Report and Recommendation of the President to the Board of Directors

Project Number: 51268-001 November 2020

Proposed Grant Independent State of : Central Cross Island Road Upgrading Project

Distribution of this document is restricted until it has been approved by the Board of Directors. Following such approval, ADB will disclose the document to the public in accordance with ADB's Access to Information Policy.

CURRENCY EQUIVALENTS (as of 19 October 2020)

Currency unit – tala (ST) ST1.00 = $2.621 $1.00 = ST0.381

ABBREVIATIONS

ACDMD – Aid Coordination and Debt Management Division ADB – Asian Development Bank COVID-19 – coronavirus disease EIRR – economic internal rate of return EMP – environmental monitoring plan GHG – greenhouse gas km – kilometer LTA – Land Transport Authority MNRE – Ministry of Natural Resources and Environment MOF – Ministry of Finance MWTI – Ministry of Works, Transport and Infrastructure O&M – operation and maintenance PAM – project administration manual TISCD – Transport and Infrastructure Sector Coordination Division TSP – Transport Sector Plan 2014–2019

NOTES

(i) The fiscal year (FY) of the Government of Samoa and its agencies ends on 30 June. "FY" before a calendar year denotes the year in which the fiscal year ends, e.g., FY2020 ended on 30 June 2020.

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

Vice-President Ahmed M. Saeed, Operations 2 Director General Leah Gutierrez, Pacific Department (PARD) Deputy Director Emma Veve, PARD General Director Dong-Kyu Lee, Transport and Communications Division (PATC), PARD

Team leader Rustam Ishenaliev, Principal Infrastructure Specialist, PATC, PARD Team members Chandra Arora; Procurement Specialist; Procurement Division 2; Procurement, Portfolio and Financial Management Department Ferila Brown; Safeguards Officer; Pacific Subregional Office in Suva, Fiji (SPSO); PARD Cindy Bryson; Safeguards Specialist; Portfolio, Results and Quality Division (PAOD-PRQ); PARD Ninebeth Carandang, Senior Social Development Specialist, Social Sectors and Public Sector Management Division (PASP), PARD Juan Gonzales, Transport Specialist, PATC, PARD Ronah Lyn Hernandez, Associate Operations Analyst, PASP, PARD Ari Kalliokoski, Senior Transport Economist, PATC, PARD Mairi MacRae, Social Development Specialist (Gender and Development), PASP, PARD Maria Melei; Senior Country Officer; Samoa Pacific Country Office, SPSO; PARD Douglas Perkins, Principal Counsel, Office of the General Counsel Pinky Serafica, Senior Communications Officer, Media and External Relations Division, Department of Communications Hanna Uusimaa, Senior Climate Change Specialist, Energy Division, PARD Jean Williams, Principal Environment Specialist, PAOD-PRQ, PARD Peer reviewer David Fay, Unit Head, Project Administration, SPSO, PARD

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

CONTENTS

Page PROJECT AT A GLANCE MAP I. THE PROPOSAL 1 II. THE PROJECT 1 A. Rationale 2 B. Project Description 3 C. Value Added by ADB 4 D. Summary Cost Estimates and Financing Plan 4 E. Implementation Arrangements 5 III. DUE DILIGENCE 6 A. Technical 6 B. Economic and Financial Viability 7 C. Sustainability 8 D. Governance 9 E. Poverty, Social, and Gender 10 F. Safeguards 10 G. Summary of Risk Assessment and Risk Management Plan 12 IV. ASSURANCES 12 V. RECOMMENDATION 12

APPENDIXES 1. Design and Monitoring Framework 13 2. List of Linked Documents 16

Project Classification Information Status: Complete

PROJECT AT A GLANCE

1. Basic Data Project Number: 51268-001 Project Name Central Cross Island Road Upgrading Project Department/Division PARD/PATC Country Samoa Executing Agency Ministry of Finance Recipient Government of Samoa

Country Economic https://www.adb.org/Documents/LinkedDocs/ Indicators ?id=51268-001-CEI Portfolio at a Glance https://www.adb.org/Documents/LinkedDocs/ ?id=51268-001-PortAtaGlance

2. Sector Subsector(s) ADB Financing ($ million) Transport Road transport (non-urban) 30.00 Urban roads and traffic management 10.00 Total 40.00 3. Operational Priorities Climate Change Information1 Addressing remaining poverty and reducing inequalities GHG reductions (tons per annum) 700 Accelerating progress in gender equality Climate Change impact on the Medium Tackling climate change, building climate and disaster resilience, and Project enhancing environmental sustainability Making cities more livable ADB Financing Strengthening governance and institutional capacity Adaptation ($ million) 0.37 Mitigation ($ million) 0.00

Cofinancing Adaptation ($ million) 0.00 Mitigation ($ million) 0.00 Sustainable Development Goals Gender Equity and Mainstreaming SDG 1.1, 1.5 Effective gender mainstreaming (EGM) SDG 5.1, 5.2 SDG 8.2 Poverty Targeting SDG 9.1 Geographic Targeting SDG 10.3 SDG 11.2 SDG 12.5 SDG 13.a

4. Risk Categorization: Low . 5. Safeguard Categorization Environment: B Involuntary Resettlement: B Indigenous Peoples: C

. 6. Financing Modality and Sources Amount ($ million) ADB 40.00 Sovereign Project grant: Asian Development Fund 40.00 Cofinancing 0.00 None 0.00 Counterpart 15.00 Government 15.00 Total 55.00

Currency of ADB Financing: US Dollar

1 The project reduces greenhouse gas emissions. However, it does not fall under the eligibility criteria for climate mitigation finance as defined by the joint multilateral development bank methodology on tracking climate finance, which notes that not all activities that reduce greenhouse gases in the short term are eligible to be counted towards climate mitigation finance. Accordingly, greenfield fossil fuel projects are excluded, and climate mitigation finance is considered zero.

Source: Asian Development Bank This document must only be generated in eOps. 10062020164743386719 Generated Date: 10-Nov-2020 8:45:36 AM

o o 172 40'W 171 30'W

S A M O A CENTRAL CROSS ISLAND ROAD UPGRADING PROJECT

Project Road National Capital Town/Village Safotu Fagamalo International Airport Falealupo o Asau Samalaeulu Road o 13 30'S Safune 13 30'S Sataua Ferry Crossing River Falelima International Boundary Puapua Boundaries are not necessarily authoritative. S A V A I ‘ I I S L A N D

Faga Salailua Tuasivi Palauli N Taga Salelologa Satupaitea Ferry Crossing Faleula Malua Faleolo Airport 0 5 10 15 Laulii Manono Saoluafata Kilometers o 172 40'W Manono-uta Fusi Falelatai Fagaloa Bay ADB'S DEVELOPING MEMBER COUNTRIES IN THE PACIFIC U P O L U I S L A N D Uafato NORTHERN Tiavea MARIANA ISLANDS HAWAII GUAM MARSHALL ISLANDS o Salani Lepa o N O R T H P A C I F I C O C E A N 14 00'S 14 00'S FEDERATED STATES REPUBLIC OF OF MICRONESIA PALAU

NAURU PAPUA K I R I B A T I NEW GUINEA SOLOMON TUVALU ISLANDS SAMOA COOK VANUATU FRENCH P A C I F I C O C E A N ISLANDS FIJI POLYNESIA NIUE NEW TONGA A U S T R A L I A CALEDONIA

200728 20SAM S O U T H P A C I F I C O C E A N

This map was produced by the cartography unit of the Asian Development Bank. The boundaries, colors, denominations, and any other information shown on this map do not imply, on the N E W Z E A L A N D part of the Asian Development Bank, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries, colors, denominations, or information.

ABV o 171 30'W

I. THE PROPOSAL

1. I submit for your approval the following report and recommendation on a proposed grant to the Independent State of Samoa for the Central Cross Island Road Upgrading Project.

2. The project will finance (i) the upgrade of about 20 kilometers (km) of national road incorporating climate-proofing considerations, innovative technologies, road safety measures, and gender-inclusive elements; (ii) 3-year routine maintenance with gender-inclusive elements; and (iii) gender-sensitive capacity strengthening for the road transport subsector. It will help meet a key infrastructure need in Samoa—improve, sustain, and climate-proof its road network and boost transport sector governance.

3. Samoa implemented quarantine measures because of a measles outbreak in late 2019 and the subsequent coronavirus disease (COVID-19) pandemic, which severely curbed economic activity. The declining revenues and the government's stimulus expenditures to protect sectors and vulnerable groups led to forecasts of high fiscal deficits. The project is expected to help boost the economy through local employment, tax revenues, and inflows of foreign exchange.

II. THE PROJECT

4. The Government of Samoa requested assistance from the Asian Development Bank (ADB) to upgrade Central Cross Island Road—a priority investment in the transport sector. The project was originally part of the World Bank’s assessment of critical road links to be covered by the Enhanced Road Access Project, which the government implemented in 2015 with World Bank support, but was not finalized.1 In 2018, the World Bank approved a $35.75 million grant for the Samoa Climate Resilient Transport Project to improve parts of West Coast Road and East Coast Road, both identified as vulnerable to climate change impacts.2 ADB financing was requested to supplement these efforts to improve the road network infrastructure. This is one of two ADB-assisted transport projects in Samoa, the other is the Enhancing Safety, Security, and Sustainability of Apia Port Project.3

5. Samoa’s coastal communities, where 70% of people live and where most public facilities, economic infrastructure, and job opportunities are, rely heavily on coastal roads and cross island roads for their transportation needs. The main island, , features three cross-island roads along its eastern, western, and central parts, providing access and livelihoods to inland communities. Central Cross Island Road is the key artery connecting West Coast Road in Apia— the country's capital, and the island's main commercial center and only deepwater port—with South Coast Road in Siumu. It links 7,031 residents and various businesses along a 20 km stretch with Apia and the southern edge of the island. Another 30,784 people living on the south coast rely on it as the shortest route to reach jobs and educational and social services in Apia. The two- lane carriageway is narrow (4 meters–5 meters) and carries up to 6,000 vehicles in average daily traffic along the first 5 km, and up to 1,500 vehicles thereafter. It is costly to maintain; unsafe for road users, particularly during heavy rains; and in urgent need of an upgrade.

6. The project is included in ADB’s country operations business plan and is aligned with Strategy 2030 and its operational priorities of addressing remaining poverty and reducing

1 World Bank. 2013. Samoa Enhanced Road Access Project. Washington, DC. 2 World Bank. 2018. Samoa Climate Resilient Transport Project. Washington, DC. 3 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Grant to the Independent State of Samoa for the Enhancing Safety, Security and Sustainability of Apia Port Project. Manila.

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inequalities; accelerating progress in gender equality; tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability; making cities more livable; and strengthening governance and institutional capacity.4

A. Rationale

7. A significant portion of the project road has fallen into disrepair and become unsafe for commuters and for pedestrians walking alongside. This is especially an issue along the first 3 km of the road, a semi-urban area where school and college students dominate pedestrian traffic. Tropical Cyclone Evan in 2012 caused significant damage to Samoa’s transport infrastructure, including the project road. The government has since restored some of the worst-hit sections (3.67 km) of it, but the road remains narrow and lacks adequate pedestrian facilities in semi-urban areas, drainage is deficient along its entire length, and the road alignment in hilly sections is unsafe, all of which creates significant hazards, particularly in wet conditions. The project road is also an alternative route between the northern and southern coasts for evacuation during a cyclone and for post-disaster relief. Hence, the upgrade of this critical link will contribute to a safer road network and increase the island’s climate and disaster resilience.

8. Samoa’s economy is based on subsistence primary production. Crops, livestock, fisheries, and forestry account for 42% of the country’s gross domestic product and for 75% of employment. Tourism is growing and represents 25% of gross domestic product. According to the Central Bank of Samoa, it is a key driver of economic development because it provides a large number of jobs and generates foreign exchange. The socioeconomic benefits of the road upgrade are expected to comprise (i) faster and safer access to public services, including schools and medical care; (ii) more enrollments in tertiary education; and (iii) greater economic activity from better connectivity, which in turn benefits tourism and increases employment for rural communities. The upgrade is expected to lessen the burden on women in meeting their transport-dependent household, productive, and community obligations. Women will also benefit from better opportunities for micro businesses and tourism-related activities.

9. The Ministry of Works, Transport and Infrastructure (MWTI) sets the sector policies, and oversees and regulates infrastructure and services through its land transport, civil aviation, and maritime transport divisions. Established under the Land Transport Authority Act 2007, the Land Transport Authority (LTA) is responsible for the planning, design, supervision, construction, and maintenance of national roads and land transport infrastructure; and also manages road use. This includes promoting vehicle safety and safe user behavior, regulating the transport of passengers and goods by road, and managing traffic. The LTA funds capital investment projects from the national budget, and the World Bank provides grant funds for road rehabilitation works.

10. In carrying out its duties, the LTA benefits from the World Bank’s long-standing involvement in Samoa’s road transport development and its considerable experience. The Samoa Climate Resilient Transport Project (footnote 2) will contribute to the sustainability of road infrastructure investments by providing the LTA with sector and spatial planning tools to manage its road assets, climate change vulnerability assessments, and a centralized database for recording accidents. Moreover, in light of government agencies’ ineffective project management in the past, which resulted in lengthy procurement and poor contract management, the World Bank project will provide technical advisors to strengthen the Aid Coordination and Debt Management Division (ACDMD) of the Ministry of Finance (MOF) and the Transport and

4 ADB. 2019. Country Operations Business Plan: 11 Small Pacific Island Countries,, 2020–2022. Manila; and ADB. 2018. Strategy 2030: Achieving a Prosperous, Inclusive, Resilient, and Sustainable Asia and the Pacific. Manila.

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Infrastructure Sector Coordination Division (TISCD) set up under the MWTI, as well as technical support to the LTA.

11. Land registration information in Samoa has not been updated in pace with modern geodetic systems, and the Ministry of Natural Resources and Environment (MNRE) has limited land survey and information management capacity. This causes delays in defining property boundaries and resulted in incomplete data on road rights-of-way. Accurate topographical and boundary surveys are required to optimize road designs and avoid or minimize the need for land acquisition. The World Bank project is extending support to the MNRE to strengthen its land administration system. The ADB project will complement these efforts by helping strengthen the capacities of the MWTI and the LTA.

B. Project Description

12. The project is aligned with the following impacts, as per Goal 1 and Goal 2 of the 5 Government’s Transport Sector Plan 2014–2019 (TSP): (i) transport sector governance framework strengthened; and (ii) road transport network improved, sustained, and climate- proofed. The project will have the following outcome: Central Cross Island Road made more sustainable, more efficient, more climate-resilient, and safer.6

13. Output 1: Central Cross Island Road upgraded and made safer. This output will finance the upgrade of about 20 km of national road incorporating climate-resilient drainage facilities to withstand increased rainfall intensity; and road safety measures for the safe management of pedestrian and vehicular traffic, particularly at times of heavier pedestrian movements near schools and poor visibility because of climatic conditions. The project team will build road features that specifically cater to the requirements and welfare of women, vulnerable road users, and nonmotorized traffic. This includes 8.4 km of footpaths, 18 streetlights, 18 safe bus stops, and 11 pedestrian crossings. The additions will collectively contribute to greater disaster preparedness by making the road safely traversable in poor climatic conditions. The project attempts to reduce the carbon footprint during construction by piloting an alternative building method, i.e., recycling the existing road pavement instead of using raw materials from quarries; this will contribute to overall road industry sustainability.

14. Output 2: Maintenance of Central Cross Island Road improved. This output will finance routine maintenance for three years starting immediately after the completion of the road upgrade. It involves performance-based contracting of national contractors and community participation, targeting 30% of the contracted workforce to be women.

15. Output 3: Institutional capacity to manage the road network strengthened. This output will finance capacity strengthening to complement the World Bank’s initiatives. ADB financing will cover (i) the engagement of an additional four nationally contracted TISCD staff for procurement, gender, safeguards, financial management, and monitoring and evaluation, to support four specialists already provided through the World Bank project; (ii) training to the MWTI and LTA in project management, procurement, gender aspects, safeguards management, and public communications; and (iii) additional measures to build women’s capacity and leadership, such as (a) the formulation of the LTA’s first institutional gender strategy to increase women’s employment and their support in the workplace, (b) targets to include women in technical training, and (c) a gender-sensitive communication campaign on road and transport safety

5 MWTI. 2014. Transport Sector Plan 2014–2019. Apia. 6 The design and monitoring framework is in Appendix 1.

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delivered to all communities in the project area.7 Capacity building for road asset management and sustainability will be coordinated with the LTA and the World Bank (paras. 10 and 11).

C. Value Added by ADB

16. The project design incorporates climate adaptation, road maintenance, road safety enhancements, alternative road construction techniques to reduce the project’s carbon footprint (pavement recycling and intelligent compaction), and gender-inclusive elements. ADB will finance 100% of the project costs associated with these measures. This is the first major road project in Samoa to receive ADB support in tandem with World Bank efforts to improve the country’s road network. Without ADB’s support, this important cross-island link would not receive its long overdue upgrade. The project’s communication strategy includes participatory methods to ensure that the road design is responsive to the needs of the road users and that adequate information is provided in a manner and form accessible to them, to mitigate disruptions during construction. The strategy also includes behavior change communication to engage road users in safety campaigns for motorists and pedestrians in various phases of project implementation.

D. Summary Cost Estimates and Financing Plan

17. The project is estimated to cost $55.0 million (Table 1). Detailed cost estimates by expenditure category and by financier are included in the project administration manual (PAM).8

Table 1: Summary Cost Estimates ($ million) Item Amounta A. Base Costb 1. Upgraded and safe Central Cross Island Road 37.8 2. Improved maintenance of Central Cross Island Road 1.2 3. Strengthened institutional capacity to manage the road network 1.0 Subtotal (A) 40.0 B. Contingenciesc 15.0 Total (A+B) 55.0 a Includes value-added tax and duties of $4.6 million to be financed in cash by the government. Such amount does not represent an excessive share of the project cost. b In mid-2020 prices. c Physical contingencies computed at 10% of civil works to cover unforeseen expenditures and future project scale-up and preparation. Price contingencies computed at an average 3.1% on foreign exchange costs and 2.9% on local currency costs in consideration of supply chain disruptions associated with the coronavirus disease (COVID-19) pandemic; includes provision for potential exchange rate fluctuation under the assumption of a purchasing power parity exchange rate. Source: Asian Development Bank estimates.

18. The government requested a grant not exceeding $40.0 million from ADB’s Special Funds resources (Asian Development Fund) to help finance the project. The summary financing plan is in Table 2. ADB’s grant will finance the civil works, routine maintenance costs for 3 years,9 office equipment and consulting services for construction supervision, and capacity building. Climate adaptation is estimated to cost $371,715 and ADB will finance 100% of the adaptation costs. The government will finance expenditures for land acquisition and compensation, and value-added tax and duties.

7 This includes supporting all community members to understand women’s concerns and ensuring that communication is tailored to the needs of women and girls, e.g., information is delivered in formats that women understand, and at times and locations that are convenient for them. 8 Project Administration Manual (accessible from the list of linked documents in Appendix 2). 9 The 3-year maintenance will be implemented within the grant closing date as shown in the project schedule (Linked Document 4).

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Table 2: Summary Financing Plan Amount Share of Total Source ($ million) (%) Asian Development Bank Special Funds resources (Asian Development Fund grant) 40.0 72.8 Government of Samoa 15.0 27.2 Total 55.0 100.0 Source: Asian Development Bank estimates.

E. Implementation Arrangements

19. MOF will be the executing agency, and the implementing agencies will be the MWTI, LTA, and MNRE. MOF will provide overall oversight, monitoring, and reporting through the ACDMD. The LTA will manage the project day-to-day in accordance with ADB’s applicable guidelines. The MWTI’s TISCD is responsible for the overall project coordination. LTA will have overall responsibility in managing land acquisition. Land and asset valuation and compensation will be implemented by MNRE, in coordination with LTA and TISCD following the project’s final resettlement plan.

20. The LTA, jointly with the TISCD, will procure works and consulting services in accordance with the ADB Procurement Policy (2017, as amended from time to time) and its associated procurement regulations and guidance notes. To avoid COVID-19-related procurement delays, e-procurement will be used for the tender of the civil works packages. The Samoa Port Authority has been using the Tenderlink network for the earlier ADB-financed project (footnote 3), and the LTA will use the Tenderlink system registered with the MOF. The ACDMD will ensure compliance with the timely submission of audited project financial statements to ADB. Retroactive financing will be used to allow contract signing and mobilization of the construction supervision consultant prior to grant effectiveness. The selection of the consultant is ongoing, and civil works bidding will start in the fourth quarter of 2020.

21. The project preparation team undertook a comprehensive procurement risk assessment and a detailed supply market analysis to underpin value-for-money considerations when choosing procurement arrangements. The project will achieve the best value for money by (i) using the e- procurement technology to lower transaction costs and ensure transparency; (ii) attracting international and national contracting firms to the tender to ensure an optimal range of capacities for delivering quality civil works—the open competitive bidding being in two packages, one for international advertisement ($19.1 million), the other for national advertisement of two lots of $2.65 million each; and (iii) procuring international consulting firms through the quality- and cost- based selection to ensure high-quality services. Further, the provisions concerning abnormally low bids and standstills will also apply to civil works to maximize value for money.

22. The implementation arrangements are summarized in Table 3 and described in the PAM (footnote 8).

Table 3: Implementation Arrangements Aspects Arrangements Implementation perioda June 2019–September 2026 (with advance actions) Estimated completion date 30 September 2026 Estimated grant closing date 31 March 2027 Management (i) Oversight body MOF through ACDMD – oversight, monitoring, and reporting MWTI through TISCD – coordination and implementation assistance

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Aspects Arrangements Project coordination committee: Chair: chief executive officer, MOF Members: MOF, MWTI, MNRE, LTA, utility owners, supervision consultant (ii) Executing agency MOF (iii) Key implementing LTA: day-to-day implementation agencies MNRE: safeguards MWTI: interagency coordination Procurementb Open competitive bidding 1 contract (civil works) $19.10 million (international) Open competitive bidding 2 contracts (civil works) $5.3 million (national) Open competitive bidding 1 contract (maintenance) $0.6 million (national) Request for quotation 2 contracts $20,000 Consulting services Quality- and cost-based 200 person-months (firm) $4.34 million selection Individual consultants 144 person-months $200,000 selection (national) Retroactive financing and/or Advance contracting for civil works and consulting services, and retroactive advance contracting financing for consulting services up to 20% of grant proceeds for eligible expenditures within 12 months of grant signing. Disbursement The grant proceeds will be disbursed following ADB’s Loan Disbursement Handbook (2017, as amended from time to time) and detailed arrangements agreed between the government and ADB. ACDMD = Aid Coordination and Debt Management Division; ADB = Asian Development Bank; LTA = Land Transport Authority; MNRE = Ministry of Natural Resources and Environment; MOF = Ministry of Finance; MWTI = Ministry of Works, Transport and Infrastructure; TISCD = Transport and Infrastructure Sector Coordination Division. a Assuming that disruptions associated with the coronavirus disease (COVID-19) pandemic do not last more than 6 months. b Amounts net of value-added tax. Source: Asian Development Bank estimates.

23. The ACDMD and TISCD were set up under the World Bank project. The TISCD is led by a division head and four nationally contracted staff for procurement, financial management, safeguards, and monitoring and evaluation. The ADB team will contract another four senior staff for the same subject areas, as well as office equipment, to cover the division’s additional workload throughout construction. The ACDMD is set up similarly but staffed with international specialists. The LTA will implement all aspects of the project in close coordination with the TISCD and with its Project Management Division, which comprises six engineers, one safeguards specialist, and two support staff.

III. DUE DILIGENCE

A. Technical

24. The technical feasibility of the project was tested initially by an ADB technical assistance at the preliminary design stage and firmed up by the detailed design carried out by the LTA with funding from the United Nations Development Programme through the Green Climate Fund. The road design is constrained by the island's topography and the need to balance the cost of construction and minimize land acquisition. To ensure climate resilience, the roadside drainage design is informed by hydrology and hydraulic analysis considering extreme climatic events. The civil works will include (i) minor realignments and widening of the narrow carriageway (now 4 meters–5 meters) for safe speeds of 40 km/hour in urban sections and 60 km/hour in nonurban sections; (ii) reconstruction of the road pavement for a 20-year design life—asphalt for the traffic carriageway (7.0 meters wide), hard shoulders and utility verge in urban areas (4.5 meters wide), and unsealed shoulders in nonurban areas (2.0 meters wide)—and reconstruction of the sub-

7 base and base course layers to carry the projected traffic loads; (iii) construction of road safety and roadside facilities with features that are gender-sensitive and user-friendly for vulnerable people; and (iv) reconstruction and provision of new cross- and side drains to protect the road from climate-change-induced extreme rainfall events with high intensity and prolonged rainfalls.10

25. An assessment of road safety measures by the International Road Assessment Programme recommended higher road safety standards with at least a 3-star rating based on its rating system.11 The road design includes guardrails, streetlights, separate pedestrian footpath along urban sections and in areas where pedestrian traffic is high, road signage and markings, bus bays, and vehicle speed-calming measures near schools and public markets. The detailed design also meets universal access requirements, such as wheelchair access to footpath and bus stops. A community consultation process was developed to determine suitable locations for bus shelters, lighting, and other facilities. Separate road safety campaigns for communities and drivers will also be implemented.

26. The road design incorporates innovative technologies to reduce the carbon footprint of the project, minimize costs, and increase resilience to excessive rainwater penetration of the road embankment. The detailed design provides for the cement stabilization of shoulders in nonurban road sections. Pavement recycling is widely used in the United States and other developed countries, and allows a reduction in a road project’s carbon footprint, cuts construction time and costs, and minimizes traffic disruptions during construction. This method is not so widely used in ADB-financed projects due to limitations in local standards, perceived risks, and lack of knowledge and even less so in small Pacific islands where construction materials are scarce. The project incorporates this technology by allowing alternative technical solutions during the bidding for civil works. The bidding documents include specifications for reclamation of existing pavement materials to be placed as a road base. The technology reduces carbon emissions significantly during construction by minimizing the extraction, transport, and placement of quarried materials.

B. Economic and Financial Viability

27. The project was not tested for its financial viability because it is not revenue-generating. The economic analysis was carried out in accordance with ADB’s Guidelines for the Economic Analysis of Projects. The evaluation of annual streams of project economic costs and associated benefits under a baseline scenario yields an economic internal rate of return (EIRR) of 14.8%, and an economic net present value of $20.33 million. This confirms the project’s economic viability, since it exceeds ADB’s minimum required EIRR for investment projects of 9%.

28. Quantifiable benefits include reductions in vehicle operating costs and time savings from traveling on the upgraded road, as well as fewer accidents and lower road agency costs because of greater road safety and more resilience to extreme climate events. The project is expected to reduce road deaths and severe injuries by 46%, bringing down the ratio of fatalities per year from 0.59 to 0.32, and the ratio of fatalities and severe injuries per year from 6.5 to 3.5.12 Unquantified benefits from the project include (i) less vulnerability to climatic events because of the availability of a reliable all-weather rescue route in case of disasters triggered by extreme weather; (ii) large potential gains in induced traffic, driven by a decline in vehicle operating costs and complementary developments to stimulate socioeconomic and tourism activity; (iii) better health and education

10 Climate Change Assessment (accessible from the linked documents in Appendix 2). 11 International Road Assessment Programme – Assessment of Central Cross Island Road, Samoa (accessible from the list of linked documents in Appendix 2). 12 Economic and Financial Analysis (accessible from the list of linked documents in Appendix 2). https://www.irap.org/methodology.

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outcomes resulting from better access to health and school facilities; and (iv) generation of employment opportunities from improved access to markets.

29. The project’s sensitivity to changes in cost, demand, and benefits were tested (Table 4). Given the ongoing COVID-19 pandemic, the project was tested for a simultaneous 20% increase in construction costs and a 20% drop in traffic levels. The project remains economically viable under this adverse scenario with an EIRR at 9% and a net present value dropping to 0, which is the switching value for the project.

Table 4: Sensitivity Analysis Scenario NPV ($ million) EIRR (%) Base case 20.33 14.8 Construction costs increase by 20% 13.49 12.3 Maintenance costs increase by 20% 20.22 14.7 Vehicle operating cost savings decrease by 20% 11.93 12.6 Travel time cost savings decrease by 20% 18.73 14.3 Traffic levels decrease by 20% 7.02 11.1 Construction costs increase by 20% and traffic levels decrease by 20% 0.0 9.0 Without accident cost savings 17.02 13.9 EIRR = economic internal rate of return, NPV = net present value. Source: Asian Development Bank estimates. C. Sustainability

30. Managing the road network is the responsibility of the LTA. Until June 2020, it was a public trading body under the Public Bodies (Performance and Accountability) Act 2001, remitting a dividend to the government each year, such as ST102,309 ($39,034 equivalent) in fiscal year (FY) 2017.13 The key sustainability parameter for road investments is the government’s ability to provide a sufficient level of operation and maintenance (O&M) funding over the life of the upgraded road, especially as the LTA becomes entirely dependent on budgetary allocations. The sustainability of an investment will be assured through maintenance over its life cycle only if two key constraints are systematically removed: (i) insufficient maintenance funding, and (ii) inadequate maintenance practices that cause premature road deterioration. The LTA’s main sources of funds have been government and external grants through the national budget (about 60%) and retained revenues from fees and charges (40%).

31. To manage a national road network of 1,255.7 km (816.5 km on Upolu and 439.2 km on Savaii), with 139 river-crossing structures (46 bridges, 19 fords, and 35 large culverts on Upolu; and 8 bridges, 19 fords, and 12 large culverts on Savaii),14 the LTA has spent an average of ST32.8 million ($14.5 million equivalent) per annum from the national budget, of which ST13.6 million ($6.0 million equivalent) per annum (41%) was spent on capital works (including cyclone rehabilitation); and ST19.2 million ($8.5 million equivalent) per annum (59%) on routine, periodic, and emergency maintenance during 2013–2017. This is in addition to expenditure funded from external grants. The budget allocations during FY2016–FY2020 increased from about ST13 million ($5.7 million equivalent) to ST19 million ($8.4 million equivalent), but are still short of the ST35 million ($15.5 million equivalent) yearly target set in the TSP.15

13 Government directive dated 27 May 2020 changing the LTA’s status to public beneficiary body. 14 Updated figures are from a preliminary draft by the LTA following careful reconciliation of data sources. Adam Smith International. 2018. Renewals and Depreciation Funding Gap Assessment. London (July). 15 The ongoing Renewals and Depreciation Funding Gap Assessment, funded by the Government of Australia, is reassessing the annual costs of asset depreciation. Its findings, coupled with the data from the Samoa Road Asset Management System, will allow a reevaluation of the level of annual maintenance needed.

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32. Generally, the LTA strikes a reasonable balance between the need to preserve, repair, and upgrade its road assets. In FY2017, the LTA managed 24 grass-cutting contracts, 7 drainage maintenance contracts, 1 traffic signal maintenance contract, and 22 routine road maintenance contracts. The routine maintenance contracts were organized by zone (12 on Upolu and 10 on Savaii), had 2-year contract periods (introduced for the first time in FY2017), and involved performance-based payments. Contractors are registered annually; in FY2019, 18 contractors were registered for routine maintenance contracts on Upolu, and 13 for Savaii.

33. The project will finance performance-based routine maintenance for 3 years from the end of construction, and capacity building in tandem with the World Bank’s ongoing efforts (para. 9) to increase the LTA’s long-term ability to manage the road network beyond project implementation. More specifically, the joint focus will be on optimizing the LTA’s asset maintenance strategies.

34. Samoa’s relatively small economic base does not generate sufficient revenues for funding all sectors, hence unconventional O&M funding sources would have to be sought. Like other Pacific countries, Samoa is disproportionately affected by the rising sea levels and the increase in extreme climatic events. At the same time, road transport generates about one-quarter of all greenhouse gas (GHG) emissions, more than other sectors and subsectors.16 The GHG modeling done for the project using the Highway Development and Management 4 (HDM-4) model predicts that a reduction of about 14,000 tons of GHG can be achieved over the project life cycle (20 years) if optimal preventive maintenance regimes are applied to arrest premature road deterioration, e.g., keeping traffic operations close to optimal speeds and reducing carbon emissions. This presents a potential to access carbon finance for O&M through new market mechanism(s) under Article 6 of the Paris Agreement, which is still under negotiation under the aegis of the United Nations Framework Convention on Climate Change. However, this would depend on the project meeting eligibility criteria under the Paris Rulebook. In any case, the project will help strengthen Samoa’s policies and regulations on reducing GHG emissions from road transport.17

D. Governance

35. The transport sector’s strengths include a strong and effective policy framework supported by well-established procedures and guidelines; a well-structured and streamlined public sector, with responsibilities defined and an appropriate arm’s-length relationship between regulator and service providers; a well-educated and motivated public sector workforce; and respect for the law. Weaknesses include a lack of up-to-date data on road and traffic conditions, resulting in an inability to assess the effectiveness of maintenance plans and works for the road network as a whole; and institutional capacity limitations, largely stemming from lack of experience. The priorities for capacity development lie mainly with minimizing sustainability risks through better life cycle maintenance planning and designs that ensure resilience to climate-change impacts, and incorporating better safety features in road designs, including the safety of pedestrians and other vulnerable road users.

36. The financial management assessment of the project found that MOF, as the executing agency and as the representative of the assistance recipient, is familiar with ADB’s procedures and reporting requirements and has sufficiently robust financial management policies, systems, and procedures to meet ADB’s requirements for the project. It will administer the advance account

16 MNRE. 2015. Samoa’s Intended Nationally Determined Contribution. Apia (presented at the 21st Conference of the Parties [COP 21] in Paris). 17 Initial Environmental Examination (accessible from the list of linked documents in Appendix 2).

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and has proven capacity. However, staff at the key implementing agencies—MWTI, MNRE, and LTA—are unfamiliar with ADB’s procedures. The financial management risks associated with these agencies are rated moderate.18 Actions to mitigate this weakness include workshops under the project to explain ADB’s financial management and disbursement requirements to the staff of MOF (ACDMD), the MWTI (TISCD), and the LTA to complement the earlier support by the World Bank to establish and staff these centralized units (footnote 2). The project will also bolster the TISCD team by providing four more staff to support ADB-funded projects. MOF, the MWTI, and the LTA agreed to implement financial management actions to strengthen their capacity.

37. ADB’s Anticorruption Policy (1998, as amended to date) was explained to and discussed with the MOF, MNRE, LTA and MWTI. The specific policy requirements and supplementary measures are described in the PAM (footnote 8). Integrity due diligence was conducted on the LTA. No significant integrity risks were detected.

E. Poverty, Social, and Gender

38. The project will particularly benefit the communities and businesses along the upgraded road that rely on it to access economic opportunities (jobs, markets) and essential social services (schools, hospitals), which tend to be in Apia. Safer vehicle traffic, shorter travel times, and a safer pedestrian environment, due to the footpaths and other new features, will reduce road accidents and improve mobility, especially for vulnerable groups such as women, school children, and the disabled. While tourists continue to travel to the seaside resorts along the coastal road, an upgraded cross-island road is likely to encourage more locals to enjoy the seaside and more tourists to venture inland, which in turn stimulates economic activities.

39. This project is classified effective gender mainstreaming. Women’s concerns and needs voiced during gender analysis and consultations are reflected in the road design with features such as lighting, pedestrian footpaths, covered bus shelters, speed signs, speed bumps, and gender-sensitive road safety training in schools and for village groups. To prevent gender-based violence (including sexual harassment), the contractors will be required to provide mandatory training to all their staff on sexual exploitation and abuse, and HIV awareness. Women and girls highlighted that they often feel unsafe on public transport. To rectify this, a campaign to prevent sexual harassment on buses will be implemented. In addition, analysis will be undertaken to define and address those gender dimensions of commuter safety that are under the jurisdiction of the LTA. The project will also support the LTA in developing its first institutional strategy to manage gender issues in the workplace, which includes gender training and plans to support more women in the workplace. Finally, income-generating opportunities for women will be provided through construction (10% of roles for women) and road maintenance (30% of roles for women). The project will also provide indirect benefits to women and girls by improving access to public services such as education and health.

F. Safeguards

40. In compliance with ADB’s Safeguard Policy Statement (2009), the project’s safeguard categories are as follows.19

18 Normally, an entity with limited experience in ADB procedures would be rated as posing a higher risk, but the planned coordinating arrangements involving the ACDMD and TISCD, both supported by external advisors in critical project management roles, will help reduce this risk. 19 ADB. Safeguard Categories. https://www.adb.org/site/safeguards/safeguard-categories.

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41. Environment (category B). The impacts of the upgrading, drainage, and resealing works on a 20 km section of existing road will be site-specific, largely created during construction, and most of the foreseen environmental impacts can be readily mitigated or managed. The environmental assessment found that the road runs through urban and rural areas of Apia, both already highly modified, and briefly transverses a wider area designated as Apia Catchment’s key biodiversity area; it is also an important bird area that supports endemic, endangered, or significant species. About 7 km of the road traverse disturbed forest and mountain forest within the boundary of the Apia Catchment’s key biodiversity area. All construction works will be entirely confined to the footprint of the road's existing right-of-way and to a degraded habitat within 1 km, which are not identified as natural habitats even though they are part of a wider area designated as critical habitat. The degraded vegetative zone between the road corridor and the non-degraded forest may have habitat values, but does not satisfy the criteria for critical habitat. The detailed assessment demonstrates that threatened species are unlikely to interact with the project footprint, preferring to use less-disturbed habitats further away from the road. No net loss of critical habitat is likely to occur as a result of the project. The existing road and the proposed road upgrade (construction limit-of-works) do not impinge on any areas of non-degraded or undisturbed forest. The assessment concludes that (i) the project can meet the three thresholds for allowing a project to go ahead in an area of critical habitat; (ii) there are no significant adverse environmental impacts; and (iii) expected impacts will be construction-related, localized, and manageable if the mitigation measures are implemented and closely monitored. As a precautionary basis, the contractor will be required to develop a biodiversity action plan, and provisions are included in the environmental monitoring plan (EMP) to ensure that all lesser impacts originating from project-related activities are mitigated to achieve at least no net loss of biodiversity (i.e., no actual harm, nor loss, nor degradation of habitat).

42. The civil works will be tendered as two contract packages, and successful contractors will prepare their construction EMP based on the final EMP (updated at the detailed design stage) with details of their construction methods and their approach to the main construction elements, the risk assessment, and the mitigation measures.20 The LTA, supported by the construction supervision consultant, will review and approve the construction EMP of each contractor prior to the start of any physical works (including site clearance) on any section. The consulting team will include at least 30 person-months of environmental and health and safety specialists to work closely with the LTA’s safeguards officer.

43. Involuntary resettlement (category B). The upgrade, including widening the road to a 16-meter wide corridor, will require land acquisition and clearance of fences, hedges, trees, and some small structures belonging to temporary roadside vendors. The project will need about 130,322 square meters of land, affecting 159 land lots. It will also require an extension of the easement areas, totaling 6,021 square meters. However, there will be no requirement to change the ownership of this land. The project will not result in impacts on residential or commercial structures, so no forced physical displacement will take place.

44. A draft resettlement plan was prepared based on the detailed designs and disclosed on ADB's website. During project preparation, community consultations were held in accordance with the Safeguard Policy Statement, and those requirements shall continue to be met during the finalization and implementation of the resettlement plan. Detailed measurement surveys and an inventory of losses were initiated in consultation with all affected persons. The TISCD and the

20 This will include a health and safety plan aligned with the World Health Organization's 2020 considerations for public health and social measures in the workplace in the context of COVID-19. https://www.who.int/publications- detail/considerations-for-public-health-and-social-measures-in-the-workplace-in-the-context-of-covid-19.

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LTA will be responsible for the overall monitoring and supervision of safeguard activities, while the MNRE will lead the land acquisition and compensation for all affected assets. The supervision team will have at least 25 person-months of social safeguard, gender, and communication specialists who will assist the TISCD, LTA, and MNRE during project implementation. A grievance redress mechanism will be implemented by the LTA, as outlined in the draft resettlement plan.

45. Indigenous peoples (category C). The project beneficiaries are not considered as being either distinct from mainstream society or vulnerable. Nonetheless, all project activities will be undertaken in a culturally appropriate manner.

G. Summary of Risk Assessment and Risk Management Plan

46. The project risks were identified based on lessons learned by ADB and the World Bank in Samoa. None of the risks were assessed as being highly likely or having the potential to significantly alter project outputs and outcome. The detailed risk assessments are in the risk assessment and risk management plan and project procurement risk assessment.21 ADB’s own experience in Samoa indicates that land acquisition is generally complex and time-consuming. The level of project readiness, stakeholder consultations conducted to formulate a draft resettlement plan, and project resources allotted to ensuring continued support to acquire the land required for the project helped bring the associated level of risk significantly down. Affected persons are supportive of the upgrade.

47. The LTA’s recent assessment indicates an O&M funding shortfall of about 30%. This is a substantial risk, which will be mitigated by the government's commitment to allocate ST35 million to the LTA to cover for O&M in line with the requirements of the TSP.

IV. ASSURANCES

48. The Government through MOF and LTA have assured ADB that the implementation of the project shall conform to all applicable ADB requirements, including those concerning anticorruption measures, safeguards, gender, procurement, consulting services, financial management, and disbursement as described in detail in the PAM and grant documents.

49. The Government through MOF and LTA have agreed with ADB on certain covenants for the project, which are set forth in the draft grant and project agreements.

V. RECOMMENDATION

50. I am satisfied that the proposed grant would comply with the Articles of Agreement of the Asian Development Bank (ADB) and recommend that the Board approve the grant not exceeding $40,000,000 to the Independent State of Samoa from ADB’s Special Funds resources (Asian Development Fund) for the Central Cross Island Road Upgrading Project, on terms and conditions that are substantially in accordance with those set forth in the draft grant and project agreements presented to the Board.

Masatsugu Asakawa President 9 November 2020

21 Risk Assessment and Risk Management Plan, and Project Procurement Risk Assessment of Samoa’s Land Transport Authority (accessible from the list of linked documents in Appendix 2).

Appendix 1 13

DESIGN AND MONITORING FRAMEWORK

Impacts the Project is Aligned with Transport sector governance framework strengthened (Transport Sector Plan, 2014–2019)a Road transport network improved, sustained, and climate-proofed (Transport Sector Plan, 2014–2019)a

Performance Indicators with Data Sources and Results Chain Targets and Baselines Reporting Mechanisms Risks Outcome By 2027: Central Cross Island a. Road agency costs for a.–b. LTA’s annual Climate change risks Road made more periodic maintenance reduced expenditure reports are underestimated. sustainable, more by 20% (2019 baseline: efficient, more ST14,000 per km of pavement Speed limitation climate resilient, and reseal) measures are not safer adequately enforced.

b. Road user costs through

improved ride quality reduced

to IRI 2.5 m/km (2019

baseline: IRI 3–7 m/km)

c. National accident c. Ratio of accidents resulting statistics produced by in serious injury or loss of life LTA. per year reduced to 3.5

fatalities and serious injuries (2019 baseline: 6.5 fatalities and serious injuries) d.–f. iRAP ex-post rating d. Road length with 3-star iRAPb rating for vehicle occupants increased to 17.9 km (2019 baseline: 4.5 km)

e. Road length with at least 4- star iRAP rating for pedestrians increased to 4.5km (2019 baseline: 0)

f. 1-star iRAP rating for both pedestrians and vehicle occupants eliminated completely (2020 baseline: 8.3 km)

Outputs By 2024: 1. Central Cross 1a. 20 km two-lane road 1a.–1b. Project quarterly Delay in Island Road upgraded and climate-proofed and completion reports implementation upgraded and made to average operating speed of prepared by LTA because of disputes safer 55 km/hour (2020 baseline: 0 over land km) (RFI A) compensation packages and 1b. 8.4 km of footpaths, uncertainty over 11 pedestrian crossings, and COVID-19 pandemic 18 bus stop laybys constructed with universal International bidders access considerations not interested in

14 Appendix 1

Performance Indicators with Data Sources and Results Chain Targets and Baselines Reporting Mechanisms Risks (inclusive of gender design tender because of features, such as lighting, and remoteness, project access features for people size, and global with disabilities) (2020 health risk issues. baseline: 0)

2. Maintenance of By 2026: Central Cross Island 2a. Routine maintenance 2a.–2b. Project Road improved contract piloting community completion report participation along the prepared by LTA upgraded 20 km two-lane road successfully implemented (2019 baseline: not applicable)

2b. LTA maintenance contracts included 30% female participation in community- based maintenance contracts (2020 baseline: 0%)

3. Institutional By 2026: capacity to manage 3a. Road transport GHG 3a. Published policy and the road network emission reduction policy, regulatory documents by strengthened regulations, and targets the Ministry of Natural strengthened (2020 baseline: Resources and not applicable) Environment and LTA

3b. At least three training 3b.–3d. Project quarterly programs on project reports and training management and three evaluation reports by training programs on road LTA maintenance and asset management conducted (including technology transfer to local contractors) (2020 baseline: 0)

3c. At least two gender- sensitive behavior change communication campaigns on road and transport safety conducted prior to opening of the road to traffic (2020 baseline: 0);

3d. Gender strategy for LTA’s human resource development and capacity building developed (2020 baseline: not applicable)

Appendix 1 15

Key Activities with Milestones 1. Central Cross Island Road upgraded and made safer 1.1 Detailed design completed by May 2020 (completed). 1.2 Final resettlement plan for implementation approved by Q4 2020 (draft disclosed on ADB website). 1.3 Selection of construction supervision consultant completed by October 2020 (under evaluation). 1.4 Procurement of civil works started by October 2020 and completed by April 2021. 1.5 Resettlement compensations started by Q4 2020 and substantially completed by Q1 2021 (started). 1.6 Civil works started by Q1 2021 and completed by Q4 2023. 2. Maintenance of Central Cross Island Road improved 2.1 Bid documents for maintenance contract prepared by Q1 2023. 2.2 Procurement of maintenance contract prepared by Q1 2023 and completed by Q3 2023.

2.3. Maintenance contract started by Q4 2023 and completed by Q4 2026.

3. Institutional capacity to manage the road network strengthened 3.1 Detailed assessment of capacity needs complete by Q1 2021. 3.2 Capacity development plans, including gender actions design and implemented during 2021–2023. 3.3 Effectiveness of the capacity development activities reviewed in 2024–2025. Project Management Activities Assess and confirm the implementation arrangements in consultation with the World Bank and the

Ministry of Finance.

Implement resettlement plan before works start.

Oversee implementation of environmental management plan.

Oversee performance of supervision consultant and contractors. Inputs ADB: $40.0 million (grant) Government of Samoa: $15.0 million Assumptions for Partner Financing Not applicable ADB = Asian Development Bank, COVID-19 = coronavirus disease, GHG = greenhouse gas, iRAP = International Road Assessment Programme, IRI = International Roughness Index, km = kilometer, LTA = Land Transport Authority, m = meter, RFI = results framework indicator, Q = quarter, ST = Samoan Tala. Contribution to the ADB Results Framework: RFI A: Roads built our upgraded (km). Target: 20 km. a Government of Samoa, Ministry of Works, Transport and Infrastructure. 2014. Transport Sector Plan, 2014–2019. Apia. b iRAP has delivered road safety solutions in more than 70 countries and is uniquely placed in ADB road safety operations being the only entity that has established a specialized road safety assessment methodology that has been successfully implemented in several developing member countries. The methodology is named Star Ratings and provides an objective measure of the level of safety “built in” to the road. 5-star roads are the safest, while 1-star roads are the least safe. Source: Asian Development Bank.

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LIST OF LINKED DOCUMENTS http://www.adb.org/Documents/RRPs/?id=51268-001-2

1. Grant Agreement 2. Project Agreement 3. Sector Assessment (Summary): Transport (Road Transport [Nonurban]) 4. Project Administration Manual 5. Economic and Financial Analysis 6. Summary Poverty Reduction and Social Strategy 7. Risk Assessment and Risk Management Plan 8. Climate Change Assessment 9. Gender Action Plan 10. Initial Environmental Examination 11. Resettlement Plan

Supplementary Documents 12. Financial Management Assessment 13. International Road Assessment Programme – Assessment of Central Cross Island Road, Samoa 14. Climate Risk Vulnerability Assessment 15. Project Procurement Risk Assessment of Samoa’s Land Transport Authority 16. Design Completion Report 17. Innovative Road Sustainability Finance