Document of The World Bank FOR OFFICIAL USE ONLY
Public Disclosure Authorized Report No: ICR00004936
IMPLEMENTATION COMPLETION AND RESULTS REPORT
ON AN
IBRD LOAN (IBRD-80490) OF US$470.49. MILLION,
IDA CREDIT (IDA-49410) OF US$69.92 MILLION, Public Disclosure Authorized
IDA CREDIT (IDA-49420) OF US$73.09 MILLION,
AND
GRANT (TF-15072) OF US$1.87 MILLION
TO THE
SOCIALIST REPUBLIC OF VIETNAM
Public Disclosure Authorized FOR THE
DA NANG-QUANG NGAI EXPRESSWAY DEVELOPMENT PROJECT
October 3, 2019
Transport Global Practice East Asia and Pacific Region
Public Disclosure Authorized
CURRENCY EQUIVALENTS (Exchange Rate Effective March 31, 2019)
Currency Unit = Vietnamese Dong (VND) VND 20,857= US$1 US$1.5855 = SDR 1
FISCAL YEAR July 1 – June 30
Regional Vice President: Victoria Kwakwa Country Director: Ousmane Dione Regional Director: Ranjit J. Lamech Practice Manager: Almud Weitz Task Team Leader(s): Dung Anh Hoang, Chi Kien Nguyen ICR Main Contributor: Hongye Fan
ABBREVIATIONS AND ACRONYMS
AusAID Australian Agency for International Development CPS Country Partnership Strategy DIR Detailed Implementation Review DQE Da Nang-Quang Expressway DPI Department of Planning and Investment DRVN Directorate of Road in Vietnam EIA Environmental Impact Assessment EIRR Economic Internal Rate of Return EMP Environmental Management Plan ENPV Economic Net Present Value EPMU E-Project Management Unit IA Internal Audit ICR Implementation Completion and Results Report IFRS International Financial Reporting Standards IRR Internal Rate of Return ITS Intelligent Transport System GDP Gross Domestic Product GoV Government of Vietnam HCMC Ho Chi Minh City JICA Japan International Cooperation Agency MDB Multilateral Development Bank MoT Ministry of Transport NH National Highway NPV Net Present Value NSEDP North South Expressway Development Program O&M Operation and Maintenance PDO Project Development Objective PMU Project Management Unit PPC Provincial People’s Committee PPP Public-Private Partnership PQ Pre-Qualification RETF Recipient Executed Trust Fund SEDP Socio-Economic Development Plan SOE State-owned Enterprise TA Technical Assistance VAS Vietnam Accounting Standards VEA Vietnamese Expressway Administration VEC Vietnam Expressway Corporation VO Variation Order VOC Vehicle Operating Cost VOT Vehicle Operating Time
TABLE OF CONTENTS
DATA SHEET ...... 1 I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 5 A. CONTEXT AT APPRAISAL ...... 5 B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE) ...... 14 II. OUTCOME ...... 16 A. RELEVANCE OF PDOs ...... 16 B. ACHIEVEMENT OF PDOs (EFFICACY) ...... 17 C. EFFICIENCY ...... 26 D. JUSTIFICATION OF OVERALL OUTCOME RATING ...... 27 E. OTHER OUTCOMES AND IMPACTS (IF ANY) ...... 27 III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME ...... 28 A. KEY FACTORS DURING PREPARATION ...... 28 B. KEY FACTORS DURING IMPLEMENTATION ...... 29 IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME .. 31 A. QUALITY OF MONITORING AND EVALUATION (M&E) ...... 31 B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE ...... 32 C. BANK PERFORMANCE ...... 33 D. RISK TO DEVELOPMENT OUTCOME ...... 35 V. LESSONS AND RECOMMENDATIONS ...... 36
ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS ...... 39 ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION ...... 47 ANNEX 3. PROJECT COST BY COMPONENT ...... 49 ANNEX 4. EFFICIENCY ANALYSIS ...... 50 ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS ...... 55 ANNEX 6. PROJECT MAP ...... 77
The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
DATA SHEET
BASIC INFORMATION
Product Information Project ID Project Name
P106235 Da Nang-Quang Ngai Expressway Development Project
Country Financing Instrument
Vietnam Investment Project Financing
Original EA Category Revised EA Category
Full Assessment (A) Full Assessment (A)
Organizations
Borrower Implementing Agency
Government of Vietnam Ministry of Transport
Project Development Objective (PDO)
Original PDO The objectives of the Project are to construct an expressway that will enhance efficiency and safety for road users traveling between Da Nang city and Quang Ngai province and build institutional capacity for expressway development in the Ministry of Transport.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
FINANCING
Original Amount (US$) Revised Amount (US$) Actual Disbursed (US$) World Bank Financing
470,490,000 144,313,832 144,313,832 IBRD-80490
73,090,000 73,090,000 66,810,294 IDA-49420
69,920,000 64,746,174 56,204,721 IDA-49410
1,870,625 1,867,513 1,872,129 TF-15072 Total 615,370,625 284,017,519 269,200,976
Non-World Bank Financing 0 0 0 Borrower/Recipient 116,600,000 116,600,000 280,005,000 JAPAN: Japan International 673,600,000 673,600,000 516,640,000 Cooperation Agency (JICA) Total 790,200,000 790,200,000 796,645,000 Total Project Cost 1,405,570,625 1,074,217,519 1,065,845,976
KEY DATES
ApprovalFIN_TABLE_DAT Effectiveness MTR Review Original Closing Actual Closing 24-May-2011 23-Feb-2012 18-May-2015 31-Oct-2018 29-Apr-2019
RESTRUCTURING AND/OR ADDITIONAL FINANCING
Date(s) Amount Disbursed (US$M) Key Revisions 13-Jun-2016 98.04 28-Jan-2019 256.52 Change in Loan Closing Date(s) 21-Mar-2019 256.52 Cancellation of Financing Reallocation between Disbursement Categories
KEY RATINGS
Outcome Bank Performance M&E Quality Moderately Satisfactory Moderately Satisfactory Modest
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
RATINGS OF PROJECT PERFORMANCE IN ISRs
Actual No. Date ISR Archived DO Rating IP Rating Disbursements (US$M) 01 19-Sep-2011 Satisfactory Satisfactory 0
02 20-Oct-2012 Satisfactory Satisfactory 0
03 26-Dec-2012 Satisfactory Satisfactory 0
04 25-Jun-2013 Satisfactory Moderately Satisfactory .50
05 03-Jan-2014 Satisfactory Moderately Satisfactory 7.50
06 02-Jul-2014 Satisfactory Moderately Satisfactory 20.92
07 24-Sep-2014 Satisfactory Moderately Satisfactory 44.19
08 17-May-2015 Satisfactory Moderately Satisfactory 74.18
09 14-Sep-2015 Moderately Satisfactory Moderately Unsatisfactory 75.76
10 22-Jun-2016 Moderately Satisfactory Moderately Satisfactory 98.04
11 23-Feb-2017 Moderately Satisfactory Moderately Satisfactory 171.20 Moderately 12 09-Nov-2017 Moderately Unsatisfactory 187.22 Unsatisfactory Moderately 13 28-May-2018 Moderately Unsatisfactory 222.27 Unsatisfactory Moderately 14 29-Apr-2019 Moderately Unsatisfactory 262.01 Unsatisfactory
SECTORS AND THEMES
Sectors Major Sector/Sector (%)
Transportation 100 Public Administration - Transportation 1 Rural and Inter-Urban Roads 99
Themes Major Theme/ Theme (Level 2)/ Theme (Level 3) (%)
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Private Sector Development 68
Jobs 8
Job Creation 8
Public Private Partnerships 10
Regional Integration 50
Urban and Rural Development 16
Urban Development 8
Urban Infrastructure and Service Delivery 8
Rural Development 8
Rural Infrastructure and service delivery 8
Environment and Natural Resource Management 24
Environmental Health and Pollution Management 24
Air quality management 8
Water Pollution 8
Soil Pollution 8
ADM STAFF
Role At Approval At ICR
Regional Vice President: James W. Adams Victoria Kwakwa
Country Director: Victoria Kwakwa Ousmane Dione
Director: John A. Roome Ranjit J. Lamech
Practice Manager: Jennifer J. Sara Almud Weitz Dung Anh Hoang, Chi Kien Task Team Leader(s): Paul Vallely, Dung Anh Hoang Nguyen ICR Contributing Author: Hongye Fan
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
I. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES
A. CONTEXT AT APPRAISAL
Context
Country Context
1. The project was prepared when Vietnam had experienced rapid economic growth for two decades and moved from a low-income country to a lower-middle-income country. In spite of a high inflation rate (20%), Vietnam’s real gross domestic product (GDP) grew at an annual rate of about 6 percent between 1994 and 2010, and real GDP per capita income increased by a factor of 2.5 between 1994 and 2010. Exports continued their rapid growth, reaching two-thirds of GDP in 2009 (US$57 billion), and foreign direct investment inflows remained among the highest in the world relative to the size of the economy.1 This remarkable economic performance over the past two decades had propelled Vietnam into the ranks of lower-middle-income countries.
2. A major catalyst for this economic progress was Vietnam’s strategic investment in infrastructure. Vietnam was among the world’s leaders in infrastructure investment with annual expenditures reaching 9–10 percent of GDP, about half of which was in transport. Continuous investment in infrastructure was identified as a key driver to maintain the economic development for the next decade as well as to avoid infrastructure bottlenecks on export and growth, especially in the less-developed regions. This required the continued expansion of the road, rail, and waterway transport networks to meet increasing needs in terms of quantity and quality.
3. In spite of the nationwide economic growth, the Central Region remained behind the Northern and Southern regions in economic growth and poverty alleviation. In 2008, the Central Region’s per capita income and poverty level stood at VND 10.1 million (about US$612 at the average market exchange rate) and 14.7 percent, respectively. Comparable levels for income and poverty in the Northern Region were VND 12.6 million (about US$760) and 8.7 percent, respectively, and for the Southern Region VND 19.8 million (about US$1,196) and 3.7 percent, respectively. 2 Interventions that could enhance the connectivity between the Central Region and the more economically dynamic Northern and Southern regions were deemed to be particularly effective in reducing the interregional gap in standards of living.
Sector Context
4. Sustained high economic growth had been accompanied by a rapid rise in transport demand and a need for lowering logistics cost through better road infrastructure. Between 1995 and 2007, the transport volume for passenger travel (measured in passenger-kilometer) and freight (measured in ton-
1 United Nations Conference on Trade and Development. 2009. “World Investments Prospects Survey.” New York and Geneva, p. 57. 2 General Statistics Office of Vietnam, Result of the Survey on Household Living Standards 2008. The government-defined income poverty line for 2008 was VND 3.48 million per person per year for rural areas and VND 4.44 million per person per year for urban areas.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
kilometer) increased at an annual average rate of 9.4 percent and 12.3 percent, respectively. It was estimated that sustained growth in per capita income would continue to drive increases in auto ownership, with the latter expected to grow fourfold by 2020. The logistics costs stood at 21 percent of GDP, a higher ratio than that of other countries in the region such as China and Thailand. Inadequate infrastructure was one of the main determinants of Vietnam’s costly logistics and a recurrent concern for foreign investors. As Vietnam transitioned to middle-income status, the country would require more reliable and higher-quality road infrastructure for the growing logistic demand.
5. At the time of project appraisal, capacity constraints began to emerge in the network. Only four percent of the national road network had four or more lanes. The transport sector had provided for this growth principally through the rehabilitation and widening of existing arterial roads. The national road network expanded to 17,000 km, and the overall condition improved with 66 percent of the network being in good and fair condition and 84 percent of the network paved. With a rapidly growing population, with an economic growth of over 8% per annum and with a significant widening of the industrial base, Vietnam had reached the stage of development where there was a strong justification for the creation of a high capacity, controlled access trunk highway network upon which to hang the rest of the roadway network.
6. The development of the transport sector was seen as crucial to integrate the Central Region into the economic development in the rest of the country. Future travel demand for passengers and freight between the Central Region and Vietnam’s largest cities was expected to grow rapidly. Specifically, travel demand for both passengers and freight between Da Nang (in the center), and either HCMC (in the south), or Hanoi (in the north), was expected to increase fivefold by 2030. In the Central Region, National Highway 1 (NH1) was the sole continuous north-south highway link but had only one traffic lane in each direction between Da Nang and Quang Ngai. It served primarily long-distance travel, with 40 percent of vehicles traveling the full length of the corridor. NH1 also suffered from mixed traffic streams where pedestrians, non-motorized traffic, motorcycles and slow-moving vehicles all merged with the faster trucks and buses. As a consequence, average vehicle speed was very low and traffic accidents on the road were frequent.
7. Updated in 2009, the Medium-to-Long-Term Expressway Strategy through 2020 with a Vision to 2030 prioritized the development of the North-South corridor and expanded its focus to the Central Region. The strategy comprised two broad development pillars: (a) the construction of a national expressway network, where priority was given to sections along the trunk North-South system, and (b) the development of the institutional infrastructure necessary to plan, fund, operate, and regulate the expressway sector. The priority North-South corridor, about 1,800 km in length, connects the country‘s Northern, Central, and Southern regions, anchored in the Hanoi, Da Nang, and Ho Chi Minh City (HCMC) metropolitan area markets, respectively, and were designated as the country‘s Focal Economic Zones. The expressway strategy’s focus in the early stages was on the Northern and Southern regions (where Hanoi and HCMC alone account for close to a third of Vietnam‘s GDP), with gradual expansion to include key sections of the Central Region.
8. To address the transport needs of Central Vietnam, only an expressway facility would provide the necessary capacity and service level, particularly for long-distance traffic. It would also help reduce road accidents as well as facilitate both domestic and international trade through regional integration. The Da Nang Quang Ngai expressway would help strengthen the economic linkages of Central Vietnam with the Northern and the Southern parts of the country and contribute to the Government of Vietnam‘s
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
(GoV‘s) efforts to reduce regional development gaps. The expressway was also expected to contribute to the development of Da Nang as a regional gateway to international markets through the East-West Economic Corridor (connecting Da Nang to Lao PDR and Thailand).
Institutional Context
9. Implementation of the expressway strategy had been carried out thus far by the Vietnam Expressway Corporation (VEC). VEC was established by the Ministry of Transport (MoT) in 2004 with a mandate that includes investment in expressway construction; management; maintenance and toll collection; construction and operation of related facilities; and the planning, appraisal, design, and supervision of construction. Although owned by MoT, VEC was established as a separate legal entity. VEC was expected to be financially independent from the Government in that its revenues, expenditures, assets, and liabilities were recorded and accounted for on a separate basis. VEC was responsible for the development of six expressway projects. The investment cost associated with those six sections is estimated at US$7.2 billion, which would complete 807 km of expressway.
10. However, MoT was concerned about capacity and financial constraints in VEC and substantial challenges on efficient operation and management of the expressway network in the long run. VEC had substantial financial constraints given its high debt to equity ratio (81 percent), and financial obligations for the construction, operation, and management of the six expressways under its mandates. This was not unexpected given the early stage of Vietnam‘s expressway development, where a number of expressways were being developed at a large capital cost (primarily funded with debt), while revenues had not yet materialized and would start at a relatively low base. In addition, a sound legal basis for the development and management of the expressway network was not yet in place. Formal ownership of the network was not specified and a legal foundation for defining the responsibilities of the Government and the developer/operator had not been created.
11. Institutional arrangements needed to be improved for expressway network integration and management. The Government proposed reforming the administration of Vietnam’s expressway program by establishing a dedicated administrative department within MoT (provisionally called the ‘Vietnamese Expressway Administration’ [‘VEA’]) to coordinate the overall planning, investment, and management of an integrated national expressway network. The establishment of VEA would allow VEC to shed the role of being the ‘owner’ of the network and focus on being a developer.
12. To solve the financial constraints of expressway development, it was critical for the Government of Vietnam to mobilize private capital. The development of the expressway system was a significant physical and financial commitment for the country, and the funding requirement was estimated at above US$20 billion for the program until 2020. This program could not be funded from government budget alone. Thus, MoT proposed to use public-private partnership (PPP) modalities to fund the construction of selected sections. To build its capacity to maximize the use of PPP modalities in expressway development, MoT proposed establishing a specialized division within MoT’s Department of Planning and Investment (DPI) to advise on structuring, implementing, and managing PPP contracts (the PPP cell).
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Rationale for Bank Assistance
13. In this context, and consistent with World Bank’s strategy of safe, clean, and affordable transport, the project was prepared to support the development of a high-capacity, robust expressway between Da Nang city and Quang Ngai province and strengthen the institutional capacity of MoT. The investment would provide the country with a more sustainable and resilient road infrastructure in the face of potential climate change impacts, while seeking to reduce transport emissions to protect air quality by reducing congestion on NH1. The expressway would contribute to the sustainable economic growth and inclusive development of the Central Region in Vietnam by enhancing the efficiency and safety of transport infrastructure. The expressway also aimed to strengthen the economic links of Central Vietnam with the Northern and the Southern parts of the country and contribute to the efforts of the Government of Vietnam (GoV) to reduce regional development gaps. The expressway aimed to contribute to the development of Da Nang as a regional gateway to international markets through the East-West Economic Corridor (connecting Da Nang to Lao PDR and Thailand).
14. The project would contribute to the sustainable economic growth and inclusive development of the Central Region in Vietnam by enhancing the efficiency and safety of transport infrastructure. The project would support the four main pillars of the Government’s Socio-Economic Development Plan (SEDP) 2006–2010 (which were in turn the organizing principles of the World Bank‘s Vietnam Country Partnership Strategy [CPS] FY07–FY11): improve the business environment, strengthen social inclusion, strengthen natural resource and environmental management, and improve governance. It was also consistent with the upcoming SEDP for 2011–2015, which highlighted infrastructure development, including large-scale projects, as a priority area to enhance competitiveness and contribute to attaining the Government‘s economic growth targets.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Theory of Change (Results Chain) Note: IFRS = International Financial Reporting Standards.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Project Development Objectives (PDOs)
15. PDOs in the Loan Agreement. The objectives of the project are (1) to construct an expressway that will enhance efficiency and safety for road users traveling between Da Nang city and Quang Ngai province and (2) build institutional capacity for expressway development in the Ministry of Transport.
Key Expected Outcomes and Outcome Indicators
16. PDO 1 is measured by five indicators and PDO 2 is measured by one indicator. Table 1 lists the outcomes and the respective indicators. The baseline values of the indicators are indicated in annex 1.
Table 1. Project outcomes and outcome indicators Outcomes Indicators PDO 1. To construct an expressway that (a) Travel time for 10-ton freight vehicles between Da Nang and will enhance efficiency and safety for Quang Ngai road users traveling between Da Nang (b) Travel time for passenger vehicles between Da Nang and city and Quang Ngai province Quang Ngai (c) Coefficient of variation of travel time for freight vehicles along the DQE corridor between Da Nang and Quang Ngai (d) Coefficient of variation of travel time for passenger vehicles along the DQE corridor between Da Nang and Quang Ngai (e) Number of fatalities due to traffic accidents in the DQE corridor PDO 2. To build institutional capacity for Adoption of a strategic plan for expressway network management expressway development in the Ministry of Transport Note: DQE = Da Nang-Quang Expressway. Components
17. Component 1: Da Nang-Quang Ngai Expressway (Estimated base cost of US$1,064.86 million, with US$432.6 million IBRD/IDA financing). This component financed (a) the construction of a four-lane expressway from NH1A, to the south of Da Nang city, to Quang Ngai province, including construction of a main carriageway, bridges, viaducts, and culverts, a tunnel, connection and service roads, and intersections, and related maintenance and rehabilitation of the local road network, in two parts: (i) from Da Nang city to Tam Ky city in Quang Nam province and (ii) from Tam Ky city to Quang Ngai province; (b) construction of a two-lane highway, including bridges, from the southern end of the expressway to NH1A in Quang Ngai province; (c) compensation, resettlement, and rehabilitation, including livelihood restoration of project-affected persons; and (d) establishment of an integrated traffic management and toll collection facility system and design, installation, and commissioning of an intelligent transport system (ITS) for the operation, management, and maintenance of the expressway.
18. Component 2: Project Implementation Support and Institutional Strengthening (Estimated base cost of US$48.5 million, with US$26.6 million IDA financing):
Component 2(a): Project Implementation Support for VEC (Estimated base cost of US$43.2 million, with US$21.3 million IDA financing). This subcomponent financed the provision of technical assistance (TA) to VEC in relation to (a) project implementation, including (i)
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
construction supervision; (ii) integrated review and monitoring; (iii) financial auditing; and (iv) implementation of the governance, transparency, and anti-corruption plan, and (b) capacity building for financial management.
Component 2(b): Institutional Strengthening for MoT (Estimated base cost of US$5.3 million, with US$5.3 million IDA financing). This subcomponent financed capacity building of (a) MoT in relation to (i) expressway planning and network management, including establishment and operationalization of an expressway planning and network management entity, and (ii) operationalization of the ministry’s PPP cell, in addition to the provision of policy support and (b) the Inspectorate Department in relation to its governance mandate.
Project Cost and Parallel Financing Structure
19. The project was financed by the Government, IBRD and IDA, the Japan International Cooperation Agency (JICA) and AusAid. At the appraisal stage, the total project financing requirements were estimated to be US$1,403.7 million, inclusive of price and physical contingencies, financing costs, and taxes. JICA agreed to finance 48 percent of the project (US$673.6 million) including civil works for the Da Nang –Tam Ky section (64.6 km), an intelligent transport system (ITS) for the entire project, and consulting supervision services for the JICA-funded civil works. The government agreed to provide counterpart funding in the amount of US$116.6 million equivalent, for land acquisition and resettlement costs necessary to construct the expressway, project management costs incurred by VEC, and taxes, duties, and other expenses on the JICA-funded works that are ineligible for JICA funding. Eligible expenses under the IDA Credit would include interest during construction. The Government of Australia provided a recipient-executed trust fund (RETF) of USD 1.87 million administered by the World Bank, to support the technical assistance to operationalize the PPP cell of MoT.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Table 2. Project Cost and Attribution to Financing Sources at Appraisal and by Project Closing Project Components Cost at Appraisal (US$, millions) Actual Cost (US$, millions) Total AusAid Total AusAid JICA IDA IBRD Gov. JICA IDA IBRD Gov. Cost RETF Cost RETF 1. Da Nang-Quang Ngai 1,064.86 527.42 85.80 346.81 104.83 1,005.38 494.75 103.73 128.60 278.30 Expressway a. Civil Works: Da 473.98 472.62 1.36 545.80 494.75 51.05 Nang-Tam Ky b. Civil Works: Tam Ky- 432.61 85.80 346.81 272.12 103.73 128.60 39.79 Quang Ngai c. ITS and O&M 54.96 54.80 0.16 equipment d. Land acquisition 103.31 103.31 152.43 152.43 and resettlement 2. Project 50.39 18.44 1.87 26.56 3.52 49.2 21.89 1.87 12.90 9.55 2.99 Implementation Support and Institutional Strengthening a. Project 43.22 18.44 21.26 3.52 44.43 21.89 10.00 9.55 2.99 Implementation Support for VEC b. Institutional 7.17 1.87 5.30 4.77 1.87 2.90 Strengthening for MoT Total base cost 1,115.24 545.85 1.87 112.36 346.81 108.35 1,054.57 516.64 1.87 116.63 138.14 281.29 Physical contingencies 85.84 42.14 8.67 26.78 8.25 Price contingencies 123.71 62.44 14.99 46.28 Total project cost 1,324.79 650.43 1.87 136.02 419.87 116.60 1,054.57 516.64 1.87 116.63 138.14 281.29 Interest during 75.12 20.49 5.32 49.31 7.11 4.38 2.73 implementation Front-end fees, 5.66 2.68 1.67 1.31 3.39 1.17 2.22 commitment fees, and service charges Total cost 1,405.57 673.60 1.87 143.01 470.49 116.60 1,065.84 516.64 1.87 123.01 144.31 280.01
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Note: O&M = Operation and maintenance.
Note: - Average exchange rate: USD/VND = 22.201; JPY/VND = 193,09. - Government financing includes: counterpart fund from state's budget, fund mobilized by VEC and estimated amount of toll fee collected from VEC' s projects used as work volume or outstanding work, which are not disbursed from WB's loan by the loan closing date.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
B. SIGNIFICANT CHANGES DURING IMPLEMENTATION (IF APPLICABLE)
20. The project went through three restructurings. Table 3 summarizes the key changes of the project in each restructuring.
Table 3. Summary of Key Changes Activities Approval Date Key Revision First Level 2 restructuring May 31, 2016 Removed the project result indicators from the Loan Agreement and Financing Agreement and included them in the Project Operations Manual Second Level 2 restructuring January 28, 2019 Extended the closing date of the project from October 31, 2018, to April 29, 2019, given that more time was needed to complete the remaining works Third Level 2 restructuring March 15, 2019 Cancelled US$135 million of the unused loan
Revised PDOs and Outcome Targets
21. There were no changes in the PDOs and outcome targets.
Revised PDO Indicators
22. The first project restructuring removed the indicators from the legal agreement but there was no change to the indicators themselves.
Revised Components
23. There were no changes in the components.
Other Changes
24. Changes of activities under JICA’s financing. The ITS and O&M facilities financed by JICA were cancelled in December 2017. The estimated cost of this component was US$54.8 million. According to JICA’s project status report dated May 2018, the O&M package and ITS package were cancelled because the technical specifications of relevant equipment could not be developed within the project implementation period, as the national guidelines and regulations for O&M of the expressway had not yet been established. MOT was concerned about the risks of incompatibility between Japanese equipment and the future Vietnamese national standard. Instead, MoT and VEC would use the JICA Study and Technical Cooperation on Expressway O&M and ITS standardization to develop the national guidelines and regulations for O&M equipment and ITS and use their own funds to procure O&M and ITS equipment in the future based on the national standards.
25. Changes in the institutional set-up during project implementation. There were two major changes in the institutional set-up during project implementation: 1) In 2018, as part of the national state- owned enterprises reform, VEC was removed from MoT to the Commission for Management of State Capital of Enterprises; and similarly, 2) VEA was dissolved in 2018 as part of national-level institutional
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reforms. These institutional changes partly impacted the project implementation and achievement of PDOs, which is explained in sections II and III of this report.
26. Incomplete activities after project closing. At project closing, some activities remain to be completed under the civil work contracts, including (a) part of the Dung Quat interchange where the works are scheduled to be completed in December 2019 due to prolonged soft soil treatment works, and (b) works on some of the access/frontage roads where the land acquisition is still not completed. The value of the remaining works is about US$20 million. The GoV will fund these works under its own budget.
Rationale for Changes and Their Implication on the Original Theory of Change
27. First project restructuring. The first restructuring took place as part of a one-time amendment for 13 World Bank projects in the Vietnam portfolio to simplify the process of changing the results framework during project implementation. Since Vietnam requires an amendment to the legal agreement whenever there is a change in the project results framework. This amendment involved a long approval process, including approval from the President. After the restructuring, the change of the project results framework only needs minister-level approval, which helped streamline the process and save time for future changes. Under this project restructuring, the project objectives, components, and M&E framework remained the same. There were no impacts on the original theory of change.
28. Second project restructuring. The second restructuring was to extend the project closing date for about six months to complete all the remaining works (except for the Dung Quat interchange). By the time the GOV requested the project extension, the expressway mainline was completed and open to traffic. About 5 percent of civil works were remaining at the Dung Quat interchange and access/frontage roads. The construction delay was mainly caused by delayed land acquisition, prolonged soft soil treatment at the interchange, and delayed approval by VEC for variation orders (VOs). An extension of the project was needed to ensure the finalization of access roads at interchanges to facilitate traffic entering and exiting the expressway and to make it an attractive alternative route to the existing NH1 and thus ensure the operational efficiency of the newly built expressway. In addition to these, with incomplete/unavailable access and frontage roads, connectivity of some affected local roads has been disrupted by the expressway. These have caused negative impacts on the integrity, operation, and safety of the expressway and the local road network in the region. Completion of the remaining works, hence, was critical to enable the efficient and safe operation of the expressway and to remove the disruptions of the affected local road networks. The restructuring was retroactively made because the letter from MOT to request the extension was not sent until November 22, 2018 which was after the original project closing date.
29. After the restructuring, the project objectives, components, and M&E framework remained the same. There was no impact on the original theory of change.
30. Third project restructuring. The restructuring was to cancel the unused loan that mainly derived from the cost savings of the civil works. It was estimated that a total amount of US$135 million of the IBRD loan would not be used by the end of the project.
31. There was a large amount of cost savings (US$166 million) from the bidding of civil works packages. As there was no agreed plan upon these cost savings and because the project closing date was approaching, it became obvious that implementation of any additional works using the cost savings would
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no longer be possible. The restructuring resulted in the cancellation of US$135 million corresponding to a reduction of the total loan and credit amount from US$470.49 million to US$335.49 million. In a letter dated January 18, 2019, the Ministry of Finance, on behalf of the Government, requested for cancelation of US$135 million IBRD loan and IDA credit.
32. After the restructuring, the project objectives, components, and M&E framework remained the same. There were no impacts on the original theory of change.
II. OUTCOME
A. RELEVANCE OF PDOs
Assessment of Relevance of PDOs and Rating
Relevance of the PDOs to the CPS
33. The objectives of the project were consistent with the development priorities and circumstances at the time of project preparation and implementation. At project closing, the PDOs remained directly aligned with CPS FY18–FY22, on the strategic focus areas of enhancing competitiveness and opportunity equality and enabling inclusive growth and private sector participation through better delivery and management of transport infrastructure. Table 5 summarizes the relevant pillars and focus areas of CPS FY18–FY22 in relation to the PDOs.
Table 4. Relevant Pillars and Their Main Objectives CPS Relevant Pillars Main Objectives of the Pillars FY18–FY22 Focus Area 1: Strengthen economic governance and market institutions. Enable Inclusive Growth Promote private sector and agribusiness development. and Enhance trade competitiveness, multi-modal transport Private Sector connectivity, and logistics services. Participation Improve planning, management, and delivery of infrastructure and land in cities. Broaden economic participation of ethnic minorities, women, and vulnerable groups.
34. The project is also highly relevant to Government’s Socio-Economic Development Plan (SEDP) 2016–2020, by supporting the pillar of continuing to push for the strategic breakthrough of building the infrastructure system in urban development. The priority areas of this pillar include: 1) Enhancing the quality of socio-economic infrastructure planning, ensure the overall efficiency and systemic aspects of planning, especially the transportation, electricity distribution, water distribution, irrigation, information, media, education, health care, and environment systems; 2) Continuing the construction of roads, highways, the Northern - Southern railroad and upgrade the current railroad system, in-land and coastal waterway network; 3) Continuing to prioritize funds for transportation infrastructure projects in low- income areas.
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35. At sub-national level, the PDOs are directly linked to the social and economic development plans of Da Nang city, Quang Nam province and Quang Ngai province. For example, the Master Plan on Socio- Economic Development of Danang City 2011-2020 indicated DQE as a priority infrastructure project will promote economic development in the city and be a socio-economic drive for regional development. The Master Plan of Social and Economic Development of Quang Ngai Province (2016 – 2020) and Quang Nam Province (until 2020 with a vision to 2030) emphasizes DQE as one of the focal and strategic transport projects that should be prioritized for investment with completion essential to leverage social and economic benefits.
36. In addition, the PDOs are highly relevant to the current ‘Master Plan on Development Of Vietnam’s Expressway Network through 2020, with Orientations toward 2030’ (the Expressway Master Plan) which was issued on March 1, 2016 by the Prime Minister. The Expressway Master Plan highlighted that the primary objective of expressway development is to rapidly form the national expressway network, ensuring links between key economic centers, major border gates, and important traffic hubs with great demand for high-speed transport, and to focus on the construction of the North-South expressway with priority given to routes linked to big cities (Hanoi, HCMC, and Da Nang city) and routes to big seaports.
37. Based on this evaluation, the relevance of the PDOs is rated High.
B. ACHIEVEMENT OF PDOs (EFFICACY)
Assessment of Achievement of Each Objective/Outcome
38. With PDO 1 and PDO 2, the project improved efficiency and safety of road users travelling from Da Nang to Quang Ngai by reducing the travel time and accidents for traveling from the Central Region to more developed areas in the country. In addition to addressing transport infrastructure bottlenecks, the project also strengthened governance and accountability in the transport sector by helping the MoT and VEC promote transparency and improve capacity on expressway PPP and network management.
39. PDO 1: To construct an expressway that will enhance efficiency and safety for road users traveling between Da Nang city and Quang Ngai province
Rating: Substantial
40. The project largely achieved its outcomes and outputs of the expressway construction component. At output level, 131.5 km of expressway and 8km of national highway (see project map and site photo below) were constructed as planned. Data on the freight tariff of 10-ton truck was collected from a freight company. Although this data is not sufficient as sampling for assessment, it shows a trend of reduction in freight tariff along the corridor. The collected data on freight tariff for a 10-ton truck from Da Nang to Quang Ngai was reduced from USD 83.43 (as baseline) to USD 53.88 which was lower than the original target of USD 75.00.
41. However, there were about 5% civil works for the interchange and access roads left to be completed by end 2019. The remaining works at the interchange are likely to impact on the traffic to be generated from the adjacent industrial zone which will be put into operation in two years. The remaining
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work on the access roads will not impact on the traffic flow and capacity of the expressway but will affect the connectivity of some road users living along the expressway.
Map and Site Photos of the DQE
42. At outcome level, the final value of outcome indicators achieved is higher than their original targets (see annex 1). The project enhanced the efficiency for road users travelling through the DQE corridor by significantly reducing travel time of 10-ton freight vehicles and passenger vehicles. Before the opening of the expressway, road users could only take NH1 - with one lane in each direction - to travel from Da Nang city to Quang Ngai Province. It took 10-ton freight vehicles and passenger vehicles about 3 hours 50 min and 2 hours 40 min, respectively, to travel from Da Nang to Quang Ngai on NH1. After the expressway opened, the road users’ travel time on the DQE corridor decreased by 36% which is beyond the original target of 20% reduction.
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Figure 1. Travel Time through the DQE Corridor before and after the Project
Travel time on Da Nang Quang Ngai Corridor (unit: minutes) 250
200
150
100
50
0 Before Project (baseline) Orignal target After Project (final value)
travel time for 10-ton freight vehicles between Da Nang an Quang Ngnai Travel time for passenger vehicles between Da Nang and Quang Ngai
Data source: Project Implementation and Status Report Seq.14, No. ISR 36486
43. The coefficient3 of travel time variation of 10-ton freight vehicles and passenger vehicles reduced by 32% and 13%, respectively, also beyond the original targets of 10% reduction. This showed that the speed of vehicles driving through the expressway was steady and less affected by traffic jam or other factors that increase uncertainty of the travel time on the expressway such as traffic accidents or road blockages from nature disaster. Figure 1 and 2 indicate the change of travel time and the coefficient of travel time for vehicles travelling from Da Nang City to Quang Ngai Province.
3 Coefficient of travel time was measured as the standard deviation of a number of trips divided by the mean travel time
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Figure 2. Coefficient of Variation of Travel Time through the DQE Corridor
Coefficient of variation of travel time on Da Nang Quang Ngai Corridor 0.2
0.15
0.1
0.05
0 Before Project (baseline) Orignal target After Project (final value) Coefficient of variation of travel time for freight vehicles along the DQE corridor between Da Nang and Quang Ngai Coefficient of variation of travel time for passenger vehicles along the DQE corridor between Da Nang and Quang Ngai
Data source: Project Implementation and Status Report Seq.14, No. ISR 36486
44. In addition, the project improved the safety of road users on the Da Nang Quang Ngai corridor. The number of fatalities due to traffic accidents was reduced by 77%, as indicated in figure 3. Before project implementation, from 2010-2011, there were about 185 fatalities on the Da Nang Quang Ngai corridor (only NH1). From the expressway opening to traffic to project closing (from Sep. 2018 to Apr. 2019), during the first 8 month of operation, there were 42 fatalities on the Da Nang Quang Ngai corridor (NH1 and DQE). There were four months’ difference between the interval fatality data before and after project, given no further data was provided after project closing. However, if comparing the monthly fatality data as indicated in Figure 3, it still indicates a significant improvement from 15 fatalities per month before project to 5 fatalities per month after project.4 The improvement is above the original target which was about 14 fatalities per month.
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Figure 3. Number of Fatalities Due to Traffic Accidents in the DQE Corridor
Number of fatalities per month due to traffic accidents in the DQE corridor 18 16 14 12 10 8 6 4 2 0 Before Project (baseline) Orignal target After Project (final value)
Data source: Project Implementation and Status Report Seq.14, No. ISR 36486
45. Although the expressway has achieved the target values of efficiency and safety, the performance of the expressway could have been improved further with completion of the remaining civil works (as mentioned in the section on ‘Other Changes’). Despite the current traffic volume at about 50% of the forecast at project appraisal, the results of safety and efficiency are better than the original targets set at project preparation.
46. PDO 2: Build institutional capacity for expressway development in the Ministry of Transport
Rating: Substantial
47. The project supported MoT’s institutional capacity building for expressway development by technical assistance and training activities to the departments in MoT and VEC (which used to be part of MoT until 2018) 5 on expressway network development and management, PPP, anti-corruption, and project implementation and management support. The outcome level indicator of this objective is the adoption of a strategic plan for expressway network management which is defined as “senior staff appointed to the VEA so that it becomes operational” in the M&E framework. Compared to the broad scope of institutions related to expressway network management, and scope of project activities, the definition of the outcome level indicator was over-simplified and narrowed down to the performance of only one institution.
48. The intermediate indicators, include measurement of intermediate outcomes for different beneficiary institutions, contributing to a more comprehensive evaluation on the efficacy of the PDO2. However, some intermediate indicators to measure PDO 2 focused more on the adoption of policies and
5 In 2018, Vietnam established Ministry (Committee) of State Capital Administration and moved VEC from the administration of MoT to administration of the new committee.
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strategies and the establishment of institutions rather than the measurement of capacity built. The former is much dependent on the political environment and the legal framework for new policies and institutions which are beyond the project scope. Such indicators were over-ambitious for measuring the achievement of PDO 2 and should have rather focused on measuring capacity built as per defined development objective in key existing institutions related to expressway development.
Given the insufficiency of the result framework to measure efficacy of PDO 2, the ICR evaluates the achievement of PDO 2 against the level of capacity enhancement attributed to the project intervention for MOT, with regard to expressway management, mobilization of private capital, tolling strategy, governance and anti-corruption, internal audit and preparation of financial reports following International Financial Reporting Standard (IFRS). The enhancement of capacity is measured from whether the human resources, procedures and functions of institutions were improved during the project implementation to carry out relevant tasks. This not only reflects achievement of the intermediate outcome but also considers the impact and results that are not measurable in the original result framework. Given the content and readiness to adopt policy changes, the design for the result framework could have been less ambitious or more phased out.
1). Building capacity of expressway network management by establishment and operationalization of Vietnam Expressway Authority (VEA) in MoT
49. During project preparation, the expressway management in Vietnam was fragmented and inefficient. The construction expressway projects were assigned to different PMUs. With increasing expressways built and connected, the institutional gap on the network-level management and operation of expressways became an emerging issue. Hence, the project supported the establishment and operationalization of VEA as an institution with operational and legal functions and technical expertise to manage the expressway network in Vietnam.
50. The VEA was established under DRVN according to the Prime Minister’s Decision No.60/2013/QD- TTg and started operation in March 2014.6 . During VEA’s operational period from 2014-2018, it consisted of nine senior staff and 18 officers who received training on expressway management in this project.7 The project also developed a system of necessary legal tools and framework for VEA to manage the expressway network and provided technical equipment and trainings for VEA to perform its management tasks. Accordingly, the functions of the VEA included: (i) setting up a policy mechanism, development planning, technical standards, and economic-technical norms; (ii) formulating medium-term and annual plans on expressway management and maintenance; (iii) directly managing expressways which are under DRVN’s management; and (iv) inspecting and supervising the management, development, operation and maintenance of expressway routes in the form of BOT.
51. However, as part of a government effort to reduce the number of government institutions, on August 14, 2018, VEA was dissolved based on the Prime Minister Decision No. 35/2018/QD TTg which re-
6 Since March 2014, the VEA officially went into operation and implement the functions and tasks according to the DRVN’s Decision No.400/QD-TCDBVN dated March 6, 2014. 7 As of September 2018, the organizational structure of the VEA consists of 1 Director, 3 Deputy Directors, 5 specialized offices (Office of Administration and Finance, Office of Planning – Technical Work, Office of Management & Maintenance, Office of Traffic Safety, and the Southern Expressway Management Office include 15 officers and 3 contracted laborers 68).
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identifies the functions, mission, powers and structure of DRVN. The vision of DRVN was identified as “essentially managing the road network efficiently, including policy, planning for network development, allocating funding for sustainable maintenance of the current network and delivering a safe and reliable road transport system.” In accordance with this Decision, DRVN in October 2018 reassigned the personnel to other agencies, and transferring the tasks and assets to other departments under DRVN. Table 6 summarizes how the functions of VEA were handed over to the respective departments.
Table 5. Summary of VEA’s Functions Transfer Arrangement Recipient Department Functions of VEA Transferred Department of Road Management and Maintenance State management on the implementation of Department of Traffic Safety management, development, operation, and Department of Science, Technology, Environment, and maintenance of expressway International Cooperation Department of Planning and Investment Planning for development of expressway network Regional Road Management Departments Expressways managed by DRVN
52. In spite of the dismantling of VEA after its four years of operation, the functions and capacity of expressway management built in the project have remained and continued in MOT. The last ISR negated the achievement of this activity, based on the fact that VEA was dismantled, but also neglected to mention that its functions and staff remained in DRVN. As the dismantling of VEA was beyond the reach of the project, the achievement of the capacity enhancement on expressway network management is hence considered as substantial.
2). Building capacity of mobilizing private capital by establishment and operationalization of a PPP unit in MoT
53. The project supported the establishment and operationalization of a PPP Public Private Participation unit in MoT. The PPP unit was established in 2012 based on MoT Decision No. 1815/QD- BGTVT, as an agency for investment and development of transport infrastructure projects using a Public Private Partnership model (PPP). The project used funds from AusAID that were administered by the World Bank as a recipient-executed trust fund (RETF). The output of project activities includes:
(a) Establishment of an institutional framework to identify, manage, and operate PPP projects in the transport sector;
(b) Development of specific procedures and guidance for a PPP unit on life-cycle management of PPP projects;
(c) Development of sample documents on procurement and contracts for various types of PPP transactions;
(d) Development of a management information system for PPP projects;
(e) Organization of domestic and international training to provide the necessary knowledge, skills, and international experience for the PPP unit and relevant agencies under MoT in management and implementation of PPP projects; and
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(f) Assessment of the current state of facilities of the PPP unit and development of a plan for facility improvement of the PPP unit.
54. By enabling the operation of a PPP cell, the project provided substantive analytical foundations for PPP project appraisal and procurement procedures. It supports the ongoing preparation of the North- South Expressway Development Program which includes eight PPP sections and paves the way for further institutional strengthening of maximizing finance for development in this sector. By project closing, the PPP Unit is fully capable in preparing and implementing PPP expressway projects. It is now organizing the tendering for the North South Expressway PPP program which is expected to mobilize USD 2.9 billion of private capital for expressway development.
3). Adoption of national expressway tolling strategy
55. The project intended to support the development and adoption of a national expressway tolling strategy. In 2014, based on Prime Minister request in No. 4202 / VPCP-KTN, MoT reviewed and researched the tolling system for national highway and expressways, especially on BOT projects. The review concluded that a national tolling strategy was not feasible because each BOT and PPP project had its own project-based tolling strategy, depending on project specifications and agreements between the operators and project owners. There were concerns from other government authorities on generalizing the tolling strategy at national level. MoT proposed to the Prime Minister to not approve the master plan for toll booths on the national highways and highways in Vietnam, and the proposed strategy was thus not adopted.
4). Building capacity for MOT Inspectorate on anti-corruption and good governance in expressway development
56. The project built the capacity of the Inspectorate Department in MoT to improve the effectiveness and efficiency in preventing corruption and settling complaints and to enhance the overall transparency of MoT, by developing work manuals and providing trainings and necessary facilities. Through the project, MoT Inspectorate disseminated 14 manuals and reports to agencies under it, the DRVN Inspectorate, and other departments for wider and more effective application in inspection, settlement of complaints and denunciations, corruption prevention, and other activities of inspection authorities.
57. The project also organized five domestic training courses, with the participation of international experts and experienced lecturers on inspection, for MoT Inspectorate, Inspectorate of Civil Aviation Authority of Vietnam, Inspectorate of Viet Nam Maritime Administration, inspectors of Directorate for Roads of Vietnam, and Viet Nam Inland Waterway Administration with a cumulative number of more than 180 participants. In addition, the project organized three international study tours (two to China and one to the UK) and with a cumulative number of 24 inspectors from MOT Inspectorate. The study tours provided experience lessons learnt from China and UK on the anti-corruption, settlement of complaints, improving operational performance of MoT Inspectorate, enhancing openness and transparency in the
transport projects and other activities within MOT’s administration.
58. As an immediate outcome of the project activities, MOT adopted 14 inspection procedures developed under the project activities, and currently is organizing trainings for the 63 provincial-level
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inspectorates on these 14 procedures in order to streamline these procedures at provincial level in the future.
5). Capacity building for VEC to undertake internal audits and prepare accounts to IFRS standards:
59. The project provided TA and trainings to VEC on internal audit (IA) and preparing accounts to IFRS standards. Through the project, VEC management and the accounting team gained a better understanding of IFRS, identified the gaps between IFRS and VAS and their impacts on the financial statements, and prepared templates for IFRS financial statements with support from consultants. VEC worked with the consultant in preparing the financial statements but could not fully comply with the IFRS, mainly due to the constraints in domestic regulations. There are differences between the Vietnam Accounting Standards (VAS) and IFRS, regarding categorization and calculation of equity and debt. According to Vietnamese law, VEC, as an SOE that is financially dependent on the GoV, had to fully comply with VAS. The main reason for VEC not to adopt IFRS is that there would be a difference in financial positions and performance between VAS and IFRS. If IFRS were used, then VEC would be technically insolvent based on the reported figures. By project closing, despite IFRS not prepared due to the legal constraints. The latest ISRs measured the achievement of this capacity building as negligible, but did not consider that the incompatibility of the two standards could not be resolved during project implementation. On the other hand, the VEC accounting team had developed the capacity to perform a similar exercise in preparation of future IFRS financial statements, once the legal constraints are removed.
60. The project also developed an IA charter for establishment of the IA function in VEC. VEC used the IA charter as a guiding document for the operational procedures of IAs and identified the detailed roles and responsibilities of internal auditors. VEC also organized training workshops on IA to improve the knowledge and skills of the IA function. By the end of the project, VEC established an IA function accountable to the member’s council and completed the recruitment of IA staff. In addition, the project built MOT’s capacity of financing management including debt management and long-term planning. Through trainings and technical assistance, VEC developed a model for financing management, debt management, and long-term planning. That model was put into practice by the end of the project.
Overall achievement of PDO 2.
61. To sum up, the project has built capacity on four of five targeted areas for MOT. In addition, the institutional component contributed to the achievement of the longer-term goal of the sector development regarding mobilization of private sector capital and a more transparent governance of expressway. Therefore, the efficacy of PDO 2 is rated substantial.
Justification of Overall Efficacy Rating
62. Both PDO 1 and PDO 2 were substantially achieved. In addition to the outcome evaluated in the M&E framework, the component of expressway construction also adopted innovative engineering solutions such as bioengineering protection against landslide risks, and design for safety. The cost saving achieved in civil works contracts also proved efficient procurement. In addition, the project reduced the construction cost of World Bank section by USD 166 million through efficient procurement. Compared to
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similar road sections of which the cost per km was about USD 6.5 million, the average cost per km of the World Bank section was about USD 3.6 million. At the same time, as the expressway was not 100% completed, and the traffic volume was much lower than expected, there is a risk that the efficiency and safety may decrease when once the remaining works are done and traffic increases.
63. Considering the factors above, the overall efficacy rating of the project is substantial.
Table 6. Overall Efficacy Rating of the Project PDO Rating 1.Construct an expressway that will enhance efficiency and safety for road users traveling Substantial between Da Nang city and Quang Ngai province 2. Build institutional capacity for expressway development in the Ministry of Transport Substantial
C. EFFICIENCY
Assessment of Efficiency and Rating
64. The project generated economic and social benefits via lower vehicle operation cost (VOC), reduced vehicle operation time (VOT), less traffic accidents, and flood impact mitigation. Table 8 presents the economic analysis results after project completion, which confirms the economic viability of the project with an NPV of VND 3,982 billion and IRR of 12.0%. The project benefits compose of 45% from VOT savings, 28% from accident savings and 13% from VOCs savings and 7% from Motorway bonus.8 In addition, the flood mitigation benefit of the expressway accounts for 0.1% of total economic benefits.
65. Although robustness of the investment was confirmed, the economic returns were reduced significantly compared to expectations at project appraisal stage. Despite a decrease in capital costs by 25%, prolonged construction time and lower-than-projected actual traffic resulted in a reduction of the internal rate of return from 25% to 12%. The PAD projected traffic based on an assumed toll rate of 800- 1,000 VND/km while the actual current base toll is set at 1,500 VND/km 1500.This is one factor contributing to the less-than-expected traffic volume. Furthermore, the longer construction time was estimated to cause a reduction of the IRR by at least 2%. Therefore, the rating of project economic efficiency is moderate. The detailed economic analysis is in annex 4.
Table 7. Updated Economic Evaluation Results
PAD ICR Toll rate (VND per km) 800 1,200 1,500 NPV (VND, billions) 42,769 40,957 3,982 IRR (%) 25.4 25.0 12.0 Note: ICR = Implementation Completion and Results Report. Discount rate at PAD was 11 percent and at ICR was 10 percent.
66. Implementation efficiency. The implementation efficiency was evaluated based on the disbursement rate and procurement efficiency. The disbursement of the project was very slow during the
8 More detailed data on Motorway bonus is pending provision.
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first three years of implementation and sped up after the mid-term review from 28% to 58%. However, the disbursement rate stayed at 58% until project closing and increased to 99% after unused loan was cancellated after the grace period. On the other hand, the project reduced the construction cost of World Bank section by USD 166 million through efficient procurement. The construction of the expressway, which accounted for about 92 percent of the total project investment, was open to traffic about one month before the original project closing date. There were delays in resettlement, land acquisition and mobilization of sub-contractors that delayed the project progress, thus a six months extension on the project closing date was requested.
67. Overall, the project efficiency was modest.
D. JUSTIFICATION OF OVERALL OUTCOME RATING
68. Given that there were moderate shortcomings in achieving project efficiency and efficacy, the rating of project efficiency is Moderately Satisfactory. Table 10 presents the rating of relevance, efficacy, and efficiency.
Table 8. Project Ratings Category Rating Project relevance High Project efficacy Substantial Project efficiency Modest Overall project Moderately Satisfactory
E. OTHER OUTCOMES AND IMPACTS (IF ANY)
Climate Change
69. The DQE contributes to climate change adaptation, since it enables more reliable transportation during times of flooding by the elevated expressway, which is important both for cargo and passenger transport. Historical data on flooding along the NH1 corridor suggests that there is a 50% probability of flooding resulting in road closure of 6-10 hours (i.e., every other year) and a 5 % chance of severe flooding resulting in road closure of 24-36 hours (i.e., once every 20 years). It was assumed that the disrupted road traffic would take the vehicles twice their normal travel time on the undisrupted road. The design of DQE considered flood issues by ensuring that the vertical alignment of the expressway was consistent with appropriate flood levels. The expressway was constructed with significant lengths of bridges, viaducts, and embankments to carry the expressway over four major rives and the associated flood plains. The project generated about 1,434 million VND of flood damage mitigation benefits in 2019 (see annex 4). This benefit is expected to increase to VND 5,796 million in 2030 along with the growth of traffic growth.
Institutional Strengthening for Mobilizing Private Sector Financing
70. The project resulted in significant capacity building for MoT on mobilizing private sector financing. This capacity has been reflected in streamlined procedure of managing transport PPP projects and its administration level upgraded to a PPP Department from a PPP Division under the Department of
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Investment and Planning. The PPP Department is currently the leading agency for the eight PPP sections of the North-South Expressway Development Program (NSEDP), which plans to mobilize about USD 2.9 billion from the private sector to develop about 654 km of expressway during the first phase of the program (2017-2021).
Other Unintended Outcomes and Impacts
71. There were no other unintended outcomes and impacts of this project.
III. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOME
A. KEY FACTORS DURING PREPARATION
72. The project objectives were realistic and aligned well with the expressway sector development priorities of Vietnam. The project objectives were defined based on thorough background analysis at country, regional, and sector levels. They aligned with the priorities of the National Strategy on Development of Vietnam Expressway Network through 2020 with a Vision to 2030. The project objectives targeted efficiency and safety of the DQE, which was a prioritized new expressway, and improvement of capacity of MoT, which is the key institution for expressway development in Vietnam.
73. The project design was straightforward and sufficiently considered the Government’s proposals on technical enhancement and institutional reform. On expressway construction, the project design incorporated the need to address increasing traffic demand, more resilient infrastructure, and improved connectivity to local communities. Considering the limited experience of VEC and MoT on expressway quality control, the project designed quality assurance activities to provide a quarterly check on the quality of construction works and supervision. The component on institutional capacity building included various functions of expressway development and management and directly operationalized the reform proposal of MoT on establishment of VEA and a PPP unit.
74. The project adopted an integrated project monitoring plan and safeguard policies on the entire expressway (both JICA and World Bank sections) and established an effective coordination mechanism with JICA. During the project preparation, the World Bank (IBRD and IDA) and JICA signed a ‘Procedure Agreement for JICA, IBRD, and IDA for Co-financing for North-South Expressway Construction Project (Da Nang- Quang Ngai Section)’ in April 2012. The agreement streamlined the information exchange and coordination of project management between the World Bank and JICA. The project preparation also designed the Integrated Project Review and Monitoring Services which would conduct general oversight and provide a mechanism to assess coordination of progress on both the World Bank- and JICA-funded sections.
75. The risks of resettlement were well identified, but the commitment from MoT, VEC, and local authorities to mitigate the risks was not adequate. The project preparation identified that VEC had limited authority to require provinces to implement agreed project safeguards plans, particularly with regard to resettlement, and disbursement of counterpart funds for land acquisition and resettlement might suffer delays if there are gaps in inter-agency coordination or procedural requirements become protracted. The land acquisition cost was ultimately higher at project implementation (about USD 152.43
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million) than estimated at project preparation (about USD 103.31 million) due to increase both unit price and quantity of households for compensation. MoT as the project owner could have played a more active role in strengthening the coordination between VEC and local authorities. As MoT was responsible for providing counterpart funds and VEC for channeling the funds to local authorities, the commitment from MoT to address the resettlement issues was not sufficient.
B. KEY FACTORS DURING IMPLEMENTATION
76. There was strong ownership of MoT and VEC for the expressway construction component but less so for capacity building activities. During project implementation, the expressway construction enjoyed support from MoT and VEC from the approval of the technical design to the procurement of contractors and the supervision of the construction sites. VEC established the EPMU in Da Nang to closely manage the expressway construction. However, on the institutional and capacity building activities, the level of commitment from beneficiary departments of MoT and VEC was relatively low. Changes in the management of MoT and VEC after the project started implementation resulted in less understanding and acceptance of the original design of the capacity building activities. In addition, there was a general perception that the benefits from technical assistance provided by donors was not fully positive, with many TA activities provided to government agencies in Vietnam not able to operationalize changes in the government administration system. Thus, MOT and VEC had less political buy-in for the capacity building activities after the change in management of the two institutions.
77. Effective contract packaging and implementation of procurement significantly lowered the construction cost and improved the efficiency of using project funds. The package division was decided after considering the market capacity, experience of implementing international competitive bidding in other projects of Vietnam, and land acquisition risks. Packaging the civil works into large-value contract helped attract a high level of interests from reputable and qualified international and national bidders. It is considered that any further consolidation of the works would have been counterproductive as it is likely that the number of qualified bidders would have been significantly smaller. Due to the value and complexity of the works, prequalification was applied to ensure invitation for bids issued to eligible bidders who had relevant and adequate qualifications to submit the bids.
78. Table 11 indicates the value of contracts and the number of prequalified applicants and final bids. The competition among contractors for the expressway construction packages was substantial, with an average number of 8.5 bidders participating in each works package and 11.8 EOIs received per major consultancy package. About 14-20 applicants submitting PQ applications, with 12-17 prequalified for each package. As a result, the civil work costs were reduced by a total of USD 166 million.
Table 11: Procurement of civil works on WB section
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Contract price, Contract Number of Number of including taxes period and Prequalifed bids Package Road length and contingency completion applicants submitted (USD) date 16.150 km 49 months 14 8 A1 70,215,482.11 and 29 days, (Km65+000 - Km81+150) April 29, 2019 49 months 14 8 18.350 km A2 80,879,210.60 and 21 days, (Km81+150 - Km99+500) April 29, 2019 50 months 17 12 10.600km A3 64,519,976.29 and 07 days, (Km99+500 - km110+100) April 29, 2019 14.600km 48 months 17 11 A4 (Km110+100 - 61,356,624.32 and 02 days, April 29, 2019 Km124+700) 6.800km 45 months 12 6 (Km124+700- Km131+500) 66,084,378.36 and 15 days, A5 and 7.704km (Km131+500 June 30, 2018 - Km139+204)
79. Regulatory and organizational changes affected the project implementation progress. Changes in the public debt management law in 2015 increased the threshold of eligibility of new borrowing for SOEs and redefined measurement of public debt, which made VEC ineligible to take on new debt given its limited borrowing space. Further, the change of the public investment management law in 2016 changed the category of the MDB funding from transfer to on-lending of the national government to SOEs. This lowered the incentives of MoT and VEC using the IBRD loan. In addition, given the nationwide reorganization of SOEs, the ownership of VEC was changed from MoT to a Commission for Management of State Capital of Enterprises, which weakened the coordination between VEC and MoT. The institutional changes also caused project progress delays. MoT assigned VEC as the project owner but initially instructing VEC to hire Project Management Units (PMUs) of the ministry (PMU1 and PMU85) for daily project management support for the World Bank- and JICA-financed sections, respectively. This arrangement created another layer of project administration and made the internal management procedures more complicated and inefficient. Later, MoT assigned the full implementation responsibility to VEC only in September 2014.
80. The lack of experience with large and complex projects following the World Bank procedures and weak administration of contracts made MOT and VEC spend longer-than-expected time for evaluations and approval of contractual and payment documents. Though VEC had some experience in implementing expressway projects, the EPMU as a new PMU had limited experience in managing projects financed by MDBs and faced difficulties in mobilizing experienced and long-term human resources. This
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was exacerbated by this being the first World Bank funded project under VEC management and as such their understanding on the World Bank procedures and guidelines was very limited. When procuring contractors for civil works, because VEC at that time was not familiar with pre-qualification procedures of the Bank’s Procurement Guidelines, it took a long time to complete the due diligence and clarifications on the PQ documents. In addition, the slow approval of variation orders (VO) caused cash flow pressures, with some main contractors with relatively weak financial capacity delaying mobilization of sub- contractors and materials. There was a lengthy process of approving VOs within VEC and MOT during project implementation.
81. Slow resettlement and land acquisition caused delays of the expressway construction. The slow land clearance and resettlement was due to financial constraints of provincial governments in providing resettlement compensation, and delayed hand-over of the accessible sites to the contractors. According to Vietnamese law, provincial governments are the primary responsible authorities to provide compensation for resettlement. However, during the project implementation provincial governments faced financial constraints following the compensation standard agreed in the project. Also, the actual cost of land acquisition and resettlement was higher than estimated at project preparation. To tackle this problem, MOT and VEC provided financial support for compensation, but it took a long time to agree on this solution and proceed with fund approval within MOT and VEC. In addition, delayed hand-over of sites to the contractors also caused delay. For example, despite the total length to be handed over to contractors as per contracts being 92.65%, the actual length that was accessible to work by the contractors until mid-term (May 2015) of project implementation was only about 60%. After the mid-term review, the resettlement and hand-over of construction sites was sped up. This was evidenced by sites for 136.3km (accounting for 97.2% of total length of expressway and national highway) handed over to contractors by April 2016.
IV. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME
A. QUALITY OF MONITORING AND EVALUATION (M&E)
M&E Design
82. The M&E framework was well designed for monitoring project outputs and outcome of component 1. However, indicators for component 2 were not consistently tied to project activities, and in some areas were not measurable. For example, an outcome-level indicator related to adoption of a strategic plan for expressway network management is hard to measure, as “adoption” and “strategic plan” were not further defined. The M&E framework used “Senior staff appointed to VEA and make it operational” as the definition for this indicator, which could not prove the adoption of the strategic plan as the plan covers more aspects than operationalization of VEA. It was also not clear how the outcome- level indicator for component 2 linked to the intermediate indicators which measured outputs of TA activities for VEA, the PPP unit, the Inspectorate Department, and VEC.
M&E Implementation
83. The implementation of M&E was challenging due to inadequate data collection and assessment of results indicators and underperformance of the M&E consultants at the early stages of
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implementation. The low performance of the M&E consultant had been a concern since the consultants were on board, with their value-added barely meeting the expectations of MOT and the World Bank team. The M&E reports lacked sufficient analysis and up-to-date information of the project progress; for example, the final M&E report submitted by the consultants didn’t provide information of indicators consistent with the project status. The indicators of institutional capacity building components were measured too mechanically, without thorough evaluation on the capacity enhancement and understanding on the context for institutional changes. The coordination between PMUs and beneficiary agencies was weak, which sometimes delayed project status updates.
M&E Utilization
84. The M&E system struggled to meet the criteria of effective utilization, due to inadequate data collection and inconsistent understanding of indicator values. For example, the supervision mission found that the understanding of “completion” of one activity was different between M&E consultants and beneficiary departments. With more effort in coordination between the M&E consultants and beneficiary departments, the effectiveness of M&E reports was enhanced. This is evidenced more timely updated indicators in the M&E reports submitted by VEC. For example, on road fatalities data, VEC asked the consultants to conduct more surveys and also carried out more frequent check-up meetings with DRVN to ensure the timely updates of M&E report.
Justification of Overall Rating of Quality of M&E
85. The overall rating of M&E quality is Modest.
B. ENVIRONMENTAL, SOCIAL, AND FIDUCIARY COMPLIANCE
86. The project complied well with environmental safeguards compliance. The project was a category A project, triggering safeguard policies on Environmental Assessment (OP/BP 4.01) and Physical Cultural Resources (OP/BP 4.11) only on a precautionary basis. The project was in compliance with environmental safeguards during project preparation and preparation of detailed technical design. However, during construction nearly all the missions indicated a moderately satisfactory environmental performance. While the PMU staffing for environmental safeguards was adequate, there were a number of non- compliances by the contractors during construction on workers’ safety and construction waste management but addressed after more supervision on these issues. For example, the mission in April 2016 found that some workers were not wearing personal protective equipment. There was inadequate dust control, management of hazardous wastes, and traffic management at the construction site. To strengthen the compliance of contractors on the environment safeguard, PMU and WB team made the construction supervision consultant work closely with the contractors on the actions and penalty on non- compliance issues. The action plans were approved by VEC, which helped strengthen the compliance of contractors related to environmental safeguard policies.
87. The social safeguards were not fully complied with during project implementation, given the remaining outstanding implementation of corrective resettlement compensation actions in Quang Nam Province. The project triggered safeguard policies on Involuntary Resettlement (OP/BPOP4.12). During the project implementation, around US$120 million of compensation payment were made to nearly
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18,000 households affected. At project closure, about US$300,000 compensation payment to around 3,000 affected households (US$100 per household) were outstanding. This non-compliance occurred in some districts in Quang Nam. A due diligence review conducted by the World Bank team based on the data provided by VEC suggested that the non-compliances were minor and dispersed and did not equate to evidence that households had been left worse off by land acquisition associated with the expressway, but rather that receipt of compensation and allowance benefits has differed. The district authorities state risk of increasing complaints and confusion about household eligibility for compensation as their key concern if they provide additional amounts to some households now after some time, especially as they have accepted previous decisions. Quang Nam PPC decided not to implement the remedy actions according to its official letter dated April 4, 2019, with the confirmation on the resolution is currently pending VEC’s confirmation. Based on the World Bank’s supervision, although there are still material discrepancies between what the policy requirements were, and what was paid in compensation, the team concluded that the objectives of the resettlement policy were met and that peoples living standards and livelihoods restored to pre-displacement levels.
88. The project compliance with financial management requirements had some gaps. Under the project’s Financing Agreement, two audited financial statements are required: (a) the project-audited financial statements and (b) the VEC entity-audited financial statements. While the quality of (a) was acceptable, the quality of (b) was not, as the auditor issued an adverse opinion on the VEC entity financial statements, citing material departure from IFRS, which are the standards required to be used for the VEC entity financial statements.
89. The project complied well with the procurement policies of the World Bank despite an INT investigation during the early stage of project implementation. The Procurement Plan was properly designed with large-value packages, attracting a high level of interest from reputable international and national bidders/consultants. The implementation of procurement activities was satisfactorily completed although in general the procurement process took a long time. On average the short-list preparation for a Quality and Cost Based Selection consultancy package was completed in 6.5 months, while proposal evaluation took about 6.3 months. The PQ process of the road packages lasted more than 7 months on average. The bid evaluation was done more efficiently within 2–3 months.
90. An administrative inquiry carried out by INT found evidence of fraud by an international consulting firm (“the Consultant”) when it failed to disclose that it had entered into a subcontract with a local firm while negotiating a contract amendment with the PMU that resulted in an increase in the scope of work entailed in the overall contract. This expansion mainly included a lump sum item in the Independent Verification Laboratory Test Work of the expressway construction works packages supervised by the Consultant. However, the Consultant did not document into the revised contract that it had entered into a subcontract with a local firm who would then provide the independent verification laboratory testing service, nor did the Consultant inform the PMU about this subcontract. From this investigation some lessons learnt were recommended by INT concerning the supervision of subcontractors and subcontracts.
C. BANK PERFORMANCE
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Quality at Entry
91. The World Bank ensured quality at entry by incorporating experience from previous projects and through an adequate alignment of the project objectives with the Government’s plans and the World Bank Country Partnership Framework. The project incorporated the experience and lessons from previous projects by (a) packaging large-value civil works contracts (cost estimates ranging from around US$30 million to US$100 million per package), applying slice-package procedures or inviting bids for several packages in one Invitation for bids to create enough competition of eligible national and international contractors; (b) limiting the number of contracts to a manageable level to VEC for effective supervision of civil work implementation; and (c) providing hands-on supervision and support to social safeguards compliance. Discussions and consultations with project team members during preparation improved the design and procedures of the environmental and social aspects of the large infrastructure project.
92. Necessary studies and documents focusing on the social and environmental aspects of the project as well as fiduciary assessments were initiated early during the project preparation, which took many years and attests to the depth of the groundwork accomplished during the project preparation. The PAD prepared by the World Bank included the arrangements (implementation, M&E, and fiduciary) needed to ensure that the outcomes of the project are attained as planned. All through the preparation, the World Bank maintained a multidisciplinary team that worked closely with the other partners.
93. The World Bank played an important role in coordinating among all parties and provided assistance to different parties during the project preparation. The project involved many stakeholders, including two bilateral development agencies (JICA and AusAid), and four beneficiary departments of MoT and two PMUs. The World Bank set up agreements with JICA and AusAid, assessed the capacity gaps of the various departments and PMUs, and incorporated consensus into capacity-building activities.
94. While the World Bank designed a solid M&E framework, there was insufficient consideration when defining the measurement of indicators. The project Results Framework included both outcome- level indicators and intermediate indicators. All indicators of PDO 1 aligned well with the project components and could reflect the achievement of efficiency and safety of the expressway. However, the definition of outcome-level indicator of PDO 2 ‘adoption of a strategic plan for expressway network management’ was limited to ‘senior staff appointed to VEA and make it become operational’, while operationalization of VEA was only part of the strategic plan. The other elements of the strategic plan for network management such as an integrated tolling system, better institutional governance, improvement of anti-corruption within the expressway development, and mobilization of private capital, while measured through intermediate indicators, were not reflected in the description of the outcome-level indicator. It would have been more appropriate if the project selected key areas of capacity building and include them in the outcome level indicators.
Quality of Supervision
95. The World Bank’s performance during implementation was consistent, proactive, and collaborative with counterpart staff. Throughout the long project life, there were only two task team leaders and a core supervision team of financial management, procurement, environmental, and social
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safeguards specialists, who maintained regular and close communications with implementing agency staff and the co-financing partner, including active monitoring of project-funded works in the three provinces. The project team was proactive in providing feedback to technical inputs, in suggesting and responding to the Government’s request for project extension, and finally in assisting the Government to cancel a substantial amount of US$135 million from the of project funds and so retain these for future use in the country’s IBRD allocation. The team also proactively brought issues that need strong support from higher levels to the attention of Bank Management so that these could be well communicated on time with high levels of the Government management for solutions.
96. The World Bank team provided constant support during implementation through 18 supervision missions (including additional safeguard missions), site visits, and regular communications (e-mails, official communication, and video and audio conferences). During missions, the World Bank team involved the various partners in the project such as PMUs, JICA, the contractors, the consultants, the different ministries and local governments and etc. The supervision of the World Bank provided constructive recommendations for improving the effectiveness of the project actions with action plans prepared and used as reference point for next steps. The project also benefitted from higher-level management support (site visits by the Country Director and managers and regular communication with high-level government representatives), which helped keep the momentum and facilitated progress.
97. Regarding the complex social safeguard issues, a lot of efforts was put into supervision yet there was a lack of effective instruments to better enforce timely compliance with World Bank safeguards requirements. For example, the issues of different compensation standards between Government’s regulations and the World Bank requirements were well noted during the project preparation as well as on the first supervision mission in 2012. However, due to the risk in non-compliance implementation at the district level, a due diligence was carried out to review the compensation standard policies and practices. The due diligence report provided a comprehensive picture to all government agencies including MOT, VEC, provincial governments, district governments, resettlement implementation agencies, and helped build consensus on the actions taken by each agency and coordination among them.
98. The project supervision did not sufficiently consider restructuring some M&E indicators to better measure the project results. Given the ambiguity of some indications in the result framework, and changes in the political commitment of conducting some TA activities, the World Bank team could have worked with the counterpart on improving the result framework and rescope some of the TA activities.
Justification of Overall Rating of Bank Performance
99. The World Bank’s overall performance is rated Moderately Satisfactory.
D. RISK TO DEVELOPMENT OUTCOME
100. Delay in completing the remaining construction works may mitigate the efficiency of expressway operation. The financial proposals and constructing plans prepared by VEC for the remaining civil works of Dung Quat interchange and access roads are still pending approval from higher-level authorities. According to the plan, the civil works of Dung Quat interchange will be completed in 10 months, and the civil works for frontage and connection roads will be completed in 3 months after the
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approval of the proposals. Although the expressway is open to traffic, the uncomplete interchange and access roads impede traffic flows into the expressway, which affects its efficiency.
101. The long-term sustainability of the expressway relies on sufficient and quality maintenance by VEC. The lack of maintenance is a worldwide challenge for long-term sustainability of roads, and Vietnam is no exception. Sufficient funding and strong institutional support are essential to overcome it. The maintenance of DQE will be undertaken by the Vietnam Expressway Management Administration (VEMA) which was set up under VEC as a specialist subsidiary to provide operation and maintenance services for expressways for which VEC is responsible. VEC received technical assistance on maintenance standards and training from JICA. The toll revenue from its managed expressways is supposed to fund the maintenance. There is a risk that financial support for future maintenance will not be sufficient as the tolls for the World Bank-financed section will not be collected until the completion of all civil works. However, this risk is considered manageable and temporary as the maintenance works are at very small scale at this stage and will be covered under the overall maintenance source, while the remaining works will be completed soon and thus the expressway will be fully operational for toll collection.
V. LESSONS AND RECOMMENDATIONS
102. The following are the lessons from the project’s implementation experience and challenges:
Effective contract management of large value and complex contracts requires clear statements of obligations of contractors, sub-contractors and procuring agencies, close monitoring of contractors on KPIs, and strict enforcement of contract conditions. Key performance indicators need to be embedded in the procurement strategy and further elaborated during detailed design and supervision TOR preparation, before the contract award. Once a contract has been signed, monitoring will need to extend to contractors and subcontractors. It is important to ensure contractors’ strong financial capacity throughout the contract period to mobilize equipment, materials and human sources for the construction.
Developing a procurement strategy during the project preparation will be helpful to clearly identify procurement arrangements, project demand and context, and mitigate the future risk of contract management. The project did not prepare procurement strategy as it was not a requirement from the WB when project was prepared. A procurement strategy helps PMUs/procuring entities foresee up front the potential risks and prepare in advance risk mitigation measures for the whole procurement and contract implementation process. Market surveys and analytic assessment during procurement strategy preparation also facilitate the development of an appropriate market engagement strategy, and relevant bidding requirements to ensure quality responsiveness/positive feedbacks of the market to procurement invitations.
More upfront and frequent training on World Bank policy and guidelines is needed to ensure that the Client staffs understand the Bank’s requirements before they implement the project. Some trainings on procurement and financial management were provided by the World Bank but were considered not sufficient for Client’s staff to fully understand the
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World Bank policy and guidelines. The level of attendance in those trainings of staff who were going to implement the project was also low. Further, as the project implementation was progressing, there were new staffs joining the project capable in project management following the World Bank requirements.
As land acquisition and resettlement activities become more expensive, the compensation policy needs to be adapted to ensure consistency with land transfer at market value. Land scarcity leads to delays in land clearance and time-consuming procedures lead to delays in project civil works progress. It is increasingly common practice for people to receive cash compensation for lands and assets on land with comparatively inadequate value. Several districts where no resettlement areas have been developed or have not yet settled have decided to recover residential land. In case of residential land acquisition, compensation is insufficient to buy a new plot in the resettlement areas. The compensation land price is lower compared with that of the land with similar condition at market rates, especially for agricultural land in urban areas and rural residential areas. The compensation for agricultural land is often not enough to receive the transfer of similar or inadequate agricultural land to transfer the nonagricultural production and business land to other jobs. To resolve the bottlenecks, the compensation policy must be consistent with the transfer price in the market. Adequate consideration and assistance need to be paid to social safeguard policies, vocational training, and income restoration for project-affected people, especially for those who are severely affected and vulnerable households. Furthermore, it is key to have an integrated centralized and complete database tracking resettlement and compensation for effective tracking and supervision.
Frequent and consistent coordination of provinces and districts by the implementing agency’s PMU is crucial for linear projects such as this one that stretches across three provinces crossing through 13 towns/districts. In Vietnam, sometimes there is inconsistent application of project policies occurs—even differently among the districts of the same province. Building and maintaining effective coordination among various provincial/district agencies and implementing agencies and the World Bank task team plays a vital role. Smooth and sufficient coordination and cooperation among VEC/EPMU, three PPCs, the Department of Natural Resource and Environment (DONREs), and especially 13 districts’ Land Fund Development Centers is a key lesson learned for the successful implementation of compensation and resettlement activities.
The M&E framework for institutional capacity-building activities should sufficiently consider the complex context of the institutional arrangement in the country and design measurable indicators to reflect the direct link between the outcome and the project activities. In Vietnam, the institutional and policy reform depends on multisector factors and multi-stakeholder consensus and often takes a long process of consultation before decision making. The TA for one specific stakeholder may have limited leverage of support from other stakeholders, for a policy/institutional change that involved many stakeholders. Thus, institutional capacity building and TA need to set up realistic and focused targets and implementable M&E framework for project implementation.
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The linkages between components funded by WB and components funded by JICA (or other parallel co-financiers) need sufficient assessment during project design and a collaborative mechanism to manage the impact from any project changes need to be set up at early stage. In this project, the cancellation of the ITS component funded by JICA indirectly affected the national tolling strategy development as part of the TA funded by WB. The procedural agreement between two financiers provides general clauses to keep each party informed but did not have clauses on how to manage correlated risks together. It will be useful to pre-assess the linkages and prepare to jointly manage the risks caused by any party’s activities. Periodic meetings (bi-annually) among donors and client should be organized to discuss any possible changes in design and potential solutions. In this project, the cancellation of the ITS component and its replacement could have been discussed at an earlier stage so that there would be enough time to complete such replacing system before project closure.”
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ANNEX 1. RESULTS FRAMEWORK AND KEY OUTPUTS
A. RESULTS INDICATORS
A.1 PDO Indicators
Objective/Outcome: Enhance efficiency and safety for road users traveling between Da Nang city and Quang Ngai province Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Travel time for 10-ton freight Minutes 233.00 186.40 149.00 vehicles between Da Nang and Quang Ngai 31-Jan-2011 31-Jan-2018 31-Mar-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Travel time for passenger Minutes 158.00 126.40 102.00 vehicles between Da Nang and Quang Ngai 31-Jan-2011 31-Jan-2018 31-Mar-2019
Comments (achievements against targets):
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Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Coefficient of variation of Number 0.19 0.17 0.13 travel time for freight vehicles along the DQE 31-Jan-2011 31-Jan-2018 31-Mar-2019 corridor between Da Nang and Quang Ngai
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Coefficient of variation of Number 0.08 0.07 0.07 travel time for passenger vehicles along the DQE 31-Jan-2011 31-Jan-2018 31-Mar-2019 corridor between Da Nang and Quang Ngai
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
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Number of fatalities due to Number 185.00 166.50 42.00 traffic accidents in the DQE corridor 31-Jan-2011 31-Jan-2018 31-Mar-2019
Comments (achievements against targets): The baseline and original target were the number of fatalities within a year, while the final value was collected after 8 month (from Sep. 2018 to Apr. 2019) of expressway operation.
Objective/Outcome: Build institutional capacity for expressway development in the Ministry of Transport Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Adoption of a strategic plan Yes/No N Y Y for expressway network management 31-Jan-2011 31-Jan-2016 31-Mar-2019
Comments (achievements against targets):
A.2 Intermediate Results Indicators
Component: Da Nang - Quang Ngai Expressway
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
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Roads constructed, non- Kilometers 0.00 131.50 131.50 rural: expressway 31-Jan-2011 31-Jan-2018 29-Mar-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Roads constructed: non-rural Kilometers 0.00 8.00 8.00 national 31-Jan-2011 31-Jan-2018 29-Mar-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Construction work Percentage 0.00 100.00 95.00 completed 31-Jan-2011 31-Jan-2018 29-Mar-2019
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion
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Freight Tariff for a 10 ton Amount(USD) 83.43 75.00 53.88 truck between Da Nanag and Quang Ngai 31-Jan-2011 31-Jan-2018 30-Apr-2019
Comments (achievements against targets):
Component: Project Implementation Support and Institutional Strengthening
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Establishment of a Vietnam Yes/No N Y Y Expressway Authority and Public Private Participation 31-Jan-2011 31-Jan-2016 31-Aug-2018 cell in MoT
Comments (achievements against targets): The PPP cell is established while the VEA was established and later dissolved.The functions of VEA has been redistributed to different departments of MOT. The final value is therefore yes.
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Adoption of a national Yes/No N Y N strategy for tolling 31-Jan-2011 31-Jan-2016 13-Apr-2018
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expressways
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Capacity building for MoT Yes/No N Y Y Inspectorate to handle complaints undertaken 31-Jan-2011 31-Jan-2016 13-Apr-2018
Comments (achievements against targets):
Formally Revised Actual Achieved at Indicator Name Unit of Measure Baseline Original Target Target Completion Capacity building for VEC to Yes/No N Y Y undertake internal audits and prepare accounts to IFRS 31-Jan-2011 31-Jan-2016 31-Mar-2019 standards
Comments (achievements against targets):
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B. KEY OUTPUTS BY COMPONENT
Objective/Outcome 1 1. Travel time for 10-ton freight vehicles between Da Nang and Quang Ngai 2. Travel time for passenger vehicles between Da Nang and Quang Ngai 3. Coefficient of variation of travel time for freight vehicles along the DQE corridor Outcome Indicators between Da Nang and Quang Ngai 4. Coefficient of variation of travel time for passenger vehicles along the DQE corridor between Da Nang and Quang Ngai 5. Number of fatalities due to traffic accidents in the DQE corridor 1. Roads constructed (non-rural: expressways) 2. Roads constructed (non-rural: national) Intermediate Results Indicators 3. Construction work completed 4. Freight tariff for a 10 ton truck between Da Nang and Quang Ngai Key Outputs by Component 1. 131.5 km expressway constructed and open to traffic (linked to the achievement of the 2. 8.02 km feeder highway constructed Objective/Outcome 1)
Objective/Outcome 2
Outcome Indicators 1. Adoption of a strategic plan for expressway network management 1. Establishment of a Vietnam Expressway Authority and Public Private Participation cell in MoT 2. Adoption of a national strategy for tolling expressways Intermediate Results Indicators 3. Capacity building for MoT Inspectorate to handle complaints undertaken 4. Capacity building for VEC to undertake internal audits and prepare accounts to IFRS standards
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1. PPP unit cell in MoT established; VEA established and in operation for four years, but dismissed in 2018. 2. Legal framework for the VEA to perform tasks of management, operation and maintenance of Vietnam's expressway network; Expressway management information system for performance of immediate and long-term goals of VEA; Capacity building through training courses. 3. Manual on steps and procedures in settlement of complaints, denunciations and Key Outputs by Component corruption prevention; Manual on takeover - payment process in capital construction (linked to the achievement of the investment; Manual on process of inspection, examination and handling of Objective/Outcome 2) administrative violations, and an application to process letters and complaints sent to MOT Inspectorate; Templates and regulations on openness and transparency of project information; Procedures to promote openness and transparency in MOT to prevent corruption; Capacity building for MOT inspectors through trainings and study tours; 4. Assessment report on VEC financial management capacity; Handbook on preparation of Accounting Standards to IFRS; Manual on financial planning and management; Manual on debt planning, management and strategies; Capacity building for VEC in preparing IFRS through trainings; Internal Audit Unit established in VEC.
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ANNEX 2. BANK LENDING AND IMPLEMENTATION SUPPORT/SUPERVISION
A. TASK TEAM MEMBERS
Name Role Preparation Supervision/ICR Dung Anh Hoang, Chi Kien Nguyen Task Team Leader(s) Ba Liu Nguyen Procurement Specialist(s) Cung Van Pham Financial Management Specialist Martin Henry Lenihan Team Member Son Van Nguyen Environmental Specialist Hongye Fan Team Member Warren Paul Mayes Team Member Thong Trung Le Social Specialist Hang Thanh Nguyen Team Member
B. STAFF TIME AND COST
Staff Time and Cost Stage of Project Cycle No. of staff weeks US$ (including travel and consultant costs) Preparation FY08 9.750 70,244.22 FY09 43.567 226,490.08 FY10 20.950 324,097.77 FY11 50.636 615,246.81 FY12 0 - 181.47
Total 124.90 1,235,897.41
Supervision/ICR
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FY09 0 62.73 FY10 0 - 31.26 FY11 1.398 7,033.48 FY12 24.083 82,038.21 FY13 27.640 96,261.48 FY14 20.513 76,292.78 FY15 20.693 63,494.25 FY16 20.164 89,370.28 FY17 29.026 114,725.20 FY18 39.866 224,287.88 FY19 45.030 236,544.45 FY20 12.393 51,286.68 Total 240.81 1,041,366.16
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ANNEX 3. PROJECT COST BY COMPONENT
Amount at Actual at Project Percentage of Components Approval (US$, Closing (US$, millions) Approval millions) 1. Da Nang-Quang Ngai Expressway 0 1,064.86 0 2. Project Implementation Support 0 43.21 0 and Institutional Strengthening Total 0 1,108.07 0
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ANNEX 4. EFFICIENCY ANALYSIS
Overview
1. The key component of the project was construction of a new four-lane expressway of 13.5 km from NH1A, to the south of Da Nang city, to Quang Ngai province, including construction of a main carriageway, bridges, viaducts, and culverts, a tunnel, connection and service roads, and intersections and related maintenance and rehabilitation of the local road network, in two parts: (a) from Da Nang city to Tam Ky city in Quang Nam province (64.6 km, JICA section) and (b) from Tam Ky city to Quang Ngai province (66.9 km, the World Bank section) and a two-lane highway of 7.7 km from the southern end of such expressway to NH1A, in Quang Ngai province.
2. The economic analysis was conducted at the completion of the project to provide an update of economic returns of the project under changes over the implementation phase.
3. The updated economic analysis employed the same methodology as in the PAD. Costs and benefits of the ‘with project’ scenario were compared with those of the ‘without project’ scenario. Economic viability was assessed using two indicators: NPV and IRR.
4. Annual costs and benefits were calculated for 2042. Unit prices of the updated project costs and benefits were based on prices in Vietnam in 2018 using VND. In the PAD, the discount rate of 11 percent was employed while at the updated phase, the discount rate of 10 percent was applied according to the latest World Bank guidelines in 2016.
Table 4.1. Discount Rate for Economic Analysis
PAD ICR Discount rate (%) 11 10
Updated Economic Analysis
Capital Costs
5. The updated analysis took into account whole life costs, which included investments and O&M costs. While costs in the PAD were initially estimated in late 2009 for primary designs plus contingencies, at ICR, the investment costs were updated actual preparation, consulting, and construction costs of the project.
6. Economic costs were updated with the actual disbursements adjusted by conversion. In line with the PAD, conversion factor of 0.95 was used for construction costs and 0.97 was used for project preparation and supervision.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
Table 4.2. Actual Disbursement (VND, billions)
Item Total 2013 2014 2015 2016 2017 2018 2019 Civil works 14,134 -?? 3,418 3,072 3,111 2,750 1,698 85 Resettlement 3,214 912 582 200 958 444 113 6 Project management, 1,203 329 60 141 232 216 161 66 consultancies Total 18,551 1,240 4,059 3,413 4,300 3,410 1,972 157
O&M Costs
7. For O&M costs, the same mechanism assumed in the PAD and VEC’s mechanism were used and updated using current 2018 prices.
Table 4.3. Updated O&M Cost (VND, billions)
2018 2019 2020 2021 2022 2032 2042 O&M cost 10.1 13.8 67.1 67.1 335.7 2,685.4 335.7
Traffic Forecast
8. The section of Da Nang - Tam Ky was opened in August 2017 while the whole project was opened in September 2018. The actual traffic volume on DQE is presented in table 4.4.
Table 4.4. Actual Traffic on DQE (vehicles per year) Passenger Car Bus 12–30 Bus >30 Seats, Trucks 10–18 Trucks >18 Year <12 seats, Seats, Trucks Trucks 4–10 Tons, cont Tons, cont Trucks <2 Tons 2–4 Tons Tons 20’ 40’ 2018 346,469 54,584 172,112 181,554 217,185
2019 (June 30, 2019) 394,211 56,971 158,757 157,782 225,190
9. Traffic projection was updated with the actual traffic on the DQE captured in 2018 and the first half of 2019.
Table 4.5. Traffic Volume on DQE (1,000 vehicles per year)
2018 2019 2020 2025 2030 2035 2040 Car 346.5 788.4 974.5 1,789.9 2,629.9 3,688.7 4,936.3 Small bus 30.0 62.7 75.2 123.1 172.6 231.0 281.0 Large bus 103.3 190.5 228.6 374.1 524.7 702.2 854.4 Small truck 24.6 51.3 58.4 90.2 126.5 169.3 216.1 Medium truck 68.8 127.0 144.8 223.4 313.3 419.3 535.2 Heavy truck 181.6 315.6 359.7 555.1 778.6 1,041.9 1,329.8 Articulated truck 217.2 450.4 513.4 792.3 1,111.3 1,487.1 1,898.0
10. Project benefits. Consistent with the PAD, economic benefits quantified for the analysis consist of (a) VOC savings, (b) travel time savings, (c) Motorway bonus to expressway users, (d)
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
improved road safety, and (e) flood damage mitigation. These benefits were annually estimated by comparing total VOCs and time values with and without the project scenarios.
(a) VOC Savings
11. In the PAD, the VOCs were calculated as a function of the travel speed for automobiles and the results showed that VOC is lowest at a speed of 60 kph. In the ICR, the VOCs were calculated using the HDM4-VOC model with inputs from recent relevant studies and similar projects, updated with changes in gasoline, lubricants costs, vehicle prices, vehicle characteristics, and usages in 2018. Given the abovementioned updated traffic forecast, the VOC savings from the investment in the Da Nang - Quang Ngai expressway are presented in table 4.6.
Table 4.6. Updated VOC Savings Benefits (VND, millions)
2018 2019 2020 2025 2030 2035 2040 Car 25,576 58,201 71,936 132,130 194,143 272,296 364,393 Small bus 742 1,549 1,858 3,041 4,266 5,708 6,945 Large bus 10,549 19,461 23,353 38,220 53,606 71,737 87,279 Small truck 374 780 889 1,372 1,924 2,575 3,286 Medium Truck 8,181 15,093 17,205 26,551 37,240 49,835 63,603 Heavy truck 36,248 63,004 71,825 110,839 155,458 208,037 265,514 Articulated truck 35,963 74,577 85,018 131,199 184,013 246,251 314,286 Total 117,633 232,664 272,085 443,353 630,649 856,440 1,105,307
(b) Travel Time Savings
12. Travel time savings are obtained when trips are faster as a result of a higher speed on the Da Nang - Quang Ngai Expressway compared to NH1. Based on the ‘Survey Report of Performance Indicators for Improved Transport Access’, the travel time from Da Nang to Quang Ngai using the expressway reduced by 36.1 percent and 35.4 percent for good vehicles and passenger vehicles, respectively.
13. Similar to VOCs, VOTs used in the analysis was also updated using recent survey results. Given the abovementioned updated traffic forecast, the VOT savings from the investment in the project are presented in table 4.7.
Table 4.7. Updated VOT Savings Benefits (VND, millions)
2018 2019 2020 2025 2030 2035 2040 Car 66,485 158,404 204,989 489,769 918,451 1,597,635 2,601,199 Small bus 3,476 7,596 9,544 20,318 36,371 60,364 89,354 Large bus 37,056 71,574 89,926 191,440 342,688 568,762 841,907 Small truck 1,729 3,779 4,510 9,053 16,205 26,896 41,764 Medium truck 8,564 16,542 19,744 39,633 70,945 117,748 182,838 Heavy truck 27,860 50,700 60,515 121,474 217,445 360,895 560,395 Articulated truck 33,328 72,361 86,368 173,371 310,342 515,078 799,808 Total 178,498 380,956 475,596 1,045,058 1,912,448 3,247,379 5,117,266
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
(c) Motorway Bonus to Expressway Users
14. The characteristics of the expressway users who preferred not only higher speeds but also safety, reliability, and ride quality were captured as Motorway bonus. Similar to the PAD, the bonus was presented as a percentage of Motorway travel time. The bonus was calculated as shown in table 4.8.
Table 4.8. Updated Motorway Bonus Benefits (VND, millions)
2018 2019 2020 2025 2030 2035 2040 Car 19,130 45,577 58,981 140,919 264,263 459,682 748,434 Small bus 693 1,515 1,903 4,051 7,252 12,036 17,817 Large bus 6,011 11,611 14,588 31,056 55,592 92,266 136,576 Small truck 172 377 450 903 1,616 2,681 4,164 Medium Truck 695 1,342 1,601 3,215 5,754 9,551 14,830 Heavy truck 2,414 4,393 5,244 10,526 18,842 31,273 48,560 Articulated truck 2,888 6,270 7,484 15,023 26,892 44,633 69,306 Total 32,003 71,085 90,251 205,693 380,211 652,123 1,039,687
(d) Improved Road Safety
15. According to ‘the Survey Report of Performance Indicators for Improved Transport Access, June 2019’, traffic accident significantly reduced because of the project. From August 2017 to February 2019, the number of accidents, deaths, and injuries that took place on the Da Nang - Quang Ngai corridor (Da Nang - Quang Ngai Expressway and NH1) was 93, 43, and 53, respectively, 77 percent reduction compared to before project investment.
16. In the last few years, there were several studies on accident costs in Vietnam following various approaches and apparently resulting in different figures. The study conducted by Ross Silcock in 2004 estimated the cost of a death at US$14,000 and an injury at US$400 whereas the research by the Transport Development and Strategy Institute under MoT in 2008 increased to the much higher value of US$30,883 per death and US$14,606 per injury. To reflect a more updated situation, the evaluation employed the methodology recommended by the International Road Assessment Programme as follows:
Economic cost of a death = 40 x GDP per capita at current price Economic cost of a serious injury = 0.25 x economic cost of a death
17. Provided GDP per capita of VND 58.5 million in 2018, economic costs of death and injury are equivalent to VND 2,340 million and VND 585 million, respectively. With these, annually, the project is expected to save nearly VND 1,500 million of social costs associated with traffic accidents.
Table 4.9. Accident Savings (VND, billions)
2018 2019 2020 2025 2030 2035 2040 Accident savings 264.3 302.8 346.8 672.2 1,214.6 2,025.4 3,100.4
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
(e) Flood Damage Mitigation Benefits
18. The benefits from flood damage mitigation were calculated based on the assumption using in the PAD. Given the abovementioned updated traffic forecast and the VOT, savings from the benefit are presented in table 4.10.
Table 4.10. Updated Flood Damage Mitigation Benefits (VND, millions)
2018 2019 2020 2025 2030 2035 2040 Car 380 445 521 1,091 2,045 3,558 5,792 Small bus 117 134 155 296 529 878 1,300 Large bus 290 334 385 735 1,316 2,185 3,234 Small truck 165 184 207 377 674 1,119 1,738 Medium truck 115 129 144 263 471 781 1,213 Heavy truck 102 115 128 234 419 695 1,080 Articulated truck 83 93 104 190 341 566 878 Total 1,251 1,434 1,643 3,186 5,796 9,782 15,236
Updated Economic Evaluation Results
19. Table 4.11 presents updated economic analysis results, which confirm the economic viability of the project with the NPV of VND 3,982 billion and the IRR of 12.0 percent. The project benefits include 45 percent from VOT savings, 28 percent from accident savings, 13 percent from VOCs savings, and 7 percent from motorway bonus. An effort to quantify benefits from mitigation of flooding, though its contribution is not remarkable, showed that they account for 0.1 percent of total benefits.
20. Although robustness of the investment was confirmed, the economic returns reduced significantly compared to expectations at PAD. Despite the decrease in capital costs by 25 percent, prolonging construction period to 2018, in addition to actual traffic lower than projected, has resulted halving the IRR from 25 percent to 12 percent. The PAD projected traffic based on assumption of the toll rate of VND 800 and 1,000 per km while the current base toll is set at VND 1,500 per km. This may explain why the actual traffic is much lower than projected in the PAD. Furthermore, longer construction time was estimated to cause a reduction of the IRR by at least 2 percent.
Table 4.11. Updated Economic Evaluation Results
PAD ICR Toll rate (VND per km) 800 1,200 1,500 NPV (VND, billions) 42,769 40,957 3,982 IRR (%) 25.4 25.0 12.0 Note: Discount rate at PAD was 11 percent and at ICR was 10 percent.
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ANNEX 5. BORROWER, CO-FINANCIER AND OTHER PARTNER/STAKEHOLDER COMMENTS
COMMISSION FOR THE MANAGEMENT OF STATE CAPITAL AT ENTERPRISES (CMSC) VIETNAM EXPRESSWAY CORPORATION (VEC)
PROJECT COMPLETION REPORT (2nd draft) AT THE CLOSING DATE OF THE LOANS (IBRD-xxxx, IDA-xxxx ) FOR DANANG – QUANG NGAI EXPRESSWAY PROJECT (DQE)
August 2019
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Disclaimer: Since the DQE Project remains unfinished, this report is prepared by VEC for WB as ICR inputs purpose only.
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Table of Contents
1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES ...... 60 1.1 Context at Appraisal ...... 60 1.2 Theory of Change ...... 62 1.3 Objective of DQE ...... 63 1.4 Key Outcomes and Outcome Indicators ...... 63 1.5 Project Components ...... 63 2.SIGNIFICANT CHANGES DURING IMPLEMETATION ...... 63 3.OUTCOMES ...... 64 3.1 Relevance of PDOs ...... 64 3.2 Achievement of PDOs ...... 64 3.3 Justification of Overall Outcomes ...... 65 3.4 Justification of Outcomes with revised Objectives ...... 65 4. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOMES ...... 65 4.1 Key Factors During Preparation ...... 65 4.2 Key Factors During Implementation...... 65 5. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME 66 5.1 Bank Performance ...... 66 5.2 Compliance Issues: ...... 66 6. EVALUATION OF THE BORROWER’S PERFORMANCE ...... 67 APPENDIX A. RESULT FRAMEWORK AND MONITORING (PAD) ...... 69 APPENDIX B. CS2 CONSULTANT’S REPORT ON PDO LEVEL INDICATORS (SENT A SEPARATE PDF FILE) ...... 70
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1. PROJECT CONTEXT AND DEVELOPMENT OBJECTIVES 1.1 Context at Appraisal Country Context
At appraisal in the year of 2011, Vietnam’s economic trajectory had been impressive over the past twenty years. Comprehensive economic reforms, sound macroeconomic management and significant investment in infrastructure had led to rapid economic growth. Real GDP grew at an annual rate of about 6 percent between 1994 and 2010; and real GDP per capita income increased by a factor of 2.5 between 1994 and 2010. Exports continued their rapid growth, reaching two thirds of GDP in 2009 (US$57 billion); and foreign direct investment inflows remain among the highest in the world relative to the size of the economy. This remarkable economic performance over the past two decades had propelled Vietnam into the ranks of lower middle income countries.
A major catalyst for this economic progress has been Vietnam’s strategic investment in infrastructure. Vietnam has been among the world‘s leaders in infrastructure investment with recent annual expenditures reaching 9-10 percent of GDP, about half of which is in transport. Investment in infrastructure will continue for many years to come not only to avoid current infrastructure bottlenecks but to support the country‘s economic growth and poverty alleviation targets. This would require further expansion of the road, rail, and waterway transport networks and an improvement in quality to meet increasing needs.
The Central Region lagged behind the Northern and Southern regions in economic growth and poverty alleviation. Despite the economic growth in the Central Region, it still lagged well behind the Northern and Southern regions of the country. In 2008, the Central Region‘s per capita income and poverty level stood at VND10.1 million (about US$612 at the average market exchange rate) and 14.7 percent, respectively. Comparable levels for income and poverty in the Northern region were VND12.6 million (about US$760) and 8.7 percent; and for the Southern region VND19.8 million (about US$1,196) and 3.7 percent. Interventions that enhance the connectivity between the Central Region and the more economically dynamic Northern and Southern regions can be particularly effective in reducing the interregional gap in standards of living.
Sectoral and Institutional Context
At appraisal in the year of 2011, the transport sector sustained high economic growth had been accompanied by a rapid rise in transport demand. Road transport demand had grown, and continued to grow, rapidly. Between 1995 and 2007, transport volume for passenger travel (measured in passenger- km) and freight (measured in ton-km) increased at an annual average rate of 9.4 percent and 12.3 percent, respectively. These rates were considerably higher than the average rate of real GDP growth over the same period (7.4 percent). The rise in transport demand was also illustrated by a fast expansion in vehicle ownership: from 1995 to 2008, the number of registered vehicles increased from about 4 million to 27 million. Going forward, sustained growth in per capita income would continue to drive increases in auto ownership, with the latter expected to grow fourfold by 2020.
Vietnam faced high overall logistics costs. Logistics costs had been estimated at about 25 percent of GDP, a considerably higher ratio than that of other countries in the region, such as China (at 15 percent). Inadequate infrastructure was one of the main determinants of Vietnam‘s costly logistics and a recurrent
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concern for foreign investors. The Logistics Performance Index (LPI), as estimated by the World Bank in 2010, showed that Vietnam attained its lowest score among the various index components in the infrastructure quality and reliability indicator, where it ranks 66th out of 155 countries (Vietnam ranks 53rd on the composite LPI3). However, as Vietnam has transitioned to Middle Income status, the country will require more reliable and higher quality logistics systems to meet the demand of new industries.
In 2005 Vietnam formally adopted a medium- to long-term expressway strategy through 2020. Updated twice since (most recently in 2009, which included a vision to 2030), the strategy comprises two broad development pillars: (i) the building of a national expressway network, where priority would be given to sections along the trunk North-South system; and (ii) the development of the institutional infrastructure necessary to plan, fund, operate, and regulate the expressway sector. The priority North-South corridor, about 1,800 km in length, connects the country‘s Northern, Central, and Southern Regions, which are anchored in the Hanoi, Da Nang, and HCMC metropolitan area markets, respectively, and were designated as the country‘s Focal Economic Zones. The expressway strategy‘s focused in the early stages had been on the Northern and Southern Regions (where Hanoi and HCMC alone account for close to a third of Vietnam‘s GDP), and was gradually expanding to include key sections of the Central Region.
The transport sector is crucial for better economic integration of the Central Region with the rest of the country. Future travel demand for passenger and freight between the Central Region and Vietnam‘s largest cities is expected to grow rapidly. Specifically, travel demand for both passengers and freight between Da Nang and either HCMC or Hanoi is expected to increase fivefold by 2030. In the Central Region, NH1 is the sole continuous north-south highway, but has only one traffic lane in each direction in the high priority corridor between Da Nang and Quang Ngai. The highway serves both local and long-distance traffic, with 40 percent of vehicles traveling the full length of the corridor. In addition to NH1, major transport infrastructure in the Central Region includes Da Nang port (the country‘s third largest), the oil port of Dung Quat (100 km south of Da Nang), a section of the 1,730 km long single-track railway line between Hanoi and HCMC, and the coastal waterways running along Vietnam‘s shoreline. Adding an expressway facility in Central Vietnam would provide the necessary capacity for future growth, help reduce road accidents, and facilitate both domestic and international trade through regional integration.
At appraisal in the year of 2011, implementation of the expressway strategy had been carried out s by the Vietnam Expressway Corporation (VEC). VEC was established in late 2004 as a separate legal entity owned by the Ministry of Transport (MoT) with a mandate which includes investment in expressway construction, management, maintenance and toll collection, construction and operation of related facilities, and the planning, appraisal, design, and supervision of construction. VEC is expected to be financially independent from the Government in that its revenues, expenditures, assets, and liabilities are recorded and accounted for on a separate basis. VEC is presently responsible for the development of six expressway projects (including the proposed project), of which three are now under construction. The investment costs associated with these six projects, which would complete 807 km of expressway, is estimated at $7.2 billion.
Institutional arrangements for the development, management, and administration of the expressway network needed to be further clarified and operationalized. The Government had proposed reforming the administration of Vietnam‘s expressway program by establishing a dedicated administrative department within MoT (provisionally called the ―Vietnamese Expressway Administra on or ―VEA to coordinate the overall planning, investment, and management of an integrated national expressway network. The establishment of VEA (an unit later transferred to Vietnam Road Administration (VRA)) allowed VEC to
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shed the role of being the owner of the network and focus on being a developer. The development of the expressway system is a significant physical and financial commitment for the country, funding requirements will be in excess of $20 billion for the program to 2020. This program cannot be funded from government budget alone. Thus, MoT proposes to use public private partnership (PPP) modalities to fund the construction of selected sections. To build MoT‘s capacity to maximize the use of PPP modalities in expressway development, at appraisal stage, MoT was proposing to establish a specialized division within MoT‘s Department of Planning and Investment (DPI) to advise on structuring, implementing, and managing PPP contracts (the ―PPP Cell‖). Planning for the new VEA and a PPP cell (later MoT established a PPP Department of the same management level with DPI) for MoT had been completed then, and these plans needed to be put into effect. The intent of the above changes in institutional arrangements is to improve service provision but to do so will require a number of changes to laws, regulations, institutions, and the management of network operations
1.2 Theory of Change The results chain, from outputs to outcomes and impacts, is as following:
Outputs Outcomes Impacts - Output of the Component 1 is - Reduction in travel time for - Improvement in the business the construction of 131.5 km of 4- freight and passenger vehicles environment, strengthen social lane expressway on a new using the DQE compared with inclusion, strengthen natural alignment from intersection with NH1A and the coefficient of resource and environmental NH 14A at km 0.00, to the south variation of travel time for freight management, and improve of Da Nang, to the endpoint at km and passenger vehicles using the governance; 131.5, in Quang Ngai Province; DQE compared with NH1A; - Strengthening the economic - Outputs of the Component 2(a) - Reduction in operating costs for linkages of Central Vietnam with include: Construction supervision; freight and passenger vehicles the Northern and the Southern Integrated project review and using the DQE compared with parts of the country and monitoring; Financial auditing; (iv) NH1A; contribute to the Government of financial capacity building for - Reduction in the number of Vietnam‘s (GoV‘s) efforts to VEC; and Training, workshops, traffic accidents in the DQE reduce and implementation of the corridor and traffic using NH1A. regional development gaps; project Governance, Development of Da Nang as a Transparency, and Anti- regional gateway to international Corruption Plan. markets through the East-West Economic Corridor (connecting Da Nang to Lao PDR and Thailand); - Providing the country with a more sustainable and resilient road infrastructure in the face of potential climate change impacts, while seeking to reduce transport emissions to protect air quality by reducing congestion on NH1.
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1.3 Objective of DQE The project’s development objectives are to construct an expressway that will enhance efficiency and safety for road users travelling between Da Nang and Quang Ngai and build institutional capacity for expressway development in Vietnam’s Ministry of Transport.
1.4 Key Outcomes and Outcome Indicators (1.4.1) 20 percent reduction in travel time for freight and passenger vehicles using the DQE compared with NH1A data before the project;
(1.4.2) 10 percent reduction in the coefficient of variation of travel time for freight and passenger vehicles using the DQE compared with NH1A data before the project;
(1.4.3) 10 percent reduction in operating costs for 10-ton freight vehicles using the DQE compared with NH1A data before the project;
(1.4.4) 10 percent reduction in the number of traffic accidents in the DQE corridor data before the project.
1.5 Project Components Component 1: Da Nang – Quang Ngai expressway. This component included the construction of the 131.5 km Da Nang – Quang Ngai Expressway, a part of the north-south expressway from Hanoi to HCMC, including a further 8.0 km of connecting road from the end of the expressway to a junction with National Highway 1A (NH1A) to the south of Quang Ngai. The section from the starting point in Da Nang to Tam Ky (64.6 Km of length) funded by JICA and the remaining section from Tam Ky to ending point in Quang Ngai and the additional 8 km, funded by the WB.
Component 2: Project Implementation Support and Institutional Strengthening. This component comprised of the following sub-components:
. Component 2(a): Project Implementation Support for VEC. Consulting services costs for assistance to VEC for: (i) construction supervision (CS1); (ii) integrated project review and monitoring services (CS2); (iii) financial audit (CS3.1, CS3.2); (iv) financial capacity building for VEC (CS4); and (v) training, workshops, and implementation of the project Governance, Transparency, and Anti-Corruption Plan (CS5).
. Component 2(b): Institutional Strengthening for MoT. Consulting services to MoT for: (i) capacity building for expressway planning and network management (including developing a national toll strategy for expressways; and establishing a system that provides the right incentives for the efficient operation of expressway corporations)); (ii) capacity building and policy support for the public-private partnership cell; (iii) capacity building for MOT State Inspectorate; and (iv) training and workshops. (For Component 2(b) it was agreed that another agency under MOT will carry out but not VEC).
2.SIGNIFICANT CHANGES DURING IMPLEMETATION The project development objectives and outputs have been unchanged.
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3.OUTCOMES 3.1 Relevance of PDOs The Project Development Objectives, at the time of project approval, were substantially relevant with the economic conditions of Vietnam’s Central Region where lagged behind the Northern and Southern regions in economic growth and poverty alleviation. Despite the economic growth in the Central Region, it still lagged well behind the Northern and Southern regions of the country. In 2008, the Central Region‘s per capita income and poverty level stood at VND10.1 million (about US$612 at the average market exchange rate) and 14.7 percent, respectively. Comparable levels for income and poverty in the Northern region were VND12.6 million (about US$760) and 8.7 percent; and for the Southern region VND19.8 million (about US$1,196) and 3.7 percent. 2 Interventions that enhanced the connectivity between the Central Region and the more economically dynamic Northern and Southern regions could be particularly effective in reducing the interregional gap in standards of living. The situation needed infrastructure to boost logistic and economic grow in the region.
The Project Development Objectives, at the time of approval, were well aligned with the government’s development plan and strategy such as Government‘s Socio-Economic Development Plan (SEDP) 2006- 2010. It was also consistent with the SEDP for 2011-2015 of the country which WB supported, highlighting infrastructure development, including large-scale projects, as a priority area to enhance competitiveness and contributed to attaining the government‘s economic growth targets.
The Project Development Objectives were relevant with CPS priorities. The expressway development project contributed to the sustainable economic growth and inclusive development of the Central Region in Vietnam by enhancing the efficiency and safety of transport infrastructure. The project supported principles of the Bank‘s Vietnam CPS FY07-FY1l to improve the business environment, strengthen social inclusion, to strengthen natural resource and environmental management, and to improve governance. It was also consistent with the World Bank strategy for promoting safe, clean, and affordable transport. The investment provided the country with a more sustainable and resilient road infrastructure in the face of potential climate change impacts, while seeking to reduce transport emissions to protect air quality by reducing congestion on NH1. The expressway program required significant financial resources to which the Bank contributed.
3.2 Achievement of PDOs The project has achieved its objectives on both of the indicators such reducing travel time for 10 – ton freight vehicles, passenger vehicles between Da Nang and Quang Ngai and the variation of travel times between vehicles (both types of freight, passenger), scaling down the number of fatalities due to traffic accidents in the DQE corridor, as well as freight tariff for a 10 ton truck between Da Nang and Quang Ngai, the data survey are as in the below table which shows significantly: Time savings to Expressway Users: The higher speed on the Expressway (design speed=120km/hr) than on NH1(design speed=80km/hr) results in significant saving time of 84 minutes for 10ton freight vehicles and 56 minutes for passenger vehicles (7 seats) on the Expressway. The Expressway provides the improved traffic safety and showed the reduced rates of fatalities by 77.3% on DQE corridor drastically. Vehicle Operation Cost (VOC) savings to Expressway and NH1 users: The VOC indicates that VOCs are high at lower speeds and usually the Expressway users could gain the benefit in VOCs than they would have been traveling on NH1 on the basis of baseline data. As the Freight tariff of DQE is lower than that of NH1 by 28.2%, the DQE is contributing the economic growth and development due to putting DQE into operation.
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Table 3.1 Performance Indicators for the Improved Transport Access Unit of Data Indicator Baseline Remark Measure (Dec.2018) 1a. Travel time for 10 – ton freight vehicles between Da Nang and 36.1% Minutes 233 149 Quang Ngai Reduction 1b. Travel time for passenger vehicles between Da Nang and Quang 35.4% Minutes 158 102 Ngai Reduction 2a. Coefficient of variation of travel time for freight vehicles along Number 0.19 0.14 the DQE corridor between Da Nang and Quang Ngai 2b. Coefficient of variation of travel time for passenger vehicles Number 0.08 0.07 along the DQE corridor between Da Nang and Quang Ngai 77.3% 3.Number of fatalities due to traffic accidents in the DQE corridor Number 185 42 Reduction 4.Freight Tariff for a 10-ton truck between Da Nang and Quang 1.74 28.2% VND 1.25 million Ngai million Reduction (Source: CS2 Consultant’s report)
3.3 Justification of Overall Outcomes The project is rated as satisfactory since its development objectives are highly relevant to country development plans and WB’s Country Partnership Strategy. The achievement of project performance is beyond targeted indicators.
3.4 Justification of Outcomes with revised Objectives Not applicable because there was no change in objectives.
4. KEY FACTORS THAT AFFECTED IMPLEMENTATION AND OUTCOMES 4.1 Key Factors During Preparation The company model of VEC. The company model of VEC has been establish following the same types in Japan and Korea where MOT considered as learning from successes. However, not from beginning but until a recent year, the VEC established the financial unit in Accounting and Finance Department and an internal audit department as per international corporate model which led to higher capacity in financial planning and management as well as debt management not at from the early stage of the Project. As a consequence, VEC sometimes failed to forecast accurately its cashflow during preparation period.
The resettlement capacity of VEC and PMU85. While preparing the Project, VEC, at that time, did not establish resettlement units in neither the headquarter nor the in the Project office. Also, the PMU85 who was the main Project Implementing Unit was not familiar with the WB’s projects. Therefore, the non- compliances happened in payment to tens of affected households among the about twenty thousands of whom lost land and assets as said in the above environmental and social safeguards chapter.
4.2 Key Factors During Implementation Shortage of counterpart budget. During the beginning years of the project, due to the shortage of government budget, the counterpart funding for land acquisition and resettlement was obstructed, led to delays in land acquisition. However, later years, VEC proposed and Government approved the
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mechanism that allowed VEC to make advance fund to provinces while waiting for state budget. This mechanism solved the problem.
Issuance of Public Investment Law. The law requires much procedures than we assumed in the preparation period which delays the disbursement of loans.
Changes in organization of VEC. The changes in organization arrangements where as VEC is now from as a major expressway developer under MOT to be an enterprise under Commission for the Management of State Capital at Enterprises (CMSC). Therefore, the development purpose the consulting services which built capacity for VEC achieved less.
The withdrawal of PMU 1 and PMU85 from the Project. The PMUs’ withdrawal from the Project caused delays while transferring tasks to VEC’s owned EPMU.
The cancel of JICA fund on ITS investment. Due to the difference in local and Japan’s technology of the ITS system, the JICA party cancel its loan fund on ITS. Except the ETC was installed before the loan closing date, other parts of the ITS system will be invested by VEC itself.
By the time of loans closure, some of frontage roads cannot be implemented as difficulty in resettlement for new AHs. 5. BANK PERFORMANCE, COMPLIANCE ISSUES, AND RISK TO DEVELOPMENT OUTCOME 5.1 Bank Performance WB staffs set clear monitoring and support schedules from beginning of the project. The staffs visit regularly the project site and VEC offices for providing supports in management of the projects. When the situation is escalated to high tension, the staffs already adjust their schedules to visit more frequently as considered by counterpart as appropriate.
5.2 Compliance Issues: Environmental Safeguards: The alignment of the highway was designed to avoid as much as possible the environmentally sensitive areas. The project area is mainly agricultural and dominated by rice paddies. People have settled and cultivated the area for centuries. The EIA identified several major environmental impacts during the construction period, and proposed mitigation measures and an EMP such as the Trien Tranh ruined historic area. The contractors were required to prepare site-specific Environment Control Plans to manage environmental impacts at construction camps and construction sites based on the EMP of the EIA. The contractors generally followed the EMPs during the constructions. Environment control was satisfactory throughout project implementation.
Social Safeguards: As far as social safeguards are concerned, 1,924 hectares of land has been acquired for the expressway construction, of which farming land such as rice paddies, vegetable gardens accounts for 1,119.4 hectares have been acquired. Residential land accounted for about 644.9 hectares. Forest land accounted for about 160,2 hectares. A total of 21,942 households are adversely affected by losses of assets and sources of livelihood as well. About 10,039 households lost more than 20% of their productive land. There have been 736 vulnerable households affected by the Project. During the implementation period, land compensation and resettlement activities have been carried out in accordance with the agreed project policy framework while there was a little discrepancy in amounts paid to HHs in about tens households amongst the nearly twenty thousand households (compensation of trees and subsistence
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allowances for farmer lost 20% agricultural land and above, assistance for structure over agricultural land). The issues are unsolved at the loan closing date due to because of resistance from Quang Nam Provincial People’s Committee who understood that the Project has been generally compliant such as if all categories of affected asset as well as land owners’ status were carefully considered and treated during implementation then it was acceptable, while the later revealing from bank staffs that all project resettlement policies must be mechanically accurate without any physical amount discrepancy.
However, the whole process was complied such as IOL, DMS was done, RCS was taken along the project cycle whenever the compensation and assistance happened. All categories of affected asset as well as owners’ status were carefully considered and treated with appropriate compensation and assistance during implementation. Up to the closing date, the recovery of livelihood was ensured for all APs. At the moment, all resources both from Bank and from government have been suspended or closed therefore Vietnamese authorities cannot provide more assistance to the affected households. The matter does not affect the project outcome because the resettlement objective already achieved by restoration of livelihood of affected persons to equal or higher than before the Project.
6. EVALUATION OF THE BORROWER’s PERFORMANCE There are several reasons regarding the slow progress of World Bank funded highway section as followings.
As the compensation issues on land have been focused on several specific locations along the thruway since the works commenced, it has been considered as one of main reasons that though the land acquisition and compensation for the households and land owners have made the works delayed behind schedule, the Engineer/Employer should have made the Contractors understand and guide about the compensation procedure for land acquisition and resettlement and should have managed the proactive measures with the Contractor about the people petitions on the land and compensation issues.
The preparation of payment documents for civil works and consulting services were slow which showed in the sluggish of payment comparing to completed work quantity along the project life cycle. Because the cash flow has been one of the most important factors for project progress, it must have influenced the work progress so much, while the Contractor should have mobilized the fully qualified personnel to expedite the disbursement process to strengthen the cash flow, but, it was more efficient if the Engineer/Employer had taken full control over the Contractor to prepare their IPCs as well as following up actions rather than waiting their submission of such pending IPCs.
Some kind of safeguard reports were enforced at ending period in the Project without prior agreement e.g. no information on applying such reports either in PAD or pre-appraisal and appraisal missions nor loan and project agreements which led to low response from executive agency (VEC) such as the monthly GRM reports and monthly compensation reports.
The borrower always worked through VEC in dealing with non-compliant issues in resettlement while as per the land law the authorized person was chairman of PPC who VEC was unable to intervene. The partnership diagram should be changed to reach an effective management.
The DQE was transferred to VEC from other PMU of MOT therefore VEC had not been really taken part in any kind of TA before implementation, it was more effective in term of capacity building if providing TA to VEC before project implementation phase.
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Appendix A. Result Framework and Monitoring (PAD)
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Appendix B. CS2 Consultant’s Report on PDO Level indicators (sent a separate PDF file)
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Borrower’s ICR input from PMU Thang Long MINISTRY OF TRANSPORT THE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness
THANG LONG PROJECT Hanoi, May 21, 2019 MANAGEMENT UNIT
Re.: Summary report on implementation of Component 2b, Da Nang - Quang Ngai project.
Respectfully addressed: Ministry of Transport Thang Long Project Management Unit (PMU) has been assigned by the Ministry of Transport to be the project management unit of technical component 2B - Institutional strengthening for Ministry of Transport; the work items have been now completed, Thang Long PMU would like to report the completed outcomes of the project as follows:
I. Project description: 1. General information: Project name: Component 2B “Institutional strengthening for Ministry of Transport” Donor: World Bank (WB) Executing agency: Ministry of Transport. Project owner: Ministry of Transport (MoT), Directorate for Roads of Vietnam (DRVN) Total value: VND 113.691 billion (of which the loan is USD 5.3 million ≈ VND 111.491 billion (1USD = 21,036 VND) and counterpart funds of Government of Vietnam is VND 2.2 billion. 2. Contents of Component 2b: 2.1 Component 2b (i) - Capacity building and institutional support for expressway planning and network management: - Target: To build capacity to provide advice on institutions, planning, state management on operation, organization and management of expressway maintenance to meet development directions and needs of the expressway system in Viet Nam. - Outputs: + Proposing processes and solutions to ensure that the Vietnam Expressway Administration will meet requirements of its duties; developing a system of necessary legal tools and framework for the Vietnam Expressway Administration to perform the tasks of management, operation and maintenance of Vietnam's expressway network.
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+ Developing, updating and application of the expressway management information system for performance of immediate and long-term goals of Vietnam Expressway Administration. + Capacity building for Directorate for Roads of Vietnam and Vietnam Expressway Administration by organization of training courses. + Provision of necessary technical equipment (within the project budget) for VEA to deliver the tasks in the initial operation phase. 2.2 Component 2b (ii) - Capacity building and institutional support for the Ministry of Transport’s PPP Department: - Target: To provide support to the Ministry of Transport in development of a clear and transparent legal framework to attract local and foreign investors in PPP investment, build capacity to manage and supervise PPP projects from preparation to implementation. + Study, assessment and proposal of an institutional framework to call for investment, and manage and operate PPP projects in the transport sector (Road, waterway, air, maritime and railway transport); + Development of specific procedures and guidance for implementation, from the project preparation to completion and transfer; + Development of sample documents on procurement and contracts depending on the type of PPP transaction + Development of a management information system for PPP projects + Organization of in-country and international training to provide the necessary knowledge, skills and international experience for PPP Department and relevant agencies under MOT in management and implementation of PPP projects + Assessment of the current state of facilities of the PPP Department and development of a plan for facility improvement of PPP Department 2.3 Component 2b (iii) - Capacity building for Ministry of Transport’s Inspectorate: - Target: To strengthen the role and improve the operational performance of MoT Inspectorate in prevention, detection and handling of corruption; promote openness and transparency in the transport projects in particular and other activities under the scope of state management of the Ministry of Transport on corruption prevention. - Outputs: + A manual on the steps and procedures in settlement of complaints and denunciations, and corruption prevention. + A manual on the takeover - payment process in capital construction investment. + The process of inspection, examination and handling of administrative violations, and an application to process letters and complaints sent to MOT Inspectorate. + Templates and regulations on openness and transparency of project information. + Introduction of the manual on the takeover - payment process in capital construction investment
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and promotion of data openness and transparency to the Da Nang - Quang Ngai expressway project. + Application of information technology to promote openness and transparency in MOT efforts to prevent corruption; application of information technology in management and and supervision of specialized inspection and examination as well as handling of administrative violations. + Capacity building for inspectors and civil servants of MoT Inspectorate by organization of training courses. + Provision of necessary technical equipment for monitoring and investigation of allegations of fraud and corruption at projects; supporting specialized inspection and examination as well as handling of administrative violations in management and protection of construction works in the transport sector. II. Result assessment of activities against the set objectives; with a focus on providing evidence on the fulfillment of activity objectives plus the contribution of supported activities and outputs in the project’s development outcomes 1. Assessment of the project effectiveness in institutional strengthening for Vietnam Expressway Administration (VEA): 1. Surveys, analysis and recommendations of the Consultants are practical and applicable to the expressway management under DRVN, considering a fact that VEA will dissolve after the Decision No. 35/2018/QD-TTg dated August 14, 2018 by the Prime Minister enters into force. The expressway management will be transferred to the other DRVN’s departments and Road Regional Bureaus; these proposals will be further reviewed by the DRVN’s departments to advise DRVN and MOT leaders on implementation. Specifically as follows: - The consultants have provided useful recommendations on developing a system of legal documents, groups of technical regulations, standards, processes and norms for the management, operation and maintenance of expressways under DRVN as presented in 07 reports for Activity 2, Component 2: + Technical regulations and standards for performance of such activities as: design, construction, management and operation of expressways; management; ITS related activities; activities related to fire prevention and response...; + General expressway maintenance process in Vietnam and specific procedures as guidance to the working groups on expressway management, operation and maintenance such as: Fire protection and response; toll collection; checking vehicle loads; operation of intelligent smart transportation system; handling of traffic accidents; joint coordination in case of accidents ...; + Activity norms for such activities as: Design, construction, management and operation of expressways; management and operation of expressways; monitoring and assessment of expressway quality; maintenance of planted trees, lighting system on expressways; ITS related activities; activities related to safety and troubleshooting. - The consultants also provided useful examples of PPP contracts for expressway management and
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maintenance in the world, as well as developed of a set of templates on implementation procedures, bidding documents, and contracts for expressway management and maintenance. According to DRVN assessment, these products are useful and can be directly used in the expressway management and maintenance under DRVN on the expressways authorized by the Ministry of Transport. This is also a valuable source that investors and special purpose vehicles can refer to for any expressway PPP projects. - For the proposed building capacity for expressway managers, DRVN will assign the Department of Organization - Administration for further review in the drafting process of job requirements for positions tasked to perform expressway management, operation and maintenance. 2. Support to VEA in development, collection of latest data, deployment and training on the use of the expressway management information system for VEA to deliver its duties: This overlaps with the task of “Development of the road database framework and development of the road asset management system and road asset management plans” under the Vietnam Road Asset Management Project (VRAMP) and has been removed in agreement with WB. 3. Training for VEA officers: Organization of in-country training (focused training programs and task-specific seminars) and international training on themes related to the management, operation and maintenance of the expressways under Ministry of Transport, DRVN and relevant agencies. 4. Undertaking surveys of current situation, equipment purchase proposal for VEA to satisfy initial conditions for operation based on its scope of duties: due to the dissolution of VEA, the equipment purchase proposal is no longer valid and the result of this task is not counted. DRVN and MOT have decided to cancel bidding for packages of VEA-G-3 (Procurement of office supplies for VEA) and VEA-G-4 (Procurement of field testing equipment for VEA). 2. Assessment of project effectiveness in institutional strengthening for MOT Inspectorate The deliverables of the project have met the initial targets of the project as described in the approved terms of reference (TOR). - MoT Inspectorate has and will continue to disseminate 14 manuals and reports to agencies under of MOT Inspectorate, DRVN Inspectorate, and other departments for wider and more effective application in inspection, settlement of complaints and denunciations, corruption prevention and other activities of inspection authorities. - Organization of 05 in-country soft skills training courses, with the participation of international experts and experienced lecturers on inspection, for MoT Inspectorate, Inspectorate of Civil Aviation Authority of Vietnam, Inspectorate of Viet Nam Maritime Administration, inspectors of Directorate for Roads of Vietnam, and Viet Nam Inland Waterway Administration with a cumulative number of more than 180 participants. - Organization of 03 study tours and experience-sharing events with a cumulative number of 24 participants who are inspectors of MOT Inspectorate and MOT advisory agencies in more developed
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countries (02 in China and 1 in the UK) that present high transparency, a pool of successful lessons learned in anti-corruption, settlement of complaints and denunciations, especially in the management and implementation of projects for stronger role and improved operational performance of MOT Inspectorate in prevention, detection and handling of corruption; promotion of openness and transparency in the transport projects in particular and other activities under the scope of state management of the Ministry of Transport on corruption prevention. - Coordination with MOT advisory agencies: MOT Office, Department Finance, Information Technology Center have received and handed over the project assets under MOT-G7 contract, including 05 rooms for the management, 07 rooms for functional divisions, 02 (1 large and 1 small) meeting rooms with relatively new furniture and facilities: laptops, desktops, photocopiers, projectors, cameras ... to improve the quality of inspection activities. All equipment was transferred on a timely basis, reflecting the project quality and progress, and handed over to agencies and individuals for inspection, handling of complaints and denunciation, as well as prevention of corruption. 3. Capacity building for PPP Department: The project started in 2015 and ended in 2016 The technical assistance project for “Development of PPP investment cooperation in the transport sector” funded by AusAID through the WB consists of 3 main components, of which its Component 3 is Institutional strengthening and capacity building to prepare, implement and manage projects in the form of PPP investment. Grant Agreement No. TF015072-VN between the Government of Vietnam and the World Bank was signed on September 12, 2013 to implement the above-mentioned Component 3. The agreement entered into force on September 12, 2013 and was terminated on June 30, 2016. On October 19, 2015, the WB had an official letter to inform Ministry of Transport of the plan of Government of Australia to reduce its financial commitments for grants to Vietnam by 40%, starting in 2015/2016. Accordingly, the grant for the technical assistance project for “Development of PPP investment cooperation in the transport sector” has also been reduced by 40%, leading to a reduction of project budget amount under MOT management from AUD 4.3 million (AUD 1.8 million as technical assistance for the Dau Giay - Phan Thiet Expressway Project and AUD 2.5 million as technical assistance for capacity building and policy support to Ministry of Transport) to AUD 2.58 million. Thus, the Government of Australia’s grant was cut by AUD 1.72 million, resulting in a shortage of funds to deliver the “Technical assistance for the Dau Giay - Phan Thiet Expressway Project” and “Technical assistance for capacity building and institutional support for PPP Department of Ministry of Transport”. In order to ensure sufficient finances to further deliver the “Technical assistance for the Dau Giay - Phan Thiet Expressway Project” and “Technical assistance for capacity building and institutional support for PPP Department of Ministry of Transport”, it is needed to use the budget of Component 2b of the Da Nang - Quang Ngai Expressway Project to cover the costs of these activities. III. Significant changes during implementation: The dissolution of Vietnam Expressway Administration: On August 14, 2018, the Prime Minister issued Decision No. 35/2018/QD-TTg dated August 14, 2018 defining the functions, tasks, powers and
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structure of the DRVN. Accordingly, in DRVN’s organizational structure, Vietnam Expressway Administration is no longer part of DRVN. Following this Decision, DRVN has developed a plan on dissolution of Vietnam Expressway Administration and reported to the Ministry of Transport in its Letter No. 79/TTr-TCĐBVN dated September 11, 2018, which presented the staffing arrangements and job transfers for those working Vietnam Expressway Administration to agencies under DRVN. On October 1, 2018, DRVN issued the Notice No. 355/TB-TCĐBVN on the terminated operation of Vietnam Expressway Administration while carrying out staffing arrangements, and job & asset transfers according to the scheduled dissolution of Vietnam Expressway Administration: - The technical duties of the Vietnam Expressway Administration will be now covered by DRVN’s Departments (Department of Road Management and Maintenance; Department of Road Safety; Department of Planning and Investment; Department of Science, Technology, Environment & International Cooperation) and 02 Road Regional Bureaus (Road Regional Bureau I and Road Regional Bureau IV) as follows: (1) Planning for expressway network development led by the Department of Planning and Investment; (2) State management over the management, operation and maintenance of expressways led by the Department of Road Management and Maintenance and Department of Road Safety, and implemented by the Road Regional Bureaus as assigned; (3) Road Regional Bureau I and Road Regional Bureau IV are assigned to undertake direct management of the expressways under DRVN.
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The World Bank Da Nang-Quang Ngai Expressway Development Project (P106235)
ANNEX 6. Project Map
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