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Dushanbe-Uzbekistan Border

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Dushanbe-Uzbekistan Border CAREC Corridor 3 (Dushanbe–Uzbekistan Border) Improvement Project (RRP TAJ 42052) ECONOMIC ANALYSIS A. Project Overview 1. Project. The project will improve the 62 kilometer (km) Dushanbe–Tursunzade– Uzbekistan border road, which is the main international route to Uzbekistan and beyond. Its importance as a route for Tajik imports and exports was well established in the former Soviet Union, when it carried almost all Tajikistan’s road-based exports and imports. The countryside traversed by the road has a mixture of agricultural (cotton, fruit, and grapes for export) and industrial uses. The biggest towns along the corridor are Tursunzade and Gissar. Tursunzade’s main industry is a large aluminum smelter responsible for a significant proportion of Tajikistan's trade. The project road links to the Uzbekistan border through the Dusti border crossing point, which is one of 29 prioritized border crossings in the Central Asia Regional Economic Cooperation (CAREC) program. Currently, about 150 trucks a day make the crossing. This is a significant increase since 2007, when less than 20 vehicles crossed daily. Multicriteria analyses were undertaken and the following is recommended (Table 1). Table 1: Road Conditions and Proposed Works IRI Road Section Existing Condition After Project Before After Section 1 5 km Width Unchanged 8 2 Avicenna Monument– 6 lane concrete pavement Category I West Gate 80% concrete failure Asphalt overlay Section 2 14 km Widening 4.5–5.5 2 West Gate–Gissar 2 lane asphalt Category I Over 50% pavement failure Asphalt surfacing 1 bridge Bridge upgraded Section 3 21 km Widening 4.5–5.5 2 Gissar–Shakhrinav 2 lane asphalt Category I Over 50% pavement failure Asphalt surfacing 2 bridges Bridges upgraded Section 4 10 km Widening 5.5–6.0 2 Shakhrinav– 2 lane asphalt Category I Tursunzade extremely deteriorated pavement, Asphalt surfacing passable only at reduced speed Bridges upgraded 4 bridges Section 5 12 km Minor widening to 5.5–6.0 2 Tursunzade– 2 lane asphalt improve geometry Uzbekistan Border extremely deteriorated pavement, Category III passable only at reduced speed Asphalt surfacing 3 bridges Bridges upgraded IRI = international roughness index, km = kilometer. Source: Ministry of Transport and Communications and consultant. 2. Methodology. The methodology follows the standard practice of comparing life cycle road agency and user costs with and without the project, using a net present value (NPV) at 12% discount and the economic internal rate of return (EIRR) as decision criteria. The Highway Development and Management Model (HDM-4) was used. The analysis focuses on transport costs savings. Value added from better transport links resulting in new industries and employment were expected to be small and were not quantified. 3. For the without-project scenario, a “do minimum” base case using existing levels of maintenance was assumed, which at present do not amount to a full condition responsive program. At the assumed level of maintenance, the HDM-4 model predicts that the international roughness index value will gradually deteriorate. For the with-project scenario, two options were considered: (i) a full upgrade consisting of reconstruction of the existing road, and (ii) reconstruction of the highway as a four-lane road for capacity expansion. 2 B. Road Condition and Traffic Volume 4. Road condition. The condition of the existing highway was investigated, including a full geotechnical assessment of the pavement conditions. A topographic survey was undertaken to estimate the quantities involved in any road widening and a survey of existing bridges was completed. 5. Traffic volume. Existing traffic is high—the count ranges from 15,000 vehicles per day (vpd) near Dushanbe and 5,000 vpd near the border. The distance-weighted average traffic volume is 10,000 vpd. Traffic surveys were carried out at six locations along the project highway in December 2008. The counts were factored up to annual average daily traffic using Ministry of Transport and Communications count data for 2004. The 2008 traffic count shows a sharp increase from 2007. Table 2 demonstrates that traffic numbers fell dramatically after 1990, but have been climbing steadily since. It appears that they have now retained pre-civil war levels. It seems unlikely that the growth observed from 2007 to 2008 would be sustained in the future. The 2008 level has been adopted as the base for future traffic predictions. Table 2: Average Daily Traffic Count Dushanbe–Tursunzade Highway 1990 1995 1999 2000 2001 2002 2003 2004 2006 2007 2008 7,634 1,831 1,912 2,342 3,377 4,410 4,896 5,477 7,774 6,374 9,580 Sources: Ministry of Transport and Communications and consultant counts. 6. Traffic growth. There are two types of traffic on the project highway—local and international. Local traffic includes traffic between the settlements in the project area, and to and from agricultural farming and industrial areas. Local traffic to and from Dushanbe will be the main project beneficiary. International traffic is currently limited by restrictions on cross- border movement. As these ease, international traffic will grow strongly. Completion of the Dushanbe–Kyrgyz border road will spur transit traffic between the People’s Republic of China and Afghanistan and the People’s Republic of China and Iran using this route. The Transport Master Plan1 proposed an income elasticity of demand of 1.4 for both passengers and freight. Normal traffic growth was assumed at 10%. For most road improvement projects, it is reasonable to use elasticity of demand to relate the level of generated traffic to the cost reductions. Generated traffic was not incorporated into the analysis as traffic growth is expected to be more influenced by externalities. Even without generated traffic, the EIRR of the project highway is sufficiently higher than the economic hurdle rate (12%). Table 3: Annual Average Daily Traffic by Road Section and Vehicle Type Articulated Heavy Heavy Light Medium Micro Mini Year Truck Car Bus Truck Truck Truck Bus Bus Total 1. Avicenna Monument–West Gate 2010 41 14,919 26 203 276 343 823 1,540 18,172 2015 60 20,925 37 298 406 504 1,155 2,160 25,544 2020 88 29,348 52 438 597 740 1,619 3,029 35,912 2025 130 41,163 73 644 877 1,088 2,271 4,249 50,493 2. West Gate–Gissar Turn-off 2010 45 11,768 23 205 292 302 546 1,070 14,252 2015 67 16,506 32 302 428 444 766 1,501 20,046 2020 98 23,150 45 443 630 652 1,074 2,106 28,199 2025 144 32,469 63 651 925 958 1,507 2,953 39,672 3. Gissar Turn-off–Sharinav 2010 48 9,774 23 231 274 258 253 901 11,762 2015 70 13,709 32 339 403 379 355 1,264 16,550 2020 103 19,227 45 499 592 557 498 1,772 23,292 2025 152 26,967 63 733 870 818 698 2,486 32,786 4. Sharinav–Tursunzade Junction 2010 38 10,253 96 146 243 150 168 710 11,804 2015 57 14,380 135 214 356 221 236 996 16,595 2020 83 20,168 189 315 524 325 331 1,396 23,331 2025 122 28,287 265 463 770 477 464 1,958 32,807 1 ADB. 2010. Developing Tajikistan's Transport Sector Master Plan, Manila (final draft). 3 Articulated Heavy Heavy Light Medium Micro Mini Year Truck Car Bus Truck Truck Truck Bus Bus Total 5. Tursunzade Junction–Uzbekistan Border 2010 100 4,470 100 90 168 107 95 134 5,264 2015 147 6,269 140 132 247 158 133 188 7,414 2020 217 8,793 196 194 363 232 187 264 10,444 2025 318 12,332 275 285 533 340 262 370 14,715 Source: Ministry of Transport and Communications and consultants. Figure 1: Traffic Forecast by Road Section 70000 60000 AADT (vpd) 50000 40000 30000 20000 10000 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Year Avecina Monument–West Gate West Gate–Gissar Sachrinav–Tursunzade Tursunzade–Uzbek Border AADT = annual average daily traffic, vpd = vehicles per day. Source: Ministry of Transport and Communications and consultants. 7. Road user costs. The poor condition of the project highway has lowered travel speeds, increased fuel consumption, and raised vehicle operating costs. Road condition components of vehicle operating costs (VOCs), with and without the project, were based on the international roughness index as in Table 1. For costs related to vehicle characteristics, data on vehicle registrations were used to identify representative vehicles for eight vehicle types. Other cost components (prices of vehicles and other inputs, vehicle utilization, and values of time) were based on figures developed by previous ADB studies,2 updated to reflect current prices (Table 4). All prices are in constant US dollars, net of taxes. 8. Road agency costs. Road improvement costs are being established for each road section separately on the basis of the estimated bill of quantities. Unit costs for construction work are based on the prices for recent bids in the country, and the advice of the construction supervision consultant for the Dushanbe–Kyrgyz border project, phases 2 and 3. Price contingencies, interest during construction, and taxes and duties were excluded. Using a world price numeraire, nontradable costs were converted from financial to economic costs by applying a standard conversion factor of 0.85. The cost for each road section and each improvement option was developed using section specific bills of quantities and costs and are shown in Table 4 and the project administration manual. Table 4: Costs by Road Section ($ million) Road section Economic Cost Financial Cost Avicenna Monument–West Gate 16.0 19.0 West Gate–Uzbekistan border 80.0 95.0 Total 96.0 114.0 Sources: Ministry of Transport and Communications and consultants.
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