World Bank Documents

RP359 V4

RESETTLEMENT ACTION PLAN FOR THE SECTION 3A, 3B AND 3C OF THE ALAT-ASTARA HIGHWAY

EXECUTIVE SUMMARY This Resettlement Action Plan (RAP) has been prepared in accordance with the laws and regulations on land acquisition and resettlement in Azerbaijan as well as the Resettlement

Public Disclosure Authorized Policy Framework (RPF) which was prepared as part of the Highway II Project in line with the Involuntary Resettlement Policy (OP4.12) of the World Bank. The Highway II Project will upgrade the M3 highway between Alat and Masalli over 143km. The entire itinerary is divided into three sections. This RAP covers the 62.3km section of the M3 Highway between Shorsulu and South of Masalli (Section 3A, 3B and 3C).

In this RAP, negative impacts expected to occur from the construction of Shorsulu – South of Masalli Section of the M3 Highway are described, and measures to mitigate the impact, as well as the estimated cost and implementation arrangements, are presented

The final alignment as provided by the Design Consultant and approved by the Azerroadservice OJSC (ARS) of the Ministry of Transport was overlaid over the digitized cadastral maps of the area in the State Land and Cartography Committee records. The extent of impact on land and properties for this road section is the result of the scope of

Public Disclosure Authorized works which involves the construction of standard dual carriageways with two lanes each, junctions and interchanges, bridges and underpasses, drainage structures and culverts, off- road service areas, installation of road furniture, signs and markings for traffic safety and control devices and others.

The project will affect 1 business and 757 households composed of 3910 persons of which 1832 are males and 2078 are females. 187 affected households are women-headed, All of the affected households will lose part of their privately-owned agricultural lands. A total of 425.75ha of various categories of lands, which consists of private (193.23ha), municipal (92.81ha) and state lands (139.71ha), need to be acquired as part of the right of way (ROW) for the construction of the approximately 62.3 km section of the highway itinerary. All of the affected private lands are cultivated mostly to produce cereal and potatoes and other vegetables; in between cultivations these lands are also used to graze livestock of the villages nearby. There are only four structures (two houses, a restaurant, and a stone fence) Public Disclosure Authorized that will be affected under this section of the road.

The RAP provides mitigations and rehabilitation measures to ensure that the livelihood of the affected persons and families will not be lowered as a result of the project. The entitlement matrix provides different measures to address these losses.

The RAP also provides for mitigating measures for temporary impacts resulting from civil work. Such measures include the following:

• Provision of temporary access/crossings for pedestrians, livestock and vehicles during the construction activities. Public Disclosure Authorized • Measures for traffic safety and accident prevention. • Rehabilitation of affected local roads, pedestrian sidewalks, etc. • Relocation of public utilities (electricity lines, irrigation canals, etc).

1 Addressing these temporary impacts will be the primary responsibility of the Civil Work Contractor and will be ensured through the inclusion of such provisions in the Civil Work Contract and compliance by the Contractor to these provisions will be duly monitored as part of Environmental Monitoring Plan (EMP).

The Land Acquisition Department (LAD) of ARS, is responsible for the implementation of this RAP. Cost of compensation and mitigating measures including information disclosure, public consultation and internal monitoring activities will be part of the Project budget allocated to the ARS. Compensation will be paid to project affected persons (PAP) by the LAD.

Additional issues arising from the implementation of this RAP and related Project implementation will be attended to and addressed through a grievance redress mechanism that will be set up as part of the RAP measure.

RAP implementation will complete before the start of civil work activities.

2 RESETTLEMENT ACTION PLAN FOR THE SECTION 3A, 3B AND 3C OF THE ALAT-ASTARA HIGHWAY

1. INTRODUCTION

This Resettlement Action Plan (RAP) has been prepared in accordance with the laws and regulations on land acquisition and resettlement in Azerbaijan as well as the Resettlement Policy Framework (RPF) which was prepared as part of the Highway II Project in line with the Involuntary Resettlement Policy (OP 4.12) of the World Bank. The Highway II Project will upgrade the M3 highway between Alat and Masalli over 143km. The entire itinerary is divided into three sections. This RAP covers the 62.3km section of the M3 Highway between Shorsulu – South of Masalli Section (Section 3A, 3B and 3C). RAPs for other sections of the M3 Highway are under development. In this RAP, negative impacts expected to occur from the construction of Shorsulu – South of Masalli Section of the M3 Highway are described, and measures to mitigate the impact, as well as the estimated cost and implementation arrangements, are presented.

The RAP seeks to ensure that persons and households unavoidably losing land or properties as a result of the Project, after exerting all effort to avoid and/or minimize negative impacts, attain equal if not better standard of living than it would have been without the project. All policies, proposals, compensation and rehabilitation measures included in this RAP are aimed to meet this objective. The “Azerroadservice” OJSC (ARS) under the Ministry of Transport, which has the lead responsibility for road construction, shall also be responsible for the implementation of the RAP through its Land Acquisition Department (LAD).

The RAP for Section 3A, 3B and 3C of Alat – Astara Highway has been prepared based on: (i) the Resettlement Policy Framework for Azerbaijan Highway Improvement and Development endorsed by the World Bank (published in http://worldbank.org/az); (ii) field assessments of the concerned alignment in consonance with the Technical Consultant during the Detailed Design Phase; (iii) verification of the centreline and right of way (ROW) boundaries against the cadastral maps of the area as prepared by the State Land and Cartography Committee; (iv) census/survey of affected parcels and the respective affected persons/households; (v) detailed measurement survey and inventory of the affected plots and assets therein; (vi) socioeconomic survey of a sample affected households; (vii) description of the property valuation methodology used and the estimated compensation value of affected lands, property and other assets; (viii) consultation with the local officials, key informants in the affected villages as well as the project affected persons (PAP); (ix) assessment of potential relocation requirements (x) unit prices determined by the MoF for the affected land and structures; and (xi) secondary data obtained by consultant hired by ARS to verify the unit prices determined by the MoF.

Project Description

3 Azerbaijan’s geographical position makes it an important link between the Black and Caspian Seas and between Russia and Iran. Trade with its neighbours, both transit and bilateral, is an important feature of the economy of Azerbaijan. Economic prospects are bright on the short and middle terms, hinging heavily on the development of the oil and gas sectors. The overall GDP has increased from 8.5 billion USD in 2004 to 43.2 billion USD in 2009, with non oil GDP increasing from 5.7 billion USD in 2004 to 19.6 billion USD in 2009. With much of the non-oil trade being small size shipments transported by road to neighbouring countries, access to international markets requires the provision of suitable road transport infrastructure on corridors, ready to meet mid-term strong traffic increase, to replace the presently narrow, low quality roads.

The World Bank’s Country Partnership Strategy FY07-10 for Azerbaijan identified the importance of transport links and transit corridors as a vital component to the development strategy of the country, particularly for the non-oil sector. Roads and transport network connecting the main regional centres with markets in Baku, neighbouring countries and Europe are crucial. The Bank’s assistance to the transport sector targets the rehabilitation and construction of main highway networks connecting Azerbaijan to its neighbours in the region particularly for improving several road segments to the west and south of Baku under the Azerbaijan Motorway Improvement and Development or Highway II Project.

The Section under evaluation (Section 3A, 3B and 3C) is part of the main highway (the Alat – Astara road under the Highway II Project) proposed to connect the country’s capital to its immediate neighbour in the southern border. It aims to improve the transport of goods and services from and to the central capital, Baku with the south border in Astara with Iran. The road to be constructed is a four lane road category with no toll gate, but would allow per design a possible upgrade to a toll way. It is expected that the type of vehicles allowed to access the road will be limited to trucks, cars and motorbike above 125 cm3. It is also expected that per design, access to the road will only be allowed through the intersections.

The newly designed highway will pass through new terrains: in its northern section, the itinerary crosses sparsely populated semi arid area of the Kura flood plains, followed by intensively irrigated farmlands further south and finally reaching the Mahmudchala and the Akhchala Wetlands, then finally again through intensively cultivated agricultural lands in the southern portion of the corridor with a predominantly subtropical characteristic. The highway crosses over numerous channels and rivers of which the predominant is the Kur River, thus requiring the construction of a number of bridges to enable passage. The World Bank is supporting the realization of this itinerary by financing the construction from the beginning of the Section in Alat up to south of Masalli for approximately 143 km stretch, inclusive of the 22-km stretch of the itinerary which was already constructed1. The southern part of the itinerary from south of Masalli to Astara and the Iranian Border will be implemented with the support of the Asian Development Bank (ADB). On the other hand, the construction of the Section 1B (22 km) which is the northern portion of the Alat to south of Masalli corridor, has already been constructed

1 The TOR of RRI for this current assignment does not include the 22-km stretch.

4 The design characteristics of the cross section are as follows:

• Sub-grade width: 27.5 m • Number of lanes: 4 • Lane width: 3.75 m • Carriageway width: 15 m (2 x 2 x 3.75 m) • Width of shoulder: 3.75m (2x3.75m); of which 2.5m (2x2.50 m) will be paved • Median strip width: 5.0 m (of which 2x1 m will be paved); • Carriageway gradient: 2% (where there is no super- elevation) • Shoulder inclination: 4% (where there is no super- elevation) • Fencing along the itinerary: • New Jersey type crash barriers at the edges of the paved part of the median • Embankment slope ratio (v & h): – 1:3 up to 2.5m height of embankment slope; – 1:2 > 2.5m to 4.0m height of embankment slope; – 1;1.5 > 4.0 m height of embankment.

For embankments higher than 6.0 m, a berm of 2.0 m width is proposed. The design speed of 120km/h for flat terrain is used for design purpose. Road furniture (e.g. crash barriers, reflective road markers, traffic signs, fencing, lighting and markings will be according to the national standards for a Category I road.

It is anticipated that the new highway will be fenced off over its entire length and consequently will separate the areas though which it is passing. For this reason, bridges and underpasses will be built depending on local demands in order to maintain the connectivity of the areas separated by the new highway.

The project falls under the responsibility of the ARS of the Ministry of Transport and its implementation is coordinated by the Project Implementation Unit (PIU). The PIU has been established to implement various projects financed by the Bank. The ARS and its various departments and offices particularly the LAD are the main counterpart of the Consultant. Road Section under Evaluation

Section 3A, 3B and 3C are the so called the Southern Section Alignment of the proposed Alat – Astara Highway. Section 3A starts at km80.6 of the proposed highway. It comes after the planned overpass to the existing road (M3) to Bilasuvar and crosses the Mahmudchala Wetlands for a total length of 29.9km. It ends up at the proposed overpass at Uzuntapa, Jalilabad at km110.8. Section 3B, which is approximately 13.9km starts from the proposed Uzuntapa overpass and runs until another proposed overpass over the Masalli railway station. Section 3C starts after that and runs for approximately 18.5 km, crossing another proposed overpass at km136.4 and ends up to connect to the ADB-financed section at km142.9 near the proposed Masalli South Interchange. See project map in Figure 1.

5 The Southern Section alignment is characterized by several features: from km80.6, after the proposed interchange over the existing M3 road to Bilasuvar the alignment crosses for the most part the Mahmudchalla Wetlands and begins to converge and run parallel with the existing railway tracks to Masalli for about 28 km; then, nearing the proposed Jalilabad interchange, the alignment starts to diverge a bit to avoid a heavy settlement area. Onward, it starts to converge and then run parallel again with the railway track at Uzuntapa until the proposed Goytapa interchange where it begins to veer away from it crossing several villages to finally end at the proposed interchange south of Masalli which is the beginning of the ADB- financed portion of the Highway. The 62.3 km section is interspersed with 17 bridges composed of the following: 3 interchanges (Jalilabad, over Masalli Railway Station, and a road overpass within the town of Masalli itself), 7 bridges over the existing highway, 7 bridges over rivers, 14 underpasses and a railway crossing. Installation of rest areas, road furniture, signs and markings for traffic safety and control devices and others as well as drainage culverts and canals will also be undertaken. The issues pertaining to these features present major challenges to the avoidance and mitigating measures for the land acquisition and resettlement resulting in the increase in scale of land acquisition.

6 Figure 1: Project Location Map The proposed construction of this Section as part of the entire itinerary is anticipated to lead to the accelerated socioeconomic development of local districts (Bilasuvar, Neftchala, Jalilabad and Masalli as well as immediate areas nearby), with the improved traffic and traffic efficiency resulting in the reduction in congestion and accidents on the existing M3. The construction of the Alat-Astara Highway will provide an efficient and faster road network that is foreseen to have the immediate positive impact of improving international trade. It is likewise anticipated that the road will facilitate the distribution of regional goods thus helping regional economic growth in the long term. Summary of Key Impacts

The Project implementation will result in unavoidable impacts both permanent and temporary because of the acquisition of road right of way (ROW). These key impacts resulting from land acquisition and the dismantling of structures and other properties and assets both private and communal, include the will include:

• Loss of agricultural land and other assets such as standing crops, trees, building structures. • Decline in the level of income as a result of the loss of agricultural land • Potential displacement of people from their places of residence and livelihood • Permanent or temporary disruption in the source of income as a result of the relocation of the commercial enterprise (restaurant). • Threat to health and safety. • Possible disruption in the community’s way of life

This RAP covers impact on loss of agricultural land and other assets, decline in the level of income and permanent disruption in the access to basic services. Other impacts are dealt with under the Environmental Monitoring Plan.

7 Land Acquisition and Resettlement Objectives

While the majority of the lands in this Section are municipal and state-owned, some privately owned lands are going to be affected by the ROW acquisition. The ROW acquisition of public lands which are used as pasture and grazing areas will have negligible impact on the livelihood and living standards of the households utilizing these lands.

The primary objective of the RAP for this Project is to ensure the minimization of negative impacts and the institution of mitigating measures for those negatively affected through providing a package of compensation and rehabilitation measures that will allow them to restore pre-project level of livelihood.

The RAP aims to accomplish the following:

• Present a strategy to achieve the objectives of the Resettlement Policy Framework; • Provide a plan for the implementation of the stated strategies to ensure timely acquisition of assets, payment of compensation and delivery of other benefits to project affected persons; • Ensure that the Plan enables the PAP to improve and/or maintain their income level and living standards from the pre-project level; • Define the principles and mechanics for public consultation and information campaign; • Estimate resources required to implement the recommended interventions; and • Provide a plan for monitoring and supervision of RAP implementation.

Options Considered to Minimize Impacts

Several approaches were employed to reduce the impacts. These included (i) undertaking a study to examine various alignment options and selecting the one with the least impact; (ii) developing a road cross section design with features to mitigate and enhance access to agricultural lands; (iii) proposing the construction of underpasses to ensure the connectivity of communities both sides of the road; (iv) selecting an interchange design with minimum ROW requirements and ensuring connectivity to existing local roads; (v) fine-tuning final designs to minimize impact; (vi) using the cadastral maps and overlaying the alignment to determine minimum impacts on structures and properties in congested areas, and (vii) proposing the construction of bypasses to avoid impacts on congested areas.

Unavoidable Impacts

The unavoidable impacts include the acquisition of parcels of land within the required road reserve of 60m wide and the additional ROW requirement for junctions and interchanges to ensure the technical integrity of the design in terms of standard width of pavement and shoulders and heights of embankments as well as the minimum acceptable radius for certain road curvatures and the like. In the course of such acquisition some residential and commercial structures as well as trees and crops and some public infrastructures like local

8 roads and irrigation ditches will be affected. Acquisition of small portion of grazing areas will be also required. The public lands which can be used for grazing purposes are abundant in these places and comprise vast areas, especially in the Jalilabad and Neftchala districts. In addition, municipal grazing lands are open areas available for herders’ free use. All acquired private lands are either agricultural or homestead areas; none of them is used for grazing purposes.

The grazing area to be affected is a narrow strip of land at the edge of a big grazing area. In spite of this, relevant mitigation measures, such as construction of underpasses for cattle at the km 82+760, km 83+612, km 92+820, km 95+312, km 106+683, km 108+340, km 113+225, km 114+645, 115+918, 117+645, km 128+859, km 133+605, km 136+165 and km 138+550 were included in the Project design2. Thus, acquisition of a narrow strip of the grazing area, combined with the installment of underpasses will not have significant negative impact on animal husbandry and the livelihood of local people.

Moreover, concerns for safety and other social-environmental impacts as well as the temporary impacts brought about by the civil work activities during construction periods may be unavoidable and measures will be instituted to mitigate them as part of the RAP.

2 Local population was consulted for the the appropriate location of underpasses, and their inputs were taken into consideration in the final design.

9 SOCIOECONOMIC BACKGROUND OF THE PROJECT AREA

2.1 National Context

Azerbaijan is a lower middle-income country with a gross national income per capita of US$3,830 (Atlas method) in 2008. Azerbaijan is rich in mineral resources, mainly in oil and gas. The country also has fertile agricultural land and a well-educated labor force with a strong entrepreneurial tradition. The oil and gas sector contributes approximately one-third of GDP, while agriculture contributes about 9 percent but provides livelihoods to just under half of all households.

The impressive GDP growth of the past five years - with an average annual growth rate of 12 percent - was led mainly by oil and gas production. Growth in non-oil output has picked up since 1999 with an average annual growth rate of more than 15 percent. However, oil production is expected to peak in 2011 and decline thereafter in the absence of major new discoveries. Diversified development of the non-oil sector is critical for generating jobs and promoting long-term growth.

Despite the country’s natural resources, poverty continues to pose a major challenge for Azerbaijan. Notwithstanding the country’s substantial poverty reduction over the last two years, in 2009, some 11 percent of the population lived in poverty. There are significant regional variations in poverty rates, with the incidence of income poverty highest in provincial towns. Access to services is limited in rural areas, giving rise to significant rural-urban migration.

Part of the strategy to address the pervasive poverty particularly in the rural areas was the stimulation of regional economic development through improved infrastructure and providing closer access of remote areas to the capital and allowing a more efficient exchange of goods and services within and among them. Improved and safer transit and transport systems would help attain the goal.

The Baku-Alat-Astara Highway (M2/M3) is a 313 km road which runs from Baku to the Iranian border in a north-south direction. The 4-lane Baku-Kurdamir (M2) Highway and mainly 2-lane Alat-Astara (M3) Highway intersect at Alat. The existing M3 links the district centres of Alat (Garadagh)-Salyan-Bilasuvar-Neftchala-Jalilabad-Masalli-Lankaran-Astara. The new highway financed under the Highway II Project will have a new alignment passing mainly through new terrains over the aforementioned districts.

Four of the eight administrative districts (Astara, Lankaran, Masalli and Jalilabad) crossed by the final alignment belong to the Lankaran Economic Region while Bilasuvar, Neftchala and Salyan belongs to Aran Economic Region and Alat settlement of Garadagh is grouped under Baku City which is classified as a separate economic region.

The socioeconomic profiles of these districts are diverse and varied. The Lankaran Economic Region, which is climatically and ecologically different from the other regions, constitutes only 7% of the total land area of the country but has about 10% of its total population, while Aran Economic Region has about a quarter of the total land area of the country and only about 20.5% of its total population. Baku City on the other hand has a total land area of 2,130 km2 or approximately 2.5% of the whole country but has 22.3% of the total population; however, unofficially, it could be higher.

Lankaran region has harnessed its favourable climate, idyllic topography and fertile soils and abundant springs and mineral water to its competitive advantage in the sector of agriculture, fishery, recreation and tourism. On the other hand, Aran region’s rich mineral resources, particularly oil, gas, iodine and bromide ground water as well as aggregates and construction materials fuel its economic growth. Baku City meanwhile remains the driving force of the country where major social, economic, financial, political and administrative decisions emanate.

The transport network helps to sustain the vital link and access of these regions to the heart of the country and other regions as well as outside the country. Transport efficiency as translated into reduced cost and improved and safer access and transit could help bolster further regional and local economy.

2.2 Local Context (Subproject profile)

Section III will impact 23 villages traversed by the alignment located in four (Bilasuvar, Neftchala, Jalilabad, and Masalli) districts and two economic regions to which these affected districts belong to, namely, Lenkaran and Aran.

2.2.1 Geography of the Impact Areas

The Project area lies within two distinct geographic and topographic zones. Bilasuvar and Neftchala districts are located in an area that is generally flat and are characterized by a semi arid land and sparse vegetation. Hot semi-desert and sub-tropical climate of dry lakes prevails over most of the area during summer. Average temperatures in July is between 27- 300C while absolute maximum temperature is 40-43o C. The annual precipitation is 230-280 mm which is below the average. Only a few cultivated lands are found in this section of the road; those cultivated are normally planted to grains and hay. Many of the lands are used to graze animals and livestock during the winter season. As one approaches the south to Jalilabad, Masalli and Lenkaran, the topography and geography of the area change. The land is now generally greener and cultivated crops are more varied ranging from grains, root crops, vegetables, to vineyards as well as fruit trees. More villages and settlements are located as the area is more densely populated.

2.2.2 District and Villages

The combined area of the four districts is approximately 4,200 km2 with Bilasuvar having a total area of 1,358 km2, Jalilabad about 669 km2, Neftchala 1,451.7 km2 and Masalli has 721 km2 (see Table 1 below). Bilasuvar and Neftchala constitute approximately 67% but with a total population in 2006 that was approximately only 30% of the total for the four districts. Of the 23 villages traversed by the road section, Masalli has the most (18) affected.

Table 1: Area and Number of Settlements of the Subproject Districts District Total Land No of villages and # villages Total population % % Area (km2) settlement traversed (2006) Male Female Azerbaijan 86,600 4272/239 - 8,436,400 49.3 50.7 Aran ER 21,930 796/37 2 1,731,000 47.88 52.12 Bilasuvar 1,358 25/0 State land 81,318 48.5 51.5 Neftchala 1,451.7 48/3 2 74,700 49 51 Lankaran ER 6,070 648/13 21 795,300 Jalilabad 669 117/0 3 178,692 49.10 50.90 Massali 721 107/1 18 183,500 49.04 50.96 TOTAL 4,199.7 297/4 23 518,208 48.91 51.09 Source: Socioeconomic Assessment, Preliminary Design Phase, RRI GmbH, February 2008

As shown in Table 2, the total population of the four districts in 2007 was approximately 538,500 composed of about 124,866 households. Masalli and Jalilabad (combined population of 376,800) are more heavily populated compared to Bilasuvar and Neftchala (combined population of 161,700). Gender composition is about 49% male to 51% female. Majority (74.1%) are rural population. The population is not characterized by ethnic diversity. It is composed mainly by Azerbaijanis.

Table 2: Population of the Subproject Districts District Total Average Total No Average Male Female Urban Rural (%) population density of HH HH Size (%) (%) (%) (2006) (person/ km2) Bilasuvar 84,200 62 18,304 4.6 48.5 51.5 23.2 76.8 Neftchala 77,500 53.4 16,848 4.6 49 51 47.7 52.3 Jalilabad 186,700 279 44,452 4.2 49.10 50.90 27.6 72.4 Massali 190,100 264 45,262 4.2 49.04 50.96 5 95 TOTAL 538,500 164.6 124866 4.4 48.91 51.09 25.9 74.1 Source: Socioeconomic Assessment, Detailed Design Phase, RRI GmbH, February 2008 Of the total 4,200 km2 of land area in the four districts, approximately 2,941 km2 or 70% are productive lands. But less than half (approx. 59%) of these so-called productive lands, are cultivated; the rest are either fallow or used as pasture lands as shown in Table 3 below.

Table 3: Land Classification and Use in the Project Districts District Name Land Area Productive Fallow Pasture Cultivated Orchard Saline (km2) Land (km2) agro-land lands lands lands lands Bilasuvar 1,358 1,129.3 202.5 562.1 425.3 12 26.1 Neftchala 1,451.7 825.3 390.3 355.4 469.9 4.5 13 Jalilabad 669 661.2 8.16 276 536.9 1.83 0 Massali 721 325 179 38 271 9 0 TOTAL 4,199.7 2,940.8 779.96 1,231.5 1,703.1 27.33 39.1 Source: Socioeconomic Assessment, Preliminary Design Phase, RRI GmbH: February 2008 Since independence, little has been done to maintain the infrastructure for utility provision that was common place during the soviet period. The 1999 survey presents a similar story to that of today. Table 4 below shows the household access to some of the basic utilities in the area. Less than 60 percent (59.8% in Aran and 48.2% in Lankaran) have access to piped water while 39% in Aran and 24.3% in Lankaran have access to gas. Lesser percentages of households in both regions have access to heating system. Electricity is generally available but availability of such utility at the household level is constrained by the current high cost.

Table 4: Proportion of Households with Access to Utilities (%) in the Project Regions Indicators Economic Region Aran ER Lenkaran ER Total Households 892,526 172,142 Electricity 100 100 Gas 39 24.3 Heating System 9.5 0.9 Piped Water 59.8 48.2 Bathroom 51.4 53.8 Sewerage 86.8 90.4 Telephone 44.9 56.2 Source: 2006 National Census, SSC 2007

Although people generally have access to social services (see Table 5) established during the Soviet period, the condition of these facilities is inadequate. This is true of both medical and educational facilities, with buildings and equipment in disrepair, supplies are limited and inadequate and staff underpaid, and had been without adequate training for a long time now.

In 2006, there were 726 hospitals in the country of which 18, 9, 7 and 4 are located in Jalilabad, Bilasuvar, Neftchala, and Masalli respectively. There are 81 hospitals beds

available for every 10,000 population on average at the national level. In the four districts, the average number of person per bed is 187. On the other hand, the national average of the number of doctors available per 10,000 persons is 37; in four districts, only one doctor is available per 724 persons. However, the figure for paramedical staff at the national and regional levels is higher.

Table 5a: Availability of Social Welfare Services in the Project Area Number of Number of Number of Number of Number Paramedical paramedical Number hospital ambulance- Economic Physicians, physicians of staff, staff per of beds per polyclinic regions person per 10,000 hospital person 10000 hospitals 10,000 service population beds population population organizations Azerbaijan 30766 36.6 61582 73.2 726 68356 81.3 1589 Republic Bilasuvar 123 14.6 324 38.5 9 520 61.8 15 Neftchala 133 17.2 426 55 7 735 94.8 17 Jalilabad 246 13.2 753 40.3 18 1,205 64.5 38 Massali 241 12.7 560 29.1 4 425 22.4 31 Source: 2006 data from SSC 2,007

Furthermore, one of the great concerns for the development of Azerbaijan is maintaining the high level and quality of literacy and education attained during the Soviet period. Although the levels of enrolment are being maintained, there is grave concern as to the quality of the schooling. As noted in the statistical reports, the number of libraries, book funds and books had been decreasing since 1995 to present. And this would also appear to be so in the Project area

Table 5b: Availability of Facilities and Services in the Project Area No of No of Average No of preschool Daytime Number Economic children in students Book fund (in copies per institutions per attendance of public regions preschool in day time ‘000 copies) 1,000 10,000 persons schools libraries institutions attendance population Azerbaijan 1,737 109,263 4,516 1,528,533 4,021 36,366.9 4,310 Republic Bilasuvar 1.19 315 36 17348 37 339,9 404 Neftchala 2.07 902 53 13797 64 374,2 483 Jalilabad 0.96 1037 129 36670 95 595,2 319 Massali 0.84 858 99 34125 79 446,0 235 Source: 2006 data from SSC, 2007

The level of education does not differ significantly by gender. On the other hand, it differs by age groups: 9.2% of aged people have higher education, 15.8% - specialized secondary education and 74.9% - secondary and lower education. At the same time among middle aged people 23.5% have higher education, 27.0% - specialized secondary education and 49.5% - secondary and lower education. It is worth mentioning that according to the data of 1996 35.2% of middle aged people had higher education. This can also be explained by intensification of migration processes due to hard social and economic condition existing in rural areas: qualified young people can not apply their knowledge and experience in rural areas, so they are forced to migrate to cities in search of employment. The more educated aged members of the population are left to stay to cope with the responsibility of supporting families. They are also less able to meet the challenges and demands that change entails; moreover, competition in a new environment is more intense.

Studies have shown that household members under 15 usually do not work. There are 3.2 persons over 15 in an average household. In particular a household member over 15 spends 46% of time working in his/her own farm, 30% of time is dedicated to household (home)

activities, 2% - to non-agricultural family business, 2% of time as employee in others’ farms, 10% - employed in non-agricultural field, 5% are dedicated to education and 5% to leisure.

In 2006, the national monthly per capita income was about AZN72. In the Aran and Lenkaran regions where the Project districts belong, the average monthly per capita income was only slightly lower at AZN70 and AZN71.5, respectively, than the national average. On the other hand Baku City’s per capita income per month was AZN89.7.

Income from self-employment and employment substantially contributes to the total income per capita per month in the two economic regions (mainly AZN18.4 and AZN15.6 in Aran and AZN18.8 and AZN18.8 in Lankaran, respectively). Furthermore, the contribution from agriculture was comparatively high in those regions (AZN17.2 in Aran which is approximately 24.6% of total and AZN17.4 or 24.3 of total average in Lankaran). Table 6 shows the share of various sources of income to the total average per concerned economic regions.

Table 6: Comparative Income Profile of Aran and Lenkaran Econ Region-AZN, per capita per month Income per capita per month (AZN) Income Sources Aran Lenkaran AZN Share % Share AZN Share % Share Total Income 70.0 100 71.5 100 Income from Employment 15.6 22.3 16.8 23.5 Income from self employment 18.4 26.4 16.8 23.5 Income from agriculture 17.2 24.6 17.4 24.3 Income from rent 0.8 1.1 0.8 1.1 Income from property 0.2 0.3 0.1 0.2 Current transfers received 8.5 12.2 7.7 10.7 Pensions 6.9 9.9 7.4 10.4 Benefits and social contributions 0.9 1.3 0.2 0.3 Social Transfers in kind 0.7 1.0 0.0 0.0 Other income 9.2 13.2 12.0 16.8 Income from other households 7.6 10.8 8.4 11.7 Money received from abroad 1.6 2.3 3.6 5.0 Source: Household Budget Survey, SSC 2006

In terms of income sources by gender, there is a significant difference in the income sources for men and women (Table 7). Free professional activity provides most of the work for the men (8.5% in Aran and 8.4% in Lankaran) while work in personal ancillary provides income for the highest proportion of women (19.4% in Aran and 25.8% in Lankaran) out of the total. On the other hand, work in ancillary activity among the men provides income for only 11.1% in Aran and 9.9% in Lenkaran. There are substantially more women (22.3% in Aran and 19.5% in Lankaran) than men (12.9% in Aran and 8.0% in Lankaran) who obtain their income from pension or through dependents.

Table 7: Sources of Income in the Project Area in Percent by Gender Category Income Share by Gender Category (%) Income Sources Aran Region Lenkaran Region Male(46.9) Female (53.1) Male(45.7) Female(54.3) Hired work in public sector 7.1 6.5 5.8 3.2 Hired work in private sector 1.4 0.2 4.2 0.2 Hired work in agriculture 0 0 - 0.4 Incomes of business, commerce, craft 5.9 1.0 5.0 1.2 Work in personal ancillary 11.1 19.4 9.9 25.8 Free professional activity 8.5 1.1 8.4 1.8 Work as a private person 2.8 0.4 3.7 1.0 Unemployment benefit - 0.1 - - Pensions 5.0 11.1 3.6 10.1 Study grants 0.1 0.3 0.3 0.2 Social grants 0.3 1.7 - 0.1 Dependents 4.3 11.2 4.4 9.4 From outside of the country 0.1 0.2 0.5 0.9 Others - 0.1 - -

Source: Household Budget Survey, SSC 2006

While the country had made a significant dent in poverty over the years, to date the problem still poses a major challenge to the government and development planners as shown in Table 8.

Table 8: Incidence of Poverty in Azerbaijan, Urban-Rural Category (2002-2005) Population Group Poverty level (%) Poor Very Poor 2002 2003 2004 2005 2002 2003 2004 2005 All Azerbaijan 44.6 39.7 28.5 24 26.9 22.1 13.4 9.2 Urban (Baku) 41.6 34.8 18.6 14.7 25.6 19.3 8.0 6.6 Urban (non-Baku) 48.7 46.0 35.4 27.2 31.5 27.9 19.0 11.9 Rural 43.7 38.4 29.6 26.9 24.7 20.0 13.0 8.9 Source: Household Budget Survey, SSC 2007

As the trends show, incidence of income poverty appears to be highest in urban areas (non- Baku) and lowest in Baku itself. Surprisingly, the rural areas have not been doing too badly compared to the urban areas (non-Baku) in terms of incidence of extreme income poverty. From 2002 to 2005, the reduction in incidence of poverty had been significantly lower. While Baku had been able to substantially reduce extreme income poverty through targeted specific social interventions, the other urban areas due to inadequate resources may not have been able to do enough. While the poverty rate in Baku is significantly lower, still the concentration of poor population in absolute number in the City is significantly higher due to its share of total population in the country and due to the continuing influx of migrants and IDPs looking for work and other opportunities therein.

The Project area is predominantly rural (74% on average). Accordingly, poverty incidence in the area is reflective of the rural situation. The incidence of poverty in the district would be lower than the national average.

Attitudes towards poverty are influenced by the reality that recent economic development in the country has been focused in the oil-sector primarily in Baku, and that little development has been distributed to the districts. But more recently, the central government had already instituted several measures to address this imbalance. However, key informant interviews and focus groups discussions in the project area indicate the general sentiment of the people that still there is only minimal improvement; that there is the continued lack of employment opportunities, frequent lack of water for drinking and other basic amenities, rising cost of energy sources, and the poor condition of medical facilities resulting in common illness. People observed that poverty was experienced when there was not enough food and clothes for the family, when they were unable to heat their houses in winter, have clothes for their children to wear to school, or when they could not afford needed medicines. Poverty is experienced most within communities by the elderly, widows or unmarried women, the disabled and IDPs.

3. POLICY AND LEGAL FRAMEWORK

3.1 Legislation of the Republic of Azerbaijan

The Alat Astara Highway Project will have major impacts on the lives and properties of households and communities in the areas traversed by the road. Accordingly, the review of laws and regulations guiding the property ownerships and rights of individuals is necessary. It will provide the framework and rationale to the assessment and bring to fore the basic considerations that must be addressed in the preparation of the RAP.

Laws and Regulations: The construction of the Shorsulu-Masalli Section of the Alat-Astara road as well as the implementation of adequate safety measures in the areas adjacent to the road require the partial and/or complete takeover of assets and properties of private individuals by the government for public interest. Therefore, the review of laws and regulations guiding the property ownerships and rights of natural and legal persons is an integral part to the RAP.

Article 29 of the Constitution of Azerbaijan (12 November 1995) establishes the right of citizens to possess properties and ensures the protection of such “property rights”. It also ensures that those dispossessed of land are provided legal recourse and that alienation of properties for state needs shall only be allowed upon fair reimbursement of its value.

There are no laws or legislation in Azerbaijan that specifically consider matters of involuntary resettlement. However, a few regulatory instruments exist in the country providing the basis for regulating and managing the acquisition of land, properties and productive assets and for compensation for the loss of these assets. These instruments include (i) Land Code (25 June 1999), (ii) Civil Code (1 December 1998), (iii) Resolution of the Cabinet of Ministers No. 42 (15 March 2000), (iv) Resolution of the Cabinet of Ministers No. 110 (June 1999), (v) Decree on Application of the Road Law (2000), and (vi) Decree on Additional Activities for Regulating the Use of Road Reserves (2004), and Resolution of the Cabinet of Ministers No. 54 (4 April 2009). Among these, the Land Code is a critical one as it (a) provides for compensation principles for the loss of land, established on the basis of the Resolution of the Cabinet of Ministers No. 54 and Standard Code of Azerbaijan No. 158, 1998; (b) allows recourse through courts; and (c) provides the basis for a land-for-land compensation option. The Civil Code and Land Code provide the basis for acquisition of land for projects of national interest and municipal needs while the Cabinet of Ministers Resolution No. 42 outlines procedures for the acquisition. Collectively, these regulations provide options for land acquisition from legal landowners: (i) land-for-land and, (ii) compensation based on market prices. Dispute over compensation is subject to resolution in the courts. Beside these, Resolution of the Cabinet of Ministers No. 54 outlines procedures for valuation of assets which are acquired for State needs. The Decree on the Application of the Road Law and the Decree on Additional Activities for Regulating the Use of Road Reserves designate the Cabinet of Ministers as the agency to approve road reserves and acquisition of affected properties.

The current legislation related to the status and control of the road reserves has its foundations in the land laws of the Soviet era. Prohibition of activities in the road reserve is outlined in the 1989 Road Decree, which itself refers to an earlier legal instrument, Decree No. 228 of 3rd July 1976. Since independence, a Decree on the Application of the Road Law of 2000 and a recent Decree No. 18 of February 2004 on additional activities aimed at regulated usage of the road reserve have provided greater clarity on the situation of the road reserve. In addition, there is a decree of the President dated 8 July 2008 which defines

standards for noise and vibration pollution. Summaries of instructions given in these and other decrees are given in the following sections.

1976 Road Decree

The 1976 Decree refers back to a Russian state construction standard SNIP 467/74 that defined the requirements for a 60 metre wide road reserve3 for State and Republican Roads and a 25 metre wide road reserve for Local Roads. This decree gives legal standing to the width requirements for road reserves given in the construction standard.

1989 Road Decree No. 461

The 1989 decree again reinforces the road reserve width requirements given in the 1976 Decree. Article 7 outlines prohibited activities and constructions in the road reserve and assigns rights for the roads authority to evict illegal occupants on 15 days notice, at the conclusion of which, the roads authority may demolish the constructions without compensation and use the resultant materials in the construction of the road. This 1989 decree provides a procedure for the road authority to review and authorise applications for developments within 200 metres of each side of the road centreline in respect of aspects including maintenance of the road reserve and access provisions to the main road. 2000 Decree on Application of the Road Law

One of the main purposes of this decree was to update the 1989 decree, especially in regard to the designation of responsible agencies. Article 14 outlined that the width of road reserves will be confirmed by the Cabinet of Ministers. Processes for inclusion of new areas into the road reserve, and acquisition of affected properties, are described, and it is stated that those permitted to use lands within the road reserve must be notified of the conditions of this use upon agreement of use terms. Article 33 states that commercial enterprise may be undertaken with Roads Authority approval within the road reserve. 2004 Decree on Additional Activities Aimed at Regulating the Usage of Road Reserves in the Republic of Azerbaijan

This recent decree designates responsible agencies for various issues relating to the road reserve and adjacent land use, including the preparation of an inventory of national road reserve to identify illegal and legal occupiers and properties, and for ongoing maintenance and protection of the road reserve. The legal basis of land use and the value of existing properties inside the road reserve must be submitted to the Cabinet of Ministers.

Other Legal Instruments

Azeri Law has the following instruments, which provide instructions on matters relating to land, land acquisition and compensation for other property losses:

• The Land Code, 25 June 1999; • The Civil Code, 1 December 1998; • Resolution of the Cabinet of Ministers No. 54. April 4, 2009; • Resolution of the Cabinet of Ministers No. 42, March 15, 2000;

3 The road reserve width is defined as being 30 metres wide on each side of the centre-line, totaling 60 metres.

• Resolution of the Cabinet of Ministers No. 110, June 1999.

Aspects of these instruments that relate to the use and protection of the road reserve are given in the following sections.

Land Code dated 25 June 1999

When land is required for projects of national interest, compensation is initially offered on the basis of valuations made in accordance with a standard code (no. 158 dated 1998). If landowners are unhappy with this valuation, the market price will be used as a basis for valuation. In the event that such agreement cannot be reached, the acquiring authority can process its application for acquisition through the courts, but this is often a long and complex process. The landowner also has an option for seeking recourse through the courts if negotiation fails. The Land Code also allows provision of alternative lands equivalent in value to the land being acquired. Significantly, the Land Code does not allow acquiring agencies to physically and legally acquire land unless every household member of the affected households have signed the legal document certifying the transfer of land to the acquiring agencies. The existing regulation also requires that the acquiring agency must submit the signed agreements with all land owners in order for the budget of land acquisition to be released. Experience from the construction of Tovuz bypass (see page 28) shows that these requirements cause significant delay in land acquisition as many land owners unsatisfied with the amount of compensation offered refuse the sign the agreements, which forces the acquiring agency to increase compensation to the level that is satisfactory to the majority of land owners.

Where a relevant local executive authority decides a land case, the decision shall come into force immediately and this decision will not be terminated by the lodgement of a complaint with the relevant court. Articles 110 and 111 describe wilful occupation of land plots, implementation of illegal construction on land plots as violations of the land legislation, and state that these are prohibited acts. The articles state that such land plots will be returned to the relevant authorities without reimbursement of the expenses incurred during the illegal utilization. Rehabilitation of the lands should also be carried out by the illegal occupants, at their own expense. These different decrees are summarized in Table 9.

Civil Code dated 1 December 1998 This Civil Code states that any rights to immovable properties must be registered with the State, and that land may be recalled from owners for state or municipal needs as approved by the relevant courts.

Resolution of the Cabinet of Ministers No. 42 - On Some Normative and Legal Acts Relating to the Land Code of the Azerbaijan Republic dated 15 March 2000 - This resolution outlines procedures for the compulsory acquisition of land for state or municipal needs. Resolution of the Cabinet of Ministers No. 110 – On Approval of Regulations for an Inventory Cost estimation of Buildings Owned by Natural Persons dated June 1999 - This Resolution outlines procedures for acquisition and compensation valuation for affected buildings and immovable properties. It refers to the standard code No. 58 that is to be used for making valuations of land and property to be acquired. These valuations are made on the basis of standard unit rates for different types of construction in different regions of Azerbaijan.

Decree of the President dated 26 December 2007 on ensuring the execution of the law No. 506-3 QD dated 7 December 2007 on “Amendments and Additions to the Civil Code of the

Azerbaijan Republic” - This decree states that 20% additional compensation should be added to the calculated market price of the acquired property to compensate for the damages resulting from the purchase of property, including lost income and loss connected with the pre-termination of commitments against third parties.

Resolution of the Cabinet of Ministers No. 54 on Approval of the Procedures for Calculating the Acquisition Price of Real Property for Public Needs - According to the Resolution, the State Committee on Property Issues (SCPI) has overall responsibilities for land acquisition and resettlement issues. The executive agency in need of land acquisition should submit all necessary documents (including preliminary budget estimate) to the SCPI. SCPI reviews the documents submitted jointly with the Ministries of Finance and Economic Development. Based on the results of this review the Cabinet of Ministers issues a resolution on the acquisition of property for public needs. After the resolution is passed a written notification should be sent to property owners by the Executive Agency within 3 calendar days. The Executive Agency should involve Independent Appraiser in order to value affected assets. The appraiser should meet the minimum qualification requirements set by the State Property Committee with agreement of the Ministry of Finance and Ministry of Economic Development. Calculation of the market price of the acquired property is based on: - market value of the real property in the respective administrative area; or - replacement value of the property and land, if there has not been any real property transaction in that area to formulate a fair price of land or if the land is to be replaced with another parcel of land; or - in case it is impractical to use market or replacement value to formulate a fair and real price of land, any price which is no less that normative price of land; - if more than one method of valuing the land can be used, then the method that formulated the highest price shall be applied.

In case the acquired land is swapped with another parcel of land with the agreement of the land owner, the following will also be provided in order to recover the livelihood of land owners after resettlement:

- for agricultural land: costs of preparing the land for planting, as well as expected costs of fees and taxes related to transfer of land title; - in the residential areas (towns, suburban, and rural): infrastructure of the same or improved quality, fees and taxes for obtaining and registering property titles. - costs incurred to reinstate land, if not undertaken; - Moving and transportation costs; - salvage materials will be returned to owners with his/her agreement.

Upon the receipt of the appraisal report, the Executive Agency shall send a notice to the owner within one day and with all supporting documents attached. Compensation shall be transferred to the bank accounts of physical and legal entities not later than 120 days of submission of the first notice sent to the owner of the property.

Table 9: Overview of Existing National Regulatory Framework Related to Social Aspects in Road Sector Azerbaijan Constitution Established the right of individuals to possess property and that such

(12 November 1995) ‘property rights’ shall be protected by law; also, establishes that no-one Article 29 will be dispossessed of land without a ‘decision of court’, and that alienation of property for state needs shall only be allowed upon ‘fair reimbursement of its value’ Land Code of Azerbaijan 1. All lands in use or in rent can be bought for state, municipality or for Republic (25 June 1999) public needs Article 70 3. Lands in use could be taken back by Local Executive Power and Municipalities via the legal enforcement on the basis of the court decision 4. Privately owned land can be forced to be sold if there is planning to locate something for state, municipality or public needs 8. People can be compensated with the same amount and same category of land in other place if the expropriated land is used for state, municipality of public needs Article 86 1. Following categories of lands and their rights can be sold: private land, municipality lands, and lands under privatized state property. 4. Foreigners and non-citizens are not allowed to buy land in the Republic of Azerbaijan Article 94 2. There are two kinds of values for lands: nominal and market price

Article 95 1. The nominal price of lands is a value indicator reflecting quality and productivity 2. The nominal price is used as a basic value in the following situations: when lands are expropriated from owners and when the land is sold by owner, and when the lands category is changing 3. Nominal price is indexed by inflation rate and calculated by the District’s Executive Power (Local Executive Body) Article 96 2. When the privately owned land is purchased by other private individuals the value is calculated by agreement of correspondent sides based on the market price (seller and buyer) 3. When municipality land is sold, market prices must be higher than nominal price and determined by municipality administration 6. When the land is sold for public needs, the price of this land will be determined by independent experts in this process. There must be an agreement by both sides. Article 103 Disputes about land are solved by the District’s Executive Power, Municipalities and Court. Law on Land Market Establishes requirements for land transactions such as purchasing and (7 May 1999) selling of land, mortgages, transferring of rights to other users and lessees, and transfer of land through inheritance; makes recommendations on the nature of land market agreements and contracts; requires registration of all land rights and sets out documentation requirements; and outlines penalties for failure to comply with regulations. Resolution No.42 of “On Expands on provisions of the Land Code with respect to the following some Normative and areas: a) procedures for determining payments for agricultural and Legal Acts Relating to forestry production losses and damage resulting from restriction of use, the Land Code of the or change in land use; b) procedures for resumption of private land for Azerbaijan Republic” state or public needs; c) procedures for granting leases for grazing and (15 March 2000) hayfield use; and, d) procedures for allotting land for industrial, transportation, communication and other purposes. Cabinet of Ministers Sets out standard or normative values of land for each district in DecreeNo.158 on Azerbaijan. For Lankaran-Astara region, which includes the Masalli normative Costs of Land district, the normative price for 1 ha agricultural land is 1695.4 AZN, while (23 July 1998) 1 ha of pasture land is specified as 474.64 AZN. For Jalilabad district normative price of 1 ha agricultural land is 848.16 AZN, while normative price of 1 ha of pasture land is 530.52. For Mugan-Salyan region, which includes Bilasuvar and Neftchala districts, normative price of 3rd category agricultural land is 1086.98 AZN.

Law on Land Leases Sets general rules governing leasing of land, procedures for changing (11 December 1998) lease conditions and establishes the requirement for registration of leases. Civil Code Defines types of legal interests in property (full ownership, lease, third (1 September 2000) party); requires proprietary rights and other rights for immovable property, as well as restrictions, formation, assignment or transfer of rights to be registered with the State. Use rights, servitude rights and mortgages must also be registered. Requires that land acquired for state or public needs shall be purchased by ‘an authorized body of the Azerbaijan Republic’ or municipality, by paying the market price in advance. Provides for people to have the right to register their ownership due to long, actual possession. Civil Procedures Code Sets out procedures and applicable timeframes for actions and appeals (1 September 2000) through the courts. Court decisions on compulsory acquisition and the Article 360 basis of any land valuation must be appealed with the higher court within one month of such decision Land Acquisition The Memorandum of Understanding on Land Acquisition between the (Memorandum of International Development Association (IDA) and the Government of Understanding on Land Azerbaijan, which is used in the Baku-Gazakh-Georgia Borders road Acquisition between IDA construction, states which information is collected for compensation and the Government of applications. This includes (a) the type of land: if sowing land, pasture, Azerbaijan for Highway garden, dry-farming or irrigated land, (b) buildings, (c) plants already Project) sown or to be sown during the next season and (d) perennial herbs, trees and their age and quantity. This information is collected by the representatives of the District’s Executive Power and Azerbaijan State Land and Cartography Committee for compensation which is finally approved and accepted by the Cabinet of Ministers. Although the state is responsible to compensate, there is no permanent Compensation Funds and clear compensation system and the accepted compensations are (Memorandum of paid from different state funds as the case maybe. For the Tovuz Bypass Understanding on Land Project it was recommended that compensations be paid from the Acquisition between IDA Government funds of the IDA loan project and monitored by the RTSD or and the Government of a supervision consultant engaged in the project. Azerbaijan for Highway Compensations must be paid immediately after the final road design has Project) been finished and those eligible to compensation are known. Compensations must be completed before any of the construction work starts.

Law of the Protection of Protection of Monuments states that no historical and/or cultural Historical and Cultural monuments which are declared as such by the Azerbaijan Science Monuments Academy, are to be demolished. No such monuments were found in the Article 10: corridors under study. Cabinet of Ministers This decree states that, wherever possible, impacts on agricultural land Decree No. 42, section I, and forests should be avoided. article 2 Decree of the President This law defines norms and standards for noise and vibration pollution. (8 July 2008) on standards of noise and vibration pollution

Decree of the President This decree states that 20% additional compensation is added on to dated 26 December 2007 calculated market price of the acquired property on ensuring the execution of the Law # 506-3 QD dated 7 December 2007 about “Amendments and Additions to the Civil

Code of the Azerbaijan Republic” Resolution of the Cabinet This resolution defines procedures for LARP valuation and of Ministers # 54, implementation.

(Source: IDA Credit 3517 – AZ, TECHNICAL ASSISTANCE FOR TOVUZ BYPASS, LAND ACQUISITION PLAN, Finnroad, Baku, May 2005)4

3.2 World Bank Policy

The proposed construction of the Shorsulu-South of Masalli Section of the Alat - Astara Highway is being implemented with the financial support of the World Bank and therefore it will comply with the requirements of the World Bank policy documents and regulations, including:

• The World Bank Operations Manual • OP/BP 4.12 Involuntary Resettlement: http://lnweb18.worldbank.org/ESSD/sdvext.nsf/52ByDocName/InvoluntaryRese • OPN 11.03 Management of Cultural Property in Bank-financed Projects: http://lnweb18.worldbank.ogp/ESSD/sdvext.nsf/52ByDocName/CulturalProperty • The World Bank Procedures on Information Disclosure http://www1.worldbank.org/operations/disclosure/

The requirement of the World Bank’s Policy (WB OP4.12) is to avoid involuntary resettlement whenever possible. Where displacement is unavoidable the following measures shall be ensured:

• Compensation should be based on the replacement cost; • Participation of displaced persons in planning and implementation of the resettlement process; • Assistance in their efforts to restore their living standards and income earning at least to their pre-settlement levels; • Completion of compensation measures prior to construction activities considered by the project.

3.3 Differences between the Azeri legislation and the World Bank Operational Resettlement Policy and Measures to Bridge the Gap

WB OP 4.12 on Involuntary Resettlement

Many of the key tenets of the WB’s OP 4.12 are covered in full or in part by current Azerbaijan law. These include:

• The requirement to pay compensation in advance where land is compulsorily acquired (Land Code, article 70.5); • The need to compensate based on full market value or through grant of another land plot or building of equal quality, size and value (Land Code articles 8 and 70.5); • The need to avoid, wherever possible, impacts on agricultural land and forests (Decree of the Cabinet of Ministers No. 42, section I, article 2);

4 Equivalent Nature Protection Law deals with issues on environmental issues, which are covered under the Environmental Assessment.

• The requirement to compensate for losses, whether temporary or permanent) in production or damage to productive assets and crops (Cabinet of Ministers Decree No. 42, Sections I and II); and • Provision for pre-judicial avenues for resolution of disputes and rights of appeal.

There are, however, six broad areas where the borrower’s obligation under OP 4.12 extends beyond those required under Azerbaijan legislation. These are as follows:

• Resettlement planning and procedural requirements • Public consultation and participation of project affected communities • Extent of compensation and types of assistance to be offered • Categories of people eligible for compensation • Property measurement • Income restoration

Resettlement Planning and Procedural Requirement

There is presently no requirement to prepare a formal Resettlement Action Plan (RAP) under Azerbaijan law, nor to undertake any of the component activities of a resettlement action plan such as, as a ‘census’, socio-economic survey, consultation with project affected people, monitoring or reporting. There are no specific references in the legislation to ‘involuntary resettlement’. Core WB planning requirements such as the need for community participation in the resettlement planning process and the requirement to improve or enhance project affected people’s living standards and income and production levels, are not explicitly addressed in current legislation. While Azerbaijan legislation is silent on involuntary resettlement, previous Azerbaijan government agreements with international companies working in Azerbaijan have stipulated that industry standards and practices comply with international standards and best practice. Measures listed below have been employed to ensure compliance with OP41.2: • Consulting with potential project-affected people on feasible measures for resettlement and rehabilitation • Drafting and implementing a full public consultation strategy and disclosure plan before construction. Funds will need to be allocated for consultation activities. • A scoping study had been carried out to identify the need for Resettlement Action Plan (RAP). • PAP have been informed of their rights to assistance with supporting information and material, where appropriate.

Public Consultation and Participation

OP 4.12 specifies that project affected people should be informed about their options and rights pertaining to resettlement and ‘…consulted on, offered choices among, and provided with technically and economically feasible resettlement alternatives; and provided prompt and effective compensation at full replacement (Clause 6, (i), (ii)). Currently there is no explicit consultation requirement in Azeri law. The Resolution of the Cabinet of Ministers No. 54 says that a written notification (its form is attached in Annex 11) should be sent to the property owner by the Executive

Agency within 3 calendar days after the resolution on property acquisition is passed by the Cabinet of Ministers. The second notification should be sent to the property owner(s) within one working day after the value of the acquired property is submitted to the Executive Agency by Independent Appraiser in order to inform him of compensation amount for the acquired property.

Measures listed below have been employed to ensure compliance with OP41.2: • Information about the project have been disclosed in an early stage • Disclosure of project environmental and social information has been conducted an integral part of the public consultation process, with information being provided about both benefits and disadvantages of the project • Information about the project and expected impact have been clearly presented in appropriate local languages and dialects and in modes that are sensitive to local communities • Information has been disclosed in locations that are open to the public and that are readily accessible to PAP Compensation Eligibility in Azerbaijan

The categories of people who must be compensated under Azerbaijan legislation are narrower than those defined under OP 4.12. Under the legislation, the only people and entities entitled for compensation are those with registered property rights, for example, registered landowners, leaseholders, users and those with registered third party rights or those who have legally obtained the right to register their title but whom, for some reason, have not completed registration. This potentially precludes many categories of affected people that would be entitled to compensation under WB Group policies. Furthermore, under the existing decree, those who illegally use the existing Right-of-Way (ROW) are required to finance activities necessary to clear the ROW out of their own finance. These categories would include, in Azerbaijan: • Users who use land on the basis of an informal agreement often with a relative or extended family member (share croppers, tenant farmers) • Owners who occupy land that was transferred by informal agreement from another owner • Owners who have not registered a change in ownership following a family death, marriage annulment or similar situation • Internally Displaced People (who have no rights to land) • People who make use of communal resources to which they have no formal title • Informal dwellers

Measures listed below have been employed to ensure compliance with OP41.2: • All users of land (including those with legal documents and those without) are entitled to compensation for loss of land, structures and livelihoods. For illegal dwellers, ARS will compensate for loss of livelihood and in case of affected structures ARS will provide alternative structures that are agreeable to the owners. Also, they are exempted from any cost that may be necessary to clear the required ROW. All land users have been informed, in a timely and appropriate manner, of their rights. Leaseholders and users are entitled for reasonable compensation subject to evidence of use of the land for 2 years or more.

Provisions for Illegal Land Use in Azerbaijan

Although the Azeri law does not make provision for people with no legal title, the practice on the ground is often different. Anecdotal information suggest that people with no legal titles to their businesses are given compensation of the value of the business but are not provided with income restoration measures, they are also given assistance with physical relocation. This practice on the ground does adhere to the World Bank OP4.12; but as it is not in law, it is conducted on a discretionary case-by- case basis and is not systematically monitored.

Measures listed below are employed to ensure compliance with OP41.2: • Adequate rehabilitation assistance will be provided for those who do not have official titles to the land but who use the land for lawful activities, without regard to the legal status; • Rehabilitation assistance will be provided including, for example, free house plots or subsidized plots.

Property Measurement

Under the WB safeguard policies, compensation for lost properties will be calculated based on full replacement cost, in other words, compensation should be equal to what enables the PAP to restore their livelihood at the level prior to the resettlement. Under the Azeri law, compensation must be equal to or above the market value of lost properties – law provides that if the state determined normative prices for affected properties are below the market prices, then compensation should be based on market prices. Compensation based on market value may not be sufficient to restore livelihood. Also, PAP may not be able to recover the pre-project level of livelihood if impact is severe. Measures listed below have been employed to ensure compliance with OP41.2: • Compensation for losses of assets will be equal to full replacement cost; • Severely affected people (who will lose more than 20% of agricultural land) will benefit from rehabilitation measures (i.e., privileged access to employment opportunities under the Civil Works activities which will be stipulated in the Contractor’s contract)

4. SCOPE OF LAND ACQUISITION AND RESETTLEMENT

4.1 Census of Affected Households and Persons The distribution of affected households and persons by villages and districts and by private and public lands is provided in Table 10. Except for one leaseholder of a portion of state forest land in Masalli, on which a restaurant complex had been constructed and operated, all (757) of the affected private landowners are losing portions of their private lands. Of the total 757 households, 624 or 82.4% are from the district of Masalli, 71 or 9.4% are from Neftchala and the rest are from Jalilabad. A portion of the leased state forest land where the restaurant complex is located will be affected. No loss of standing crops is anticipated since the construction schedule will be adjusted so farmers will be able to harvest the annual crops on the affected land.

Table 10: Summary of Losses of Affected Persons District/Village Total PAPs losing land Loss of structure Trees/crops loss Business loss PAP # PAPs Total ha # PAPs Type loss # PAPs Type loss # PAPs Type loss Bilasuvar 0 0 Neftchala (2) 71 71 Qachaqkand 43 43 29.0216 Qirmizikand 28 28 21,0722 Jalilabad (3) 62 62 Uzuntapa 48 48 24,0478 2 2 houses 2 HH Fruit trees Soyudlu 14 14 11,445 Kazimabad 0 0 0 Masalli (18) 625 624 Takla 13 13 2,8268 Restaurant Food Mollahasanli 89* 88 12,7093 1 complex 1 catering Sigincaq 15 15 3,66 Kelbehuseynli 18 18 3,5134 Chakhirli 39 39 9,44 Bala Takla 20 20 4,6621 Sharafa 7 7 2,82 Agakishibayli 56 56 8,0747 Seybatin 44 44 6,2516 Dadva 47 47 3,5868 Samidkhan-1 2 2 0,0837 Samidkhan-2 7 7 0,3265 1 Fence ** 1 HH Fruit trees Oncaqala 12 12 3,011 Musakucha 120 120 18,6828 Goyachol 72 72 16,4104 Shixlar 1 1 0,0057 Xil 52 52 10,7089 Sarcuvar 11 11 0,8694

Total 758 757 193,2296 4*** 3 HH 1 Source: Census Result – RRI/SLCC: March 2008 * Includes the restaurant owner. ** The fence owner is also an affected land owner; *** Of the 4 PAPs whose structures are affected, 3 are private landowners.

4.2.1 Socioeconomic Profile of Project Affected Persons

(i) Demographic profile The socio-economic survey covered all households directly affected by project implementation. The project will affect 1 business and 757 households of which 187 are women-headed, and composed of 3910 persons of which 1832 are males and 2078 are females. The average size of these households is 5.16 persons. Of the total households, 100% are of Azerbaijani ethnic origin. The survey revealed that the affected population in the project-affected area has the following demographic characteristics: 47% of members of surveyed households are men while 53% are women. Most (82.4%) of the affected households are located in Masalli. Of the total affected households, 187 or 24.6% are women headed. Table 11 below shows the distribution of the households in terms of specific indicators.

Table 11: Selected Demographic Data of the PAPs, Section 3 Indicator Number and Percent of PAPs by Location Bilasuvar Nefchala Jalilabad Masalli Total HH total Number Percent Number Percent Number Percent Number Percent Number Percent 0 0 71 100 62 100 625 100 758 100 Total Person 0 0 410 345 3155 3910 Male 203 49.5 160 46.38 1469 46.70 1832 47 Female 207 50.5 185 53.62 1686 53.30 2078 53 Women headed HH 0 0 16 22.5 21 33.87 156 24.9 187 24.6 Ethnicity 0 0 Azerbaijani 410 100 345 100 3101 100 3861 100 Average size - - 5.77 5.56 5.01 5.16 of HH Source: Census Result – RRI/SLCC: March 2008

(ii) House and Homestead All of the households own the house and the plot they occupy. Houses are generally built of mud-filled wood frame with cement finish and with tile slates as roof. The affected households own livestock along with the land plots and houses. Ownership of livestock is as follows: 41% of households own big horned animals; 11% small-horned animals and 33% poultry. See Table 12 for details.

Table 12: Asset Ownership and Access to Basic Services, Section 3 Number and percent of PAPs by Location Indicator Bilasuvar Neftchala Jalilabad Masalli Total Animal Ownership # % # % # % # % Big Horned - - 45 62 38 61 223 36 306 41 Small Horned - - 30 42 20 32 33 5 83 11 Poultry - - 36 49 37 60 174 28 247 33 Presence of : Electricity - - 71 100 62 100 625 100 758 100 Gas - - 0 0 47 76 89 14 136 18 Water - - 62 85 42 68 373 60 477 64 Car ownership - - 27 36 13 21 111 18 151 20 Source: Census Result – RRI/SLCC: March 2008

(iii) Basic services Of the total affected households, 100% has access to electricity, only 18% has gas supply, while 64% has access to potable water supply. Of these households, 20%

reported ownership of car. In case of medical need, the households have reported that more often they availed of the services of the district hospital or local ambulance while some indicated that they avail of the services of a private doctor or private hospital from time to time. Children of the affected households generally go to nearby schools for their elementary education. Very few respondents could name an active non-governmental organization or cooperative society in the affected communities. (iv) Incomes and Expenditures Table 13 below shows the details for the source of income of PAPs.

Table 13: Source of Income of the PAPs, Section 3 Number and percent of PAPs by Location

Source Bilasuvar Neftchala Jalilabad Masalli Total # % # % # % # % # % Total HHs - 71 100 62 100 625 100 758 100 Salary/wages - - 5 6,8 16 25,8 99 16,1 120 16,0 State pension - - 4 5,5 4 6,5 56 9,1 64 8,5 Agriculture - - 60 82,2 35 56,5 398 64,7 493 65 Aid from Relative - - 0 0,0 3 4,8 6 1,0 9 1,2 Other - - 4 5,5 4 6,5 56 9,1 64 8,5 Source: Census Result – RRI/SLCC: March 2008 Some 65% percent of affected households identify agriculture related activities as their main source of income; pensions, state allowances and benefits are the main sources of income for 8.5% of households; salaries and wages are reported by 16% of the affected households as their primary source of income; aid from relative is reported by approximately 1.2% households as their source of primary income while 8.5% of respondents indicated other source of income.

Almost all PAP refused to provide information on the amount of household income. Thus, it is difficult to say whether the potential land take will have a significant impact on the quality of life of the PAPs. It is however, worthwhile to note that majority (66%) of the PAPs has indicated that agriculture is their main source of income. Figure 3: Proportion of PAPs in various sources of primary income (2008).

Almost all of the lands which will be affected are agricultural lands cultivated mainly to grains and potato. The proportion of PAPs experiencing land take of less than 30% of the cultivated area is approximately 84% of the total; the remaining proportion will experience land take of varying proportions from 30% and above. (v) Attitude toward the project and expectations

By the time of the survey, all of the affected households had been informed about the project of the construction of the Alat Astara Highway. The primary source of this information is the officials of the Executive Power and the local land offices. Socio- economic survey questionnaire contained a question about willingness of the PAP to give up their land for the Project , All PAPs consider the project beneficial and they indicated their willingness to give up the land they occupy or cultivate if needed for the purpose of road construction. Monetary compensation is the preferred option for all PAPs to compensate for loss of land. Monetary compensation is also the preferred option as for damages to privately owned buildings, tree plantations, perennials and harvest and suspension of commercial activity. 4.2 Affected Assets The following discussion presents the results of the investigation on the category and types of impacts of the Project on land, structures, businesses, crops and trees and other assets and property as well as the unavoidable temporary impacts on the community particularly during the period of construction.

(i) Affected Land

Section 3A.3B and 3C will traverse 23 villages in four districts, namely Neftchala, Bilasuvar, Jalillabad and Masalli affecting private, municipal as well as state lands. Because the alignment generally follows new terrain running parallel to the existing railway track and have tried to avoid residential communities, most of the private lands affected are agricultural lands generally used to cultivate grains and animal feeds; only a few residential and commercial structures are affected. However, in municipal land, a number of public infrastructures like local roads and irrigation ditches as well as pasturelands, and public building area will be affected.

The total area of the land required as ROW for the alignment of the concerned section is approximately 425.753 ha composed of state, municipal and private lands in 23 villages within the districts of Bilasuvar, Jalilabad, Neftchala and Masalli, respectively. See Table 14 below for the summary of affected lands of various categories.

Table 14: Summary of Impacts on Lands of Various Categories Private land Village No. Municipal District # Village Name plots Size (ha) land (ha) State land (ha) Subtotal Bilasuvar - 0 0 0 23.0569 23,0569 Neftchala 1 Qachaqkand 49 29,0216 9.35 13,28 51,6516 2 Qirmizikand 28 21,0722 12,6439 4,9189 38,635 Jalilabad State Reserve - - - 52.85 52.85 3 Uzuntapa 52 24,0478 12,52 4,28 40,8478 4 Soyudlu 17 11,445 19,76 4,46 35,665 5 Kazimabad 0 0 0,79 1,46 2,25 Masalli 6 Takla 14 2,8268 2,0245 20,01 24,8613 7 Mollahasanli 88 12,7093 1,3388 9,4237 23,4718 8 Sigincaq 15 3,66 1,102 0,574 5,336 9 Kelbehuseynli 18 3,5134 0,0945 0,0556 3,6635 10 Chakhirli 39 9,44 6.647 0,85 16,937 11 Bala Takla 20 4,6621 6,4214 0,2562 11,3397 12 Sharafa 7 2,82 2.88 0,45 6,15 13 Agakishibayli 56 8,0746 3,9846 0,9609 13,0201

14 Seybatin 45 6,2516 1,1817 0,1187 7,552 15 Dadva 47 3,5868 0,4357 0 4,0225 16 Samidkhan-1 2 0,0837 0,2962 0 0,3799 17 Samidkhan-2 7 0,3265 2,4915 0 2,818 18 Oncaqala 12 3,011 0,4551 0 3,4661 19 Musakucha 121 18,6828 0,8803 1,7224 21,2855 20 Goyachol 78 16,4104 2.45 0,71 19,5704 21 Shixlar 1 0,0057 0,4064 0,28 0,6921

22 Xil 52 10,7089 3,8127 0 14,5216 23 Sarcuvar 11 0,8694 0,8398 0 1,7092 Total 779 193. 2296 92.81 139.717 425. 753 Source: DMS and SES Data, RRI International and SLCC, March 2008

• Affected Private Land

The affected private land used to be part of the communal plots used to cultivate various crops and grazing crops during the soviet times which have been parcelled and transferred to individual families as a result of the privatization process during the late 1990’s. Currently, the plots are mostly cultivated for grains and livestock feeds or potatoes; some are merely left fallow to be used as grazing area. Toward the Masalli area, these plots are generally used to cultivate root crops, wheat, barley and some patches of vegetables during spring and early summer season but left mostly fallow during the height of summer and autumn due to insufficient irrigation.

The road alignment is designed so it will traverse these plots in such a way as it will affect small portion of their area. But because of the configuration of land parcels against the proposed road alignment (diagonal rather than parallel), a substantial number (779 plots owned by 757 private individuals) is affected. Table 15 below provides the summary of private land take in Section 3. A sample of this land cadastral pattern is shown in Figure 3 below.

Table 15: Summary of Private Land Take in the concerned districts of Section 3 Affected Private Location and Size (ha) Total Land Bilasuvar Neftchala Jalilabad Masalli (ha) Size 0 50.0938 35.4928 107.643 193.2296 No of Plots 0 77 69 633 779 No of HHs 0 71 62 624 757 DMS Results, RRI: March 2008

Figure 3: Sample of Cadastral Lot Pattern in the Project Area

As can be seen, some land plots are inevitably divided into two pieces by the project road. If the remaining part(s) of the divided land plot is less than or equal to 0.04 ha, the part will also

be acquired and duly compensated to the owner based on the same market price as the acquired portion. Underpasses or overpasses are deliberately designed, based on the consultation with local population, to minimize disruption in mobility between both sides of the road.

• Affected Municipal Lands

Table 16 below presents the various categories of affected municipal lands.

Table 16: Summary of municipal land affected by Section 3 alignment Land Classification of affected Location and Size Total Municipal Land Neftchala Jalilabad Masalli (ha) Local Road 0.95 1.48 6.7334 9.1634 Unusable 2.3832 3.29 2.8209 8.4941 Irrigation Ditch - - 4.4128 4.4128 Pasture 0.3896 24.38 12.9559 37.7255 Agricultural 5.488 3.9 5.8481 15,2361 Municipal Reserve 12.7831 0.02 4.5712 17.3743 Prospective Expansion Area - 0.4 0.4 TOTAL 21.9939 33.07 37.7422 92.8061 DMS Results, RRI: March 2008

Approximately 92.8061 ha of municipal lands are affected in the Section III alignment in Neftchala, Jalilabad and Masalli districts. The biggest impact is in municipal lands utilized as grazing area, followed by municipal reserve area, cultivated area and local roads. Acquisition of grazing areas as ROW will not result in income loss to the shepherds who occasionally use these parcels as grazing area for their animals. The total area used for occasional grazing which will be acquired as ROW is so insignificant in size compared to thousands of hectares available for open grazing around the community. Although some municipal lands in official land cadastral documents are classified as agricultural, it was established during the inventory that these lands are not cultivated for agricultural purposes and in fact maintained as municipal reserve lands. Municipalities will get compensation based on normative price.

• Affected State Land Reserve

Table 17 shows the summary of the state land reserve in the different districts that will need to be acquired for Section III alignment.

Table17: Summary of State Land Reserve affected by Section 3 alignment Location and Size (ha) Total Bilasuvar Neftchala Jalilabad Masalli (ha) State land 23.0569 18.1989 63.05 35.4115 139.7173 DMS Results, RRI: March 2008 The acquisition of state land of approximately 139 ha indicated as pasture area will not result in the income loss of occasional users. The affected land runs on several thousand kilometers wide open spaces of grass- and marshland belonging to the state which serve as occasional grazing area for livestock of communities nearby.

In summary, a total of 425.753 ha of various categories of land had been identified as required for the right of way of the final alignment for Section 3A, 3B and 3C, which consists of 193.2296 ha (45.38%) of private plots, 92.8061 ha (21.8%) of municipal plots and 139.7173 ha (32.82%) of state lands. (iii) Impacts on Buildings and Structures

Even though the alignment was carefully selected to avoid affecting buildings and structures and minimize dislocation and impact on residential and commercial establishments, still a group of structures (two residential houses (one with animal stable), one restaurant complex and one residential fence) will be affected by the proposed road construction. These structures are located in three villages (2 in Masalli and 1 in Jalilabad) as shown in Table 18. All of the affected structures are privately owned.

Table 18 Category and Number of Affected Structures by Location Land Type of Components Dimension of Location Category structure structure Materials used 1 house 171.84 m2 Mud filled wood frame, cement finished, roof slate Uzuntapa, Located Residential 1 animal stable 65.57 m2 Mud filled wood frame, cement Jalilabad on private house with finished, roof slate plot animal 1 threshing 98.44 m2. Roofing slates with wooden poles stable barn 1 bath house 6.72 m2 Mud filled wood frame, cement finished, roof slate/tile 1 water tank 6 m3 Brick, cement 1 shed 100.5 m2 Roofing slates on iron poles Uzuntapa, Located Residential 1 house 160 m2 Mud filled wood frame, cement Jalilabad on private House finished, roof slate plot Main building 119.07 m2 Wood, roof slates, iron, brick Mollahasanli, Located Restaurant Kiosks (2) 16.61 m2 x 2 Wood, roof slates, iron, brick Masalli on leased complex Kitchen 23.56 m2 Wood, roof slates, iron, brick plot of Toilet 2.25 m2 Brick, cement state Water tank (1) 1.68 m3 Brick, cement forest land Sewerage tank 4.5 m3x 2 Brick, cement area (2) Samidkhan Located in Fence Fence 2000 bricks Brick and cement 2, Masalli private plot Source: DMS and SES Data, RRI International and SLCC, March 2008

Residential House 1. The first residential house is located in Uzuntapa village of Jalilabad district and belongs to a family of four members (parents and their 2 school-age sons). The head of the family works as a driver in Baku. The family also owns a herd of sheep and about 1.5 ha of agricultural land (this land is not affected by the project). The family prefers to receive cash compensation as the head of the household has a job in Baku and the family plans to purchase a property closer to the place of work. According to the agreement reached between the family and ARS, the latter will provide cash compensation for the structures. In addition, the family has expressed interest to benefit from the land swap option, and local government agreed to provide alternative land plot of the same size and quality.

Affected Residential House (1) in Uzuntapa village of Jalilabad district

Residential House 2.The second residential house is also located in Uzuntapa village of Jalilabad district. The woman-headed household is comprised of the head of the family and three sons (ages between 18-25). The family owns about 2 ha of agricultural land used for cultivation of potato (this land is not affected by the project). Another income source of the family is cattle breading. Part of the house and land plot falls under the ROW. The distance between the house and future road is about 15 meters. Given the limited impact, ARS has offered to the owner an option to keep the house as it is and acquire only small affected portion of the land. However, the owner has prefered to receive cash compensation for the entire property and relocate to the district center, and ARS has agreed with this request. Meanwhile, as a woman-headed household, the family will also benefit from provisions for severely affected people specified in the RAP.

Affected Residential House (2) in Uzuntapa village of Jalilabad district

Restaurant Complex. The affected restaurant complex is located in Mollahasanli village of Masallli district. It includes main restaurant building, 2 separate kiosks, a separate restaurant kitchen, toilet, water tank and two sewerage tanks. The owner/operator prefers cash compensation and plans to relocate the business across the other side of the road not affected by the alignment. Agreement was reached that ARS will provide cash compensation for the affected structure and state forestry office (the regional office of the Ministry of Ecology and Natural Resources) will provide the owner of the restaurant with relevant land plot from the state reserve to relocate his business.

Affected Restaurant Complex in Mollahasanli village of Masalli district Fence of a residential yard. The fence of a residential yard, located in Samidkhan village of Masalli district, falls under the ROW. The owner of the affected fence agreed with the cash compensation for the structure to be used to build the fence outside of the ROW. ARS will also provide compensation for the affected small portion of the land and 5 peach trees.

(iv) Impacts on Crops and Trees

The DMS revealed that the project will affect a number of trees (fruit-bearing and otherwise) owned by three households, two in Jalilabad and another one in Masalli. Table 19 below shows the detailed inventory of the affected trees in terms of type and number and years of maturity.

Table 19: Location, Category and Number of Affected Trees Number of Category and Age Category in years Location Household Affected Type of trees < 5 5-10 10-15 >15 TOTAL Jalilabad Uzuntapa 1 HH Quince 1 1 2 Cherry plum 1 1 Fig 5 1 6 Mulberry 1 1 1 3 Pomegranate 26 26 Oleaster 1 1 Subtotal 33 3 1 2 39 Jalilabad Uzuntapa 1 HH Pomegranate 3 3 Mulberry 2 2 Fig 1 1 Subtotal 4 2 6 Masalli Samidkhan 2 1 HH Peach 4 1 5 Medlar 3 1 4 Apple 3 2 5 Pear 2 2 Blood orange 2 1 3 Willow (nfb) 4 4 Pine (nfb)* 2 2 Subtotal 14 11 25 Grand Total 3 HH 51 16 1 2 70 Source: DMS and SES Data, RRI International and SLCC, March 2008 nfb = non fruit bearing

No crops like grains, cereals or vegetables will be affected in the ROW area as its harvest will be allowed and ensured even before construction.

(v) Impacts on Businesses

As described above, the restaurant complex is affected by the alignment that traverses the section in the village of Mollahasanli in Masallli. The restaurant is located in a state forest area that is leased to the current owner of the restaurant. The complex includes main

restaurant building, 2 separate kiosks, a separate restaurant kitchen, toilet, water tank and two sewerage tanks. The business had been in operation for approximately three years. The owner of the restaurant has expressed interest to relocate the business to an unaffected area across the project road. Agreement was reached that ARS will provide cash compensation for the affected structure and state forestry office (the regional office of the Ministry of Ecology and Natural Resources) will provide the owner of the restaurant with relevant land plot from the state reserve to relocate his business To ensure that there will be no disruption to business and no loss of income, the operation in the old structures will be allowed until the construction of new facilities are completed. (vi) Other Impacts

In affected municipal and state lands, there are forest areas where trees will need to be cut and removed. Concerned state and municipal agencies requsted the replacement of these trees and this was agreed with ARS.

Other impacts include direct or indirect effects of the proposed construction on utilities, common/public properties, cultural and archaeological sites. Likewise, a detailed inventory of these affected utilities and other public infrastructure was undertaken. However, the mitigating measures for these impacts will be addressed by the Civil Work Contractor and will be incorporated in the terms of reference for the civil work contract. The sum effects of these impacts on income and quality of life of the affected person or households will be determined as the case maybe.

4.3 Impact Assessment: Approach and Methods

Following approaches and methods were utilized to identify the project affected persons and assess and determine the scope of impacts of the Project on them: 4.3.1 Cadastral Mapping

The plans and coordinates of the final alignment of the itinerary for the Shorsulu-Masalli Section (3A, 3B and 3C) were overlaid over the land cadastre data for the areas in the records of the State Land and Cartography Committee (SLCC). From this cadastral data, the information on all publicly and privately owned land parcels within 30 m width zone from both sides of the centerline was extracted and mapped. Accordingly, an integrated database was developed where the information on specific location, ownership, land category, land-use profile, and potential land take for ROW is indicated for each land parcel.

The mapping for each subsection and for each affected parcel was done and printed on a scale of 1:2000. SLCC will ask all concerned and relevant local officials (Executive Power and Local Land Offices) to certify the updated cadastral maps reflecting the size of the parcel required for the ROW of the Project and update ownership status.

4.3.2 Census

A census was conducted for all households affected by the land take using the detailed cadastral maps printed on a scale of 1:2000 as reference. With the cadastral map as basis, staking of the centerline and delineation of the 60m ROW requirement were undertaken in the field. The staked out centerline and delineated ROW boundaries were the basis for the subsequent field investigations:

- all property ownership were identified/rechecked through the conduct of “on-site” census in cooperation with the local administration and community key informants; - the boundaries of the affected parcels were delineated and measured; - the profiles for all land parcels were prepared, revised/updated; - the condition of all agricultural lands (irrigated and non-irrigated, arable and non-arable, perennial, etc.) were recorded; - all non-agricultural properties and facilities were identified and recorded: public properties including schools, commercials including shops and petrol stations, etc; - all houses/buildings were identified and recorded (number of floors, profile, condition permanent/temporary, etc); and - analysis of the non-agricultural property were conducted. All affected land owners are found to have proper registration to stand as legal land owners, except for three for whom registration process is under way by the time of the survey. Registration process was completed with the assistance of the Consultant in 2009.

4.3.3 Asset Inventory/Detailed Measurement Survey and Socioeconomic Survey

The list of land owners within the ROW requirement of the final road alignment was obtained from the SLCC. After the determination and identification of the affected parcels, the Team undertook an inventory and detailed measurement of assets (i.e., structures, trees, crops, utilities, communal resources, etc.,) within each affected parcels as well conducted a socioeconomic survey of sample of affected households to come up with a profile and determine the impact of the land take and displacement on their standard of living.

The information contained in the profile per parcel included the category of affected land and updated ownership, size of land that is affected, size of the parcel to be acquired for ROW, the structures to be damaged within the affected parcel, standing crops and trees within the said parcel that will be cut down, income to be lost and access to be lost. A sample of the Asset Inventory and Detailed Measurement Form used for such purpose is shown in Annex 1. It will also contain the demographic and socioeconomic data of the affected person and household. Annex 2 provides the sample form for the Socioeconomic Survey.

4.3.4 Inventory of Project Impacts

Based on the cadastre map and census data, an inventory of project impacts was developed. The inventory will sum up the overall effect and impacts of permanent and temporary loss of land, structures, crops and trees, business and other social, environmental and cultural benefits on the income and quality of life of the persons or households affected by the proposed road construction. Compensation Methodology

(i) Compensation for Land

PAP will be offered a choice between the cash compensation and the provision of alternative land plot of the same size and quality. Based on discussions during public consultations as well as land acquisition experience with other projects in Azerbaijan, it is expected that most PAP will prefer cash compensation, especially when the size

of land to be acquired is minor. However, the land swap option will be Tovuz Bypass Lessons (unofficial version): offered to PAP since some PAP, especially those who will lose Tovuz Bypass Project is one of the road rehabilitation projects financed by the World Bank under the Highway significant part of their farm land, may II Improvement and Development Project. It is an 11km prefer receiving alternative lands of the road intended to bypass the main town of Tovuz through which the Baku-Qazakh Highway of the East West same size and quality. Indeed, land Corridor passes. swap is commonly practised in As part of the Bypass development, a RAP was acquisition of land, property and other formulated in 2006 to mitigate impacts of road ROW assets for public needs in Azerbaijan. acquisition (58ha of agricultural lands) affecting 399 HH. Based on cadastral maps from SLCC, the Executive Power approved the list of affected parcels and PAPs as The methodologies for cash compensation well as agreed with PAPs on the market value of the and land swap are described below. affected land. This is the basis for the negotiation between LAD ARS and PAP to be finalized in a purchase agreement. The voluntary agreement is the Cash Compensation basis of LAD ARS for the compensation payment.

Unfortunately, RAP implementation has been confronted The unit compensation values for private with a number of issues, foremost of which are the and public lands are determined based on following: • Some affected landowners were not in the original the following approaches: list of the SLCC cadastral map which is the basis of the purchase agreement. - Assessment of the value of private • Because of the delays (1-2years) in compensation payment, PAPs demanded adjustment in the land land is based on current market price pricing which unfortunately LAD had been unable to (Assessment was made by the District respond to because its basis for purchase and Valuation Commission in assistance payment is the original estimate approved by DEP . • The original list of PAPs and land valuation with Ministry of Finance. Specialists of agreement was the basis for budget allocation by the Ministry of Finance partially applied the Ministry of Finance. Changes as a result of negotiation could not be accommodated in the RAP the Cabinet of Ministers Resolution No budget allocated to LAD ARS. 54 in the assessment process. The criteria for determining current market prices specified in the Resolution No. 54 were used, but the assessment was not conducted by an independent appraiser; - Value of municipal land was assessed based on the normative price established for each district by the Cabinet of Ministers. - 20% additional compensation is added on to calculated market price of the acquired land (based on the Decree of the President dated 26 December 2007 on ensuring the execution of the law No 506-3 QD dated 7 December 2007 about “Amendments and Additions to the Civil Code of Azerbaijan Republic).

The existing laws require that the price determined still needs to be mutually agreed by both sides (buyer and seller). This agreement is critical as shown by the experience in various projects, e.g., Tovuz Bypass (see the box below). In this example, market price for the affected plots was agreed initially between parties during the finalization of the RAP, but payment on the agreed price could only be implemented after two years when construction was about to start. Accordingly, landowners required price adjustment to consider current market prices which take into account inflation. The Road Department had then to renegotiate with the PAPs with the adjusted price being considered.

Under the Project, the Executive Powers of the Neftchala, Jalilabad and Masalli districts formed the District Commission composed of various members of the Executive Power and individuals with expertise in land, agriculture and construction determined the current market prices of the affected lands. Bilasuvar did not participate since no private and municipal lands

will be affected within its area of jurisdiction. The District Commissions determined the price of both agricultural and non-agricultural land as the following: Neftchala - 10,000 AZN/ha, Jalilabad - 25,000 AZN/ha, Masalli - 34,000 AZN/ha and informed the local population about determined land prices at the public consultation meetings.

The Ministry of Finance determined that this price does not reflect the true market value of land in the project area and inquired the State Real Estate Registration Agency (SRERA) for data on recent transactions with land prices. SRERA responded to the inquiry of the Ministry of Finance in the letter dated May 19, 2009 and provided information on market prices of land in project area based on its records of recent transactions with land deals. In addition, specialists of the Ministry of Finance conducted anonymous informal survey in the project area. Based on the collected information the Ministry of Finance established new land prices in collaboration with the District Commission (Table 20).

Table 20: Revised unit prices of land in Section 3

Location Unit price of 20% additional Total unit Unit Price of 20% additional Total unit price residential compensation price of agricultural compensation of agricultural land bonus Residential land bonus land (AZN/ha) (AZN/ ha) Land (AZN/ha) (AZN/ ha) (AZN/ha) (AZN/ha) Residential Agricultural

Neftchala 5,000 1,000 6,000 1,800 360 2,160 Jalilabad 5,000 1,000 6,000 1,800 360 2,160 Masalli 7,000 1,400 8,400 6,000 1200 7,200 Source: District Land Acquisition Commissions

ARS conducted public consultation meetings in Neftchala (24 September, 2009), Jalilabad (25 September, 2009) and Masalli (25 September, 2009) districts in order to explain the above changes in land prices. The participants of the meetings were representatives of affected people and communities, local executive authorities, local NGOs and businesses. Brochures on land acquisition procedures and information on revised compensation rates were distributed among meeting participants.

ARS attempted to conduct a survey in order to corroborate the prices thus determined by the Ministry of Finance. However, local population who were informed about the revised prices at the public consultation meetings complained to a local NGO for the significantly reduced prices. As a result, any attempt to collect data on land prices in project areas became extremely sensitive.

Therefore, it was determined that existing, secondary data on market prices of comparable land would be used to verify whether the land prices established by the Ministry of Finance and District Commission reflect the true market values of land in project area. The consultant analyzed two surveys on land prices that have been carried out recently in Azerbaijan in areas that are comparable to project areas. Summary of these surveys is discussed below.

Survey 1: The survey was conducted in the framework of the World Bank financed Azerbaijan Rural Investment Project to assess the value land in Salyan-Mugan area (Aran Economic Region) in February 2010. The survey is based on interviews of local residents who were asked to reveal their knowledge about prices of their land. As such, the collected data do not necessarily reveal the actual transaction value of land during the survey time. The survey was conducted in seven districts of the Aran region of which the Project will affect Neftchala and Jalilabad districts. The following table summarizes results of the survey:

Table 21: Average market prices of agricultural land in Mugan-Salyan:

District Salyan Neftchala Jalilabad Saatly Sabirabad Imishli Bilasuvar Price of agricultural 480 – 320 – 400 – 320 - 400 – 800 320 - 720 480 – 800 land (AZN/ha) 800 720 800 720

The price of agricultural land across districts varies between 320 – 1,600 AZN/ha. The prices are significantly correlated both to the distance from relevant district centers and main roads as well as availability of irrigation water in the area. The survey found that the price of most agricultural land in the region is below 800 AZN. Only 10% of agricultural land surveyed had the price above 1,600 AZN, and those agricultural lands with the price between 800 and 1,600 AZN account for less than 10% of the surveyed land. The remaining 80% of agricultural land has the value lower than 800 AZN.

The survey results also revealed that about 60% of the farmlands in the region are irrigated and have good irrigation system. The prices for these lands are at the range of 640 – 1,600 AZN/ha. 40% of the farmlands are not or poorly irrigated with land prices at the range of 320 - 640 AZN.

The survey found that prices of residential land vary across districts between 4,000 – 8,000 AZN/ha. The price of residential land is significantly correlated to the distance from respective district centers

Survey 2: Survey was conducted by a consultant hired by the ARS for the estimation of land acquisition cost under the World Bank financed Highway III Project. The objective of the assignment was to conduct a survey on current market prices of agricultural and non- agricultural land in areas affected by the Project. The survey covered lands in districts of Gobustan and Shamakhi that are adjacent to the Baku-Shamakhi road. The survey was conducted based on interviews with individuals who intended to sell or buy land. Result of the survey is summarized in Tables 22-23.

Table 22: Average market price of agricultural and residential land in Gobustan:

N Village Category of land Type of land parcel Distance from the main road Unit price (1 ha/AZN) Agricultural land 1 Gobustan town 3 Agricultural 500 m 2,400 2 Gobustan town 3 Agricultural 800 m 1,900 3 Gobustan town 3 Agricultural 400 m 2,600 4 Gobustan town 3 Agricultural 100 m 2,700 Average: 2,400 5 Shikhzarli 3 Agricultural 300 m 1,200 6 Shikhzarli 3 Agricultural 100 m 1,700 7 Shikhzarli 3 Agricultural 400 m 1,400 8 Shikhzarli 3 Agricultural 100 m 1,600 Average: 1,475 9 Badalli 3 Agricultural 200 m 1,300 10 Badalli 3 Agricultural 100 m 1,500 Average: 1,400 11 Takla 3 Agricultural 200 m 1,700 12 Takla 3 Agricultural 100 m 1,800

13 Takla 3 Agricultural 50 m 1,900 Average: 1,800 Total Average: 1,823 Residential land 1 Gobustan town 3 Residential 700 m 8,000 2 Gobustan town 3 Residential 500 m 11,000 3 Gobustan town 3 Residential 500 m 13,000 4 Gobustan town 3 Residential 100 m 16,000 Total Average: 12,000

Table 23: Average market price of agricultural and residential land in Shamakhy:

N Village Category of land Type of land Distance from the main road Unit price (1 ha/AZN) Agricultural land 1 Muganli 1 Agricultural 400 m 5,000 Average: 5,000 2 Shahriyar 2 Agricultural 1.7 km 2,500 3 Shahriyar 2 Agricultural 1.6 km 2,600 4 Shahriyar 2 Agricultural 1.8 km 3,000 5 Shahriyar 2 Agricultural 1.6 km 3,500 Average: 2,900 6 Sabir 3 Agricultural 150 m 5,000 7 Sabir 3 Agricultural 100 m 6,000 8 Sabir 3 Agricultural 50 m 6,500 9 Sabir 3 Agricultural 300 m 4,500 10 Sabir 3 Agricultural 400 m 4,900 11 Sabir 3 Agricultural 500 m 4,000 Average: 5,150 12 Marzandiya 3 Agricultural 50 m 7,000 13 Marzandiya 3 Agricultural 100 m 6,700 Average: 6,850 Total Average: 4,708 Residential land 1 Muganli 1 Residential 200 m 25,000 Average: 2 Shahriyar 1 Residential 1.2 km 10,000 3 Shahriyar 1 Residential 1.1 km 12,000 Average: 11,000 4 Sabir 1 Residential 400 m 15,000 5 Sabir 1 Residential 100 m 21,000 Average: 18,000 6 Marzandiya 1 Residential 300 m 16,000 7 Marzandiya 1 Residential 200 m 19,000 Average: 17,500 Total Average: 16,857

Gobustan district is more comparable to Neftchala and Jalilabad areas given similarities in climate and land quality (although Gobustan is significantly closer to

Baku). The survey found that the average prices of agricultural and residential lands adjacent to M4 Baku-Shamakhi Highway in Gobustan area are 1,823 AZN and 12,000 AZN, respectively. Meanwhile, Shamakhi is a popular touristic attraction within the quick driving distance from Baku with more fertile land and scenic landscape. The fertility of land and prevailing landscape of Masalli makes its land prices more comparable with ones in Shamakhi. The survey also revealed that land prices, both agricultural and residential differ among municipalities and the difference is more substantial in Shamakhi. The price difference is a function of the degree of economic development and potential and prices are strongly correlated with the distance to the main roads. Apparently, those areas with significant tourism attractions have higher land values than those that do not have particular non-agricultural businesses. For example, the prices of agricultural land are 5,000 AZN/ha in Muganli, 2,900 AZN/ha in Shahriyar, 5,150 AZN/ha in Sabir and 6,850 AZN/ha in Marzandiya. Prices of land are higher in Sabir, Muganli and Marzandiya villages of Shamaki, because these villages are tourism/recreation areas and/or located close to the main road.

The revised unit prices of lands in the project area determined by the Ministry of Finance and approved by the District Commission (Table 21) are significantly higher than the prices resulted from Survey 1. Survey 1 indicates that only 10% of surveyed agricultural lands have the value above 1,600 AZN. The revised land prices in Neftchala and Jalilabad for agricultural land are also consistent with prices for comparable lands in Gobustan area determined under the Survey 2 (average price of 1823 AZN/ha).

Agricultural land prices in Masalli are higher than other districts, as this district is situated in the southern part of Azerbaijan, having more fertile land areas and subtropical climate. Second reason of high land prices in Masalli is very high population density in the district. Because of these, land is shortage and more expensive in Masalli. Given that both Masalli and Shamakhi are situated in perspective tourism development areas, and have fertile lands, the land prices of Masalli are comparable to ones in Shamakhi. Thus, the revised unit price (6,000 AZN plus 20% bonus) determined by the Ministry of Finance and District Commission is consistent with the market prices of agricultural lands in Shamakhi revealed in the Survey 2.

As for the residential lands, the area affected by the Project (which builds a new highway on greenfield) is distant from the existing main highway; and therefore the price determined is consistent with the Survey 1 findings (Survey 2 did not study land prices in the remote areas from main arterial roads).

The assessment of existing survey findings indicates that unit prices of lands determined by the Ministry of Finance and approved by the District Commission are broadly consistent with the market value of lands in the project area. Nonetheless, since only secondary data were used in the analysis, strong grievance redress mechanisms, specified in the Section 5 of this document, are employed under the Project to ensure that PAP receive compensation equal to replacement value. The applicable unit prices will be adjusted every six months in order to incorporate inflation. PAPs will be also offered a choice between land swap - provision of land plots of the same size and quality from the state or municipal land reserve near the

current farmland - and the cash compensation based on the unit price used under the RAP. If the former option is chosen, the cost of preparing land or other costs associated with starting the use of alternative land plots would be covered by the ARS.

Land Swap

The land swap option will be provided to the affected households if they prefer getting land plots of the same size and quality to cash compensation. As already mentioned, land swap is commonly practised in acquisition of land, property and other assets for public needs in Azerbaijan. Public land is available for swap in most affected areas, and local government and municipal officials confirmed during the public consultation meetings and inquiries from ARS that alternative land plots of the same size and quality can be provided, where available, to those who prefer. The transaction cost and other start up costs of using new land plots would be compensated by the ARS through contingency budget.

The land swap process will be implemented as specified below: - Individual PAP will be first offered cash compensation as determined based on the principles laid out in the RAP. If they prefer land swap, then land owners will apply to LAD/ARS with standard application stating their preference for the land swap option; - Application are reviewed, documented and filed by LAD/ARS to Rayon Executive Powers and local municipalities with requests to allocate appropriate land plots. Rayon Executive Powers and local municipalities propose alternative land plots for consideration of the land owners. In the process, more than one land plots may be offered to land owners, if necessary, till agreements can be reached between land owners and ARS. After consideration of all available options, PAP has the right to drop their preference to land swap and elect cash compensation; - Once the land plot for swap is agreed between the land owner and local authorities, transaction is registered in the records of Local Land Office/SLCC and State Real Estate Registration Service. Related registration and transaction costs are covered by ARS. Throughout the process the monitoring consultant will be accessible to PAP and provide necessary assistance in addressing any grievances.

All land swaps will be completed prior to initiation of civil works. The monitoring consultant will work closely with ARS to ensure that the land swaps are processed appropriately and timely and all related transaction costs are covered by ARS.

(ii) Compensation for Trees and Crops

Trees are valued based on classification/type and age category/productive capacity (i.e., seedling, not yet productive and productive). The ARS has a price index based on their experience and records of the replacement value of the different categories of trees as shown in Table 24 below. This is also used as a basis for negotiation on the compensation with the PAPs.

Table 24: Category and Type of Trees and Estimated Value per Age Group Category and Type of Age Category in years and Estimated Value TOTAL trees Ag Value Age Value Age Value Age Value # Value e per per tree per tree per tree tree < 5 5-10 10-15 >15

Trees in Private lands Quince 1 9.6 1 20.8 2 30.4 Cherry plum 1 9.6 1 9.6 Fig 6 9.6 1 17.6 7 75.2 Mulberry 3 20.8 2 35.2 5 132.8 Pomegranate 29 9.6 29 278.4 Oleaster 1 36.8 1 36.8 Peach 4 10 1 19.2 5 59.2 Medlar 3 6.4 1 19.2 4 38.4 Apple 3 6.4 2 17.1 5 53.4 Pear 2 9.6 2 19.2 Blood orange 3 15.2 3 45.6 Willow (nfb) 4 9.6 4 38.4 Pine (nfb)* 2 9.6 2 19.2 Total 49 12 6 3 70 836.6 Trees in State lands 3833 95533.3 Total for Trees 96369.9

Source: DMS and Expert Opinions, RRI International and SLCC, March 2008; *nfb = non fruit bearing Crops on the other hand are allowed to be harvested but if unavoidably affected by the scheduled construction will also be valued based on the formula below. Data on the productivity of crops and the average price of produce issued by the district Department of Statistics5 were used.

CrC = ((RP x Yd) – CC) x A x T Where: CrC = the compensation for loss of income from annual crops RP = the retail price of the produce (AZN/100 kg) Yd = the yield (100 kg/hectare) CC = the growing costs including material inputs, agro-technical activities, transport, and taxes and duties (AZN/hectare) A = the area cleared by the Project (hectares) T = the number of lost growing seasons

The complete list of owners and the estimated compensation value of these trees is provided in Annex 4a. The complete inventory of affected trees in state forest land is also found in Annex 4b. (iii) Compensation Rate for Building and Structures

Houses and buildings’ valuation were based on the average value at replacement cost based on current market prices of materials, type of construction, labour, transport and other construction cost as surveyed by the RAP Team and compared with the price index in the records of a concerned department of ARS (estimated cost to build a similar structure).

According to the Cabinet of Ministers resolution No 54, fees, taxes in connection with the registration of rights of an affected person to a new property should be reimbursed and the cost entailed for the design, registration and approval of new property in lieu of the previous improvement (facilities and services) in the parcel of land acquired for state need as well as dues connected with registration of rights on and taxes to be paid for the new property should

5 The procedure to be used in preparing these certificates is prescribed in Cabinet of Ministers Resolution No. 164 (25 November 1996).

be taken into consideration in the valuation process6. 20 % additional compensation of value of the affected property is paid to the property owners to reimburse the costs considered in the resolution. The average replacement costs provided in Table 23 are used as base values in negotiating the amount of compensation with concerned PAPs.

Table 25: Average cost of affected buildings/structures by category and location Category Average Estimated Cost (AZN) Calculated 20% Total Price addition Residential House Stable Barn Bath Water Shed Cooking Fence house tank area AZN 17000 3800 1500 450 300 1200 100 650 25,000.00 5,000 30,000.0 Residential House AZN 20000 20000 24000 Commercial Main Kiosk (1) Kios Toilet Water Other Blg.+ k (2) tank construction kitchen s AZN 24,196 1,454 3,17 1,285 779 3,015 33,906.00 6781 40,687.0 7 Ancillary Fence structure AZN 1,316.53 1,316.53 263.31 1,579.84 Source: DMS and Expert Opinions, RRI International and SLCC, March 2008

Annex 5 provides the list of owners and the corresponding affected structures with its estimated replacement value.

(iv) Compensation for Loss of Business

Latest resolution of the Cabinet of Ministers (Resolution No 54, 04.04.2009) includes the following provision which was not in the previous legislative acts. Section 3.3.1 of the Resolution defines: in estimating the purchase price, damages resulting from the purchase of real estate, as well as lost income and loss connected with the pre-termination of commitments against third parties should be considered. In the frame of Alat-Masalli Highway Project special arrangement with the Contractor and the owner of affected restaurant complex will be undertaken to ensure the continuity of the restaurant operation until the replacement structures had been constructed and ready for operation in order not to lose income. The Contractor will help the owner in dismantling and transportation of construction materials. These obligations will be reflected in Contractor’s contract. Compensation will be paid to the Restaurant owner to rebuild therestaurant complex in the adjacent state forest land. Only after that the Contractor will be allowed to demolish the existing restaurant complex. Provision of the restaurant owner with replacement land to relocate his restaurant complex has been agreed with the state forestry office (regional office of the Ministry of Ecology and Natural Resources). As a result, the owner of the restaurant will be provided with alternative land plot of the same size and quality In addition, the owner of the affected restaurant will receive the cash compensation for the structures affected by the project.

(v) Severe Impact

Severely affected people are defined as people who will lose over 20% of land, as well as vulnerable people such as elderly, disabled and female-headed households. 458 households out of 757 will lose more than 20 percent of their land. The main type of impact is loss of land in one plot.7 The level of the impact on affected people, including on woman headed households in each village is described in Table 26.

Table 26: Data on severely affected people

6 Cabinet of Ministers Resolution No 54, 04.04.2009, Section 3.3.7 7 During the land reform many households in the area were provided with several land plots of different quality.

O O

V T HH N HH N HH G

HH G

HH U

HH S

HH K

HH T

HH M

HH S

HH K

HH C

HH B T

HH S

HH A

HH S

HH D

HH S

HH O

HH M

HH G

HH S

HH X

HH S

Similar to other PAP, severely affected people will be offered an alternative land plot or cash compensation. In case of preference for alternative land plot, applications from severely affected people will be processed on a priority basis. The monitoring consultant will work closely with ARS to ensure that the land swaps are processed appropriately and timely and all related transaction costs are covered by ARS.

As an additional rehabilitation measure, severely affected people will be the priority group for job opportunities in civil works during the road construction. It is estimated that civil works for this section of the road will require about 2000 local workers in total, for two years of construction.8 The experience from the rehabilitation of Baku- Shamakhi road under the Highway II Project demonstrated that the contractor employed about half of labour from local people living in villages along the road. The civil work contracts in Azerbaijan are based on standard FIDIC contract provisions with a clause encouraging engagement of local labour force, especially women and unskilled labour. Under the present project ARS will modify the language in civil work contracts to ensure that severely affected people will be given priority in benefiting from job opportunities created by the project. Thus, the specific provision of contracts on “Engagement of Staff and Labour” (Part B, sub-clause 6.1) will use the following language: “The Contractor is encouraged to employ women. Subject to availability of suitable candidates, the Contractor shall engage unskilled labour from Azerbaijan. In all instances of engaging labour, the Contractor is encouraged to give priority to people severely affected by the project as determined in the Resettlement Action Plan for Section 3 of Alat-Masalli road, dated ____”.

In addition, severely affected people, including widows and women headed households will be given priority in job opportunities in service/rest areas to be created once the road becomes operational. This is an economic activity to be generated in the mid-term with employment opportunities for local people. One of the major criteria for selection of the

8 The experience of road projects in Azerbaijan suggests that every10 million USD investment in construction of roads results in 170 local employment places in average. Estimation is based on data from recent investments on construction of Baku- Shamakhi road and first 22km of Alat-Masalli road. Experience shows that that local people hired by contractors for manual labor are paid about $600 per month.

location of service areas was the proximity to villages so employees of the service areas can commute easily. The Ministry of Transport / ARS, as the operator of service areas, will attach the list of the severely affected people in the concession or lease contracts and encourage businesses in the service areas to hire severely affected people.

5. GRIEVANCE AND REDRESS MECHANISM

As mentioned above, only secondary data were available to determine the unit prices of compensation. While these secondary data indicate that the unit prices established by the Ministry of Finance are equivalent to or higher than the market prices of lands in the project affected area, a considerable variance between municipalities observed means that there may well be cases where higher land prices prevail in exceptional cases. Under the RAP, a strong grievance redress mechanism will be applied in order to ensure that all PAP would receive compensation that is sufficient to restore their livelihood. Under the existing law in Azerbaijan, ARS cannot acquire land and start civil works without land purchase agreements signed by land owners, or they need to go through the extremely complex and time consuming expropriation process. Grievance redress mechanisms to be employed under the Project will help ARS and PAP avoid such a lengthy expropriation process for mutual gain. To implement grievance redress mechanism, a local monitoring consultant will be hired by ARS to monitor the implementation of the RAP. Specifically, the consultant will receive grievances from PAP and convey them to the LAD to ensure that grievances are duly and timely addressed. The consultant will help ARS develop solutions to redress grievances from PAP. Throughout the implementation, the monitoring consultant will be accessible to the PAP through the hotline and regular field visits and receive grievances from PAP. Prior to RAP implementation, consultation meetings will be organized in each municipality and applicable grievance redress mechanisms will be explained to PAP. A handbook summarizing the grievance redress mechanisms, together with applicable unit prices, valuation methodology and implementation arrangements will be prepared and made available at public spaces like schools and health posts. The monitoring consultant will investigate grievances received and report the results in the monthly progress report with brief description of complaints received, assessment conducted and solutions recommended to the ARS. Solutions would be developed on the principle of replacement cost, so as to ensure that the livelihood of PAP with grievance will be restored after their implementation. The monitoring consultant will pay a particular attention to the relocated family and help them fully benefit from the social compensation plan. The consultant will keep the log book of complaints received and attach it in the monitoring completion report which will be submitted to the ARS and the Bank task team. The Monthly progress report will be disclosed at publicly accessible places. To provide support to the local monitoring consultant and ensure the effective implementation of the Resettlement Action Plan, ARS will also hire international monitoring consultant. The international monitoring consultant will work with local consultant and help ARS to address grievances and solve other related issues in order to ensure that provisions under the RAP are fully complied with. More specifically, international monitoring consultant will support ARS and local monitoring consultant in (i) ensuring the RAP is implemented based on the principle of transparency and replacement cost; (ii) reviewing the grievance screening and redress procedure and providing advice based on the best international experience; (iii) assessing grievances received and finding measures to redress them; (iv) developing the database of compensation amounts for land or other assets, with the

description of salient physical characteristics of land and other assets; ensuring that the process of land swaps is duly implemented to the satisfaction of project affected people, (vi) implementation of measures to ensure the income of severely affected people is sufficiently restored, and other aspects of RAP implementation, as needed. Where PAPs with grievances are not satisfied with the solutions, they may apply to the court for mediation. The Monitoring consultant will provide them necessary support. Where the compensation determined by the court is less than what would enable the restoration of livelihood, the ARS would implement additional rehabilitation measures, under the guidance of the Monitoring Consultant, so the livelihood of PAP in question would be restored.

6. INFORMATION DISSEMINATION, CONSULTATION, PARTICIPATORY APPROACHES AND DISCLOSURE REQUIREMENTS

6.1 Project Stakeholders To ensure that stakeholders are aware of resettlement policies for the construction of the Shorsulu-South of Masalli Section of the Alat – Astara Highway comprehensive information campaign and public disclosure program have been undertaken. The primary stakeholders of this RAP are the private owners of land and buildings within the required road ROW of the final alignment, officials (executive power and local land offices) of concerned municipalities traversed by the alignment, private contractors who will undertake the civil works, the State Land and Cartography Committee, the Ministry of Finance and its regional representatives, and the ARS as the executing agency. The secondary stakeholders include officials of the affected villages and rayons; nongovernmental organizations (NGOs); the SLCC; general public and the World Bank. The stakeholders’ view and recommendations were properly considered in the preparation and implementation of the RAP. 6.2 Information Dissemination, Participation, Consultation and Disclosure

Information about the project was properly disseminated and issues were discussed during consultation meetings. During RAP preparation, stakeholders were informed through the distribution of the Project Information Brochure (PIB) and Resettlement Information Booklet (RIB) translated to local language, containing the details of the Project and the RAP (see Annex 7 for the sample of the Information Brochure). Initial discussions were held with the primary stakeholders (community members/landowners and community and district officials on the project concept and planned interventions during the preliminary and detailed design phases of the Project. The LAD, SLCC, district officials and the Consultant in consonance undertook this first major consultation. The draft RAP was prepared in consultation with the stakeholders and PAPs after the final road alignment had been determined and staked out. A major consultation concerning the draft RAP was undertaken. Annex 8 shows the complete list of these consultation activities as well as summary of issues and responses provided. The number and category of participants as well as the date and venue of consultations are likewise appended. Based on the result of initial consultation and information dissemination, the LAD- ARS and Consultant had been able to achieve the following: (a) avoid critical areas and minimize dislocation and resettlement with the adjustment of the road alignment; (b) reduce potential conflicts with the affected communities; (c) minimize the risk for

sub-project delays due to grievances. Consultations are conducted in three phases, as described below. (i) Phase 1: Consultation during the Project RAP Preparation This phase occurs during the RAP development and preparation. During this phase, the public, particularly the PAPs, will be informed of the Project and the RAP. They are informed of the Project impacts and compensation policies, and institutional arrangements. Preliminary consultation meeting and focused group discussions have already been undertaken. Notices for such consultation, indicating the place, date and time, was appropriately disseminated in public places. First Public Consultations were undertaken on 24 July 2007 in Neftchala, 25 July 2007 in Jalilabad and 25 July 2008 in Masalli. The following were discussed in that consultation meeting: a. Project Background and Objectives b. Description of the final alignment c. Potential impacts including environment, land acquisition and resettlement d. Mitigation Measures for Adverse Impact e. Implementation Schedule and Activities f. Consultation and Participatory Development Process

PAPs, community officials and other stakeholders took part in these meetings. It was also in these meetings that the PAPs have confirmed their consent that their land and assets/properties could be acquired by the Project, subject to proper compensation. They will be again consulted after the final RAP has been drafted. The PAPs, stakeholders and local institutions as well as women are consulted as part of the participatory planning process. During the conduct of the transect walk, informal discussions was had with potential PAPs on potential impact of the project including land acquisition. During these initial consultations, a wide ranging issues and concerns were raised, the summary of which is presented below: • Affected communities recognize that the new road network will contribute to and accelerate socio-economic development in impacted areas.

• But PAPs also raised a number of concerns that have to be addressed: - Fair and immediate compensation for affected assets and properties - Address the environmental and safety issues concomitant to construction and improved traffic - Impact on public utilities should be avoided if not minimized; if unavoidable repair and rehabilitation measures should be instituted immediately; - Protection of cultural and historical sites and monuments; and - Community/public access across the road during and after construction should be ensured.

The ARS responded that (i) compensation will be based on the valuation methodology and inventory attached to the RAP to ensure transparency; (ii) EMP will provide measures to mitigate project impact on environment, safety and cultural heritage; (iii) road is designed to minimize impact on utilities and any damaged utilities will be repaied; and (iv) overpasses and underpasses will be constructed to allow easy communication both sides of the Highway. See Annex 6 for details.

(ii) Phase 2: Consultations on the Draft RAP

In order to achieve maximum transparency and public participation in the Resettlement Action Planning process, the LAD assisted by the RAP Consultant held public consultation once more to inform the stakeholders and PAPs about the draft final RAP and the Grievance and Redress Mechanism. The PAPs were informed about the scope of impact, the Compensation Matrix and the procedure for payment. Likewise, project implementation schedule were shared with the public and the PAPs. Public Consultations were undertaken twice during this phase. Firstly, Public Consultations were held after draft RAP on 24 September 2009 in Neftchala, 25 September 2009 in Jalilabad and 25 September 2009 in Masalli. The participants to this consultative meeting included the following persons and organizations:

• representatives of affected people, both beneficiaries and aggrieved; • officials from relevant local governmental bodies; • representatives of local government; • competent and authoritative community representatives, women, and elders; and • representatives of local NGOs and businesses as the case may be

Results of the official consultation undertaken in the different districts with various stakeholders were fully documented and comments and reaction to the draft were integrated into the Final RAP. (iii) Phase 3 – Consultation after approval of the RAP

Prior to the implementation of the RAP, the ARS, together with the monitoring consultant, will conduct a consultation meeting in every affected village, where the scope of impact, compensation methodology and rates, land swap option and grievance redress mechanisms would be explained to PAP. These issues will be also described in a simple handbook to be distributed among affected people. The contact address of ARS and monitoring consultant will be spelled out in the handbook. The monitoring consultant will be accessible to PAP with grievances through his/ her own mobile. PAP will be also informed about the hotline to send grievances.

7. COMPENSATION AND REHABILITATION MEASURES UNDER THIS RAP

Land acquisition and resettlement under this Project will be implemented based on a compensation eligibility and entitlement framework in line with the Azeri laws and regulations and the World Bank’s Involuntary Resettlement Policy (OP 4.12).

7.1 Entitlement Matrix and Compensation Measures

(i) Compensation Entitlements.

Compensation entitlement will include provisions for permanent land losses, house and building losses, crops and tree losses. Table 27 of the entitlement matrix shows these details. These entitlements are as follows:

• Private Land Impact. PAPs regardless of legal title will be compensated in cash at the current market rates. Eventual transaction taxes/fees will be paid by the Executing Agency (ARS) or waived by the government. • Public Land Impact. Municipal owners will be compensated based on the nominal value in the form of cash at normative price as indicated in the Cabinet of Ministers Resolution providing nominal prices for land of various categories in the different districts of the country. Public land leased to private individuals will not be compensated as it is stipulated in the leased contract that such lease will be subject to cancellation in case the government needs the said land for public use. • Houses, buildings and structures. These will be compensated in cash based on the replacement cost free of deductions for depreciation, salvaged materials and transaction costs irrespective of the registration status of the affected item. The cost of lost water and electricity connections will be included in the compensation. • Trees and standing crops. The construction schedule is adjusted so farmers will be able to harvest the annual crops. In the event that the schedule cannot be adjusted and some loss of crops becomes inevitable, compensation based on the replacement value will be provided. Cash compensation for affected trees will be based on replacement value as used by LAD ARS in the various road projects • Severe impact. Severely affected people (over 20% land take), including the elderly, widows and female-headed households will be given a priority in benefiting from additional rehabilitation measures such as employment opportunities under the Civil Works activities which will be stipulated in the Contractor’s contract, and jobs created in service/ rest areas that will be established once the highway becomes operational.. • Businesses. Cabinet of Ministers Resolution No 54 stipulate compensation for loss of income. In the frame of Alat-Masalli road Project a special arrangement with the Contractor and the business operator of affected restaurant complex will be undertaken to ensure continuity of the restaurant operation until the replacement structures had been constructed and ready for operation. Moreover, 20% additional compensation will be paid to the restaurant owner based on the President Decree (26.12.2007) to cover extra costs. Only then will the Contractor be allowed to demolish the existing restaurant structures. Thus, no compensation will be paid for the potential loss of business. No lost jobs are registered since the affected restaurant will continue operating. • Community Structures and Public Utilities. If damages are unavoidable, these will be fully replaced or restored to meet their pre-project functions. This will be part of the Civil Work contract. • Temporary impact during construction. Temporary impacts concerning traffic diversion and rerouting during construction is a major consideration. Mitigating measures for

these temporary impacts will be instituted. The civil works contract will require the contractor to be responsible for the temporary acquisition and reinstatement of all land required outside the road reserve for construction camps, offices, borrow pits, materials storage sites, materials processing sites and haul roads. The contractor will select the land parcels they require and they will be responsible for negotiating agreements with land owners to occupy the land. In the event that a contractor fails to obtain the agreement of any landowner, they would be required to select an alternative site and negotiate a new agreement. No involuntary occupation of land for temporary construction purposes would occur. Provision will be made in the civil works contract for the contractor to be responsible for providing adequate measures to cater for existing traffic while the road/bridge rehabilitation/construction works are in progress. The contractors shall be required to obtain the approval of ARS for all proposals for traffic management during the construction of the civil works contracts and they shall also be required to maintain all temporary diversion roads and existing roads used to carry diverted traffic from the main road.

(ii) Eligibility and Cut Off.

PAPs entitled to compensation or at least rehabilitation provisions under the Project are (i) PAPs losing land and other assets with legal titleand rights will be compensated, and PAPs will be rehabilitated; and (ii) owners of buildings, crops, plants, or other assets attached to the land.

Compensation eligibility was limited by a cut-off date which is the date of the approval of the census results by the district Executive Power. It is on this date that all impacted persons and properties were identified and the nature of impact determined. Any land transfer or modification to the affected land and property after this date will not be considered affected by the Project and any changes in values a consequence of the information given in the census and DMS activities.

Persons who settled in the affected areas after the cut-off date will not be eligible for compensation and modifications made to the property will not be considered. These illegal settlers will be given sufficient advice to vacate the premises and dismantle whatever structure they may have constructed without threat of confiscation, fine or sanction during the period of deadline for compliance to vacate; otherwise forced eviction will be instituted. The legal documents will be reviewed again as part of the negotiation with land owners. If it is found that documentation is not complete for a PAP, they will be assisted to complete the registration so they will be entitled for compensation as legal owners, or receive entitlements as illegal owners.

Table 27: Entitlement Matrix

Type of Application Entitled Person9 Compensation Measures Policy Basis Responsible Loss Agency Permanent Agricultural land Land owners PAP will be compensated based on market value in cash free of transaction Azerbaijan Constitution, Land LAD-ARS, SLCC 1 loss of Residential and cost. 20% additional compensation will be paid to land owners according to Code of Azerbaijan Article 96, private commercial land the Presidential Decree dated 26.12.2007. 101 & 102, Cabinet of land If preferred, land plots of the same size and quality may be provided instead Ministers Resolution #110. of cash compensation. All transaction costs related to land swap will be Resolution of the Cabinet of covered by ARS from contingency budget or waived by the government. Ministers No 54, April 4 2009 PAP will have opportunity to benefit from additional rehabilitation measures such as employment opportunities under the Civil Works activities which will be stipulated in the Contractor’s contract, and jobs created in service/ rest areas that will be established once the highway becomes operational. Meanwhile, severely affected people (over 20% land take), as well as the elderly, widows and female-headed households will be given a priority in benefiting from these additional rehabilitation measures. Permanent Municipal lands Municipality and Compensation will be paid to municipality for affected municipal lands which Cabinet of Ministers’ LAD-ARS, SLCC loss of Rayon is calculated on the normative price. 20% additional compensation will be Decree#158 (1998), Land and the Executive public land paid for only agricultural and perspective housing areas of municipal land. Code (1999): Article Powers of Leaseholders will not be reimbursed by the municipality for the period of 46/47/71/72 & 96. Resolution respective areas lease not utilized on the portion retaken as the lease has set limitation in of the Cabinet of Ministers No case of recall by the government of the said land for public use. 54, April 4 2009. 2 Loss of Private Owners with Compensation will be in cash based on replacement cost free of deduction LAD-ARS, structures Residential, holding numbers for depreciation, salvaged materials and transaction costs irrespective of the commercial and Leaseholders, registration status of the structure. Land Code of Azerbaijan other types like Owners of legal structures will be assisted in the transfer of the affected (1999): Article 101/102 fences and animal buildings to new premises; if damaged, cash compensation will be provided. stables. If damages to public structures and utilities are unavoidable, replacement or Rayon restoration to pre-project status will be undertaken as part of the Contractor’s Contractor’s Contract Community Administration responsibility. structures and 20% additional compensation will be paid to structure owners based on the public utilities President Decree (26.12.2007) 3 Loss of Standing crops Owner/cultivator, 60 days advanced notice to harvest standing seasonal crops, if crops cannot LAD-ARS and the trees, and trees tenants, be harvested within the 60 days, cash compensation for crops (or share of Civil Work crops leaseholders crops) equivalent to prevailing market price Contractor Cash compensation for perennial crops and fruit bearing trees based on replacement principle. Land Code of Azerbaijan Cash compensation equivalent to prevailing market price of timber for non- (1999): Article 101/102 fruit trees No compensation will be provided for crops already harvested. Affected trees and other perennials will be compensated per policy but the lumber from these trees maybe kept by the owner.

9 Identified during cut-off date 54 Standing crops/trees shall be compensated on the basis of the compensation measures discussed below.

6 Temporary Various types: General public, The contract will require the civil work contractor to be responsible for the Contractor’s Contract PIU-ARS and impacts Temporary owners of roadside temporary acquisition and reinstatement of all land required outside the road Executive Powers impacts structures reserve for construction camps, offices, borrow pits, materials storage sites, concerning traffic materials processing sites and haul roads. The contractor will select the land diversion and parcels they require and they will be responsible for negotiating agreements rerouting during with land owners to occupy the land. In the event that a contractor fails to construction; obtain the agreement of any landowner, they would be required to select an temporary loss of alternative site and negotiate a new agreement. No involuntary occupation of access land for temporary construction purposes would occur.

55 7.2 Gender Impact and Mitigation Measures

In general women compose about 53% of the total affected population. Almost 24.6% of the affected households are women-headed. Women play important economic role in the project areas and engage in a variety of income generating activities in the agriculture and marketing sectors. The Project will ensure that women also share the benefit derived from the Project as well as receive the appropriate compensation directly as PAP.

Women headed households are identified in the survey and they are listed as the beneficiary of project compensation and resettlement measures under the RAP. Similar to other PAP, women headed households, will be offered an alternative land plot or cash compensation. In case of preference for alternative land plot, applications from women headed households will be processed on a priority basis. Meanwhile, widows and women headed households will be given priority in job opportunities in civil works as well as service/rest areas to be created once the road becomes operational. Accordingly, civil work contracts under the Project and future service area concession/lease contracts will have clauses encouraging employment of project affected women.

8. RAP IMPLEMENTATION AND INSTITUTIONAL RESPONSIBILITY 8.1 Implementation Activities and Timetable

The schedule for the implementation of the Resettlement Action Plan presented in Table 26 shall correspond to the project implementation schedule. All activities considered by the Resettlement Action Plan shall be completed prior to commencing the construction activities at specific sections.

Table 28: Resettlement Action Plan Implementation Schedule Months # Activities 1 2 3 4 5 6 7 8 9 10 11 12 1. Preparation/Finalization of the RAP 1.1 Consultation/Disclosure Activities on the draft RAP 1.2 Revision and Submission of Final RAP 1.2 Pursuing RAP approval 1.3 Organization of mechanism for compensation payment and transfer of fund 1.4 Preparing RAP Implementation mechanism (i) Mobilization of LAD Working Team (ii) Review of the DMS results and cadastral maps (iii) Establishment of Compensation Payment Mechanism 2. RAP Implementation 2.1 Hiring of monitoring consultant 2.2 Information Dissemination on construction schedule 2.3 Conduct of field assessment/verification/audit of ownership 2.4 Preparation of land documents for registration with the Public Register 2.5 Verification of preference between cash compensation versus swap 2.6.1 Cash Compensation (i) Negotiation/agreement on compensation between the Working Team and the PAP and execution of Land Purchase Agreement (ii) Opening of bank account by PAP. In case of missing PAP, opening an account by ARS and deposit of payment. (iii) Demarcation of ROW area and documentation in a cadastre (iv) Processing of land purchase agreement and its registration at the Land Offices and SLCC (v) Payment of compensation 2.6.2 Land Swap (i) Application of land owners to LAD/ARS on their preference for the land swap option (ii) Review of application by LAD/ARS, local executive authorities and municipalities (iii) Allocation of alternative land plots by local executive authorities and municipalities (iv) Review and acceptance by PAP of the land offered (v) Processing of land swap agreement and its registration at the Land Offices and SLCC 2.7 In case of negotiation failure on cash compensation or land swap, ARS pursues the expropriation proceedings. 3 Construction Phase 3.1 Sending of notification to vacate purchased/sold property 3.2 Dismantling/takeover of ROW structures by Contractor 3.3 Start of Construction 3.4 Grievance Redress Action and Monitoring Activities

The presented schedule of implementation of the Resettlement Action Plan considers the following:

• time required to undertake the cadastral and topographic surveys and prepare land documentation for registration;

• time required for providing public with necessary information;

• time required for negotiations and reaching agreement, as well as time needed for giving out compensations; • time required to secure a decree and proceed with the expropriation proceeding through the court;

The schedule considers synchronization of the above components and the time necessary for the grievance redress.

8.1.1 Preparation/Finalization of the RAP

• RAP Approval Process. The Final RAP are approved by the ARS and cleared by the World Bank. • Budgetary Allocation and Release. In accordance with the approved RAP, budget for compensations will be allocated from the state to the ARS.

8.1.2 RAP Implementation

The Land Acquisition Department (LAD) of the ARS OJSC is responsible for carrying out the implementation of RAP.

• Information dissemination regarding the project activities and schedule. Prior to start of civil works activities, PAP will be informed about the schedule of civil works, likely impacts, mitigating measures and the schedule and procedure of compensation and land acquisition. Before the start of the RAP implementation a monitoring consultant will be hired by ARS who will work closely with ARS LAD and will inform PAP about the Project implementation, including grievance redress mechanisms set in the RAP. • Demarcation of the project affected parcels. The Contractor and ARS OJSC working in coordination will demarcate the affected parcels in the presence of land owners and their neighbours as well the representatives of the Rayon based on the final alignment and the approved RAP. During the RAP preparation, the individual land parcels that will be affected had already been measured and surveyed and adjustment in the cadastral maps already been undertaken. In each affected village, the list of property owners with signed copies of their consent to the result of the measurement as mapped out in the cadastral drawing will be developed. These formal documents constitute as the initial demarcation act that will serve as basis for the subsequent action in the demarcation activities to be undertaken during the RAP implementation. The affected land parcels had already been adjusted in the records of the Local Land Offices and the SLCC as a basis for issuance of new land documents for the affected landowners. All of these inventory data and cadastral maps are presented in Volume 2 of this RAP document. These documents will be the basis for the physical demarcation by the Contractor of the ROW areas for the Project road. • Mobilization of Working Team. The Working Team under the LAD will be mobilized and field reassessment would be conducted. The Working Team, in cooperation with the Supervision Consultant for the Civil Work Contract, representatives of Executive Power and the Local Land Offices and PAPs, will undertake the verification of the RAP census and asset inventory data on the demarcated parcel. • Land Acquisition Procedures. The process of ROW acquisition for private land requires the pursuance of four basic sequential activities as follows:

9 Confirmation of Land Ownership by the Affected Persons. 9 Undertaking of Land Purchase Agreement between the concerned PAP and the Roads Department 9 Demarcation and Registration of ROW required parcels 9 Payment of Compensation

These steps are described in more details below.

• Land Ownership Document. To process land transactions, the appropriate documents by the affected land owner establishing his right to the property are required. During the conduct of the DMS, the RAP Team collected copies of these documents from land owners. In cases when required documents are not in order, ARS and monitoring consultant will provide PAPs with necessary assistance in collection of required documents and process compensation. All PAPs regardless of legal status will be eligible for compensation. • Final negotiation on compensation and Undertaking Land Purchase Agreement. Negotiation on the final compensation is undertaken by the LAD Working Team with the concerned PAPs to institute the procedure for the release of payment. In case of a successful negotiation; according to current legislation, the land purchase agreement/deed will be signed and registered with the Local Land Offices and SLCC and will serve as a basis for paying compensation. In case of negotiation failure, the expropriation procedure will be pursued. • Processing of land purchase agreement and its registration with the Local Land Office and the SLCC. After a successful negotiation for land purchase by LAD-ARS, the said transaction will be duly documented and registed in the records of the Local Land Offices and the SLCC. • Opening of bank accounts for PAPs. PAPs may open individual bank account in local on any other bank according to their preference/choice. In case of missing PAPs, the ARS OJSC will open an escrow account to deposit the compensation payment. All payments of cash compensation shall be undertaken through the banking system. • Payment of compensation. After the successful negotiation between the PAP and the Working Team on the scope of impact, the amount of compensation and the manner of payment, the purchase agreement (deed) will be notarized (or, in line with current legislations, certified by the Executive Power and Local Land Office). Based on purchase agreement the equivalent cash value of compensation will be deposited to the PAP’s bank account. The purchase agreement shall be concluded in accordance with the Civil Code of Azerbaijan as the main legal document regulating the deed between ARS OJSC and the PAP. • Land Swap. The land swap option will be provided to the affected households if they prefer getting land plots of the same size and quality to cash compensation. All land swaps will be completed prior to initiation of civil works. The land swap process will be implemented as specified below: - Individual PAP will be first offered cash compensation as determined based on the principles laid out in the RAP. If they prefer land swap, then land owners will apply to LAD/ARS with standard application stating their preference for the land swap option; - Application are reviewed, documented and filed by LAD/ARS to Rayon Executive Powers and local municipalities with requests to allocate appropriate land plots. Rayon Executive Powers and local municipalities propose

alternative land plots for consideration of the land owners. In the process, more than one land plots may be offered to land owners, if necessary, till agreements can be reached between land owners and ARS. After consideration of all available options, PAP has the right to drop their preference to land swap and elect cash compensation. - Once the land plot for swap is agreed between the land owner and local authorities, transaction is registered in the records of Local Land Office/SLCC and State Real Estate Registration Service. Related registration and transaction costs are covered by ARS. Throughout the process the monitoring consultant will be accessible to PAP and provide necessary assistance in addressing any grievances

8.1.3 Expropriation Proceedings

If the ARS OJSC (through the LAD Working Team) and the PAP fail to reach an agreement on the acquisition of private properties, the ARS OJSC will pursue the expropriation proceedings in accordance with the "Law of Azerbaijan on Procedures for the Expropriation of Property for the Urgent Public Needs" (Rule of Acquisition of Private Property in Case of Urgent Public Need). Legal procedures for expropriation are not yet well established in Azerbaijan. Currently, legislation of the expropriation proceedings is being drafted (a draft will be submitted to the President for approval and corresponding submission to the Cabinet of Ministers for passage as legislation by 2008) which will make it easier for the Government to take over a private property for the interest of the common good.

The steps to pursue the expropriation procedure are as follows:

• Submission to the Court of request for expropriation. ARS OJSC submits to the Court a request for expropriation of a particular property for the road project. • The amount of compensation for the expropriated property shall be deposited in favour of the legitimate owners in escrow account in bank nearest to them. • Based on Court decision, the ARS OJSC will implement the right of Expropriator and take over the expropriated property.

If the compensation determined by the court is lower than the replacement value established by ARS and monitoring consultant, then the ARS will add the balance to ensure PAP would be compensated as per requirements under the RAP.

8.1.4 Construction Phase

• Notice to vacate the purchased/sold property sent to the individual PAPs. After the release of payment for the impacted properties, ARS OJSC will officially notify the PAPs on the need to vacate or clear the property for the road construction giving a deadline after which, the said property shall be subject of forced takeover by the government through the Civil Work Contractor. • Dismantling/takeover of ROW by ARS OJSC/Contractor. After the lapse of the deadline to vacate and clear the purchased property, the Project will physically take over them. • The Supervision Consultant which will be contracted to assist the Civil Work Contractor will support the LAD in ensuring that the RAP is implemented in accordance with the Plan and the Policy Framework.

• Start of Construction. The Contractor may now proceed with the construction after this.

8.1.5. Grievance Redress Action and Monitoring of RAP Implementation

Complaints and grievance shall be addressed according to the procedures outlined in Chapter 5. Internal monitoring will include: (i) review of census information for all PAP, (ii) consultation and informal interviews with PAP; (iii) regular visits to project affected areas and scheduled meetings with PAP; (iv) review of grievances received through hotline or regular site visits; and (vi) monthly monitoring reports that summarize results of RAP implementation, investigations of grievances and solutions employed. The monthly monitoring reports would be submitted to the ARS and shared with the Bank. The local monitoring consultant will keep the log book of complaints received and attach it in the monitoring completion report which will be submitted to the PIU and the Bank task team.

8.1.6. Ex -post evaluation

As foreseen in the Highway II Project legal documents, ARS will employ a consultant (resettlement expert) to conduct an ex post review of the implementation of the RAP. The tasks for ex post evaluation will be to (i) review and verify internal monitoring reports; (ii) review the socioeconomic baseline census information; (iii) undertake impact assessment through surveys or focus groups with affected people; (iv) assess if adequate compensation was provided to a sample of PAP as per the requirements under the RAP; (v) assess if those PAP who faced severe impacts and vulnerable people have received rehabilitation measures as defined in the RAP; and (vi) assess the resettlement efficiency, effectiveness, impact, and sustainability to draw lessons for preparation and implementation of future resettlement planning documents.

The consultant will pay particular attention to whether vulnerable people and those who faced severe impact did receive jobs to be created in service/ rest areas. The consultant will prepare the RAP completion report and submit it to the PIU and the Bank.

8.2 Institutional Responsibility

8.2.1 The AzerRoadService of the Ministry of Transport of Azerbaijan

The ARS OJSC of the MOT of Azerbaijan is responsible for supervising the road construction activities undertaken by the Contractor and shall also have oversight responsibility for the implementation of the Resettlement Plan. The LAD of the ARS OJSC shall be responsible for implementation and coordination of activities specified in the Resettlement Plan. It shall also be and ensure that RAP related impacts (permanent and temporary) are properly addressed as indicated in the RAP.

The Land Acquisition Department of ARS (LAD) shall be responsible for the day to day implementation of the various activities related to RAP implementation. The LAD’s tasks

involve the coordination and supervision of the activities of the Working Team. It ensures the acquisition of the road ROW; it takes decisions on compensation and expropriation which should be agreed with the ARS management. The LAD is responsible for ensuring that all PAPs are duly compensated and that mitigating measures are instituted by the Civil Work Contractor as a result of temporary impacts. Accordingly, monitoring of RAP shall be duly undertaken.

The LAD since its creation in 2006 has had extensive and varied experiences in resettlement and land acquisition of various roads projects of the Agency which are either state-, bilaterally, or multi-laterally funded. In carrying out the tasks for this RAP, the LAD staffs bring with them their wealth of experience in dealing with similar issues in cognizance of the policy requirement of the funding institutions like the WB.

Throughout RAP implementation ARS/LAD will be supported by local and international monitoring consultants. The monitoring consultants will be responsible for investigating grievances received and report RAP implementation progress. 8.2.2 Court of Azerbaijan

The Court of Azerbaijan shall be the body of last resort for issues and concerns regarding the implementation of the RAP.

In case of failure in the negotiation between the ARS OJSC and the PAPs concerning the acquisition of private properties, the ARS OJSC with the mandate for expropriation based on existing legislations will submit to the Court a request for expropriation. Upon its approval and following prescribed procedure, ARS can then take over the concerned property after having been given by the Court the right of the Expropriator.

Furthermore, in cases where complaints and grievances regarding the RAP implementation and compensation are not solved at the various levels as prescribed in the agreed Grievance and Redress Mechanism for this RAP, the PAPs will have the right to appeal the case to the Court as a last resort. Its decision shall be final and executory.

8.2.3 State Committee on Property Issues (SCPI)

The SCPI is responsible for ensuring that ARS complies with the procedure for preparing the various documents for the acquisition of properties for state needs.

Real Estate State Register Service of the State Committee on Property Issues - The agency reviews whether the said property has been mortgaged and counterchecks the ownership of the said property and gives certificate form No 1 for all assets in order to be used by LAD to register land acquisition in notary. After the land acquisition process completed, the Agency updates the land and property register documents of all the PAPs removing the right to the parcel of land or property purchased by the ARS MoT.

8.2.4 Contractor

A Civil Work Contractor appointed by the ARS OJSC to undertake the construction will be responsible for mitigating temporary impacts resulting from the construction activities. Based on the RAP and the Technical Design, the parcel of land that had been identified and acquired as part of road ROW will be demarcated to clearly delineate it from the remaining non affected parts. Contractor will be responsible for implementing measures for temporary

impact as laid out in the EMPs. The construction activities shall be monitored closely by the LAD and Monitoring Consultant to ensure compliance to the temporary mitigating measures.

9. MONITORING AND REPORTING

In accordance with the World Bank’s Resettlement Policy, all projects that result in land acquisition and resettlement need to be properly monitored and evaluated. To ensure that the Project is implemented in compliance with the provisions of the RAP, a monitoring will be carried out during the implementation of the RAP. Ex -post evaluation will also be undertaken to assess the effectiveness of RAP implementation and determine whether the PAPs have the level of livelihood at least as same as before the road construction.

9.1. RAP Implementation Monitoring

To ensure that the project is implemented in accordance with the WB policy requirements and the approved RAP, the monitoring will be undertaken by the LAD, PIU in ARS. ARS will hire local and international monitoring consultants to work closely with PIU and carry out monitoring of the progress and results of RAP implementation.

Responsibilities of local monitoring consultant will include: (i) review of census information for all PAP, (ii) consultation and informal interviews with PAP; (iii) regular visits to project affected areas and scheduled meetings with PAP; (iv) review of grievances received through hotline or regular site visits; and (vi) monthly monitoring reports that summarize results of RAP implementation, investigations of grievances and solutions employed. The monthly monitoring reports would be submitted to the ARS and shared with the Bank. The local monitoring consultant will keep the log book of complaints received and attach it in the monitoring completion report which will be submitted to the PIU and the Bank task team.

To provide support to the local monitoring consultant and ensure the effective implementation of the Resettlement Action Plan, ARS will also hire international monitoring consultant. The international monitoring consultant will work with local consultant and help ARS to address grievances and solve other related issues in order to ensure that provisions under the RAP are fully complied with. More specifically, international monitoring consultant will support ARS and local monitoring consultant in (i) ensuring the RAP is implemented based on the principle of transparency and replacement cost; (ii) reviewing the grievance screening and redress procedure and providing advice based on the best international experience; (iii) assessing grievances received and finding measures to redress them; (iv) developing the database of compensation amounts for land or other assets, with the description of salient physical characteristics of land and other assets; ensuring that the process of land swaps is duly implemented to the satisfaction of project affected people, (vi) implementation of measures to ensure the income of severely affected people is sufficiently restored, and other aspects of RAP implementation, as needed.

Monitoring indicators will be related to process and immediate outputs and results. Specific internal monitoring indicators are shown in Table 29.

Table 29: Internal Monitoring Indicators Monitoring Indicators Basis for Indicators ave all land acquisition and resettlement staff been appointed and mobilized for the field and office work on time? ave capability building and training activities been completed on schedule? Budget and ave resettlement activities been completed according to the agreed timeframe? Timeframe e funds for resettlement being allocated to the resettlement agencies on time? ave ARS received the scheduled funds? ave funds been disbursed to the affected families according to the RAP? as all land required been acquired in time for project implementation? ave all PAP received compensation and/ or rehabilitation measures sufficient to restore livelihood? Delivery of PAP ave all PAP received complete payments on time? Entitlements ave all PAP losing temporary land been compensated?

restoration proceeding for social infrastructure and services? e PAP able to access schools, health services, cultural sites, and activities? ave vulnerable people and those with severe impact been hired in civil works? ave vulnerable people and those with severe impact been hired in service/ rest areas? ave consultations taken place as scheduled? ave resettlement booklets and announcement been delivered? ow many PAP know their entitlements? How many know if they have been received? as any PAP used the grievance redress procedures? What were the outcomes? Consultation, ave conflicts been resolved? Grievance and ow many PAP have reported their grievances? Special Issues as the grievance screening mechanisms developed? as monthly monitoring report been prepared and submitted to the Bank? as database of land prices and other asset values been established and regularly updated? as the monitoring consultant visited every district in a month? e PAP aware of the contact of the monitoring consultant?

9.2 Ex post evaluation

10. RESETTLEMENT COST AND BUDGET

10.1 Compensation on Land Acquisition

Table 30: Summary of Land Compensation Costs

Category District Land Area Total Cost classification Unit Cost Cost (AZN) (AZN) (including 20% addition) Agricultural 50.0988 2160 108213.41 Neftchala Homestead 0 0 0 Agricultural 34. 6528 2160 74850.05 Private Jalilabad 963651.10 Homestead 0.84 6000 5040 Agricultural 107.212 7200 771926.4 Masalli Homestead 0.4311 8400 3621.24 Agricultural 18.2711 1500 27406.65 Neftchala Non-Agricultural 3.3332 166.96 556.51 Pasture 0.3896 162.56 63.33 Agricultural 3.92 1500 5880.00 Municipal Jalilabad Non-Agricultural 21.13 166.96 3527.86 68188.25 Pasture 8.02 263.18 2110.70 Agricultural 10.82 2160 23371.20 Masalli Non-Agricultural 15.814 166.96 2640.31 Pasture 11.106 236.96 2631.68

Total: 1031839.34

10.2 Compensation for Structures Impacted

Table 31: Summary of Compensation Costs for Structures

Category Average Estimated Cost (AZN) Calculated 20% Total Price addition Residential House Stable Barn Bath Water Shed Cooking Fence house tank area AZN 17000 3800 1500 450 300 1200 100 650 25,000.00 5,000 30,000.0 Residential House AZN 20000 20000 24000 Commercial Main Kiosk Kiosk Toilet Water Other Blg.+ (1) (2) tank constructions kitchen AZN 24,196 1,454 3,177 1,285 779 3,015 33,906.00 6781 40687.0 Ancillary Fence structure AZN 1,316.53 1,316.53 263.31 1579.84 TOTAL 96266.84

10.3 Compensation for Affected Trees

Table 32: Summary of Compensation Costs for affected trees

Category and Age Category in years and Estimated Value TOTAL Type of trees Age Value Age Value Age Value Age Value # Value per per tree per tree per tree tree < 5 5-10 10-15 >15 Trees in Private lands Quince 1 9.6 1 20.8 2 30.4 Cherry plum 1 9.6 1 9.6 Fig 6 9.6 1 17.6 7 75.2 Mulberry 3 20.8 2 35.2 5 132.8 Pomegranate 29 9.6 29 278.4 Oleaster 1 36.8 1 36.8 Peach 4 10 1 19.2 5 59.2 Medlar 3 6.4 1 19.2 4 38.4 Apple 3 6.4 2 17.1 5 53.4 Pear 2 9.6 2 19.2 Blood orange 3 15.2 3 45.6 Willow (nfb) 4 9.6 4 38.4 Pine (nfb)* 2 9.6 2 19.2 Total 49 12 6 3 70 836.6 Trees in State lands 3833 95533.3

Total for Trees 96369.9

10.4 Administrative Cost

Table 33: Summary for Administrative Cost Category Cost (AZN) Cost for Internal Monitoring10 - Cost for External Monitoring - Communication expenses 2000 Consultation campaign 2000 Total 4000

10.5 Summary of RAP Budget Requirement

Table 34: Resettlement Budget in Summary Item Qty Unit Cost Land 286.03 ha 1 031 839.34 Structure 3 number 96 266.84 Trees/crops 3903 number 96 369.90 RAP Administration 4 000.00 Total: 1 228 476.08 Contingency11: 15 % 184 271.41 Grand Total: 1 412 747.49

10 ARS will contract one internal monitoring consultant and one external monitoring consultant for the implementation of RAPs for all three sections of Alat-Masalli Road. The cost of internal (18 500 AZN) and external monitoring (40 000 AZN) services is included into the budget of the RAP for the Section 1 of the road. 11 If more compensation will be needed to ensure livelihood restoration, it will be paid from the contingency budget. In an unlikely event that the contingency budget is not sufficient to pay compensation of replacement value to all eligible households, ARS will secure an additional budget from the Ministry of Finance

References

3.2 IDA Credit 3517 – AZ, TECHNICAL ASSISTANCE FOR TOVUZ BYPASS, LAND ACQUISITION PLAN, Finnroad, Baku, May 2005.

3.3 Country Assistance Strategy for Azerbaijan Republic; The WB (2003)

3.4 BTC co (2002): BTC Project Resettlement Action Plan Azerbaijan Final Report

3.5 World Bank (2001) Poverty Assessment and Poverty Alleviation in Azerbaijan’s Central Corridor: Final Report, Baku/Rotterdam, May 2001

3.6 Phase 1 Report: HIV/AIDS Activity Summary – Preparation of Environmental Assessment and Management Plans and Capacity Building. Azerbaijan Motorway Improvement and Development. Scott Wilson Ltd with Swiss Center for International Health, Swiss Tropical Institute. November 2006.

3.7 The following World Bank documents: