The World Bank Multimodal Transport Terminal Development Project (P172342)

Public Disclosure Authorized Public Disclosure Authorized Project Information Document (PID)

Appraisal Stage | Date Prepared/Updated: 26-Feb-2020 | Report No: PIDA28437

Public Disclosure Authorized

Public Disclosure Authorized

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Kandy Multimodal Transport Terminal Development Project (P172342)

BASIC INFORMATION

OPS_TABLE_BASIC_DATA A. Basic Project Data

Country Project ID Project Name Parent Project ID (if any) P172342 Kandy Multimodal Transport Terminal Development Project Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) SOUTH ASIA 19-Feb-2020 24-Sep-2020 Transport

Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Democratic Socialist Ministry of Urban Republic of Sri Lanka Development, Water Supply and Housing Facilities

Proposed Development Objective(s)

The Project Development Objective (PDO) is to enhance accessibility, efficiency, and safety for public transport users of the Kandy Multimodal Transport Terminal.

Components Development of Kandy Multimodal Transport Terminal (KMTT) Urban integration and road safety improvements around KMTT Institutional strengthening and capacity building

PROJECT FINANCING DATA (US$, Millions)

SUMMARY-NewFin1

Total Project Cost 75.00 Total Financing 75.00 of which IBRD/IDA 75.00 Financing Gap 0.00

DETAILS-NewFinEnh1

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Kandy Multimodal Transport Terminal Development Project (P172342)

World Bank Group Financing

International Development Association (IDA) 75.00

IDA Credit 75.00

Environmental and Social Risk Classification Substantial

Decision The review did authorize the team to appraise and negotiate

B. Introduction and Context

Country Context

1. Sri Lanka has shown steady growth over the last decade although key macroeconomic challenges persist. Sri Lanka is an upper middle-income country with a GDP per capita of USD 4,102 (2018) and a total population of 21.7 million people. Following 30 years of civil war that ended in 2009, Sri Lanka’s economy grew at an average 5.6 percent during the period of 2010-2018, reflecting a peace dividend and a determined policy thrust towards reconstruction and growth. However, economic growth witnessed a slow- down in the last few years.

2. The country’s economy is transitioning from a predominantly rural-based economy towards a more urbanized economy oriented around manufacturing and services. Social indicators rank among the highest in South Asia and compare favorably with those in middle-income countries. Economic growth has translated into shared prosperity with the national poverty headcount ratio declining from 15.3 percent in 2006/07 to 4.1 percent in 2016. Extreme poverty is rare and concentrated in some geographical pockets. However, a relatively large share of the population subsists on slightly more than the poverty line. Female Labor Force participation (FLFP) at 34.9 percent was less than a half of men (73.4 percent) by 2019 and needs to increase to facilitate sustained economic growth1.

3. Low fiscal revenues combined with largely non-discretionary expenditure in salary bill, transfers, and interest payments have constrained critical development spending on health, education and social protection, which is low compared to peer countries. Public debt levels are high while the overall debt portfolio indicate some important challenges. In view of the Easter bombings of April 2019, the economic outlook is subject to heightened uncertainty.

1 Department of Census and Statistics, Sri Lanka, http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf

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Kandy Multimodal Transport Terminal Development Project (P172342)

Sectoral and Institutional Context

4. A city of strategic importance. Located in central Sri Lanka, Kandy city region is known both for its natural and cultural attractions and its strategic geographic location. The Kandy district has a population of 1,375,382 (2012)2 spreading across a land area of approximately 1,940 square kilometers. Kandy is the capital city of the Central Province of Sri Lanka, which is the second biggest contributor to the country’s economy with a share of 10.7 percent3 of the GDP. The city’s central location with road access to all other regions of the island positions it with the potential to become a residential and commercial hub. Kandy has been identified as a World Heritage Site by UNESCO in 1988 and is a major tourist attraction of the country. Thus, the city region stands to benefit significantly with a well-planned urban transport network which could enhance accessibility to and from the city, efficiency of mobility within the city region and its attractiveness as a tourist destination.

5. Traffic congestion poses a major constraint to the city’s development potential. The Kandy city region attracts many commuters for employment, shopping, education, services, cultural and entertainment purposes. Under the World Bank’s Strategic Cities Development Project (SCDP), a comprehensive traffic analysis was conducted within the Kandy city region to identify major bottlenecks for transport and passenger commuting4. Despite the relatively small local population, the study finds that nearly 389,000 commuters (more than 2 times the local population) enter into the city on a typical weekday through different transport modes for various purposes (27 percent for employment and 19 percent for education purposes). Around 58 percent of these commuters use public transport to enter into the city and around 15 percent of the commuters use private vehicles and 8 percent of commuters use para-transit (mostly three- wheelers/tuk-tuks) modes. The share of passengers using non-motorized transport (NMT) such as biking is extremely insignificant (0.03 percent) and tourist vans, school vans and other transport modes such as tractors makes up for the rest of the share of passenger transport. The high volumes of vehicle and passenger flows into the city region has resulted in significant levels of congestion in the heart of the city during peak hours, leading to inefficiency, loss of productivity as well as air pollution.

6. Lack of adequate transport infrastructure has aggravated traffic congestion in the city. The main mode of public transport in Kandy is bus transport, with 500-600 busses operated by the state-owned Sri Lanka Transport Board (SLTB) and around 1,900 busses operated by private bus operators. The city center has one large bus terminal – the Goods Shed – and two main bus stations (smaller scale) - Clock Tower and Torrington - (referred collectively as the ‘terminals’ herein), which are used by both public and private bus operators for both inter-provincial and intra-provincial services. They attract nearly 80 percent (or 165,000) of the 209,000 bus commuters entering the city daily through approximately 5,000 bus trips. With an equal number of outbound bus travelers, a total of nearly 330,000 passengers (served by 10,000 bus trips) use the three terminals on a daily basis. The Goods Shed terminal attracts the majority of the passenger flow being the largest terminal and given its proximity to the Kandy railway station. Nearly all bus trips (97.4 percent

2 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy 3 Central bank of Sri Lanka, Annual Report 2019 4 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy – Integrated Strategic Public Transport Plan (ISPTP) and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD

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Kandy Multimodal Transport Terminal Development Project (P172342)

of the 5000 trips) into the Kandy city region terminate at these three terminals (69 percent of the 5000 trips terminating at the Goods Shed) with only 2.6 percent of inter-provincial trips bypassing or passing-through the city for onward journey (touch-and-go - TnG).

7. The terminals lack critical infrastructure such as adequately planned bus bays, parking areas for buses, passenger waiting and queuing areas, adequate sanitation facilities and centralized ticket/information counters, to accommodate the high volume of bus and passenger traffic. Passenger queues can most often be seen spilling over to the road due to the lack of adequate space. The lack of segregation of bus and pedestrian movement around the area poses significant safety risks for the pedestrians. The large number of bus trips terminating at the three terminals has led to abnormally high requirement of dispatch and parking bays, spill-over parking on the road around the terminals, long layovers, and congestion around the three terminals. Facilities provided in the existing three terminals and in parking places in the surrounding areas are not sufficient to meet the current bus-parking requirements. Organized off-street bus parking is available only at two venues - Bogambara and Kandy South Depot - for 70 and 30 buses respectively and are far fewer than required. Furthermore, the high level of passenger flows around the terminals coupled with pedestrians within the city results in heavy pedestrian movement around the city area. Lack of safe walking paths and pedestrian-friendly infrastructure has added to the traffic congestion in the city as well create safety risks for pedestrians.

8. Existing terminals do not provide adequate facilities to ensure personal safety of commuters in public transport. The Goods Shed terminal and other existing bus stands do not have adequate lighting, passenger waiting areas, adequate segregation of bus and pedestrian movement, security surveillance, personnel to handle safety concerns or signage with necessary precautionary instructions. This has led to these areas being particularly unsafe for female commuters and has created an environment where women are subjected to sexual harassment. The terminals also lack other female-friendly facilities such as breastfeeding areas and adequate sanitation facilities. A recent study by the World Bank has identified security concerns, inadequate or unsafe transportation networks as a key constraint in increasing female employment5 in Sri Lanka6. Furthermore, a study conducted by UNFPA at the national level states that at least 90 percent of women surveyed have been subjected to sexual harassment when using public transport7. Experiences of sexual harassment which create an environment of insecurity and the lack of other facilities in public transport can limit women’s full participation in public life, employment and education, especially as women from lower socio-economic background depend more on public transport than men8,9. This experience leads women to either drop out from the labor force due to lack of safety during travel or resort to use of private transport as an alternative. Studies also reflect very low rates of women seeking support from law enforcement and knowledge of services that were available to report harassment.

5 Sri Lanka’s female labor forcé participation remain low with only 34.9 percent of the labor force being women as compared to 73.4 percent of men (Source: Department of Census and Statistics – Sri Lanka: http://www.statistics.gov.lk/samplesurvey/2019Q1report.pdf). 6 Solotaroff, J. L., Joseph, G., & Kuriakose, A. (2018). Getting to Work: Unlocking Women’s Potential in Sri Lanka’s Labour Force. Washington, DC: World Bank 7 Sexual Harassment on public trains and buses, UNFPA (2015) {unpublished}: https://srilanka.unfpa.org/sites/default/files/pub- pdf/FINAL%20POLICY%20BRIEF%20-%20ENGLISH_0.pdf 8 Sexual Harassment on public trains and buses, UNFPA Sri Lanka (2015) {unpublished} 9 Asian Development Bank, 2014. Rapid Assessment of Sexual Harassment In Public Transport and Connected Spaces in Karachi. Technical Assistance Consultant’s Report. https://www.adb.org/sites/default/files/project-document/152881/44067-012-tacr-19.pdf

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Kandy Multimodal Transport Terminal Development Project (P172342)

9. Kandy is among cities with highest number of road accidents in the country. The total number of road accidents in Kandy in 2016 was recorded as 2,221. 105 of these incidents were fatal10, which is around 3.5 percent of the total fatalities recorded in the country (2,837 fatalities nationwide). While there is a limitation on road safety information specific to Kandy, data on the national level shows around 37 percent of lives lost are pedestrians and cyclists11, with motorcycle-pedestrian crashes accounting for about 40 percent of pedestrian fatalities.

10. Fragmented institutional structure has made transport planning and integration difficult both at the national and provincial levels. The complex institutional structure distributes urban transport responsibilities across multiple ministries, with no lead institution or coordinating body for the sector, inhibiting policymaker’s ability to promote an integrated multi-modal planning approach. Urban transport responsibilities fall under three cabinet-level ministries with Ministry of Transport Services Management (MTSM) focusing on railways and buses, Ministry of Roads and Highways (MRH) focusing on expressways and national highways, and the Ministry of Public Administration, Home Affairs, Provincial Councils and Local Government being responsible for provincial and local roads. Certain transport projects, such as light rail transit (LRT) and multimodal transport terminal development is under the purview of the Ministry of Urban Development, Water Supply and Housing Facilities (MUDWSHF). The SLTB, a state institution under the MTSM operates public buses at both the national and provincial levels. Private bus ownership is extremely fragmented with around 20,241 private buses across the country, owned and operated mostly by individuals. The National Transport Commission (NTC), under the MTSM regulates inter-provincial private buses at the national level and provincial Passenger Transport Service Authorities (PTSA), under provincial Ministries of Transport, regulate the intra-provincial private busses. Route permits are issued by NTC (for SLTB buses and inter-provincial private busses) and the respective PTSAs of each province (for intra- provincial private buses) for each route based on a fixed-sum as opposed to passenger demand forecasts.

11. The fragmented institutional structure has also led to a complex ownership and operational structure of the existing bus terminals in Kandy. Operations of the terminals are managed by two authorities: the SLTB manages all state busses, while the Central Province Passenger Transport Service Authority (CPPTSA) manages intra-provincial private buses as well as the inter-provincial private busses. The SLTB maintains small offices in each terminal which house a time keeper to serve the state buses. There are no official space allocations for private bus operators to maintain their offices. There is no formal time table integration among state buses and private operators and therefore, both operators operate on independent timetables creating many inefficiencies. While time schedules are observed fairly well for long-distance operations for both state and private busses, local operations are fraught with unplanned operations often dictated by time keepers. Ownership of the terminals is complex as the land is owned by the (KMC)12, while the structures are owned by the respective operators. This has also led to a situation where expenses related to the maintenance of the terminals (cleaning, utilities etc.) are borne by the operators while the rent from commercial operations within the terminal areas are collected by the KMC. The

10 NTC, 2017, National Transport Statistics 11 World Health Organization, 2018, Global Status Report on Road Safety. 12 in the case of Torrington, which is a just a bus stand along a road side, land ownership is with the Road Development Authority – RDA

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Kandy Multimodal Transport Terminal Development Project (P172342)

terminals lack adequate financial planning to understand revenues and expenditures, and potential sources of funding.

12. The Readiness Plan for Implementation of Intended Nationally Determined Contributions (INDCs) 2017- 2019 identifies that in Sri Lanka, the transport sector is one of the major contributors to greenhouse gas (GHG) emissions13. The increase in private vehicles has resulted in increased traffic congestion, reduction in fuel economy and higher emissions. The vehicles are primarily powered by imported petroleum oil (crude and refined). About 70 percent of the petroleum is consumed by the transport sector, which is about 3 billion liters per annum, where the main fuel is diesel. The plan recognizes the potential for reducing fuel consumption, thereby the GHG emissions, in the road transport sector by switching from private vehicles to public (or mass) transport modes.

13. The ongoing Strategic Cities Development Project (SCDP) financed by the World Bank has identified a number of urban development interventions in the Kandy city region to address these issues. The program aims to support priority infrastructure investments in the city, to improve connectivity, achieve significant urban transformation to support economic growth in Kandy and improve the overall livability and investment attractiveness of Kandy through activities on urban service improvements and public urban spaces enhancements. These interventions inter alia include: development of an integrated strategic public transport plan, and a strategic traffic management and traffic circulation plan for Kandy, development of an urban design scheme, and rehabilitation of selected roads (see Annex 2 for details). The development of a multimodal transport terminal where the Goods Shed terminal is located given its proximity to Kandy railway station and its current use as the major downtown bus terminal and integrating the other two bus stations (Clock Tower and Torrington) with the terminal as TnG bus stands was one of the key public transport improvement measures recommended by the integrated strategic public transport plan as a critical area for urban improvement. The Kandy Multimodal Transport terminal (KMTT) once operational is expected to play a significant role in addressing the critical urban mobility issues identified above by improving public transport facilities and services in the Kandy city region.

14. The development of the KMTT is a key intervention which is part of a comprehensive transport planning activity that is currently ongoing in the Kandy city region. A key intervention carried out under SCDP as part of the development of the public transport plan and the traffic plan14 was to develop a comprehensive bus scheduling and route planning exercise to increase the efficiency of bus transport in Kandy. As part of this exercise, a new operational plan has been proposed with a number of interventions to restructure the current route operations, including combining routes, spliced route, introducing new routes, the introduction of combined time tables for identical routes and converting the Clock Tower and Torrington bus stations into TnG bus stands (once the KMTT is operational). The plan has been developed taking into consideration the potential impact of the KMTT on public transport and passenger mobility within the city once it is operational and therefore the interventions are expected to complement the impact of KMTT in improving public transport and urban mobility in Kandy. This proposed operational plan has been discussed

14 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD 14 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD

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Kandy Multimodal Transport Terminal Development Project (P172342)

and agreed with all relevant stakeholders, including the KMC. In addition to these interventions, the project is also well coordinated with other infrastructure planning activities carried out in the city by other development partners with the common goal to ease congestion and improve public transport. Key activities are the proposed development of tunnels for vehicle circulation funded by Government of South Korea and the development of the Greater Kandy Urban Plan by the Urban Development Authority of Sri Lanka under the assistance of Japan International Cooperation Agency (JICA), which has acknowledged the development of KMTT as a priority investment.

C. Proposed Development Objective(s)

Development Objective(s) (From PAD) The Project Development Objective (PDO) is to enhance accessibility, efficiency, and safety for public transport users of the Kandy Multimodal Transport Terminal.

Key Results

15. The PDO – level outcome indicators are proposed to be the following: I. Access to the terminal: measured by 1) the presence of information system available to access public transport system; 2) the presence of physical accommodation and facilities for people with disabilities and baggage; II. Efficiency: measured by, share of buses departing the terminal on time; III. Safety: safety for pedestrians accessing public transport inside the terminal measured by the number of accidents/injuries occurring inside of the terminal; IV. Personal security: measured by the percentage of passengers that feel safe to travel through the terminal (gender-disaggregated).

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Kandy Multimodal Transport Terminal Development Project (P172342)

D. Project Description

16. The development of the Kandy Multi Modal Transport Terminal (KMTT) at the existing Goods Shed station in Kandy was conceived as an important step towards streamlining public transport facilities and services in Kandy out of the strategic consultations and studies carried out under SCDP (see Annex 2 for details). The Goods Shed station is located at the city center and provides an access to the railway station. Therefore, the terminal is expected to integrate bus, rail and some para transit modes (three-wheelers) and pedestrian commuters in the city. The construction of the terminal, including the implementation of transitional transport service solutions were included in SCDP originally. However, the GoSL and the World Bank agreed to carry forward the development of the KMTT as a stand-alone project, separated from SCDP considering the following reasons: 1) significant delay on the design of KMTT under SCDP; 2) the strategic importance of addressing mobility and safety issues in Kandy city center; 3) the technical complexity of the transport terminal; 4) linkages of other proposed transport interventions in the city; 5) the size of the intervention; and 6) the necessity to provide more focused attention to both SCDP and the KMTT development with dedicated implementation support. Therefore, this project has been developed on the ground work that has already been carried out under SCDP to continue and complete the construction of the KMTT along with essential technical assistance in the areas of road safety, business development, institutional strengthening and capacity building required for public transport planning and the operation and maintenance of the multimodal transport terminal.

17. A number of preliminary activities around the development of the KMTT has been initiated under SCDP. Some of these activities are already completed and some are contracted and currently ongoing. To avoid any disruption, the ongoing activities which are currently contracted under SCDP will continue to be funded by SCDP until their completion as outlined in the respective contracts. The construction of the main KMTT, the supervision contract and other technical assistance activities as per Components 2 and 3 below will be funded under this project.

Component 1: Development of Kandy Multimodal Transport Terminal (KMTT) - US$70 million.

18. This component will finance the construction of the multimodal-terminal at the existing Goods Shed station in Kandy. A preliminary technical design for the terminal has been developed under SCDP based on the requirements identified in the public transport plan and the traffic plan15. The component will allocate funds to carry out a gap analysis of this preliminary design of the terminal and to incorporate any revisions as necessary to ensure the terminal is accessible, efficient, safe and user-friendly for the public.

19. The design of the KMTT consist of the following key structures:

o The preliminary KMTT design consists of two main buildings about 100 meters apart – a terminal building and a parking building which are connected by an internal road. The terminal building is three story and includes a roof terrace. It’s designed to accommodate bus flows on the ground floor and the first floor, and the ticketing and passenger waiting area on the second floor. The parking building accommodates a pickup/drop off area (kiss & ride) on the ground floor for private vehicles and three-wheelers to park only briefly alongside the main terminal, in order to promote usage of the public transport system at the terminal. The first floor of this building is allocated for parking for buses with long layovers. The terminal and the parking building will be developed with all required services to facilitate the commuters, bus services and transport terminal facilities. The terminal will be built using

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Kandy Multimodal Transport Terminal Development Project (P172342)

principles of universal design: it will include gender-informed designs, such as women-only waiting areas, breastfeeding rooms, and sanitation facilities which are in safer locations and well-lit, to increase safety and comfort for female travelers; the terminal design will be guided by the World Bank’s guideline for disability inclusive station design16. Fire safety measures and safe refuge shelters for floods and landslides will be incorporated into the architectural design to adapt to climate risks and other hazards. The detailed engineering design will determine appropriate building material and resilient features to withstand the impacts of slope failures/landslides, flooding or fire and to prevent the damages. Furthermore, sustainable construction material will be used to minimize carbon emissions. To the extent possible, supplies will be locally produced and taken from renewable resources such as wood. This terminal is designed to obtain the green building certification from the Urban Development Authority. As such, Green Building guidelines have been taken into consideration in the KMTT design to the extent possible, governing areas such as energy efficiency, sustainable site planning management, materials and resource management, quality of the building environment, water efficiency and green cover enhancement have been applied in the development of the terminal.

o The second floor of the terminal connects to a pedestrian overhead walkway (Skywalk) serving the areas to east and west and also connecting to the Kandy Railway Station. The 150m long Skywalk stretching from old Peradeniya Road to William Gopallawa Road and the adjoining Kandy Teaching Hospital, allows pedestrians to move safely between the important points of railway station, hospital and KMTT. Its building height will be informed by historical flood levels and inundation, specifically the risk of urban flooding. Component 2 will further inform this on optimized options for urban integration at the street level ensuring safety and enhanced walkability.

o The terminal area will also consist of pedestrian friendly public space. The design of the public space shall be guided by international best-practice examples on gender inclusive planning. The creation of the public space is expected to lead to increased non-motorized transport and user satisfaction.

o In addition to the above features, this component will also finance the diversion of Meda Ela, the urban storm water drainage canal which runs across the proposed site to facilitate the construction of the terminal.

Component 2 – Urban integration and road safety improvements around KMTT - US$1 million.

20. Sub-component 2.1: Technical assistance (TA) to identify safer and better pedestrian circulation and access to the terminal and potential for Transit Oriented Development (TOD). Making a city pedestrian friendly and offering easy access to public transport for all leads to a reduction in the usage of private vehicles, thus reducing congestion and air pollution. The KMTT, as a major new transport hub in the heart of the city, gives the possibility to reshape the city to make it more pedestrian friendly. This component will complement the existing studies carried out under SCDP on walkability improvements and on providing good, equal access to the terminal for all users, taking into consideration the latest pedestrian-priority urban design strategies and interventions. This TA will focus on the following aspects:

15 Public Transport Design & Operations Management Plan & Strategic Traffic Demand Management & Design Plan for Kandy and Strategic Traffic Management and Traffic Circulation Plan Report for Kandy CBD 16 WB, 2013, Improving Accessibility to Transport for People with Limited Mobility (PLM), A Practical Guidance Note

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Kandy Multimodal Transport Terminal Development Project (P172342)

(i) Identify improvements for pedestrian circulation around the KMTT (US$ 0.3 million). The study will carry out a thorough analysis of possible pedestrian friendly measures around KMTT and offer design/planning solutions for easy access to the new KMTT building, easy change of modes, and safe walkways to the city center and surrounding areas. The study will pay particular attention to improving safety for women and children commuters and ensuring adequate space for people with disabilities to move conveniently and safely.

(ii) Identify possibilities for Transit-oriented-Development (ToD) (US$ 0.2 million). For the development of the station and its area, options will be explored to make the terminal area a compact, mixed-use, pedestrian-friendly development organized around the terminal, embracing the idea that locating amenities, employment, retail shops, and housing around transit hubs promotes transit usage and nonmotorized travel. The TA would lay out ways for collaboration and possible intervention to guide decision makers to move forward on this initiative. The component will also explore potential for private participation/PPPs for identified ToD interventions.

21. Sub-component 2.2: Road Safety (US$ 0.5 million). Road safety concerns discussed under sector context indicate a clear need for improvements, especially for pedestrians at major transport terminals in the city center. As physical improvements alone cannot address these issues this sub-component will look into measures within a broader scope of road safety enforcement and traffic policing supported by transport authorities and Police Departments, emergency medical and rehabilitation services, and community education and awareness programs. The project comprehensively addresses safety from three major aspects (i) engineering design, (ii) enforcement, legal and policy aspects and (iii) education/campaign to the public.

Component 3: Institutional strengthening and capacity building- US$4 million.

22. Sub-component 3.1: Develop a comprehensive business development plan for overall terminal management and operation (US$1 million). This sub-component will develop a business plan to identify the best institutional arrangement for the management and operation of the terminal, to carry out a financial analysis and explore potential for private sector participation in maintenance and operation of the terminal (MFD opportunities).

(i) Ownership of the terminal and its operation and maintenance: As there are number of stakeholders involved in the KMTT (bus operators, land owners17 etc.), the Government has proposed a Trust/Special Purpose Vehicle (SPV) to be set up with the participation of all key stakeholders to transfer the ownership of the terminal. The business development plan will explore the viability of this proposed arrangement as well as alternative arrangements looking at both local and international experience. The plan will also explore potential for private participation/PPPs for the maintenance and operation of the terminal.

(ii) Financial analysis of the KMTT: It is also important to carry out a proper assessment of how the terminal’s operations and maintenance can be financed. It has been identified that the existing terminals do not have robust financial plans and no financial assessment has been carried out for the proposed KMTT. Therefore, this component will support a comprehensive financial analysis of the KMTT which will identify the short- and long- term costs involved, such as operations and maintenances costs. It will also explore funding options such as private

17 The land ownership of the area proposed for the KMTT is under four key state agencies: KMC, RDA, and Kandy Teaching Hospital.

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sector participation and use of municipal finance as well as options to augment its revenues and ensure that the terminal can be financially self-sustaining in the long-run. The financial analysis and models developed through this project could also serve as a model for other terminals in the country.

23. Sub-component 3.2: Capacity building for key stakeholders involved in the management, operation and maintenance of the terminal (US$1 million).

(i) Enhance capacity in operations, maintenance and management of the terminal: the project will provide support to improve capacity of the KMTT PMU, CPPTSA, SLTB and other relevant stakeholders in carrying out comprehensive financial analysis and financial planning for transport infrastructure projects as identified in the business plan under Component 3.1 This will also provide capacity building in the areas of contract structure and management for public transport services.

(ii) Enhance capacity of female workers engaged in the KMTT through targeted training: The project will evaluate whether job opportunities related to the operations and management of the KMTT are equally accessible to women and thereby, encouraging the engagement of female workers at the terminal as well as increasing the sense of safety for female passengers with more presence of women at the terminal.

(iii) Enhance transport planning capacity of relevant authorities in Kandy: this will provide support to enhance the transport planning capacity of institutions such as CPPTSA, SLTB and NTC. The areas will inter alia include traffic management, route planning, bus scheduling, integration with other transport modes, bus dwell time analysis, and real time transport information system.

(iv) Climate Adaptation related capacity building for resilience, supporting the following activities for the terminal operation: develop emergency planning mechanisms; Disaster Risk Management (DRM) plans; Strengthened communication to users of the terminal/local communities around the terminal; Coordination between relevant stakeholders such as transport service providers, terminal operators, Police departments, fire and other emergency services in case of emergency to supply Early Warning Systems (EWS).

(v) Personal safety related measures: a. A kiosk for reporting issues around personal security of commuters, particularly of female users, issues of service provision and suggestions for improvements of the facilities will be set up at the terminal. This will be augmented by a hotline dedicated to reporting experiences of sexual harassment. b. All stakeholders in the management, and operation of the terminal, bus and train drivers, and conductors will be trained on the issue of sexual harassment and a bystander intervention initiative will be carried out to encourage community participation to prevent incidents of sexual harassment in public transport c. Safety audits will be carried out periodically – both during construction and operation of the terminal - to ensure safety measures are in place and functional and notify the management of areas which require further improvements, with particular attention to female commuters.

24. Sub-component 3.3: Project Management (US$2 million): This sub component will support the KMTT PMU in its new setup, including its incremental operating costs, training requirements such as applying the new Environmental

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and Social Framework and the World Bank’s procurement processes, capacity building for project management and . contract management. . Legal Operational Policies Triggered?

Projects on International Waterways OP 7.50 No

Projects in Disputed Areas OP 7.60 No

Summary of Assessment of Environmental and Social Risks and Impacts .

25. The project is located in the heart of Kandy city with a number of significant civic infrastructure located in its immediate surrounding. The project is likely to result in a range of environmental and social impacts associated with large civil works and construction related transport carried out in an urban centre during the project’s construction stage.

26. Environmental and Social Standards: Environmental and social safeguards due diligence for this project will be carried out under the World Bank’s new Environment and Social Framework (ESF). Five Environmental and Social Standards (ESS) are directly relevant to the project: ESS1 Assessment and Management of Environmental and Social Risks and Impacts, ESS2 Labor and Working Conditions, ESS3 Resource Efficiency and Pollution Prevention and Management, ESS4 Community Health and Safety and ESS10 Stakeholder Engagement and Information Disclosure. While not significantly relevant, ESS6 Biodiversity Conservation and Management of Living Natural Resources could have implications with polluted runoff from the site potentially reaching the river downstream via the Meda Ela drainage canal.

27. Environment and Social Assessment and Management: There are considerable construction-related social environmental impacts expected from the proposed construction of the KMTT (discussed in detail in the risk section). To manage the above risks, the PMU of the SCDP has prepared an Environmental and Social Impact Assessment (ESIA)18 and an Environmental and Social Management Plan (ESMP) for both construction and operational phases. Accordingly, the project will comply with the Bank’s new ESF and its Environmental and Social Standards. While the Project will not require EIA clearance from the Central Environmental Authority (CEA) (as the proposed intervention does not fall within the stipulated thresholds for EIA clearance), it will be subjected to other national and local permits and clearances as per the existing legal-institutional framework. The exact requirements to obtain such permits and clearances have been recorded in the ESCP.

28. Labor and Working Conditions: The project will engage a sizeable work force, estimated to be around 150- 200 contracted workers, some of whom may have to be brought in from outside the project area. The various categories of workers hired for the anticipated civil works (as required) and the influx of ‘followers’

18 The ESIA was disclosed publicly on 19 February 2020 - https://www.minud.gov.lk/web/index.php/en/projects/kandy- multimodal-transport-terminal-project1

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Kandy Multimodal Transport Terminal Development Project (P172342)

will be subject to the requirements of ESS2 (and ESS4). To address the labor-related issues, a labor management procedure (LMP) has been prepared and disclosed on 19 February 2020 in MUDWSHF’s website. There will also be a grievance mechanism for labor issues, drawing on national laws and procedures. Further, to ensure health and safety of workers during the construction and operational phases of the project, a Health, Safety and Environmental (HSE) plan, in line with the World Bank Group Environmental Health and Safety Guidelines and Good International Industry Practice (GIIP), will also be prepared during project implementation.

29. Resource Efficiency and Pollution Prevention and Management: KMTT has been designed to obtain the green building certification from the Urban Development Authority. As such, Green Building guideline have been taken into consideration in the KMTT design, governing areas such as energy efficiency, water efficiency, sustainable site planning and management, materials and resource management, green cover enhancement etc. The operationalization of the KMTT is expected to contribute to improved city air quality through lessened traffic congestion. The project will set in place a program to measure and document ambient city air quality in collaboration with the CEA including the setting up of an air monitoring station within the KMTT. However, the project will have high demand for water, energy and construction material during the civil works, and construction activity will also increase the risk of air and water pollution, which would be mitigated through the implementation of the contractor’s ESMP. All construction materials will be sourced from licensed sources and wastes from the site will be either treated and discharged and/or collected and disposed in approved sites. The Environment and Social Commitment Plan (ESCP) includes provision for an assessment of GHG emissions for the overall project.

30. Community Health and Safety: The design of the KMTT has been based on international criteria to ensure health and safety of users in a transport terminal, including: (i) incorporation of fire safety measures designed to the mandatory national and international standards; (ii) maximization of natural light and ventilation and where needed powered ventilation to maintain good internal air quality; (iii) incorporation of green cover areas for improved air quality and to turn down the thermostat. However, construction of the project is expected elevate health and safety risks to the urban community. To address such risks, during construction the site will be completely delineated and public access to the construction area will be prohibited. Contamination of Meda Ela and subsequently the downstream, with chemicals and turbidity can give rise to various health issues although this risk is low and can be managed. The ESCP requires the contractor to retain an experienced H&S expert to develop a full Health and Safety plan complete with emergency procedures.

31. Land Acquisition, Restrictions on Land Use and Involuntary Resettlement: Acquisition of private land under the Project is considered to be minimal because of the total land requirement for KMTT, 99.5% is public land which will be secured from various government agencies19. However, the project related economic damages include both permanent and temporary loss of livelihoods that would affect an estimated 841 businesses, mobile vendors, shop assistants, three-wheelers, etc., operating in the existing bus station and/or its immediate buffer zone. To address these impacts, a comprehensive Resettlement Action Plan (RAP) was prepared under SCDP and cleared by the Bank and disclosed on 9 November 2018 and is currently under

19 Land acquisition will not be funded by the project.

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Kandy Multimodal Transport Terminal Development Project (P172342)

implementation. Since the RAP was prepared under the World Bank’s previous safeguards policies, a rapid audit of the RAP was conducted to verify the payment of compensation, livelihoods support, and relocation support, and also assess the adequacy of the RAP against the requirements of the ESS5. Overall, the RAP audit indicates that the preparation and implementation of RAP to-date has been satisfactory and meets the requirements under ESF. Few areas for improving includes: strengthening information dissemination channels, expediting disbursement of compensation, establishing a robust monitoring mechanism to assess progress under the livelihood restoration programmes, and creating greater awareness regards the function of the GRM and broadening the scope of the existing GRM. The RAP audit has been appended to the current RAP and re-disclosed on MUDWSHF’s website on 19 February 202020.

32. Biodiversity Conservation and Sustainable Management of Living Natural Resources: Since the project area is completely modified urban landscape with very little remnant natural features, the application of ESS 6, is expected to be minimal. Potential risks associated with the discharge of turbid wastewater into the Meda Ela during the construction period which may carry pollution as far down as the Mahaweli river, removal of some large trees within the project area, and the need for large quantities of construction material which will involve burrowing, quarrying and extraction, could potentially have impacts on natural habitats. The ESMP will cover all such ancillary facilities should they be operated directly by the contractor.

33. Stakeholder consultation and information disclosure: As defined under ESS 10, the project involves 'affected parties' (e.g., business operators, mobile vendors, three-wheeler operators, shop assistants), 'other interested parties' (e.g., KMC, SLR, CPPTSA, Kandy Police, Utility Providers, commuters, contractors, civil society and NGOs), as well as 'vulnerable groups' (e.g., affected persons (APs) suffering from chronic illnesses, people with disabilities, women-headed households, and those living below the poverty line). During the preparation of the SIA and RAP, extensive consultations were carried out with all categories of affected persons (APs) with effect from November 2017. However, since these consultations were carried out mainly as part of RAP preparation, a separate Stakeholder Engagement Plan (SEP) has been prepared that specifies: (i) how the activities carried out so far will be retrofitted to meet the ESF requirements; (ii) additional consultations that need to be carried out at this stage; (iii) consultations that will be required during project implementation, (iv) the full list of relevant stakeholders (other than the direct project affected people), including their interest and influence on the project.

34. At present, under SCDP, there is a project-based four-tier grievance redress mechanism (GRM) which is easily accessible to the aggrieved parties. The GRM is considered transparent and accountable in grievance handling as well as in responding both effectively and efficiently to the grievances reported by the affected parties. Under Component 3 of the project on 'Institutional strengthening and capacity building,' specific activities will be carried out to strengthen the ESF capacity within PMU, PIU and implementing agencies, especially on stakeholder engagement.

35. In terms of information disclosure, the existing RAP was cleared by the World Bank and disclosed on 9 November 2018 on the GoSL’s as well as World Bank’s external website. The updated RAP as well as other

20 https://www.minud.gov.lk/web/index.php/en/projects/kandy-multimodal-transport-terminal-project1

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Kandy Multimodal Transport Terminal Development Project (P172342)

instruments such as the ESIA, ESMP, LMP, SEP, were subsequently disclosed on MUDWSHF’s website on 19 February 202021.

36. Environment and Social Commitment Plan: An ESCP has been prepared for the project which sets out a summary of measures and actions needed to address potential environmental and social risks and impacts of the project, as well as targeted training for capacity building environmental and social specialists in keeping with the World Bank’s environmental and social due diligence under the new ESF.

37. Organizational Capacity and Competency: The Environmental and Social specialists of the SCDP, in the PMU and PIU/Kandy) has provided technical support for the preparation of the KMTT including the development of the ESF related documents. However, the SCDP PMU will only support the project until a new PMU dedicated to KMTT is set up which is expected to be established by project effectiveness. The KMTT PMU will consists of (i) Resettlement Manager who will be appointed as PMU E&S specialist to lead and coordinate the work of a dedicated E&S Unit comprising of (a) Livelihood restoration manager (b) Resettlement officer (c) Citizen engagement officer (d) Social development officer responsible for information and communications, consultations and grievance handling (e) Monitoring and documentation officer (f) Management Assistant and a (ii) Senior Safety, Health and Environment specialist. Once the new PMU is established, a capacity assessment will be carried out to identify capacity gaps in implementing the ESF.

38. As the level of knowledge, awareness and commitment in the PMU/Kandy PIU for environment and social safeguards management is satisfactory and their familiarity with the KMTT project and experience in implementing safeguards under SCDP is considered an advantage, cross learning between the two projects will be facilitated. This is in addition to KMTT specific training and capacity building for sound E&S management that is already included in the project.

39. Monitoring and Reporting: The reporting requirements of the project is outlined in the ESCP. While the contractor will report to the PMU on status of environmental compliance on a monthly basis, the PMU will submit consolidated quarterly E&S monitoring reports to the World Bank. Further, the project will conduct independent environmental and social audits at least three times during the project construction period to review compliance and ensure due diligence.

E. Implementation

Institutional and Implementation Arrangements

40. As the preliminary activities around the development of the KMTT (as described in Annex 2) are carried out under SCDP, the Ministry of Urban Development, Water Supply and Housing Facilities (MUDWSHF) under which the SCDP is implemented, will continue to be the key implementing agency of this project. However, the project will be implemented in close coordination with the Ministry of Transport Services Management under which the key transport entities including Sri Lanka Transport Board and Sri Lanka Railways are

21 https://www.minud.gov.lk/web/index.php/en/projects/kandy-multimodal-transport-terminal-project1

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Kandy Multimodal Transport Terminal Development Project (P172342)

instituted. The project will be carried out by the SCDP Project Management Unit (PMU) together with the SCDP Kandy Project Implementation Unit (PIU) as the acting PMU until a dedicated PMU for the project is established under the MUDWSHF. The SCDP PMU will carry out all procurement, FM, safeguards and technical activities until the new PMU (referred to as the KMTT PMU herein) is established. The KMTT PMU, with dedicated staff for procurement, FM and safeguards activities of the project will be established before the date of effectiveness of the project. The KMTT PMU will be based in Kandy to enable close supervision of the implementation of the project.

41. The KMTT PMU will include a dedicated Project Director, Deputy Project Directors for procurement, finance, environmental and social safeguards, public transport planner, traffic management engineers, construction management, contract management and operations, and other technical officers for implementation support and contract management. All staff of the KMTT PMU will be based in Kandy. To ensure continued coordination with the Ministry of Transport Services Management, a representative of the Ministry will be seconded to the PMU. As requested by the Government, a Bank staff member will be assigned under Hands on Expanded Implementation Support (HEIS) to support the PMU to carry out procurement and contract management activities well and to build their capacity in these areas. .

CONTACT POINT

World Bank

Wei Wang Senior Transport Specialist

Borrower/Client/Recipient

Democratic Socialist Republic of Sri Lanka

Implementing Agencies

Ministry of Urban Development, Water Supply and Housing Facilities Dr. Priyath Bandu Wickrama Secretary [email protected]

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The World Bank

Kandy Multimodal Transport Terminal Development Project (P172342)

FOR MORE INFORMATION CONTACT

The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects

APPROVAL

Task Team Leader(s): Wei Wang

Approved By Environmental and Social Standards

Advisor: Practice Manager/Manager:

Country Director: Valerie Marie Helene Layrol 02-Mar-2020

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