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Download 562.42 KB Report and Recommendation of the President to the Board of Directors Sri Lanka Project Number: 33307 November 2005 Proposed Loan Socialist Republic of Viet Nam: Greater Mekong Subregion: Kunming-Haiphong Transport Corridor─Noi Bai-Lao Cai Highway Technical Assistance Project CURRENCY EQUIVALENTS (as of 7 November 2005) Currency Unit – dong (D) D1.00 = $0.000063 $1.00 = D15,895 ABBREVIATIONS AADT – annual average daily traffic ADB – Asian Development Bank ADF – Asian Development Fund AP – affected person AusAID – Australian Agency for International Development CFD – Caisse Française de Développement DFID – Department for International Development EA – executing agency EIA – environmental impact assessment EIRR – economic internal rate of return EMDP – ethnic minority development plan EMP – expressway master plan FIRR – financial internal rate of return GDP – gross domestic product GMS – Greater Mekong Subregion HIV/AIDS – human immunodeficiency virus/ acquired immune deficiency syndrome IA – implementing agency JBIC – Japan Bank for International Cooperation MOT – Ministry of Transport NH – national highway O&M – operation and maintenance PIU – project implementation unit PRC – People’s Republic of China RP – resettlement plan SDR – special drawing rights SEDP – Socio-Economic Development Plan SEIA – summary environmental impact assessment TA – technical assistance VEC – Vietnam Expressway Corporation WACC – weighted average cost of capital WB – World Bank NOTE In this report, "$" refers to US dollars. Vice President L. Jin, Operations Group 1 Director General R. Nag, Mekong Department (MKRD) Director J. Cooney, Infrastructure Division, MKRD Team leader Y. Tanaka, Transport Specialist, MKRD Team members M. Huddleston, Senior Social Development/Resettlement Specialist, MKRD T. Kawano, Economist, MKRD S. Phanachet, Senior Financial Specialist, MKRD M. Sultana, Social Development/Poverty Reduction Specialist, MKRD S. Tu, Environment Specialist, MKRD N. Tuyen, Social Development and Gender Officer, MKRD CONTENTS Page LOAN AND PROJECT SUMMARY i MAPS I. THE PROPOSAL 1 II. RATIONALE: SECTOR PERFORMANCE, PROBLEMS, AND OPPORTUNITIES 1 A. Performance Indicators and Analysis 2 B. Analysis of Key Problems and Opportunities 3 III. THE PROPOSED PROJECT 5 A. Impact and Outcome 5 B. Outputs 5 C. Special Features 6 D. Cost Estimates 7 E. Financing Plan 8 F. Implementation Arrangements 8 IV. PROJECT BENEFITS, IMPACTS, ASSUMPTIONS, AND RISKS 10 A. Project Benefits and Impacts 10 B. Project Risks 11 V. ASSURANCES 11 A. Specific Assurances 11 B. Conditions for Loan Effectiveness 12 VI. RECOMMENDATION 12 APPENDIXES 1. Design and Monitoring Framework 13 2. Sector/Subsector Analysis 15 3. Feasibility Study of the Noi Bai-Lao Cai Highway Project 19 4. External Assistance to the Road Subsector 22 5. Summary Poverty Reduction and Social Strategy 23 6. Cost Estimates and Financing Plan 26 7. Project Management Structure 27 8. Implementation Schedule 28 9. Outline Terms of Reference for Consultants 29 10. Consulting Services Contract Package 36 LOAN AND PROJECT SUMMARY Borrower The Socialist Republic of Viet Nam Classification Targeting classification: General intervention Sector: Transport and communications Subsector: Roads and highways Themes: Sustainable economic growth, regional cooperation, capacity development Subthemes: Fostering physical infrastructure development, institutional development, organizational development Environment Category C. This technical assistance project has no adverse Assessment environmental impact. The ensuing investment project will be categorized at a later stage. Project Description The Greater Mekong Subregion: Kunming-Haiphong Transport Corridor─Noi Bai-Lao Cai Highway Technical Assistance Project (the Project) is to assist the Government in preparing the ensuing Noi Bai-Lao Cai Highway Project. The scope of the Project will include: (i) detailed engineering design, (ii) updated economic and financial studies, (iii) social and environmental studies, and (iv) procurement assistance for civil works and construction supervision consulting services for the ensuing highway project. Rationale Viet Nam’s economy has grown over the past decade by an average 7–8% per annum. Based on the Government’s forthcoming Socio-Economic Development Plan (SEDP) for 2006 to 2010, this rate of growth is projected to continue. Among the most important consequences of this soundly based and steady growth is a dramatic reduction in the country’s poverty rate, from 53% in 1993 to 25% in 2005. The SEDP estimates that the rate will fall to 15–16% by 2010. However, Viet Nam will need to invest about 35% of gross domestic product (GDP) to achieve this, and basic economic infrastructure will receive a large share. Infrastructure bottlenecks are becoming apparent, especially in the transport and energy sectors. These will need to be addressed quickly if growth and consequent poverty reduction targets are to be met. The proposed Project will assist the Government in preparing one of its highest priority infrastructure investments—a modern standard road link from Hanoi to connect at Lao Cai with the road network of the People’s Republic of China (PRC). This link will serve two purposes. At the national level, it will connect the northwest region of the country, now very poor and isolated, with the economic centers that have developed around Hanoi and its port, Haiphong. At the regional level, it will link the rapidly- expanding economy of PRC’s Yunnan province with Hanoi and Haiphong, facilitating rapid expansion of cross-border trade and commerce. ii Impact and Outcome The proposed highway will contribute significantly to the development of the poor northwest region of the country, by improving national and regional transport linkages. It will also help reduce poverty levels in this region. The Project will facilitate achieving these objectives by providing the resources required to ensure that the highway is: (i) designed to the highest technical standards, (ii) cost-effective, and (iii) takes into account the unique environmental and social characteristics of the region it will pass through and impact significantly. Cost Estimates The project cost is estimated at $8 million. Financing Plan The Asian Development Bank (ADB) will provide a loan of $6 million equivalent (75%) and the Government will finance $2 million equivalent (25%). Loan Amount and Terms It is proposed that ADB provide a loan of $6 million equivalent, denominated in Special Drawing Rights, from its Asian Development Fund (ADF). The loan will have a term of 32 years, including a grace period of 8 years, an interest charge of 1% per annum during the grace period and 1.5% per annum thereafter, and such other terms and conditions as are set forth in the draft Loan Agreement. Allocation and The Borrower will transfer the loan proceeds from the Government Relending Terms to the Implementing Agency through budgetary allocation. Period of Utilization 2 years Estimated Project 31 March 2008 Completion Date Executing Agency The Executing Agency will be the Ministry of Transport (MOT), and the Implementing Agency will be the Vietnam Expressway Corporation (VEC). Implementation MOT will have overall responsibility for project implementation, and Arrangements formal correspondence with line ministries, the governments of the provinces through which the highway will pass, and ADB. VEC will be responsible for day-to-day project implementation under MOT’s supervision. VEC will set up a project implementation unit headed by an experienced project director and suitable staff. Procurement Equipment will be procured in accordance with ADB’s Guidelines for Procurement (2004). iii Consulting Services An international consulting firm will be recruited using quality and cost-based selection procedures, in accordance with ADB’s Guidelines on the Use of Consultants (2005) and other arrangements satisfactory to ADB for the engagement of domestic consultants. About 90 person-months of international consultants and 240 person-months of domestic consultants will be required. The consultants will have expertise in project management, design of high standard highways, road safety, transport economics, financial analysis, environmental impact assessment, resettlement planning, social development (including indigenous peoples), and procurement assistance. The duration of the consulting services will be about 15 months. Project Benefits and The proposed highway, to be constructed based on the outputs of Beneficiaries the Project, will support Viet Nam’s poverty reduction program through enhanced economic growth and by providing access for currently isolated communities to economic and social services. It will also contribute to the efficient development of the Greater Mekong Subregion by strengthening connectivity with neighboring countries and increasing competitiveness. The Project will produce direct benefits such as: (i) preparing the subsequent highway project to high technical and safeguards standards; (ii) implementing the ensuing project without unnecessary delay; and (iii) substantially improving VEC’s capability for project management, detailed design of highways, procurement, and safeguard arrangements. Risks and Assumptions The main risk for the Project is delayed implementation because of slow finalization of the single consulting services contract, which will implement the Project. This is being addressed through advance procurement action for the Project’s consulting services, and by providing
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