital platform provided by GEMS would enable remote supervision, real-time monitoring of ESF implementation, third-party monitoring, coordination across project components, as well as with other operations in the country. Such arrangement would improve transparency, accuracy and cost-efficiency project monitoring particularly in remote areas and throughout the project cycle and would allow continued monitoring of project progress in case of continued travel restrictions imposed by COVID-19 or any causes during implementation. The specific use of technologies, data collection methods, and reporting mechanisms will be described in detail in the Project Operations Manual.
32 Developed by the World Bank’s Fragility, Conflict and Violence Group to enable project teams to use open source ICT tools for collection of structured digital data that automatically feeds into a centralized system for information management and monitoring and evaluation.
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C. Sustainability 69. The sustainability of the road network is being addressed through the development of a Road Asset Management System within MoT. With donor support, MoT has developed a five-year Action Plan for the development of a RAMS. The plan identifies the actions to be taken in developing the RAMS, the targets to be achieved each year, the entity responsible for achieving them, and the estimated funding required. This Action Plan forms the basis for a Government Decree that will be prepared and issued before June 30, 2020. The Action Plan, which is supported by ADB, EBRD, IsDB, JICA, and the World Bank, covers: (i) creation of a Road Asset Management Unit within the MoT; (ii) data collection for the road network, including the procurement of road survey equipment; (iii) the development of a road database to store and manage the collected data; (iv) the development of data analysis and planning system for the preparation of five-year and annual plans; and (v) the identification of suitable sources of road maintenance financing to fund the planned maintenance works. Activities proposed under CARs-4 build on work completed under CARs-2, are consistent with the RAMS Action Plan, and are closely coordinated with support from other donor partners. 70. The government’s commitment towards the rehabilitation of priority road links is a key determinant for the sustainability of the project. This commitment is demonstrated by the rehabilitation of adjacent road sections, including the north-south link between Khujand and Dushanbe and its extension to the border with Uzbekistan. The fourth phase of the CARs program is designed to ensure sustainability of the investment through improved road structures, with timely and improved practices of asset management, and targeted traffic safety measures. 71. The civil works to be implemented under the project are “climate proof” and take into account climate adaptation measures. Soil erosion and landslides are significant problems in Tajikistan which could be accelerated by poor land management practices, such as the cultivation of land on steep slopes, excessive cutting of forests, shrubs and bushes including wind shelters, overgrazing, and improper irrigation. As the project area is located at the edge of the Central Asian Fold Belt in the Tien Shan Mountain System, it is prone to natural hazards, including earthquakes, debris flow, flash floods, and landslides. The engineering designs prepared include specific measures to protect against hazards. 72. For activities to streamline cross-border movement of goods, the World Bank will work closely with the United Nations Conference on Trade and Development (UNCTAD). UNCTAD has extensive experience of trade facilitation initiatives and, in particular, the installation, commissioning and operation of the Automated System for Customs Data (ASYCUDA) system. The ASYCUDA system will provide a platform for the proposed activities to rationalize processes and procedures at borders and for the application of a range of internationally agreed norms and standards, many of which are incorporated in the Government of Tajikistan’s Medium-Term Program for Customs Development. The GoT has provided the Bank with a request for CARs-4 funds to be applied to the installation, commissioning and operation of ASYCUDA, including technical support from UNCTAD.
IV. PROJECT APPRAISAL SUMMARY
A. Technical and Economic Analysis Technical Analysis for Component 1 73. The roads in Sughd region, located along the same regional trade corridor as those rehabilitated under CARs- 1 and CARs-2 projects, are of the priority identified in the National Sector Strategy. This key corridor connects Tajikistan’s road network to Uzbekistan and Kyrgyz Republic, effectively improving connectivity among the three countries in the Fergana Valley. These roads are vital for the national economy as Sughd region is home to nearly a
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third of the country’s population.33 These roads carry high traffic but in poor and unsafe condition, with high roughness (IRIs, or International Roughness Index, of 8-10 m/km), cracks, potholes, and edge breaks, which require immediate interventions. Most of the roads pass through irrigable lands on relatively flat terrains and some sections are affected by seasonal mudflows. The intervention strategy, which is being finalized based on the ongoing engineering surveys and assessment of natural hazard vulnerability, would consist of (i) reconstruction with removal of asphalt and placing of new pavement layers along existing alignment and (ii) new pavement construction along alignment. 74. Construction of Bridge and Galleries and Bridges in the GBAO region expects to address the vulnerability to natural hazards along the critical corridor. The Pamir Highway (also known as M41) that runs through the city of Khorog and Barsem village constitutes the critical part of the road network for the mountainous GBAO region, which is highly prone to natural hazards. Uninterrupted functioning of the primary road network in GBAO and around Khorog is vital to the economic and social well-being of GBAO’s 225,000 residents, providing links to major markets in Dushanbe and the rest of the country. The Pamir Highway is also the only regional corridor that links Tajikistan directly to China and facilitates trade with China and transit between China and neighboring countries. a. Bridge in Khorog city (approx. 300m): The town of Khorog is the capital of GBAO and has a population of 28,000 (2000 census). The road passes though the city of Khorog, part of the Pamir Highway and regional corridor, is heavily congested. In 2015, the Government passed a decision to construct a bypass road, totaling 1.1km and including a new Khorog Bridge over Gunt River, to alleviate traffic delays for the traffic travelling on the regional corridor. The bypass is expected to reduce travel time and improve safety both for transit and local traffic by separating them. b. Galleries and bridges in Barsem area: The regional corridor that runs from Dushanbe in the west to the Chinese boarder in the east, passes through the valleyed Barsem area, highly susceptible to natural hazards such as avalanches, landslides, flooding and earthquakes, In May 2015, prolonged torrential rains caused serious floods and mudslides in the area, destroying about 3.3km (km 636 to km 639) of the Dushanbe-Khorog- Murgab-Kulma regional corridor. After a 1.5 month-long closure, a temporary road was built. Construction of climate resilient structures, consisting tunnels/galleries and bridges in Barsem area, will minimize vulnerability of the corridor to natural hazards, directly contributing to regional connectivity and trades. The specific interventions will be determined based on the engineering study and economic viability of the options. 75. Road safety. The Road Safety Screening and Appraisal Tool (RSSAT) was applied to assess the road safety impact of the proposed project. The project safety impact (PSI) score 34 for the project roads indicates positive road safety impact of the project. Thus, while the project will improve driving conditions and reduce travel time, it will not materially contribute to worsening the road safety situation considering the safety measures and improvements included under the project. In addition, disaster and climate resilience will be ensured in design of all project roads and structures. The detailed designs of civil works will incorporate measures to address road safety and resilience. A road safety audit and design review by disaster risk management specialists will be supported under the project. 76. After completion of the project roads and structures in Sughd and GBAO, there remain sections to be rehabilitated or upgraded along these regional corridors. In Sughd, rehabilitation of Khujand-Gafurov-Kanibadam section would complete the east-west corridor connecting Fergana valley; in GBAO, Khorog to Kulma Pass is the next
33 Worldodometers.info reports that the total population of Tajikistan is 9.3 million, and the population of Sughd Region: 2.6 million in 2019. 34 PSI is one of the outcome metrics calculated by the RSSAT representing the ratio of expected crash fatalities with project design over current fatalities on the road segment. For instance, a PSI score of 0.8 indicates that project design will have an expected 20 percent decrease in fatalities compared to current situation.
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priority for the Government to upgrade and rehabilitate, as part of the China-Pakistan Economic Corridor, providing direction connection from Tajikistan to China. This component, therefore, will support a preparatory work to assess the technical and economic aspects of these corridors, encompassing disaster risk management, wider economic benefits through trade facilitation and market access, and long-term road asset management. This work would be partially funded by the South Asia Region Regional Cooperation and Integration Trust Fund, under the Program for Asia Connectivity and Trade window, in the amount of US$1 million (of the estimated cost of US$2 million). A Bank-executed Trust Fund will accompany this allocation to provide technical support to MoT in implementing this activity. Technical Analysis for Component 2 77. Road asset management system is under development in Tajikistan but is missing some elements to be fully functional. The ongoing CARs-2 project laid the foundation for RAMS, including through deployment of Weight-in- Motion-System (WIMS), traffic counters, and roughness profilers. The CARs-4 supports the missing elements of the RAMS, including: (i) collection of the national road network (14,000km) data, including geometry, location, condition, traffic volume and natural hazard exposure, (ii) development of asset management modules for bridges and tunnels within the RAMS, (iii) supply of additional data collection of equipment, (iv) technical assistance and capacity building for data analysis, (v) capacity-building for installation and operationalization of the traffic counters, and (vi) construction and operationalization of additional WIMS. This component would support institutional strengthening for MoT, MoF, and other stakeholders, to ensure that the RAMS-generated information is used for evidence-based prioritization of road construction and maintenance, budget planning, and private sector involvement. 78. Road safety is of serious concern in Tajikistan, both due to enforcement of traffic safety rules and unsafe design features of infrastructure. Very few vehicle occupants comply with seat-belt laws, as confirmed in a small observational survey in Dushanbe and on mountain roads outside the capital conducted during pre-appraisal (see Table 2). 35 Experience from other countries shows that simply enforcing requirements to wear safety belts can dramatically reduce traffic crash fatalities. In mountainous areas current design practice is to specify solid concrete barriers spaced at intervals to prevent vehicle from leaving the road carriageway. Whilst these barriers are very effective at preventing vehicles from falling over cliff edges, they can cause a very severe crash if either a vehicle is pushed back into passing traffic or if a vehicle makes contact with the end of a barrier. Experience in other countries demonstrates that use of modern barrier design can dramatically improve crash outcomes on cliff-side roads. The instillation of 7.3km of barrier on mountainous roads in western Nepal is calculated to save 3,456 lives over the 20-year life of the barriers.36 Table 2 Results of a small on-road observational survey of safety belt wearing Vehicle Occupant Driver Front passenger Rear passenger Child (<16 years old) Total (weighted) Wearing Rate (%) 23 6 0 0 (smaller sample) 11.6 Note: Conducted in Dushanbe and mountain roads and villages outside Dushanbe 79. The above pilot-scale interventions need to be underpinned by a comprehensive strategy and a systematic way to collect and analyze road crash data. To that end, the project will support development of a National Road Safety Strategy, including education and measures to raise awareness for traffic safety, requirement for road safety audits, definition and treatment of blackspots, development of a traffic accident reporting and analysis database, restructuring the system of training and licensing of drivers, strengthening first-aid stations for traffic accidents; and mechanizing and modernizing the system for registering motorized vehicles. It will also support establishment of a
35 Tajik Law currently only required the driver and front seat passenger to wear safety belts. Based on an informal survey in Dushanbe it was estimated that only about 10% of drivers wore a safety belt. In rural areas compliance is even lower. 36 GRSF/World Bank (2020). Global Road Safety Facility leveraging Global Road Safety Successes Success Vol 2. Washington, DC., USA
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Road Safety Observatory, comprising establishment of a suitable facility to house the Observatory including staffing and equipment, support for the design, installation, commissioning and training of staff for a road accident reporting and analysis database, and training of key staff in the management and operation of a Road Safety Observatory. Technical Analysis for Component 3 80. The introduction of a new Customs ICT system will help address critical bottlenecks to trade and align the regulatory regimes of Tajikistan with its regional and global trade partners. Component 3 of this project has been designed based on global evidence that Customs automation coupled with accompanying procedural simplification results in positive benefits.37 The current ICT system, the Unified Automated Information System (UAIS), does not support automated border clearance process because many of its features are not in operation since its inception. This situation arose because the key technical resources that had originally developed the system were not available to support it on an ongoing basis. The Custom Service suffers from a shortage of skilled workers (including software programmers and systems administrators) to support the ICT operations. It was neither able to train internal resources nor could afford pay salaries at market rates and hire such resources. 81. In place of UAIS, the Government of Tajikistan expressed its interest to introduce the Automated System for Customs Data (ASYCUDA) provided by United Nations Conference on Trade and Development (UNCTAD), the system that is successfully implemented in neighboring countries. Considering the high importance of transit, Tajikistan needs to introduce a Customs Systems that is compatible with those operational in Kazakhstan and Afghanistan (ASYCUDA World), as well as the bespoke systems running in Uzbekistan, Kyrgyz Republic and China. A new ICT system needs to support automated transit procedures, not only for the transit agreements with its neighbors, but also for other international regimes such as TIR. Under TIR, traders will be able to submit Electronic Pre-Arrival Declaration (EPDs) to customs authorities in countries participating in the transit transaction. Such a system, which is fully interoperable with the requirements of transit through EAEU member countries, will enable Tajikistan to connect efficiently with trade partners in the European Union as well as trade undertaken in the routes established under the BRI. Additionally, experience in Afghanistan demonstrated that UNCTAD could support not only the designing and supply of ASYCUDA but also the training of IT specialists and deploy resources for systems maintenance. 82. The project will not only introduce a state-of-the-art technology solution but also implement optimized business processes aimed at delivering improved trade facilitation and more efficient implementation of border regulations. The new ICT solution would enable a paperless customs declaration and border clearance procedures and transparent implementation of Customs and other border controls, covering all modes of transport and all types of cargo including those handled in the express cargo and postal modes. A trader should be able to deliver Customs declarations and supporting documents electronically, using electronic signatures where required. This program would also cover all other regulatory institutions in Tajikistan that support international trade, which will be able to use the new ICT platform to access the system in order to apply controls at the borders. Licenses, permits, certificates and other authorizations issued by the state agencies, including those to be generated online by Single Window system soon to be operational, will be handled electronically in the new Customs ICT System for border clearance.38 The activities under this component will build on and complement related support by various development partners.39
37 The Role of Automation in Trade Facilitation - OECD Trade Policy Papers No. 22 38 The Ministry of Economic Development and Trade informed the project team regarding the Single Window project, which is currently under pilot operations. 39 The on-going activities by development partners are proceeding in parallel and are supportive but not key to achieving the PDO.
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83. Currently, there are legal, procedural and human resource constraints to custom automation, which are being addressed. Specifically, laws that enable automated systems are also not yet in place, the existing procedures are also not compatible with automation; and the staff does not have adequate training to implement modern Customs practices, particularly in respect to assessment of declarations and Customs valuation. Therefore, the project will be preceded by a series of short-term actions designed to the prepare the ground for the introduction of the new ICT System. These mainly include (i) taking stock of the legal and regulatory changes that should place for the ICT system design and implementation; (ii) ensuring that senior management in the Customs Service has clarity on the business benefits and outcomes from the project; (iii) creating appropriate and well-resourced structures for project governance and operations, including change management; and (iv) developing a set of features of the proposed ICT system while ensuring consistency with the goals of the modernization, including the government’s medium-term program for customs development. These efforts are in line with an ongoing separate analytical work by the World Bank, financed by a trust fund, covering 5 pillars. (i) legal and regulatory environment governing cross-border trade; (ii) institutional arrangements for trade, logistics and cross-border movements; (iii) border compliance management and improvement plan, (iv) review automation systems for border clearance, and (v) border agency skills and capacity. 84. The automated system will enable the introduction of new, more efficient practices, including risk-based inspections; post-clearance compliance checks and controls; pre-arrival processing; the ‘Authorized Economic Operator’ (AEO) program for traders with demonstrated track record of compliance; introduction of binding advance rulings on classification, valuation and origin; electronic methods for payment of duties, taxes and fees; and separation of border clearance from the final determination of duties, taxes and fees. Keeping in view the disaster proneness of the region as well as to ensure the movement of essential goods under emergency situations such as COVID-19, the automated system will house a module to enable border management agencies to swiftly and efficiently handle relief consignments during disasters at Tajikistan’s land borders and airports. The support provided will include border agency preparedness in terms of ICT, legal and procedural and training aspects. The solution is expected to interface with the scanning and monitoring equipment deployed as a part of the Customs inspection facilities. Economic Analysis for Component 1 85. Investments under Component 1 would be economically feasible with the overall Economic Internal Rate of Return (EIRR) at 15.7 percent and the Net Present Value (NPV) at US$18.3 million, using a discount rate of 10 percent. Economic benefits comprise monetized amounts of a reduction of vehicle operating costs (VOC), travel time savings, safety improvement and GHG reductions. These benefits result from the road condition improvement, travel speed increase, safety features such as intersection treatment and pedestrian crossing, and improved fuel economy at the optimal speed of 60-70km/h. For all sections, accident savings costs were estimated using the Road Safety Screening and Appraisal (RSSAT) model, and GHG emission savings calculated in accordance with 2017 Guidance note. Further details of the economic analysis are presented in Annex 2. 86. Landslide protection measures at Barsem are viable. Using conservative without project assumptions of closures of only four-days per year due to future landslips and limiting economic impacts to local communities the investments in landslide protection at Barsem were found to be viable. However, without the proposed measures the actual impact of any future landslides is likely to be higher than those assumed as (i) the 2015 landslip at Barsem closed the road for 42 days, and (ii) the highway is the only transport link to GBAO communities to the east of Khorog. In the case of the Khorog bypass, two solutions were studied for the main bridge, with approaches on embankment or flyover. The solution on embankment has a higher economic return than the construction of a flyover, due to lower construction costs, but is not judged feasible from environmental and social perspective.
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87. Public sector financing is considered appropriate for financing road rehabilitation as the large initial costs are not commensurate with sector revenues. In Tajikistan the public investment in the main road corridor infrastructure is the main option available to secure the necessary capital and operational expenditures to develop the essential regional integration. Moreover, the proposed financing by public sector is complemented with the responsibility for axle weight controls and road safety regulations which also are in the public domain. The World Bank’s role is justified because of the project’s economic and social benefits and because of the value added it brings beyond financing in areas such as: construction quality control, sustainability of road maintenance, road safety, transport planning, mitigation of environmental and social risks, and prudent fiduciary management. Economic Analysis for Component 3 88. Investments under Component 3 would be economically feasible with significant overall EIRR under various trade growth and cost reduction assumptions, using a discount rate of 10 percent. Customs automation proposed under the project is expected to lower the costs of trade by between 0.3 and 1.6 percent against the baseline. Assuming average annual trade growth rates at 7.9 percent for imports and 3.4 percent for exports, the EIRR is estimated to range between 26 and 77 percent (or NPV between US$37 million and US$311 million), depending on the cost reduction potential of customs automation. Under a more modest trade growth scenario, with average annual growth rates at 4 percent for imports and 1.8 percent for exports, the EIRR would range between 19 and 66 percent (or NPV between US$21 million and US$111 million). As this component supports facilitation of cross-border movement through customs automation and streamlining of business procedures, the main economic benefits are expected to result from time reduction in border crossing and compliance, estimated using the data generated from Time Release Studies. While the project will result in all round improvements in efficiency, the major cost reductions to be attributed to the project will be time savings at the border clearance through faster processing, fewer face-to-face transactions for Customs, elimination of manual documentary clearance, and reduction of the travel time to and from Customs offices. Further details of the economic analysis are presented in Annex 2. 89. The customs automation along with all accompanying simplifications represents a significant opportunity for Tajikistan to improve the speed and efficiency of border procedures. The project will also strengthen government agency users’ ability to enforce trade laws and regulations. Savings due to faster processing would be on account of automated review of data submitted by brokers, forwarders and importing and exporting firms. Increased use of risk management and selective inspection would result in the faster clearance of eligible consignments. The benefits arise when traders experience lower clearance times, documentary cost and improvements in efficiency of their transport and inventory systems. Benefits will be realized gradually as different modules of the automated systems come online and different types of simplified procedures will come into place. The impact will be felt only once the business processes are re-engineered, automated, and staffed with capable officers. Climate Co-Benefits 90. Climate co-benefits: the project would achieve a net GHG reduction and bring about climate adaptation co- benefits. For road sections in Sughd region, rehabilitation works would improve the road condition and thus increase travel speeds for all types of vehicles. Constructions of the bridge in Khorog city will allow transit vehicles to bypass the city center, therefore increasing the vehicle speed of both the transit and local traffic. In Barsem, reduction in roughness and effect of widening in the realigned section will result in higher vehicle speeds, from 35-45 km/h to up to 70 km/h in case of tunnel. Though traffic on some road sections are predicted to emit more CO2 after the project, the overall project would achieve a net GHG reduction of over 20,000 tons of CO2 during the analysis period, due to the relative fuel efficiency at speed of 60-70 km/h, which leads to a reduction in fuel consumption. The project also supports
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resilient infrastructure in face of more frequent and intense climatic events occurring in the region, through the designing and construction of resilient infrastructure under Component 1 and establishment of a road asset management system that prioritizes maintenance and repairs based on exposure to natural hazards under Component 2. Under Component 3, the customs automation system would include a module that can facilitate movement of relief consignment in case of natural disasters or other emergency situations, which would help Tajikistan to mitigate the negative impacts of such events.
B. Fiduciary 91. Financial Management capacity is overall adequate. MOT through the existing PIG (currently implementing CARs2) and CS through its PIU currently implementing the ADB project, will be responsible for financial management function under the project. Overall, FM arrangements at both implementing agencies are adequate to implement the project and meet the minimum requirements of the Bank’s Policy and Directive on Investment Project Financing. However, the following capacity building actions will need to be in place before the project implementation, within 30 days after project effectiveness: (i) FM/accounting staff, acceptable to the Bank, shall be contracted to support the Chief Accountant in both IAs on daily basis,40 (ii) the accounting system in both IAs shall be updated and have inbuilt controls to ensure data security, integrity and reliability, and the functionality of automatic generation of IFRs. Additionally, by project effectiveness, the FM sections of the POM, acceptable to the Bank, shall be developed and approved. 92. With regard to the FM Covenants to be included in the Disbursement and Financial Information Letter (DFIL), the following should be noted: (i) interim unaudited financial reports (IFRs) per formats agreed with the MOT and CS will be submitted to the Bank within 45 days after the end of the calendar quarter; and (ii) the project’s annual audited financial statements will be submitted to the Bank within 6 months after the end of the audit period. The IFRs will include: (a) Project Sources and Uses of Funds, (b) Uses of Funds by Project Activity, (c) Designated Account Statements, (d) A Statement of the Financial Position, and (e) SOE Withdrawal Schedule. Given that the larger portion of the project will be implemented by the MOT, they will be responsible for collecting financial information and other data related to implementation of Component 3 from CS, and for consolidating it into overall IFRs and progress reports for the project. Further details describing the relationship between MOT and CS will be provided in the POM. The audits will be carried out by independent auditors acceptable to the Bank (funded out of the project) on the terms of reference pre-agreed with the Bank, and according to the International Standards on Auditing (ISA) issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC). The audit reports will be disclosed within one month of their receipt from the auditors and acceptance by the Bank by posting the reports on the official websites of the IAs. Following the Bank's formal receipt of these reports, the Bank will make them publicly available according to World Bank Policy on Access to Information. 93. Two separate designated accounts (DAs) – one for MOT and one for CS – will be opened in a financial institution acceptable to the World Bank to enable funds to flow from the World Bank to the project. Considering the distressed situation in the country’s banking sector, the Bank will monitor the performance of local commercial banks. Currently only a few commercial banks are considered acceptable to the Bank for holding the projects’ DAs. The SOE based disbursement method will be applied for the Project. Project funds will flow from the Bank, either: (i) via the DA, which will be replenished on the basis of SOEs or full documentation; or (ii) on the basis of direct payment withdrawal applications and/or special commitments, received from the IAs. The following disbursement methods may be used
40 This will be reconfirmed during appraisal; in case the contracts with existing FM staff at the PIUs will be extended this action will be revised.
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under the Project: Reimbursement, Advance, Direct payment and Special Commitment. Further details and instructions with respect to disbursements will be included in the Disbursement and Financial Information Letter. 94. The POM will include an Annex dedicated to the component 5 which would provide operational, fiduciary and disbursement details for activating and implementing the CERC. The IA’s capacities of the original project should be used under CERC Component. If this is impossible and alternative implementation arrangements are being considered, these shall be assessed prior to activation of CERC based on simplified procedures. To activate CERC component the Government will: (i) determine the Eligible Crisis or Emergency and send a request to the World Bank for support through the CERC; and (ii) prepare and submit to the World Bank for approval an Emergency Action Plan (EAP) for the use of CERC funds. In its turn, the World Bank will ensure that all safeguard instruments, adequate staff capacity and resources are in place. Once the disbursement conditions are fulfilled and WB confirms the compliance, the reallocation of uncommitted funds from the original project components to the CERC is processed based on the EAP, and disbursements for CERC activities may commence. A separate Designated Account will be opened for CERC component. The CERC will be audited as part of the audits of the original project. 95. Procurement. Procurement under the project will be governed by the World Bank’s Procurement Regulations for IPF Borrowers (July 2016, revised November 2017 and August 2018) (Procurement Regulations), and will also be subject to the Bank’s Anti-Corruption Guidelines (dated July 2016). Both MOT-PIG and CS-PIG will be responsible for day-to-day administration of project activities in their respective components, including procurement and contract management. MOT-PIG will have a nationally recruited procurement consultant while CS-PIG will continue operate with the existing procurement staff. The Bank’s team provided support to the MoT and CS in preparation of the PPSD to develop the best procurement approach for the project. The team will continue its technical support through reviews of any further updates of the PPSD and procurement plan, and procurement capacity building activities for staff of participating agencies. 96. The Project Procurement Strategy for Development (PPSD) is being developed jointly by the MoT and the Customs Service with inputs from the Department of State Automobile Inspection, with close support by the Bank team. Initial analysis of the PPSD shows that procurement activities and packages envisaged under the project are typical for the sectors integrated in the project and are of a standard nature. The investments mainly include improvement of road infrastructure, construction of bridges/galleries and related consultancy services; technical assistance on road safety management; modernizing the Customs ICT system. The specifics of the interventions will be identified at the completion of the Feasibility Study. Market analysis has confirmed the availability of relevant and competitive markets for key civil works packages and has identified the preferred service providers that could be directly approached in case of ICT investments. The PPSD, including procurement plan for the project duration, will be discussed with the Bank’s team during appraisal and finalized by negotiations. A positive list of goods, works, and services under the Contingent Emergency Response Component (CERC) will be agreed with the Government. In case the CERC is activated, the PPSD will be updated to include a section applicable to CERC. 97. The key issues and risks concerning procurement identified so far include: (i) Insufficient interest from the bidders to the selected packages; (ii) Procurement and implementation delays due to the existing technical/procurement capacity to develop and implement international biddings/selections based on the new procurement regulations as well as the new standard procurement documents; to provide quality reviews and timely approvals of the procurement decisions; (iii) Limited contract monitoring and management skills and tools; and (iv) Overall high public procurement risk environment. Given the above risks, the following preliminary risk mitigation measures are proposed: (i) careful procurement planning and optimization of packages to maximize interest from the bidders; (ii) strengthening the implementation capacity and devoting additional resources to support the implementing agencies; (iii) putting in place
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an efficient contract monitoring mechanism; and (iv) Enforcement of public disclosure of contract awards and implementation progress information. Under the above-described implementation arrangement, MoT and CS will be responsible for coordinating the implementation of procurement and contract management for their respective components. The MoT-PIG and CS-PIG will undertake the main procurement responsibilities under the MoT’s and CS’s guidance and monitoring, respectively. In case the Component 5 is triggered, streamlined procurement methods and arrangements will apply that could be managed by the existing capacities of the original project. Procurement arrangements for CERC will be detailed in the specific Annex of the Project Operation Manual.
.C . Legal Operational Policies . Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No .
D. Environmental and Social 98. The social and environmental risks and impacts are mostly construction induced and contextual. The Environmental Risk is due to the fact that much of the road rehabilitation work is expected to take place in remote and mountainous regions of GBAO; therefore, the risk of landslides resulting in damage to ecosystems is higher than for roads in the more populated parts of the country. Such risks will be mitigated by prudent construction site management and designing of the road sections using appropriate bio engineering techniques, resilient structures against hazards, and quality materials. On the social front, while the project is expected to result in positive impacts due to increasing the number of people with access with improved transportation resulting in enhanced employment and livelihood opportunities, there are , a variety of risks are evident, most of which are identifiable and can be mitigated. Some of these do will have a bearing on the project as it manifests in risks related to security and safety. Apart from this, the project interventions, especially the activities under component 1, require additional lands for the widening of the road and potential economic displacement due to livelihood losses. On securing lands, the established procedures outlined in the RPF to be followed and RAPs will be prepared for the subprojects that have land acquisition and resettlement issues. In planning and designing interventions as well as during implementation, due consideration to be given to vulnerable and disadvantaged groups/communities and need to be monitored closely to ensure full compliance with Environmental and Social Standards (ESS) in the remote areas being targeted by the project. Preliminary assessments suggest that capacity of the client in reaching out to remote and poorer households and the provision of appropriate technologies is quite inadequate. Considering the above, the social and environmental risks are both rated as substantial. 99. This is one of the first projects in the country that the Bank’s new Environment and Social Framework (ESF) to be applied. Except ESS 7 and 9 all other Environmental and Social Standards apply for the project. The borrower has prepared: 1) an Environment and Social Impact Assessment/Environment and Social Management Plan (ESIA/ESMP) for the rehabilitation of Bek Abad–Kurkat, Dehmoi–Gafurov–Kistevarz and Kuchkak–Kanibodom road sections (dated June 4, 2020); 2) an Environment and Social Management Framework (ESMF) for the remainder of activities under the project including the two major works planned in GBAO, and the road safety component; 3) a Resettlement Policy Framework (RPF) for the entire project; 4) Labor Management Procedures (LMP) for the entire project; and 5) and a Stakeholder Engagement Plan (SEP). Site specific ESIA/ESMPs and Resettlement Action Plans (RAPs) acceptable to the World Bank will be prepared, consulted on, and disclosed for each of the planned works in GBAO prior to the finalization
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of the bidding documents so that the ESMP can be included. For the road sections in Sughd, the ESIA/ESMP have identified that the project interventions will be all within the existing right-of-way and no land is to be acquired, and thus RAPs have not been prepared. In all relevant ESF instruments, COVID-19 induced requirements to ensure health and safety of workers and communities are incorporated. Environment and social due diligence requirements for the Contingent Emergency Response Component (CERC) will be addressed once the CERC is activated with details of planned activities, and the ESMF will be amended accordingly. 100. The project does not expect labor influx issues and only limited number of external/foreign labor force will be involved. The total number of labor force involved under the project will not exceed 200. The LMP outlines the procedures and actions to be carried out in labor recruitment and management. The project will conduct GBV screening and implement SEA/H prevention measures such as sensitization/orientation of the PIU, implementation of the Code of Conduct, training of workers on SEA/H prohibition, awareness sessions with communities and SEA/H sensitive grievance redress mechanism. Some locations covered under the project (Sughd and GBAO regions) are intrinsically diverse regions and some groups living along the borders are vulnerable due to absence of livelihood and job opportunities, particularly women and youth in remote villages. The Stakeholder Engagement Plan (SEP) is prepared taking into consideration of views of stakeholders and will continue throughout the project in compliance with the SEP prepared. A project specific GRM for external stakeholders and a worker’s GRM will also be established in line with the ESS 10 and ESS 2 requirements, respectively. Advanced drafts of the ES documents prepared by the Borrower (ESIA/ESMP, ESMF, RPF, SEP, LMP and ESCP) will be consulted on virtually and disclosed prior to Appraisal completion due to COVID 19 pandemic crisis. 101. Citizen Engagement. Due to the socially vulnerable and conflict prone social context in some of the project locations, several citizen engagement (CE) activities are being carried out and will aim to take into account voices and views of vulnerable groups. First, the proposed project will establish processes for participatory planning and needs assessments through a series of digital (virtual, online) or traditional focus group discussions, blended to adapt to post- COVID circumstances and prevailing regulations. These discussions will ensure to obtain feedback from local communities on road safety needs, challenges to be addressed in rehabilitation works designs. Focus groups will also provide the opportunity for all citizens to provide feedback on the effectiveness of the consultation process. Second, the project will set up participatory monitoring through Social Impact Monitoring Committees (SIMCs), in localities through which the road improvements/rehabilitation works are conducted. These SIMCs may also function as auditing and monitoring of the quality of the works carried out by contractors and will provide a vehicle for communities to provide feedback on any issue that emerges (e.g. inconvenience, safety for children, etc.). The SIMCs may form at Akimat (local level) comprising local citizens and leaders, technical and professional, local government representatives and members of civil society organizations (CSOs), etc. It will be important to ensure that SIMCs closely monitor the processes of the rehabilitation and construction work and that local citizens themselves are trained and empowered for the monitoring work and are in the position to identify gaps and provide feedback to arrangements. Third, a robust Beneficiary Feedback and Grievance Redress Mechanism will be established for the proposed project. It will not only address safeguards-related issues, but also cover a broader range of aspects related to the proposed project, including gender-based violence. This mechanism will be actively promoted and easily accessible through the project and will ensure that various avenues of contact and information are utilized (including telephone and widely used web apps such as Facebook, WhatsApp, and Viber). Its results are reported on an annual basis. 102. Moreover, MoT will launch a robust communication strategy to increase the awareness about the proposed project. Such communication campaign may include frequent beneficiary surveys (for example through online user report card surveys) as well as communications about the objectives of the project, main activities, status of
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implementation and next steps through leaflets, posters and localized public consultation meetings. To implement these CE mechanisms, the MoT will appoint a Social Development specialist, who will be responsible for CE activities, gender mainstreaming and gender-based violence (GBV) activities. An indicator is suggested to be included in the Results Framework to measure the effectiveness of the above community engagement processes. 103. Gender. The appraisal for the project was informed by consultations with a number of non-governmental organizations working with female smallholder farmers and entrepreneurs in the Project’s two regions, as well as focus group discussions undertaken during project preparation with women and men smallholder farmers, traders and entrepreneurs of small and medium-sized businesses. 104. From the consultation it has been found that several factors influence women’s labor force participation, entrepreneurship, and cross-border trade in Tajikistan. For example, women entrepreneurs in Tajikistan are reported to be facing disproportionate challenges to start or grow their businesses due to barriers, such as, weak application of property rights, which limits their ability to pledge property as collateral to access finance, limited transport infrastructure and red tape. Women are also more likely to cite tax code as particularly onerous, and in some cases, report harassment by tax authorities. Female entrepreneurs are also disadvantaged by unequal access to business networks, lack of accounting and legal literacy skills and information about markets4142. In the study conducted by the UNDP43 in Sughd and Khatlon regions, the women entrepreneurs interviewed named lack of business skills, self-esteem and self-confidence together with market information and knowledge of legislation and taxes as some of the key barriers to start and operate their businesses. The information on the challenges that women are facing with cross border trade is limited in Tajikistan but existing literature44 and discussions with key interlocuters45 indicate that women traders are constrained by the limited knowledge about taxes and customs regulations, and the related concerns about fines and confiscation of goods. It is of note that 6.4% of the surveyed firms in Tajikistan headed by females identified customs and trade regulations as a major constraint compared to 2.3% of those managed by males46. Discussions of the Project team with the Customs Service and the National Association for Women Business Owners of Tajikistan confirmed the lack of knowledge of customs regulations by women traders as one of the significant barriers that women are facing at border crossing. These observations are in line with the global evidence47 that shows that since women are more likely to operate outside mainstream business circles and have more limited business networks, accurate trade information on customs requirements does not often reach them. Also, lack of gender-sensitive customer-service in customs offices is a challenge that women traders are likely facing, which tends to be exacerbated by largely male-dominated workforce: just 10 percent (114) of the 1, 108 employees in customs offices are female in Tajikistan 48. 105. The Focus Group Discussions held with female and male smallholder farmers and entrepreneurs in Sughd and GBAO regions as part of the preparation of this Project confirmed some of the above-mentioned challenges. According to the respondents, poor quality roads and insufficient transport links pose a significant obstacle to accessing markets and various essential services, such as health and education facilities. Among road safety concerns,
41 Ibid, ADB 2016 42 Gender-responsive climate investment assessment in Tajikistan, European Bank for Reconstruction and Development (EBRD) 2019 43 Barriers to Female Entrepreneurship in Tajikistan” Micronarrative study, UNDP and the Ministry of Foreign Affairs of Finland https://www.undp.org/content/dam/tajikistan/docs/Poverty%20Reduction/Barriers%20to%20Female%20Entrepreneurship%20report_ENG.pdf 44 Ibid, EBRD 45 The team consulted Sanavbar Sharipova, Executive Director of the National Association for Women Business Owners of Tajikistan (NABWT) about the challenges that women traders face. ALso, 46 Ibid, the World Bank’s Enterprise Surveys 47 Gender Dimensions of Trade Facilitation and Logistics”: World Bank 2012 48 Data obtained from Customs Service on 06/05/2020
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respondents named lack of street lighting and road accidents. Some participants identified a large number of regulatory bodies, duplication of their functions and costs of registering business as reasons for abandoning trade activities. In terms of challenges within marketplace, the overall market infrastructure was reported somewhat acceptable although some mentioned they often cannot trade under cover because of the lack of free covered spots. 106. The project aims to narrow the existing large gender gaps in economic opportunities, both in terms of employment and entrepreneurship, by promoting equal access to information and economic opportunities. To that end, the project will implement a range of actions to create a more amenable customer service experience for all traders with a focus on females. Firstly, the project will increase number of female employees in both management and customer-facing roles, by promoting women’s employment in traditionally male-dominated roles and gender sensitize customer service. Secondly, the project will revise the Code of Ethics of the Customs Service and/or related guidance to set minimum requirements for gender-sensitive customer care and provide necessary training for management and staff in customer-facing roles. The staff will be required to use non-discriminatory language towards customers, and provide equal treatment in terms of time, courtesy, privacy and information given to both female and male customers. To make staff accountable to adequate service standards, customers will be given an opportunity to leave anonymous feedback, protocols will be defined to respond to the complaints in a timely manner, and the customer satisfaction will be tracked separately of female and male users. Thirdly, to maximize the potential long-term systemic benefits of above measures, the project will work closely with the Human Resources (HR) team of the Customs Office to enhance their capacity focusing on the design and implementation of key HR policies and processes including but not limited to staff recruitment and career management, which is critical to raise and sustain the number of female employees within customs offices.. In parallel, the project will reach out to female traders informing them of customs and border requirements and processes using relevant communication channels. Finally, in coordination with key stakeholders, a regional conference will be organized to bring together women business associations of neighboring countries and explore the challenges they face during cross-border trade. The findings of the conference will inform these envisaged interventions. Lastly, the project will closely coordinate its gender interventions with the International Trade Centre (ITC) which under the gender component of its Ready4Trade project will be undertaking a range of activities such as guiding policy decisions with sex-disaggregated data in the area of trade, raising awareness of border officials on gender-specific challenges faced by women traders, and encouraging women to engage in trade through confidence building activities and advocacy. Close coordination will enhance synergies and avoid fragmentation of efforts.
V. GRIEVANCE REDRESS SERVICES
107. Communities and individuals who believe that they are adversely affected by a World Bank (WB) supported project may submit complaints to existing project-level grievance redress mechanisms or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address project-related concerns. Project affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/en/projects-operations/products-and-services/grievance-redress-service. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org.
VI. KEY RISKS .
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108. The overall risk to achievement of the Project development outcomes is rated as Moderate. The sections below present the assessment and a discussion of the main residual risks. 109. Political and Governance Risk is Moderate. The Project needs firm and steady political support for several critical institutional strengthening activities, which are essential to achievement of the PDO and require high-level skills and specialization. While several civil works under the Project are designed to support post-COVID recovery of the economy by maximizing employment of domestic workers and suppliers, some key consulting services and goods packages need to be delivered by highly specialized and skilled consultants or suppliers, who can bring international experiences. Due to the ongoing economic struggle, however, there may be increasing pressures to engage domestic firms even at the expense of quality or reduce the scope for institutional strengthening activities in exchange for civil works and goods. To mitigate such risks, high-level policy dialogues around the need for institutional capacity-building will be maintained, and the Bank’s close implementation support will be provided to ensure the adequate scope and requirements are stipulated in relevant terms of reference, technical specifications, and contracts. 110. Macroeconomic Risk is Moderate. Whilst the deterioration of the macroeconomic situation in the country due to COVID-19 impacts and the ongoing Rogun Hydropower Plant49 project is very likely, the change in macroeconomic condition and the Government’s macroeconomic policies will have limited impact on development outcomes. First, the widening fiscal deficits may limit available counterpart funds to cover the cost of land acquisition and compensations to project affected people, of which amount is to be determined upon the completion of engineering design and preparation of RAPs. Failure to allocate adequate counterpart funds in a timely manner would delay project implementation and cause disputes with contractors. This risk will be mitigated through consideration of alignment and design options to minimize the need for land acquisition and compensation, as well as close monitoring and careful budget planning. Second, TJS depreciation and acceleration of local inflation will not be impacting the construction of the project because the main contracts are denominated in hard currencies and the local currency denominated small- scale civil works will have price adjustment, which will help to partially capture the impact from TJS depreciation through adjustment of costs. The country’s overall macroeconomic risks are expected to be monitored within the on- going policy dialogue with IMF in the context of the Rapid Credit Facility (RCF) which was disbursed in May to finance a part of the estimated fiscal gap in 2020. The RCF-supported macro-fiscal framework envisages substantial re- allocation of public funds towards social sector priorities. The Tajik authorities committed also to reduce the fiscal deficit to achieve debt sustainability by the end of the medium-term horizon. 111. Sector Strategies and Policies Risk is Low. All activities under the Project are in line with the Government’s respective sector strategy. Transport sector strategy that is being developed under the ongoing CARs-2 Project fully supports the development of the key corridors to be improved under the Project, as well as the need for a sustainable system for road network asset management. The Ministry of Internal Affairs has started developing a priority action plan for road safety, with which the identified activities are in alignment. The Government has adopted the Medium- Term Program for Customs Development which includes automation and human resources development as its priority. 112. Technical Design Risk is Low. Design work for the road component is being carried out by a qualified international engineering consultant; while terrains and access are difficult, design solutions are well known and tested in similar conditions. The customs automation will employ an internationally recognized solution by a trusted vendor with good track records, reducing the design risks.
49 The Rogun Hydropower Plant project is a mega-project that requires disproportionately high fiscal resources and can crowd out other priority spending in social sectors and infrastructure investments.
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113. Institutional Capacity for Implementation and Sustainability Risk is Substantial. A large portion of the project will be implemented by an existing Project Implementation Group within MOT, currently implementing ongoing CARs- 2 project, which is rated Satisfactory; on the other hand, some activities under Component 2 would require substantial technical inputs from DSAI and Component 3 will be implemented by Customs Service, the entities with whom the Bank has had no prior engagements. Involvement of multiple entities can be a source of miscoordination, conflicting goals, and administrative bottlenecks, and would require close coordination, not only for day-to-day operation but also for coherent strategies and policies. Mitigation measures to ensure coordination will include establishment of a Steering Committee, signing of a Cooperation Agreement, close coordination of implementation activities based on integrated POM and PPSD, and integrated reporting arrangement. 114. Fiduciary risk is Moderate. As described above, the IAs have adequate capacity and prior experiences in financial management and procurement for projects financed by international financial institutions. While there are risks related to procurement due to the small size of the market, the PPSD has been developed to identify optimal packaging and procurement methods, taking into consideration of the market conditions and risks. The Bank will provide close implementation support and build capacity in the PIG staff. 115. Environmental Risk is Substantial, as defined under the Bank’s Environmental and Social Framework.: (i) Part of the Project will be implemented in remote, mountainous and potentially fragile areas of GBAO region, which are greatly exposed to various natural disasters such as landslides and floods. Such exposure poses risks to accessing the project locations, maintaining safe work sites, and carrying out high-quality works if it is not well managed. To mitigate those risks, the IAs will require contractors and consultants prepare and implement short-term disaster management plans. (iii) There is a risk of occurrence of traffic accidents involving road users and residents during the construction period, as well as possible increase in road traffic accidents due to improved road conditions and resultant higher speed. The Project will support design elements to protect pedestrians, prevent speeding in urban sections, and keep intersections safe, detailed traffic management plans, and road safety audits when the design is completed. 116. Social Risk is Substantial. Albeit, the project areas (Sughd Oblast and GBAO region) are intrinsically diverse regions, they are exposed to common fragility risks. Vulnerabilities along the borders and the absence of livelihood and job opportunities and income-generating activities has led to unemployment and poverty which has proven to be a key push factor incentivizing individuals to turn into extremist views and ideologies. Certain segments are particularly exposed to such risks- women and youth. The project areas are thus characterized by : (i) inter regional and international/ cross border risks; (ii) economic risks – high rate of unemployment in particular among youth and significant dependency of household income on remittances which is vulnerable to external economic conditions and fluctuations; and (ii) social risks – security risks to contractors and laborers as well as migrant laborers. While the first two risks remain external and related to FCV contxt of the country, project will have to manage the security risks. This apart, project could require lands and hence carry resettlement related risks as well. Although the risk associated with land acquisition and resettlement impacts can be identified and mitigated through appropriate instruments, the general social risk associated with the proposed project implementation required close monitoring and supervision. As per the previous projects, land acquisition impact associated with road rehabilitation and improvement is expected to be modest. However, the country systems related to land acquisition and resettlement does not adequately meet Bank policy requirements. For example, the use of compensation standards that are less than the Bank policy and community consultations and grievance management are inadequate and can cause delays to project implementation. In addition to land acquisition impacts, labor influx and GBV-related risks are assessed moderate from the initial screening. These risks will be mitigated through appropriate instruments already prepared and disclosed by the IAs, as detailed in the
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Environmental and Social Management Framework, as well as close monitoring and supervision throughout the life of the Project. 117. Stakeholder Risk is Low. The project objectives are well understood, and there is a strong support for the Project from all key stakeholders. 118. The ongoing COVID-19 situation adds Moderate risks. An outbreak and associated travel restrictions would severely undermine the IAs’ ability to conduct necessary stakeholder engagement, contractors’ ability to mobilize to project sides, and feasibility of effective monitoring. The project preparation activities, including the site surveying for engineering design, are already being delayed due to the current situation. Such risks will be mitigated through the use of digital data collection and monitoring, enabled by GEMS, and strict enforcement of guidelines and procedures to protect the health of workers and communities during works contracts as stipulated in the ESF instruments.
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VII. RESULTS FRAMEWORK AND MONITORING
Results Framework COUNTRY: Central Asia Fourth Phase of the Central Asia Regional Links Program
Project Development Objectives(s) The Project development objectives of the Fourth Phase of the Central Asia Regional Links Program are to enhance the efficiency of cross-border trade for participants of the regional economy and to improve the resilience and safety of regional connectivity infrastructure in Sughd region and Gorno- Badakhshan Autonomous region.
The project contributes to the Central Asia Regional Links Programs higher-level development objectives of increasing cross-border connectivity and enhancing integrated regional development to revitalize historically active economic exchanges in Central Asia and beyond along the Silk Route.
Project Development Objective Indicators
RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target
Time efficiency of cross-border trade
Average travel time between Kannibodam and Bekobod BCP 210.00 126.00 (Minutes)
Average time spent for customs clearance (Minutes) 834.00 584.00
Average time spent for customs clearance for import 1,112.00 778.00 (Minutes)
Average time spent for customs clearance for export 556.00 389.00 (Minutes)
Access to markets and trade opportunities
Market accessibility index of Sughd region (Number) 0.00 0.00
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RESULT_FRAME_TBL_PDO Indicator Name PBC Baseline End Target
Resilience and safety of transport and trade
Road closures per year in Barsem caused by natural hazards 720.00 120.00 (Hours)
Road crashes or fatalities along the main routes in Khorog 12.00 6.00 (Number)
PDO Table SPACE
Intermediate Results Indicators by Components
RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 Component 1: Improve regional connections in Sughd and GBAO regions Roads rehablitated (CRI, Kilometers) 0.00 50.50 Roads rehabilitated - rural (CRI, Kilometers) 0.00 42.50 Roads rehabilitated - non-rural (CRI, Kilometers) 0.00 8.00 Climate resilient structure constructed in 0.00 3.80 project areas in GBAO (Kilometers) Average daily traffic volume passing 1,233.00 1,480.00 through Khorog Bridge (Number) Communities in target areas with effective citizen engagement channels 0.00 60.00 (Percentage) Road construction jobs created for the 0.00 350.00 local community (Number) Component 2. Improve road asset preservation and road safety
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
RESULT_FRAME_TBL_IO Indicator Name PBC Baseline Intermediate Targets End Target 1 2 Size of road network with baseline geometry, location, condition, traffic 0.00 2,128.00 5,476.00 7,000.00 volume, and natural hazard exposure data are collected (Kilometers) Preparation of five-year and annual road No Yes maintenance plan and budget (Yes/No) Road sections where barriers have been 0.00 40.00 retrofitted (Kilometers) Safety belt compliance (Percentage) 20.00 60.00 Adoption of a National Road Safety No Yes Strategy (Yes/No) Component 3. Facilitate cross-border movement of goods Establishment of customs procedures for paper-free clearance operations, including electronic payment of duties, No Yes taxes and fees (Yes/No) The established customs procedures There is no established customs Customs procedures are Implementation of procedures for for processing of pre-arrival procedures for processing of pre- established for processing of pre- lodgement of pre-arrival information and information and risk-based border arrival information or risk-based arrival information and risk-based risk-based border clearance (Text) clearance are being implemented border clearance. border clearance. using the automated system. Detailed implementation plan for Developed and adopted by the Not prepared customs automation (Text) government (target by end of 2021) Implementation of customs automation No Yes pilot (Yes/No) Female customs officers at managerial level as share of total managers 5.00 10.00 (Percentage) Female customs inspectors as a share of 10.50 20.00 total inspectors (Percentage)
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IO Table SPACE
UL Table SPACE
Monitoring & Evaluation Plan: PDO Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Travel time survey using a probe vehicle to Travel time between Travel time travel along the Kannibodam and Bekobod survey concerned road BCPs, measuring the conducted by section; The sample Average travel time between Kannibodam improvement of regional Annually the MoT size should be 10, and Ministry of Transport and Bekobod BCP connectivity along the trade annually is taken during a corridor connecting with during the regular weekday, Kyrgyz Republic and project during normal work Uzbekistan hours (non-holiday and non-peak).
The baseline Average time required for data is from customs clearance, the Time separately for import and Release export accounting for time Twice, at the Time Release Studies to Study(TRS) spent at border crossing beginning be conducted at the conducted in Customs Service Average time spent for customs clearance point and at clearance and end of beginning and end of 2017 with terminals, measuring time- the project the project support from efficiency of trade across the IFC, borders resulting from aggregating improved customs three processes BCPs/associa
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
ted terminals and Dushanbe airport terminal. TRS will be repeated under the project after custom automation pilot is in place
Average time spent for customs
clearance for import Average time spent for customs
clearance for export The baseline and target values will be Spatial analysis using Market accessibility index of established the transport network, Sughd Region, measuring Twice, at the before speed data, population trade opportunities beginning Effectiveness distribution, and Ministry of Transport Market accessibility index of Sughd region resulting from reduced time and end of ; speed data locations of key and cost for customs as well the project will be markets, to understand as improved reduced collected market access changes. transport cost annually to update
Road closures per year in Barsem caused Annual number of hours of Annually Regular Cumulative number of Ministry of Transport, by natural hazards road closures in Barsem reporting of hours of road closure, in collaboration of
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caused by natural hazards, the Ministry which are significantly GBAO administration measuring the resilience of of Transport disruptive and transport and trade necessitate the authorities to make the public announcement and notification on sites
The baseline and target values will be established after the Annual Road crashes or ongoing Regular The methodology will fatalities along the main feasibility reporting by be updated after the Road crashes or fatalities along the main Traffic police routes in Khorog, measuring study is the Traffic ongoing feasibility routes in Khorog the sustainable opportunity completed; Police study is completed of transport and trade road crash data will be collected annually to update
ME PDO Table SPACE
Monitoring & Evaluation Plan: Intermediate Results Indicators Methodology for Data Responsibility for Data Indicator Name Definition/Description Frequency Datasource Collection Collection Regular Supervision consultant Ministry of Transport, Annually monitoring reporting and physical Roads rehablitated Tajikistan of contract inspection
implementati
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
on
Regular monitoring Supervision consultant Ministry of Transport, Annually of contract reporting and physical Roads rehabilitated - rural Tajikistan implementati inspection
on
Regular monitoring Supervision consultant Ministry of Transport, Annually of contract reporting and physical Roads rehabilitated - non-rural Tajikistan implementati inspection
on
Regular The total number of km of monitoring Supervision consultant all bridges, tunnels and Climate resilient structure constructed in Annually of contract reporting and physical Ministry of Transport galleries constructed for project areas in GBAO implementati inspection climate resilience in GBAO on under the project.
Regular Traffic counting to be reporting by managed by the MoT Traffic volume passing the Ministry and local through Khorog Bridge, of Transport; administration; The measuring the improvement the baseline baseline was set up as Average daily traffic volume passing of regional connectivity as Annually and target an average of AADT Ministry of Transport through Khorog Bridge well as increased trade and values will be during 2019 (1,755 travel in GBAO, resulting updated vehicle/day) and during from reduced transport and after the 2020 (712 trip delays. ongoing vehicles/day), which feasibility was severely affected study if by COVID-19.
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
completed in June 2020.
The indicator will measure the project’s establishment of functioning channels for citizen engagement (that follow approved MoT PIG procedures) at the representatives will use MoT PIG community (village or town) checklists to verify with monitoring in the design/planning and Semi- Mahalla and local Communities in target areas with and MoT PIG monitoring of rehabilitation annually women’s groups that effective citizen engagement channels evaluation and construction of roads to the approved reports ensure that local concerns procedures were
and needs are addressed. implemented Procedures will ensure, inclusion, and that the feedback loop is closed by MoT information and response. MoT PIG Based on supervision Under civil works contracts, Once in the monitoring consultant reporting, create opportunities for third year Road construction jobs created for the and MoT PIG will confirm Ministry of Transport labor from local of the local community evaluation number of jobs created communities to be Project reports for local communities employed under the project
Ministry of Transport will Recording of the road Size of road network with baseline collect baseline data of network data collected geometry, location, condition, traffic Tajikistan's road network, Annually MoT's RAMS Ministry of Transport and stored in the RAMS volume, and natural hazard exposure data covering geometry, location, database are collected condition and traffic
volume, to utilize them in
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the Road Asset Management System. It will collected data from all international roads by end of 2022, all national roads by end of 2024, and additional roads by end of 2026. Commissioning and operationalizing of a national road asset Once at the management system that MoT’s finance and Preparation of five-year and annual road end of the MoT's RAMS Ministry of Transport generates on an annual budget department maintenance plan and budget project basis prioritized
maintenance budgets within budget allocation constraints. The total length of mountainous road sections - Regular to be identified by the monitoring Supervision consultant Ministry of Transport, Road sections where barriers have been Ministry of Transport - Annually of contract reporting and physical Tajikistan retrofitted where the existing concrete implementati inspection
barriers have been replaced on or retrofitted with safer barriers Monitoring Field surveys along the Percentage of vehicles of by project roads to be which drivers and Department conducted by the Department of State passengers wear safety belt, Bi-annually Safety belt compliance of State Department of State Automobile Inspection observed through road side Automobile Automobile Inspection. surveys along the project Inspection Sample size to be roads. minimum of 200
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vehicles at each survey
Ministry of Once in the Interior’s Ministry of Interior’s third year adoption of adoption of the Adoption of a National Road Safety Adoption of a National Road Ministry of Interior of the the National National Road Safety Strategy Safety Strategy project Road Safety Strategy Strategy
Customs Service will develop regulatory and Customs Review and administrative procedures Once in the Establishment of customs procedures for Service’s confirmation of the to operationalize paper-free second paper-free clearance operations, including enactment of Customs Service’s Customs Service clearance operation, to be year of the electronic payment of duties, taxes and the enactment of the compatible with and project fees procedures procedures implemented upon the
development of the automation system Customs Service will develop regulatory and administrative procedures Customs Review and to enable pre-arrival Service’s confirmation of the Implementation of procedures for information and risk-based Annually enactment of Customs Service’s Customs Service lodgement of pre-arrival information and border clearance, to be the enactment of the risk-based border clearance compatible with and procedures procedures implemented upon the development of the automation system A detailed plan for customs Once in the Reporting by Customs Service to Detailed implementation plan for customs automation is to be second Customs document their Customs Service automation prepared under the project, year of the Services detailed covering (i) Project project reviewed and implementation plan
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governance and operational assessed by covering all areas listed framework, (ii) technical and independent in the description functional requirements of technical the proposed solution, (iii) expert The identified legal, regulatory and procedural gaps (iii) Technology architecture and procurement elements, (iv) Project schedule, including activities, timelines and milestones, (v) Project benefits profile, including the expected benefits mapped to milestones, (vi) Project risks and mitigation strategies, and (vii) change management strategy Reporting by The pilot implementation of Customs the Customs Automated Services system covering the basic Once at the Customs Service to plan reviewed and Implementation of customs automation Customs features for import end of the and implement a pilot Customs Service assessed by pilot and export is launched for at project project, and report on it independent least one land border technical crossing and Dushanbe expert airport
The project aims to promote Reporting by Currently there are 11 an increasing share of the human (less than 5%) female Female customs officers at managerial Annually Customs Service female customs staff in resources of managers in seven level as share of total managers managerial positions, both the Customs managerial categories. to provide equally adequate Service The project aims to
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services for female and male double their number at users and to promote 22 (10%) employment opportunities for women in high skilled jobs. Currently 104 (10.51%) The project aims to promote females are Chief an increasing share of Inspectors, Senior Reporting by female customs staff in Inspectors and the human customer facing roles, both Inspectors, out of total Female customs inspectors as a share of Annually resources of Customs Service to provide equally adequate 990 employees in the total inspectors the Customs services for female and male three categories. The Service users and to promote project aims to double
employment opportunities their number at 208 for women. (20%).
ME IO Table SPACE
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The World Bank Fourth Phase of the Central Asia Regional Links Program (P166820)
ANNEX 1: Implementation Arrangements and Support Plan
COUNTRY: Central Asia Fourth Phase of the Central Asia Regional Links Program
1. The Project Implementation Group under MoT (MoT-PIG) will implement Component 1: Improve regional connections in Sughd and GBAO regions; and Component 2: Improve road assets preservation and implementation of road safety measures to support the MoT in all aspects of the CARs-4 implementation of the above components 1 and 2. The MoT-PIG was first established by the MoT’s Decree dated August 1, 2014 (Decree No. 139) and maintained through the subsequent decrees dated April 28, 2015 (Decree No. 94) and May 19, 2016 (Decree No. 122). The same organizational and reporting arrangements as the existing MoT-PIG established for CARs-2 will be used to ensure that experience gained during the successful implementation of CARs-2 is carried over to CARs-4. The MoT-PIG will consist of a team of MoT staff assigned for the project and additional individual national consultants; staffing will be further strengthened through additional positions for experienced technical staff. It was agreed with the MoT that individual national consultants will include (i) project coordinator, (ii) engineer, (iii) procurement specialist, (iv) financial management specialist, (v) disbursement specialist/cashier, (vi) safeguards/communications specialist, (vii) monitoring and evaluation (M&E) specialist/economist, (viii) resident engineer/regional coordinator; (ix) public relations specialist, as well as (x) logistic support staff, including one office manager and one translator. Organizational Structure of MoT-PIG
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2. The nationally recruited individual consultants will help the MoT in day-to-day administration of project activities including technical and procedural aspects, such as: (a) review of technical aspects; (b) procurement and financial management related issues with respect to contracts; (c) the management of the designated account; (d) financial management and reporting on the overall project; (e) execution of the project specific audit; (f) preparation of quarterly financial and biannual progress reports; (g) management of the environmental and social safeguards aspects; and (h) citizen’s engagement and communications. The proposed institutional arrangements shall provide for capacity building of the MoT staff (through exposure to Bank’s procedures, specific training, etc.) as well as ensure sustainability of the project outcomes and impact. 3. For some of the activities under Component 2 concerning road safety, the National Traffic Police will provide technical inputs and necessary reviews/approvals, in coordination with MoT-PIG, who will maintain the fiduciary responsibilities including procurement and contract management. Component 2 Activities by Responsible Agency Activity Description Type of activity Agency 1 Enforcement of use of 4-wheel vehicle safety belts Consulting Services Traffic Police 2 Safety Barrier retrofitting - Design Consulting Services MoT 3 Safety Barrier retrofitting - Installation Works MoT 4 Preparation of Road Safety Strategy Consulting Services Traffic Police 5 Design and Commissioning of Road Safety Observatory Consulting Services Traffic Police 6 Equipment for Road Safety Observatory Goods Traffic Police 4. Under the Customs Services a Project Implementation Group (CS-PIG) will be established. This CS-PIG will be responsible for the implementation of Component 3: Facilitate cross-border movement of goods and people. It is proposed that the CS-PIG for CARs-4 will be based on an existing PIU responsible for the implementation of the CAREC Regional Improvement of Border Services Project with funding from the Asian Development Bank. This project is due to close in December 2020 at which time the resources of this PIU can be fully applied to component 3 of CARs-4. An assessment of the capacity of this PIU to implement component 3 concluded that current staff have the capacity to meet the requirements of the Bank’s policies and procedures subject to additional training that will be provided by the Bank’s implementation support team. 5. The MoT-PIG and the CS-PIG will be responsible for day-to-day administration of project activities in their respective components. These responsibilities will include, inter alia: (i) the management of designated accounts; (ii) financial management and reporting on the overall project; (iii) ensuring the execution of the audit of the project; (iv) preparation of quarterly financial and bi-annual progress reports; (v) the management of the environmental and social safeguards aspects; and (vi) undertaking all procurement and contract management activities for all components. The budget under this component will be used by both MoT-PIG and CS-PIG, proportionate to the amount of their respective components. 6. Procurement. The Bank’s team provided support to the MoT and CS in preparation of the PPSD to develop the best procurement approach for the project. The team will continue its technical support through reviews of any further updates of the PPSD and procurement plan. In addition to routine reviews, procurement supervision will be carried out during the team’s missions, the Bank team will conduct regular field-visit supervision. Post review will be conducted once a year and implementation of recommendations of the post review report will be followed up. Procurement implementation support will also include start-up and intensive procurement training for staff of participating agencies, including Tender committee members, involved in the procurement decision making
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process. The Bank’s team will provide technical support and oversight in detailing procurement processes in the POM. 7. Financial Management. The Bank’s team will provide FM support to both MoT-PIG and CS-PIG, wherever necessary, and will conduct risk-based financial management implementation support and supervisions within a year from the Project effectiveness, and then at appropriate intervals. During the Project implementation, the Bank will supervise the Project’s financial management arrangements in the following ways: (a) review the project’s quarterly IFRs as well as the Project’s annual audited financial statements and auditor’s management letters and remedial actions recommended in the auditor’s management letters; and (b) during the Bank’s on-site missions, review the following key areas: (i) project accounting and internal control systems; (ii) budgeting and financial planning arrangements; (iii) disbursement arrangements and financial flows; and (iv) any incidences of corrupt practices involving project resources. As required, a Bank-accredited Financial Management Specialist will participate in the implementation support and supervision process.
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ANNEX 2: Economic Analysis
COUNTRY: Central Asia Fourth Phase of the Central Asia Regional Links Program Component 1: Improve regional connections in Sughd and GBAO Regions 1. In order to ensure that all project roads generate sufficient economic benefits that warrant rehabilitation, a cost-benefit analysis was conducted for the project roads using the Highway Development and Management Model (HDM-4) that computes annual road agency and user’s costs for each project alternative over the evaluation period. The quantities of resources consumed, and vehicle speeds are calculated first and then multiplied by unit costs to obtain total vehicle operating costs and travel time costs. The resources consumed and vehicle speeds are related to traffic volume and composition, and road surface type, geometric characteristics and roughness. The model computes the total transport costs for the without project and with project alternatives computing the net benefits of the project alternatives in relation to the without project alternative. 2. The quantified benefits computed by HDM-4 comprise savings in vehicle operating costs, travel time costs and road maintenance costs due to the road rehabilitation. The following assumptions were applied in the HDM-4 calculations (i) the discount rate is 10 percent and the evaluation period is 20 years; (ii) a conversion factor of 0.80 is applied to identify economic costs; (iii) the road works will start in 2021 and construction will be completed within three years; (iv) the average daily traffic annual increase rate from 2020 to 2025 is 6.0 percent and after 2025 it is 4.0 percent for all vehicles, considering that the average annual GDP growth in Tajikistan from 2010 to 2018 was around 7.0 percent average and the GDP growth forecast by the IMF for Tajikistan is 4.0 percent per annum from 2020 to 2024; and (v) no generated traffic is considered to occur after the road rehabilitation. 3. Table A-1 presents the project roads basic characteristics and the current traffic volumes. The 4 project roads totaling 54.8 km carry traffic ranging from 2000 to 5000 vehicles per day with 35 percent of trucks on average. All roads are in poor condition with an average roughness, in terms of international roughness index (IRI), between 6- 8m/km. Table A-1: Existing Road Characteristics Road Section Length Roughness Traffic (vehicle per day), 2019 (km) (IRI), 2019 Total Cars Vans Small Medium Large Buses trucks trucks trucks Bek Abad – Kurkat 12.3 8 2,620 1,728 327 241 220 6 98 Dehmoi – Gafurov 21.9 8 2,569 1,695 321 237 216 5 96 Gafurov- Kistevarz 6.3 6 5,199 3,430 649 479 437 11 194 Kanibodom-Kuchkak 10 6 12,474 10,127 442 326 186 120 1,275 Khorog City Bridge 1.1 10 4,925 3,249 615 454 414 10 183 Barsem 3.2 10 2,500 1,649 312 230 210 5 93 4. Table A-2 presents the rehabilitation alternatives by road with their related construction costs. The “without project” scenario assumes that routine maintenance, pothole patching and reconstruction, when the road reaches very poor condition, will be conducted over the evaluation period. The project alternatives for the sections in Sughd region consists of widening the road to a “category III” lane highway standard and maintaining the road with proper routine and periodic maintenance. The alternatives in GBAO sections consider for Khorog (i) construction of a bridge in Khorog with or without flyover, (ii) Construction of a tunnel or galleries in the landslide prone areas near Barsem.
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Table A-2: Project Interventions and Costs Road Section Alternative Total Financial Cost Unit Financial Cost Unit Economic Cost (US$ Million) (US$ Million/km) (US$ Million/km) Bek Abad – Kurkat Widening to Category III 6.521 0.528 0.423 Dehmoi – Gafurov Widening to Category III 12.046 0.550 0.440 Gafurov- Kistevarz Widening to Category II 7.227 1.147 0.917 Kanibodom-Kuchkak Widening to Category II 10.963 1.096 0.877 Khorog Bypass Bridge with embankment access 4.18 3.80 3.04 Bridge with flyover Access 16.22 14.75 11.80 Barsem km 638-643 Tunnel 32.57 10.18 8.14 Galleries 30.52 9.54 7.63 5. Table A-3 presents the vehicle fleet economic unit costs, basic characteristics and typical traffic composition on the project roads, based on the HDM-4 calibration studies done in 2014 for Uzbekistan50 and 2019 in Kyrgyzstan51, and available local data. The average percent of cars on the vehicle fleet is 71 percent. Table A-3: Vehicle Fleet Economic Unit Costs and Basic Characteristics Economic Unit Costs Car Bus Small truck Medium truck Heavy truck New Vehicle Cost (US$/vehicle) 12,500 22,000 22,500 32,000 45,000 New Tire Cost (US$/tire) 40.00 180.00 120.00 2250.00 250.00 Fuel Cost (US$/liter) 0.50 0.57 0.45 0.57 0.57 Lubricant Cost (US$/liter) 5.0 5.0 5.0 5.0 5.0 Maintenance Labor Cost (US$/hour) 3.00 5.0 4.0 5.0 6.0 Crew Cost (US$/hour) 0.00 3.2 2.1 2.5 3.5 Overhead (US$/year) 80 500 500 500 500 Interest Rate (%) 12 12 12 12 12 Working Passenger Time (US$/hour) 1.9 0.65 0.00 0.00 0.00 Non-working Passenger Time (US$/hour) 0.47 0.16 0.00 0.00 0.00 Cargo Delay (US$/hour) 0.00 0.00 0.32 2.3 2.3 Basic Characteristics Kilometers Driven per Year (km) 17,000 70,000 60,000 90,000 100,000 Hours Driven per Year 550 2,000 1,800 2,500 2,500 Service Life (years) 10 10 8 10 8 Percent Private Use (%) 100 0 0 0 0 Number of Passengers (#) 4 35.0 0.0 0.0 0.0 Work Related Passenger-Trips (%) 25 10 0 0 0 Gross Vehicle Weight (tons) 1.2 12.5 6.5 17.83 29.3 Equivalent Standard Axels (ESA) 0 0.8 0.780 2.32 2.83 Typical Traffic Composition (%) 66% 3.7% 12.5% 9.2% 8.6% 6. Table A-4 presents the resulting unit road user costs (vehicle operating costs and travel time costs), in US$ per vehicle-km, for different roughness levels.
50 Calibration of HDM-4 for Republican Road Fund Uzbekistan, June 2014, Padeco Co., LTD. 51 Calibration and Configuration of HDM-4 for MoTR Kyrgyzstan, September 2019, Destia Finroad Oy
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Table A-4: Unit Road User Costs Function of Roughness (US$ per vehicle-km) Roughness (IRI, m/km) Car Bus Small truck Medium truck Heavy truck 3 0.19 0.40 0.22 0.46 0.61 4 0.20 0.42 0.22 0.47 0.63 5 0.20 0.43 0.23 0.48 0.64 6 0.20 0.44 0.24 0.49 0.66 7 0.21 0.46 0.25 0.51 0.68 8 0.21 0.47 0.26 0.52 0.70 9 0.22 0.49 0.27 0.53 0.72 10 0.23 0.51 0.28 0.55 0.75 7. For the particular case of Barsem land slide protection measures, social and economic exogenous benefits have been taken into account, In the analysis, only the time and cargo delays, as well as annual emergency repair works for the annually repeating closures of 4 days were taken into account. This resulted in annual benefits in Table A-5. Table A-5: Exogenous Benefits on Barsem section linked to annual closure of 4 days
Time Cargo Delay Maintenance Total Benefits (US$) 444,000 238,000 51,000 733,000 8. This constitutes only a small part of the social impacts, not even considering the major mudflow of 2015, following which the road was closed for 42 days. As the road is the only link to the GBAO region, resulting in huge impacts in case of closures from the perspectives of lifeline for the communities affected, inclusiveness, national territorial integrity and security, etc. Those impacts have not been quantified, resulting in a conservative economic evaluation of the benefits. The option with construction of a tunnel is yields a better economic return, due to the realignment of the road section, reducing length and improving geometry. 9. A separate road safety impact appraisal was conducted using the World Bank’s Road Safety Screening and Appraisal Tool (RSSAT). The project is expected to help reduce road accidents through road infrastructure enhancements under Component 1 by achieving and PSI score of 0.78. meaning and expected 22 percent decrease in fatalities compared to current situation. The overall road safety benefits are estimated to be over US$20 million during the road’s life cycle of 20 years 10. The overall Economic Internal Rate of Return (EIRR) of the program, including Vehicle Operating, Travel Time GHG and accident cost savings is 15.7 percent and the Net Present Value (NPV) is US$18.3 million, using a discount rate of 10 percent. Table A-6 presents the economic evaluation results per project road. Table A-6: Economic Evaluation Results Road Section Alternative Length (km) EIRR (%) NPV (M US$) Bek Abad – Kurkat Widening to Category III 12.3 18% 2.445 Dehmoi – Gafurov Widening to Category III 21.9 17% 4.191 Gafurov – Kistevarz Widening to Category II 6.3 10.9% 0.252 Kanibodom – Kuchkak Widening to Category II 10 30.2% 10.922 Khorog Bypass Bridge with flyover access 1.1 10.7% 0.471 Barsem km 638-643 Tunnel Construction 3.2 11.1% 1.166
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11. Depending on the discount rate used, NPVs range from US$11.8 million (a discount rate of 12 percent) to US$44.9 million (a discount rate of 5 percent). When the discount rate exceeds 17 percent, benefits are negated. Table A-7: NPV obtained for Alternative Discount Rates (US$ M) Discount rates
Base rate, 10% 5% 7% 12% 15% 18% All Project 18.3 44.9 32.1 11.8 4.6 -0.37 12. Sensitivity analysis shows that only the Barsem improvements would not be economically justified. All other project roads would also be economically justified even if construction cost were 20 percent higher or if the project benefits were 20 percent lower. Table 8 shows the results of the sensitivity analysis considering: (i) increasing construction costs by 20 percent, (ii) decreasing project benefits by 20 percent, and (iii) both (i) and (ii). If construction costs were 20 percent higher, the overall EIRR reduces to 11.5 percent and if the project benefits were 20 percent lower, the overall EIRR reduces to 13.5 percent. Under the worst-case scenario with an increase in costs and a decrease in benefits of 20 percent, the overall EIRR will be reduced to 11.0 percent. The inclusion of the social cost of CO2 emissions, at US$30 dollar per ton, will not change the economic evaluation results due to the very small reduction on CO2 emissions expected with the project. Table A-8: Results of the Sensitivity Analysis Base NPV Economic Internal Rate of Return (%)
(US$ million) Base scenario A: Costs+20% B: Traffic-20% A+B All Project 44.9 15.7 13.3 12.5 10.4 13. Main benefits result from a reduction of Vehicle operating costs and time savings, in a relation of about 60% to 40% (in absence of other benefits) and count for 72 percent of all benefits. VOC reduction is obtained mainly by reducing the average roughness over the analysis period from a value of 6-7 in the “without project case” to a value between 3 and 4 with project, depending by sections. Time savings are linked to this reduction in roughness, but also to the effect of widening, with speeds of cars increased from 35-45 km/h currently to 60 km/h and up to 70 km/h for the realigned section in Barsem in case of tunnel. 14. Benefits obtained from safety improvements and GHG emission reductions represent 15 percent and 13 percent respectively of the overall benefits. This assumes that safety improvements are implemented during the rehabilitation and reconstruction works, in particular median barriers on 4-lane carriageways, as well as footpaths and speed calming measures in all settlements and urban areas. Component 3. Facilitate cross-border movement of goods 15. The economic analysis of Component 3 of the CARs-4 project evaluates the impact of the upgrade of the automated Customs system in terms of the size of the savings for the trading community due to reduced trade costs relative to the investment costs to be undertaken under the project. The economic analysis is based on a quantification of the costs and benefits of the project as faced by the trading community and the Customs Service. 16. Benefits: The project targets different segments of the Customs process that private firms encounter, with a potential for reducing the costs they will face at each stage. While the project will result in all round improvements in efficiency, the major cost reductions to be attributed to the project will be time savings at the border clearance through faster processing, fewer face-to-face transactions for Customs, elimination of manual documentary
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clearance, and reduction of the travel time to and from Customs offices. The Customs Service has developed52 the following narrative on advantages to the public and private sector stakeholders: Table A-9: Enhanced Customs Automation- advantages to the government and private sector stakeholders Benefits to the Customs Service Benefits to the Private Sector Indirect, economy-wide benefits • Modernized and streamlined Customs legislation, • Online, web-based access to customs • A more reliable and predictable international administrative instructions and business- automated system, Direct Trader Input & trade supply chain; processes; remote lodgment; • Improved ease of participation of firms in • Optimized structure of the Customs • Minimal face-to-face contacts between international trade administration; Customs and trade; • Ensuring the uniform application of Customs • A robust, fully integrated automated system in • Gradual move to a fully paperless legislation at all levels; place; environment for trade; • Realization of the many of the goals in the area • Integrated Tariff management; Automated • Auto-registration and automatic release of of trade facilitation; application of Non-Tariff measures; declarations; • Improved regional positioning of Tajikistan as a • Enhanced controls at the borders; • Facilitated procedures for AEO; regional transit hub; • Strengthened operational capacity for combating • Electronic payment, electronic documents, • Improved protection against illegal activities fraud, smuggling and other infringements; barcodes and other advanced features; resulting in the loss of Customs revenue; • Effective risk management and post audit tools; • Online monitoring of status of submitted • Better institutions; enhanced state capacity to • Anti-corruption and performance measurement; declarations and release time; curb corruption, fraud, smuggling etc.; • Efficient processing through electronic interfacing • Pre-arrival processing; Increased supply- • Safer imported products; with external systems of other governmental chain security; • Strengthened interaction between Customs and agencies; • Improved automated transit procedures; other governmental agencies; • Cross-border Customs data exchange with • More transparency in the availability of • Enhanced cross-border co-operation on trade neighboring countries; information. and transport facilitation; • Improved decision making through real-time • Better decision support through timely and operational statistics and analysis; accurate trade statistics for economic decisions; • Improved data protection and disaster recovery • Co-ordinated border management; capability; 17. The Customs Automation project along with all accompanying simplifications represents a significant opportunity for Tajikistan to improve the speed and efficiency of border procedures. The project will also strengthen government agency users’ ability to enforce trade laws and regulations. For the project to bring about cost savings due to efficiency of processes as well as strengthened regulations, the customs service needs to develop metrics for itself and for the trade community. The metrics could help estimate savings associated with the increased efficiency of border clearance processes, estimate the value of increased efficiencies for partner agencies, to measure any savings associated with the system capabilities. The elimination of paper records had been the primary benefit realized through Customs automaton. Eliminating document delivery to Customs offices would save money based on reduction in trips made by brokers to hand deliver documents or mailing costs (measured at hourly rates), besides savings in storage costs (measured at prevailing storage rates per cubic meter). Therefore, the metrics employed would include (i) a reduction in the reliance of paper records (ii) observable differences in the volumes of mail receipts and hand deliveries of paper for manual processing (iii) the numbers of paper forms required by Customs and partner agencies automated. 18. Savings due to faster processing would be on account of automated review of data submitted by brokers, forwarders and importing and exporting firms. Increased use of risk management and selective inspection would result in the faster clearance of eligible consignments. The benefits are estimated through how the traders in the private sector will experience lower time and documentary cost savings as well as improvements in efficiency of the transport and inventory systems that interact with the Customs Service. Benefits will be captured gradually as different modules of the automated systems come online as well as different types of simplified procedures will come
52 This refers to the presentation prepared by the Customs Service in November 2018.
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into place. The impact will be felt only once the business processes are automated, re-engineered and staffed officers who will have improved capabilities. Table A-10: Expected Project Economic Impact Activity Expected impact Private Sector Savings Faster clearance times, reduced costs manual document processing, greater information availability, and lower uncertainty at trading ports, allowing for lower inventory carrying costs. Public Sector Savings Reduction in administrative costs on a per transaction basis.
19. Based on empirical evidence, the automation of the border process has been found to have significant impacts on trade costs. An OECD paper points to savings in low income countries of between 2.8 percent and 4.2 percent depending on the level of development of an economy, with an average of 3.9 percent savings in low income countries.53 A more recent OECD paper on ASEAN indicates that the full implementation of the Trade Facilitation Agreement will generate an average of nearly 17 percent, with automation alone generating a 3.2 percent reduction in trade costs.54 For Tajikistan, one could assume that there would a substantial reduction in trade cost comparable to levels found in low income countries. 20. The economic analysis of the cost savings associated with trade and transaction volumes examines the benefits from reduced trade costs facilitated by easier Customs related transactions. The approach utilizes an estimate of the trade costs obtained in Tajikistan, estimated costs savings based on international surveys from similar projects, and projections of the trade transactions expected to be processed through the Customs processing system over time. A modest reduction of 30% in documentary and border compliance costs are expected resulting in a reduction in trade costs equivalent to 0.27% of the value of trade, which much lower than the projections made in studies. 21. The economic analysis is based on these key assumptions and parameters as follows: a. The import and export values for the Tajikistan have been obtained from the publications of the government of Tajikistan. b. Only merchandise trade has been considered for the analysis. Export and import of electricity have been fossil fuels have been left out of the calculation as the trade facilitation measures would not have any impact on this trade costs. c. The projected growth rate is calculated for all trade volumes and is based on the Aggregate Annual growth rate for the last 20 years and it has been computed separately for imports and export. In any case, these rates of growth in tune with the projected rate of growth for the economy. d. Cost savings from simplification and automation would be 1.6 percent of trade costs, which is lower than 3.2 percent assumed savings from automation in ASEAN by the OECD study;55 The figure of 0.27% is computed based on a 30% reduction in border and documentary compliance costs for the purposes of sensitivity analysis. e. Cost savings for exports is presumed to be half of the cost savings for imports because exports undergo fewer examinations than imports.
53 Moise, E. and Sorescu, S. (2013) “The potential impact of trade facilitation on developing countries’ trade” OECD Trade Policy Papers No. 144. 54 Organisation for Economic Co-Operation and Development (2015) “OECD Trade Facilitation Indicators: Moving ASEAN Forward” http://www.oecd.org/trade/facilitation/oecd-tfi-asean-july-2015.pdf. 55 Organisation for Economic Co-Operation and Development (2015) “OECD Trade Facilitation Indicators: Moving ASEAN Forward” http://www.oecd.org/trade/facilitation/oecd-tfi-asean-july-2015.pdf.
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f. Benefits to the economy on account of improved business climate and increase in revenue due to a better quality of compliance and risk management have not been taken into account. g. The cost savings are also different for export and import flows. Imports are subjected to the full gamut of customs processes and procedures so they will receive the full cost savings, while exports are subjected to less inspections, so the cost savings are assumed to be 50 percent; h. The number of trade transactions are taken from Customs transaction provided by the Customs Service; and i. The benefits of the begin after year 4 once the IT systems are installed and the improvements are completed, with the benefits starting at 20 percent, increasing by 20 percentage points each year, and reaching 100 percent by year 8. 22. Using these assumptions and parameters, the economic analysis was carried out for the direct and indirect costs and benefits. The benefits on trade flows and the costs of the investment is measured over a 10-year period at a discount rate of 10 percent. The NPV and the EIRR is estimated and presented in Table A-11. Sensitivity analysis with lower trade growth and 50 percent lower benefits still yield lower but comparable NPV and EIRR. Table A-11: Summary of NPV and EIRR Expected Trade Growth Expected Trade Growth is Halved 7.9% imports, 3.37% exports 4% Imports, 1.8% exports Scenarios NPV (US$ million) EIRR (%) NPV (US$ million) EIRR (%) Baseline (1.6% cost reduction) 311 77 211 66 Lower Cost Reductions (0.27%) 37.42 26 20.67 19 Note: The NPV is calculated over 10 years at a discount rate of 10 percent, in alignment with the World Bank 2016 note “Discounting Costs and Benefits in Economic Analysis of World Bank Projects”.
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ANNEX 3: Institutional Infrastructure for Trade: National and Regional Initiatives
COUNTRY: Central Asia Fourth Phase of the Central Asia Regional Links Program 1. The CARs-4 project is embedded into the national context and the country’s program for the rapid and all- round development of institution that support international trade. International trade figures prominently in the government reform priorities as defined in the ‘Tajikistan National Development Strategy 2030’. That strategy specifically includes improvement of legislation in the field of international trade and investment, and the introduction of international standards for product quality safety. The government has also approved the implementation of a ‘Medium Term Strategy for Customs Development’. which is expected to come into effect in 2020-2024 and has been endorsed by the legislative and executive branches of the government. Tajikistan’s 2. After considerable delay and slippages, there are indications that a few services under National Single Window project will come online. Ministry of Economic Development and Trade (MEDT) is the executing agency and the Customs Service of Tajikistan is the Implementing Agency (IA) are responsible for the implementation of ADB financed Regional Improvement of Border Services Project. The Single Window Center operates in the form of the State Unitary Enterprise under the Customs Service, which was established in 2010 through a government Resolution. Today, 11 state agencies and one public organization are connected to the Center; they are involved in issuing permits for export, import and transit. The system is still operating as a pilot but is expected to be launched officially in early 2020. 3. The World Bank’s concurrent initiatives in the form of Analytical and Advisory Services (ASA) Projects will support institutional development that will reinforce the results achieved through CARs-4 : The CARs-4 project is being delivered in the context of several initiatives of the World Bank Group and other development partners to help Tajikistan overcome its institutional and connectivity bottlenecks and to take advantage of the country’s strategic geographic location along principal continental trade routes. “Regional Trade-Connectivity Linkages CA” project started at the same time as the CARs-4 project. It has two pillars, one focused on the institutional reforms in Tajikistan and the other is on Regional Trade and Investment: a. The objective of the Regional Trade and Investment pillar is to assess impediments to and opportunities for closer trade and investment linkages both within Central Asia and with partner countries (in particular South Asia, East Asia and Europe). The findings will lay the basis for a high-level regional dialogue on a trade modernization agenda and selected investments to be supported by the World Bank Group. The development outcome would be to lower trade costs by harmonizing trade rules and addressing non-tariff barriers, improving the efficiency of border crossings and transit systems, and stimulating private sector development in trade logistics. Long-term expected impact of this initiative would be to lower trade costs by harmonizing trade rules and addressing non-tariff barriers, improving the efficiency of border crossings and transit systems, and stimulating private sector development in trade logistics. The pillar will comprise three phases: (i) comprehensive diagnostics; ii) consultation and innovation; and iii) high-level dialogue on engagement options for a trade modernization agenda. The comprehensive diagnostic will lay the basis for subsequent phases. A series of technical papers will: a) document present trade and investment dynamics and opportunities for Central Asian traders to expand in new and traditional markets; b) take stock of commonalities and inconsistencies in major trade agreements (WTO, EAEU) that can enhance or impede economic integration; and (c) assess soft barriers to supply-chain connectivity that increase transit
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time and trade costs. The project also aims to assess impediments to and support opportunities for closer trade and investment linkages both within the region and with partner countries and building high-level dialogue on engagement options for a trade modernization agenda. Analytics and TA for all five countries will cover soft barriers to supply chain connectivity, inter alia: (i) infrastructure and BCP design review; (ii) border process mapping and gap analysis, and; (iii) benchmarking of customs transit systems including legal, regulatory, infrastructure (including ICT infrastructure) as well as operational aspects. The regional work will form the analytical underpinning of trade-related interventions in the individual countries. b. The second first pillar is concerned with Tajikistan. It will develop recommendations to reduce barriers to cross-border trade as they are specific to Tajikistan. It is supported by the Korea Trust Fund for Economic & Peace-Building Transitions (K-FCV) grant "Enabling Trade in a Challenging Environment”. It will assist the Government of Tajikistan on formulating a comprehensive trade reform program and implementation plan that tackles regulatory and procedural barriers to international trade and contributes to enhance border compliance, build capacity of government agencies, and improve stability in border hinterlands. The program is built around 5 pillars: (i) legal and regulatory environment governing cross-border trade; (ii) institutional arrangements for trade, logistics and cross-border movements; (iii) border compliance management and improvement plan, (iv) review automation systems for border clearance, and (v) border agency skills and capacity. The project will also support knowledge exchange between the Government of Tajikistan and Korean stakeholders. It will provide the analytical underpinning to informed decision making leading towards government actions to lower trade costs and modernize trade. 4. IFC Investments and Advisory Services are supportive of the effort to enhance Tajikistan’s capacities to expand international trade. The Tajikistan Country Partnership Framework (2019) emphasizes initiatives including IFC investments and advisory services to address the high cost of international connectivity in the air mode, which acts is a significant barrier to trade in Tajikistan. IFC, through advisory services, and jointly with the World Bank, will continue to focus on activities aimed at enhancing the investment climate by, inter alia, addressing business-related regulations, trade policy, and procedural barriers. IFC's Trade Facilitation Program will continue to provide support to trade facilitation stakeholders and streamline international trade procedures. In the past, it has provided a baseline study for monitoring of the quality of implementation of the WTO Trade Facilitation Agreement, produced a Time Release Study and technical assistance to improve risk management capabilities of the Customs administration of Tajikistan. It will work with the Tajik Customs Administration and the National Trade Facilitation Committee (Coordinating Committee on Trade Facilitation) to establish a "green corridor" designed to expedite the export of agricultural products, by seeking to identify and implement opportunities for streamlined terminal and border procedures (such as joint controls or reduced inspections). These efforts will be supported by the parallel development of legal language for authorized operators, ensuring that trusted traders will receive priority treatment and clearance in return for compliance and provision of information to Customs and other border agencies. 5. IFC’s line of business in trade finance and its Global Trade Finance Advisory Program have an important part to play as ‘financial connectivity’ often comes up as major bottleneck for international trade.: As a part of its operations in low income countries, IFC in Tajikistan issues trade finance guarantees to local commercial banks that support the financing of import and export operations. Through its Global Trade Finance Advisory Program, IFC has a mandate to promote trade by integrating developing countries into the international trade network. IFC has carried out several trade finance training program for banks in Tajikistan (a) to help them explore new trade finance products (b) broaden financial services for their clients who export and import goods and services and (c) help identify and mitigate operational risks by adopting good trade finance practices.
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6. The successful pilot testing of a transit route using TIR has opened new possibilities for Tajikistan as a trading and transit country. In order to develop its economy, Tajikistan has accorded priority to becoming reliable trade and transit partner to its neighbors. The opening of a new transit route starting at Bandar Abbas port in Iran, the TIR pilot covered and Afghanistan and Tajikistan and Kyrgyz Republic. This route has opened the region to vast possibilities, providing access to the economies of Iran, Afghanistan, Tajikistan and the Kyrgyz republic (KTAI) optimizing trade flows and driving growth in the region.
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ANNEX 4: Maps COUNTRY: Central Asia Fourth Phase of the Central Asia Regional Links Program
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