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Documentof The World Bank FOR OFFICIAL USE ONLY Public Disclosure Authorized Report No. 18765 IMPLEMENTATION COMPLETION REPORT Public Disclosure Authorized INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-TN) Public Disclosure Authorized December28, 1998 Infrastructure Unit South Asia Region Public Disclosure Authorized This document has a restricted distribution and may be used by recipients only in the performanceof their official duties. Its contents may not otherwisebe disclosed without World Bank authorization. CURRENCY EQUIVALENTS Currency Unit Indian Rupee (Rs.) US$1.00 Rupee 13 (Appraisal 1988) US$1.00 = Rupee 42.5 (As of December 28, 1998) GOVERNMENT FISCAL YEAR April 1 - March 31 ABBREVIATIONS AND ACRONYMS ADT - Average Daily Traffic ARAN - Automated Road Analyzer BOT - Build-Operate-Transfer BRCD - Bihar Road Construction Department ERR - Economic Rate of Return GOB - Government of Bihar GOI - Government of India GOM - Governmentof Maharashtra HDM - Highway Design and Maintenance Standards Model III ICB - International Competitive Bidding ICR - Implementation Completion Report IRI - International Roughness Index MBIU - Mobile Bridge Inspection Unit MDR - Major District Roads MOST - Ministry of Surface Transport NlH - National Highways NPV - Net Present Value PIU - Project Implementation Unit PMS - Pavement Management System PWD(s) - Public Works Department(s) R&R - Resettlement and Rehabilitation Rs - Indian Rupee SAR - Staff Appraisal Report SH - State Highways SRP - States' Road Project UP - State of Uttar Pradesh VR - Village Roads Vice President Mieko Nishimizu Country Director Edwin R. Lim Sector Manager Frannie Humplick Task Leader Yoneo Oka FOR OFFICIAL USE ONLY IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) Tableof Contents PageNo. Preface.................................................... i EvaluationSummary ................................................... ii Introductionand ProjectObjectives ................................................... ii ImplementationExperience and Results................................................... iii Summaryof Findings,Future Operation, and KeyLessons Learned ............................................... v PARTI - PROJECTIMPLEMENTATION ASSESSMENT A. Statement/Evaluation of Objectives. B. Achievementof Objectives .2 C. MajorFactors Affecting the Project .6 D. ProjectSustainability .7 E. BankPerformance .................. 8 F. BorrowerPerformance ...... 8..8 G. Assessmentof Outcome .9 H. Future Operations.10 I. Key LessonsLearned .10 PART II - STATISTICAL TABLES Table 1 Summnaryof Assessment.13 Table2 RelatedBank Loan/Credits .14 Table3 ProjectTimetable .14 Table4 Loan/CreditDisbursements: Cumulative and Actual.15 Table 5 Key Indicatorsfor ProjectImplementation .16 Table6 Key Indicatorsfor ProjectOperation .18 Table7 StudiesIncluded in Project.18 Table8A ProjectCost .......................................... 19 Table8B ProjectFinancing .......................................... 19 Table9 EconomicCosts and Benefits.......................................... 20 Table 10 Status of LegalCovenants .......................................... 21 Table 11 Compliancewith OperationalManual Statements .......................................... 22 Table 12 BankResources: Staff Inputs .......................................... 22 Table 13 BankResources: Mission .......................................... 23 APPENDICES AppendixA The ICR Mission'sAide Memoire .......................................... 24 AppendixB Borrower'sContribution to the ICR...................................... 36 AppendixC EconomicRe-Evaluation ...................................... 62 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 i IMPLEMENTATION COMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) PREFACE This is the Implementation CompletionReport (ICR) for the States' Road Project in India, Loan No. 2994-IN in the amount of US$170 million and Credit No. 1959-IN in the amount of SDR 62.2 million(US$80 millionequivalent). The project was approved on October 20, 1988 and made effective on March 2, 1989. The loan and credit were closed on June 30, 1998, after four extensionsto the original closing date of June 30, 1995. With the exception of some of the Bihar sub-components- the Bhagalpur bridge, approach roads and supporting consultant services- all other project components were closed on June 30, 1996, after two extensions (October 31, 1995 and June 30, 1996). The Bihar components were granted two further extensions (June 30, 1997 and June 30, 1998). Disbursementswere completed on December 28, 1998 and July 12, 1994, for the loan and credit respectively. The credit was fully disbursed, and the total amount disbursed under the loan and credit was US$188,665,924. Three cancellationsof the loan balance took place during the project totaling US$66,624,998. The first two cancellationswere for the purpose of reducing the scope of the project and occurred on May 1, 1993 (US$55,000,000) and November 20, 1996 (US$6,409,545). The third cancellation, representingthe remaining balance, took place on December 28, 1998 (US$5,215,453). The ICR was prepared by Yoneo Oka (ICR Task Leader, SASIN), Fabio Galli(Financial Analyst, SASIN), and Rodrigo Archondo (Highway Engineer, Consultant). The ICR was reviewed by all required reviewers, and Peter Long (Highway Engineer, Consultant) served as the peer reviewer. Preparation of this ICR started during the Bank's final supervision/ICRmission in June 1998. It is based on documents in the project files, and material submitted by the Borrower. The Borrower contributed to the preparation of the ICR by providing information to the ICR mission in the field. In addition, the Borrower (the implementingagencies) provided comments on the report, which are given in Appendix B of this ICR. ii IMPLEMENTAIONCOMPLETION REPORT INDIA STATES' ROAD PROJECT (Loan 2994-IN/Credit 1959-IN) EVALUATIONSUMMARY Introduction 1. The total length of the Indian road network (based on 1996 figures) is approximately 3,321,000 km; of which National Highways (NHs) represent 35,000 kmi,State Highways (SH) 135,000 km, other Public Works Department (PWD) Roads includingMajor District Roads (MDRs) 764,000 km, and the remaining 2,387,000 km are classified as other roads'. Over the last 30 years, the road network has become the dominantmode of transportation in India for both freight and passengers. In addition, road traffic in the last decade has grown at a rate of nearly 10 percent per year, and at present, the road network carries 60 percent of all freight traffic (ton/km) and 80 percent of all passenger traffic (passenger/km). 2. In March 1987, the Government of India (GOI) expressed its interest in obtainingBank assistance for the improvement of the core state road network (SHs and MDRs). The core state road network is used to classify an intermediate category of roads that falls between national highways and rural roads, based on traffic volume and function. The States' Road Project was the Bank's first lending operation to focus on the improvementof India's core state road network. Project Objectives 3. The principal objectives of the project were to: (i) improve the quality of investment planningfor India's highways and to rationalize the financing,planning, and implementationof road maintenance/improvement;and (ii) assist in rectifying the extensiveand long-standing deficienciesin the condition, structure, and capacity of the road networks of the selected states. 1 Other roads: 1,022,000 km of Panchayat Raj Roads; 211,000 km of Urban Roads; 916,000 km of Rural Roads; and, 238,000 km of Project Roads (those built and maintained by the forestry, irrigation, electric power and other departments of the govermnent). Hii 4. At appraisal, the project includedthe followingcomponents: (i) civil works for the widening, strengthening,and improvementof road networks in the four States2 ; (ii) procurement of specializedequipment; (iii) staff training and technical assistance;and (iv) consultant services for studies and supervisionof civil works. ImplementationExperience and Results 5. Civil works, includingthe improvement(widening and strengthening) of state roads to 7 meters (width of carriage-way)as well as the construction of the Bhagalpur Bridge and its approach roads, represented 86 percent of the total cost of the project. The nnajorfactors affecting the timely implementationof civil works were: (i) the PWDs implementingthe project were unfamiliarwith the Bank's procurement practices and were not fully equipped to follow the Bank's procurement guidelines; (ii) ownership of the project by the PWDs was weak due to the multi-state nature of the project; and (iii) the contractors' poor physical and financialperformance delayed contract implementation. These and other factors resulted in major delays in the implementationof project components. 6. The performance ratings reflect the poor implementationresults of the physical components of the project. The implementationratings by state are: satisfactory in Maharashtra, marginally satisfactoryin Rajasthan, unsatisfactoryin Uttar Pradesh, and highly unsatisfactoryin Bihar. Of the 1,508 km of roads that were to be completed under the reduced roads improvementscope of the project, only about 1,293 km were actually completed. Additionally,the construction