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Proposed Loan and Asian Development Fund Grant to the Republic of Tajikistan for the Dushanbe-Kyrgyz Border Road Rehabilitation Project (Phase II)

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Proposed Loan and Asian Development Fund Grant to the Republic of Tajikistan for the Dushanbe-Kyrgyz Border Road Rehabilitation Project (Phase II) Report and Recommendation of the President RRP: TAJ 38236 Report and Recommendation of the President to the Board of Directors on a Proposed Loan and Asian Development Fund Grant to the Republic of Tajikistan for the Dushanbe-Kyrgyz Border Road Rehabilitation Project (Phase II) October 2005 October 2005 CURRENCY EQUIVALENTS (as of 13 October 2005) Currency Unit – somoni (TJS) TJS1.00 = $0.3142 $1.00 = TJS3.183 ABBREVIATIONS ADB – Asian Development Bank BCC – behavior change communication CAR – Central Asian republic CARE – Cooperative for Assistance and Relief Everywhere, Inc. CAREC – Central Asia Regional Economic Cooperation CIS – commonwealth of independent states EA – executing agency EIA – environmental impact assessment EIRR – economic internal rate of return EMP – environmental management plan FSU – former Soviet Union GDP – gross domestic product HIV/AIDS – human immunodeficiency virus/acquired immunodeficiency syndrome IA – implementing agency IAS – international accounting standard ICB – international competitive bidding IEE – initial environmental examination IOM – International Organization for Migration IS – international shopping JFPR – Japan Fund for Poverty Reduction LAR – land acquisition and resettlement LCB – local competitive bidding MOT – Ministry of Transport MSDSP – Mountain Society Development Support Program NGO – nongovernment organization PAM – project administration mission PCR – project completion report PIU – project implementation unit PPMS – project performance management system PPTA – project preparatory technical assistance PR – progress report PRC – People's Republic of China RMU – road maintenance unit RSA – road safety audit SCEPF – State Committee for Environmental Protection and Forestry SEE – state ecological expertise SIEE – summary initial environmental examination SRP – short resettlement plan STI – sexually transmitted infection TA – technical assistance TSSU – Transport Safety and Security Unit UNAIDS – Joint United Nations Programme on HIV/AIDS UNDP – United Nations Development Programme UNIFEM – United Nations Development Fund for Women VOC – vehicle operating cost GLOSSARY jamoat – traditional local community unit in villages, or village, or county, or community mazar – religious site rayon – region or district WEIGHTS AND MEASURES ha – hectare km – kilometer m – meter mm – millimeter NOTES (i) The fiscal year of the Government ends on 31 December. (ii) In this report, "$" refers to US dollars. This report was prepared by a team consisting of J. Miller (team leader), R. Ishenaliev, B. Konysbayev, A. Maxwell, O. Nazmieva, T. Oi, F. Tornieri, and X. Yang. CONTENTS Page LOAN AND PROJECT SUMMARY i MAPS vii I. THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1 A. Performance Indicators and Analysis 1 B. Analysis of Key Problems and Opportunities 2 C. Policy Dialogue 6 III. THE PROPOSED PROJECT 8 A. Impact and Outcome 8 B. Outputs 8 C. ADF IX Grant Component on HIV/AIDS and Migration 10 D. Special Features 11 E. Cost Estimates 12 F. Financing Plan 13 G. Implementation Arrangements 14 IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS 17 A. Traffic Forecast 17 B. Economic Benefits 17 C. Environmental Impact 19 D. Poverty Reduction Impact 19 E. Social and Gender Impact 20 F. Resettlement Effects 20 G. Risks 21 V. ASSURANCES 21 A. Specific Assurances 21 B. Condition for Disbursement 24 VI. RECOMMENDATION 24 APPENDIXES 1. Design and Monitoring Framework 25 2. Road Subsector Analysis 28 3. External Assistance to the Road Subsector 33 4. HIV/AIDS and Migration Component 34 5. Consultation with Stakeholders 38 6. Cost Estimates and Financing Plan 39 7. Implementation Schedule 40 8. Contract Packages 41 9. Traffic Forecast 42 10. Economic Analysis 44 11. Summary Initial Environmental Examination 48 12. Summary Poverty Reduction and Social Strategy 54 13. Summary Short Resettlement Plan 57 SUPPLEMENTARY APPENDIXES (available on request) A. Institutional Strengthening of MOT’s Accounting Department and Internal Auditing Function B. Detailed Financing Plan C. Terms of Reference for Consulting Services D. Terms of Reference for HIV/AIDS and Migration Component LOAN AND PROJECT SUMMARY Borrower Republic of Tajikistan Classification Targeting classification: General intervention Sector: Transport and communications Subsector: Roads Themes: Regional cooperation and sustainable economic growth Subthemes: Promoting economic efficiency and enabling markets, and fostering physical infrastructure development. Environment Category B Assessment An initial environmental examination was undertaken, and a summary is attached as Appendix 11. Project The road sections to be improved under the Project are an integral part Description of a regional road network in Central Asia that directly links Kazakhstan, the Kyrgyz Republic, the People’s Republic of China (PRC), Tajikistan, Afghanistan, and Uzbekistan. More broadly, this network is part of a larger network providing links to the ocean ports of Iran and Pakistan to the south, and to the Russian Federation to the north. The project road links the Rasht Valley in Tajikistan and the capital, Dushanbe. Poverty incidence in the project area, estimated at 68%, is higher than the national poverty incidence of 64%. The project outputs include (i) improvement of 89 kilometers (km) of the central and border sections of the Dushanbe–Kyrgyz border road and 60 km of rural roads; (ii) improved sustainability of Tajikistan’s road network through increased financing of road maintenance, procurement of road maintenance equipment, installation of vehicle weighing systems, and implementation of pilot cases of tendering road maintenance; (iii) strengthened institutional capacity of the Ministry of Transport (MOT); (iv) improved governance in MOT through the strengthening of its accounting department; and (v) improved road safety through the strengthening of the Transport Safety and Security Unit. Rationale The road sections to be rehabilitated under the Project are bottlenecks to regional trade due to their poor condition. In particular, these road sections obstruct trade between much of Tajikistan, Afghanistan, and adjacent countries to the south, and the Kyrgyz Republic, the Xinjiang Uygur Autonomous Region of the PRC, and neighboring countries to the north. By improving key sections of the road from Dushanbe to the Tajik-Kyrgyz border, the Project will substantially reduce this obstruction to trade, and facilitate regional trade and cooperation. The project road provides the only substantial link between the Rasht Valley and Dushanbe. Before independence, the immediate project area in the Rasht Valley produced large quantities of fruit, which were marketed throughout the former Soviet Union. However, fruit production in the project area has declined substantially since independence. Many inhabitants of the project area live in rural areas where poverty incidence is particularly severe. The improvement of the Dushanbe– ii Kyrgyz border road and selected rural roads will improve access to Dushanbe and other cities in the region, which have higher prices for agricultural products and more job opportunities than in the immediate project area. The Project will lead to reduced transport costs, most of which will be passed on to transport users. The Project includes a $500,000 ADF-IX grant-financed component on HIV/AIDS and migration, to be carried out by the Ministry of Health’s National HIV/AIDS Center. The ADF grant-financed component will develop an integrated, community-based and gender-responsive approach to the prevention of HIV/AIDS and sexually-transmitted infections (STI). Subcomponents include (i) capacity development for local government agencies and NGOs, including training to implement the Government’s policies, strategies, and regulations in HIV/STI prevention, anti-trafficking, and regulation of migration; (ii) behavior change and communication for local communities and high-risk groups to reduce risks along the road corridor and establish an environment conducive to maintaining safe behavior among seasonal migrants, women, intravenous drug users, sex workers, and transport and construction operators; and (iii) clinical support, through the provision of HIV testing kits and STI treatment packages to health clinics, to help them meet the incremental needs of mobile populations and local communities. Impact and The project impact will be increased trade in the region and increased Outcome economic growth in the immediate project area. The project outcome will be improved and sustainable regional and national road networks. The broader region served by the road network being rehabilitated under the Project stretches from Kazakhstan to Afghanistan, with links to the Russian Federation in the north, the PRC to the east, and Pakistan and Iran to the south. The immediate project area in the Rasht Valley northeast of Dushanbe was the scene of heavy fighting during the civil conflict in the 1990s. Cost Estimates The total project cost, including physical contingencies, price escalation, and interest and other charges during construction, is estimated at $39.5 million equivalent, of which $26.5 million (67%) is foreign exchange cost and $13.0 million (33%) equivalent is local currency cost. Financing Plan ($ million) Foreign Local Total Source Exchange Currency Cost ADB Loan 26.1 3.4 29.5 Grant 0.4 0.1 0.5 Subtotal 26.5 3.5 30.0 Government 0.0 9.5 9.5 Total 26.5 13.0 39.5 ADB=Asian Development Bank. Source: Asian Development Bank estimates.
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