Decentralized Rural Infrastructure and Livelihood Project | 38426-023

Completion Report

Project Numbers: 38426-023 and 30232-013 Grant Number: 0267 Loan Numbers: 2092, 2796, and 8257 October 2019

Nepal: Decentralized Rural Infrastructure and Livelihood Project

This document is being disclosed to the public in accordance with ADB’s Access to Information Policy.

CURRENCY EQUIVALENTS

Currency unit – Nepalese rupee /s (NRe /NRs )

At Appraisal At Project Completion 8 February 2004 30 June 201 7 NRe1.00 = $0.01389 $0.00895 $1.00 = NRs72 NRs 111.72

ABBREVIATIONS

ADB – Asian Development Bank CISC – central implementation support consultant DDC – district development committee DMF – design and monitoring framework DOLIDAR – Department of Local Infrastructure Development and Agricultural Roads DPO – district project office DRILP – Decentralized Rural Infrastructure and Livelihoods Project EIRR – economic internal rate of return GESI AP – gender equality and social inclusion action plan MTR – midterm review NGO – nongovernment organization OFID – OPEC Fund for International Development PCU – project coordination unit SDC – Swiss Agency for Development and Cooperation SDR – special drawing rights VDC – village development committees VWRCC – village works and roads construction committee

NOTE

(i) In this report, “$” refers to United States dollars.

Vice -President Shixin Chen, Vice President (Operations 1) Director General Hun Kim , South Asia Department (SARD) Director Mukhtor Khamudkhanov, Nepal Resident Mission, SARD

Team leader Laxmi P. Subedi, Senior Social Development Officer (Safeguards), SARD Team members Deepak B. Singh, Senior Environment Officer, SARD Bhakta M. Sitoula, Project Analyst, SARD Suman Subba, Senior Social Development Officer (Gender), SARD Malika KC Thapa, Operations Assistant, SARD

In preparing any country program or strategy, financing any project, or by making any designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

PAGE BASIC DATA i I. PROJECT DESCRIPTION 1 II. DESIGN AND IMPLEMENTATION 1 A. Project Design and Formulation 1 B. Project Outputs 3 C. Project Costs and Financing 5 D. Disbursements 5 E. Project Schedule 6 F. Implementation Arrangements 6 G. Technical Assistance 6 H. Consultant Recruitment and Procurement 7 I. Gender Equity 7 J. Safeguards 8 K. Monitoring and Reporting 8 III. EVALUATION OF PERFORMANCE 9 A. Relevance 9 B. Effectiveness 9 C. Efficiency 11 D. Sustainability 11 E. Development Impact 12 F. Performance of the Borrower and the Executing Agency 13 G. Performance of Cofinanciers 13 H. Performance of the Asian Development Bank 14 I. Overall Assessment 14 IV. ISSUES, LESSONS, AND RECOMMENDATIONS 14 A. Issues and Lessons 14 B. Recommendations 15

APPENDIXES 1. Design and Monitoring Framework 16 2. Project Cost at Appraisal and Actual 23 3. Project Cost by Financier 25 4. Disbursement of ADB Loan and Grant Proceeds 29 5. Contract Awards of ADB Loan and Grant Proceeds 32 6. Implementation of Gender Action Plan and Achievements 34 7. Achievement and Performance Assessment of Safeguards 46 8. Status of Compliance with Loan Covenants 56 9. Economic Analysis 71 10. Maintenance Responsibility and Road Status 85

BASIC DATA (I)

A. Loan Identification 1. Country Nepal 2. Loan number and financing source 2092 -NEP ( COL ) 3. Project title Decentralized Rural Infrastructure and Livelihood Project 4. Borrower Government of Nepal 5. Executing agency Department of Local Infrastructure Development and Agricultural Roads 6. Amount of loan SDR27.32 million ($40.00 million) 7. Financing modality Project loan

B. Loan Data 1. Appraisal – Date started 8 February 2004 – Date completed 22 February 2004 2. Loan negotiations – Date started 10 May 2004 – Date completed 11 May 2004 3. Date of Board approval 24 September 2004 4. Date of loan agreement 23 December 2004 5. Date of loan effectiveness – In loan agreement 23 March 2005 – Actual 31 October 2005 – Number of extensions 1 6. Project completion date – Appraisal 31 October 2011 – Actual 31 October 2011 7. Loan closing date – In loan agreement 31 October 2011 – Actual 31 October 2011 – Number of extensions None 8. Financial closing date – Actual 26 January 2012 9. Terms of loan – Interest rate 1.0% per annum during the grace period, 1.5% per annum thereafter – Maturity 32 years – Grace period 8 years

10. Disbursements a. Dates: Loan 2092-NEP (COL) Initial Disbursement Final Disbursement Time Interval 25 November 2005 20 January 2012 74 months

Effective Date Actual Closing Date Time Interval 31 October 2005 26 January 2012 75 months

b. Amount (SDR): Loan 2092-NEP (COL) Cancelled Last Undis- Original Increased during during Revised Amount bursed Category Allocation Implementation Implementatio Allocation Disbursed Balance (1) (2) n (3) (4=1+2 –3) (5) (6 = 4–5) Transport 0 infrastructure 12,595,000 7,066,241 19,661,241 19,661,241 Supplementary 0 investment 2,141,000 (1,161,876) 979,124 979,124 Vehicles and 0 motorcycles 56,000 28,836 84,836 84,836 Office equipment and 0 furniture 198,000 691,994 889,994 889,994 Consulting services 2,521,000 (2,504,658) 16,342 16,342 0 Technical services 4,601,000 (2,280,160) 2,320,840 2,320,840 0 Training 1,268,000 (330,992) 937,008 937,008 0 Surveys and studies 569,000 (510,575) 58,425 58,425 0 Implementation 0 supervision 670,000 (390,941) 279,059 279,059 Interest charge 836,000 (507,450) 328,550 328,550 0 Unallocated 1,873,000 (1,873,000) 0 Total 27,328,000 7,787,071 (9,559,652) 25,555,419 25,555,419 0

Amount ($): Loan 2092-NEP (COL) Cancelled Last Original Increased during during Revised Amount Undisburs Category Allocation Implementation Implementatio Allocation Disbursed ed Balance (1) (2) n (3) (4=1+2 –3) (5) (6 = 4–5) Transport 18,435,305 12,166,878 30,602,183 30,602,183 0 infrastructure Supplementary 0 3,133,782 1,606,652 1,527,130 1,527,130 investment Vehicles and 0 81,967 42,361 124,328 124,328 motorcycles Office equipment and 0 289,813 1,061,747 1,351,560 1,351,560 furniture Consulting services 3,689,988 0.000 3,666,695 23,293 23,293 0 Technical services 6,734,485 0.000 3,125,716 3,608,769 3,608,769 0 Training 1,855,972 0.000 399,186 1,456,786 1,456,786 0 Surveys and studies 832,845 0.000 744,860 87,985 87,985 0 Implementation 0 980,679 0.000 551,033 429,646 429,646 supervision Interest charge 1,223,653 0.000 714,487 509,166 509,166 0 Unallocated 2,741,511 0.000 2,741,511 0 Total 40,000,000 13,270,986 13,550,140 39,720,846 39,720,846 0

11. Local costs (financed): Loan 2092-NEP (COL) – Amount ($) 35.73 – Percent of local costs 93.12 – Percent of total costs 93.12

C. Project Data 1. Project cost ($ million): Loan 2092-NEP (COL) Cost Appraisal Estimate Actual Foreign exchange cost 7.00 5.89 Local currency cost 63.20 68.03 Total 70.20 73.92

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2. Financing plan ($ million) Cost Appraisal Estimate Actual Implementation cost Borrower financed 16.4 24.7 ADB financed 39.2 39.2 SDC financed 7.9 7.9 GIZ financed 0.7 0.0 Local government and beneficiaries 5.0 1.6 Total implementation cost 69. 4 73.4 Interest during construction costs Borrower financed 0.0 0.0 ADB financed 0.8 0.5 Other external financing 0.0 0.0 Total interest during construction cost 0.8 0.5 ADB = Asian Development Bank, GIZ = Deutsche Gesellschaft für Internationale Zusammenarbeit, SDC = Swiss Agency for Development and Cooperation. 3. Cost breakdown by project component ($ million) Component Appraisal Estimate Actual Base Cost Community development and rural livelihood restoration 15.5 14.3 Capacity building and decentralized governance 1.3 1.5 Rural transport infrastructure 35.6 53.8 Project management services 7.6 3.8 Contingencies Physical contingencies 4.6 0.0 Price contingencies 4.4 0.0 Interest charge s during implementation 1.2 0.5 Total 70.2 73.9

4. Project schedule Item Appraisal Estimate Actual Date of contract with consultants Q1 2005 Q4 2006, Q1 2007, Q2 2007, Q3 2007 Completion of engineering designs Q4 2007 Q2 2010 Civil works contract Date of award Q1 2006 Q2 2006 Completion of work Q1 2011 Q3 2011 Equipment and supplies Dates First procurement Q1 2005 Q2 2006 Last procurement Q4 2011 Q2 2011 Start of operations Completion of tests and commissioning Q1 2009 Q1 2006 Beginning of start-up Q1 2009 Q2 2009

5. Project performance report ratings Ratings Implementation Period {Development Objectives} {Implementation Progress} From 1/7/2004 to 30/12/2004 Satisfactory Satisfactory From 1/4/2005 to 31/3/2005 Satisfactory Satisfactory From 1/4/2005 to 30/9/2005 Unsatisfactory Unsatisfactory From 1/10/2005 to 31/12/2005 Satisfactory Satisfactory From 1/4/2006 to 31/12/2006 Satisfactory Satisfactory From 1/4/2007 to 31/12/2007 Satisfactory Satisfactory From 1/4/2008 to 31/12/2010 Satisfactory Satisfactory From 1/4/2011 to 31/12/2011 On Track From 1/4/2012 to 31/12/2012 On Track

D. Data on Asian Development Bank Missions Specialization Name of Mission Date No. of Persons No. of Person -Days of Members Project review 1 8 to 22 May 2007 10 50 a, b, c, d, e Project midterm review 2 1 to 15 Oct 2007 7 45 a, b, c, d, h Project review 3 8 to 23 Dec 2008 7 37 d, b, c, h Project review 4 18 to 30 Jun 2009 6 32 d, b, c, h Project review 5 10 to 24 Dec 2009 6 30 b, d, h Project review 6 26 Apr to 10 May 2010 7 49 b, i, d, h. c Project review 7 13 Dec to 27 Dec 2010 5 75 d, b, j, c Project review 8 2 May to 12 May 2011 7 45 d, b, h, c, f, g, j a = engineer cum transport specialist, b = procurement specialist, c = programs officer or specialist, d = project implementation officer, e = portfolio management officer, f = governance cum capacity building officer, g = gender and social development consultant, h = project analyst, i = environment officer, j = social safeguard officer.

BASIC DATA (II)

A. Loan/Grant Identification 1. Country Nepal 2. Loan/grant number and financing 2796-NEP (COL) / 0267-NEP source 3. Project title Decentralized Rural Infrastructure and Livelihood Project —Additional Financing 4. Borrower Government of Nepal 5. Executing agency Department of Local Infrastructure Development and Agricultural Roads 6. Amount of loan and grant SDR11.475 million ($18.00 million) / $7.0 million 7. Financing modality Project loan

B. Loan/Grant Data 1. Appraisal – Date started 15 June 2011 – Date completed 30 June 2011 2. Loan negotiations – Date started 15 September 2011 – Date completed 15 September 2011 3. Date of Board approval 31 October 2011 4. Date of loan agreement 1 February 2012 5. Date of loan effectiveness – In loan agreement 30 April 2012 – Actual 23 April 2012 – Number of extensions None 6. Project completion date – Appraisal 31 December 2016 – Actual 31 December 2016 7. Loan closing date – In loan agreement 30 June 2017 – Actual 30 June 2017 – Number of extensions None 8. Financial closing date – Actual G0267-NEP: 4 April 2019

L2796 -NEP (COL ): 5 April 2019 9. Terms of loan – Interest rate 1.0% per annum during the grace period, 1.5% per annum thereafter – Maturity 32 years – Grace period 8 years

10. Disbursements a. Dates: Grant 0267-NEP Initial Disbursement Final Disbursement Time Interval 7 August 2012 25 February 2019 79 months

Effective Date Actual Closing Date Time Interval 23 April 2012 4 April 2019 83 months

Dates: Loan 2796-NEP (COL) Initial Disbursement Final Disbursement Time Interval 5 September 2012 22 February 2019 78 months

Effective Date Actual Closing Date Time Interval 23 April 2012 5 April 2019 83 months

b. Amount ($): Grant 0267-NEP Increased Cancelled Last Original during during Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2 –3) (5) (6 = 4–5) Equipment 850,000 (370,534) 479,466 473,630 5,836 Vehicle 580,000 (6) 579,994 572,177 7,818 Training 960,000 (59,511) 900,489 891,098 9,391 Study tours 290,000 (130,493) 159,507 158,928 579 National consultant 210,000 381,789 591,789 488,950 102,838 Technical support 3,840,000 (3,740,899) 99,101 42,855 56,247 Road construction 270,000 3,589,654 3,859,654 3,727,143 132,511 Total 7,000,000 3,971,44 3 (4,301,443 ) 6,670,000 6,354,78 1 315,220

Amount (SDR): Loan 2796-NEP (COL) Increased Cancelled Original during during Last Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2 –3) (5) (6 = 4–5) Road infrastructure 5,489,000 1,398,499 6,887,499 6,572,400 315,099 Supplementary investment 1,377,000 118,388 1,495,388 1,434,510 60,878 Road maintenance 956,000 34,342 990,342 957,535 32,807 Training 749,000 26,400 775,400 787,880 (12,480) Technical services (nongovernment 427,000 (183,450) 243,550 237,802 5,748 organizations support) Resettlement 309,000 (292,710) 16,290 23,313 (7,023) Surveys and studies 191,000 (131,469) 59,531 91,002 (31,471) Financial charge 1,007,000 1,007,000 192,805 814,195 Unallocated 970,000 (970,000) Total 11,475,000 1,577,629 (1,577,629) 11,475,000 10,297,247 1,177,753 Amount ($): Loan 2796-NEP (COL)

Increased Cancelled Original during during Last Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2 –3) (5) (6 = 4–5) Road infrastructure 8,610,000 1,300,570 9,910,570 9,473,466 437,104 Supplementary investment 2,160,000 (44,887) 2,115,113 2,030,663 84,450 Road maintenance 1,500,000 (93,629) 1,406,371 1,360,861 45,510 Training 1,175,000 (77,344) 1,097,656 1,114,968 (17,312) Technical services (nongovernment (319,429) 350,571 342,597 7,974 organizations support) 670,000 Resettlement 485,000 (461,238) 23,762 33,504 (9,742) Surveys and studies 300,000 (211,812) 88,188 131,845 (43,657) Financial charge 1,580,000 (178,990) 1,401,010 271,558 1,129,452 Unallocated 1,520,000 (1,520,000) - - Total 18,000,000 1,300,570 14,759,46 (2,907,329) 16,393,241 1,633,779 1

C. Project Data 1. Project cost ($ million) Cost Appraisal Estimate Actual Foreign exchange cost 6.18 0.50 Local currency cost 60.27 67.78 Total 66.45 68.28 2. Financing plan ($ million) Cost Appraisal Estimate Actual Implementation cost Borrower financed 13.29 19.28 ADB financed 23.42 20.85 OFID financed 20.00 19.63 SDC financed 7.07 7.06 VDC and beneficiaries 1.10 1.15 Total implementation cost 64.87 67.62 Interest during construction costs Borrower financed 0.00 0.00 ADB financed 1.58 0.27 Other external financing 0.00 0.00 Total interest during construction cost 1.58 0.27 ADB = Asian Development Bank, OFID = OPEC Fund for International Development, SDC = Swiss Agency for Development and Cooperation, VDC = village development committee.

3. Cost breakdown by project component ($ million) Component Appraisal Estimate Actual Base cost Rural livelihood improved 14.44 13.34 Capacity building and decentralized governance 1.73 1.62 Rural transport infrastructure 36.64 45.44 Project management services 7.18 7.22 Contingencies Physical contingencies 4.73 0.00 Price contingencies 0.15 0.00 Interest charge s during implementation 1.58 0.27 Total 66.45 67.89

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4. Project schedule Item Appraisal Estimate Actual Date of contract with consultants Q3 2012 Q3 2012 Completion of engineering designs Q4 2014 Q3 2016 Civil works contract Date of award Q2 2012 Q3 2012 Completion of work Q4 2016 Q2 2017 Equipment and supplies Dates First procurement Q1 2012 Q2 2012 Last procurement Q2 2014 Q2 2017

5. Project performance report ratings Ratings Implementation Period {Implementation Progress} From 1/1/2012 to 31/9/2012 On Track From 1/10/2012 to 31/12/2012 Potential Problem From 1/1/2013 to 31/3/2013 Potential Problem From 1/4/2013 to 30/6/2013 Actual Problem From 1/7/2013 to 31/12/2013 Potential Problem From 1/1/2014 to 30/6/2014 Potential Problem From 1/7/2014 to 31/12/2014 On Track From 1/1/2015 to 31/12/2015 On Track From 1/1/2016 to 31/12/2016 On Track From 1/1/2017 to 31/12/2017 On Track From 1/1/2018 to 31/12/2018 On Track From 1/1/2019 to 31/3/2019 On Track

D. Data on Asian Development Bank Missions No. of No. of Person- Specialization of Name of Mission a Date Persons Days Members b

Project consultation 9 to 18 Mar 2010 2 18 a, b Project reconnaissance 26 Apr to 05 May 2010 3 30 a, b, d Project technical assistance inception 7 to 17 Feb 2011 3 30 k, f Project fact finding 15 Jun to 1 Jul 2011 10 70 c, d, f, g, h, i, l, k, f, r Project inception 14 to 16 Mar 2012 9 27 b, b, c, e, g, i, f, k Project consultation 28 Sep to 5 Oct 2012 6 48 b, b, f, f, r Project review 1 18 Dec 2012 to 9 Jan 2013 9 43 a, b, e, g, h, i, f, r Project review 2 3 Jun 2013 to 25 Jun 2013 7 36 a, c, g, h, i, f, r Project review 3 26 Nov to 26 Dec 2013 7 46 a, c, d, g, h, i, f, r Project review 4 24 Mar to 11 Apr 2014 6 38 f, g, h, i, f, r Project midterm review 5 10 Nov 2014 to 5 Jan 2015 6 48 c, d, e, f, g, i, f, r Project review 6 17 Dec 2015 to 12 Jan 2016 6 39 e, i, f, r Project review 7 20 Sep to 27 Oct 2016 7 24 f, d, h, f, r Project review 8 20 Apr to 01 Jun 2017 6 39 h, i, f, r a = engineer cum transport specialist, b = procurement specialist, c = programs officer or specialist, d = project implementation officer, e = portfolio management officer, f = governance cum capacity building officer, g = gender and social development consultant, h = project analyst, i = environment officer, j = peace building consultant, k = natural resource management specialist, l = social safeguard officer.

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BASIC DATA (III)

A. Loan Identification 1. Country Nepal 2. Loan number and financing source 8257-NEP (OFID) 3. Project title OFID Loan 1442: Rural Connectivity and Community Development Project

ADB Loan 8257: Decentralized Rural Infrastructure and Livelihood Project— Additional Financing 4. Borrower Government of Nepal 5. Executing agency Department of Local Infrastructure Development and Agricultural Roads 6. Amount of loan $20.00 million

7. Financing modality Project loan

B. Loan Data 1. Appraisal – Date started 15 June 2011 – Date completed 30 June 2011 2. Loan negotiations – Date started 15 September 2011 – Date completed 15 September 2011 3. Date of Board approval 31 October 2011 4. Date of loan agreement 1 June 2012 (1); 29 June 2012 (2) 5. Date of loan effectiveness – In loan agreement 1 June 2012 – Actual 6 February 2013 – Number of extensions None 6. Project completion date – Appraisal 31 December 2016 – Actual 31 December 2016 7. Loan closing date – In loan agreement 30 June 2017 – Actual 31 May 2018 – Number of extensions 2 (31 Oct ober 2017, 31 May 2018) 8. Financial closing date – Actual 11 September 2019 9. Terms of loan – Interest rate 1.0% per annum during the grace period, 1.5% per annum thereafter – Maturity 32 years – Grace period 8 years

10. Disbursements a. Dates Initial Disbursement Final Disbursement Time Interval 23 December 2013 30 June 2019 66 months Effective Date Actual Closing Date Time Interval 6 February 2013 September 2019 67 months

b. Amount ($) Increased Cancelled Original during during Last Revised Amount Undisbursed Allocation Implementation Implementation Allocation Disbursed Balance Category (1) (2) (3) (4=1+2 –3) (5) (6 = 4–5) 0301 Road infrastructure 20,000,000 0.00 0.00 20,000,000 19,631,487 368,513 Total 20,000,000 0.00 0.00 20,000,000 19,631,487 368,513

I. PROJECT DESCRIPTION

1. Poor connectivity has been a development constraint in Nepal, one of the world’s poorest countries. With an estimated 38% poverty incidence in 2004, the country’s poverty was concentrated in rural areas, where its incidence (44%) was almost double of that in urban areas (23%). The incidence of poverty in the hill and mountain districts (56%) was much greater than the national average. 1 Pervasive poverty in these districts was linked to poor road connectivity and corresponding high transport costs. In 2011, only 17% of the rural population had access to road network. That contrasted with 60% rural road access in India and 37% in Bangladesh. Road density was only 121 kilometers (km) per 1,000 square kilometers of land area. That density was especially low in remote districts in the hill and mountain region. 2 Limited access to a wider road network and social services constrained opportunities to enhance economic activities and livelihoods. The Decentralized Rural Infrastructure and Livelihood Project (DRILP) was designed to enhance road network and access to social services. The project aimed to establish sustainable connectivity while restoring incomes and livelihoods of poor, disadvantaged, and conflict-affected people from 18 very remote hill and mountain districts. 3 At the request of the Government of Nepal, Asian Development Bank (ADB) approved a loan of SDR27.32 million ($40 million equivalent) on 24 September 2004 from its Special Funds resources to achieve outputs (i) community development and rural livelihood restoration, (ii) capacity building and decentralized governance, (iii) rural transport infrastructure, and (iv) project management services (footnote 1).

2. On 7 November 2010, the government requested additional financing for the project to continue and extend DRILP activities that were performing well. ADB approved additional financing on 31 October 2011. The additional financing aimed to continue supporting improvement of rural road network and lifting rural livelihoods in the same 18 project districts. The additional financing (loans L2796 and G0267) extended the project’s scope of works while increasing outputs. The outputs were structured as (i) rural livelihood improved, (ii) capacity and decentralized local governance enhanced, and (iii) rural transport infrastructure extended and maintained, and (iv) project management improved (footnote 2).

II. DESIGN AND IMPLEMENTATION

A. Project Design and Formulation

3. The project design was rated relevant at appraisal. The design was, and still is, relevant and aligned with the country context and consistent with the government’s policies and priorities. The project was designed during conflict with an aim to support the government’s strategy to address root causes of that conflict. The strategy identified poverty and lack of employment opportunity in rural areas, limited access to the market and government services, poor community infrastructures, and low level of community awareness as root causes of the conflict. The project was in line with the government’s 10th to 14th periodic plans,4 which emphasized increasing rural investment to improve rural connectivity

1 ADB. 2004. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to the Government of Nepal for the Decentralized Rural Infrastructure and Livelihood Project. Manila. 2 ADB. 2011. Report and Recommendation of a Proposed Loan, Grant, and Administration of Loan for Additional Financing to the Government of Nepal for the Decentralized Rural Infrastructure and Livelihood Project. Manila (Loan 2796 and Grant 0267-NEP). 3 Nepal had experienced armed conflict during 1996 to 2006. Although the conflict affected the entire country in varying degrees, the hill and mountain districts with poor connectivity were affected most. The majority of people there were poor and disadvantaged and lacked access to income opportunities, education, and social services. The project districts are Baglung, Baitadi, Bajhang, Bajura, Dadeldhura, Dolpa, Gorkha, Humla, Jajarkot, Jumla, Kalikot, Lamjung, Mugu, Myagdi, Okhaldhunga, Ramechhap, Solukhumbu, and Taplejung. 4 Government of Nepal. 2002. 10 th Five-Year Plan (2002–2007), Three Year Interim Plan (2008-2010), 1 2th Three-Year Plan (2011-2013), 13 th Plan (2014–2016), and 14th Plan (2017–2019) Kathmandu.

2 and social inclusion while broadening income and employment opportunities. The project was closely aligned with the government’s local infrastructure development policy 2005 and strategic action plan 2008, which aim to provide (i) road access in rural areas, 5 and (ii) income opportunities for the rural poor and disadvantaged groups.

4. The project was designed in consultation with the government and development partners involved in rural infrastructure and based on lessons from earlier similar interventions (footnotes 1 and 2). Hence, complementarity among interventions was ensured. The project was consistent with ADB’s country strategy and program 2000–2004 for Nepal, which emphasized reducing rural poverty by enhancing connectivity while increasing access for rural people to income, employment opportunities, and social services. 6 ADB’s country strategy and program 2005–2009 had emphasized inclusive development to address root causes of the conflict. 7 The midterm review of the strategy and program in 2008 confirmed the validity of inclusion as a strategic pillar of the 2005–2009 strategy and program in the changed context. 8

5. Building upon efficiencies from the original project, the additional financing was designed to scale up the project scope to meet infrastructure needs in the project districts. The additional financing design was aligned with ADB’s Strategy 2020 agenda for inclusive economic growth and rural infrastructure development. 9 The project was part of ADB’s country partnership strategy for Nepal, 2010–2012, which supported the country’s peace and development aspirations by promoting economic growth. 10 The project continued to be relevant for the 2013–2017 country partnership strategy as well as ADB’s strategy 2030 operational plan,11 which recognizes the role of rural infrastructure development for faster economic growth and increasing access to economic opportunities and ensuring social inclusion. 12 The project continued to be relevant during and after implementation, given that the government intended for the 15 th plan to give priority to improving rural transport.

6. The outcome, outputs, and inputs of the design and monitoring framework (DMF) were logical and the stated risks and assumptions relevant. The DMF outputs were aligned with the project aim and enhanced the project’s relevance. The subproject selection criteria for roads were appropriately determined. 13 The activities associated with road maintenance, construction of community infrastructure, employment generation through work in building groups, raising awareness of saving and credit schemes and improving access to microfinance, and mandatory provisions for including women and excluded groups in project activities were innovative features in the rural development context. Selection of the sector lending modality was deemed appropriate, given the large number of subprojects that would be financed and concurrent objective to strengthen institutional capacity.

7. Loan effectiveness and implementation commencement were delayed by 9 months. That affected the implementation schedule, and completion of 151 km of road was moved to

5 Lack of motor vehicle access was considered a critical constraint for rural economic growth, poverty reduction, and inclusiveness as confirmed by ADB. 2009. Sector Assessment Program Evaluation: Agriculture and Natural Resources Sector in Nepal. Manila; ADB and DFID and International Labor Organization 2010. Country Diagnostics Studies Highlights, Nepal: Critical Development Constraints . Manila. 6 ADB. 2000. Country Strategy and Program: Nepal , 2000–2004. Manila. 7 ADB. 2004. Country Strategy and Program: Nepal, 2005–2009 . Manila 8 ADB. 2008. Country Partnership Strategy Midterm Review: Nepal, 2005-2009 , Manila. 9 ADB. 2009. Strategy 2020: The Long-Term Strategic Framework of the Asian Development Bank, 2008–2020. Manila 10 ADB. 2009. Country Partnership Strategy: Nepal, 2010–2012 . Manila. The current country partnership strategy was designed for a 5-year term (2013–2017) and, in 2017, was extended until 2019. 11 ADB. 2013. Country Partnership Strategy: Nepal, 2013–2017 . Manila. 12 ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific, 2020–2030. Manila 13 Criteria include roads that are listed in district transport master plans, serving higher numbers of beneficiaries, having potential for generating employment, and technical feasibility and cost.

3 the additional financing. This could have been avoided or minimized had there been proper conflict analysis at project design and mitigating measures proposed for implementation. Project implementation capacity and staffing issues, particularly concerning accounting staff, could have been better analyzed and incorporated into implementation arrangements. There was no analysis reconciling the nature of the road with the corresponding cost estimates. That resulted in the road construction target’s being reduced by 30% during the midterm review (MTR) of DRILP. 14 This could have been avoided or minimized had there been proper due diligence of geography, terrain, construction technology, and rate. This problem was well assessed while designing additional financing, and a labor-based equipment-supported approach was adopted to replace the earlier labor-based approach, a peace filter was used to analyze post-conflict implementation challenges, and a longer implementation period was chosen. This resulted in achieving a 22% greater road construction target with additional investment and completing the 151 km carried over from DRILP.

B. Project Outputs

8. Output 1. Community Development and Rural Livelihood Restoration. This output intended to improve livelihoods of rural poor through skills training; employment opportunities; and contributions to planning, implementation, and maintenance of community infrastructure. The project constructed 552 community infrastructure schemes against the revised target of 550. 15 Equal wages for equal value of work between men and women was practiced and institutionalized. Each building group member received payment for the days spent in completing an assigned task by dividing the total billing amount by the total number of person- days spent to complete the task irrespective of gender. Against a target of 6,000 beneficiaries, 7,575 persons were provided with livelihood-related skills training. Of these, 42.91% were women and 60.82% were poor and from excluded groups. A study carried out by the project in 2016 reported that 13% of trainees were self-employed, 2% were salaried, 14% worked for daily wage, remaining are reported as not using skill. A total of 3,117 orientation, awareness raising, and consultation events on subproject planning, budgeting, implementation, safeguards, occupational health and safety, account keeping, and maintenance were conducted in which 108,972 persons participated, 41% of whom were women and 68% were from disadvantaged groups. As planned at appraisal, a microfinance access program was piloted in 9 districts selected based upon a detailed study of all 18 districts. Orientation and awareness-raising programs on savings and credit and on microfinance access were organized to establish new or strengthen existing groups. An original 113 groups was reformed into 82 groups with 2,884 members, of which 66.50% were women and 33.40% were from disadvantaged groups. Thirty members participated in exposure visits. 16 Appendix 1 reports detailed achievements against the project output indicators.

9. Output 2. Capacity Building and Decentralized Governance. This output intended to promote institutional capacity in planning, construction, and maintenance of rural roads at district level, as well as technical, procurement, and management capacity at national level. Seventy-one officers attended exposure visits in Indonesia and Thailand and learned best practices for rural roads construction and management. The knowledge gained from visits was applied in road planning, maintenance, and contract administration. This resulted in increased capacity to implement bigger packages, adopt incentives and impose penalties in contract

14 ADB (South Asia Department). 2008. Mid Term Review Mission to Nepal: Decentralized Rural Infrastructure and Livelihood Project. Back-to-office report. December (internal). The MTR reported that the reduction was due to the implementing agency’s priority to strategically important district road over the intended village roads. 15 ADB (South Asia Department). 2014. Mid Term Review Mission to Nepal: Decentralized Rural Infrastructure and Livelihood Project-Additional Financing. Back-to-office report. April (internal). The MTR revised the community infrastructure target from 600 to 550. The revision was required to comply with the community infrastructure investment threshold of $120,000 or 20% of the cost of a road subproject, whichever is lower. 16 The activities contributed to improved livelihoods of beneficiaries through enhanced income-generating skills, short-term work in the project, health and hygiene awareness, leadership quality, connecting to wider market, savings and credit awareness, and access to microfinance.

4 administration, and plan maintenance. 522 members from building groups, district road construction committees, and village works and roads construction committees (VWRCCs) participated in inter district exposure visits. Of these, 28% were women. All roads were selected based on priorities set in the district transport master plans. The project supported preparation or updating of these plans in the project districts. The district development committees (DDCs) and district technical offices or officers were trained on procurement, contracting, and financial management. Project staff demonstrated improved skill through reduced time needed for subproject selection and approval, faster procurement, enhanced contract administration skill, and improved report qualities.

10. Output 3. Rural Transport Infrastructure. This output intended to construct or rehabilitate district roads and trails and to construct trail bridges. The project constructed 527 km of road versus a revised target 555 km, and it rehabilitated 249 km of road against a revised target of 255 km.17 The achievement is 96% of the overall revised target. The road construction target was exceeded for the additional financing, when the target was 260 km and 315 km was completed. Construction and rehabilitation of village roads and trails was dropped from the original project because such activities were not prioritized under the district transport masterplan and village development committees agreed to finance these using internal resources. A total of 29,314 running meters of trail bridges were completed, which was greater than the revised target of 26,600 running meters. The trail bridge construction target was increased at MTR for both investments to increase connectivity and access to social services by connecting villages to nearest road access. The increment positively contributed to achieving the outcome indicator of better access to social services. As envisaged in project design, the original project had initiated establishment of a maintenance fund in each DDC to maintain roads. All districts allocated budget for road maintenance on a matching-funds basis under the rural transport infrastructure category, but this could not be continued due to low revenue-generating capacity of the project districts. Under the additional financing, an improved approach was adopted providing direct support to road maintenance. Stringent eligibility criteria were established for utilizing the maintenance fund. Seventeen project districts prepared annual road maintenance plans following district road inventories and road condition surveys. A total of 1,273 km of roads were maintained under the additional financing versus the 1,200 km target. The project conducted a study on potential for piloting a toll collection system in 9 districts to augment the road maintenance fund. The proposed pilot toll collection system was dropped during MTR in accordance with the study’s recommendation.18

11. Output 4. Project Management Services. The Department of Local Infrastructure Development and Agricultural Roads (DOLIDAR) established project coordination unit (PCU) at the center and district project offices in all 18 districts. All designated staff members were assigned at PCU and district project offices on time. Project management skills and efficiency were significantly improved between effectiveness of the original project and completion of the additional financing. The project management team took actions against nonperforming contracts and focused on timely completion of the subprojects. The project imposed penalties for delays on 13 contracts and terminated 5 contracts citing fundamental breach of contract by the contractor. New contracts were quickly awarded so outputs and outcomes were achieved. With improved project management capacity, bid evaluation time was reduced and a competitive environment created. The competitive environment was enhanced by rolling out an e-submission process implementing information technology used for the first time in Nepal in ADB rural roads projects. Vehicles and equipment were procured on time as per project

17 The original project (DRILP) MTR decided to reduce road construction target from 515 km to 355 km and raise the road rehabilitation target from 130 km to 195 km. The revision was mainly due to delays in loan effectiveness and subsequent delays in recruiting district implementation support consultants. In part, it was because of greater demand for rehabilitation of existing roads and cost overruns. The cost overruns were reportedly due to remoteness of the districts, difficult geographical terrain, and rocky conditions. 18 ADB. 2014. Back to Office Report. Mid Term Review Mission DRILP-AF, 10 Nov 2014 to 5 January 2015 (para. 11, footnote 22).

5 requirements. This resulted in improved field monitoring and quality control on site. Quality- testing equipment and establishment of a laboratory supported achieving the expected quality and results. A common financial management system for the project was developed for the Ministry of Local Development, DDCs, and DOLIDAR. A gender desk with a dedicated staff member was established at DOLIDAR in December 2013.

C. Project Costs and Financing

12. The total project cost from all financiers at appraisal was $134.75 million, 19 of which $68.30 million was for the original project and $66.45 million for the additional financing. By completion, the actual overall project cost had risen slightly to $73.92 million for the original project and $68.28 million for the additional financing. ADB financing was slightly decreased, however, from $65 million at appraisal to $60.98 million at completion due to depreciation of the Nepalese rupee against the US dollar. 20 Spending in the civil works category was $102 million versus the projected base costs of $75.27 million. There were no major shifts between foreign and local costs. There was no significant loan or grant cancellation. Appendix 2 details project cost at appraisal and actual utilization.

13. The Swiss Agency for Development and Cooperation (SDC) financed consulting services for the central office and in 8 districts under both investments. The ADB loan, government, and local governments financed consulting services in 10 districts, and the civil works and livelihood components under the original project. ADB loan financed rural infrastructure, training, surveys and studies, and safeguard costs. The ADB grant was used for equipment, vehicles, training, and consulting services under the additional financing. Savings of $3.5 million relating to the grant due to USD appreciation against the Nepalese rupee and cancellation of district consulting packages were utilized in civil works by creating a new cost category while amending the grant agreement. 21 OPEC Fund for International Development (OFID) joined in additional financing as cofinancier and covered 54.2% of rural infrastructure cost. At appraisal, the government was to finance 22.02% of the total project cost. This increased to 31.93% at completion to cover costs for consulting services, land acquisition, and counterpart funding from local government. Reallocation of loan and grant was made once under the additional financing and twice for the original project to utilize potential savings in one category for covering cost overruns in other categories. Appendix 3 details the financing plan and actual cost in relation to each financier.

D. Disbursements

14. The disbursement projections were deemed realistic, but the disbursement schedule could not be followed due to (i) the start-up delays and delay in loan effectiveness,22 (ii) weak contractor performance and weak contract management, (iii) time taken to collect statements of expenditure due to remoteness of districts, and (iv) the 2015 earthquake and resulting obstruction of trade and transit. The disbursement schedule caught up during the second half of both investments. Total disbursement of ADB financing at project completion was $39.72 million for DRILP and $21.11 million for DRILP’s additional financing. Audited project financial statements are available only for $50.08 million. The balance of $10.74 million is being audited and final audited project financial statements should be submitted to ADB by 30 November 2019. The ADB-administered OFID loan of $19.63 million and SDC-financed grant of $13.96

19 Estimated financing of $0.70 million from GIZ did not materialize, because GIZ did not confirm funding. 20 The Nepalese rupee depreciated by about 7% against the dollar, from NRs72 to the dollar at appraisal of the original project in August 2004 to NRs77/USD1 at completion in October 2011. The rupee further depreciated by about 20%, from NRs77/USD1 at appraisal of the additional financing in September 2011 to NRs111.72/USD1 at completion in June 2017. 21 An amendment to the financing agreement on 21 December 2016 included a new cost category under G0267. 22 The loan effectiveness was delayed in the absence of a suitable implementation environment in many project districts due to the conflict and insecurity.

6 million were fully disbursed. Although government and beneficiary contributions had been estimated at $34.48 million, $46.73 million was utilized. Imprest funds were established for both the investments to meet liquidity needs for timely payments, and statement of expenditure procedure was used for claims up to $100,000. These mechanisms significantly improved liquidity management and for timely settlement of small expenditures and claims reimbursed from ADB. DOLIDAR fully liquidated the imprest accounts before financial closing of the project. Annual and cumulative disbursements are reported in Appendix 4.

E. Project Schedule

15. The DRILP was approved on 24 September 2004 and closed on 31 October 2011. The implementation schedule for rural roads during 2005–2008 could not be followed due to delays in loan effectiveness, mobilizing consultants, and identifying road subprojects. ADB approved additional financing for a 6.5-year implementation period with completion date on 30 June 2017. The project was closed on 30 June 2017. The additional financing was implemented in accordance with its implementation schedule. The winding-up period for additional financing was extended by 2 months to 31 December 2017 due to delay in receiving statement of expenditure documents from the project districts. Though all withdrawal applications were submitted within the extended winding-up period, the statement of expenditure review took longer than expected. This caused delay in actual financial closure by 16 months, mainly due to poor documentary evidence. The original project was closed financially on 26 January 2012 and the additional financing on 4 April 2019 (Grant 0267-NEP) and 5 April 2019 (Loan 2796- NEP). The OFID loan closed on 11 September 2019.

F. Implementation Arrangements

16. DOLIDAR was executing agency and the 18 DDCs were the implementing agencies. A project steering committee headed by a secretary was established in what was then the Ministry of Local Development to provide policy guidance. A project implementation coordination committee chaired by the director general of DOLIDAR was established. That committee helped in addressing project implementation issues and advised the PCU on technical matters. District project offices within district technical offices implemented the project at district level. In each project district a district road construction committee, VWRCC, and grievance redress committee was formed. These committees played key roles in subproject selection and implementation. Grievance redress subcommittees created in each of the subproject village development committees helped in addressing grievances on site. The provision of central and district consulting services helped to fill capacity gaps at DOLIDAR and the DDCs. The project’s implementation arrangements were adequate and enabled achieving the envisaged outputs and outcomes (paras. 8–11).

G. Technical Assistance

17. The original project and the additional financing were designed using project preparatory technical assistance. This assistance contributed to properly designing both the investments and setting realistic performance targets. Advisory cum operational technical assistance associated with the original project was implemented during 2006–2009 with outputs i) establishing best practices and procedures, ii) enhancing defined and quality service provisions, and iii) preparing long-term implementation plans. The assistance successfully supported enhancing DOLIDAR’s and local bodies’ institutional capacity, implementing local infrastructure development policy, preparing and adopting local infrastructure development strategies, and improving procedures and practices for sustainable rural roads maintenance. The technical assistance was rated successful as it achieved its outputs and outcomes.23

23 ADB. 2011. Technical Assistance Completion Report: Capacity Building in Rural Infrastructure Institutions. Manila (TA 4397-NEP).

H. Consultant Recruitment and Procurement

18. Consultants. The performance of the consultants is rated satisfactory . The SDC provided technical support to PCU through central implementation support consultant. SDC recruited a team of international and national experts. A nongovernment organization at center was engaged with ADB funding to support in social development and community mobilization. At district level, district implementation support consultants were recruited for design, supervision, and monitoring of project activities in eight districts.24 Recruitment of these consultants for additional financing in 10 districts was cancelled, however, due to a legal issue during their procurement and collusion among the firms. The implementation arrangement was changed, and individual consultants were recruited. The SDC provided extended support in 10 districts, the government hired field-level technical staff, and two individuals in each district were hired using ADB grant financing. The government followed ADB’s Guidelines on the Use of Consultants (2010, as amended from time to time) in recruiting consultants and adopted a quality and cost-based selection procedure.

19. Contractors and Suppliers. The project procured 272 civil work contracts through national competitive bidding and 2014 building group packages through community participation methods. It also procured 28 cars, 158 motorcycles, computers, generators, and other office equipment for use at the center and districts using ADB’s Procurement Guidelines (2010, as amended from time to time). No major issues were encountered in procuring suppliers and their delivery of goods to intended sites. The civil works contracts were completed, and quality of project outputs and outcomes delivered within the stipulated schedule and costs. Annual and cumulative contract awards are reported in Appendix 5.

I. Gender Equity

20. Built on lessons of the DRILP, the DRILP-AF was categorized as effective gender mainstreaming and incorporated specific targets into a gender equality and social inclusion action plan (GESI AP) to ensure project benefits would reach women, the poor, and excluded groups. The project ensured representation of women and excluded groups in consultations and orientations, livelihood enhancement and microfinance trainings, committees, and project- generated employment. The DMF included five gender-related performance indicators (at least 40% women and 60% from poor and excluded groups among the 3,000 beneficiaries trained in livelihood-related skills; 40% women and 60% from poor and excluded groups among the beneficiaries gaining access to microfinance; at least 20% women from building groups or VWRCCs and savings and credit groups to participate in and learn from exposure visits; 40% women, poor, and excluded to be engaged in maintenance of 1,200 km of roads; and a gender desk to be established in DOLIDAR). The gender desk provided assistance to ensure effective implementation of the GESI AP. Although it remained effective throughout the project, the gender desk no longer exists at the department level due to the country’s new federal system. The GESI mainstreaming has been devolved to local government. Each local government has a social development unit that is now responsible for GESI.

21. The project supported institutional and capacity development for project staffs while targeting women and excluded groups through trainings and exposure visits. The activities and targets in the GESI AP are fully aligned with the revised DMF. The targeted trainings in livelihood-related skills for the poor and excluded provided opportunities to use their skills for income generation. Social mobilization activities supported access to saving and credit trainings and microfinance for building groups in the piloted districts. The women, the poor, and the excluded group’s participation in construction work increased due to gender-friendly working environment created by the project following GESI AP provisions. Appendix 6 provides a detailed assessment of the GESI AP achievements.

24 The eight districts are Bajhang, Baglung, Baitadi, Bajura, Myagdi, Okhaldhunga, Ramechhap, and Solukhumbu

J. Safeguards

22. The overall safeguard impact assessment, planning, and implementation were satisfactory. The project was classified as category “B” at appraisal for all three safeguard requirements—environmental, involuntary resettlement, and indigenous people—in accordance with ADB’s Safeguard Policy Statement (2009) and continued to be category “B” at completion. Safeguard planning documents for 40 road subprojects selected for construction and/or rehabilitation under the overall project were prepared and updated as required in line with approved safeguard frameworks. Quality semiannual safeguard monitoring reports were submitted and disclosed on time.

23. Involuntary Resettlement. The involuntary resettlement category for three sample subprojects studied at appraisal and completion remained categorized as B. For the other 37 subprojects, categorization was done at screening and their categorizations remained unchanged. Resettlement plans were approved and implemented prior to contract award, and the objectives of the resettlement plans were largely achieved with restoration of livelihood and income sources of affected persons. A careful impact assessment during screening of each subproject and strict application of subproject selection criteria avoided subprojects with significant involuntary resettlement impact. This ensured that no subproject had significant involuntary resettlement impact, either due to loss of 10% or more of productive assets or physical displacement or both. In total, 5,369 households comprising 19,661 persons were affected by losing 221.15 ha of land due to the road subprojects. The project established a grievance redress mechanism to hear and address grievances. All grievances were settled and there were no outstanding issues in the project (detail in Appendix 7).

24. Indigenous People . Indigenous people safeguards were implemented satisfactorily following requisite processes. Of the 40 road subprojects, 34 were category “C” and 6 were category “B” for indigenous people. The indigenous people living in the project area were consulted throughout the project. Indigenous people plans were prepared and implemented for category “B” subprojects. The plans ensured participation and representation of indigenous people in the organizations formed under the project. Life skills training was provided based on the skills of indigenous people and community infrastructure was constructed to enhance livelihoods of indigenous people. Indigenous people plans were completed on time. The plan objectives were met, as the project supported enhanced livelihood strategies by creating short- term jobs in civil works and providing enhanced skills to improve income strategies.

25. Environmental Safeguards. Implementation of environmental safeguard measures was satisfactory. The project caused no significant negative environmental impacts because several safeguard measures were incorporated into the project design. The project adopted a labor-based equipment-supported construction approach to protect environmental integrity and slope stability. Slopes in road alignments were generally comparatively stable as there was less disturbance in the natural settings due to the labor-intensive work along with technically engineered slope cutting, road grade design, and partial application of bioengineering. An initial environmental examination for each subproject was prepared (23 in the original project and 17 under additional financing). In addition, 23 due diligence reports were prepared in additional financing along with environmental management plan. The road design considered factors to address climate change impacts (more details in Appendix 7).

K. Monitoring and Reporting

26. The financing agreement included 35 general and specific covenants. The project fully complied with 33 and 2 covenants were partly complied with. The covenants were realistic. No covenant was modified, suspended, or waved under either investment. The covenants related to the submission of audited project financial statements and completion of

9 compensation payments were partly complied with. Appendix 8 provides information on status and reasons for partial compliance.

27. The project generally generated required documentation, monitoring reports and these were submitted to ADB in accordance with the financing agreement. The borrower’s financial management arrangements were deemed generally satisfactory. Audited project financial statements of the original project were submitted late for the initial two fiscal years. Although progress reports were submitted on time under the additional financing, quality and content of the reports meaningfully improved only during the second half of the additional financing through ADB’s stringent compliance monitoring. The audit management letter continuously indicated ineligible expenditure under the original project, which hampered getting required budget release from the government during the second half of the original project. The additional financing also encountered difficulties in timely release of trimester budget from the government due to the original project’s ineligible expenditure.25

III. EVALUATION OF PERFORMANCE

A. Relevance

28. The project is assessed to be relevant at appraisal, during implementation, and at completion. As stated in paras. 3–7, the project was aligned with the policies, strategies, and development priorities of the government and ADB. The project components were designed with the overall goal of poverty reduction through inclusive development. The project was able to address the access problems that limited the market integration of poor farmers in remote areas. During the 10-year conflict period, development of rural infrastructure sector had suffered greatly due to the limited resources available for investment, and interruptions and incompletion for security reasons of ongoing rural infrastructure works. The project helped to address the unfilled demand for constructing, upgrading, and maintaining rural infrastructures in the post-conflict situation by resuming interrupted works and completing the unfinished infrastructures with additional financing. The so-called labor-based construction approach of the original project remained relevant, as it transferred large amounts of cash to the residents from payment for works. The construction approach was adjusted to a labor-based equipment- supported approach for the additional financing due to shortage of laborers, difficult geological conditions, and local people’s demand for faster access to motorable roads. The design and monitoring framework had strong logical linkages, and most target indicators were realistic, appropriate, and measurable. Exceptions were the rural road construction targets, the trail and village road construction (both in the original project), and piloting toll collection (under the additional financing). These were corrected during MTR. Implementation arrangements were deemed adequate. The financial management capacity of the executing and implementing agencies could have been better assessed at fact-finding. The GESI AP was designed based on the results of the social and poverty assessment done during the project preparation. Hence, it contributed to the relevance of the project. Overall, assessment showed the project was successful in reaching target beneficiaries in rural hill and mountain districts. The project did not overlap with other development partner initiatives. Activities planning and implementation were done in close coordination with development partners working in the sector.

B. Effectiveness

29. The project was assessed effective in achieving the intended outcomes and outputs (Appendix 1). It achieved or exceeded six of seven intended outcome performance indicators,

25 The Financial Comptroller General’s Office withheld budget release due to unapproved project accounting and lack of settlement for $4.2 million (about $3 million is settled now) of reimbursable expenditure incurred under Loan 2092. ADB has closed the loan and could not reimburse costs borne by project coordination unit for local government contribution, as no such provision was included.

10 and one was partly achieved. A total of 639,764 persons (higher than the projected 600,000) from the project districts have much better access to market and social services because of connectivity enhanced by road and trail bridge construction and benefitted from construction of such community infrastructure as classrooms, health posts, and community and market centers. The improved access and labor-based construction approach contributed to increase in per capita income. Average annual income per household in the road subprojects’ zone of influence has risen by 36% (NRs186,312). That is greater than the 10% increment target with baseline (NRs69,500). Transportation costs for people were reduced by 42.1%, from NRs18/km at appraisal to NRs10.4/km in 2016. Further reduction is occurring in 2019. Similarly, transportation costs for goods decreased by 80% in 2016 and are still going down. Freight volume grew by an average 21% from 2007 compared with the pre-project condition, which is slightly more than originally envisaged (20%), and a substantially larger increase (25%) was recorded in 2016 compared to 2015. Anticompetitive activities are diminished, and further decrease is expected as more transport operating companies are appearing with the improved connectivity. On average, three transport organizations have been established in each district, the range being from one to six organization within a district. The outcome monitoring survey conducted in 2016 recorded 36 such organizations in 11 districts. A total of 11.90 million person-days of employment were generated in road, trail bridge, and community infrastructure construction work, slightly surpassing the envisaged 11.2 million person-days26 .

30. Out of 16 performance indicators set for 4 outputs, the project achieved or exceeded 13. Two performance indicators were substantially achieved by more than 90%, and one indicator was dropped during MTR. The output indicators substantially achieved are rural road construction and regional study tour cum exposure visits. The output achievement and performance are discussed detail in paras. 8–11.

31. The GESI indicators in the DMF and GESI AP were achieved, as 89% activities were completed and 100% of the quantitative targets were achieved. The overall GESI AP implementation was rated successful. The project supported improving GESI in human capital development, economic empowerment, and decision-making of the beneficiaries. Significant GESI achievements included (i) participation by 41% women and 68% poor and excluded in project-related consultations; (ii) 40% women members in building groups and 43% women leaders; (iii) 35% women members and 40% women in leadership and 100% from excluded groups in VWRCCs; (iv) 43% women participated in 238 trainings for community infrastructure operation and maintenance; (v) 41% women and 61% poor and excluded in trainings for livelihood skills and microfinance; (vi) 36% women and 100% poor and excluded from building group members employed in project-generated works; and (vii) 67% women from 113 building groups and/or saving groups from nine pilot districts trained in microfinance.

32. The project adequately addressed environmental and social safeguard measures (paras. 22–25). Upgrading earthen roads to gravel standard has contributed to reducing carbon emissions by minimizing the use of fossil fuels, as travel times are reduced and efficiency increased. The new road construction connected a remote part of the country to the national strategic road network, making it easier to introduce modern technology for construction and cooking fuel. Use of liquefied natural gas and modern building construction are increasing in the project area. That has contributed to reduced over-dependency on forests for firewood and timber. The bioengineering works and adoption of the cut-and-fill approach in construction contributed to slope stabilization and faster growth of vegetation along the road alignment. The project prepared and satisfactorily implemented a resettlement plan for each road subproject requiring land acquisition, in compliance with ADB requirements. The project gave priority in construction works to the affected persons and provided life skills training to

26 Integrated Rural Development Center. 2016. Outcome Monitoring Survey Report . Kathmandu (submitted in December for DRILP additional financing).

11 improve the livelihood of affected persons. The livelihoods of affected persons were maintained or improved in comparison to pre-project levels.

C. Efficiency

33. The project was efficient in achieving outcomes and outputs. The project’s economic internal rate of return (EIRR) was estimated at 18% overall, with a 16% EIRR for the original project and 20% EIRR for the additional financing. The studied rural roads demonstrated viability and assisted beneficiaries, with EIRRs ranging from 13.5% to 24.5%. These values are similar to those estimated at appraisal for roads, which ranged from 14% to 22%. EIRRs for the trail bridges were 21.74% and 22.3%, which values are slightly lower than the 23.2% to 28.34% estimated at appraisal. 27 Three sensitivity test scenarios were considered: 20% increase in costs, 20% decline in benefits, and the combined case of 20% increase in costs together with 20% drop in benefits. Distributional impacts for the road subprojects indicate their relevance for poverty reduction. The results of the economic analysis and sensitivity tests are in Appendix 9.

34. Despite a few shortcomings in project formulation and due diligence, the project was mostly implemented as planned and without major changes to the design or scope. Nevertheless, there were time overruns for some rural road contracts due to weak contract administration capacity of district project staff and governance uncertainties. Although the project faced start-up delays due to delays in loan effectiveness for the first investment, countermeasures were taken to expedite implementation after effectiveness. The initial 2 years of both investments were greatly affected due to delays in resettlement planning, approval for the initial environmental examination, and trimester budget release. The project substantially achieved the intended outcome and outputs targets.

D. Sustainability

35. The project outcomes are likely to be sustainable after project completion. The roads constructed by the projects were strategically important. Upon completion of road construction, 26 roads were taken over by different agencies and were being upgraded to higher pavement standard (Appendix 10). With promulgation of a new constitution, the country has adopted a federal structure and the operation and maintenance of rural roads was assigned to municipalities. The respective municipalities are maintaining the roads. The municipalities are allocating annual budget averaging NRs3 million for maintenance of the project roads for the past 2 years. The local level governments confirmed to the project completion review mission that the maintenance budget allocations will be continued in the future. Some communities annually contribute cash or labor through the road maintenance groups to maintain the roads immediately after monsoon but prior to Dashain festival .

36. The annual maintenance funding requirement for rural roads is estimated at about $90 million per year. About $546 million was estimated to be available for rural road construction and maintenance during 2017/18 from $906 million of Ministry of Federal Affairs and Local Development’s budget. An assessment of maintenance requirements and budget allocation indicated that the maintenance needs of rural roads will be fully met. The Road Board Nepal generates revenue from fuel levies and toll charges and provides maintenance funding for rural roads. The allocation from the Road Board more than doubled during 2017/18 to about $16.7 million for rural road maintenance. 28 Nepal has an established maintenance planning and budget allocation system. The relevant office prepares an annual road maintenance plan, based on which budget is allocated. Development partners also support rural road

27 Four rural roads and two trail bridges (equal to the numbers studied at project appraisal) were reevaluated for EIRR computation at project completion using collected primary data. For others, secondary data were used. 28 ADB. 2017. Report and Recommendation of the President on a Proposed Loan and Technical Assistance Grant to the Government of Nepal for the Rural Connectivity Improvement Project. Manila (Loan 3620-NEP).

12 maintenance. The project constructed roads are reasonably good but will continue to require maintenance. Current financing may suffice as the funding allocation for road infrastructure is increasing.

37. The project design for a labor-based approach to road construction was found to cause the least damage to the environmental setting and disturbance to slope stability due to the application of less-intrusive manual labor, restriction on blasting, and longer construction period facilitating stabilization through natural forces (rainfall). Skills learned by the locals are found to be useful for future road maintenance, thereby helping to ensure sustainable operation of the infrastructure. The environmental benefits achieved from the design and implementation process are likely to contribute to attaining the goal of project sustainability.

E. Development Impact

38. Poverty. The project’s development impact is assessed satisfactory . In Nepal, population below the poverty line decreased to 18.7% in 2018 from 30.9% in 2004. The 14th plan estimated the percentage of the population in poverty would be reduced to 17% by 2019. 29 The average poverty level in the 18 project districts was reduced to 38.7% in 2011 from 41% in 2004.30 By 2020, poverty in the project district should further decline by 0.32% per year. The project contributed to six indicators of ADB’s results framework by constructing 527 km of roads, rehabilitating 249 km of road, achieving gender equality gains, engaging civil society in implementation, creating jobs in project works totaling 11.9 million person-days, increasing access to market and social services for more than 600,000 people, and reducing percentage of population living in poverty. This outweighs the immediate gains from employment during construction of rural roads and community infrastructures. Many of the rural roads have connected remote areas and poor and disadvantaged people with emerging market centers. This will contribute to poverty reduction at the project’s full development.

39. Institutional. The project has enhanced capacity of DOLIDAR for planning and executing large multicomponent projects supported by multiple development partners. The DDCs have strengthened their technical and managerial capacities in executing rural roads. Many road-building groups formed during project implementation have emerged as local institutions for planning and managing local infrastructure. A few savings and credit groups formed were institutionalized and registered as cooperatives. The VWRCCs and building group leaders were elected in local elections, and the leadership skills gained through the project contributed to their taking on leadership roles.

40. Economic. Given the various types of economic activities taking place along the road corridors, the economic impacts of the roads are positive. Hydropower generation projects are coming due to increased access. The emergence of small market centers with retail shops, tea shops, hotels and lodges, and vehicle repair services will impact the local economies. Local people along the road corridors are beginning to take advantage of market access by expanding their cultivation of high-value crops, benefitting from the reduced costs of consumables, and realizing much better prices for local production and higher land prices. There will be increased opportunities for employment and self-employment locally.

41. Environment. There are no major negative environmental impacts of the project. All the project-financed roads were screened for environmental impacts. Adequate budget was allocated to mitigate environmental losses. Environment-friendly construction practices were adopted, with rationale use of machines, prohibition of downhill spoil disposal, and

29 National Planning Commission, Government of Nepal. 2019. Page 5, Approach Paper for 15th Plan (2019– 2023), Kathmandu. The figure for 2004 is from ADB’s country poverty analysis (para 2, page 2) in the country partnership strategy, 2013–2017. 30 Central Bureau of Statistics, World Food Program and World Bank, 2011. Nepal Small Area Estimates of Poverty, Kathmandu.

13 compensatory plantation. Independent external monitors reported that both the investments under the project implemented the environmental mitigation plans satisfactorily.

42. Social. Social inclusion was a key focus of the project. The project’s impacts on local people, especially women and disadvantaged groups, were encouraging. They have been able to benefit from the mandated representation and leadership in the building groups. Awareness raising and orientation have empowered local communities. The life skills trainings contributed to raising socioeconomic status of women and the disadvantaged.

F. Performance of the Borrower and the Executing Agency

43. The performance of the borrower and the executing agency was satisfactory . The government and DOLIDAR had full ownership of the project and gave it high priority throughout implementation. The executing agency submitted periodic progress reports. The reporting timeliness and quality were substantially improved with the additional financing. The PCU has shown its strength on safeguard compliance monitoring, reporting, and compliance with corrective actions. Quality and content of the borrower’s project completion reports were below the required standard for both investments. The borrower’s performance with respect to meeting loan and grant covenants and safeguard and fiduciary requirements and implementing project activities was noteworthy. Counterpart funds were generally made available on time. The executing agency’s financial management was less than satisfactory, given the delayed submission of related audited project financial statements (para. 14).

44. A project procurement related review was conducted for the original project in 2010. An implementation risk mitigation action plan was prepared and implemented by the project following that review’s recommendation. The executing and implementation agencies prepared and implemented a contract administration manual that helped to reduce procurement time and improved the competitive environment, such that larger contract packages were introduced with fewer civil works shopping packages. Poor-performing contractors were penalized by imposing damages and contract termination. The executing agency performance on fiduciary risk management and internal control, including asset management, was also improved with implementation of the mitigation action plan. Nevertheless, there still is room for improvements.

G. Performance of Cofinanciers

45. The performance of the cofinanciers was satisfactory . SDC and OFID cofinanced the project. SDC was involved from project design and provided grant technical assistance in the form of parallel financing. SDC’s involvement during project design benefitted from that agency’s long experience in designing and implementing rural roads. SDC participated in review missions, monitored the consultants’ works, and demonstrated flexibility in providing consulting services as needed for the project’s extended scope. 31 OFID joined only in the additional financing as cofinancier, providing a $20 million loan and covering 54.2% of rural infrastructure cost. OFID signed a loan agreement with the government on time with closing date of 28 February 2017 and extended its closing date to align with the ADB loan and grant closing dates until 21 May 2018. OFID acted promptly in its disbursement as recommended by ADB, and ADB administered the OFID loan pursuant to a cofinancing agreement. SDC’s and OFID’s responsiveness contributed to addressing implementation issues in a timely manner, avoiding financial constraints, and achieving the project objectives.

31 SDC extended its grant agreement with the government twice to align with ADB’s project closing date. SDC also remained flexible in adjusting its consultant inputs beyond eight districts.

H. Performance of the Asian Development Bank

46. ADB’s performance was satisfactory . It responded to the needs of the borrower and demonstrated flexibility in project implementation to better utilize savings through change in implementation arrangements, fund reallocation, and minor adjustments in scope of works. ADB provided continuous guidance to DOLIDAR through review missions, consultations, and progress review meetings. 32 ADB promptly approved bid documents and provided timely disbursement to expedite project implementation. It provided technical, financial, procurement, and safeguard management orientation, as well as training and onsite coaching to the project staff. ADB effectively coordinated with cofinanciers, liaising with them for timely delivery of services and disbursement of project expenditure. ADB mobilized its staff consultant to enhance implementing agencies’ procurement, safeguard, and financial management capacity. It provided handholding support to resolve issues identified during implementation. Given the delays in submitting and uploading audited project financial statements, ADB could have strengthened its follow-up. ADB’s close supervision during implementation contributed to timely project completion with substantial achievement of outcome and outputs.

I. Overall Assessment

The overall project is rated successful . This rating is based on the assessment of relevance, effectiveness, efficiency, and sustainability. The project was rated relevant from design to completion of both investments. The project was effective in delivering targeted outputs and outcomes. These were achieved despite the conflict, protracted political transition, unstable governments, and weak institutional capacity of the executing and implementing agencies. Project implementation was nevertheless completed within the stipulated timeframe by applying countermeasures to overcome initial delays. The project is rated efficient in terms of its economic efficiency and work of the government, ADB, and the cofinanciers. The project’s outcomes are likely sustainable given the high priority accorded by the government to rural infrastructure maintenance and high level of community ownership.

Overall Ratings Criteria Rating Relevance Relevant Effectiveness Effective Efficiency Efficient Sustainability Likely sustainable Overall Assessment Successful Development impact Satisfactory Borrower and executing agency Satisfactory Performance of ADB Satisfactory Source: ADB =Asian Development Bank.

IV. ISSUES, LESSONS, AND RECOMMENDATIONS

A. Issues and Lessons

47. Project design during conflict. Projects designed in conflict or post-conflict contexts have advantages in partnering with nongovernment organizations for accessing sites and creating conducive working environments in conflict affected areas.

48. Geographical spread and multiple implementing agencies. In Nepal’s federal structure, it would be prudent to adopt ADB support at the selective local or provincial level to minimize supervision, management, and transaction costs, as well as to avoid spreading a

32 DRILP was delegated to the Nepal Resident Mission on 22 August 2005 and the additional financing was delegated on 12 December 2011, immediately after Board approval. The delegation of the project was timely.

15 project over a scattered geographical area. A project design with multiple implementing agencies needs to assess the individual agencies’ capacity and resource base at appraisal.

49. Voluntary donation of land. Provision of voluntary land donation demands more time in resettlement planning. To verify no coercion by an independent third party is challenging. The confirmation of donation becomes more critical if lands are disputed, mortgaged, or a landowner is absent. The pros and cons of voluntary land donation needs, therefore, to be carefully analyzed at future similar project design and investment.

50. Use of acquired skill. The project conducted targeted livelihood programs with short- term employment in construction works, saving and credit practices, and skills training based on needs. Only 29% of 3,159 trainees were employed, however beneficiaries can meaningfully utilize their skills only if they are provided with capital needed to operate businesses and if they are provided with extended support for business opportunities.

B. Recommendations

51. Upgrading, sustainability, synergy, and readiness. Given great demand for rural roads, there is need for further investments in rural roads to broaden connectivity. ADB’s future investments in rural roads should focus on upgrading network to sealed all-weather roads. Possibilities for low-cost sealed road construction should be explored. ADB should support preparing a sustainable rural roads maintenance strategy for Nepal and encourage the government to formulate a medium-term road maintenance action plan. Current practice of project readiness, provision of advance procurement, and retroactive financing should be continued to shorten implementation periods and minimize delays. Synergizing rural road investment with ADB’s investments into agriculture and livestock value chain development can enhance such investments’ economic viability.

52. Covenants. The sector and safeguard covenants should be maintained for the next 5 years, because these are relevant for the ongoing and planned rural road projects under ADB financing. However, the project’s specific financial and other covenants can be waived.

53. Economic Analysis. At project appraisal, economic analysis was done only for selected quantifiable components. Because investment into other components significantly contributes to communities’ livelihood improvement, these could have been included and benefits quantified in the economic analysis at appraisal. That would have enabled comparing returns at project completion. Hence, ADB economic analysis guidelines should clearly state process, approach, and methodology (sample size) for economic analysis at project appraisal and completion according to lending modalities.

54. No Combined Completion Report for Additional Financing. ADB requires combined completion report for an original project and for additional financing. This creates challenges in accessing information from the original project. Therefore, a separate completion report should be prepared for the original project if additional financing does not have scope to mitigate issues arising due to cost and time overruns in the original project.

55. Timing of the project performance evaluation report. Preparation of the project performance evaluation report is suggested for the first quarter of 2022.

16 Appendix 1

DESIGN AND MONITORING FRAMEWORK

Overall Project (Loan 2092-NEP (COL); Loan 2796-NEP (COL)-NEP; Grant 0267-NEP)

Performance Indicators Design Performance Indicators and and Targets with Project Achievements Summary Targets with Baselines Baselines (At Completion) (Overall Project) (At Appraisal 2011) (Revision at MTR 2015) Impact Poverty levels in 18 project Poverty levels in 18 project The Nepal Living Standard Reduced rural districts reduced from 41% in districts reduced from 41% Survey 2015 indicates that poverty in 18 2004 to 20% in 2020 in 2004 to 20% in 2020 poverty level in rural areas very poor and decreased to 23% in 2015. remote hill and Further decrease to 20% mountain districts and even below is expected in the rural areas, including in the project districts, by 2020. Outcome Widened access 600,000 persons have better 600,000 persons have Exceeded. 639,764 to social services access to social services by better access to social persons have better access and economic 2016 from the baseline of services by 2016 from the to social services by June opportunities 200,000 persons in 2010 baseline of 200,000 2017 persons in 2010

Average annual income per Average annual income per Achieved . Average annual household is subprojects household is subprojects income per household in zone of influence (ZOI) zone of influence (ZOI) subprojects ZOI increased increased by 10% in 2016 increased by 10% in 2016 by 36% and reached from NRs69,500 in 2007 from NRs69,500 in 2007 NRs186,312 in 2016

Transport costs for people Transport costs for people Achieved . Per km and goods reduced by 55% and goods reduced by 55% transportation cost for and 87% in 2016 from and 87% in 2016 from people and goods NRs18/km and NRs491/t-km NRs18/km and NRs491/t- decreased by 42.1% and respectively in 2010 km respectively in 2010 80%, respectively in 2016.

Freight volume increased by Freight volume increased Achieved . Freight volume 20% per year in 2016 from by 20% per year in 2016 increased by 29% in 2016. 0.116 tons/capita/year in from 0.116 tons/capita/year 2007 in 2007

Anticompetitive activities in Anticompetitive activities in Partly Achieved . Although rural transport services rural transport services there has been some curtailed curtailed decrease in anticompetitive activities, further decrease is needed.

11.2 million person-days (4.7 11.2 million person-days Achieved. 11.90 million million person-days under (4.7 million person-days person-days (with 4.94 additional financing) of works under additional financing) million person-days [p-ds] are provided of works are provided under additional financing and 6.96 million under the original project) of employment provided in construction of roads, trail bridges and community infrastructures in 2016.

Women and excluded groups Women and excluded Achieved. Women and represent at least 50% of groups represent at least excluded groups building groups membership 50% of building groups represented 67% (40% in 2016 from 40% in 2010 membership in 2016 from women and 27% men from 40% in 2010 excluded groups) in building group membership in 2016.

Appendix 1 17

Performance Indicators Design Performance Indicators and and Targets with Project Achievements Summary Targets with Baselines Baselines (At Completion) (Overall Project) (At Appraisal 2011) (Revision at MTR 2015) Outputs 1. Rural 600 community 550 community Achieved. 552 community Livelihood infrastructures (250 under infrastructures (200 under infrastructures (238 under Improved additional financing) additional financing) additional financing) constructed in 2016 involving constructed in 2016 constructed involving building groups in 50% involving building groups in building groups in over contracts 50% contracts 50% contracts.

Equal wage for equal value of Equal wage for equal value Achieved. Equal wage for work of work equal value of work practiced.

6,000 beneficiaries trained in 3,000 beneficiaries trained Exceeded. 7,575 livelihood-related skills by in livelihood-related skills beneficiaries trained in 2016 of which at least 40% by 2016 of which at least livelihood-related skills of are women and 60% are the 40% are women and 60% which 42.91% were women poor and excluded are the poor and excluded and 60.82% were poor and excluded groups. [In additional financing- 4,806 beneficiaries were trained, of which 41% were women and 61% were poor and excluded groups from total 29,863 BG members; and in original project 2,719 beneficiaries were trained, of which 46% were women and 66% were poor and excluded group.]

Awareness-raising activities, Awareness-raising Achieved . 3117 meetings, and training activities, meetings, and awareness-raising, conducted training conducted consultation, orientation events conducted for 1,08,972 beneficiaries, VWRCC, DRCC, DDC, members (1,949 event for 62,969 participants under the original project and 1,168 events for 46,003 participants under additional financing).

Access to microfinance by Access to microfinance by Achieved . Microfinance building groups and savings building groups and access program piloted in and credit schemes in piloted savings and credit selected 9 districts. nine districts improved – 40% schemes in piloted nine National-NGO carried out of beneficiaries are women districts improved – 40% of detailed study to identify and 60% are the poor and beneficiaries are women piloting districts. Local excluded groups and 60% are the poor and NGO implemented the excluded groups program for microfinance access facilitation. LNGO organized orientation trainings related to saving and credit and microfinance access for 113 groups, reformed into 82 groups, with 2,884 members, where 66.50% (1918) are women and 33.40% (966) are men. All 100% members were from poor and excluded groups.

18 Appendix 1

2. Capacity Fifteen central and 72 district 25 central and 62 districts Substantially Achieved . Building and officers, of which at least 20% learn from regional tours 71 project staff including Decentralized are women, participate in and one-woman officer (35 Local learn from regional tours central and 36 district Governance officer) attended regional Enhanced study tour/training in Indonesia and Thailand.

BGs/VWRCCs and saving Exceeded. 420 participants credit group member, of from DRCC, VWRCC and which at least 20% are official staff. Out 420 women, participate in and participants, 116 (28%) learn from exposure visits were women; 59 (14%) in other districts of the were Dalits and 71 (17%) country. were Janajati.

All participating DDCs All participating DDCs Achieved . All DDCs prioritize and propose the prioritize and propose the proposed subprojects subprojects subprojects based on district strategic priorities and District Transport Master Plan priorities.

DDCs demonstrate DDCs demonstrate Achieved . DDCs and progressively improved progressively improved DTOs demonstrated their capacity to implement capacity to implement improved capacity through transport infrastructure transport infrastructure reduced time for subproject subprojects; and DDC and subprojects; and DDC and selection and approval, district technical officer district technical officer bigger contract packaging capacity in all aspects of capacity in all aspects of and faster procurement, development project development project enhanced contract planning, management, and planning, management, administration skill, and implementation improved and implementation improved reporting improved qualities.

3. Rural 715 km of rural roads built, 555 km of rural roads built, Partly Achieved . 527 km Infrastructure and 190 km rural roads and 255 km rural roads of rural roads built, and 249 Extended and rehabilitated (200 km of rural rehabilitated (200 km of km rehabilitated/upgraded Maintained roads built, and 60 km of rural rural roads built, and 60 km (216 km road built, and 99 roads rehabilitated under of rural roads rehabilitated km rehabilitated/upgraded additional financing) involving under additional financing) under additional financing). building groups in 50% of the involving building groups in The achievement is 86% of new road construction 50% of the new road target at appraisal and 96% contracts construction contracts compared to revised target at MTR of original project. The original target couldn’t achieve due to cost overrun because of remoteness, geographical terrain, and rocky area.

20,500 meter of trail bridges 26,600 meter of trail Exceeded . 29,314 meters built (12,600 meter under bridges built (6,500 meter (422 number) trail bridges additional financing) under additional financing) built (16,314 meter- 256 number under additional financing).

1,200 km of rural roads Exceeded . 1,273 km rural fully maintained through roads fully maintained- length-persons engaged mainly through length- from local communities, of persons engaged from local community for routine

Appendix 1 19

Performance Indicators Design Performance Indicators and and Targets with Project Achievements Summary Targets with Baselines Baselines (At Completion) (Overall Project) (At Appraisal 2011) (Revision at MTR 2015) 6,100 km of rural roads fully which 40% will be provided and periodic maintenance, maintained through length- by women but contractors were also persons engaged from local used for periodic and communities, of which 40% special maintenance. will be provided by women Among length-person hired 41% were women.

Toll collection system piloted Dropped during MTR. A Not Applicable . in nine districts to augment study was carried out to the district road maintenance identify 9 districts to pilot funds toll collection system with review of existing road use fee, legal framework and 4. Project consultation with Management stakeholder. Toll collection Improved piloting was dropped at mid-term review following recommendation of the study.

Agreed-upon number of Agreed-upon number of Partly Achieved . PCU and staffs, number of district staffs, number of district DTO staff and CISC, technical office staff, and technical office staff, and national NGO, and eight required number of required number of district consultants consultants and NGO staff consultants and NGO staff engaged on schedule. engaged according to engaged according to Under additional financing, schedule schedule engagement of consulting firms for 10 districts was substantially delayed due to sub-judices in court and complaints on procurement. Individual consultants were recruited later with change in implementation arrangement.

Vehicles and equipment Vehicles and equipment Achieved . Vehicles (20), procured according to time procured according to time motorcycles (41) and other and cost schedules and cost schedules equipment procured on schedule.

A common financial A common financial Achieved . Common management system management system financial management developed for the Ministry of developed for the Ministry system was established in Local Development, DDCs, of Local Development, MLD, DDCs and DOLIDAR, and DOLIDAR DDCs, and DOLIDAR and two financial management specialists placed at PCU for facilitation.

Gender desk established in Gender desk established in Achieved . A gender desk DOLIDAR DOLIDAR was established in DOLIDAR. Sources: DOLIDAR. 2017. Completion Report of the Decentralized Rural Infrastructure and Livelihood Project and Decentralized Rural Infrastructure and Livelihood Project – Additional Financing . Kathmandu (June); Asian Development Bank.

20 Appendix 1

COMMUNITY INFRASTRUCTURE COMPLETED UNDER THE PROJECT

DRILP DRILP-AF SN Type of Community Infrastructure Nos. Nos 1 School Building 115 98 2 Water Supply & Sanitation 65 28 3 Community Buildings and other Facilities support 49 41 4 Irrigation Pond and Water Management 36 29 5 Community Electrification & Energy Project 14 13 6 Mule and Foot Trail Improvement 10 12 7 Health and other Facilities 11 8 8 Village Roads Improvement 10 3 9 Other (River trailing, market center and solar) 4 6 Total 314 238 Source: Government PCR 2017 and PCR consultant report.

Appendix 1 21

L2796/G0267: LIST OF TRAINEES WITH DISAGGREGATED DATA BY SEX AND ETHNICITY

Trainees no as Total Total Disaggregated Details of Trainees who per NSTB/Non selected completed completed the trainings Package NSTB Total for the Non training training NSTB Male Female DAG Dalit Janajati NSTB Package I 339 128 675 609 510 99 446 69 94 609 Package II 753 303 1224 1056 711 345 374 133 549 1056 Package III 786 364 1194 1150 576 574 815 158 177 1150 Package IV 344 0 350 344 308 36 205 54 85 344 Total of LEST (A) 2222 795 3443 3159 2105 1054 1840 414 905 3159 Total trainees participated in the microfinance related training 1. Micro Finance Orientation 575 694 837 164 268 1269 2. Basic Saving and Credit Training 122 193 205 58 52 315 3. Micro Finance Exposure visit 26 37 41 9 13 63 Total of Micro Finance (B) 723 924 1083 231 333 1647 Grand Total (A+B) 3443 3159 2828 1978 2923 645 1238 4806 % of female participation out of achieved no. 58.84 41.16 60.82 13.42 25.76 Source: Government PCR 2017

L2092: LIST OF TRAINEES WITH DISAGGREGATED DATA BY SEX AND ETHNICITY

22 Appendix 1

LIST OF ROADS OF PROJECTS WITH TARGET AND ACHIEVEMENTS

New Rehab New Rehab New Rehab New Rehab New Rehab New Rehab 5.5 Km section handed over to 1 Baglung -Kusmisera 20.88 20.88 - 20.88 16.00 - 16.00 77% Kaligandaki Corridor project. Road completed by project. 240 meter lenthg redued due curve 2 Baglung-Ghodabande 25.44 25.44 - 25.44 25.20 - 25.20 99% and grade improvement. All road section completed. 750 meter lenthg redued due curve 3 Shreebhabar -Kotila-Malladehi-Hat 24.30 12.25 12.05 24.30 - 11. 50 12.05 23.55 - 97% and grade improvement. All road section completed. 4 Salena-Melauli 14.84 14.01 0.83 14.84 - 14. 01 0.83 14.84 - 100% S. 5 Bhopur-Rupatola 17.92 Total length 17.92 Approved length in DPR by investment (km) 17.92 - Completed 17.92 length of road (km) 17.92 - 100% Overall No. 6 Dangaji-Mahendrajhar3 Name of Subprojects 31.50 of DPR DRILP 31.50 DRILP-AF 31.50 - Total DRILP 31.50 DRILP-AF 31 Total .50 - 100%Progress (%) Remarks 7 Barbis -Aatichaur-Delta Bazaar- approved Thamlek 35.56 8.50 27.06 35.56 - 8. 50 27.06 35.56 - 100% 8 Martadi- Majhigaun 7.20 6.70 0.50 7.20 - 6 .67 0.50 7.17 - 100% Less progress is due to unstable 9 Bitule-Latinath-Paribagar 14.80 14.80 14.80 - 14.09 14.09 - 95% land and repeated land slide occurrence Less progress is due to unstable 10 Khalanga-Dethala 20.38 18.60 1.78 20.38 - 16. 82 1.78 18.60 - 91% Baglung land and repeated land slide occurrence The PCO advised not to start about 5 Km section at last due to delay in Bajura 11 Dunai- Sahatara- Lasikyap 31.76 15.00 16.76 31.76 - 10. 00 10.29 20.29 - 64% initial section from Dunai. 6.47 Km section couldn't complete due to Baitadi exposure of hard rock much higher than estimate. Trak is opened in full Darchula length. 12Bajhang Dunai- Supani 14.40 8.00 6.40 8.00 6.40 8 .00 6.40 8.00 6.40 100% 13 Gorkha - Koyabhanjyang 38.20 38.20 - 38.20 38.20 - 38.20 100% 14 Khabdibhanjyang Bunkot-Namjung- Ghairung Batase 14.90 14.90 - 14.90 14.90 - 14.90 100% 15 Nareshwir - Padin Chautara 7.86 7.86 - 7.86 7.86 - 7.86 100% 4.8 Km section handed over to 16 Humla Hilsa- Simikot - Kharpu 31.04 20.90 10.14 31.04 - 16. 10 10.14 26.24 - 85% Department of Roads. DOR is working to complete road section. 17Dolpa Khalanga-Rimna 16.50 16.50 16.50 - 16.50 16.50 - 100% 18 Thalaha - Batule - Aulatari/Seto Pahiro 31.82 20.90 10.92 20.90 10.92 20. 90 10.92 20.90 10.92 100% 19 Dillichaur- Dhupaghat 10.60 10.60 10.60 - 10.60 10.60 - 100% 20 Kudari- Tamti - Topla-Imilcha 30.44 14.30 16.14 30.44 - 14. 30 16.14 30.44 - 100% 21 Thinke - Uthichautara 4.92 4.92 - 4.92 4.90 - 4.90 100% 22 Khulalu-Lalu-Laifu 33.10 33.10 33.10 - 13.80 13.80 - 42% Remaining road section handed over to DOR. DOR completed the road. Myagdi 23 Hulma-Seri-Sakh-Chhelahanna 10.15 10.15 10.15 - 8.81 8 .81 - 87% Remaining road section handed over to DOR. DOR completed the road. 24 Salmebhanjyang-Ghamrang 7.60 7.60 7.60 - 7.10 7.10 - 93% 25Okhaldhunga Sundabazaar-Kuncha-Duipiple 23.58 14.97 8.61 - 23.58 23.60 8.61 - 23.58 100% 1.54 Km handed over to mid hill 26Ramechhap Tarkughat-Pyarjung Bhanjyang 21.66 21.66 - 21.66 20.12 - 20.12 93% highway. DOR has completed the road. 27Solukhumbu Gamgadi-Rara 14.50 14.50 14.50 - 14.50 14.50 - 100% 28 Kalkandelek-Khamale-Kawa 34.20 18.00 16.20 34.20 - 16. 63 16.20 32.83 - 96% 29 Beni-Darbang 23.10 23.10 - 23.10 23.10 - 23.10 100% Taplejung Due to low performance of contract 30 Beni-Pakhapani 12.61 2.50 10.11 - 12.61 1.40 8.71 - 10.11 80% contract terminated, but all road section and initial gravelling is completed. 31 Rummjatar- Khartekhol-Serna- Sewa kendra 29.71 8.35 21.36 29.71 - 8. 35 21.36 29.71 - 100% 32 Okhaldhunga-Jantardhap 21.50 21.50 21.50 - 21.50 21.50 - 100% 33 Gaikhura- Pakarbas- Galba 32.82 16.80 4.33 11.69 4.33 28.4 9 16.80 4.33 11.69 4.33 28.49 100% Road length reduced due to landslide 34Gorkha Manthali-Kathajor-Dhobi 22.30 8.30 14.00 8.30 14.00 8.0 0 11.50 8.00 11.50 87% and no further work. 35 Garma-Nele-Budhidanda 22.50 9.68 12.82 22.50 - 9. 73 12.82 22.55 - 100% 36 Lekkharka-Maidel-Mukli 8.75 8.75 8.75 - 8.75 8.75 - 100% 37 Phaplu-Jantardhap 37.20 29.10 8.10 29.10 8.10 29 .10 8.10 29.10 8.10 100% 38 Gupha Pokhari - Dhungesangu 20.68 18.04 2.64 20.68 - 18. 04 2.64 20.68 - 100% 39 Sanghu - Change 9.64 9.64 9.64 - 9.64 9.64 - 100% 830.84 346.25 154.43 223.53 106.63 569.79 261.06 311.76 159.20 215.73 98.81 527.4 9 249.38 94%

Kalikot Jajarkot

Jumla

Lamjung

Mugu Appendix 2 23

PROJECT COST AT APPRAISAL AND ACTUAL LOAN 2092-NEP (COL)

Appraisal Estimate ($ Million) Actual ($ Million) Item Foreign Exchange Local Currency Total Cost Foreign Exchange Local Currency Total Cost A. Investment Costs 1. Civil Works 1.60 34.70 36.30 1.28 55.09 56.37 2. Consulting Services 0.00 8.80 8.80 0.00 7.92 7.92 3. Technical Services 3.60 2.20 5.80 3.59 0.02 3.61 4. Training 0.00 1.80 1.80 0.06 1.40 1.46 5. Equipment, Vehicles and Furniture 0.10 0.30 0.40 0.40 1.27 1.67 6. Land Acquisition/Resettlement 0.00 1.70 1.70 0.00 0.50 0.50 7. Survey and Studies 0.00 0.80 0.80 0.00 0.09 0.09 8. Project Staff 0.00 0.80 0.80 0.00 0.90 0.90 Subtotal (A) 5.30 51.10 56.40 5.33 67.19 72.52 B. Recurrent Costs 0.10 3.40 3.50 0.04 0.86 0.90 C. Contingencies 0.40 8.70 9.10 0.00 0.00 0.00 D. Interest During Implementation 1.20 0.00 1.20 0.50 0.00 0.50 Total Project Costs (A+B+C+D) 7.00 63.20 70.20 5.87 68.05 73.92 Sources: DOLIDAR. 2011 (October). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Manila. Asian Development Bank. ADB = Asian Development Bank; NGO = nongovernment organization; SDC = Swiss Agency for Development and Cooperation

24 Appendix 2

PROJECT COST AT APPRAISAL AND ACTUAL LOAN 0267-NEP/2796-NEP (COL)

Appraisal Estimate ($ Million) Actual ($ Million) Foreign Local Foreign Local Item Exchange Currency Total Cost Exchange Currency Total Cost A. Investment Costs 1. Civil Works 2.47 36.5 38.97 0 46.33 46.33 2. Consulting Services 0 2.96 2.96 0 3.22 3.22 3. Technical Services 0.76 6.82 7.58 0 5.53 5.53 4. Training 0 2.86 2.86 0 2.31 2.31 5. Equipment, Vehicles and Furniture 0.56 2.33 2.89 0 1.37 1.37 6. Land Acquisition/Resettlement 0 1.37 1.37 0 2.53 2.53 7. Survey and Studies 0 0.5 0.5 0 0.88 0.88 8. Project Staff 0 0.85 0.85 0 2.53 2.53 Subtotal (A) 3.79 54.19 57.98 0 64.7 64.7 B. Recurrent Costs 0.5 1.5 2 0 2.2 2.2 C. Contingencies 0.3 4.58 4.88 0 1.11 1.11 D. Interest During Implementation 1.58 0 1.58 0 0.27 0.27 Total Project Costs (A+B+C+D) 6.17 60.27 66.44 0 68.28 68.28 Sources: DOLIDAR. 2011 (October). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Manila. Asian Development Bank. ADB = Asian Development Bank; NGO = nongovernment organization; SDC = Swiss Agency for Development and Cooperation Sources: DOLIDAR. 2011 (October). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Manila. Asian Development Bank. ADB = Asian Development Bank; NGO = nongovernment organization; SDC = Swiss Agency for Development and Cooperation

Appendix 3 25

PROJECT COST BY FINANCIER

Table A.3.1: Project Cost at Appraisal by Financier (Loan 2092-NEP (COL)-NEP) ($ million)

ADB Government SDC/GTZ/SNV Local Government Beneficiaries Total Item Amount % Amount % Amount % Amount % Amount % Amount % A. Investment Costs 1. Civil Works 26.90 62.4 11.60 26.80 3.70 8.60 0.90 2.20 43.10 61.50 2. Consulting - - - - 5.80 100.00 5.80 8.30 - - Services 3. Technical 7.40 76.0 - - 2.20 22.68 - - - - 9.70 13.80 Services 4. Training 1.90 100.00 ------1.90 2.80 5. Vehicle and 0.40 84.40 0.10 15.60 ------0.50 0.70 Equipment 6. Land - - 2.10 100.00 ------2.10 2.90 Acquisition/Resett- lement 7. Survey and 0.90 100.00 ------0.90 100.00 Studies 8. Project Staff - - 0.90 100.00 ------0.90 1 .20 Total Investment 37.60 58.00 14.60 22.40 8.00 10.70 3.70 5.70 0.90 1.50 6.18 92.40 Costs B. Recurrent 1.20 29.20 1,90 44.5 - - 1.10 33.10 - - 4.20 59.00 Costs C. Contingencies Total Project 38.80 56.20 16.40 23.80 8.00 10.10 4.80 7.00 0.90 1.40 69.00 98.30 Costs (A+B) D. Interest During 1.20 100 ------1.20 1.70 Implementation Total Project Cost 40.00 57.00 16.40 23.40 8.00 11.40 4.80 6.80 0.90 1.30 70.20 100.00 (A+B+C+D) ADB = Asian Development Bank; SDC = Swiss Agency for Development and Cooperation. Source: ADB. 2005 (January). Project Administration Memorandum of the Decentralized Rural Infrastructure and Livelihood Project . Manila % indicates percentage of cost category.

26 Appendix 3

PROJECT COST BY FINANCIER

Table A3.2: Project Cost at Completion by Financier (Loan 2092-NEP (COL) ($ million)

ADB Government SDC Local Government Beneficiaries Total Item Amount % Amount % Amount % Amount % Amount % Amount % A. Investment Costs 1. Civil Works 32.13 57.00 22.64 40.16 - - 1.20 2.13 0.40 0.71 56.37 100.00 2. Consulting 0.02 0.25 - - 7.90 99.75 - - - - 7.92 100.00 Services 3. Technical 3.61 100.00 ------3.61 100.00 Services 4. Training 1.46 100.00 ------1.46 100.00 5. Vehicle and ------1.48 88.62 0.19 11.38 1.67 100.00 Equipment 6. Land ------

Acquisition/ - - 0.50 100.00 0.50 100.00 Resettlement 7. Survey and 0.09 100.00 ------0.09 100.00 Studies - 8. Project Staff - - 0.90 100.00 ------0.90 100.00 Total Investment 38.79 53.49 24.23 33.41 7.90 10.89 1.20 1.65 0.40 0.55 72.52 100.00 Costs B. Recurrent 0.43 47.78 0.47 52.22 ------0.90 100.00 Costs C. ------Contingencies Total Project 39.22 53.42 24.70 33.64 7.90 10.76 1.20 1.63 0.40 0.54 73.42 100.00 Costs (A+B+C) D. Interest During 0.50 100.00 ------0.50 100.00 Implementation Total Project 39.72 53.73 24.70 33.41 7.90 10.69 1.20 1.62 0.40 0.54 73.92 100.00 Cost (A+B+C+D) ADB = Asian Development Bank; SDC = Swiss Agency for Development and Cooperation. Sources: DOLIDAR. 2011 (October). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Kathmandu. Asian Development Bank.

Appendix 3 27

PROJECT COST BY FINANCIER

Table B 3.1: Project Cost at Appraisal by Financier (Grant 0267-NEP/ Loan 2796-NEP (COL)) ($ million)

VDCs and ADB SF ADB ADF Grant Government SDC/GTZ/SNV OFID Total Item Beneficiaries Amount % Amount % Amount % Amount % Amount % Amount % Amount % A. Investment Costs 1. Civil Works 12.27 31.49 - - 7.57 19.43 - - 18.12 46.51 1.00 2.57 38.96 100.00 2. Consulting Services - - 0.21 7.07 - - 2.76 92.93 - - - - 2.97 100.00 3. Technical Services 0.67 8.84 3.84 50.66 - - 3.07 40.50 - - - - 7.58 100.00 4. Training 1.17 41.05 1.25 43.86 0.43 15.09 ------2.85 100.00 5. Vehicle and - 1.43 1.28 0.19 - - 2.90 Equipment 49.31 44.14 6.55 - - 100.00 6. Land Acquisition 0.48 0.89 - - - - 1.37 /Resettlement 35.04 - 64.96 - - 100.00 7. Survey and Studies 0.30 60.00 - - 0.20 40.00 - - - - 0.50 100.00 8. Project Staff - - - - 0.65 100.00 - - - - 0.65 100.00

Total Investment Costs 14.89 6.73 10.17 6.87 18.12 1.00 57.78 25.77 11.65 17.60 11.89 31.36 1.73 100.00 B. Recurrent Costs - - - - 2.00 90.91 0.20 9.09 - - - - 2.20 100.00 C. Contingencies 1.52 31.15 0.27 5.53 1.11 22.75 7.07 10.64 1.88 38.52 0.10 2.05 4.88 100.00 Total Project Costs 16.41 7.00 13.28 7.07 20.00 1.10 64.86 (A+B) 25.30 10.79 20.47 10.90 30.84 1.70 100.00 D. Interest During 1.58 ------1.58 Implementation 100.00 - - - - 100.00 Total Project Cost 17.99 7.00 13.28 7.07 20.00 1.10 66.44 (A+B+C+D) 27.08 10.54 19.99 10.64 30.10 1.66 100.00 ADB = Asian Development Bank; SDC = Swiss Agency for Development and Cooperation. Sources: DOLIDAR. 2011 (October). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Kathmandu. Asian Development Bank.

28 Appendix 3

PROJECT COST BY FINANCIER

Table B 3.2: Project Cost at Completion by Financier (Grant 0267-NEP/ Loan 2796-NEP (COL)) ($ million) VDCs and ADB SF ADB ADF Grant OFID Government SDC Total Item Beneficiaries Amount % Amount % Amount % Amount % Amount % Amount % Amount % A. Investment

Costs

1. Civil Works 12.93 27.91 3.73 8.05 19.63 42.37 8.89 19.19 - 1.15 2.48 46.33 100.00 - 2. Consulting - - - 100.00 Services 0.49 15.22 - - - - 2.73 84.78 - 3.22 3. Technical - 100.00 Services 0.34 6.15 0.04 0.72 - - 2.05 37.07 3.10 56.06 - 5.53

4. Training - 100.00 1.11 48.05 0.89 38.53 - - 0.31 13.42 - - - 2.31 5. Vehicle and - - 100.00 Equipment 1.04 76.18 - - 0.14 9.90 0.19 13.92 - 1.37 6. Land

Acquisition - - 100.00 0.03 1.19 - - - 2.50 98.81 - - - 2.53 /Resettlement 7. Survey and - 100.00 Studies 0.130 14.77 0.16 18.18 - - 0.40 45.45 0.19 21.59 - 0.88

8. Project Staff - - - - 100.00 - - - 1.88 74.31 0.65 25.69 - 2.53 Total Investment 100.00 Costs 14.54 22.47 6.35 9.82 19.63 30.34 16.17 24.99 6.86 10.60 1.15 1.78 64.70 B. Recurrent - - - - 100.00 Costs - - - 2.00 90.91 0.20 9.09 - 2.20

C. Contingencies - - 100.00 - - 1.11 100.00 - - 1.11 Total Project 100.00 Costs (A+B) 14.54 21.38 6.35 9.34 19.63 28.87 19.28 28.34 7.06 10.38 1.15 1.69 68.01 D. Interest

During - - 100.00 0.270 100.00 ------0.27 Implementation Total Project 100.00 Cost (A+B+C+D) 14.81 21.69 6.35 9.30 19.63 28.75 19.28 28.23 7.06 10.34 1.15 1.68 68.28 Sources: ADB = Asian Development Bank; SDC = Swiss Agency for Development and Cooperation. DOLIDAR. 2011 (October). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Kathmandu. Asian Development Bank.

Appendix 4 29

DISBURSEMENT OF ADB LOAN AND GRANT PROCEEDS

Table 4.1: Annual and Cumulative Disbursement of ADB Loan Proceeds (combined) a ($ million) Annual Disbursement Cumulative Disbursement Amount Amount Year ($ million) % of Total ($ million) % of Total 2005 0.277 0.46 0.277 0.46 2006 0.402 0.66 0.679 1.12 2007 2.155 3.54 2.834 4.66 2008 3.478 5.72 6.312 10.38 2009 7.229 11.88 13.541 22.26 2010 9.232 15.18 22.773 37.43 2011 16.92 27.81 39.693 65.25 2012 0.174 0.29 39.867 65.53 2013 1.181 1.94 41.048 67.48 2014 3.685 6.06 44.733 73.53 2015 3.627 5.96 48.36 79.50 2016 4.885 8.03 53.245 87.53 2017 5.59 9.19 58.835 96.71 2018 1.439 2.37 60.274 99.08 2019 0.56 0.92 60.834 100.00 Total 60.834 100.00 Sources: ADB = Asian Development Bank.

Figure 4.1: Projection and Cumulative Disbursement of ADB Loan Proceeds ($ million)

Projection and Cumulative Disbursement of ADB Loan Proceeds ($ million) 70 60 50 40 30 20 10 Cumulative Disbursement ($ million) ($ Disbursement Cumulative 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year

Projection Actual

30 Appendix 4

Table 4.1.1: Annual and Cumulative Disbursement of ADB Loan Proceeds ($ million) 2092-NEP (COL) Annual Disbursement Cumulative Disbursement Year Amount ($ million) % of Total Amount ($ million) % of Total 2005 0.277 0.70 0.277 0.70 2006 0.402 1.01 0.679 1.71 2007 2.155 5.43 2.834 7.13 2008 3.478 8.76 6.312 15.89 2009 7.229 18.20 13.541 34.09 2010 9.232 23.24 22.773 57.33 2011 16.920 42.60 39.693 99.93 2012 0.028 0.07 39.721 100.00 Total 39.721 100.0% Source: ADB = Asian Development Bank.

Table 4.1.2: Annual and Cumulative Disbursement of ADB Loan Proceeds (0267-NEP)a ($ million) Annual Disbursement Cumulative Disbursement Year Amount ($ million) % of Total Amount ($ million) % of Total 2012 0.141 2.22 0.14 2.22 2013 0.179 2.82 0.32 5.04 2014 0.564 8.88 0.88 13.91 2015 0.377 5.93 1.26 19.85 2016 0.880 13.85 2.14 33.70 2017 3.421 53.84 5.56 87.54 2018 0.642 10.10 6.20 97.64 2019 0.150 2.36 6.35 100.00 Total 6.354 100.0% Source: ADB = Asian Development Bank.

Table 4.1.3: Annual and Cumulative Disbursement of ADB Loan Proceeds (2796-NEP (COL)) ($ million) Annual Disbursement Cumulative Disbursement Year Amount ($ million) % of Total Amount ($ million) % of Total 2012 0.005 0.03 0.005 0.03 2013 1.002 6.79 1.007 6.82 2014 3.121 21.15 4.128 27.97 2015 3.250 22.02 7.378 49.99 2016 4.005 27.14 11.383 77.12 2017 2.169 14.70 13.552 91.82 2018 0.797 5.40 14.350 97.22 2019 0.410 2.78 14.759 100.00 Total 14.759 100 Source: ADB = Asian Development Bank.

Table 4.1.4: Annual and Cumulative Disbursement of ADB Loan Proceeds (8257) ($ million) Annual Disbursement Cumulative Disbursement Year Amount ($ million) % of Total Amount ($ million) % of Total 2012 0.000 0.00 0.000 0.000 2013 0.263 1.34 0.263 1.34 2014 2.943 14.99 3.206 16.33 2015 3.570 18.19 6.776 34.52 2016 7.293 37.15 14.069 71.67 2017 3.239 16.50 17.308 88.17 2018 1.336 6.81 18.644 94.97 2019 0.987 5.03 19.631 100.00 Total 19.631 100.00 Source: ADB = Asian Development Bank.

Appendix 4 31

SOURCE WISE ANNUAL PROJECT DISBURSEMENT

L2092 -NEP (COL) Additional Financing L2796- NEP ADB SDC Govt & G0267-NEP (COL) L8257 Govt & Year Others ADB ADB OFID SDC Others Total 2005 0.277 0.055 0.184 - - - - - 0.516 2006 0.403 0.080 0.267 - - - - - 0.750 2007 2.154 0.428 1.427 - - - - - 4.009 2008 3.478 0.692 2.302 - - - - - 6.472 2009 7.229 1.438 4.786 - - - - - 13.453 2010 9.232 1.836 6.113 - - - - - 17.181 2011 16.920 3.365 11.205 - - - - - 31.490 2012 0.028 0.006 0.019 0.141 0.005 - 0.025 0.073 0.298 2013 - - - 0.179 1.002 0.263 0.250 0.724 2.418 2014 - - - 0.564 3.121 2.943 1.148 3.323 11.100 2015 - - - 0.377 3.250 3.570 1.247 3.609 12.053 2016 - - - 0.880 4.005 7.293 2.110 6.106 20.395 2017 - - - 3.421 2.169 3.239 1.530 4.427 14.786 2018 - - - 0.642 0.797 1.336 0.481 1.391 4.647 2019 - - - 0.150 0.410 0.987 0.268 0.776 2.591 39.721 7.900 26.303 6.354 14.759 19.631 7.060 20.430 142.158 Source: Asian Development Bank

32 Appendix 5

CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS

Table 5.1: Annual and Cumulative Contract Awards of ADB LOAN PROCEEDS

($ million) 2092-NEP (COL)/ Annual Contract Awards Cumulative Contract Awards Amount Amount Year a ($ million) % of Total ($ million) % of Total 2005 0.077 0.127 0.077 0.127 2006 1.349 2.226 1.426 2.353 2007 4.850 8.003 6.276 10.356 2008 8.763 14.460 15.039 24.816 2009 8.114 13.389 23.153 38.206 2010 11.449 18.892 34.602 57.098 2011 4.609 7.605 39.211 64.704 2012 0.82 1.353 40.031 66.057 2013 4.21 6.947 44.241 73.004 2014 3.85 6.353 48.091 79.357 2015 5.61 9.257 53.701 88.614 2016 6.22 10.264 59.921 98.878 2017 0.68 1.122 60.601 100.000 Total 60.601 100.000

Source: ADB = Asian Development Bank.

Figure 5.1: Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million) Projection and Cumulative Contract Awards of ADB Loan Proceeds ($ million) 70 60 50 40 30 20 10 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year

Cumulative Contract ($CumulativeContract million) Projection Actual

Appendix 5 33

CONTRACT AWARDS OF ADB LOAN AND GRANT PROCEEDS

Table 5.1.1: Annual and Cumulative Contract Awards of 2092-NEP (COL) ($ million) Annual Contract Awards Cumulative Contract Awards Year Amount ($ million) % of Total Amount ($ million) % of Total 2005 0.077 0.20 0.077 0.20 2006 1.349 3.44 1.426 3.64 2007 4.850 12.37 6.276 16.01 2008 8.763 22.35 15.039 38.36 2009 8.114 20.69 23.153 59.05 2010 11.449 29.20 34.602 88.25 2011 4.609 11.75 0.077 100.00 Source: ADB = Asian Development Bank.

Table 5.1.2: Annual and Cumulative Contract Awards of 0267-NEP ($ million) Annual Contract Awards Cumulative Contract Awards Yea r Amount ($ million) % of Total Amount ($ million) % of Total 2012 0.24 3.69 0.24 3.69 2013 0.54 8.39 0.78 12.08 2014 0.57 8.78 1.35 20.86 2015 0.43 6.68 1.78 27.54 2016 4.38 67.70 6.16 95.25 2017 0.31 4.75 6.46 100.00 Total 6.46 100.0% 6.46 100.00 Source: ADB = Asian Development Bank.

Table 5.1.3: Annual and Cumulative Contract Awards of 2796-NEP (COL) ($ million) Annual Contract Awards Cumulative Contract Awards Year Amount ($ million) % of Total Amount ($ million) % of Total 2012 0.58 3.86 0.58 3.86 2013 3.67 24.59 4.25 28.45 2014 3.28 22.00 7.53 50.45 2015 5.18 34.74 12.71 85.19 2016 1.84 12.35 14.55 97.54 2017 0.37 2.46 14.92 100.00 Total 14.92 100.00 14.92 100.00 Source: ADB = Asian Development Bank.

Table 5.1.4: Annual and Cumulative Contract Awards of 8257 ($ million) Annual Contract Awards Cumulative Contract Awards Amount Amount Year ($ million) % of Total ($ million) % of Total 2012 1.12 5.66 1.12 5.66 2013 5.75 28.95 6.87 34.61 2014 4.98 25.06 11.85 59.67 2015 6.12 30.83 17.97 90.50 2016 1.35 6.82 19.32 97.32 2017 0.53 2.68 19.86 100.00 Total 19.86 100.00 19.86 100.00 Source: ADB = Asian Development Bank.

34 Appendix 6

IMPLEMENTATION OF GENDER ACTION PLAN AND ACHIEVEMENTS

A. Introduction

1. The Decentralized Rural Infrastructure and Livelihood Project Additional Financing (DRILP AF) was designed to address the development needs of conflict-affected communities in18 very poor hill and mountainous districts. 1 The target beneficiaries were mainly the poor, Dalits, ethnic minorities, and women, who face development constraints due to lack of basic infrastructure and limited or no access to resources, employment, health and education services, and other services. The project emphasized community involvement, engagement of local bodies, and support for livelihood restoration activities together with infrastructure development.

2. DRILP AF was built on the lessons of its successful precursor, DRILP, and other past rural road projects. DRILP was designed and implemented in 2005 to support the tenth five-year plan (2002-2007)of the Government of Nepal (GoN) with the aim of reducing poverty by addressing the root cause of the conflict and increasing access to resources and services in the project districts. 2GON gave high priority to the development of rural infrastructure integrating social development to reduce regional imbalances and socioeconomic inequality. DRILP AF reflected the strategic priorities set out in the Three-Year Interim Plan (2008-2010) which has poverty reduction as an overarching goal. 3

3. DRILP AF was categorized effective gender mainstreaming (EGM) as it was designed to contribute to gender equality and social inclusion (GESI) by supporting the economic empowerment of women, poor and excluded groups through capacity building in road construction, operation and maintenance, and in micro-finance, savings and credit mobilization. The project ensured that women, poor and excluded groups were employed in works generated and represented in project activities.

B. Gender and Social Inclusion Issues

4. Poverty incidence was about 41% for the 18 poor and remote hill and mountain districts of the project in 2004, significantly higher than the national average of 30%(footnote 2).Evidence collected during feasibility study suggested that 56%-76% of the households were poor, with 50% of the households in Ramechhap District subproject area (one of the surveyed districts) being extremely poor. Poverty was seen most acute in the Far Western region, where 73%-80% of households lived below the national poverty line. Likewise, in the Eastern and Central project districts poverty was found acute with 58% households of Okhaldhunga and 63% households of Solukhumbu as poor. In the Western project districts poverty average was 46% (footnote 2). Decline in overall poverty levels was observed with poverty incidence of 42% in 1996 dropped to 25% in 2011. 4However, the decline in poverty was more visible in urban areas than in rural areas (footnote 3). The remoteness of the districts from the center kept communities distant from the district headquarters and with less access to basic social services and economic opportunities.

1 The districts are Baitadi, Bajhang, Bajura, Darchula, Dolpa, Humla, Jumla, Kalikot, Mugu, Jajarkot, Baglung, Gorkha, Lamjung, Myagdi, Okhaldhunga, Ramechhap, Solukhumbu and Taplejung. 2 ADB. 2004. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Technical Assistance Grant to the Kingdom of Nepal for the Decentralized Rural Infrastructure and Livelihood Project. Summary of Poverty Reduction and Social Strategy (accessible from the list of documents in Appendix 2). Manila. 3 ADB. 2011. Report and Recommendation of the President to the Board of Directors: Proposed Loan, Grant and Administration of Loan for Additional Financing Nepal: Decentralized Rural Infrastructure and Livelihood Project . Summary of Poverty Reduction and Social Strategy (accessible from the list of documents in Appendix 2). Manila. 4 CBS. 2011. Nepal Living Standards Survey: Statistical Report Volume I. Kathmandu: Central Bureau of Statistics.

Appendix 6 35

5. Poverty was widespread in the project districts with highest occurrence among the disadvantaged castes and the socially excluded, including women, who faced the highest level of discrimination and poverty. People’s access to basic infrastructure like motorable road, transport, schools and health centers increased remarkably in 2000 resulting in declined poverty incidence and improved human development indicators. Still, government’s efforts to enhance rural transports were not able to meet the needs of women, excluded groups and rural poor. Nuanced detail of transport needs and travel patterns of men and women of different geographic topography, caste/ethnicities, economic status was still seen as a gap.

C. Gender Equality and Social Inclusion Features

6. To address the identified GESI issues in the project districts, a GESI Action Plan (GESI AP) was prepared for the project. It incorporated specific targets to ensure that project benefits reach rural poor women and excluded groups in the subproject areas through the following:  Representation of women and excluded groups in activities such as (i) formation of building groups (BGs), district road coordination committee (DRCC), road maintenance committee (RMC), compensation determination committee (CDC), grievance redress committee(GRC), and village works road construction committee(VWRCC) in project districts, (ii) consultations and orientations on project related activities, (iii) training programs on infrastructure operation and maintenance, livelihood enhancement, micro-finance, saving and credit and (iv) project generated employment for project affected family, poor and disadvantaged.  Supporting the enhancement of project management through gender responsive and socially inclusive activities such as GESI orientations to project staffs, targeted women staffs and staffs from excluded groups in all project related activities (trainings, exposure visits, periodic meetings); recruitment of social development officers and social mobilizers in PCO, DDC, and DTO; and formulation of GESI implementation plan for subprojects and maintenance of monitoring system with sex, caste/ethnicity and minority group disaggregated data.

7. Apart from the GESI AP, the project’s design and monitoring framework (DMF) also included four quantitative and one qualitative GESI related performance indicators (three quantitative indicators are also in the GESI AP), (i) at least 40% women and 60% poor and excluded among 3000 beneficiaries trained in livelihood related skills, (ii) 40% women and 60% poor and excluded among the beneficiaries to gain access to microfinance through building groups and savings and credit schemes piloted in 9 districts, (iii) at least 20% women (of BGs or VWRCCs and savings credit groups) participated in and learned from exposure visits to other districts, (iv) 40% women, poor and excluded engaged in maintenance of 1200 km of roads, and (v) GESI desk established in DOLIDAR. 5 The activities and targets in GESI action plan are fully aligned with revised DMF. The targeted trainings in livelihood related skills for poor and excluded provided opportunities to use their skills for income generation. Social mobilization activities supported access to saving and credit trainings and micro-finance for BGs in the piloted districts. Also gender friendly working environment was set up in the road sub-projects with all provisions in GESI AP which encouraged women, poor and excluded to participate in construction works. The local BGs were engaged in most of the construction works that were labor intensive and women participation was high in those.

5 MTR aid-memoire dated 16 January 2015 mentioned – revisions of targets were made considering (a) reasons for under representation, (b) terrain of upcoming subprojects, (c) potential change in implementation approach, (d) remote location of project districts with sparse population and representation of women in various committees, in employment opportunities, in road maintenance works, access to micro finance, and participation in study tours and based on agreed new target, the project’s GESI AP was been revised.

36 Appendix 6

8. The project also supported to form a GESI desk in DOLIDAR to mainstream GESI in rural road sector. A sociologist was assigned with a TOR as the focal for taking GESI related project work. Capacity development of the GESI focal continued throughout the project period that helped in strengthening GESI desk. This not only supported in GESI action plan implementation and reporting but also helped in mainstreaming GESI work within DOLIDAR. The GESI desk in DOLIDAR remained effective until the country’s federal restructuring process. With this change the gender desk within the department does not exist anymore, however the GESI mainstreaming work within the government is now devolved to municipal government under social development units.

D. Gender and Social Inclusion Achievements

9. In sum, as shown in the GESIAP Achievements matrix, 89% activities in the GESI AP were completed and 100% of the quantitative targets were achieved

Gender Equality and Social Inclusion Action Plan Achievements Matrix Status at Activities Achievements Project Completion Output 1: Rural Livelihood Improved 1. Conduct a baseline socio-economic  Collection of baseline information on gender, caste and Completed survey through collection of sex, caste, ethnicity disaggregated data for all the sub-projects ethnicity and minority groups completed. In addition, baseline survey (BLS) for 20

disaggregated data of the project sub-projects (50% of the total 40 sub-projects) was

districts. Conduct poverty mapping of done. BLS conducted during DRILP was validated subproject areas (ZOI) to identify poor, during the preparation of DPR of relevant sub-projects excluded and most vulnerable of DRILP-AF. households. Based on the poverty mapping carry out GESI assessment of the subproject area to identify specific

constraints, barriers and opportunities to

their participation in project activities.  The updated baseline data disaggregated by sex, caste, ethnicity and minority groups collected. QT1. Poverty mapping carried out in  Poverty mappings were carried out during BLS in 20 Achieved sampled (20%) subproject areas and sub-projects (50%) with indicators on well-being criteria include indicators on income, ranking and information on food sufficiency, income, health/nutrition, education, occupation, education status, social capital, existing infrastructure social capital, existing infrastructure facilitiesof female-headed households facilities and female headed households (HHs). (FHHs). Gender and social inclusion  GESI action plans of 40 (100% of) sub-projects in 18 assessment carried out and GESI districts were completed and approved by ADB and Action plan/social action plan prepared implemented for all sub projects. 2. Ensure representation of women  1,296 BGs with a total of 29,863 members formed. Out Completed and excluded groups in BGs, DRCC, of total members, 11,945 (40%) are women and 60% RMC, CDC, GRC, and VWRCC in project districts.

Appendix 6 37

Status at Activities Achievements Project Completion QT2. BG: 35% women and proportionate are men; and 12,542(42%) are from excluded groups— Achieved representation from excluded groups 6 4,778(36%) are Dalit; and 7,764 (58%) are Janajati, QT3 .BG leadership: 33% women from all  Out of 1,296 BG leaders, 557 ( 43%) are women.7 Of Achieved caste, ethnic and minority groups the 1,296 BGs, 241 have only women members. QT4. VWRCC: 33% women and  84 VWRCCs were formed with total of 1,184 Achieved proportionate representation from members-- 414 (35%) are women and all (100%) excluded groups. come from excluded groups : 157 (13.3%) are

Dalits; 239(20.2%) are Janajati; and 788 (66.5%) are from other excluded groups.Inkey leadership position of VWRCC are 40% women .  DRCC, CDC, RMC, GRC and GRSC: Formed were the following: Ensure representation of women and  18 DRCC with 288 members: Women= 13 (4.5%); excluded groups as committee Dalits=12(4.2%) Janajatis= 53(18.4%)

members.  18 CDC with 130 members: Women=7 (5%); Dalits =

8(6%); Janajatis=12 (9%)

 18 GRCs with 204members. Women=27 (13.23%); Dalits=15 (7.35%);Janajatis=27(13.23%)  52 GRSC in 18 project districts: 8 Women=48 (31%), Dalits andJanajati=47 (30%) 3. Ensure participation of women and  1,168 awareness raising events organized for BGs, Completed excluded in consultations, orientation VWRCC and DRCC members and other programs on project approach, health and stakeholders. They were oriented on the project and

sanitation, local governance, safety its GESI elements.

measures, core labor standards, and  Out of total 46,003 participants, 18,861 (41%) were implementation of GESI action plan. women. All of them were from excluded groups: QT5. 40% women of the total participants Dalits: 9109 (19.8%); Janajatis : 6118 (13.3%); Achieved and 60% from poor and excluded other groups 30,776 (66.9%). Out of this total, 31,282 (68%) were from disadvantaged groups (DAG). 9 4. Provide supplementary community  238 events of CIs operation and maintenance Completed infrastructure operation and maintenance training organized for 2,142 participants, of whom training (where applies) 922 ( 43%) were women; Of the 922 women, 117

QT6. Women are at least 40% of those (13%) were Dalits, and 293 (32%) were Janajati. Achieved trained

5. Identify and conduct special  Of 29,863 BG members , a total of 4,806 trained Completed livelihood enhancement training in livelihood skills—1,978 (41%) women; programs as per the interest, demand participants from poor and excluded groups—

and scope for marketing. 2,923 (61%) DAG; 645 (13%) Dalit; 1,238 (26%) Achieved QT7 .BG members are given priority in Janajati targeted skills training of which at least - 3,159 completed trainings in different trades— 40% are women and 60% poor and 1,054 (33%) women; 2,105 (67%) men; 1840 excluded as per the TIP.

6 The original target was 40% women representation. This was reduced to 35% during the MTR mission, conducted on 10 November 2014 to 5 January 2015 (MTR Aide Memoire dated 16 January 2015). 7 Project used the building group formation guidelines, which has a provision for a woman to be a leader or co-leader. 8 Except in Baitadi District. 9 In DRILP-AF, DAG refers to economically poor households with less than US$1 a day income or food sufficient for less than 6 months.

38 Appendix 6

Status at Activities Achievements Project Completion  Priority given to women, poorest (58%) DAG; 414 (13%) Dalit; and 905 (29%) households and individuals from DAG Janajati (QT7 corresponds with DMF Output - 1,647 attended training in microfinance—924 1c. 3,000beneficiaries trained in (56%) women; 723 (44%) men; 1,083 (66%) livelihood-related skills, of which at least DAG; 231 (14%) Dalit; 333 (20%) Janajati. 40% are women and 60% are the poor and excluded.) 10 6. Group mobilization of BGs through  Village Development Society, and LNGO, Completed social mobilization including savings and implemented social mobilization activities for credit, record keeping, institutional microfinance access, savings and credit, institutional

capacity building and access to micro capacity building for BGs in road sub project area of

11 finance in 9 pilot districts. the 9 pilot project districts.  Relevant social mobilization strategy,  Relevant social mobilization strategy, guidelines and guideline and relevant capacity training manual were developed and implemented building training manuals, tools  Out of total 2,884 participants of microfinance and developed. savings and credit training and other activities - Achieved QT8 . 40% women and 60% poor and 1,918 ( 66.5% ) were women and 966 (33.4%) were excluded accessed opportunities to micro- men. All ( 100% ) were from poor and excluded finance and saving and credit training groups.

7. Provide enabling work environment  Gender friendly working environment was set up - Partly for women and marginalized by providing such as health and safety at work place, provision of Achieved child care facilities, separate toilets for insurance, temporary separate toilet construction in

women and men, health and safety, and sub-projects for women and men.

insurance at the work place.  There was no need to set up child care centers  At least one child care center is in construction sites because all labors involved in operating in each project district road construction were local people who lived during the working seaso n (as per the nearby and they preferred to leave their children at need) their homes to be cared by family/relatives at their homes than to bring at the construction sites. 8. Apply the policy of employing local  43% BG women were in key position. Out of total Completed people in BGs with preference to affected 1,296 BGs, 557 BG's leader or co-leader are women families, Dalits, Indigenous People and  The policy of employing local people in BG with

excluded, and the policy of equal pay for preference for affected families, Dalit, IPs and

work of equal value in employment for excluded was fully applied. rural roads.  Equal payment for work of equal value was  Women and men BG members are practiced in all BGs. This amount varied from NPR provided equal opportunity as 250 to 600 per day depending upon nature of work. supervisors and laborers Wage payment was made based on volume of work

 Receive equal payment for work of for both men and women on equal amount.

equal value and core labor standards  Of total 150,329 persons engaged in BGs and Achieved enforced in all contracts contract packages, 36% were women; 13.5% were QT9. Women provide35% of the Dalits; 8% were Janajati. employment generated 12

10 The original DMF Output 1c target was 6,000 beneficiaries. This was reduced to 3,000 during the MTR mission (MTRAide Memoire dated 16 January 2015). 11 Solukhumbu, Okhaldhunga, Gorkha, Mugu, Jumla, Jajarkot, Bajhang, Bajura and Baitadi 12 The original target was 40%. This was reduced to 35% during the MTR mission (MTR Aide Memoire dated 16 January 2015).

Appendix 6 39

Status at Activities Achievements Project Completion DMF Gender Target that is not in the GESI AP 13 but included in output 1 of DMF. QT10. DMF Output 1e. Access to 113 BGs/saving groups were formed in nine pilot Achieved microfinance by building groups and districts with 2,884 total members. Out of them, 1918 savings and credits piloted in nine districts (67%) were women members, 1107 (38%) were improved—40% of beneficiaries are members from excluded and poor groups. The women and 60% are the poor and members of 113 BGs access to microfinance was excluded improved through various orientations, workshops, trainings and exposure visits. Total saving by 2884 members was 2,094,970 of which 2,079,720 (99%) was taken as loan by 231 members to invest in productive sector. Also 702 members (women–393 [56%] and men-309[44%]) of 65 BGs were linked with four micro finance institutions. Output 2: Capacity Building and Decentralized Local Governance Enhanced 9. Identification and selection of  Identification, selection and survey with participatory Completed subprojects (including supplementary approach was practiced in all DRP approved CIs in infrastructure) are carried out in a sub-projects areas. Total 242 CIs were selected

participatory manner based on community through participatory process and construction of

demand. 238 CIs completed, 3 were cancelled, 1was Achieved QT11.Out of the total consulted, 50% are removed from CI list. women and proportionate number of  463 consultation meetings on CIs identification and excluded groups. demand collection were conducted in 242 identified CIs. Out of total 13,898participants, 7366 (53%) were women, and all (100%) came from excluded groups –2,543 (18.3%) Dalit; 2,460 (17.7%) Janajatiand8,895 (64%) were from other excluded groups. 10. Ensure participation of women and  18 project districts organized exposure visits with total Completed excluded from the central and district level 420 participants from DRCC, VWRCC and official staff. (DDC, DTO) in exposure visits. Out 420 participants, 116 (28%) were women; 59

QT12.Of the total participants, 20% are (14%) were Dalits and 71 (17%) were Janajati. Achieved women and proportionate number from

excluded groups. 14

(QT 12 corresponds with DMF Output

2b . BGs/VWRCCs and saving credit group member, of which at least 20% are women, participate in and learn from exposure visits in other districts of the country.) Output 3: Rural Transport Infrastructure Extended and Maintained 11. Ensure involvement of BG members  Out of total 150,328 members of BGs, employed Completed in the construction and rehabilitation of were 54,118 ( 36%) women ; and 100% were from roads. poor and excluded groups : (i) 20,294 (13.5%)

were Dalits; (ii) 27,059 (18%) were Janajati; and (iii)

QT13.Women provide 35% and poor and 102,975 (68.5%) were from other excluded groups excluded provide 60% of the employment  The project generated a total of 4,943,031 pers on- Achieved generated 15 days employment through BGs and contractor

13 The original DMF had one more performance indicator with a gender target (DMF Output 2a. 15 central and 72 district officers, of which at least 20% are women, participate in and learn from regional study tours). During the MTR mission, the target 20%women participation was dropped, making the target non-GESI related. 14 The original target specifically mentioned ‘study tour’. This was dropped during the MTR Mission (MTR Aide Memoire dated 16 January 2015). 15 The original target was 40% of employment generated provided to women. This was reduced to 35% during the MTR mission.

40 Appendix 6

Status at Activities Achievements Project Completion package in CI and sub-project construction / rehabilitations, including direct employment for the project staff. Of these employment days, 3,123,995 (63.2%) were done by men 1,819,035 (36.8%) were done by women . 12. Ensure involvement of women, poor  1,273 km district road core networks maintained. Completed and excluded in road maintenance Length persons were engaged for routine activities 16 maintenance after agreement with rural road

QT14.40% of the work done by maintenance users’ committee Achieved maintenance groups will be from women, (RRMUC). 18 Preference was given to single women, 17 poor and excluded women heads of households, and poor people. Out (QT14 corresponds with DMF Output of total 63 length persons,25 ( 40%) were women 3c. 1,200 km of rural roads fully maintained, of which 40% will be provided and 38 (60%) were from poor and excluded groups. by women, poor and excluded.) 13. Provide capacity development  One day training was provided to the selected Completed program for women and excluded on road length persons (in Activity 12) before routine road maintenance. maintenance work. 19

Achieved QT15. 40% of BG members receive  One day orientation training for all BG members--

training on routine maintenance, nursery 29,863 members; women- 11,945 (40%) and men- preparation and bio-engineering etc. 17,918 (60% ) was organized by district team. Orientation mainly focused on safety measures, management of construction tool and equipment, agreement amount and payment mode; and also covered bio-engineering and routine maintenance so that they could participate in bioengineering works when needed.

Output 4: Pr oject Management Improved 14. Adopt GESI plan and formulate output  GESI action plans for 40 road sub-projects were Completed based annual plan for implementation at prepared, approved and implemented. center and district level. 20  Output based annual plans were prepared for  Annual output based central and implementation in sub-projects whose DPR have district plans are developed, been approved and implemented. implemented and reported.

16 Original activity statement was “Ensure rural roads are fully maintained through length persons engaged from the local communities.” This was revised during the MTR Mission. 17 Original target was “Women provide 40% and poor and excluded provide 60% of the employment generated.” This was revised during the MTR mission. 18 Length persons refer to poor people who carry out routine maintenance of rural roads. 19 Length workers were trained separately because they were involved in maintenance work on a monthly basis. 20 GESI action plans with subproject specific activities were prepared in the beginning of the project. The activities of the action plans are incorporated when annual output based central and district plans are developed with budget allocation for implementation.

Appendix 6 41

Status at Activities Achievements Project Completion 15. Provide GESI orientation to  Orientations on GESI and safeguards for district Completed PCU/DDC/DTO/DPO/DRCC on GESI staff were conducted in center and during field visit, Action Plan including mainstreaming tools. and for regional and central staff of DDC/DTO/DPO  DOLIDAR / PCU / DPO / DDC / DTO / staff at regional level and central level (Total number DRCC are capacitated and equipped of participants was 279 -- 216 regional level and 63 to effectively mainstream GESI and central level; 53 (19%) women and 266 (81%) men. implementing district specific GESI plans, monitoring and reporting.

16. Ensure that all project related  Various project-related activities were undertaken in Completed activities (training, exposure visit, periodic which different groups (BG, VWRCC, DRCC, meetings, and review meetings) integrate GRC/GRSCs) participated. Of the total 31,825

GESI related issues and targets women participants, 12,454 (39%) were women and 13,113

staff and staff from excluded groups. (41%) were from excluded groups (Dalit and QT16. At least 33% women participation Janajati) Achieved in the events and proportionate representation from excluded groups. 17. Establish a monitoring system with  Monitoring system with data disaggregated by sex, Completed sex, caste, ethnicity and minority group caste, ethnicity and minority groups for approved sub- disaggregated data including poverty projects was established and operationalized. Data

data. Establish quarterly review, collected were usedfor planning, implementation and

monitoring and reporting system against monitoring and in monthly and quarterly progress indicators of GESI action plan including reports of GESI action plan. women’s participation and benefits.  Data collection methods and template were provided  Progress update of GESI plan to district team and orientation training on the use of included in project progress reports. these methods and template were given to SMs and

 Achievement on GESI disaggregated SMCs. District team collected disaggregated data for

by sex, caste, ethnicity, and minority the subprojects as per the template requirement. groups are available

QT17.Monitoring team consists of at least  Monitoring team consisted of one gender and social Achieved one gender and social development development expert and mobilized in each district two expert. or more times in a year 18. Integrate GESI measures and  Gender friendly working environment and women- Completed monitoring indicators in project operating and excluded-groups-focused programs were guidelines, sub sector strategies, integrated in the preparation, implementation and

institutional mechanisms and program monitoring of GESI action plan. This is also promoted

budget. in the National and MoFAGA's GESI policy including  Project design and monitoring the GESI policy of rural transport sector. framework, guidelines and strategies  The project operating guidelines, monitoring incorporate GESI indicators as per the framework, guidelines and strategies included GESI GESI Action Plan. Provisions as per indicators as specified in the GESI action plan. the MLD’s GESI policy and GESI policy of the rural transport sector are considered. 19. Establish a Gender Desk in DOLIDAR  Gender Desk was established in DOLIDAR. A Completed and assign Social development officers sociologist (Social Development Officer) from each in the PCU and DDC/DTO. DoLIDARwas assigned as the focal person for taking

GESI related issues in the project.

42 Appendix 6

Status at Activities Achievements Project Completion (Activity 19 corresponds with DMF Output 4d. Gender desk established in DOLIDAR.) QT18.At least 40% women and  There were 179 staffs in total in the PCU/DTO/DPO Not Achieved proportionate representation of excluded of whom 65 (36%) were women. There were 3 in PCU and consultant team (CISC, DISC, women sub engineers and 3 assistant sub engineers. junior technicians, sub overseers, However, the women were not in the officer level engineers) 21 position.  There were 37 consultants recruited (as Engineer, SMC, SE, SM and ASE) among whom 43% were women and excluded caste/ethnic groups (2 women and 14 from excluded caste/ethnic groups). QT19. At least 50% of SM are women and  Of the total 21 social mobilizers in 14 project districts, Achieved proportionate number from excluded and 12 (57%) are women and 7 (43%) are men; and 12 minority groups. (57%) are from excluded groups (Dalit=4; Janajati=8) BG = building group; BLS = baseline survey; CDC = Compensation Determination Committee; CISC = Central Implementation Support Consultants; DAG = disadvantaged group; DDC = district development committee; DISC = District Implementation Support Consultants; DOLIDAR = Department of Rural Infrastructure and Agricultural Roads; DPO = district project office; DRCC = District Road Coordination Committee; DTO = district technical office; FHH = female-headed household; GESI = gender equality and social inclusion; GRC = Grievances Redress Committee; IP = indigenous people; MLD = Ministry of Local Development; NNGO = national nongovernment organization; QT = quantitative target; PCU = project coordination unit; RMC = road maintenance committee; SCC = savings and credit cooperative; SCI = Supplementary Community Infrastructure; SFCL = Small Farmers Cooperative Limited; SM = Social Mobilization; TIP = Training Implementation Plan; VWRCC = Village Works Road Construction Committee; ZOI = zone of influence.

E. Evidence of the Project’s Gender Equality and Social Inclusion Results

9. Direct beneficiaries of the project were interviewed to assess the gender equality and social inclusion (GESI) results of the project. 22 Testimonials of the interviewed beneficiaries show that women, poor and socially excluded of the project districts benefitted in areas of economic empowerment, gender equality in human development and gender equality in decision-making and leadership. Access to rural roads built improved mobility for rural people enabling women and disadvantaged communities get connected to market centers and benefit through access to other services such as hospital, school, and banking. The road access also supported enhancing business opportunities for women, transporting farm produce easily and simultaneously decreasing travel time and transport cost. Targeted women membership in BGs and VWRCC helped build leadership skills, as some of them are found to have participated in the local level election. Also the saving and credit groups formed during project period empowered of women members through trainings, fund mobilization and access to credit improving their knowledge on micro finance.

21 QT17 merges two original targets of Activity 19 of GESI AP. The merging was done during the MTR mission. 22 Interviews were conducted during the PCR mission in April 2019.

Appendix 6 43

WOMEN’S ECONOMIC EMPOWERMENT

Increased income after vocational skills training “I worked as labor in the project’s road construction and earned aboutNPR60,000 for nearly 160 days of work. As an eldest daughter, I help my parents in their small hotel which makes about NPR10,000-15,000 a month. I am very happy that Itook 3 months skills training on Indian food cooking supported by the project. This not only helped me to gain skills but also boosted my confidence. After training I was highly motivated to work as a cook. Hence, I upgraded our hotel. I added new cuisines in menu and attracted more customers in short time. Now I lead the hotel and earn NPR 20,000-30,000 monthly. I am supporting my brother’s education with this income and also planning to continue my education to higher secondary level.”

Meena Prasai (24 years old, unmarried woman, MaiyaKhola Rural Municipality, Taplejung District) Access to road paved way for economic opportunities and mobility “I run a hotel in GuphaPokhari, a beautiful trekking route. I cook for several visitors everyday who take overnight rest in trekking route that passes through the village. The road of DRILP starts from this place and is linked to Taplejung district. This road access has increased the number tourists in the area. We used to ride on yak and ‘khacchar ’23 all day to go to hospitals in Basantpur and Dharan, the nearest town and city. But now women can go to hospital for delivery easily within few hours’ drive. We can even get vehicle on call so sick people can be rescued on time. With road access, our income has increased during tourist seasons. Also, with the road access, I am now able to use LPG stove for cooking. It has made my cooking easier and faster. Before I used wood that used to make rooms smoky and affect my health.”

Donga Sherpa (58 years old married woman from Chainpur Urban Municipality, Sankhuwasabha District) Project provided opportunity for extra income “I live with my husband, son, and in-laws. My husband teaches at nearby boarding school and I am currently studying in class XI. When Delta-Atichour road project under DRILP-AF affected the land parcel belonging to my family, the project provided opportunities for livelihood skills training for people of the affected households. I took part in beauty parlor training held for 3 months. The training was held at Dhangadi District between January and March 2014.After the completion of three-month training, I received opportunity to work as an assistant at ‘Puspanjali Beauty Parlor’, Churaha, Dhangadi for 2 months. There I practiced my skills and earned salary of NPR5000 per month. After this work, I was confident enough to open my own beauty parlor. Now I have my own parlor in the market area and it is running well. From my earning I save NPR10,000 per month and support my family.”

Puja Kumari Khadka, (19 years old marriedwoman, Kuldevmandu, Bajura District)

Gender Equality in Human Development and Decision Making Access to road paved way for economic opportunities and mobility “I took three months veterinary training provided by this project. My family encouraged me to join the training. After the certified training, I wanted to practice my skills. But the people in my village discouraged women from entering into professions associated with men, such as veterinary. It was extremely difficult for me to practice castration of domesticated animals. While livestock farming is one of the livelihood activities in the village and people badly needed animal vet, they didn’t accept me because I was a woman. I was not able to practice my work immediately after training. What I did was to work as a trainer (resource person) for other veterinary trainings conducted by different organizations in my village. I trained about 20-25 women. That strengthened my self-confidence. My persistence also led the villagers to accept me as a woman vet. I also started an agro vet shop 6 months ago and the shop is running well. The project road has helped to shorten the time to reach market and get medicine and other materials for the shop. I plan to continue my job and train women for this profession. I am already supporting my family with the shop earning.”

Khun Maya Roka (20 years old unmarried woman, Ghairung, Sahid Lakhan Rural Municipality, Gorkha District) Training provided by project helped in supporting family business and gender e quality Lal Bahadur Bhujeland and I am residents of the Neleunder the Garma – Nele- Bhugol road supported by DRILP. Our land was under the alignment of the DRILP road, so our family was resettled by the project. We received adequate compensation for the small land we owned. Besides the project supporttedus for livelihood restoration through skills training. Both of us took driving that time. Now we are working as drivers for locally operated business. We receive NPR15,000 as a basic salary and daily food allowance of NPR800. With our income, we are able to support the grocery store and teashop which are run by our wives. Also, the income has helped in paying school fee

23 Mule in Nepali language

44 Appendix 6

for our children. We both want to buy our own vehicle to improve our livelihood for which we are looking for access to finance from local banks and financial institutions.

Lal Bahadur Bhujel, (23 years old); Manoj Basnet (24 years old married man), Nele, Solukhumbu District

Gender Equality in Decision Making and Leadership

Access to road paved way for economic opportunities and mobility “I received 68-day training in tailoring from DRILP-AF. My husband is abroad. Still, his earning is not enough, and the family primarily depends on farming. It was hard to meet the needs of our two children and in-laws through traditional farming so when I heard this project was providing skills training, I persuaded my in laws to allow me to attend. With my acquired skills, I have felt empowered. Recently I borrowed a loan worth NPR10,000 from microfinance institution to start my own tailoring business. At first people from my community were reluctant to take service from me but gradually they became confident on my skill and capacity. I have already paid off loan borrowed from cooperative. During festival season, I earn NPR12,000-15,000 per month. Other time, I save about NPR7000-8000 per month after deducting my expenses. I plan to expand my business and set up a training center so that more women like me can become economically independent.”

Kamala BK, (27 years old marriedwoman, Pyarjang -1 ,Lamjung District)

The following is a general profile of the interviewed beneficiaries.

Sex Occupations (a beneficiary may have multiple occupations) Female 5 1. Livelihood skills trainer 1 Male 2 2. Construction worker 1 Others 3.Own business/livelihood (tailoring, hotel, tourism, 5 veterinary) 4. Job/work for others after training (parlour, driving) 3 Age Group Civil Status Less than 20 1 Single 2 21–40 5 Married 5 41–60 1

F. Conclusions and Lessons

10. The designing of the GESI AP based on the results of the social and poverty assessment of the 18 project districts contributed to the relevance of the project. The GESI AP implementation also strengthened the project’s outputs and outcome. The GESI objectives were aligned with Government of Nepal’s overarching goal of poverty reduction reflected in Tenth Five Year Plan (2002-2007) 24 and the Three-Year Interim Plan (2008-2010) 25 and ADB’s Strategy 2020, which incorporated gender equity among five drivers of change towards inclusive growth. 26

11. The implementation of GESI-AP was successful. The project completed all GESI AP activities and achieved 95% of quantitative targets. Project’s specific targets to ensure representation of women and excluded groups in project activities, economic empowerment through capacity building and provision of work in project generated employment strongly contributed to the project effectiveness. Significant GESI achievements of the project included (i)participation of 41% of women and 68% of poor and excluded in project related consultations; (ii)40% women members in BGs with 43% women leaders; (iii)35% women with 40% women in leadership and 100% from excluded groups in VWRCC; (iii) 43% women trained in 238 trainings

24 National Planning Commission Government of Nepal. 2002. Tenth Plan (2002-2007). Kathmandu. 25 National Planning Commission Government of Nepal. (2007). Three Year Interim Plan (2007/08- 2009/10). Kathmandu. 26 ADB. 2008. Strategy 2020: The Long-term Strategic Framework of the Asian Development Bank 2008–2020 . Manila.

Appendix 6 45 for CIs operation and maintenance; (iv)41% women and 61% poor and excluded in trainings for livelihood skills and microfinance; and (v)36% of women and 100% poor and excluded from BG members employed in project generated works. The 113 BGs/saving groups formed in nine pilot districts included 1,918(67%) women whose access to microfinance was improved. Also, 702 members (women–393 [56%] and men-309[44%])of 65 BGs were linked with four micro finance institutions.

12. Challenges and lessons : The lone unachieved target of the GESI AP was the 40% women and proportionate representation of excluded in PCU and consultant team (CISC, DISC, junior technicians, sub overseers, engineers). The major reason was the lack of women engineers and officers in DOLIDAR during project implementation, which made the target unachievable. Another challenge was the low participation of women (19% in GESI AP Activity 15) in the project’s institutional development and project management activities. Moreover, while BG and savings groups were formed and access to microfinance was improved through different interventions, there was slow growth in savings due to difficulty in developing saving habit. The project was also less effective in linking BG and savings groups to microfinance institutions meaningfully mainly due to the project’s short timeline. Also, despite ensuring the participation of women and excluded groups in all committees, their meaningful participation in decision making structures still needs further strengthening. These challenges accentuate the need for (i) thorough assessment of contextual reality during project preparation with baseline data as basis for targets, (ii) assigning adequate time for project activities such as micro finance facilitation, and (iii) designing more and effective interventions to ensure meaningful participation of women and excluded groups.

46 Appendix 7

ACHIEVEMENT AND PERFORMANCE ASSESSMENT OF SAFEGUARDS

I. Social Safeguards

A. Introduction

1. Both Decentralized Rural Infrastructure and Livelihood Project (DRILP) and Decentralized Rural Infrastructure and Livelihood Project- Additional Financing (DRILP-AF) were classified as category B projects for involuntary resettlement and indigenous people safeguard. 1 A resettlement framework and an indigenous people planning framework (IPPF) was prepared to ensure compliance with ADB's safeguard policy statement 2009 (SPS). Resettlement framework was followed to screen, assess and plan land acquisition and resettlement aspects, and designing mitigation measures. Similarly, IPPF was followed to screen and assess impact on indigenous people and designing mitigation and enhancement measures. The impact assessment was carefully done during screening of each subproject and strictly followed subproject selection criteria to avoid subprojects with significant involuntary resettlement impact. It was ensured that none of subprojects resulted significant involuntary resettlement impact either by loss of 10% or more of productive assets, or physical displacement or both. The involuntary resettlement category for three sample subprojects studied at appraisal and completion was remain same as “B”. 37 subprojects categorization was done at screening and continue to be same at completion.

2. Thirty subprojects were categorized as category “B” for involuntary resettlement 30 short resettlement plans were prepared. A total of 30 short resettlement plans and 4 due diligence report (DDR) were prepared and implemented under original project for 34 subprojects. None of subproject had IR significant impact though the number of affected household and population is high due to 40 linear subprojects. Similarly, the number of affected structures is also reported quite high but the number of persons experiencing physical displacement and requiring relocation is less within threshold of less than 200 affected person experiencing 10% or more loss of productive assets plus requiring physical displacement. Four subprojects were categorized as category “C” and four due diligence report (DDR) were prepared. Under additional financing, total 40 road subproject were undertaken of which 25 were categorized as category “B” for involuntary resettlement and 25 resettlement plans were prepared for new subprojects selected in additional financing. 15 Subprojects were carried over from DRILP and resettlement due diligence report were prepared to assess outstanding issues after implementation of resettlement plan prepared in DRILP. The plans were approved and implemented prior to contact award. The central implementation support consultant (CISC) prepared and submitted resettlement plan implementation verification report and recommended for contract award. At appraisal the impact was categorization was assessed based on assessment of 3 sample subproject, the level of impact of sample subproject was same as appraisal. For the remaining subprojects the IR impact was assessed after detailed design of the subproject and the impact was actual and implement.

3. Of the 40 road subprojects, 34 were category “C” and 6 were category “B” for indigenous people. The indigenous people living in the project area were consulted throughout the project. Indigenous people plan (IPP) were prepared and implemented for category “B” subprojects. The IPP ensured participation and representation of indigenous people in the organization formed under the project. The IPPs were prepared in consultation with indigenous people living in zone of influence of the subprojects. Th activities included in the IPP were prioritized and selected by

1 Involuntary resettlement impact is considered significant when 200 or more people experiences major impact. “Major impact” involves (i) physically displacing people from housing; or (ii) causing people to lose 10% or more of their productive, income-generating assets.

Appendix 7 47 the indigenous people. The implementation arrangement was formulated based indigenous people preference and practices.

B. Scope of Land Acquisition and Resettlement

4. Inventory of loss followed by cadastral survey was undertaken to determine the assets to be affected due to implementation of road subprojects. A census survey of affected household followed by socio-economic survey was done to determine the impact and define restoration measures to be undertaken by the project. A total of 5,369 households, comprising 19,661 persons were affected by losing 221.15 ha land due to the road subprojects. Though the number of affected household and persons is high a household lost about 0.04 ha land in average and most of them lost less than 10% of total holding. Hence, the project category assessed at appraisal remains same as category “B” at completion.

5. The project had provision of voluntary donation of land from direct project beneficiaries. The voluntary donation was accepted only from eligible affected persons who conform the donation criteria. No donation was accepted from affected persons falling below poverty level and losing land more than 10% of total holding. The project had given a choice of compensation payment or voluntary donation following voluntary donation criteria. Majority of the affected persons chosen compensation payment. In DRILP almost all project has applied voluntary donation but in additional financing out of 40 road subproject the donation was applied only for 5 road subprojects. In 35 subprojects affected persons opted for compensation. Each voluntary donation paper signed by affected person was verified by independent third party to ensure there was no coercion and social pressure for voluntary donation. The project had established grievance redress mechanism to hear and address grievances. All grievances were settled and there were no outstanding issues in the project. Table below provides details on lost and compensation amount.

S.N. Type of Impacts Unit Quantity Total compensation cost (NRs) 1. Land Household 5,369 283,101,373.46

2. private/structure/sheds Number 409 54,425,323.66

3. public structure Number 79 17,323,243.17

4. Loss of Trees Number 35,861 2,406,730.16

5. Loss of crops Hectare 39.06 9,255,995.8

Source: Semiannual monitoring report, 2017

6. A total of 5,369 households, comprising 19,661 persons were affected by losing 221.15 ha land due to the road subprojects. Though the number of affected household and persons is high a household lost about 0.04 ha land in average and most of them lost less than 10% of total holding. The overall progress in compensation payment for loss of land, structures, trees, and crops (NRs220.65 million versus NRs272.36 million) and deed transfer (3,618 HHs versus 5,369 HHs) was 81% and 67% respectively. The mortgage of property, legal complications due to death of official owners, lack of land registration certificate and number of absentees were major obstacles faced to complete compensation payment and deed transfer. The outstanding compensation payment has been deposited in a compensation determination committee account to ensure affected person receives compensation once above-mentioned problem is solved. The

48 Appendix 7

Department of Local Infrastructure in coordination with municipalities will monitor the progress at post project context.

7. The government paid $2.5 million in land acquisition and compensation compared with estimated $0.65 million for land acquisition and resettlement at appraisal. The project had provision of voluntary donation of land from direct project beneficiaries. At appraisal it was anticipated that most of the land will be received through voluntary donation and land acquisition cost estimated accordingly. The project had given a choice to affected person to choose compensation or voluntary donation following voluntary donation criteria. Majority of the affected persons chosen compensation payment, which caused significant increase in resettlement cost at completion. The project had established grievance redress mechanism to hear and address grievances. All grievances were settled and there were no outstanding issues in the project.

8. The objective of resettlement plan was largely achieved with restoration of livelihood and income sources of affected persons. The affected persons got preference in job created by the project. A total of 720 affected person completed skill training against resettlement plan target 421 and passed national skill test board level 1 (NSTB 1). The skill training found effective to restore sources of income.

C. Grievance Redress Mechanism

9. The project formed Grievance Redress Committee (GRC) at district level and Grievance Redress Sub-Committee (GRSC) at village development committee level in all 18 districts. Each committee received complaints of affected persons (AP) and facilitated for their resolution. Majority of grievances addressed within stipulated time from in GRM and some cases took longer than expected. SAOD and NRM organized grievance handling training in coordination with ADB’s office of special project facilitator. Each GRCs maintained grievance registry and records later part of the implementation. The key issues related to grievances are missing information in cadastral survey, alignment change and error in cadastral survey, structures at risk due to landslides, disturbance in agricultural lands due to soil disposal, dissatisfaction over land rate and valuation of affected assets. All grievances received were resolved and no outstanding issues at completion.

D. Information Disclosure, Consultation, and Participation

10. The DPO conducted consultation meetings, information disclosure, awareness program in compliance with resettlement framework requirements. The public consultation and information dissemination/campaign was carried-out in each Village Development Committee (VDC) to disseminate information about road sub-project to the affected people and local communities in zone of influence (ZOI) of the sub-project. The APs and other in ZOI were provided relevant information in all stages of project cycle through posters and pamphlets, verbal commination. A copy of RP was placed at each VDC office and summary of RP in Nepali language was made available to APs. District Technical Office PCU supported by CISC posted all resettlement plan and updated versions into EA’s website and ADB posted in ADB website for public disclosure.

E. Monitoring and Evaluation

11. Resettlement plan implementation progress was monitored by central and district level team of government staff and consultant. The social mobilization coordinators reported monthly progress on resettlement plan implementation to the District Project Office (DPO). The DPO reviewed the progress status in safeguard desk and submitted the report to PCU and CISC in a

Appendix 7 49 monthly basis. The PCU and CISC compile information, prepare quarterly progress report and submit to ADB. The CISC prepared resettlement plan implementation verification report prior to start of construction. After resettlement verification report ADB has permitted DOLIDAR and DDC to sign the contract with the building groups and contractors. The PCU with support of CISC prepared and submitted semi-annual social safeguard monitoring report. The monitoring reports included detailed progress on resettlement plan implementation, grievance record and resolution status. The semi-annual report also evaluated resettlement and compensation process to ascertain that the procedure prescribed in resettlement framework were followed and assessed whether AP’s economic status were restored prior to the project implementation. The CISC conducted regular field visits to support district team and monitor resettlement implementation and facilitated to address grievances lodged by APs. EA prepared semi-annual monitoring report and submitted to ADB for review and record. The semiannual monitoring reports were submitted and disclosed in ADB website as required.

F. Outstanding activities and provisions agreed to complete the activities

12. In DRILP, the overall implementation of resettlement plan, particularly compensation payment and deed transfer were sluggish with only 66% of compensation paid and 28% deed transfer completed up to project period. An exit plan for each subproject was prepared and the district continued with compensation payment and deed transfer and implemented during additional financing. In DRILIP-AF, the overall progress in compensation payment (Rs. 220.65 million versus 272.36 million) and deed transfer (3,618 HHs versus 5,369 HHs) was 81% and 67% respectively. The mortgage of property, legal complications due to death of official owners, lack of land registration certificate and number of absentees were major obstacles faced to complete compensation payment and deed transfer. The compensation has been deposited in CDC account to ensure affected person can receive compensation once issue is resolved. The DOLIDAR (now DOLI) committed with PCR mission to follow up monitor for compensation payment and will ensure fund will be available. The DOLI management ensured the mission that the project does not result in any compliance or reputational risk for the borrower and ADB.

G. IPP implementation status

13. The IPP had planned to enhance livelihood strategy of indigenous people living in zone of influence of the subproject. In consultation with indigenous people the IPP focused on skill generation training, awareness on health and hygiene, construction of community infrastructure which would help production system and household activities. The IP community provided water supply and irrigation scheme, fishpond to enhance their existing livelihood practice. IP female were provided leadership, maternity health and sanitation training, and provided some skill for marketing of goods the IP community produced. A total of 825 indigenous people attended life sill training provided by the project in different trade majority of them were participated in poultry, animal husbandry, off season vegetable farming. There was mandatory provision of representation of IP community in committees formed under the project. The project formed 84 Village works and road construction committees with 1,184 members. Out of total members, 20.2% were Janajati (indigenous people) of which 70% were male and 30% were female. After the training and other initiatives, the livelihood and economic status of IP have been improved and it can be stated that the objective of IPP has been met.

H. Performance and evaluation in relation to social safeguards

14. Overall performance on social safeguard is rated satisfactory. Detailed assessment is in following paragraphs:

50 Appendix 7

15. Relevance: Preparation, implementation and achievements there-off of the resettlement plan is relevant and justified in terms of its potentials to address the need of the APs, consistency with government safeguard policies, working approaches, strategies and models.

16. Effectiveness: Mechanism for consultation with, participation of and disclosure to APs and beneficiaries complemented by institutional arrangement for monitoring the implementation of resettlement plan engaging EA, PCU, CISC, etc. implies overall safeguard strategies for resettlement to be effective. The timely safeguard impact assessment, planning and compensation payment completed to achieve project output and outcome. So, safeguard is rated as effective.

17. Efficiency: Involvement of DTO and DPO along with DISC/individual consultant on resettlement framework preparation and implementation, and institutional mechanism such as District Level Resettlement Coordination (DLRC) mechanism, Village Works and Roads Construction Committee (VWRCC), Grievance Redress Sub-Committee (GRSC), District Grievance Redress Committee (DGRC), District Level Resettlement Coordination Committee (DLRCC) was efficient to ensure timely resettlement plan implementation and grievance redressal. Safeguard desk headed by DDC planning officer established in all 18 project districts was effective to establish coordination of multiciliary team and facilitated the resolution of design and implementation issues of subproject related to social safeguards. The role of institutions played to increase process efficiency of the project.

I. EA’s performance in relation to social safeguard

18. EA had owned, prepared and implemented resettlement plan for each planned road subproject mobilizing its district team with support from CISC. EA ensured that resettlement plan be reviewed by PCU, approved by CDC and submitted to ADB for no-objection. EA created required institutional set-up for all the road sub-project and ensured that sufficient budget is allocated for resettlement plan preparation. The government paid $2.5 million in land acquisition and compensation compared with estimated $0.65 million for land acquisition and resettlement at appraisal. At appraisal it was anticipated that most of the land will be received through voluntary donation and land acquisition cost estimated accordingly.

J. Some testimonials of restoration of income after life skill training

1. Example from Bajhang (Mobile phone repair trade): Dipendra Bhadur Sayer, the resident of Dangaji-8, Bajhang district, is the son of Man Bahadur Sayer and Naru Devi Sayer. He is father of one son and one daughter. He received Mobile repairing training, conducted by the project from B.S 2071/9/29 to B.S 2071/12/7. After receiving the training, he returned to the village and opened a mobile sales and repair shop. He invested Rs. 10,000 at starting. He sales mobile chargers, earphone, batteries, master charge, hot gun, DC voltage, multimeter, iron, PCB stand, iron stand, mike speaker, soldering wire/paste and battery connector from his shop. Mr. Sayer also provide mobile repairing service at his village and his costumers are satisfied with the service of Mr. Sayer. The earning from the sales and repair services his can manage his family expenditure and some savings. He is planning to expand his shop by investing savings from the income.

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2. Assistant Beautician trade: Puja Kumari Khadka (Khati), 19 was born in 2053 in Bajura. After getting married, she is permanently dwelling in Kuldevmandu VDC of Sahubada with her husband, son and other in-laws. Her husband teaches at nearby boarding school and side by side she (Puja) is studying in class XI. During that time too, she harbored interest to do something new, but she was clueless what to do. Meanwhile, implementation of Delta-Aatichour Road Sub project was started under the support of DRILP-AF. During that time, land parcels belonging to her family also affected and they are among the APs donating lands. She got opportunity to participate in three months beauty parlor training which was held at Dhangadi (Magh 2071-Chaitra 2071). After graduation from training, she started to work as an assistant at ‘Puspanjali Beauty Parlor’, Churaha, Dhangadi. She worked there for two months with monthly salary of NRs5,000 and enhanced her skill. After this work, she got confidence in her skill. She opened a beauty parlor in Delta Bazaar, Kuldevmandav VDC. She is serving the needs of local people with this new initiative. Besides, she saves NRs10,000 per month. According to her, the family life is better than before.

3. Tailoring trade: Mr. Ganesh Nagari was born in BS 2046/1/5. He used to live in a joint family with 14 members. Agriculture and daily wages were the main income source of his family. They were struggling to feed family from the income. Because of poor economic condition, he went to Malaysia. His income wasn't good there and, he was jailed and sent back to Nepal. After returning to Nepal, he joined the Maoist party worded as Janamukti sena in BS.2069 and took the driving training inside the camp. During integration process of Janamukti sena into Nepal Army, he was identified as a disqualified combatant and he returned to home. One day, he saw the notice for training published by DRILP- AF. He applied for tailoring training and was selected. He completed the 3 months tailoring training conducted by DRILP-AF in Dhangadhi. From saving of daily subsistence allowance provided by the project, he bought two machines, one interlock was provided by the project to facilitate the business kick off. He started tailoring business paying NRs500 per month room rent at Kotila. His earning is NRs15,000 per month. Now he has 4 machines, one interlock and other necessary materials. He is happy and heartily thanks to DRILP-AF project for giving such opportunity.

4. Indian cook trade: There is a beautiful bamboo cottage offering snacks near to bridge over Tamakoshi river. Since Magh, 2072, Sukre Majhi has opened a khajaghar (hotel offering snacks) at Tamakoshi bazaar, who was worker of a hotel in Manthali. Being a member of affected family of Gaikhura-Bhatauli Road in Ramechhap district, he got an opportunity to take part in three months training on Indian cook trade conducted by the Project. After training, he returned his home. He started to run a hotel on rent at Tamakoshi Bazaar taking a loan of NRs50,000 from a local cooperative. Rate of his snack package ranges from NRs500 to 2500. He became owner of a shop with improved skill. He always greets his customers with his beautiful smile and good lunch. He is saving average NRs20,000 per month. He shares that training gave him happiness chasing bitter and painful past. He is confident that his business will help him earn more to pay back the loans and increase savings.

52 Appendix 7

Table 2: List of affected person with severity of impact by subproject Persons HH losing HH requiring Person Total losing Total llosing Total 10% or physical affected due >10% and S. Name of the affected 10% or structur Name of Subprojects more of displacement to physical physical No. District household more of e productiv due to loss of displaceme displaceme s productive affected e assets structure nt nt assets

401 34 170 9 4 20 190 1 Baglung -Kusmisera Baglung 53 - - 10 - - - 2 Baglung-Ghodabande 119 3 21 - - - 21 3 Shreebhabar -Kotila-Malladehi-Hat Baitadi 128 - - 9 4 21 21 4 Salena-Melauli 132 2 8 47 3 33 41 5 Bhopur-Rupatola Bajhang 125 14 102 17 3 22 123 6 Dangaji-Mahendrajhar Barbis -Aatichaur-Delta Bazaar- 94 9 69 6 - - 69 7 Thamlek Bajura 55 ------8 Martadi- Majhigaun 170 - - 33 20 140 140 9 Bitule-Latinath-Paribagar Darchula 89 - - 10 1 5 5 10 Khalanga-Dethala 64 - - 6 4 29 29 Dunai-Supani Dolpa 137 - - 6 4 29 29 12 Dunai- Lasicape-Dho 799 2 13 61 25 160 173 13 Gorkha - Koyabhanjyang-Aarughat Khabdibhanjyang Bunkot-Namjung- Gorkha 245 35 152 18 8 35 187 14 Ghairung Batase 137 2 12 13 11 66 78 15 Nareshwir - Padin Chautara 53 6 45 - - - 45 16 Hilsa- Simikot - Kharpu Humla 34 1 7 3 1 5 12 17 Sallikhola - Tumkot Thalaha - Batule - Aulatari/Seto Jajarkot 121 12 88 10 3 22 110 18 Pahiro 53 - - 1 - - - Thinke - Uthichautara Jumla 200 - - 20 10 47 47 19 Kudari- Tamti - Topla-Imilcha Kalikot 57 6 50 2 - - 50 20 Hulma-Seri-Sakh-Chhelahanna 525 1 4 5 4 20 24 21 Sundabazaar-Kuncha-Duipiple Lamjung 282 23 104 30 10 45 149 22 Tarkughat-Pyarjung Bhanjyang 44 - - 4 - - Gamgadi-Rara Mugu 55 - - 2 - - - 23 Kalkandelek-Khamale-Kawa 143 ------24 Beni-Darbang Myagdi 39 2 14 10 1 6 21 25 Beni-Pakhapani Rummjatar- Khartekhol-Serna-Sewa 227 30 182 22 1 7 189 26 kendra Okhaldhunga 32 - - 8 1 8 8 27 Okhaldhunga-Jantardhap Ramechhap 227 3 21 27 - - 21 28 Gaikhura- Pakarbas- Galba 120 15 98 7 - - 98 29 Garma-Nele-Budhidanda Solukhumbu 60 7 46 - 46 30 Lekkharka-Maidel-Mukli 137 19 118 4 - - 118 31 Phaplu-Jantardhap 84 2 10 6 - - 10 32 Gupha Pokhari - Dhungesangu Taplejung 128 3 19 3 - 19 33 Sanghu - Change 5,369 231 1,352 409 118 720 2,072 Total

Appendix 7 53

II. Environmental Safeguards

1. Decentralized Rural Infrastructure and Livelihood Project (DRILP) and additional financing (DRILP-AF) adopted labor-based equipment supported (LBES) construction technique to protect environmental integrity and slope stability along the road alignment and involve local beneficiaries for employment and transfer road construction skill at local level. The project was classified as environment category "B" in accordance with the ADB's safeguard policy. 2 The project also complied with the environmental provisions of Nepal. The project prepared an environmental assessment and review framework (EARF) based on which Initial Environmental Examination (IEE) for each sub-project (23 in DRILP and 17 in DRILP-AF) was prepared along with environmental management plan (EMP). Prior approval of IEE from ADB and the government was taken. The road design considered factors to address the impacts from climate change. Copy of the environmental management plan (EMP) was attached with the bidding and contract agreement/memorandum of understanding. Budget for mitigation measures were included in the project cost and BOQ.

2. The project had established an institutional arrangement for implementing safeguards mechanism. The EMPs were implemented by the subproject BGs and/or contractors, monitored by the district project office under frequent monitoring by the DPO engineer and environment specialist from CISC. A “safeguard desk” (SD) was established in each of the 18 DRILP-AF districts comprising of environmental and social experts chaired by a district engineer. Safeguards team of CISC coordinated with the SD, although efficiency of the desk in safeguard operation was partial. This was evident from a total of 46 SD meetings conducted ranging from 1 to 17 meetings per district. A grievance redress committee was established in each project district. A total of 143 grievances were addressed, mostly related to loss of trees and crops due to spoil disposal, compensatory plantation, and coordination with forest user groups. The project organized 19 half day environmental awareness training to field staff, RBGs and contractors in 9 districts with 1,997 participants. In general, although quality of IEE improved overtime, quality of EMP implementation remained comparatively weak, mainly due to absence of responsible EMP compliance monitoring staff in the district, lack of EMP awareness among the field staff and contractor, and insufficient environment monitoring staff in CISC. Environmental orientation was not provided to all RBG Naike (leader) as per the project requirement.

3. A total of 73,837 trees (12,434 from national forest and 61,403 private) required to be cleared in 33 roads with compensatory plantation of 432,208 seedlings at a ratio of 1:25 in national forest and 1:1 in private land. Of this, 46.3% of the target could be achieved for planation in national forest and 15% in private land in 16 subprojects in 12 districts.

4. The key areas of non-compliances challenging stability and sustainability of the roads were the downhill tipping of spoil without toe-wall, insufficient or lack of drainage management, and negligence over implementing vegetative methods of slope stabilization (bio-engineering)— although the cost was allocated in DDR. Nevertheless, overall slope stability in the road alignments were found to be comparatively stable due to labor-intensive work, and technically engineered slope cutting and road grade design. The labor camps were either in rented building or mobile tents having acceptable level of basic facilities. While potable water and LPG gas for cooking were provided in the rented buildings, the laborers resorted to the use of water from local spring, and firewood for cooking and practiced open defecation. The gaps were because of cultural practice in the project area and low compliance by the contractor. Personal protection equipment (PPE) were distributed to the workers, although insufficient and their use was partial.

2 Environment Policy 2002 for DRILP; and Safeguard Policy Statement 2009 for DRILP-AF

54 Appendix 7

Minimal cases of hunting, social conflict with locals, crime & gambling, and fatal injuries were reported. Despite of all the limitations, no major cases of irreversible environmental impact was noted in the project, making it qualified for “satisfactory” ranking in environmental safeguards performance rating.

5. Effectiveness: Environment and social safeguard measures were implemented throughout the project initiating changes in behavioral practices detrimental to environment by raising awareness. The completed roads have contributed significantly to the remote communities to have access to social services such as education, health care and easy access to nutrition and supplies. Easy access will attract higher frequency of visit and longer stay by government staff from agriculture, health, forest, education and other development offices. This will indirectly benefit long-term environmental sustainability through improved infrastructure, housing and sanitation; community awareness to avoid open defecation; reduction in carbon emission by planting trees and saving trees by using LPG accessible due to road; increased income through higher productivity by using improved seed and fertilizer, and easy market access; and savings in medical expenses through reduced indoor air pollution.

6. Sustainability: The project design of labor-based approach of road construction was found to incur least damage to environmental setting and disturbance on slope-stability due to application of less intrusive manual labor, restriction on blasting, use of less damaging handheld tool (such as hammer, chisel, spade and wheel barrow), and longer time taken for construction facilitating stabilization through natural forces (rainfall). Skills earned by the locals is found to be useful in the future road maintenance—ensuring sustainable operation of the infrastructure. Introduction of vegetative method of slope stabilization, although in a limited scale, have made the locals aware of the long-term benefits of bioengineering and implementation process. Benefits could be achieved by linking bioengineering with fruit and fodder for community use. The achieved environmental benefits from design and implementation process of the infrastructures, and all project roads being operational are sufficient indication of the project being likely to attain the goal of project sustainability.

7. Lessons. The civil works were implemented through contractors and building groups. In case of building groups, the Environment, Health and Safety (EHS) equipment were procured and provided by the DDC and found enough, however EHS equipment sufficiency is less in contractors’ sections, which was due to absence of clear BOQ item in the bidding document. So, in future the EHS item shall be included in BOQ as recommended in the EMP.

8. Recommendations with Rationale:  Keep provisions of EMP cost in the bidding document as BOQ item for quantifiable and as provisional sum for non-quantifiable activity. The provision will make the contractor aware of environmental responsibilities and assure payment for the work;  Keep sufficient inputs of environmental safeguards specialist and field monitors in the consultant’s team to ensure implementation of EMP compliance requirements, standard monitoring, and reporting.  Provide safeguard orientation to the employer, consultant and contractor’s staff before initiation of construction activity;  Contractor should submit a construction EMP (CEMP) accepting percentage of deduction in interim bills for non-compliance and seek employer’s approval before field mobilization. CEMP shall confirm spoil disposal sites, waste management, occupational health and safety standards, tree cutting and compensatory plantation plan, and mobilize an EMP assurance

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officer, among others. The contractor will have ownership of CEMP and employer will have a tool to enforce EMP compliance;  Tree cutting clearance from Cabinet shall be a task prior to awarding a contract;  Support the local bodies in establishing a “bio-engineering unit” and nursery, and train them in bio-engineering so that the infrastructure (mostly rural roads construction by using heavy equipment and seriously damaging environmental and geological setting of the fragile hill slopes) could be avoided and better slope protection using vegetative method could be promoted for sustainability of the roads.

56 Appendix 8

STATUS OF COMPLIANCE WITH LOAN COVENANTS

Reference in Covenants Status of Compliance S. No. Loan Agreement Particular Covenants 1. (a) The Beneficiary shall (i) maintain, or cause to be Article IV Partly Complied. maintained, separate accounts for the Project, including Section 4.02 separate accounts for the Loan and the Grant; (ii) have such Separate project accounts accounts and related financial statements audited annually, maintained by the project. in accordance with appropriate auditing standards Annual audit conducted and consistently applied, by independent auditors whose audited project financial qualifications, experience and terms of reference are statement regularly submitted acceptable to ADB; (iii) furnish to ADB, as soon as available to ADB. However, the APFS but in any event not later than 9 months after the end of each of FY2016/17 is yet to receive related fiscal year, certified copies of such audited accounts by ADB. The EA planned to and financial statements and the report of the auditors submit APFS with inclusion of relating thereto (including the auditors' opinion on the use of final disbursement data, but the Loan proceeds and the Grant proceeds and compliance the final disbursement data is with the financial covenants of this Financing Agreement as yet to receive due to delay in well as on the use of the procedures for imprest acc ount and all loan products financial statement of expenditures), all in the English language; and closure. The OFID provided (iv) furnish to ADB such other information concerning such final disbursement data only accounts and financial statements and the audit thereof as on 24 June 2019. ADB shall from time to time reasonably request. (b) The Beneficiary shall enable ADB, upon ADB's request, to discuss the Beneficiary's financial statements for the Project and its financial affairs related to the Project from time to time with the auditors appointed by the Beneficiary pursuant to subsection (a) hereinabove, and shall authorize and require any representative of such auditors to participate in any such discussions requested by ADB, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Beneficiary unless the Beneficiary shall otherwise agree. 2. The Beneficiary shall enable ADB's representatives to Article IV Complied. inspect the Project, the Goods and Works, and any relevant Section 4.03 The beneficiaries allowed to records and documents. inspect ADB representative as and when needed. It was regularly checked during review mission. Financial 1. Percentages of ADB Financing: Except as ADB may Schedule 3, Complied. otherwise agree, the items of expenditure shall be para. 2 The percentage financing financed out of the proceeds of the Loan and the Grant on was followed as per financing the basis of the percentages set forth in Table 1 and agreement table 1 and 2 for Table 2, respectively. loan and grant. 2. Reallocation: Schedule 3, Complied. Notwithstanding the allocation of the Loan proceeds and para. 4 The loan and grant the Grant proceeds and the withdrawal percentages set reallocation were done with forth in Table 1 and Table 2, respectively, approval of land grant (a) if the amount of the Loan or the Grant allocated to any reallocation memo. Final Category appears to be insufficient to finance all agreed reallocation was done at expenditures in that Category, ADB may, by consultation closing of the loan. with the Beneficiary, (i) reallocate to such Category, to the extent required to meet the estimated shortfall, amounts of the Loan or the Grant which have been allocated to another Category but, in the opinion of ADB, are not needed to meet other expenditures, and (ii) if such reallocation cannot fully meet the estimated shortfall, reduce the withdrawal percentage applicable to such expenditures in order that further withdrawals under such

Appendix 8 57

Reference in Covenants Status of Compliance S. No. Loan Agreement Category may continue until all expenditures thereunder shall have been made; and

(b) if the amount of the Loan or the Grant then allocated to any Category appears to exceed all agreed expenditures in that Category, ADB may, by consultation Complied. with the Beneficiary, reallocate such excess amount to any other Category. 3. Disbursement Procedures: Schedule 3, Except as ADB may otherwise agree, the proceeds of the para. 5 Complied. Loan and the Grant shall be disbursed in accordance with While disbursement of loan the Loan Disbursement Handbook. disbursement hand book was followed. 4. Imprest Account; Statement of Expenditures: Schedule 3, Complied. (a) Except as ADB may otherwise agree, the Beneficiary para. 6 Two impreset account were shall establish immediately after the Effective Date, a opened and used for ADB loan Loan Imprest Account at Nepal Rastra Bank. The Loan and grant. The imprest Imprest Account shall be established, managed, advance was used only for replenished and liquidated in accordance with the Loan project purpose. Disbursement Handbook and detailed arrangements agreed upon between the Beneficiary and ADB. The Loan Imprest Account shall only be used for the purposes of the Project. The currency of the Loan Imprest Account shall be the Dollar. The ceiling for the Loan Imprest Account shall not exceed the lower of (i) the estimated expenditure to be financed from the Loan Imprest Account for 6 months of Project implementation, or (ii) the equivalent of 10% of the Loan amount. (b) Except as ADB may otherwise agree, the Beneficiary shall establish immediately after the Effective Date, a Grant Imprest Account at Nepal Rastra Bank. The Grant Imprest Account shall be established, managed, replenished and liquidated in accordance with the Loan Disbursement Handbook, and detailed arrangements agreed upon between the Beneficiary and ADB. The Grant Imprest Account shall only be used for the purposes of the Project. The currency of the Grant Imprest Account shall be the Dollar. The ceiling for the Grant Imprest Account shall not exceed the lower of (i) the estimated expenditure to be financed from the Grant Imprest Account for 6 months of Project implementation, or (ii) the equivalent of 10% of the Grant amount. (c) The statement of expenditures procedure may be used for reimbursement of eligible expenditures and to liquidate advances provided into the Loan Imprest Account and the Grant Imprest Account, in accordance with the Loan Disbursement Handbook and detailed arrangements agreed upon between the Beneficiary and ADB. Any individual payment to be reimbursed or liquidated under the statement of expenditures procedure shall not exceed the equivalent of $50,000. 5. Goods and Works: Except as ADB may otherwise agree, Schedule 4, Complied. Goods and Works shall only be procured on the basis of para. 3 Package for vehicle purchase the methods of procurement set forth below: was done through ICB and shopping. 42 NCB packages (a) International Competitive Bidding; were used for civil works. And (b) National Competitive Bidding; and shopping was used for small (c) Shopping. scale good and works. 6. Goods and Works: Schedule 4, The methods of procurement are subject to, among other para. 4 Complied.

58 Appendix 8

Reference in Covenants Status of Compliance S. No. Loan Agreement things, the detailed arrangements and threshold values No modification was made in set forth in the Procurement Plan. The Beneficiary may procurement method but only modify the methods of procurement or threshold procurement plan updated to values with the prior agreement of ADB, and modifications reflect changes in number of must be set out in updates to the Procurement Plan. packages. 7. The Beneficiary shall not award any Works contract for a Schedule 4, Complied. Subproject which involves environmental impacts until para. 8 All contracts were awarded DOLIDAR has: only after approval of IEE. (a) obtained the approval of the IEE from the relevant environment authority of the Beneficiary, if necessary; and

(b) incorporated the relevant provisions from the EMP into Complied. the Works contract. The EPM cost was included in provisional sum or into cost item as relevant. 8. The Beneficiary shall not award any Works contract Schedule 4, Complied. involving involuntary resettlement impacts for a para. 9 Resettlement plan of each Subproject until the Beneficiary has prepared and road subproject were submitted to ADB the final RESETTLEMENT PLAN for prepared after detailed such Subproject based on the Subproject's detailed design and contract awarded design and obtained ADB's clearance of such only after approval from ADB. RESETTLEMENT PLAN. 9. The Beneficiary shall not award any Works contract for a Schedule 4, Complied. Subproject which involves impacts on indigenous peoples para. 10 Indigenous people plan of until the Beneficiary has prepared and submitted to ADB road subproject were the final IPP and obtained ADB's clearance of such IPP. prepared where impact on IP found and contract awarded only after approval from ADB. 10. Except as ADB may otherwise agree, and except as set Schedule 4, Complied. forth in the paragraph below, the Beneficiary shall apply para. 11 QCBS with 80:20 ratio was quality- and cost-based selection for selecting and applied for selecting engaging Consulting Services as set out in the consultants. Procurement Plan. 11. The Beneficiary shall recruit the individual consultants as Schedule 4, Complied. set out in the Procurement Plan in accordance with para. 12 Individual consultant procedures acceptable to ADB for recruiting individual selection method was duly consultants. followed. 12. (a) The Beneficiary shall ensure that all Goods and Works Schedule 4, Complied procured (including without limitation all computer para. 13 hardware, software and systems, whether separately procured or incorporated within other goods and services procured) do not violate or infringe any industrial property or intellectual property right or claim of any third party. (b) The Beneficiary shall ensure that all contracts for the procurement of Goods and Works contain appropriate representations, warranties and, if appropriate, indemnities from the contractor or supplier with respect to the matters referred to in subparagraph (a) of this paragraph. 13. The Beneficiary shall ensure that all ADB-financed Schedule 4, Complied. contracts with consultants contain appropriate para. 14 Proper due diligence and representations, warranties and, if appropriate, monitoring was done while indemnities from the consultants to ensure that the implementing contracts. Consulting Services provided do not violate or infringe any industrial property or intellectual property right or claim of any third party. Safeguards 14. The Beneficiary shall ensure, or cause DOLIDAR to Schedule 5, Complied. ensure, that the preparation, design, construction, para. 9 All project facilities complies

Appendix 8 59

Reference in Covenants Status of Compliance S. No. Loan Agreement implementation, operation and decommissioning of the with beneficiaries law, ADB’s Project, each Subproject, and all Project facilities comply safeguard policy and with (a) all applicable laws and regulations of the provisions of safeguard Beneficiary relating to environment, health, and safety; (b) frameworks prepared for the the Environmental Safeguards; (c) the EARF; and (d) all project. measures and requirements set forth in the respective IEE and EMP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. 15. The Beneficiary shall ensure, or cause DOLIDAR to Schedule 5, Complied. ensure, that all land and all rights-of-way required for the para. 10 The land acquisition and Project, each Subproject, and all Project facilities are resettlement activities made available to the Works contractor in accordance implemented following with the schedule agreed under the related Works beneficiaries’ law, ADB’s contract and all land acquisition and resettlement safeguard policy and activities are implemented in compliance with (a) all frameworks. ROW was made applicable laws and regulations of the Beneficiary relating available to the contractor to land acquisition and involuntary resettlement; (b) the prior to taking possession of Involuntary Resettlement Safeguards; (c) the RF; and (d) the site. The corrective action all measures and requirements set forth in the respective and recommendation of RESETTLEMENT PLAN, and any corrective or monitoring report followed. preventative actions set forth in a Safeguards Monitoring Report. 16. Without limiting the application of the Involuntary Schedule 5, Partly Complied. Resettlement Safeguards, the RF or the para. 11 The compensation provided RESETTLEMENT PLAN, the Beneficiary shall ensure, or as per approved cause DOLIDAR to ensure, that no physical or economic RESETTLEMENT PLAN but displacement takes place in connection with the significant amount is yet to Subprojects until: paid because of absentee (a) compensation and other entitlements have owner and dispute cases. The been provided to affected people in accordance with the amount is deposited in RESETTLEMENT PLAN; and compensation committee account and DOLIDAR will (b) a comprehensive income and livelihood monitor the project in post restoration program has been established in accordance project implementation. with the RESETTLEMENT PLAN. Life skill training provided to affected persons. 17. The Beneficiary shall make available, or cause DOLIDAR Schedule 5, Complied. to make available necessary budgetary and human para. 13 The beneficiary provided resources to fully implement the EMP, the budget more than estimated. RESETTLEMENT PLAN and the IPP. 18. The Beneficiary shall cause DOLIDAR to do the following: Schedule 5, Complied. (a) submit semiannual Safeguards Monitoring Reports to para. 15 Required safeguard ADB and disclose relevant information from such reports monitoring reports submitted to affected persons promptly upon submission; and uploaded in ADB website (b) if any unanticipated environmental and/or social risks for disclosure. and impacts arise during construction, implementation or operation of the Project that were not considered in the IEE, the EMP, the RESETTLEMENT PLAN or the IPP, promptly inform ADB of the occurrence of such risks or impacts, with detailed description of the event and proposed corrective action plan; and (c) report any actual or potential breach of compliance with the measures and requirements set forth in the EMP, the RESETTLEMENT PLAN or the IPP promptly after becoming aware of the breach. 19. The Beneficiary shall ensure, or cause DOLIDAR to Schedule 5, Complied. ensure, that the preparation, design, construction, para. 12 implementation and operation of the Project, each Subproject, and all Project facilities, comply with (a) all applicable laws and regulations of the Beneficiary relating

60 Appendix 8

Reference in Covenants Status of Compliance S. No. Loan Agreement to indigenous peoples; (b) the Indigenous Peoples Safeguards; (c) the IPPF; and (d) all measures and requirements set forth in the respective IPP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. 20. Safeguards – Related Provisions in Bidding Documents Schedule 5, Complied. and Works Contracts : para. 14 In the bidding document The Beneficiary shall ensure, or cause DOLIDAR to safeguard related provisions ensure, that all bidding documents and contracts for were included and Works contain provisions that require contractors to: safeguards plans were attached to the bidding (a) comply with the measures and requirements relevant document. to the contractor set forth in the IEE, the EMP, the RESETTLEMENT PLAN and the IPP (to the extent they concern impacts on affected people during construction), and any corrective or preventative actions set out in a Safeguards Monitoring Report; (b) make available a budget for all such environmental and social measures; and (c) provide the Beneficiary with a written notice of any unanticipated environmental, resettlement or indigenous peoples risks or impacts that arise during construction, implementation or operation of the Project that were not considered in the IEE, the EMP, the RESETTLEMENT PLAN or the IPP. 21. The Beneficiary shall ensure, or cause DOLIDAR to Schedule 5, Complied. ensure, that no proceeds of the Loan are used to finance para. 16 Loan and grant proceed was any activity included in the list of prohibited investment used only in activity which do activities provided in Appendix 5 of the SPS. not fall in prohibited list. 22. The Beneficiary shall ensure that (a) the GESI is Schedule 5, Complied. implemented in accordance with its terms; (b) the bidding para. 17 GESI-AP of each subproject documents include relevant provisions for contractors to was prepared and comply with the measures set forth in the GESI; (c) implemented to ensure adequate resources are allocated for the implementation gender outcome and output of the GESI; and (d) key gender outcome and output are achieved. targets are monitored regularly and achieved. 23. The Borrower shall ensure that all Works contracts Schedule 5, Complied. include provisions requiring contractors: (a) to comply with para. 18 In the contract document it all workplace occupational safety norms, applicable local was included and strictly labor laws and the Core Labor Standards; (b) not to followed during employ child labor in any aspect of their activities; (c) to implementation. provide appropriate facilities for children in construction campsites if such sites are established; and (d) not to differentiate wages between men and women for work of equal value. Others 24. The Beneficiary and DOLIDAR shall ensure that the Schedule 5, Complied. Project is implemented in accordance with the detailed para. 1 Any changes in the PAM was arrangements set forth in the PAM. Any subsequent implemented only after change to the PAM shall become effective only after approval. approval of such change by the Beneficiary and ADB. In the event of any discrepancy between the PAM and this Financing Agreement, the provisions of this Financing Agreement shall prevail. 25. Within 3 months of the Effective Date, the Beneficiary Schedule 5, Complied. shall establish the Project performance and monitoring para. 2 PPMS was developed and system acceptable to ADB. established within 3 moths of effective date. 26. The Beneficiary shall ensure that the Project funds are Schedule 5, Complied. allocated only to those DDCs that have (a) effectively para. 3 Fund allocation and

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Reference in Covenants Status of Compliance S. No. Loan Agreement implemented the first phase Subprojects under the Initial subproject approval was Project; (b) demonstrated a commitment to the Project's done in line with the objectives of poverty alleviation as measured against covenant. criteria agreed with ADB; and (c) established and successfully operated a district road maintenance fund. 27. The Beneficiary shall ensure that no Project funds are Schedule 5, Complied. allocated to any district for construction of new roads, para. 4 The allocation of fund or unless sufficient allocations have been made for the arrangement of maintenance maintenance of existing infrastructure in such district. was strictly monitored and district prepared annual road maintenance plan covering all roads in the district. 28. The Beneficiary shall ensure that (a) each road Schedule 5, Complied. Subproject is selected from the pipeline of subprojects para. 5 Selection of road, community developed under the Initial Project under each district’s infrastructure and transport master plan and as described under Appendixes maintenance activities were 1 and 2 of the PAM; (b) each community infrastructure carried out following set Subproject is selected in accordance with the criteria criteria. The activity not described in Appendix 3 of the PAM; and (c) the road meeting set criteria were maintenance program is implemented in accordance with excluded from project Appendix 4 of the PAM. funding. 29. The Beneficiary shall ensure that (a) the implementation Schedule 5, Complied of the road Subprojects will employ labor-based para. 6 Subprojects were assessed equipment-supported methods; (b) the works performed based on suitability of by BGs will be promoted over construction by contractors; construction approach. (c) only those works that cannot be executed by the Priority of BG has given and communities may be awarded on the basis of national works which couldn’t be competitive bidding to contractors; (d) employment in BGs carried out from BG was shall be reserved for those living within the influence area given to the contractor. The of the infrastructure to be constructed; (e) priority shall be priority was given to poor and given to include poor and disadvantaged groups and excluded group by castes, as well as households affected by the acquisition developing mechanism. of land and assets; and (f) the workers are paid in full on a fortnightly basis. 30. National Competitive Bidding: Schedule 4, Complied. The Beneficiary and ADB shall ensure that, prior to the para. 6 First bidding document was commencement of any procurement activity under approved by ADB and all national competitive bidding, the Beneficiary’s national subsequent changes were competitive bidding procedures are consistent with the also approved by ADB prior Procurement Guidelines. Any modifications or to bidding to ensure ADB’s clarifications to such procedures agreed between the procurement guideline is Beneficiary and ADB shall be set out in the Procurement followed. Plan. Any subsequent change to the agreed modifications and clarifications shall become effective only after approval of such change by the Beneficiary and ADB. 31. The Beneficiary shall ensure that prior to the Schedule 5, Complied. commencement of any activities in a district, DOLIDAR para. 7 The PCO and each district and DDC of such district shall have entered into an signed MOU prior to agreement, acceptable to ADB, which includes: (a) in-kind participating in the project contribution from the beneficiaries for supplementary activities. investments; (b) the terms and conditions for releasing funds from the DDC to the BGs; (c) establishment and staffing of the district Project office; (d) the auditing and reporting mechanism from the DDC to the Project coordination unit; and (e) coordination mechanisms with similar activities under other projects in the district. 32. The Beneficiary shall ensure that prior to the Schedule 5, Complied. commencement of any Works in a community, the DDC para. 8 The DDC signed agreement and the relevant VDC, and the VDC and the BGs shall with VDC, then VDC signed have entered into agreements, acceptable to ADB, which agreement with VWRCC and

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Reference in Covenants Status of Compliance S. No. Loan Agreement include: (a) provision of the VDC contribution, if required; then VWRCC signed (b) the minimum specifications and standards of agreement with BG prior to construction of the Works to be performed by the BGs; (c) civil works. the minimum specifications and standards for the operation of the Works to be performed by the BGs; (d) environmental standards applicable to the design, construction, and operation and maintenance of the Works; and (e) employment terms and conditions for BG- members, including wage rate and frequency of pay. 33. The Beneficiary shall ensure, or cause DOLIDAR to Schedule 5, Complied. ensure, that the preparation, design, construction, para. 9 Provision of EARF, EMP, RF, implementation, operation and decommissioning of the RESETTLEMENT PLAN, Project, each Subproject, and all Project facilities comply IPPF, IPP were strictly with (a) all applicable laws and regulations of the followed. Beneficiary relating to environment, health, and safety; (b) the Environmental Safeguards; (c) the EARF; and (d) all measures and requirements set forth in the respective IEE and EMP, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. 34. The Beneficiary shall ensure, or cause DOLIDAR to Schedule 5, Complied ensure, that all land and all rights-of-way required for the para. 10 Project, each Subproject, and all Project facilities are made available to the Works contractor in accordance with the schedule agreed under the related Works contract and all land acquisition and resettlement activities are implemented in compliance with (a) all applicable laws and regulations of the Beneficiary relating to land acquisition and involuntary resettlement; (b) the Involuntary Resettlement Safeguards; (c) the RF; and (d) all measures and requirements set forth in the respective RESETTLEMENT PLAN, and any corrective or preventative actions set forth in a Safeguards Monitoring Report. 35. The Beneficiary, DOLIDAR, DDCs, and other Schedule 5, Complied implementing agencies shall (a) comply with ADB’s para. 19 Anticorruption Policy (1998, as amended to date) and acknowledge that ADB reserves the right to investigate directly, or through its agents, any alleged corrupt, fraudulent, collusive or coercive practice relating to the Project; and (b) cooperate with any such investigation and extend all necessary assistance for satisfactory completion of such investigation. 36. DOLIDAR, DDCs, and other implementing agencies shall Schedule 5, Complied ensure that the anticorruption provisions acceptable to para. 20 ADB are included in all bidding documents and contracts, including provisions specifying the right of ADB to review and examine the records and accounts of the executing and implementing agencies and all contractors, suppliers, consultants, and other service providers as they relate to the Project. 37. The Beneficiary shall cause DOLIDAR to maintain a Schedule 5, Complied. Project website and update it regularly to include (a) para. 21 The DOLIDAR maintain bidding procedures, bidders, and contract awards; (b) use project website in the name of the funds disbursed under the Project; and (c) the of drilpnepal.org. physical progress of the Project. The Beneficiary shall The bidding process and also cause the Project coordination unit to periodically activities updated in the inspect contractor fund withdrawal and settlements. website. 38. The Beneficiary shall ensure that OFID, SDC and any Schedule 5, Complied. other co-financier to the Project accept application of para. 22 All agreed and applied SPS safeguard policy statement (SPS) to the entire Project 2009 provisions.

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Reference in Covenants Status of Compliance S. No. Loan Agreement and adopt a unified approach to implementing and monitoring the entire Project and shall cause such cofinancier to reach a suitable understanding with ADB, if necessary. 39. The Beneficiary shall make available, through budgetary Schedule 5, Complied. allocations or other means, all counterpart funds required para. 23 Counterpart fund for for the timely and effective implementation of the Project safeguard made available as including any funds required to make land available for required. the Project, to mitigate environmental and social impacts, and to meet additional costs arising from design changes, price escalation in construction costs and/or other unforeseen circumstances.

64 Appendix 8

LOAN 2092: STATUS OF COMPLIANCE WITH LOAN COVENANTS

Reference S. No. Covenants in Loan Status of Compliance Agreement Particular Covenants 1 (a) 'The Borrower shall cause the Project to be carried out Section Complied with. with due diligence and efficiency and in conformity with sound 4.01. Proper due diligence and administrative, financial, engineering, environmental, rural monitoring was followed during development and infrastructure, gender equity and LEP project implementation. practices. (b) In the carrying out of the Project and operation of the Project facilities, the Borrower shall perform, or cause to be performed, all obligations set forth in Schedule 6 to this Loan Agreement. 2 The Borrower shall make available, promptly as needed, the Section Complied with. funds, facilities, services, land and other resources which are 4.02. The government managed required, in addition to the proceeds of the Loan, for the required fund, facilities and carrying out of the Project and for the operation and services as required. maintenance of the Project facilities. 3 (a) In the carrying out of the Project, the Borrower shall cause Section Complied with. competent and qualified consultants and contractors, 4.03. acceptable to the Borrower and the Bank, to be employed to The Project was carried out an extent and upon terms and conditions satisfactory to the according to plans, design Borrower and the Bank. standards, specifications, work (b) The Borrower shall cause the Project to be carried out in schedules and construction accordance with plans, design standards, specifications, methods acceptable to the work schedules and construction methods acceptable to the Borrower and the Bank. Borrower and the Bank. The Borrower shall furnish, or cause to be furnished, to the Bank, promptly after their preparation, such plans, design standards, specifications and work schedules, and any material modifications subsequently made therein, in such detail as the Bank shall reasonably request. 4 The Borrower shall ensure that the activities of its Section Complied with. departments and agencies with respect to the carrying out of 4.04. the Project and operation of the Project facilities are conducted and coordinated in accordance with sound administrative policies and procedures. 5 (a) The Borrower shall make arrangements satisfactory to the Section Complied with. Bank for insurance of the Project Facilities to such extent and 4.05. The DDC did necessary insurance against such risks and in such amounts as shall be consistent to minimize risk. with sound practice. (b) Without limiting the generality of the foregoing, the Borrower undertakes to insure, or cause to be insured, the goods to be imported for the Project and to be financed out of the proceeds of the Loan against hazards incident to the acquisition, transportation and delivery thereof to the place of use or installation, and for such insurance any indemnity shall be payable in a currency freely usable to replace or repair such goods. 6 (a) The Borrower shall maintain, or cause to be maintained, Section Complied with. records and accounts adequate to identify the goods and 4.06. Separate project accounts services and other items of expenditure financed out of the maintained by the project. Annual proceeds of the Loan, to disclose the use thereof in the audit conducted and audited Project, to record the progress of the Project (including the project financial statement cost thereof) and to reflect, in accordance with consistently regularly submitted to ADB. maintained sound accounting principles, the operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof. (b) The Borrower shall (i) maintain, or cause to be

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maintained, separate accounts for the Project; (ii) have such accounts and related financial statements audited annually, in accordance with appropriate auditing standards consistently applied, by independent auditors whose qualifications, experience and terms of reference are acceptable to the Bank; (iii) furnish to the Bank, as soon as available but in any event not later than nine months after the end of each related fiscal year, certified copies of such audited accounts and financial statements and the report of the auditors relating thereto (including the auditors' opinion on the use of the Loan proceeds and compliance with the covenants of this Loan Agreement as well as on the use of the procedures for imprest account/statement of expenditures), all in the English language; and (iv) furnish to the Bank such other information concerning such accounts and financial statements and the audit thereof as the Bank shall from time to time reasonably request. (c) The Borrower shall enable the Bank, upon the Bank's request, to discuss the Borrower's financial statements for the Project and its financial affairs related to the Project from time to time with the Borrower's auditors, and shall authorize and require any representative of such auditors to participate in any such discussions requested by the Bank, provided that any such discussion shall be conducted only in the presence of an authorized officer of the Borrower unless the Borrower shall otherwise agree. 7 (a) The Borrower shall furnish, or cause to be furnished, to Section Complied with. the Bank all such reports and information as the Bank shall 4.07. reasonably request concerning (i) the Loan, and the expenditure of the proceeds and maintenance of the service thereof; (ii) the goods and services and other items of expenditure financed out of the proceeds of the Loan; (iii) the Project; (iv) the administration, operations and financial condition of the agencies of the Borrower responsible for the carrying out of the Project and operation of the Project facilities, or any part thereof; (v) financial and economic conditions in the territory of the Borrower and the international balance-of-payments position of the Borrower; and (vi) any other matters relating to the purposes of the Loan. (b) Without limiting the generality of the foregoing, the Borrower shall furnish, or cause to be furnished, to the Bank four monthly reports on the carrying out of the Project and on the operation and management of the Project facilities. Such reports shall be submitted in such form and in such detail and within such a period as the Bank shall reasonably request, and shall indicate, among other things, progress made and problems encountered during the four months under review, steps taken or proposed to be taken to remedy these problems, and proposed program of activities and expected progress during the following four months. (c) Promptly after physical completion of the Project, but in any event not later than three (3) months thereafter or such later date as may be agreed for this purpose between the Borrower and the Bank, the Borrower shall prepare and furnish to the Bank a report, in such form and in such detail as the Bank shall reasonably request, on the execution and initial operation of .the Project, including its cost, the performance by the Borrower of its obligations under this Loan Agreement and the accomplishment of the purposes of the Loan. 8 The Borrower shall enable the Bank's representatives to Section Complied with. inspect the Project, 'the goods financed out of the proceeds 4.08. Access was provided to the Bank’s

66 Appendix 8

of the Loan, and any relevant records and documents. representative. 9 The Borrower shall ensure that the Project facilities are Section Complied with. Project facilities operated, maintained and repaired in accordance with sound 4.09. were satisfactorily operated, administrative, financial, engineering, environmental, and maintained and repaired maintenance and operational practices. 10 (a) It is the mutual intention of the Borrower and the Bank that Section Complied with. no other external debt owed a creditor other than the Bank 4.10. shall have any priority over the Loan by way of a lien on the assets of the Borrower. To that end, the Borrower undertakes (i) that, except as 'the Bank may otherwise agree, if any lien shall be created on any assets of the Borrower as security for any external debt, such lien will ipso facto equally and ratably secure the payment of the principal of, and interest charge and any other charge on, the Loan; and (ii) that the Borrower, in creating or permitting the creation of any such lien, will make express provision to that effect. (b) The provisions of paragraph (a) of this Section shall not apply to (i) any lien created on property, at the time of purchase thereof, solely as security for payment of the purchase price of such property; or (ii) any lien arising in the ordinary course of banking transactions and securing a debt maturing not more than one year after its date. (c) The term "assets of the Borrower" as used in paragraph (a) of this Section includes assets of any political subdivision or any agency of the Borrower and assets of any agency of any such political subdivision, including the Nepal Rastra Bank and any other institution performing the functions of a central bank for the Borrower. Others 1 Established, Staffed, and Operating PMU or PIU Schedule 6, Complied with. para 1 PCU in center and 18 districts project offices as PIU established, and well-staffed. 2 Establishment of Project Coordination Unit (PCU) within Schedule 6, Complied with. DOLIDAR. para 4 The PCU was established in DOLIDAR. DOLIDAR officially appointed Project coordinator to coordinate all project activities. 3 The District Project Office established with the district Schedule 6, Complied with. technical office of each DDC. This shall comprise a full-time para 5 All 18 districts had DPO engineers. engineer, sufficient overseers, and an accountant. Each DPO Full time accountants were shall be responsible for preparing district annual work assigned for the Project in all programs based on agreed subproject; (ii) coordinating the districts. application for and selection of supplementary investments in village development committees in subproject areas; (iii) coordinating the implementation of livelihood activities through local NGOs; (iv) procuring services; (v) organizing community level training; and (vi) monitoring the implementation of works. 4 Selection of subprojects shall be in accordance with criteria Schedule 6, Complied with. agreed upon between the Borrower and the Bank and shall para 12 All subprojects were selected follow a strict phased process of (i) identification, (ii) based on the criteria agreed. prioritization, (iii) feasibility study, and (iv) approval by the concerned DDC. All selected subprojects shall be technically suited for construction using the LEP approach. 5 DOLIDAR, SDC and the ADB shall jointly undertake at least Schedule 6, Complied with. two review mission annually. para 30 Joint review missions were undertaken in every six months. 6 DOLIDAR, SDC and ADB shall jointly undertake a mid-term Schedule 6, Complied with. review (MTR) of the Project at the end of year three of Project para 31 Mid-term review was conducted on implementation. 8-23 December 2008. 7 Within nine months of the Effective Date, the PCU shall have Schedule 6, Complied with.

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established a PPMS to monitor whether Project inputs and para 33 The baseline was prepared. activities deliver the expected outputs and benefits to the intended beneficiaries. 8 Submission of Project Completion Report of the Project. Complied with. Project Completion Report has been prepared along with the additional financing. 9 Submission to ADB of quarterly progress report. Complied with. Quarterly progress report submitted with quality. 10 Fielding of Consultants Complied with. Consultant fielded as required. Financials 1 No withdrawals from the Loan Account shall be made in Schedule 3, Complied with. respect of any local taxes. para 3 All taxes borne by the government. 2 The imprest account shall be established, managed, 3, para 8 Complied with. replenished and liquidated in accordance with the Bank's An impreset account open in Nepal "Loan Disbursement Handbook" dated January 2001, as Rastra Bank. Estimated amended from time to time, and detailed arrangements Expenditure Statement prepared agreed upon between the Borrower and the Bank. The initial to maintain six-month expenses. amount to be deposited into the imprest account shall not exceed the lesser of the equivalent of $1,000,000 or the estimated expenditure for the subsequent six months. 3 Within one month of the Effective Date, each Project district Schedule 6, Complied with. shall establish a district road coordination committee, as a para 6 District Road Coordination subcommittee of the DDC. These committees shall be Committees formed in each district responsible for planning and overseeing roads subprojects. and the committee took decisions on planning and implementation of subprojects. 4 If co-financing by either or both GIZ and SDC has not been Schedule 6, Complied with. obtained by 28 February 2005, the scope of Components 1,C para 7 SDC cofinance obtained, but GIZ and Component 3 of the Project, and of those Components cofinance was not obtain which only, shall be reduced accordingly. was only of $0.70 million. No material impact faced due to no finance from GIZ. 5 The Borrower shall ensure that the activities related to the Schedule 6, Complied with. recruitment, training and deployment of social mobilizers to para 8 The social mobilizers were villages, shall be done on a priority basis at the outset of the mobilized giving priority and prior Project and prior to the commencement of any construction to selection of roads and other activities. subprojects.

6 The Borrower shall ensure that prior to allocating funds to a Schedule 6, Complied with. district for subproject funding, such district shall have para 11 DTMP of all the 18 districts were developed a District Transport Master Plan, and such plan completed shall have been fully approved in accordance with the relevant guidelines. 7 The Borrower shall ensure that for the second phase of the Schedule 6, Complied with. Project, starting in year four of Project implementation, para 13 Subprojects have been selected allocation and disbursement of funds shall only be provided for phase II. to those DDCs that have (i) effectively implemented the first phase subproject (ii) demonstrated a commitment to the Project's objectives of poverty alleviation as measured against criteria agreed with by the Bank; and (iii) established and successfully operated a district road maintenance fund. 8 The Borrower shall ensure that prior to the commencement Schedule 6, Complied with. of any activities in a district, DOLIDAR and the DDC of such para 14 All participating districts entered district shall have entered into a project agreement, approved into agreement with DOLIDAR. by ADB, which regulates: (i) the local counterpart DDC and VDC funding of ten percent in cash for transport infrastructure and fifteen percent in kind from the beneficiaries for supplementary investments; (ii) the terms and conditions for

68 Appendix 8

releasing funds from the DDC to the BGs - including conditions relating to the DDC contribution; (iii) establishment and staffing of the DPO; (iv) the auditing and reporting mechanism from the DDC to the PCU; and (v) coordination mechanisms with similar activities under other projects in the district. 9 The Borrower shall ensure that prior to the commencement Schedule 6, Complied with. of any works in a community, the DDC and the relevant VDC, para 15 and the VDC and the BGs shall have entered into contracts, The work of BGs was satisfactory. in form and substance acceptable to the ADB, regulating: (i) the provision of the VDC contribution, if required; (ii) minimum specifications and standards of construction works performed by the BGs; (ii) minimum specifications and standards for the operation of the works to be performed by the BGs; (iv) environmental standards applicable to the design, construction, and operation and maintenance of the works; adn (v) employment terms and conditions for BG-members, including wage rate and frequency of pay. 10 The Borrower shall ensure that the approved annual Schedule 6, Complied with. development program allocations for the Project shall be para 16 Counterpart fund of 10% was in sufficient to cover all counterpart funding required for the place. Project, in accordance with the financing plan as agreed between the Borrower and the ADB. 11 The Borrower shall finalize the National Policy and Strategy Schedule 6, Complied with. for Rural Infrastructure by 31 December 2004. In so doing, it para 17 The policy was finalized in 2005. shall take into account the views of the donor community. The The policy recommendation were Borrower shall take all necessary and appropriate measures implemented as applicable. to implement the recommendations of the Policy in 2005. 12 The Borrower shall ensure that unskilled employment in the Schedule 6, Complied. subproject BGs shall be resewed for beneficiaries living para 20 within the influence area of the infrastructure to be BG were provided the unskilled constructed. Priority shall be given to include poor and employment which was around disadvantaged groups and castes, as well as households 50% of the construction works. affected by the acquisition of land and assets. The Borrower shall ensure that workers shall be paid in full, on a fortnightly basis. 13 The Borrower shall ensure that civil works contractors comply Schedule 6, Complied. with all applicable labor legislation. Bidding documents shall para 21 The contractors comply with all include a clause on the prohibition of child labor, as defined applicable labor legislation. in national legislation, for construction and maintenance activities as well as a clause stipulating equal pay for men and women for work of equal value. Compliance with these provisions shall be strictly monitored during Project implementation. 14 Before 14 April of each year during Project implementation, Schedule 6, Complied with. DOLIDAR and the Bank shall agree on the annual para 22 maintenance program for rural roads in the Project districts for the following year. DOLIDAR shall submit to the Bank for its review, the proposed maintenance budget by 14 March of every year. 15 Loan proceeds up to the amount equivalent to SDR Complied with. 23,707,000 may be withdrawn from the loan account in foreign currency for the purpose of financing local expenditure. 16 DOLIDAR and the Project districts in the Project Area shall Schedule 6, Complied with. take all appropriate and necessary measures to increase para 23 20% of each subproject cost was rural road maintenance funding to a sustainable level. This set aside for maintenance fund. shall include the establishment of district roads maintenance funds. 17 DOLIDAR shall ensure that no Project funds shall be Schedule 6, Complied with. allocated to any district for the construction of new roads, para 24 Funds were allocated to the unless sufficient allocations shall have been made for the districts as per financial plan.

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maintenance of existing infrastructure in districts. 18 If involuntary resettlement and land or asset acquisition are Schedule 6, Complied with. required for any of the subprojects or supplementary para 26 Resettlement plan were prepared investments, a resettlement plan based on the detailed as required following resettlement subproject design, shall be prepared in accordance with the framework. Resettlement plans Project Resettlement Framework and the Bank's Handbook were disclosed in EA and ADB on Resettlement. The concerned DDC shall publicly disclose website. the resettlement plan, in places and using language accessible to all affected people. The resettlement plan shall include a complete census and inventory of losses. 19 Within nine months of the Effective Date, the PCU shall have Schedule 6, Complied with. established a PPMS to monitor whether Project inputs and para 32 PPMS was established within nine activities deliver the expected outputs and benefits to the months of effectiveness. intended beneficiaries. 20 The Borrower shall open a Project Account at the Nepal Complied with. Rastra Bank. The EA opened a project account at the Nepal Rastra Bank. Social 1 The DDCs shall ensure to contract only local NGOs with a Schedule 6, Complied with. track record of at least three years relevant experience. para 9 DDCs shall ensure to reflect the findings and NGOs in 18 districts are on board. recommendations resulting from performance monitoring of social mobilization activities in their later contractual arrangements with such local NGOs. 2 The Borrower shall ensure that the social mobilization Schedule 6, Complied with. activities shall facilitate (i) full dissemination of Project para 10 Local NGOs were involved in information to beneficiaries; and (ii) effective participation by dissemination of information, women, and poor and disadvantage groups in all Project conduct training, awareness. activities. DOLIDAR shall ensure that all contracted NGOs National NGO were selected. provide social development training, including awareness on gender and vulnerable groups, labor rights, life-skills, nutrition and health, functional literacy, livelihood, savings and income generation. 3 The Borrower shall ensure that all appropriate and necessary Schedule 6, Complied with. measures shall be taken to implement the Project para 25 Resettlement plan in 20 Resettlement Framework agreed upon between the Borrower subprojects were approved. and ADB. 4 DOLIDAR shall not approved any subproject construction, Schedule 6, Complied with. unless a resettlement plan, in form and substance acceptable para 27 to the ADB, shall have been submitted to and approved by Contracts were awarded only after the PCU, DOLIDAR and the ADB. DOLIDAR shall ensure the approval of resettlement plan. that all people affected by land acquisition under the Project, Compensation payment was shall be fully compensated prior to possession of land and completed before possession of assets, in accordance with the resettlement plan agreed for a land in all subprojects. specific subproject. 5 The Borrower shall take all necessary and appropriate Schedule 6, Complied with. measures to ensure full implementation of the Project Gender para 28 Gender Action Plan was Action Plan. Gender issues shall be duly considered in implemented. respect of Project beneficiaries, staff recruited by DOLIDAR, participating NGOs and consulting firm. 6 Within nine months of the effective Date, the PCU shall have Schedule 6, Complied with. conducted initial gender segregated baseline physical and para 33 socioeconomic surveys and shall have submitted a detailed Gender segregated baseline Project implementation-monitoring plan for the Bank's review physical and socioeconomic were and concurrence. done in road subprojects. 7 The Borrower shall take all necessary and appropriate Complied with. measure to implement the recommendations of the Policy in 2005. 8 The Borrower shall ensure that 30% of the annual funds of Complied with. the Borrower's Road Borad's road fund are allocated for rural road maintenance by DDCs and VDCs.

70 Appendix 8

9 The Borrower shall finalize the National Policy and Strategy Complied with. for Rural Infrastructure by 31 December 2004. In so doing, it shall take into account the views of the donor community. Sector 1 Ministry of Local Development formed a joint coordination Schedule 6, Complied with. committee for all rural transport projects and the committee para 2 MLD formed a joint local transport shall serve as the PSC for the Project. The PSC shall meet sub sector steering committee for whenever necessary, but not less than twice a year to (i) all rural transport projects. review progress under the Project; (ii) resolve policy issues; (iii) coordinate sector activities and (iv) guide DOLIDAR 2 Establishment of Implementation Coordination Committee Schedule 6, Complied with. (ICC) within DOLIDAR and chaired by the Director General para 3 of DOLIDAR. GON established a functional implementation coordination committee (ICC) at central level with participation of ADB, SDC, DOLIDAR, and district representatives to facilitate the project coordination and implementation. 3 DOLIDAR shall have developed and approved the rural 6, para 18 Complied with. infrastructure subsector policy on gender. Safeguards 1 The Borrower shall ensure that all road and trail construction Schedule 6, Complied with. shall use the full LEP approach, which includes (i) employing para 19 unskilled labor instead of construction equipment; (ii) It was considered during planning, applying design and construction methods that protect the selection, survey and design of physical environment; and (ii) applying design and subproject and implementation of construction methods that protect the physical environment; works and (iii) incorporating local interests and opinions in the planning, design, and implementation of the works. DOLIDAR shall provide adequate technical assistance to ensure that the integrity of the approach is maintained in all Project districts and throughout the entire implementation period. 2 The Borrower shall ensure that all subprojects shall be Schedule 6, Complied with. identified, selected, implemented, and reported in para 29 accordance with (i) the environmental procedures and IEE in selected subproject was requirements specified in the Environmental Assessment and done. Review Procedure, (ii) the IEE of each subproject, (iii) the Bank's Environmental Assessment Guidelines, and (iv) relevant national and local environmental laws, regulations and guidelines.

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ECONOMIC ANALYSIS

A. Introduction

1. The Decentralized Rural Infrastructure and Livelihood Project, implemented in two phases 61 (the original project and the additional financing, also interchangeably termed hereafter as first and second investments) was designed to contribute to poverty reduction in 18 poorest and most disadvantaged hill and mountain districts.62 The project aimed at supporting local communities through livelihood development programs and improved access to markets and social services by developing rural connectivity. The project districts were selected based on high incidence of poverty, poor access to markets and social services and needs for livelihood restoration of rural people highly affected from the conflict.

2. Rural livelihood improvement; local bodies’ capacity building for decentralized governance; rural transport infrastructure development; and project management services were the project components. The rural transport infrastructure was the main component in terms of scope and investment. For the first investment, the project followed labor based, environment friendly and participatory approach to improve rural connectivity by rehabilitating existing rural roads, constructing trail bridges and providing support to improve physical structures and matching funds for maintenance of district roads. However, for the second investment, the project adopted labor-based equipment supported (LBES) method for road construction and maintenance, which was considered appropriate based on lessons learned during implementation of the first investment. Through both the approaches, local communities, particularly women and disadvantaged people, were provided employment and income opportunities, and they significantly benefitted from the project and contributed to the project implementation.

B. Economic Evaluation

1. Approach and Methodology

3. Economic evaluation of representative rural road and trail bridge subprojects has been carried out in accordance with Asian Development Bank’s (ADB’s) Guidelines for the Economic Analysis of Projects. 63 This follows the approach and methodology adopted in design of both the investments at appraisal, which is based on the economic evaluation of representative sample subprojects, focusing on rural transport (including maintenance) and supplementary infrastructure. Although investments in community development, capacity building, skills training, awareness raising, and exposure visits also have significant socioeconomic benefits to people from enhanced confidence and abilities in exploring new livelihood options, such outputs are not easily quantifiable and realized more at medium to long-run. Hence, this approach of economic evaluation is considered logical because it follows the methodology adopted at project appraisal, and the results from the sample subprojects significantly represent the overall project as over three-fourth of the disbursed ADB loan and grant and OFID loan under the project was on rural transport and supplementary infrastructure (Table A.1).

Table A.1: ADB Loan, Grant and OFID Loan Disbursement ($)

61 Decentralized Rural Infrastructure and Livelihood Project (Loan 2092) and Decentralized Rural Infrastructure and Livelihood Project – Additional Financing (Loan 2796-NEP and Grant 0267-NEP). 62 The Projects districts are Baitadi, Bajhang, Bajura, Darchula, Dolpa, Humla, Jumla, Kalikot, Mugu, Jajarkot, Baglung, Gorkha, Lamjung, Myagdi, Okhaldhunga, Ramechhap, Solukhumbu, and Taplejung. 63 ADB. 2017: Guidelines for the Economic Analysis of Projects . Manila

72 Appendix 9

Original Additional Financing Total Project Category ADB Loan ADB Loan OFID Loan and Grant

Transport Infrastructure 30,602,183 12,217,678 18,875,606 61,695,467

Supplementary Investments 1,527,130 1,964,709 - 3,491,839 Road Maintenance - 1,344,374 - 1,344,374

Vehicles, Motorcycles and Equipment 124,328 572,177 - 696,505 Office Equipment and Furniture 1,351,583 473,630 - 1,825,213

Resettlement - 33,504 - 33,504 Consulting Services 23,293 462,030 - 485,323 Technical Services 3,608,909 42,855 - 3,651,764

Training and Tours 1,456,887 2,155,618 - 3,612,505 Surveys and Studies 87,985 133,602 - 221,587

Implementation and Supervision 429,949 - - 429,949 Interest Charge 509,166 271,558 - 780,724 Advance Account - 218,976 218,976 Total 39,721,413 19,890,708 18,875,606 78,487,727 ADB = Asian Development Bank; OFID = OPEC Fund for International Development Source: DOLIDAR. 2018 (August). Project Completion Report (Tables 5, 6 and 7) of the Decentralized Rural Infrastructure and Livelihood Improvement Project and the Decentralized Rural Infrastructure and Livelihood Project - Additional Financing . Kathmandu.

5. The economic evaluation is based on the costs and benefits of providing improved rural transport infrastructure such as rural roads and trail bridges by taking into account the quantifiable costs and benefits.

6. The project benefits include the consumer and the producer surpluses available to the beneficiaries in the “with project” situation compared to the “without project” situation. In case of rural roads, the benefits in terms of consumer surplus resulting from savings in vehicle operating costs (VOC) are likely to be small due to the low traffic volume of motorized vehicles. The vehicle operating VOC will decrease and travel time will be saved due to construction and upgrading of roads. Increased volume of goods and passenger movements can also be expected due to lower transportation costs. Hence, the benefits estimation will include the savings in VOCs for normal as well as the generated traffic. The benefits from producer surplus are likely to be significant in case of rural roads and trail bridges as improved access creates favorable conditions for increased use of improved agricultural inputs by farmers leading to higher yield of crops and shift to high value commercial crops from low value cereal crops. Improved access also helps in reducing the marketing costs and increasing the margin for farmers. The incremental net benefits to farmers in terms of higher return from crops production has been estimated. Economic internal rate of return (EIRR), net present value (NPV) and benefit-cost (BC) ratio have been calculated for economic evaluation of subprojects. Sensitivity analysis on EIRR (base case) has been carried out with cost increase (10%), benefit decrease (10%) and the combined case of cost increase and benefit decrease together. The estimated EIRRs have been compared with the estimates at project appraisal to assess the consistency of the estimates for the economic viability of the subprojects. In sensitivity analysis, only the operation and maintenance cost has been taken into account as the investment cost represents the actual cost that is not subject to change in the

Appendix 9 73

future. The economic benefits specifically going to the poor and the poverty impact ratio has also been analyzed and estimated.

7. Field surveys were conducted during July-August 2018 to collect data on the use of roads and trail bridges based on which average annual daily traffic (AADT) for both motorized and non- motorized modes were estimated. The “Roads Economic Decision Model” spreadsheets were used to estimate the VOCs for the motorized modes of transportation with necessary adjustments based on consultant’s field observation and surveys. 64

8. The economic evaluation is based on analysis of four rural road and two trail bridge subprojects. These are representatives of the “Class” of subprojects implemented under the transport infrastructure development component of both the investments. The geographical locations of the subprojects represent different regions of the country from Solukhumbu district in the eastern region to Bajura district in the far-western region. Basic data of the selected subprojects are given in Table A.2.

Table A.2: Basic Data of Sample Subprojects for Economic Evaluation

District Subproject Description Length of Population Number Farm Construct Road/ in ZOI of HHs Size/HH ion Cost Span of (NRs TB ‘000) Ramechhap Manthali- New 22.3 km 15,249 3,875 0.74 98,185 Kathjor- Construction Dhobi Road Solukhumbu Garma-Nele- Rehabilitation, 22.5 km 14,762 2,684 0.89 248,749 Bogal Road New Construction Lamjung Sunderbazar Rehabilitation 23.6 km 25,245 4,085 0.52 206,460 -Kuncha- Upgrading Duipiple Road Bajura Barabis- New 22.7 km 16,111 3,199 0.42 191,000 Deltabazar Construction Aatichaur Gorkha Chepe Nadi New 105 m 1,510 370 0.55 4,038 Trail Bridge Construction Myagdi Kaligandaki New 120 m 552 135 0.55 2,038 Trail Bridge Construction HH = household; NRs = Nepalese Rupees; TB = trail bridge; ZOI = zone of influence. Sources: ADB. 2004: Report and Recommendation of the President to the Board of Directors on a Proposed Loan and a Technical Assistance Grant to the Kingdom of Nepal for the Decentralized Rural Infrastructure and Livelihood Project . Manila. ADB. 2011. Report and Recommendation of the President to the Board of Directors for the Proposed Loan, Grant, and Administration of Loan for Additional Financing for Nepal: Decentralized Rural Infrastructure and Livelihood Project. Manila. Central Bureau of Statistics. 2012. National Sample Census of Agriculture . Kathmandu. National Planning Commission. 2011. National Population and Housing Census . Kathmandu. ADB. 2018 (July-August). Field Survey of PCR Consultants . Kathmandu.

9. The selected road subprojects with the exception of Manthali Kathjor Dobi road received funding under both the investment to complete the construction work. The Manthali Kathjor road subproject was completed under the first investment. Of the two sample trail bridge subprojects, construction Kali Gandaki Trail Bridge was completed under the first investment whereas the the Chepe Nadi Trail Bridge was constructed under the second investment. Hence, selection of the

64 Roads Economic Decision Model, HDM-4 Vehicle Operating Costs Module, Version 3.2, 06/06/04, Road Management Initiative, Sub-Saharan African Transport Policy Program.

74 Appendix 9

subprojects is representative of both the geographical distribution as well as the two implementation phases.

10. Financial analyses of the subprojects were not carried out because the subprojects do not generate any revenue. Similarly, an overall project evaluation (including all component costs and benefits) is not considered necessary as the government almost solely bears the investment cost. The share of beneficiaries in total project funding was $1.55 million out of the total investment of $144.48 million, which constitutes about 1.1% of the total project cost. 65 Nevertheless, both financial and economic net present values were computed using 12% discount rate in the distribution analysis.

11. The sample subprojects are representative of the geographical distribution of the subprojects as well as the original project and additional financing. The approach adopted for the economic evaluation is to arrive at reliable estimates of EIRRs for the four road subprojects and two trail bridges. No aggregation was done to estimate the EIRRs separately for roads and trail bridges as it would not be a meaningful exercise considering the wide variation in terms of geographical (high mountain and hill areas), and socio-economic factors between the subprojects. The estimated individual subproject EIRRs are expected to provide the ranges within which the aggregated EIRRs (for roads and trail bridges) will likely fall and results should be interpreted accordingly. Hence, no overall EIRR has been estimated for the project. 66

12. The key assumptions for the economic analysis include the following:

(i) The economic life of the subprojects (roads and trail bridges) is assumed to be 20 years excluding the duration of construction or subproject completion. (ii) The financial costs and benefits are based on mid-2018 prices and are expressed in constant 2018 values. (iii) Taxes and subsidies are excluded in the economic evaluation of the sample subprojects. (iv) All financial prices were adjusted to economic prices by deducting taxes and duties. Specific conversion factors were computed and applied to non-traded goods. (v) The economic costs of tradable agricultural inputs and outputs are based on world market prices (to border) and adjusted to local transportation costs to derive equivalent farm-gate prices. (vi) A Standard Conversion factor of 0.9 was applied to adjust the local currency values of non- tradable inputs and outputs to obtain economic costs and benefits following the standard practice in similar project analysis. (vii) A shadow wage rate of 0.85 of the market wage rate is applied to reflect the opportunity cost of unskilled labor. (viii) A discount rate of 12% is used to represent the opportunity cost of capital.

2. Project Costs

13. Project costs include construction cost taken as investment cost and maintenance cost. The subproject construction costs are listed in Table A.2. Construction costs include labor (skilled and unskilled), tools and equipment, materials, and costs related to environmental safeguards as well as resettlement of affected families. Provision made for physical contingencies are also

65 Source: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project and Decentralized Rural Infrastructure and Livelihood Project - Additional Financing. Kathmandu. 66 This is consistent with the approach followed at appraisal of both the original project and additional financing, under which a process approach was adopted. Project-wide analysis and estimation of overall EIRR was not carried out for both the investments.

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included in project costs. The road maintenance costs have been taken at NRs120,000 per kilometer based on earlier estimates used in project documents. The road subprojects are all classified as District Class A roads according to DOLIDAR standards. The roads being mostly of earthen surface (with partly graveled sections) need adequate budget for minimum levels of maintenance to sustain their anticipated benefits by ensuring year round traffic flow (maintenance to all-weather status).

3. Quantifiable Benefits

14. The economic evaluation aims to quantify and incorporate a range of potential benefits to the beneficiaries as a result of improvements in rural transport infrastructure. The two main quantifiable benefits include consumer surplus and producer surplus benefits to the users of roads and trail bridges. The benefits to movement of people and goods through reduced costs of travel and cargo movements are estimated. However, benefits to education, health and information, which has significant impacts on people’s livelihood cannot be quantified.

15. The consumer surplus benefits are estimated assuming that transport improvement leads to reduced VOC for all motorized as well as non-motorized modes. There will be time saving per trip, which is imputed in monetary or economic value and is included as benefits. The consumer surplus benefits include savings in VOCs for normal or existing traffic and benefits due to generated traffic resulting from modal shift. Similarly, per unit cost of cargo transported from origin to destination is reduced with transport modal shift from porters and pack animals to pickups, trucks, and tractors. In estimating the consumer surplus benefits, only incremental transportation of nonagricultural cargo is included with the assumption that benefits due to increased movement of agricultural goods and inputs are captured by the producers’ surplus estimation. Generated or incremental trips and cargo benefits are valued at 50% of the savings on existing travel and cargo movements.

16. The producer surplus benefits to households are estimated considering the likely expansion in area under cash crops, as farmers gradually shift from cultivating low value to low volume high value crops due to improved connectivity and access to markets. The estimated value of incremental production of cash crops by comparing between “with” and “without” project situation constitutes the producer surplus benefits to households. Cash crop area expansion (incremental) is assumed to be fully realized within five years after the project completion. In the case of trail bridges benefits do not include any area expansion (cash crops) rather the estimated incremental benefits are attributed to reduced spoilage and higher margins on fruits and vegetables sold in small quantities by farmers in the nearby markets as facilitated by improved connectivity.

4. Non-quantifiable Benefits

17. Non-quantifiable benefits of rural roads are observed to be significant, particularly on access to education, health, information, and government and non-government services. Road connectivity has improved access to medical facilities for rural communities contributing to improved health conditions in general and decreased mortality of women during childbirth in particular. Road connectivity in the previously remote hill and mountain villages has helped growth of small market centers that offer education, health, information, and financial services from government and non-government sources contributing to social transformation and improved rural economic activities and livelihoods.

76 Appendix 9

18. Trail bridges improved rural connectivity that is highly valued by local communities especially during rainy seasons. The Chepe Khola trail bridge, which connects communities between Gorkha and Lamjung districts, has provided people’s safer access to participate in social functions contributing to social cohesion and communal harmony. Similarly, the Kali Gandaki bridge provides safer and quick access to Galeshwor, an important religious site, and to local markets and service centers.

5. Economic Internal Rate of Return

19. The subprojects are economically viable as shown by the results of the economic analysis in Table A.3. The economic internal rate of return (EIRRs) of selected subprojects (roads) range from 13.51% (Barabis-Deltabazar-Aatichaur road in Bajura district) to 24.5% (Manthali-Kathjor- Dhobi road in Ramechhap district). In the case of trail bridges, the Chepe Nadi trail bridge in Gorkha district and the Kali Gandaki trail bridge in Myagdi district have the estimated EIRRs of 21.7% and 22.3%, respectively. The benefit-cost ratios (B/C Ratios) of all subprojects range from 1.13 to 1.87. The results show that in relatively remote mountain districts having low population density within the immediate vicinity of the roads the traffic of motorized vehicles as well as the volume of cargo movements are relatively lower compared to locations with high population density, hence the lower economic returns (as in Garma-Nele- Bogal road in Solukhumbu district and Barabis-Deltabazar-Aatichaur road in Bajura district).

20. The subproject EIRRs based on actual costs and estimated benefits at project completion are compared with the EIRRs estimated at appraisal even though all the sampled projects are not identical. The results are comparable and mostly consistent with the estimates at appraisal. However, the recalculation gives slightly lower estimated EIRR of 15.46% for Garma-Nele-Bogal road compared to 22% at appraisal and 13.51% EIRR for Barabis-Deltabazar-Aatichaur road against 15.3% at appraisal. Nevertheless, the overall results are consistent with the appraisal estimates.

21. The sensitivity analysis has been carried out to examine robustness of the estimated EIRRs for future increase in operation and maintenance (O&M) cost of the infrastructure (roads and trail bridges) and decrease in expected benefits to the users as well as the producers (farmers). Three cases considered in the sensitivity analysis are cost increase by 10%, benefit decrease by 10% and the combined case of cost increase (10%) and benefit decrease (10%). The results of the sensitivity analysis indicate that the subprojects are robust for cost increase as well as for benefit decrease. Economic viability of the subprojects has been further strengthened by combining cost increase by 10% and benefit decrease by 10%. No sample subproject has an estimated EIRR lower than 12% (Table A.3). Furthermore, the calculated switching values for benefit decrease also indicate that the subprojects are sufficiently robust and economically viable. 67 However, in case of Barabis-Deltabazar-Aatichaur road, the economic viability seems highly sensitive to benefit decrease as shown by the relatively low switching value (Table A.3). Commercial agriculture development within the zone of influence with the induced shift from traditional crops such as maize and millet to high value crops (potato and vegetables) will have great significance to actually realize the potential economic benefits from construction of road in mountain areas like the zone of influence of the Barabis-Deltabazar-Aaticaur road.

67 Switching values are calculated only with respect to decrease in benefit since investment costs are not supposed to change after completion of subprojects, and it will not be a meaningful exercise to calculate switching values partially based on operation and maintenance costs.

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Table A.3: Subproject Economic Analysis Results

Item Garma- Manthali- Sunderbaza Barabis- Chepe Kali Nele - Kathjor- r-Kuncha- Deltabazar- Nadi Gandaki Bogal Dhobi Duipiple Aatichaur Trail Trail Road Road Road Road Bridge Bridge Base Case EIRR (%) 15.46 24.50 22.84 13.51 21.74 22.3 ENPV (NRs’000) 41,241 76,108 84,335 14,592 2,050 1,037 B/C Ratio 1.26 1.87 1.75 1.13 1.72 1.68

Sensitivity Analysis - EIRR (%) Cost (O&M) Increase by 15.39 24.28 21.35 13.43 21.72 22.23 10% Benefit Decrease by 10% 14.2 22.03 21.38 12.39 19.57 19.82 Combined case-cost 14.13 21.85 21.28 12.3 19.55 19.78 (O&M) increase by 10% and benefit decrease by 10% Switching Value (%) Benefit Decrease 20.57 46.62 42.86 11.12 41.94 40.30 B/C = benefit/cost; EIRR = economic internal rate of return; ENPV = economic net present value, O&M = Operation and Maintenance Source: ADB. 2018 (July-August). Field Survey by PCR Consultants . Kathmandu (Detailed data are given in Table A.5, Table A.6, Table A.7, Table A.8, Table A.9, and Table A.10)

6. Distribution of Benefits

22. Construction or upgrading of rural roads following labour intensive method has potential in generating employment and income opportunities and reducing rural poverty. The poverty impact ratio of the subprojects are estimated between 0.65 (Manthali-Kathjor-Dhobi road, Ramechhap district) to 5.76 (Barabis-Deltabazar-Aatichaur road, Bajura ditrict) as given in Table A.4. It is assumed that the poor constituted 80% of unskilled labour, 30% of skilled labour, 60% of farmers and passengers, 0% of private vehicle owners, and 10% of government beneficiaries (approximate share of poor in GDP). The subprojects are able to provide significant proportion of net economic benefits to the poor, making positive contribution to poverty reduction in the remote hill and mountain districts.

78 Appendix 9

Table A.4: Distribution Analysis of Selected Subprojects (NPVs in NRs'000 at 12% discount rate)

Item Unskilled Skilled Farmers Private Passengers Government/ Total Labor Labor Vehicle Economy Owners

Garma-Nele-Bogal Road, Solukhumbu Net Economic Effects 25,534 3,061 96,774 (18,778) 53,230 (118,579) 41,241 Economic Benefits to the Poor 20,427 918 58,064 - 31,938 (11,858) 99,490

Poverty Impact Ratio 2.41

Manthali-Kathjor-Dhobi Road, Ramechhap Net Economic Effects 8,090 1,901 34,996 (14,358) 33,374 12,104 76,108 Economic Benefits to the Poor 6,472 570 20,998 - 20,024 1,210 49,275

Poverty Impact Ratio 0.65

Sunderbazar-Kunchha-Duipiple Road, Lamjung Net Economic Effects 38,095 2,992 38,880 (40,624) 54,673 (9,681) 84,335 Economic Benefits to the Poor 30,476 898 23,328 - 32,804 (968) 86,537

Poverty Impact Ratio 1.03

Barabis-Deltabazar-Aatichaur Road, Bajura Net Economic Effects 20,636 3,074 99,992 (14,414) 32,312 (127,007) 14,592 Economic Benefits to the Poor 16,508 922 59,995 - 19,387 (12,701) 84,112

Poverty Impact Ratio 5.76

Chepe Nadi Trail Bridge, Gorkha Net Economic Effects 243 23 259 - 4,339 (2,814) 2,050 Economic Benefits to the Poor 195 7 156 - 2,603 (281) 2,679

Poverty Impact Ratio 1.31

Kaligandaki Trail Bridge, Myagdi Net Economic Effects 130 15 387 - 1,914 (1,409) 1,037 Economic Benefits to the Poor 104 4 232 - 1,149 (141) 1,348

Poverty Impact Ratio 1.30 NPV = net present value Source: ADB. 2018 (July-August). Field Survey by PCR Consultants . Kathmandu.

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Table A.5: Economic Costs and Benefits of Garma-Nele-Bogal Road Subproject in Solukhumbu District (NRs‘000)

Year Investment O&M Total Savings on Value of Savings on Value of Value of Total Net cash Costs existing generated existing generated Induced Benefits flow passenger passenge cargo nonagricultural trips r trips agricultural production cargo 2011 45,322 - 45,322 ------(45,322) 2012 45,322 - 45,322 ------(45,322) 2013 29,310 1,045 30,355 1,791 107 2,947 507 3,929 9,282 (21,074) 2014 29,310 1,045 30,355 1,791 107 2,947 577 7,857 13,280 (17,075) 2015 29,310 1,045 30,355 1,791 107 2,947 1,023 11,786 17,654 (12,701) 2016 29,310 1,045 30,355 1,791 107 8,696 3,704 15,715 30,013 (343) 2017 - 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921 2018 - 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921 2019 - 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921 2020 - 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921 2921 - 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2022 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2023 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2024 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2025 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2026 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2027 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2028 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2029 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2030 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2031 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2032 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2033 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2034 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2035 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

2036 2,430 2,430 7,884 2,424 8,696 3,704 19,643 42,351 39,921

207,884 52,782 260,666 164,849 48,906 191,449 79,891 432,150 917,244 656,578

BCR 1.259

` ENPV 41,241

EIRR 15.46% BCR = benefit-cost ratio; EIRR = economic internal rate of return; ENVP = economic net present value; O&M = operation and maintenance Sources: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Kathmandu. ADB. 2018 (July-August). Field Survey of PCR Consultants . Kathmandu.

80 Appendix 9

Table A.6: Economic Costs and Benefits of Manthali-Kathjor-Dhobi Road Subproject in Ramechhap District (NRs‘000)

Year Investment O&M Total Costs Savings on Value of Savings Value of Value of Total Net existing generated on generated Induced Benefits cash passenger passenger existing nonagricultural flow trips trips cargo agricultural production cargo 2010 43,069 - 43,069 ------(43,069) 2011 43,069 - 43,069 ------(43,069) 2012 - 2,408 2,408 4,933 672 13,231 798 1,497 21,131 18,722 2013 - 2,408 2,408 4,933 672 13,231 2,959 2,994 24,789 22,380 2014 - 2,408 2,408 4,933 672 13,231 2,959 4,491 26,286 23,877 2015 - 2,408 2,408 4,933 672 13,231 2,959 5,988 27,783 25,374 2016 - 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871 2017 - 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871 2018 - 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2019 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2020 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2021 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2022 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2023 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2024 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2025 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2026 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2027 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2028 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2029 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2030 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

2031 2,408 2,408 4,933 672 13,231 2,959 7,485 29,280 26,871

86,137 48,168 134,305 98,660 13,434 264,629 57,011 134,730 568,463 434,158

BCR 1.874

ENPV 76,108

EIRR 24.50% BCR = benefit-cost ratio; EIRR = economic internal rate of return; ENVP = economic net present value; O&M = operation and maintenance Sources: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project. Kathmandu. ADB. 2018 (July-August). Field Survey of PCR Consultants. Kathmandu.

Appendix 9 81

Table A.7: Economic Costs and Benefits of Sundarbazar-Kuncha-Duipiple Road Subproject in Lamjung District (in NRs’000)

Year Investment O&M Total Savings on Value of Savings Value of Value of Total Net cash Costs existing generated on generated non- Induced Benefits flow passenger trips passenger existing agricultural agricultural trips cargo cargo production 2008 33,207 - 33,207 ------(33,207) 2009 33,207 - 33,207 ------(33,207) 2010 - - 0 2,339 1,387 7,858 5,041 1,578 18,203 18,203 2011 33,207 1,728 34,935 2,339 1,387 7,858 5,041 3,157 19,782 (15,154) 2012 - 1,728 1,728 2,339 1,387 7,858 5,041 4,735 21,360 19,632 2013 44,666 1,728 46,394 2,339 1,387 7,858 5,041 6,314 22,938 (23,455) 2014 - 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2015 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2016 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2017 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2018 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2019 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2020 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2021 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2022 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2023 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2024 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2025 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2026 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2027 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2028 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2029 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2030 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2031 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2032 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

2033 2,549 2,549 6,239 5,825 11,591 7,436 7,892 38,983 36,434

144,288 56,160 200,448 134,140 122,042 263,249 168,884 173,621 861,936 661,488

BCR 1.75

ENPV 84,335

EIRR 22.84% BCR = benefit cost ratio; EIRR = economic internal rate of return; ENPV = economic net present value; O&M = operation and maintenance Sources: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project. Kathmandu. ADB. 2018 (Julu-August). Field Survey of PCR Consultants. Kathmandu

82 Appendix 9

Table A.8: Economic Costs and Benefits of Barabis-Deltabazar-Aatichaur Road Subproject in Bajura District (NRs’000) Year Investment O&M Total Savings Value of Savings Value of Value of Total Net Costs on generated on generated Induced Benefits cash existing passenger existing nonagricultural flow passenger trips cargo agricultural production trips cargo 2011 32,477 - 32,477 ------(32,477) 2012 32,477 - 32,477 ------(32,477) 2013 18,192 - 18,192 465 242 465 242 - 1,414 (16,778) 2014 18,192 - 18,192 465 242 465 242 - 1,414 (16,778) 2015 18,192 918 19,110 465 242 465 242 4,289 5,703 (13,407) 2016 18,192 918 19,110 465 242 465 242 8,578 9,992 (9,118) 2017 18,192 1,415 19,607 7,186 801 2,490 1,138 12,867 24,482 4,875

2018 1,415 1,415 7,186 801 2,490 1,138 17,156 28,771 27,357

2019 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2020 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2021 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2022 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2023 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2024 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2025 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2026 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2027 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2028 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2029 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2030 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2031 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2032 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2033 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2034 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2035 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2036 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

2037 2,452 2,452 7,186 801 2,490 1,138 21,445 33,060 30,609

155,915 51,246 207,161 152,762 17,797 54,152 24,864 450,348 699,924 492,763

BCR 1.13

ENPV 14,592

EIRR 13.5% BCR = benefit cost ratio; EIRR = economic internal rate of return; ENPV = economic net present value; O&M = operation and maintenance Sources: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project. Kathmandu. ADB. 2018 (Julu-August). Field Survey of PCR Consultants. Kathmandu.

Appendix 9 83

Table A.9: Economic Costs and Benefits of Chepe Nadi Trail Bridge Subproject, Gorkha District (NRs’000) Year Investment O&M Total Savings on Value of Savings on Value of Producer Total Net cash Costs existing generated existing generated non- surplus Benefits flow trips trips cargo agricultural cargo 2016 1,656 - 1,656 ------(1,656) 2017 1,656 - 1,656 ------(1,656)

2018 10 10 502 226 39 10 44 821 811

2019 5 5 502 226 39 10 44 821 815

2020 5 5 502 226 39 10 44 821 815

2921 5 5 502 226 39 10 44 821 815

2022 5 5 502 226 39 10 44 821 815

2023 10 10 502 226 39 10 44 821 811

2024 5 5 502 226 39 10 44 821 815

2025 5 5 502 226 39 10 44 821 815

2026 5 5 502 226 39 10 44 821 815

2027 5 5 502 226 39 10 44 821 815

2028 10 10 502 226 39 10 44 821 811

2029 5 5 502 226 39 10 44 821 815

2030 5 5 502 226 39 10 44 821 815

2031 5 5 502 226 39 10 44 821 815

2032 5 5 502 226 39 10 44 821 815

2033 10 10 502 226 39 10 44 821 811

2034 5 5 502 226 39 10 44 821 815

2035 5 5 502 226 39 10 44 821 815

2036 5 5 502 226 39 10 44 821 815

2037 5 5 502 226 39 10 44 821 815

3,313 126 3,439 10,047 4,526 778 195 871 16,417 12,979

ENPV 2,050

BCR 1.72

EIRR 21.70% BCR = benefit-cost ratio; EIRR = economic internal rate of return; ENVP = economic net present value; O&M = operation and maintenance Sources: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Kathmandu. ADB. 2018 (July-August). Field Survey of PCR Consultants . Kathmandu.

84 Appendix 9

Table A.10: Economic Costs and Benefits of Kali Gandaki Trail Bridge Subproject, Myagdi District (NRs’000)

Year Investment O&M Total Savings on Value of Savings Value of Producer Total Net Costs existing generated on generated non- surplus Benefits cash trips trips existing agricultural flow cargo cargo 2007 1,672.24 - 1,672 ------(1,672)

2008 10 10 198 89 39 2 58 386 376

2009 5 5 198 89 39 2 58 386 381

2010 5 5 198 89 39 2 58 386 381

2011 5 5 198 89 39 2 58 386 381

2012 5 5 198 89 39 2 58 386 381

2013 10 10 198 89 39 2 58 386 376

2014 5 5 198 89 39 2 58 386 381

2015 5 5 198 89 39 2 58 386 381

2016 5 5 198 89 39 2 58 386 381

2017 5 5 198 89 39 2 58 386 381

2018 10 10 198 89 39 2 58 386 376

2019 5 5 198 89 39 2 58 386 381

2020 5 5 198 89 39 2 58 386 381

2021 5 5 198 89 39 2 58 386 381

2022 5 5 198 89 39 2 58 386 381

2023 10 10 198 89 39 2 58 386 376

2024 5 5 198 89 39 2 58 386 381

2025 5 5 198 89 39 2 58 386 381

2026 5 5 198 89 39 2 58 386 381

2027 5 5 198 89 39 2 58 386 381

1,672 126 1,798 3,958 1,783 778 39 1,161 7,718 5,920

NPV 1,037

BCR 1.68 EIRR 22.3% BCR = benefit-cost ratio; EIRR = economic internal rate of return; ENVP = economic net present value; O&M = operation and maintenance Sources: DOLIDAR. 2018 (August). Project Completion Report of the Decentralized Rural Infrastructure and Livelihood Project . Kathmandu. ADB. 2018 (July-August). Field Survey of PCR Consultants . Kathmandu.

Appendix 10 85

MAINTENANCE RESPONSIBILITY AND ROAD STATUS

Table 1: Name of Road, Length, and current status of ownership and maintenance responsibility Current ownership of Total length Approved length Completed length the road and Name of of DPR S. N. District in DPR (km) of road (km) maintenance Subprojects approved responsibility roads (km) New Rehab New Rehab 5.5 Km section upgraded by Kaligandaki Corridor project. Road being 1 Baglung -Kusmisera 20.88 - - 16.00 20.88 maintained and Baglung upgraded by parliament member fund. Already black topped Baglung- 2 25.44 - - 25.20 by DOR and being Ghodabande 25.44 maintained. Part of road undertaken by DOR Shreebhabar -Kotila- 3 24.30 24.30 - - and remaining section Malladehi-Hat 23.55 Baitadi being maintained by rural municipality. Undertaken by DOR 4 Salena-Melauli 14.84 14.84 - - 14.84 for upgrading. Undertaken by DOR 5 Bhopur-Rupatola 17.92 17.92 - - 17.92 for upgrading. Bajhang Dangaji- Being maintained by 6 31.50 31.50 - - Mahendrajhar 31.50 rural municipality. Barbis -Aatichaur- Being maintained by 7 Delta Bazaar- 35.56 35.56 - - 35.56 rural municipality. Bajura Thamlek Being maintained by 8 Martadi- Majhigaun 7.20 7.20 - - 7.17 rural municipality. Bitule-Latinath- Being maintained by 9 14.80 14.80 - - Paribagar 14.09 rural municipality. Darchula Being maintained by 10 Khalanga-Dethala 20.38 20.38 - - 18.60 rural municipality. Dunai- Sahatara- 11 31.76 31.76 - - No information. Lasikyap 20.29 Dolpa Undertaken by DOR 12 Dunai- Supani 14.40 8.00 6.40 6.40 8.00 for upgrading. Part of the road being 13 upgraded under ADB Gorkha - financed EEAP, part 38.20 - - 38.20 Koyabhanjyang 38.20 fall in mid hill highway and part being

Gorkha upgraded by DOR. 14 Khabdibhanjyang Community and rural Bunkot-Namjung- 14.90 - - 14.90 14.90 municipality. Ghairung Batase

Nareshwir - Padin Being upgraded by 15 7.86 - - 7.86 Chautara 7.86 DOR. Hilsa- Simikot - Being upgraded by 16 Humla 31.04 31.04 - - Kharpu 26.24 DOR. Being upgraded by Khalanga-Rimna 16.50 16.50 - - 16.50 DOR. 17 Part being upgraded Jajarkot Thalaha - Batule - by DOR and part of the 18 31.82 20.90 10.92 Aulatari/Seto Pahiro 10.92 20.90 road being maintained by municipality.

86 Appendix 10

Total length Approved length Completed length Current ownership of Name of of DPR in DPR (km) of road (km) the road and S. N. District Subprojects approved maintenance roads (km) New Rehab New Rehab responsibility Dillichaur- Being maintained by 19 10.60 10.60 - - Dhupaghat 10.60 rural municipality. Kudari- Tamti - Being maintained by Jumla 30.44 30.44 - - 20 Topla -Imilcha 30.44 rural municipality. Thinke - Undertaken by DOR 4.92 - - 4.90 21 Uthichautara 4.92 for upgrading. Undertaken by DOR 22 Khulalu-Lalu-Laifu 33.10 33.10 - - 13.80 for upgrading. Kalikot Hulma-Seri-Sakh- Undertaken by DOR 23 10.15 10.15 - - Chhelahanna 8.81 for upgrading. Salmebhanjyang- Being maintained by 7.60 7.60 - - 24 Ghamrang 7.10 rural municipality. Half of the road Sundabazaar- 23.58 - - 23.58 already upgraded, and Kuncha-Duipiple 23.58 25 half being upgraded. Lamjung Part of the road undertaken by mid hill Tarkughat-Pyarjung 26 21.66 - - 20.12 highway, part being Bhanjyang 21.66 maintained by municipality. 27 Undertaken by DOR Gamgadi-Rara 14.50 14.50 - - 14.50 for upgrading. Mugu 28 Kalkandelek- Undertaken by DOR 34.20 34.20 - - Khamale -Kawa 32.83 for upgrading. Undertaken by DOR 29 Beni-Darbang 23.10 - - 23.10 23.10 for upgrading. Myagdi Being maintained by 30 Beni-Pakhapani 12.61 - - 10.11 12.61 municipality. Being upgraded under Rummjatar- ADB funded EEAP

31 Khartekhol-Serna- 29.71 29.71 - - project, part being 29.71 Sewa kendra maintained by Okhaldhunga municipality. 32 Upgraded by ADB Okhaldhunga- 21.50 21.50 - - project STEP, Jantardhap 21.50 maintained by DOR. 33 Gaikhura- Pakarbas- Being maintained by 32.82 4.33 28.49 Galba 28.49 4.33 municipality. Ramechhap Manthali-Kathajor- Being maintained by 34 22.30 8.30 11.50 Dhobi 14.00 8.00 municipality.

Garma-Nele- Being upgraded by 22.50 22.50 - - 35 Budhidanda 22.55 ADB project EEAP. Lekkharka-Maidel- Being maintained by 8.75 8.75 - - 36 Solukhumbu Mukli 8.7 5 municipality. Upgraded by ADB

37 Phaplu-Jantardhap 37.20 29.10 8.10 project STEP, 8.10 29.10 maintained by DOR. Being upgraded by Gupha Pokhari - Madan Bhandari 38 20.68 20.68 - - Dhungesangu 20.68 Lokmarga project

under DOR. Taplejung Being upgraded by

Madan Bhandari 39 Sanghu - Change 9.64 9.64 - - 9.64 Lokmarga project under DOR. 830.84 569.79 261.06 527.49 249.38